1961-02-28

RESEARCH


[Stage Direction]
Mr. J. W. Murphy (Lambton West) presented the first report of the special committee on research, and moved that the report be concurred in.
Motion agreed to.


Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, I wish to announce the appointment of Mr. George Vickers Haythorne as deputy minister of labour. Mr. Haythorne has held the position of assistant deputy minister after a very distinguished scholastic career at the University of Alberta and Harvard University, from which he received a Ph.D. degree in economics. In addition, he has received certain fellowships and scholarships. He has had practical experience as secretary of the Nova Scotia economic council in Halifax from 1938 to 1942, and he was associated with the national selective service, Department of Labour. He was director of the agriculture, forestry and fisheries branch, and director of the economics and research branch up until 1953 for a period of five years. Since that date he has been assistant deputy minister of labour. He is well known for the various articles he has written on matters of economics and political science.



PRODUCTIVITY COUNCIL


John George Diefenbaker: Mr. Speaker, I have another announcement I wish to make having to do with the national productivity council. We have endeavoured to mobilize the best people available in Canada, in our opinion, so as to be sure that the council can carry out the heavy responsibilities which rest upon it.
As the house knows, there were to be representatives of industry and commerce, labour, the primary industries, the general 90205-6-158
public and the government. The chairman of the productivity council will be George De Young, president of Atlas Steels Limited of Welland, Ontario. Industry and commerce will be represented by N. R. Crump, president of the Canadian Pacific Railway, Montreal; Mr. George C. Metcalf, president of Loblaw Companies Limited, Toronto; E. P. Taylor, president, Argus Corporation, Toronto; Jean Raymond, president of Alphonse Raymond Company Limited, Montreal. In all these cases various other directorates are held.
Labour will be represented by Claude Jodoin, president of the Canadian Labour Congress; Marcel Pepin, secretary and technical advisor of the national metal trades federation, an affiliate of the confederation of national trade unions of Quebec, who lives in Quebec city; Arthur R. Gibbons, vice president and legislative representative in Canada of the brotherhood of locomotive firemen and engineers, Ottawa; Michael H. Nicols, Canadian vice president, international association of asbestos workers and president of the provincial building and construction trades council of Ontario, Toronto; John D. Carroll, international representative and assistant to Canadian vice president S. Finlay of the international brotherhood of boilermakers, iron shipbuilders, blacksmiths, forgers and helpers, a native of Moncton, New Brunswick, and at present having his office in the city of Toronto.
Agriculture will be represented by Dr. H. H. Hannam of the Canadian Federation of Agriculture; Rene Trepanier of Quebec, formerly deputy minister of agriculture in the province of Quebec; J. E. Brownlee, Q.C., chairman of the United Grain Growers, Winnipeg. Other representatives will be H. R. MacMillan, honorary chairman, MacMillan and Bloedel and Powell River Company Limited, Vancouver; W. H. Kirkpatrick, president, Consolidated Mining and Smelting Company, Montreal.
The general public representatives will be Miss Anna Speers, a businesswoman in Winnipeg; H. R. Milner of Edmonton, a director of a variety of corporations; Sidney Buck-wold, mayor of Saskatoon, president of the Canadian federation of mayors and municipalities and also at present of the Saskatchewan municipalities association, a wholesaler who operates a number of wholesale distributing firms; A. Russell Harrington,

Productivity Council
general manager, Nova Scotia Light and Power Company Limited, Halifax; J. F. Cauley, vice chairman, Ontario workmen's compensation board, Toronto.
The government representatives will be George Haythorne, deputy minister of labour; B. G. Barrow, assistant deputy minister, Department of Trade and Commerce; Dr. John Convey, director, mines branch, Department of Mines and Technical Surveys; Dr. A. H. Zimmerman, chairman, defence research board.
This productivity council will naturally be meeting quite regularly and, while every regard has been had to territorial representation, of necessity the representatives must be generally close to Ottawa. The executive director will be John Dickenson, Northern Electric Company, Montreal, an economist of outstanding reputation. This will be the membership of this body, and I am sure hon. members as a whole will appreciate the fact that every consideration has been given to assuring that those who serve will enjoy and do enjoy the confidence of their fellow Canadians and have a contribution to make in connection with this very important matter.


Hon. L. B. Pearson (Leader of the Opposition):: Mr. Speaker, the Prime Minister has made two announcements of very considerable interest to the house. In so far as Mr. Haythorne's appointment as deputy minister of labour is concerned, may I merely say on behalf of the opposition that we welcome his appointment as a well merited promotion from inside the department. We are confident that he will discharge these very important duties in a satisfactory way as his predecessors in that office have done.
In so far as the council on productivity is concerned the announcement, for which we have been pressing the Prime Minister for some time, is an interesting one. It shows that the Prime Minister has been able to secure for this council a number of very distinguished Canadians, and very busy Canadians who have their own responsibilities in their own spheres of activity.
We on this side of the house, Mr. Speaker, have felt that the terms of reference of the productivity council are not wide enough to deal with the economic problems that are facing us; and it would have been preferable, we thought, to give the council at this time far wider terms of reference than have been given in the legislation establishing this body. We have pointed out also that this council is not, by its terms of reference, likely to be effective in dealing with economic problems-


Mr. Speaker:: Order. I question whether the Leader of the Opposition is limiting 
himself, as he ought, to commenting upon the announcement when he refers to decisions the house has taken with respect to this legislation.


Lester Bowles Pearson: Thank you, Mr. Speaker. However, within the terms of reference that have been given to the council, we agree that the Prime Minister has announced a list of very distinguished Canadians to assist in this important work. We hope that this work, and members associated with it, will be helpful to the economy of our country.


Mr. Hazen Argue (Assiniboia):: Mr. Speaker, when the productivity council is being set up we in this group make a point of the fact that, in our view, the council should have the right to make recommendations. Having said that, Mr. Speaker, I am at a loss to know why the government did not appoint personnel to this council who were likely to come to some more progressive conclusions than I think is likely to be the case with this council, which is so heavily weighted by representatives of big business interests. The resolution that was passed by this house, Mr. Speaker, provides for representation from business, but I think the government has bent over backward to select in the main from business interests people who represent the very wealthy in this country but are not in any way representative of general small business.
Mr. Speaker, as far as the representation from labour is concerned, it would seem to me at first glance that the government has weighted the representation on the side of what we might term craft unions rather than having a balanced representation as between craft and industrial unions. I wonder whether the government asked some of the main labour organizations to make recommendations, or whether the personnel were selected by the government arbitrarily, without any consultation, and merely with the consent perhaps of the people who today have been-


Mr. Speaker:: Order. The hon. member will find in the debate an opportunity to discuss in detail the constitution of the committee. If he pursues the line he is pursuing now and makes inquiry or raises questions about the course followed by the government in selecting its nominees, then he will not find himself in a position to object if some answer is proposed to the question which he has raised. I suggest that anything of a controversial nature by way of comment should be reserved for the time of debate, because the practice of the house does not permit

debate at this stage. If controversial matters are raised and left unanswered it puts the party making a factual announcement in an invidious position.


Hazen Robert Argue: Mr. Speaker, on the question you have raised, I think on reflection you would agree that it puts the opposition in an impossible position if all we can do is butter up the government when it makes an announcement. I have two or three brief points I wish to make in regard to the announcement.


Mr. Speaker:: It is not my duty to tell the hon. member what he shall say, but I think I have made it clear that it is not appropriate in commenting on factual announcements by the government of names of its appointees to enter into controversial matters, because there is not supposed to be an opportunity to reply. There will be opportunities to debate the action of the government if it is not approved.


Hazen Robert Argue: Mr. Speaker, on the general question of the announcement of appointments I have made my comments, at least on the part of the business group, and have raised a question about the method of the appointment of the labour people. As far as the agriculture representatives are concerned I would make the comment, Mr. Speaker, that I do feel, while I am making no objections to the people who have been appointed, that the people who have been enlisted to represent agriculture represent only a part of the agricultural movement, and that it will be impossible for them to bring to the committee the consensus of farmers in this country because of the particular people the Prime Minister has selected.
Mr. Speaker, we are glad the government is going forward with this proposal, but we are not satisfied that the government has obtained the best possible personnel, nor obtained them in the best possible way.


John George Diefenbaker: Mr. Speaker, once again the hon. gentleman has-


Mr. Martin (Essex East):: On a point of order, Mr. Speaker-


John George Diefenbaker: Mr. Speaker, I have
risen-


An hon. Member:: The Prime Minister is speaking on a point of order.


Mr. Speaker:: I do not know how a point of order has yet arisen, but if the hon. member has a point of order of course I shall hear him.


Paul Joseph James Martin: My point of order arises this way. If the hon. member for As-siniboia is not to be allowed to comment on the statement-
90205-6-158J
Productivity Council


An hon. Member:: He did.


Paul Joseph James Martin: -then no one should be allowed to make a reply. The Prime Minister may feel chagrined because of what has been said, but that does not justify this kind of action.


John George Diefenbaker: Mr. Speaker, it is not a
question of being chagrined. It is interesting to see the hon. member always coming to the help of those to his right.


Paul Joseph James Martin: I always help the weak.


Mr. Speaker:: Order. I can see the Prime Minister rising. I am not sure whether it is on a point of order or a matter of privilege. The Prime Minister knows, as I have indicated, that this is not the time for debate on issues raised by his statement.
In my opinion the hon. member for As-siniboia did go beyond the realm of appropriate comment, but I would hope the Prime Minister would not feel that it was necessary to reply, unless some erroneous construction has been put on his announcement. In that event I should think the house would consider it appropriate to permit the Prime Minister to correct, as any hon. member is permitted to correct a wrong construction which has been put on something he has said. But I should say to the Prime Minister before he proceeds, this seems to me to be the limit of what can be properly done within our practice.


John George Diefenbaker: Mr. Speaker, I adhered closely in the announcement to what I am privileged to do and what every hon. member of this house is privileged to do, but when an hon. member chooses, under the guise of referring to what has been said, to make observations that cannot be accepted, I have the right, sir, to reply to those observations that were extraneous.


Some hon. Members:: No.


John George Diefenbaker: No. 1 is the fact that strong criticism is made by the hon. member of the labour representation. The head of the C.L.C., who is not completely dissociated from the hon. member, was appointed. In agriculture we have Dr. H. H. Hannam, who is the head of the Canadian Federation of Agriculture. That speaks for itself.


Mr. Speaker:: Order. I am afraid the remarks of the Prime Minister do not come within the limitations which I expressed, but are rather a controversial reply to a question which I agree should not have been raised and which I curtailed when its impropriety became clear.

Inquiries of the Ministry BRIDGES



INTERPROVINCIAL BRIDGE, OTTAWA  ANNOUNCE- MENT OF NAME

[Stage Direction]
On the orders of the day:
Hon. D. J. Walker (Minister of Public Works):: Mr. Speaker, I have a short statement to make. With the consent of Ontario, Quebec, Ottawa and Hull, the new bridge to be built across the Ottawa river referred to in the house yesterday will be called the Macdonald-Cartier bridge, in honour of two of the great fathers of confederation, Sir John A. Macdonald, Canada's first prime minister, and Sir Georges Etienne Cartier, French Canada's outstanding leader.
While I am on my feet, Mr. Speaker, may I take this opportunity of adding that Quebec was brought into agreement for the first time on participation in the financing of the bridge by the government of former Premier Barrette.



HOUSING


[Stage Direction]
On the orders of the day:
David James Walker: Mr. Speaker, I have been asked to make a statement on loans for university dormitories and municipal sewage treatment projects. Last December the scope of the National Housing Act was broadened to include two entirely new concepts of federal government lending. Hon. members will recall that the amendments empowered Central Mortgage and Housing Corporation with the approval of the governor in council to make long term, low interest loans to Canadian universities to assist in providing resident student accommodation, and to municipalities to aid in the construction or expansion of municipal sewage treatment projects.
Many universities and municipalities have responded promptly and with enthusiasm to the new legislation. Each loan approved, of course, is another tangible and concrete contribution to the relief of unemployment and, for this reason, I know the house will wish me to report on progress.
First, the universities. Two loans in an aggregate amount of $2,238,000 to provide accommodation for 488 students have already been approved, to Brandon College for 152 students and to the University of British Columbia for 336 students.


Paul Joseph James Martin: Mr. Speaker, I rise on a point of order.


David James Walker: Yes?


Paul Joseph James Martin: Is it permissible on motions, Mr. Speaker, for a minister to


associate with an announcement of some development of policy a progress report which is nothing more than an apologia for this apathetic government? Is that what we are to have?


Mr. Speaker:: The hon. member has characterized this statement. At the moment I had not come to a conclusion of that kind. Since the question is asked, I may say that it is not proper to rise to make a statement of fact of a statistical character unless it is of sufficient importance to be brought to the attention of the house in this manner. The house frequently requires that announcements of important appointments or actions of the government be communicated to it in the house and I assume that is what the minister is proceeding with.


David James Walker: In answer to my hon. friend, Mr. Speaker, I thought the opposition was vitally interested in remedies for unemployment and it is for this reason that this statement has been prepared.


Paul Joseph James Martin: We are not interested in your defence for doing nothing about it.


David James Walker: There is no defence in this statement. This speaks for itself.


Mr. Pickersgiil:: Exhibitionism.


David James Walker: To continue, Mr. Speaker, the corporation also has under consideration applications for 12 loans in an amount of very close to $10.5 million which, if approved, will provide living quarters for nearly 2,500 students. There have also been another ten active inquiries.
In our efforts to assist in preventing water and soil pollution, three loans for nearly $8.9 million have been approved for treatment plants and interceptor sewers in greater Vancouver, Peterborough and Fort William. In addition, 14 applications for loans in an aggregate amount of some $12.7 million are now being reviewed. These relate to both sewage treatment plants and collector sewers in centres in British Columbia, Saskatchewan, Ontario and Quebec. By far the largest of these is the loan sought by the city of Ottawa, in an amount of more than $9 million. Furthermore, the corporation has received inquiries from 145 other municipalities and, of these, 72 have given us an indication of how much they wish to borrow; the figure is nearly $63 million.
The active interest of universities and municipalities in the new loans is, I submit, further evidence that the legislation sponsored by the government and unanimously passed by parliament in December is both practical and effective, and is already providing many new employment opportunities.


Lester Bowles Pearson: Surely, Mr. Speaker, this is the kind of announcement which should be made when we are in committee of supply. The minister has used the procedure of motions to make an announcement which is contentious, incomplete and controversial, and Your Honour has suggested that on this procedure of motions we on this side of the house are not in a position to reply as we feel we should be able to reply to this kind of statement.


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order. The Leader of the Opposition is quite within the rules in making his point of order, and I trust the house will hear it completed.


Lester Bowles Pearson: If I may be permitted to continue, Mr. Speaker, we o$ this side of the house consider that this use of the procedure for motions is an abuse of the custom and the rules. The practice in this house should not be so abused.


Mr. Benidickson:: This is quite new.


Mr. Speaker:: I take it that the minister has completed his statement. If the hon. gentleman had continued in the vein of his last sentence I would have intervened myself, because it did occur to me that there he was making a point of debate rather than disclosing a decision of policy or action of the government.
As I endeavoured to say earlier, the rule which applies to the making of statements and comment thereon is the same for both sides of the house. If it is to be enforced it will have to be enforced on both sides and due regard had to the fact that any controversial or partisan statement will inevitably provoke a response of that kind.
The rules do not provide for debate at this stage of our proceedings, and I must ask the co-operation of both sides of the house to prevent debate. I have no knowledge of the statements which are to be made; therefore I must rely on the ministers who rise to make statements to keep them within the rules. I have no knowledge of what comment is forthcoming, and must do my best to keep it within what I think is a rather difficult line to draw but which nevertheless is a line which must be drawn.
Having said that, I trust that hon. members on both sides will use their best judgment so that this stage of routine proceedings can be used for the purpose for which it is designed, namely to permit the government to make important announcements to the house before they are made to the public. I stress "important" because it is obviously not intended that the time of the house should
Inquiries of the Ministry be taken up in announcing statistical advances of the departments in pursuance of legislation which the house has passed unless such announcements are of considerable urgency and significance.


David James Walker: I thank hon. members for the applause which greeted me when I rose in my place, Mr. Speaker. I simply wanted to say that I got this procedure from perusing Hansard for that period when the Liberals were in power.



COMMONWEALTH CONFERENCE


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: Mr. Speaker, I should like to ask the Prime Minister, prior to his departure for London, whether he could indicate to the house in a general way, of course, the nature of the subjects which are likely to be discussed at the prime ministers' conference, and also the names of those whom he will be taking with him to that conference.


John George Diefenbaker: Mr. Speaker, as the hon. gentleman knows it has never been the practice to announce the agenda in advance. I believe that course has been followed fairly generally throughout the years.
With respect to the second portion of the hon. member's question, I will have an announcement to make on that subject either tomorrow or the day after.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day;
Mr. Harold E. Winch (Vancouver East):: Mr. Speaker, I should like to ask the Minister of National Defence if he would care to comment on a report which has interested many people, to the effect that a golf course is being built at the army base at Petawawa and that military equipment and the funds of the department are being used for this purpose.


Mr. Speaker:: Has notice of this question been given?


Harold Edward Winch: Yes.


Mr. Speaker:: I think the question is one that would more appropriately be raised on the estimates. If the minister wishes to deal with it, of course, he may.


Harold Edward Winch: This is supposed to be under way now; and that is why it is important at this time.

Inquiries of the Ministry


Hon. D. S. Harkness (Minister of National Defence):: I am prepared to deal with the question if it is permissible. As part of the recreational facilities at Camp Petawawa, authority was given in March, 1957, to construct a golf course. Work has been proceeding since that date and the course is partially completed.
In so far as public funds are concerned, the authority given in March, 1957 involved the provision of $6,000 in cash, the use of one surplus building, the use of land and the provision of some equipment at no direct expense to the public in terms of pay and wages and in such a way as not to interfere with training or administration. In addition, expenditures on power, heat and water would be met from public funds.
The following have been or are being provided from non-public sources: all labour and material, except the $6,000 already mentioned, to an estimated total value of $61,000, and all equipment, labour and equipment necessary for the subsequent maintenance of the golf course except for power, heat and water.
Generally I may say that since the inception of the Canadian forces it has been the policy to provide recreational facilities. This has particularly taken the form of football fields, baseball diamonds, skating rinks and things of that sort. In nearly all instances the expenses were met entirely by public funds. During later years there has been a policy of encouraging units, particularly those in the more remote areas, to engage in as great a program of self-help in the provision of recreational facilities as possible, and this is one example of that type of policy being worked out.



CHURCHILL, MAN.    REPORTED LOSS BY FIRE AT ROCKET BASE

[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier (Laurier):: May I
direct a question to the Minister of National Defence. A Manitoba radio station carried a story this morning that there had been a serious fire at the rocket base at Churchill, involving a loss in the neighbourhood of a million dollars. If this is a fact, has the minister any statement to make in connection with it?


Douglas Scott Harkness: I regret to inform the house that there was a fire at the rocket launching site 15 miles east of Fort Churchill which occurred last night at 30 minutes past midnight. The cause of the fire has not yet been established; the damage to the building and the contents whilst extensive, has not been established either, and any guesses along the lines that apparently appeared in the radio dispatch I think would have no real foundation in fact.



CONGRATULATIONS TO HON. MEMBER FOR CARIBOO ON BIRTHDAY ANNIVERSAIRY

[Stage Direction]
On the orders of the day:
Mr. William Anderson (Waterloo South):: Mr. Speaker, I rise on a question of privilege, one of interest to every hon. member of this house and especially to the Minister of National Health and Welfare, as it affects the estimates of his department.
Is the minister aware of the fact that our esteemed colleague the hon. member for Cariboo (Mr. Henderson) is today celebrating his seventieth birthday and from now on, as a token of the esteem in which he is held by all hon. members, the government of Canada will honour him with a monthly cheque? Here's to the man from Dawson Creek
Who never failg his piece to speak.
To boost his riding of Cariboo
And heckle his C.C.F. friend Argue.
He's very sharp in his attack
And seldom do they answer back.
Because they know that if they do.
They'll get a blast from Cariboo.
I hope in the future he'll ease his tension As from now on he'll get the pension To spend it wisely and not be caught
On Clayt. Hodgson's tips at the old Connaught.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Paul Joseph James Martin: May I ask
the Prime Minister a question. Although we on this side of the house believe that the government itself should undertake a direct program in the matter of medical care insurance-


Some hon. Members:: Question.


Mr. Speaker:: Order.


Paul Joseph James Martin: I am sure the Prime Minister has not heard what I said because of the volubility of his colleagues.


Mr. Speaker:: Order. May I remind the hon. member that his question might-


Paul Joseph James Martin: The Prime Minister said he missed it, and I repeat it.


Mr. Speaker:: Perhaps I should interpose. If the hon. member for Essex East had not put his argument before his question the Prime Minister might have been able to hear his question.


Paul Joseph James Martin: Mr. Speaker, your last remark causes me to observe that you know that I know better than that. In view of the fact that two months have elapsed since the announcement of government policy, may I ask the Prime Minister whether, before he leaves the country, he will announce the

personnel of the proposed royal commissions which I believe is unnecessary, to be set up to study the matter of medical care insurance?


John George Diefenbaker: Mr. Speaker, the announcement will be made in due course. May I say to the hon. gentleman that following the meeting which was held here in January and some of the excessive promises which were made in this connection, I think a royal commission is necessary.



HARBOURS


[Stage Direction]
On the orders of the day:
Mr. E. J. Broome (Vancouver South):: Mr. Speaker, I should like to direct a question to the Minister of Transport. Has the minister's attention been drawn to a Canadian Press dispatch from Vancouver to the effect that the captain of a Russian vessel loading grain in the port of Vancouver has expressed his disgust with what he termed the ridiculous slowness of grain-loading facilities at Vancouver, and that it took 12 days to load a cargo of grain which he said could have been done in one or two days in Russia? If so, will the minister investigate these charges?


Hon. Leon Balcer (Minister of Transport):: Mr. Speaker, I had notice of a similar question from the hon. member for Vancouver East, and I think I will answer them both.
I am advised that loading the Russian ship Tiksi did consume a longer period of time than usual. Several factors contributed to this particular ship being in Vancouver 12 days in all. The Tiksi is a high, three-deck type of vessel not usually loaded with grain in Vancouver. Owing to its construction, the normal flow of grain was considerably reduced. The particular grades of wheat required to make up its full cargo of 10,345 tons necessitated a move from one elevator to another. A considerable portion of the grain had to be sacked, which is a time consuming operation. There were two other vessels taking grain at the berth where the Tiksi was completed, which left only two belts available for the Russian ship during this period. On one day, loading operations were suspended owing to a severe storm. The ship arrived in port during a busy week and was obliged to lay over a week end.
It is very unlikely that a similar situation will occur, and every effort is being made to give good service to shipping in Vancouver harbour.
Inquiries of the Ministry



INQUIRY AS TO FURTHER SALES TO CHINA

[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: May I ask the Minister of Agriculture whether negotiations are being conducted at present with a view to further wheat sales to China?


Hon. Alvin Hamilton (Minister of Agriculture):: Mr. Speaker, I do not believe it is in the public interest to divulge all the activities of the Canadian wheat board in respect of additional sales to any of our particular customers. I think all I can say at the present time is that there is a mission in Hong Kong dealing with this subject.



WATER RESOURCES


[Stage Direction]
On the orders of the day:
Mr. W. H. McMillan (Welland):: I should like to direct a question to the Secretary of State for External Affairs. Are there any regulations concerning the discharge of oil and other chemicals in all parts of the great lakes system? Is there any recent report from the international joint commission concerning sewage and other pollution of our international waterways?


Hon. Howard C. Green (Secretary of State for External Affairs):: Mr. Speaker, I thank the hon. member for having given me notice of these two questions. The answer to the first one is that under the Canada Shipping Act the Department of Transport has drawn up regulations which concern the discharge of oil from ships in Canadian waters of the great lakes. Problems caused by pollution which originates from land in this area are considered by the Ontario water resources commission.
The answer to the second question is that the international joint commission's report of 1950 on the pollution of boundary waters contained recommendations to the two governments regarding the objectives of boundary water quality control. These recommendations have been accepted by the governments of Canada and the United States. In October, 1959 the international joint commission recommended that the same objectives for boundary water control contained in the 1950 report be adopted for the St. Croix river basin in Maine and New Brunswick. This recommendation is at present under study by the two governments. In May, 1960 the two governments requested the commission to report on the extent and causes of pollution in Rainy river and Lake of the Woods, and
2490	HOUSE OF
Inquiries of the Ministry to suggest appropriate remedies. An international board set up by the commission is carrying out field surveys and will report to the commission.


Lionel Chevrier: May I ask
a supplementary question. My recollection is that the recommendations by the international joint commission to which the minister has referred applied to international waters. Have these recommendations approved by the two governments been implemented?


Howard Charles Green: I will have to check into the matter further and let the hon. member have a reply at an early date.


Mr. J. W. Murphy (Lambton West):: should like to ask a supplementary question. Can the minister report to the house whether there has been any progress in the negotiations between the governments of Canada and the United States respecting the dumping of oil and sewage by ships using the great lakes system?


Howard Charles Green: This question involves not only the Department of External Affairs but also the Department of Transport, and we will have it looked into further.



REPORTED PREPARATION OF DRAFT QUALITY CONTROL REGULATIONS

[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: I should like to direct a question to the Minister of National Health and Welfare. Has his attention been drawn to a recent news release by the Ontario retail pharmacists association, which has no specific date, which indicates that the food and drug directorate of the minister's department has prepared draft regulations to control effectively the quality of drugs in Canada, and that these draft regulations have been circulated to the industry? Would the minister care to comment on that report?


Hon. J. W. Monteith (Minister of National Health and Welfare):: Mr. Speaker, draft regulations have been circulated to the industry. However, I have not seen the report, and I think I should like to examine it before giving a further direct reply.


Frank Howard: Would the minister indicate whether or not these draft regulations can be made available to parliament?


Jay Waldo Monteith: I am not sure what the procedure is. These regulations are accessible, and I presume that when they become final they will be available in the ordinary course of events.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
John Whitney Pickersgill: Mr. Speaker, I wonder whether I could ask the Secretary of State to be good enough in the near future, as has been customary at this stage of the session, to provide hon. members with a list of orders for returns that have not yet been complied with.


Hon. Noel Dorion (Secretary of Stale):: Surely, Mr. Speaker.



TRANS-CANADA HIGHWAY BRITISH COLUMBIA    FEDERAL PARTICIPATION IN OPENING OF NEW LINK

[Stage Direction]
On the orders of the day:
Mr. W. H. Payne (Coast-Capilano):: I should like to direct a question to the Minister of Public Works, notice of which has been forwarded to him. Has the minister or his deputy been invited to be present at the opening ceremony in connection with the upper levels highway between the second narrows bridge and Taylor Way on March 4? Would the minister advise the house as to how much the government of Canada has obligated itself to pay for that part of the trans-Canada highway now completed-


Mr. Speaker:: Order. I think the latter part of the question might very properly go on the order paper, as it seeks statistical information.


William Hector Payne: Would it be in order to have the minister answer the first part?


David James Walker: The answer to the first part of the question, whether or not the minister or his deputy has been invited to the opening of this new link in the trans-Canada highway, is no.


Ernest James Broome: should like to ask a supplementary question. Is it not true that the federal government paid 90 per cent of the cost of this project as part of the gap program?


David James Walker: On completion of the highway we will have paid over $100 million to British Columbia. We will have paid $2.9 million on this particular link and an additional $40 million with respect to that part of the road through the national parks in British Columbia.

Economic Co-operation and Development CANADIAN NATIONAL RAILWAYS


Some hon. Members:: Agreed.



INQUIRY AS TO PROTESTS AGAINST INTENDED LAY-OFFS

[Stage Direction]
On the orders of the day:
William Moore Benidickson: I should like to address a question to the Minister of Transport. Having regard to the fact that some of the lay-offs ordered by Canadian National Railways become effective tomorrow, are likely to be on a national basis, and may be in contravention of the Maintenance of Railway Operation Act, what steps has the minister taken to try to inform the house as to the situation in response to a question asked on February 21 by the hon. member for Assiniboia and a question asked yesterday by me?


Léon Balcer: Mr. Speaker, I have followed the usual channel that has been followed by all my predecessors. I forwarded the information at once to the management of the C.N.R. and I am waiting for a report.


Hazen Robert Argue: I should like to ask a supplementary question. Has the minister made any request to the management of the C.N.R. that these personnel should be kept on the job?


Léon Balcer: I made the usual request for a report on the situation, and as soon as I have the report I will act accordingly.



DOMINION-PROVINCIAL CONFERENCE REQUEST FOR TABLING OF FEDERAL PROPOSAL

[Stage Direction]
On the orders of the day:
John Whitney Pickersgill: Mr. Speaker, I should like to ask the Prime Minister whether he is in a position to table and have put on Hansard the document I asked for yesterday.
Righf Hon. J. G. Diefenbaker (Prime Minister): I am, and I herewith table two copies in English and French.


John Whitney Pickersgill: Would the Prime Minister ask for permission to have them put on Hansard? Would the Prime Minister ask the Speaker to have them made an appendix to Hansard, as there are a good many requests for the document?


Mr. Speaker:: Is there a request before the house that these documents be made a part of the proceedings today?


Some hon. Members:: Agreed.


Mr. Speaker:: Is it agreed that the documents tabled by the Prime Minister shall be printed as an appendix to today's Hansard?
[Editor's Note: For documents referred to above, see appendix.1



O.E.C.D.-APPROVAL OF CONVENTION AND RELATED AGREEMENTS

John George Diefenbaker: That it is expedient that the houses of parliament do approve the convention on the organization for economic co-operation and development, supplementary protocol No. 1 to the convention on the organization for economic co-operation and development, supplementary protocol No. 2 to the convention on the organization for economic co-operation and development, and the memorandum of understanding on the application of article XV of the convention on the organization for economic co-operation and development, all of which were signed in Paris on December 14, 1960; and that this house do approve the above agreements.
He said: Mr. Speaker, this convention is a most important one and marks a tremendous step forward in the economic field. We are happy today to have present in the gallery of this house Mr. Torkil Kristensen, secretary general designate of O.E.C.D. He is a leader in his native Denmark and one of our most respected allies in the field of economic cooperation in NATO. He is here for the purpose of acquainting members of the government with some of the features of this convention in so far as implementation is concerned and the terms thereof.
It is intended, by the establishment of O.E.C.D., to assist in the sustained economic growth and expansion of multilateral trade on a non-discriminatory basis, to the end that economic equilibrium will be secured which will constitute a major contribution not only to the strength and welfare of each and all the member nations, but to the assurance that the countries participating shall remain economically strong and shall have regard to the effect of the policies of each on other member nations. The task of reconstruction in western Europe is essentially complete. It is important at this time, however, that regard be had to supplementing and strengthening rather than replacing existing organizations, while at the same time assuring that current international economic and trade policies shall be carried into effect within the limitations I have mentioned.
This organization, when established, will not take the place of other organizations such as the general agreement on tariffs and trade or the international monetary fund, but will provide a high degree of consultation, close association and co-operation which should be effective instruments for broad and continuing co-operation. It is particularly important that there shall be maintained the closest

Economic Co-operation and Development consultation on all types of economic and financial policies, especially in connection with finding solutions to current international gold and foreign exchange reserve problems as well as in the other fields to which O.E.C.D. will apply.
The acceptance of this convention will recognize the growing interdependence of nations, and the fact that the better oil nations shall contribute to the growth and prosperity of the world community. What I intend to do is simply traverse in a general way something of the field of O.E.C.D., leaving it to the Minister of Finance to deal at length with such portions of the convention as he may deem appropriate. He has taken a large part in bringing about the adherence of Canada to this organization. He was present with the present Minister of Veterans Affairs at Paris in January, 1960 when the general framework of this organization was laid. In July, 1960 he went by himself to attend these meetings on behalf of the Canadian government and, finally, was present at the signing of the convention in December, 1960. At that time, he was accompanied by the present Minister of Trade and Commerce. I am sure the house would expect me, as I most willingly do, to pay tribute particularly to the Minister of Finance for all he has done in order to enable the inclusion of Canada among the nations comprising this organization.
The convention provides for the establishment of the organization for economic cooperation and development and, as I said a moment ago, constitutes a great step forward for the countries of the Atlantic community. Indeed, it is no exaggeration to say that this is one of the most important agreements that have come before this house in recent years. One week ago yesterday I discussed this matter with President Kennedy in Washington, and I can say that he fully shares the view I have expressed as to the importance of this convention.
In order to grasp the significance of this development, one has to go back to the unprecedented offer of the United States in 1947 whereby the United States undertook to help European countries help themselves. The full extent of the material and social destruction wrought by war was only then becoming evident. In spite of large scale financial assistance already extended from both the United States and Canada, the European countries acting individually lacked the resources to import vitally needed food and new materials. On the political scene, the freedom and independence fought for at so great a cost seemed once again to be in serious jeopardy.
[Mr. DiefenbakerJ
European statesmen moved rapidly in response to the offer to draw up a joint European recovery program and established an organization, the organization for European economic co-operation, designed to allocate United States aid and promote European economic development. In 1950 both Canada and the United States became associated with this organization with the status of associated countries.
All who have visited Europe have seen something of the phenomenal recovery of the European countries. Indeed, this recovery has been one of the most significant achievements in this era since the war. The extraordinary economic growth and development of the European countries fully attests to the high degree of economic co-operation achieved among themselves and with their partners on this side of the Atlantic, and is a tribute to the industry and imagination of not only the leaders of the several countries concerned but their peoples as well. Indeed, when one looks at the developments since the war and the degree to which ancestral enemies in Europe have become trusted friends-one sees the relationship between France and Germany, enemies for a hundred years-one begins to appreciate that indeed in this age we have seen changes that few could have contemplated or even imagined.
The restoration of external convertibility of major European currencies marked the end of the post-war period, and has underlined the fact that Europe is again in a position to contribute her full share to the solution of the wider economic issues facing the free world.
The accompanying development of the last decade has been the creation of regional groupings, the E.E.C. or common market composed of France, Germany, Italy, the Netherlands, Belgium and Luxembourg, and also the European free trade association composed of the United Kingdom, Norway, Denmark, Sweden, Portugal, Switzerland and Austria. The Canadian government has repeatedly emphasized its hope that these developments would not lead to any loss of traditional Canadian export markets in Europe; and while all the problems in this connection have not been solved, we believe that through close consultation with the European partners these problems will be solved and solved in a manner consistent with the maintenance of the growing interdependence among nations. We believe, and I think the house will agree, that a trade rift within Europe or between Europe and other western countries would be a matter of the greatest concern for all the free countries of the world.

Outside Europe there have also been rapid and significant developments, particularly in the less developed areas of the world. More and more we realize this tact, that there cannot be peace in the world with the peoples of the world half hungry or unpossessed of their minimum needs or lacking the opportunities of those of us who live in those parts of the world where the economies are strong and effective.
Many newly independent countries face the formidable task of raising the living standards of their peoples through economic development, they will not be able to do it by themselves. As the hon. member for Greenwood has so frequently said in this house, if we fail to realize their dependence on us we shall indeed reap a harvest in the years ahead which will not be in keeping with the opportunities that are ours. There is a challenge to the more prosperous countries to devise means, as the hon. gentleman has said so frequently in what I might describe as a crusade which he has undertaken, to encourage and assist those countries through aid and trade policies.
The decision to establish a new framework of economic co-operation including Canada and United States reflects the fact that the purely European goals of the O.E.E.C. has been largely realized. We now face the 1960's. If we are to meet the challenges of this decade I believe that the co-operating countries must forge new and stronger links with each other, and in the preparatory discussions in Paris there was recognition of the need of a new framework for co-operation which would reflect the needs of this decade. While the European economies are now prosperous and largely free of trade controls and restrictions, there are compelling reasons to reaffirm interdependence through concrete co-operation and to realize the fact, as I said earlier, that economic maladjustment whether in Europe or in North America is necessarily of common concern and importance to the western countries on either side of the Atlantic.
All these challenges that we face are well expressed in the three basic goals of the new organization. They are, to achieve the highest sustainable economic growth and employment and a rising standard of living of member countries while maintaining financial stability and thus to contribute to the development of the world economy. Next, to contribute to sound economic expansion in member as well as non-member countries in the process of economic development; and finally, to contribute to the expansion in world trade on a multilateral non-discriminatory basis in accordance with international obligations.
Economic Co-operation and Development
The O.E.C.D. will not provide ready made solutions to these questions or a solution to the trade problems arising through the establishment of the two European regional economic groupings, but the historic significance of what is being done reflects the decision of the free countries on both sides of the north Atlantic to join together and co-operate closely in working out solutions to these problems for their own benefit and for the benefit of other countries throughout the world. The O.E.C.D. has value for Canada and is of special significance to Canada. It brings together countries of the Atlantic area, countries with which we have had historical, political, cultural and economic ties at a time when the traditional pattern of western economic and commercial relationships was undergoing profound and rapid changes. I think I can go further than that and say that I expect that in time other European countries will become associated in the co-operative work of the O.E.C.D.
I might digress for a moment and say something of the organization and of the protocols referred to in the resolution. The convention will come into effect following ratification. That is provided for in the agreement, which says that the convention will come into effect before the 30th September, 1961, upon the deposit of instruments of ratification or acceptance by all the signatories; or on the same date if by that date 15 signatories or more have deposited such instruments as regards those signatories; and after that date, but not later than two years from the signature of this convention, upon the deposit of such instruments by 15 signatories, as regards those signatories.
Some indication as to the comprehensiveness of the membership of the organization is shown by simply reading the list of countries participating: Austria, Belgium, Canada, Denmark, France, the Federal Republic of Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States of America. That is a comprehensive list of powers generally devoted to the preservation of individual liberty and the increase of general well-being.
The manner in which the objectives will be attained is contained in article 3, which reads as follows:
With a view to achieving the aims set out in article 1... the members agree that they will:
(a)	keep each other informed and furnish the organization with the information necessary for the accomplishment of its tasks;
(b)	consult together on a continuing basis, carry out studies and participate in agreed projects; and
(c)	co-operate closely and where appropriate take co-ordinated action.

Economic Co-operation and Development
There is also provision for aid to developing countries, which it is realized demands the support of all countries rather than being restricted to a few countries, as is often the case. The question as to the structure of the various committees will be dealt with by the Minister of Finance. There is, however, one committee to which I intend to make reference. That is the agriculture and fisheries committee, which is of particular interest to primary industries in Canada.
The provision respecting this economic field provides that there shall be consultations on agricultural, food and fishery policies with a view to promoting the harmonious development of these policies among member countries; that there shall be an examination of the over-all situation of agriculture and fisheries in member countries and of the prospects, including examination of the trend of supply and demand; studies of the possibilities for improving the marketing and distribution of these products with a view to determining measures which could be adopted nationally and internationally; surveys of the market situation for the main agricultural and fisheries products; and formulation in co-operation of proposals for remedial measures in the event of market difficulties; and generally assistance in the agricultural field to the economic, trade, and technical activities of the other bodies of the organization; the promotion of a better use of production factors and of technical progress in the sectors of agriculture and fisheries.
That is a most important section and one that has very great importance economically to Canada, as it has to other countries. The Minister of Finance will deal with the negotiations that took place and generally with the technical fields with which he has been so intimately connected.
I now wish to say a word with regard to the operation of O.E.C.D. in the economic field. I do not take this convention as one that will substitute action for the provisions of the North Atlantic Treaty Organization, article II, with reference to economics. Article II reads as follows:
The parties will contribute towards the further development of peaceful and friendly international relations by strengthening their free Institutions, by bringing about a better understanding on the principles upon which these institutions are founded, and by promoting conditions of stabilization and well-being. They will seek to eliminate conflict in their international economic policies and will encourage economic collaboration between any or all of them.
I said this organization would not be a substitute for article II of NATO, but I believe that the nations comprising NATO, having failed to implement by action article II, have left for this organization a large field of economic collaboration. I also believe
that O.E.C.D. will carry out, in the main, the hopes of the nations which are signatories to the NATO agreement in the field of economic development, co-operation and collaboration.
This government contends that the organization will help to safeguard the vital trade interests of Canada and ensure that they will be fully taken into account by member countries as those member countries develop their respective policies. We expect that the activities of the new organization will supplement and reinforce the work of the other international arrangements, as I said earlier, including the United Nations specialized agencies.
The O.E.C.D. will require broad support, not only from governments but from the peoples of the member countries and, in particular, from both management and labour. Some consideration is being given to arrangements which would provide for some form of parliamentary association being set up in connection with the new organization which would serve to make the purposes and activities of the organization more widely known.
As one of those who advocated the setting up of the NATO parliamentary association, I believe that a similar body, not in the nature of one that recommends the adoption of policy but rather in the nature of an inquiring organization, would do much to increase the knowledge not only of the participating members of parliament belonging to such an organization but the Canadian people as a whole. My hope is that the O.E.C.D. will become an enduring association. It cannot do so unless there is on the part of all member countries a willingness to make their full contribution through co-operation and consultation in order to ensure the effective use of their respective capacities and potentialities.
I have read the debates of one of the parliamentary institutions of a nation that is giving consideration to this convention and I know that concern and fears have been expressed regarding some of its provisions. I do not share those fears or that concern. I believe that through the establishment of O.E.C.D. the countries of Europe and of North America will be serving notice of their right to co-operate among themselves and with others in order to attain the economic betterment of themselves and of all other nations.
I am seeking the approval of the house for this convention believing that its approval will mean that Canada will give full support to this organization. Our approval will constitute a declaration by Canadians that they intend to contribute to the best of their abilities and capacities to the achievement of its basic purposes.
I mentioned earlier that I discussed this organization with Mr. Kristensen. I was deeply

impressed by his dedication to its principles and his realization of the need for cooperation. Today there are signs, as there have been in the last several years, of some weakening in the NATO organization. The nations comprising the North Atlantic Treaty Organization must not permit that thing to take place for any weakening of the organization or of any of its member nations will inevitably lead to the danger of attack and will diminish the certainty of survival.
On the other hand, this organization has principles which are founded on co-operation in the economic field and, if its full implications are lived up to it will so strengthen the economies of each of the member nations as to assure the economic strength of all of us. Thereby it will make a contribution to the maintenance of peace not only among the member nations but throughout the world. I ask the house to give its support to this motion.
Canada since 1945 has demonstrated its belief in the basic principles upon which O.E.C.D. is founded. Canada believes that this organization will help to prevent the break-up of Europe into competitive trade groups or blocs, a potential danger that can only lead to a great and real danger in the future.
Canada also believes that O.E.C.D. will bring together not only the nations of NATO but also the members of the Six and the Seven and will foster good relations between Canada and the United States on the continent of North America in the economic field. While history shows that many of the wars that have taken place have been the consequence of economic competition, this organization is designed to remove the danger of that possibility and to bring about a new unity among nations whose economic strength, when exercised in unity with full respect for the sovereignty of the member nations, can assure that mankind itself and people everywhere will see new economic vistas achieved in their time and generation and thereby the removal of a major cause of potential war. I ask the house to give support to this motion.


Lester Bowles Pearson: Mr. Speaker, I rise on a point of order. The Prime Minister (Mr. Diefenbaker) indicated that he would introduce this resolution in a preliminary way, as he has done, and that the Minister of Finance (Mr. Fleming) would follow with a more detailed explanation and statement of the case for approval. If the minister would prefer to follow now upon the Prime Minister, that procedure would be quite agreeable to this side of the house and would complete the case for approval.
Economic Co-operation and Development


Hon. Donald M. Fleming (Minisier of Finance):: Mr. Speaker, in the light of the remarks of the Leader of the Opposition (Mr. Pearson) I shall be glad now to take the opportunity to follow the Prime Minister (Mr. Diefenbaker) and of enlarging upon some of the aspects of the organization for economic co-operation and development which have been the subject of the Prime Minister's remarks.
On previous occasions I have reported to the house in some detail on the steps taken over the past 13 months which led to the signing of the O.E.C.D. convention by ministers of the 20 countries concerned in Paris in December. I do not propose to review this ground further. The statements are to be found in Hansard of last session.
I should like to say, however, that the successful conclusion of these negotiations in a relatively brief period of time was a significant achievement. It could not have been accomplished without sustained and devoted effort by all those concerned. The representatives of all countries approached the difficult task of reconstituting the O.E.E.C. in a spirit of co-operation that augurs well for the future success of the organization. With this spirit and sense of purpose, I have every confidence that the O.E.C.D. will realize the high aims to which it is committed.
What are these aims? Briefly stated, they are threefold: first, to achieve the highest sustainable economic growth in member countries while maintaining financial stability and thus to contribute to the development of the world economy; second, to contribute to the economic development of less developed countries by increasing and improving the flow of capital and technical assistance; third, to promote the expansion of world trade on a multilateral non-discriminatory basis.
The first of these aims is fundamental. The other two cannot be achieved if the first is not achieved. Sustained economic growth including high levels of employment of resources, monetary stability and equilibrium in international payments are major objectives of economic policy in all countries. If we in the western industrial countries are to achieve a more abundant life in freedom, both for ourselves and for the newly developing areas in the world, we must grow. On such growth depends our ability to raise our own living standards, to give assistance to others and to provide markets for the fruitful expansion of international trade.
The desirability of strong and vigorous growth is self-evident. What perhaps is not so apparent is that it has become increasingly difficult to achieve such growth by unilateral action. Progress made in liberalization of
2496	HOUSE OF
Economic Co-operation and Development trade and payments since the war and the introduction of convertibility of the major European currencies in the last two years have led to a growing interdependence of the various national economies. They have become more sensitive to changes in world trends and to measures taken in other countries. There are now important limitations on the action which individual countries can allow themselves to take without regard to the external repercussions of their decisions. There are also limitations on the effectiveness of action that any individual country may take in isolation. The program just announced by the President of the United States for improving the United States balance of payments provides a striking illustration of this interdependence. The success of this program will depend to a considerable degree on the extent to which the major western European countries pursue compatible policies. There is thus a clear need for co-operation in economic policy if we are to experience sustained and growing prosperity without sacrificing financial stability.
It is in this context that the O.E.C.D. is likely to prove particularly valuable. It will provide a forum for regular and continuing consultation and review of the economic and financial situation in member countries and the policies pursued by member governments. Special attention will be paid to the international effects of national policies. For this purpose the O.E.C.D. will have two committees, namely the economic policy committee and the economic and development review committee. The economic policy committee will keep under review the economic and financial situation of member countries with a view to attaining the objectives of the convention. It is intended that its sessions be attended by senior officials from national capitals who are intimately familiar with the formulation of economic policies in their own countries. Canada participated in a similar committee in the O.E.E.C. and found it valuable. We believe it will be increasingly useful in the years ahead and that those consultations and discussions will prove to be the central part of the activities of the new organization. If these consultations are to be fruitful, members must have clear knowledge of the problems faced by one another and the techniques used to deal with them. Accordingly, it has been decided to establish an economic and development review committee to hold annual detailed examinations of the economic situation of member countries. In this committee member states will obtain the raw material, so to speak, as well as the understanding required for effective consultation about broad policies.


The O.E.C.D. will also have an important role to play in contributing to the expansion of the economies of the less developed countries. The vast majority of the world's peoples live under the bondage of a grinding poverty from which they are determined to free themselves. The extent to which they succeed may well prove vital to the future peace and well-being of all mankind. If the free industrialized countries are to be true to the highest values of their civilization, as well as to their own economic and political interests, they must assist in this great endeavour.
Their acceptance of this responsibility has already been demonstrated by their participation in the economic assistance program of the United Nations, the international bank for reconstruction and development, the international finance corporation and the international development association as well as through programs such as the Colombo plan. Let me emphasize that the O.E.C.D. will not in any sense replace or weaken these existing agencies and programs. Its main function in the field of aid will be to provide an informal forum in which aid programs and policies can be discussed frankly and be made more effective. In this way we hope it will stimulate an increased flow of aid to developing areas as well as help to ensure that existing resources are used more effectively. It will not, however, establish and administer aid programs of its own. It will not limit or change the nature of Canada's existing programs, such as the Colombo plan, nor will it involve any Canadian obligation to provide additional assistance.
The main body for consultations on aid programs will be the development assistance committee, sometimes called DAG. This committee will take over the functions and characteristics of the development assistance group which was formed early in 1960, and which has already had three meetings.
The development assistance committee will be concerned with methods of providing assistance to non-member countries. The problems of the less developed member countries will be the concern of two other subsidiary bodies. The O.E.E.C. is already engaged in useful programs of technical assistance in less developed member countries, particularly Greece and Turkey. It is expected that these programs will be continued under the aegis of the technical assistance committee. In addition, the development programs of members in the process of development will be discussed in the economic and development review committee.
The extent to which the O.E.C.D. will succeed in stimulating economic growth and in providing increased assistance to developing

areas will depend to a significant degree on the maintenance and continued vigorous growth of international trade. This fact is recognized in the organization's third major aim, which is to contribute to the expansion of world trade on a multilateral non-discriminatory basis in accordance with international obligations. The words "in accordance with international obligations" make it clear that membership in the O.E.C.D. in no way subtracts from the obligations which participating countries have assumed through their adherence to GATT and their membership in the international monetary fund. The purpose of discussions in the O.E.C.D. will be to strengthen the effectiveness of these more broadly based institutions and to promote the fulfilment of their objectives. I think it important to stress the nature of this relationship for two reasons. First, it is only by supporting the authority of GATT and the I.M.F. and collaborating with them that the O.E.C.D. will be able to realize its aims in the field of trade and payments. Second, I should like to allay any apprehensions among non-participating countries that the industrial countries of Europe and North America intend to concentrate on their own affairs at the expense of other countries.
From what I have said it follows that the organization's function in the field of trade will be essentially consultative. It has been agreed that much of the earlier activity of the O.E.E.C. in the field of trade, which was based upon a regional approach to European reconstruction, is no longer appropriate and will be discontinued. It is not intended that O.E.C.D. will establish or administer new trade rules. The proposed trade committee will be used for frank discussions of general trade policies and practices, for the examination of specific trade problems primarily of interest to members and their overseas territories and for the consideration of any outstanding short and long term problems between the six countries of the European economic community and the seven countries of the European free trade area association. Within these terms of reference it is hoped that any member country may obtain prompt consideration and discussion by the trade committee of trade measures by another member which may adversely affect its interest, with a view to removing or minimizing such adverse effects. In establishing these terms of reference account has been taken of the interests of outside countries and arrangements will be made for attendance of representatives of the GATT at meetings of the trade committee.
One task of the trade committee may be to consider the problems created by the formation of the two regional trading groups
Economic Co-operation and Development in western Europe. Some work has already been done in this field by the committee on trade problems which was set up on a temporary basis at the Paris meetings in January, I960. Its work will be taken over by the O.E.C.D. Canada clearly has an important interest in the policies of these two groups and in the nature of any accommodation which may ultimately be reached between them.
The broad activities I have mentioned in the fields of economic policy consultations, aid and trade will be the main preoccupations of the new organization. In addition there will be a series of committees to handle work in more specific fields. There will be an agriculture committee, whose work we hope will be closely integrated with that of other bodies within the organization, to consider agricultural problems and policies pertinent to the organization's objectives. A similar committee will be established to deal with fisheries problems. The organization will also have subsidiary bodies with responsibilities in the field of science and technology. Their task will be to stimulate member countries to increase and to use more efficiently their scientific manpower, and their training and research facilities. The organization is expected to fulfil this role by acting as a clearing house for information and experience and by means of consultations, conferences and the provision of fellowships.
Provision has also been made for co-operation among member states in a number of other fields including tourism, manpower, maritime transport, energy and industry. The European nuclear energy agency, in which members of the O.E.E.C. co-operated in the development of the peaceful uses of nuclear energy, will be retained in its present form. Canada and the United States are to retain their present status as associate members. The European productivity agency of the O.E.E.C. is to be dissolved. Its responsibilities in the fields of science and technical assistance will be transferred to other bodies. Decisions with respect to the continuance of other activities of the E.P.A. will be taken during the coming year.
This then, Mr. Speaker, is an outline of the work on which the O.E.C.D. proposes to engage. I should like to turn now to the provisions of the convention which set forth how the organization is to govern itself in carrying out its manifold tasks.
A council composed of all members will be the supreme body, meeting either at the level of ministers or of permanent representatives. It is authorized to establish an executive committee and such other subsidiary bodies as may be required for the achievement of the organization's aims. There will be an
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Economic Co-operation and Development international secretariat headed by a secretary general. He has been given considerable powers and authority. He will serve as chairman of the council when it meets at the level of permanent representatives and he may submit proposals to council or to any other body of the organization. He will be responsible only to council. As the Prime Minister (Mr. Diefenbaker) has told the house today, Professor Torkil Kristensen of Denmark has been selected to fill this extremely important post. Professor Kristensen is a former finance minister of Denmark and has a very distinguished political and administrative background.


Paul Joseph James Martin: An excellent man.


Donald Methuen Fleming: He has already proved his mettle as chairman of the O.E.C.D. preparatory committee which he guided through the arduous and complicated negotiations which preceded signature of the convention. It has been a great joy to the government and all others who have been conferring with Professor Kristensen and his colleagues during the past two days that it has been possible for him and them to pay this present visit to Canada.
To achieve its aims the organization may take decisions binding on all members and make recommendations to members. It will not be able to do so, however, without unanimous agreement. In other words, each member has the power of veto. A member may abstain from voting on a particular decision or recommendation and if it does so that decision or recommendation will not apply to it. It is clear therefore that the organization cannot take action respecting a member without the consent of that member.
There will doubtless be some situations in which it would be desirable for the organization to use its power of decision and recommendation. At the same time I believe it would be wise to do so sparingly. To achieve its major objectives it must rely on action on the part of the individual governments. Governments are more likely to be influenced through the process of discussion itself, in the economic policy committee and other committees, than through the mere formality of a council decision or recommendation.
The last provision of the convention which I should like to discuss is article 15 and the related memorandum of understanding on its application. Under the provisions of this article all acts of the O.E.E.C. council, including decisions, recommendations and resolutions, will lapse, except those which the council of the successor organization decides to carry over. The acts of the O.E.E.C. were


examined in the O.E.C.D. preparatory committee in order to determine which should be recommended for retention by the O.E.C.D. with modifications, where necessary, in order to adapt them to the functions of the new organization. Several member countries wished to have reasonable assurance that the recommendations of the preparatory committee would in fact be endorsed by the O.E.C.D. council. A memorandum of understanding to ensure this result was drawn up at their request.


Paul Joseph James Martin: Did Canada have a representative on the preparatory committee?


Donald Methuen Fleming: Yes.


Paul Joseph James Martin: Who was the
representative?


Donald Methuen Fleming: Attendance was chiefly in the hands of Mr. Peter Towe. Mr. Jules Leger was, of course, associated with the representation of Canada in this regard until his illness, and following his illness he was very capably represented by Mr. Peter Towe. Having had some opportunity myself of observing the quality of the work done by Mr. Peter Towe in representing Canada at Paris in this regard, it gives me much pleasure to pay tribute to the excellence of the work he performed.
I said that a memorandum of understanding to ensure what I have referred to as an assurance that the recommendations of the preparatory committee would in fact be endorsed by the O.E.C.D. council was drawn up at the request of several countries. Under it members of the O.E.E.C. are committed to voting for the recommendations of the preparatory committee when these are considered for approval in the O.E.C.D. council. However, Canada and the United States, which are not full members of the O.E.E.C., have been permitted a certain latitude in this respect. We will be released from voting for any recommended act which we specify in a notice to the preparatory committee not later than ten days after the deposit of our instrument of ratification of the convention.
Not all the acts which the preparatory committee has recommended for retention will apply to Canada. Some of them contain provisions which conflict with Canadian legislation or practice. In these cases we have stated that we either would not adhere or would adhere only with specific reservations. Most of the acts which will apply to us are decisions of a technical nature or are relatively unimportant recommendations which are not binding, but merely have to be taken into consideration, thus leaving leaving participat-

ing countries freedom of judgment as to the action that may be required. The review of the acts is not yet complete.
The convention I have described, Mr. Speaker, is a flexible instrument. It is designed to equip each of its members better for the challenging roles which await us. Just as in the past 12 years solutions were found through the O.E.E.C. to many problems confronting western Europe, so in the future 18 nations in Europe and two on the western side of the north Atlantic will seek solutions to their common problems through the O.E.C.D.
In the O.E.C.D. Canada and the other members have attested their mutual interest, their common purpose, their interdependence and the renewed vigour with which we shall pursue our declared economic goals. In all aspects of our work we shall be mindful of our responsibilities throughout the world.
To a greater extent than perhaps has ever been the case we live in one world. That world is full of dangers and difficulties. But it also holds great promise of a life in which we can realize our full potential as individuals and as part of the human family. It is my firm belief that through the O.E.C.D. we can move toward this great ideal, that this organization can effectively serve the high hopes of the free world and that it can contribute to the prosperity and well-being of our own people and of other peoples throughout the world. With the willingness of member states to use their capacities and potentialities to promote the objectives of O.E.C.D., I believe the new organization will prove to be a major step forward in international economic co-operation. The Canadian government will do all that lies within its power to ensure that this potential is realized.
The convention has been submitted to the congress of the United States for approval, and is under debate. I believe it has not yet been submitted to the parliament of any other member country of the O.E.C.D. which signed the convention in Paris in December last. Thus, Mr. Speaker, is given to the Canadian parliament the honour, if it so chooses, of being the first parliament among the parliaments of the 20 member countries of O.E.C.D. to give approval to the convention and thus to lead the way to what we believe is a bright future for a beneficent international institution.


Lester Bowles Pearson: Mr. Speaker, the resolution
which is before the house, as has been said, is an important one. It deals with extremely important questions and asks the house to approve the setting up of what may become a very important institution. I can say at
Economic Co-operation and Development once, Mr. Speaker, that so far as the official opposition is concerned we are happy to approve the resolution. We wish the institution well, and we hope it will accomplish what it is designed to accomplish in the convention establishing it, which has been signed by a representative of the Canadian government and which is now up for approval.
The importance of this resolution lies not only in its terms, in the convention which sets up the organization for economic cooperation and development, but also in the implications of the organization itself and of the approval that we are being asked to give to the convention setting it up. As the Prime Minister (Mr. Diefenbaker) has pointed out this afternoon this convention, in a sense, marks the culmination of the work of European reconstruction. We are honoured, as has been said already, in having in the gallery this afternoon one of those dedicated Europeans who has done so much to bring about not only the successful completion of the work leading up to this convention but all the progressive steps that have been taken toward European unity.
In this organization referred to in the convention we now have a new and broader framework not only for European economic co-operation but for Atlantic economic cooperation. The organization which we are being asked to approve, through approval of the convention, replaces the organization for European economic co-operation which in its day has been invaluable in aiding the progress of Europe toward economic co-operation and unity. I should like to pay my tribute to the work of O.E.E.C., which was so important and with which Canada and the United States have been associated. In replacing O.E.E.C., with Canada as an observer, we are being asked now to approve the full membership of Canada in this new broader organization along with the membership of the United States. I think the extension of membership in that way is not only important but is gratifying.
The Prime Minister said that the organization for economic co-operation and development is not meant to replace in any way article 2 of NATO. I think I am reporting his words accurately. We in this house should not wish, I am sure, to take any action which would weaken NATO in any degree as an organization for collective defence. If anything should be done in that direction, it should be to strengthen NATO. I am not sure, however-and only events will show this-whether the new organization will [DOT] not in fact begin to replace the work of economic co-operation which was visualized as being performed by NATO under article 2, but concerning which there have always been great
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Economic Co-operation and Development difficulties in implementation, as the Minister of Finance (Mr. Fleming) knows so well.
Indeed, I think I am right in saying that in a discussion before the Senate foreign relations committee of the United States the secretary of the treasury indicated that this organization may eventually take over a great deal, if not all of the work, that it had been hoped might have been done by the implementation of article 2 of NATO. The secretary of the treasury, Mr. Dillon, himself did a great deal to bring the negotiations on O.E.C.D. to a successful conclusion when he was the assistant secretary of state. However, I do not believe we need to worry too much about this possibility provided that such a development did not interfere with other aspects of NATO in any way, shape or form. After all, O.E.C.D. does provide an enlarged foundation at least for Atlantic economic cooperation because when it comes into existence it will include several countries that are not now members of NATO, and their absence from NATO was one of the reasons it was so difficult to use that organization as an agency for economic co-operation.
O.E.C.D. not only has two North American members of NATO in its proposed membership, but I believe I am right in saying every European country except those behind the iron curtain. The minister will correct me if I am wrong.


John Whitney Pickersgill: And Spain.


Lester Bowles Pearson: No, I think Spain is a member of O.E.C.D. I believe, therefore, there is at least the broadest possible foundation for Atlantic economic co-operation and development in this organization. It will be interesting to see the action and interaction between the economic discussions of the existing NATO organization under article 2 and the development of O.E.C.D. Although none of the expressions that have been used today by the Prime Minister and the Minister of Finance give us any reason to believe that they have this matter in mind in asking us to approve this convention, perhaps this organization with its broad membership may become an effective foundation for Atlantic development, and not only in the field of economic consultation.
One who has had a good deal to do with these matters, namely Lord Gladwyn, whom we perhaps know better as Sir Gladwyn Jebb, speaking in the House of Lords on January 20 of this year, had this to say when he was dealing with European co-operation and development, and the desirability of NATO as an agency for that purpose:
My Lords, such a body exists. It is true that, for political reasons, it cannot call itself an Atlantic community, but that, in effect, is what it is. I refer, of course, to O.E.C.D.-the Organization


for Economic Co-operation and Development-the 20 members of which comprise all non-communist European states this side of the iron curtain save Finland, plus the United States and Canada.
It does not at present represent a unity-some of its members are members of military alliances, and some most emphatically, are not-but it does represent a common, and basically Christian, tradition, an ethnic affiliation, a geographical area and an economically homogeneous group. Australia and New Zealand are the only really similar countries in the world which are not included, and they, after all, are situated many thousands of miles away from the Atlantic. Six of the members of O.E.C.D. are already on the way to becoming unified. Others may (and, personally, I hope they will) join that unity. But that will not harm O.E.C.D.-rather the reverse.
Eventually, I hope, it will become rather more coherent. Some day, no doubt, with the aid of those excellent NATO parliamentarians, I trust it will develop an assembly of its own. At this point it might well even absorb the council of Europe. But all this is for the future. At this moment, the rather anonymous Organization for Economic Co-operation and Development is as near a thing to an Atlantic community as we can achieve.
That is a vision for the future, but it is one to which I think most of us will subscribe as something which should be and one day I hope will be realized.
A much more limited expression of the significance of this organization-and I am not quarrelling with that expression-has been given to the house this afternoon by the Prime Minister and by the Minister of Finance. Indeed, the minister himself referred to statements he made in earlier days of this session. They appear at page 196 of Hansard. He emphasized then and has repeated this afternoon that this organization is not meant in any way to override or replace GATT, and that larger trade questions and tariff matters will continue to be discussed within the ambit not of this organization but of GATT itself.
Mr. Speaker, I think we can welcome the expansion of the O.E.E.C. into the O.E.C.D. because it brings the United States and Canada into organic and full association as members of this new organization. The expansion is desirable but of course those who could follow the negotiations leading up to the signature, in so far as one can follow them in the press, know that this expansion was secured at a price. The price is in a sense the watering down, in some respects at least, of the commitments of the narrower and more limited organization of O.E.E.C. At an early stage in the negotiations I understand there was some difference in opinion as to whether trade should be even mentioned in the convention. Agreement was reached in that regard and trade fortunately is mentioned as a subject for consultation. But article 6, to which the Minister of Finance has referred limits the application of any recommendation or any decision taken by O.E.C.D. in trade or

in any other matter within the convention to those members of the organization who agree with the decision. In other words, every member of the organization has a veto in so far as that member is concerned over the application of any decision or recommendation.
I know that in all these matters the pursuit of perfection can sometimes lead to failure to achieve anything and it would perhaps have been quite impossible to secure any other result at this time in the negotiations on this subject of international economic co-operation. However, it is hoped that one day the practices of the O.E.E.C. may be acceptable to the members of this wider organization. As the minister has pointed out, that organization does provide for consultation, and that fact in itself can be important. It does not provide for much more than consultation in this field of trade policy and, more important, any consultation will depend on leadership and direction given by the governments inside this organization; I refer to leadership in the right direction which must be an extension of European movement toward economic co-operation and unity across the Atlantic. I suggest, Mr. Speaker, that consideration will be the ultimate justification for this organization; namely its ability to make progress in that direction. No hope, of course, has been expressed today which would justify the feeling that this is going to be an easy or quick achievement.
When the O.E.C.D. was signed last December the press communique announcing the signature had this to say on the subject of trade:
In the field of trade the O.E.C.D. will carry out the following functions:	Confrontation on
general trade policies and practices at regular intervals or when requested by a member; examination of specific trade problems primarily of interest to members; and consideration of any outstanding short and long term problems falling within the terms of reference of the committee on trade problems established in January 1960.
The Minister of Finance in his statement in this house on December 16 to which I have already referred elaborated on the trade question in these words which I am quoting from page 866 of Hansard:
The organization will provide a continuing forum for consideration of the effect, on member countries and on others, of the trade groupings that are emerging in Europe. I refer of course, to issues arising from the formation of the Six and the Seven.
Then further down:
The new organization is, as I have said, to promote the expansion of trade on a multilateral and non-discriminatory basis, thus contributing to the achievement of the purposes of the general agreement on tariff and trade.
Mr. Speaker, in the statements we have had this afternoon from the Prime Minister
Economic Co-operation and Development and the Minister of Finance no light has been thrown on the attitude of the government towards these issues referred to by the minister on December 16th arising from the formation of the Six and the Seven. What we should like to hear, as perhaps we shall before this debate is over because it has a very direct relationship to O.E.C.D., is something about the attitude of the government toward the common market and European free trade area, and especially about how Canada's foreign economic policy is to be developed. Now that we are contemplating full partnership in this Atlantic organization we shall have even more to take into account the emergence of these new trade blocs, all the members of which will also be members of the organization for European Economic Cooperation and Development. The government, aside from certain statements, which have been interpreted as threats of retaliation, by the Minister of Trade and Commerce (Mr. Churchill) in Paris, and implied in some statements of the Minister of Finance.


Donald Methuen Fleming: No.


Lester Bowles Pearson: I said that they were inter, preted as threats of retaliation.


Donald Methuen Fleming: They were not correctly so interpreted.


Lester Bowles Pearson: Apart from these statements, Mr. Speaker, the government has given no indication of how it intends to meet the challenge or the opportunities presented by the development of the Six and the Seven. Perhaps there will be greater opportunity to deal with this matter now that Canada is a full member of the organization for economic cooperation and development. We have had no indication this afternoon as yet as to how the government will use Canadian membership in this proposed organization to promote Canadian economic interests, or in what direction Canada will use its influence in the furtherance of long-run economic objectives or in helping to solve these specific problems of the common market Six and the European free trade area with its Seven.
Surely information on that point is of importance before we approve of this particular resolution. Surely a solution of this problem, namely the relationship of the Six and the Seven within O.E.C.D., is of paramount importance to O.E.C.D. itself as it begins its operation. Together the European economic community, the common market, and the European free trade area make up 40 per cent-and we sometimes forget this fact-of world trade and the manner in which their trade relations develop will have a profound effect on the world in general
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Economic Co-operation and Development and on Canada, I suggest, in particular. I hope to show this effect a little later.
The common market is now a growing concern. It is no longer any Utopian dream. Commenting not long ago on its first two years of operation the president of the commission of the European economic community, Professor Hallstein, made these claims for the common market. He said that the community is the world's second largest industrial power, and the world's largest trader; that its exports and imports have risen, as indeed they have risen in a most exciting way during its brief existence, resulting from-and we had better not forget this fact-the removal of trade barriers between the members of the common market. Professor Hallstein said that investment in 1959 in the common market countries had tripled in comparison with 1958. He also indicated that businessmen and industrialists inside the common market countries were now pressing for a speeding of the transition period, which I think is to extend over 15 years.
This glowing account, by a man who had so much to do with the formation and development of the common market, of a new and dynamic trading area of 165 million inhabitants is just one more evidence of the magnificent post-war recovery of western Europe. It is an example of what the removal of trade barriers can do in the promotion of economic prosperity. But in Canadian, and indeed in American minds it has also aroused a good deal of apprehension over the impact of a development of this kind on our trade with the common market and the free trade area countries which, as they develop, might take the wrong course. I will explain what I mean by that in a moment.
Perhaps this is one of the things in which the proposed organization we are discussing today can exercise an important and beneficial influence. I am referring to this apprehension which is felt in Canada as to the effect that these developments in Europe, if they take the wrong course, may have on jobs, income and trade. That apprehension was expressed not long ago before the Senate committee on manpower by the president of the Canadian exporters association when he asserted that the formation of the European trade bloc presents a grave situation for Canadian exporters into the area because of proposed high protective tariffs; that is, a high common tariff against non-members of the common market.
That apprehension is understandable because we know how important this market is to Canadian exporters. Indeed, at the present


time it is the third largest market for Canadian products. About 40 per cent of our sales to this market are in agricultural products, and another 40 per cent are in primary and semi-processed materials exported largely by the chemical, metal, mineral and pulp and paper industries. This European common market is now growing by leaps and bounds and it is of vital importance that not only should our products not be excluded from it as that growth takes place, because of a high external tariff but that we should be able to share in the advance being made by these European countries. I think that hope and that apprehension lie at the basis of our approach to this particular problem.
So we are bound to ask ourselves this question: will the common market create trade, or will it merely divert trade? Also we are bound to ask ourselves: can the O.E.C.D. in its operations exercise the kind of influence which will ensure the former, namely the expansion and creation of trade rather than the latter, namely merely the diversion of trade?
Naturally if the common market develops on the basis of increased protectionism against traders outside its membership, that would certainly divert the flow of trade rather than create new trade through specialization. So we wonder, whether the common market will have this latter effect, and whether O.E.C.D. will be able to ensure that it does not have it. The apprehension based on those dangers has been created from two sources. One is the averaging method used in setting the common market tariff against the rest of the world, and the range of commodities for which duties are fixed by negotiation.
Mr. Speaker, before I develop that point perhaps I may be permitted to call it five o'clock.


Mr. Speaker:: It being five o'clock the house will now proceed to consideration of private and public bills, the former having precedence, pursuant to section 3 of standing order 15.



PRIVATE BILLS

[Stage Direction]
On the order:
House in committee on Bill No. S-2, an act to incorporate Aurora Pipe Line Company (without amendment).-Mr. Woolliams.
Mr. Churchill:: Stand.


Mr. R. J. McCleave (Halifax):: Mr. Speaker, I understood from the sponsor of the bill that he was going to ask that it stand this afternoon.


Mr. Speaker:: The first item called stands in the name of Mr. Woolliams, who is not here. Shall this item stand?


Gordon Minto Churchill: Stand.
Order stands.
On the order:
Second reading of Bill No. SD-1, for the relief of Jean George Lipsman.-Mr. McCleave.


Robert Jardine McCleave: Mr. Speaker,
I wish to ask, on my own behalf this time, that order No. 2 and all the orders up to No. 24 inclusive and the divorce bills thereafter be allowed to stand today.


Mr. Speaker:: That is all of the divorce bills which are on the order paper for second reading?


Robert Jardine McCleave: Yes, Mr. Speaker.


Frank Howard: Mr. Speaker, perhaps I may say this. This is done on the understanding that they remain in the orders as they are and will not all stand under one order. That is, they will not be consolidated under one order, as was done a few weeks ago, but will stand as orders No. 3, 4, 5, etc.


Mr. Speaker:: Yes. If there is any objection to their consolidation, they cannot be consolidated. We will allow order No. 2 to stand in the first instance.
Order stands.


Mr. Speaker:: Is the house agreeable that, without consolidating these orders for second reading, we allow them all to stand?


Some hon. Members:: Agreed.


Mr. Speaker:: That is, orders Nos. 3 to 24 inclusive.



QUEEN'S UNIVERSITY AT KINGSTON

Hon. J. M. Macdonnell (Greenwood) moved: the second reading of Bill No. S-7, respecting Queen's University at Kingston.


Mr. Speaker:: Does the hon. member wish to speak? Is the house ready for the question? Is it the pleasure of the house to adopt the motion?


John Whitney Pickersgill: Does the hon. member not have something to say on this matter?


Gordon Minto Churchill: Surely he has something to say about Queen's.


James MacKerras Macdonnell: Mr. Speaker, I could talk for hours, but I will restrain myself and do it all in about two minutes. The situation is very simple and is fairly well explained in the explanatory note which reads as follows:
The governing statute, chapter 123 of the statutes of 1882, provides by section 11 thereof, as follows:
"11. The principal shall be vice chancellor of the university, and in the absence of the chancellor shall take his place and discharge his duties."
The purpose of the proposed amendment is to give the board of trustees freedom of decision in the future so that the principal and vice chancellor
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may be one person or two persons as the board in its discretion may decide.
No change is proposed in the method of appointment, or in the statutory duties of these officers.
If this bill is passed they may, if they see fit, have a principal and a vice chancellor or they could continue as they are. The reason is obvious enough. Like every other university, Queen's has been growing by leaps and bounds. There have been considerable additions to buildings and an increased attendance and staff. It is obvious that the senior executive positions have become more onerous.
The trustees have concluded that they would like to have this provision in the statutes of 1882 altered so that they may in their discretion have a principal and a vice chancellor, two separate officials.


John Whitney Pickersgill: Mr. Speaker, I have no desire to speak on this question myself but I wonder whether, before the hon. member technically takes his seat, he would allow me to put a question to him. Would the hon. member explain why this parliament rather than the legislature of Ontario has the jurisdiction?


James MacKerras Macdonnell: Mr. Speaker, as I understand it, the university was originally incorporated by the legislature of Ontario but in the statute of 1882, chapter 123, I find that some doubt apparently arose. Being only a reformed lawyer I am not able to give all the technical details but apparently some doubt arose as to the competency of the legislature of Ontario in this respect and accordingly this statute, chapter 123, was passed in 1882 for the purpose of curing any possible defect. I think it was one of those things lawyers dream up when they wake up early in the morning. It looks to me as though it has little substance but it had sufficient substance to have that statute passed in 1882.


John Whitney Pickersgill: Mr. Speaker, could the hon. member say whether it had anything to do with the royal charter?


James MacKerras Macdonnell: Is the hon. member for Bonavista-Twillingate (Mr. Pickersgill) asking me whether the doubt was connected with the royal charter? I am not competent to answer that. I do not know, Mr. Speaker.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on miscellaneous private bills.

Mr. J. R. Keays (for Mr. Smith, Winnipeg North) moved: the second reading of Bill No. S-8, to incorporate Canadian Federation of Music Teachers' Associations.

Private Bills


Mr. H. W. Heriidge (Kootenay West):: Mr. Speaker, is the sponsor going to make a statement?


James Russell Keays: Mr. Speaker, knowing of your love for music I am sure you welcome second reading of this bill and possibly you will become a member of the federation at some time or other.
The federation was founded in 1935, bringing together music teachers' associations then existing in Manitoba, Saskatchewan, Alberta and British Columbia. Since that time all provincial music teachers' associations across Canada, with the exception of those in Newfoundland and Prince Edward Island, are members of C.F.M.T.A. Negotiations are under way to bring these two groups into the federation. At the present time there are approximately 2,400 music teachers who are members of provincial music teachers' associations associated with C.F.M.T.A. Provincial committees meet regularly and there is a biennial meeting held by the federation.
The main object of the federation is to raise the standard of the teaching of music in all its branches across Canada. This is accomplished in two ways, first, by master courses held at every biennial convention which not only raise the standard of teaching but also deal with the teaching of music. In some cases these master courses assist music teachers in obtaining degrees in recognized music schools. Second, the standard of music teachers is raised by insisting that all members of the provincial music teachers' associations be an associate of a recognized music school and have two years' experience in teaching. This insistence in itself has done much to raise the standard of music teaching in Canada.
The federation also conducts a young artists' series whereby each of the provinces in turn holds local auditions. A group from these auditions are then sent on tour across Canada giving recitals in various cities and towns. The organization of these groups and the financial responsibility for them are matters taken care of by C.F.M.T.A. There are many recognized artists in Canada who have achieved their initial start in this manner.
The federation has supplied funds both as loans and as gifts to various groups in various parts of Canada in order to organize music teachers' associations and to assist them in obtaining registration in a provincial charter and has also supplied these groups with personnel to assist them in the organization.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on miscellaneous private bills.

Mr. G. C. Fairfield (Poriage-Neepawa) moved: the second reading of Bill No. S-9, to incorporate International Brain Research Organization.
He said: Perhaps in introducing this bill, Mr. Speaker, I should offer a fairly comprehensive explanation concerning the establishment of this organization.
The purpose behind the organization is, I believe, well explained in the preamble to the statutes and bylaws. The preamble reads as follows:
Whereas there is need, throughout the world, for the mobilization and direction of a larger proportion of our best scientific resources for research on the brain, an international organization has been created for this purpose.
Progress in medicine generally has been great and in the physical sciences it has been even greater. We have witnessed the development of the atom bomb and the highly technical automated machinery of the last few decades. These developments have far outstripped our understanding of even the most elementary brain mechanisms upon which this fantastic progress is based.
All the achievements of man, including cultural and intellectual thought and behaviour in relation to social and physical environment and man's mental and physical health and welfare depend to a large measure on the relatively unexplored universe of the brain.
This has in the past and will in the future pose a most difficult problem to those who are devoting a great deal of their time and energy in an attempt to explore the universe of the brain and to devise methods of further exploring this realm. The methods and principles applied to the physical and biological sciences should be applied to research on the brain. Even the money applied to the physical sciences, for instance in the development of the atom bomb, far outstrips that which is being spent on research on the brain and the amount of creative energy devoted to the former exceeds that devoted to the latter.
The problems encountered in this field are of the greatest difficulty and complexity and are becoming increasingly acute. In psychiatry the revolution caused by the discovery of psychopharmacological agents and the recognition of the importance of basic knowledge of brain chemistry underlying mental disorder and behaviour, has brought into clear relief not only the importance of basic scientific work in this field, but also the depth and extent of our ignorance.
Within the last five years a revolution has occurred through the discovery of the action of certain psychopharmacological agents on the brain in terms of emulating the symptoms

of the mental disorder known as schizophrenia. In neurology there are many debilitating diseases of which we have no real understanding and for which we have no therapy. We feel that a more promising approach to some of the problems in neurology can be made through basic scientific work and biological work on fundamental mechanisms to determine the development of the brain and its function.
In communications, engineering and electronic computers, the need for more basic knowledge concerning how the brain perceives the outside world, how it records memories and how it solves problems, is becoming more acute.
In relation to jet space travel there is a tremendous amount of research required to get the basic knowledge of the brain's reaction to such travel. In brain research we have been very concerned with precise information about the organization and very fine structure of the brain, how it reacts to different biochemicals and how it reacts physiologically to changes in its environment.
In the realm of neurophysiology, with the development of the electronic microscope, we have been able to discover the reaction of single brain cells to stimuli, such as learning, fright, and so on. This is a tremendously difficult problem and very complex. I can recall -it is too long ago to admit to-before world war II, assisting as an interne in brain operations. Since world war II I have observed brain operations in one of the leading neurological hospitals in the western world, that in Montreal, and I can tell the house frankly that there has been terrific progress in brain study and operative technique in a matter of 25 or 26 years. I feel that this progress has been due to the work of those very selfless, devoted people in the brain research field who have not the backing that they should have, because of the lack of co-ordination between groups in different countries of the world which are doing research on brain diseases and functions of the brain. Although they have developed techniques and knowledge in those different centres, heretofore there has been no close collaboration between the findings and the knowledge of those different centres. It is hoped that with the setting up of this International Brain Research Organization greater facilities for coordination on an international scale will be brought about. This is to increase and accelerate the exchange of information and ideas between scientists of different countries.
The organization itself stems from a resolution passed by a number of brain research scientists in Moscow at an international meeting of neurologists in 1958. I hope no one will entertain any serious thoughts over the fact
Private Bills
that the birth of this organization got its stimulus in Moscow. It has no such appellation. The proposal to form this international brain research organization was then presented to the United Nations educational, scientific and cultural organization by this committee; that is, UNESCO. The first committee was headed by Professor H. Jasper of Montreal. At its tenth session, the general conference of UNESCO recommended that its responsibilities in the field of natural sciences be also extended to brain research. At a meeting in Paris in October, 1959, a study group formulated the main outlines of the organization. They also elected compilers to draw up lists of scientists to serve on seven international panels. These panels are really parts of the study of the brain and consist of the following:	neuroanatomy,
neurochemistry, neuroendocrinology, neuropharmacology, neurophysiology, behavioural sciences, neurocommunications and biophysics.
The council for the international organization of medical sciences was then charged by UNESCO with the task of helping in setting up the organization to be known as IBRO. Thus, in this bill we have the final act in the setting up of this international organization on brain research.
Over 250 scientists in more than 30 different countries were approached and asked whether they approved of the proposal, and if they did, to elect by ballot those of their scientists whom they wanted to represent them on the various panels. Then, those were to meet as delegates on a central committee held in October, 1960 in Paris.
By July of 1960 an overwhelming majority of the panel members gave their consent in writing and elected their representatives to this central committee, and IBRO was then definitely established. What of this organization? One of its main functions, certainly at the beginning, will be to foster knowledge between different panels of the different countries throughout the world.
As hon. members can readily understand, the research scientists in brain work in Moscow had little liaison, for instance, with the brain research scientists in the United States of America. By means of this organization, which is to be set up with headquarters in Montreal, the findings of those panels or disciplines in the U.S.S.R. will be centralized and funnelled through the central headquarters in Montreal and will be made available not only to scientists in the U.S.S.R. but to brain scientists all over the world. Not only in information alone will this procedure prove of great value to those countries which are just developing and have not as yet research facilities, but this information will be provided in their own language through making

Private Bills
use of the facilities of UNESCO for translator! and compilation for the IBRO. They also hope through their program of action to set up fellowships and provide for the exchange of scientific workers. Strangely enough, in the scientific world national and cultural lines do not seem to make very much difference, and the exchange of workers is felt to be of a great deal of importance in this organization. They also think they will be able to provide the facilities and the money to set up temporary research teams.
Through their teaching facilities they also hope to promote world-wide education with regard to brain research. I must say that any research work is a very thankless task. Such workers are not too highly paid. The work takes a great deal of time and effort and even considerable loss of sleep in order to reach an objective. Many who have struggled for years on a project have not yet reached their objective.
They also hope, particularly in the underdeveloped countries, to help in the extension of existing laboratory facilities. Finally, by means of international meetings and conferences which will be held at least every two years they hope to exchange information and to extend their knowledge to research groups throughout the world. I hope the bill will pass without any amendment.
(Translation):


Mr. J. E. Bissonnetie (Quebec West):: Mr. Speaker, it affords me great pleasure as a physician and also as a member of this house, to add a few words in support of this bill which is being introduced by the hon. member for Portage-Neepawa (Mr. Fairfield) with a view to incorporating the International Brain Research Organization.
This bill is a most appealing one because of its purport: medical science and its development.
Owing to its international and highly humanitarian character, medical science must be universal and know no boundary in the distribution of its blessings. It is constantly developing. Everything must be done to support our scientists in their search for new techniques, new drugs, in short for all those things which are likely to relieve suffering and prolong life.
Consequently, this bill purports to facilitate the work of the many scientists of all countries who have tackled the great science of the nervous system, and especially the human brain, which is after all the noblest organ in man since it is the one which is most involved in human activities.
Through the work of those scientists, our hospitals are no longer crowded with epilep-

tics, those poor creatures who may now be of some use to their fellowmen. Thanks also to their wTork and to their discoveries, a high percentage of patients have been able to leave our mental institutions and live with their families and become of some use to them.
This means that great progress has been made in the knowledge of the nervous system and especially of the diseases of the human brain, so complex in its anatomy and its physiology.
I think that all members of this house should give their full support to this bill to incorporate the International Brain Research Organization. In so doing, there is no doubt that we shall accomplish a noble and highly humanitarian task, for its purpose is to support the efforts of all our scientists and especially to allow them to communicate with each other through the various learned societies dedicated to that kind of research in different countries such as Russia, France, the United States, England and Canada. Moreover it is important that such scientific societies meet, study together and share their knowledge and the results of their work and of their experiments so that science may continue to benefit all mankind.
(Text):


Herbert Wilfred Herridge: Mr. Speaker, I rise on behalf of this group to express our wholehearted support for what we consider to be an extremely important measure. I also wish to express my appreciation of the explanation of the bill and the historical background behind it which was given by the hon. member for Portage-Neepawa (Mr. Fairfield), the sponsor of the bill.
When we read the bill and see the names of the members of the present unincorporated organization it is obvious that in those names we have a guarantee of the need, value and purpose of this measure. When we read names such as Herbert Henri Jasper, professor; Wilder Graves Penfield, surgeon; and Frank Campbell Macintosh, professor, being those of the persons connected with the unincorporated organization and who when this measure is passed will be the members of the corporated body, surely there is no necessity to question the real need of this pioneering legislation. It is the first measure of this particular type that has come before the House of Commons in my experience. The persons mentioned as the incorporators

are men of distinction with great achievements to their credit and having a world-wide reputation.
As I see it, Mr. Speaker, the bill provides the legal instrument, shall I say, to make possible the extension into the international field of the work they have been carrying on within Canada. It provides opportunities for the co-ordination of this work and for co-operation with people of like talents in all countries. I think we should take particular pride in the fact that the headquarters of what in effect will be an international organization will be in Montreal, Canada. I am sure that decision was not arrived at without some recognition in other countries of the work done by Canadians in this field to which the bill relates. These people will be given an opportunity, through this legislation, to perform an even greater service to mankind.
I was much interested to hear of the discussion that had taken place in other countries on the international aspects of the purpose of this organization which, without any doubt, proves that its activities will be to the advantage of all people. I trust this highly successful effort in international cooperation in this scientific-medical field does give us reason to hope that in the days to come the same co-operation will be extended into the more difficult areas to which, to date, we have not been able to achieve any great measure of co-operation and understanding. On behalf of this group, Mr. Speaker, I wish the persons in this body which is to be incorporated continued success in the great work they have been undertaking for so many years on behalf of mankind.


Mr. P. B. Rynard (Simcoe East):: I am happy to rise and say a few words in support of this bill, Mr. Speaker. I should like to congratulate the sponsor of it upon the explanation he gave of the bill and the reasons stated for introducing it. I think he gave the house a very lucid explanation.
As its name implies, this organization is an international brain research organization. It will have the job of correlating all of the scientific research information in one centre. The story of the research and the work being done in every brain centre of the world will be available at this centre. If a neurosurgeon, for example, in South America wants to obtain certain scientific facts regarding certain areas of the brain, he will just communicate with this centre and they will be able to give him the scientific facts as well as the names of the surgeons concerned and the places in which the original work was done.
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The brain has, for a number of years, lain hidden and unknown to the mind of man. Little by little an unravelling process has been proceeding concerning the various areas of the brain until today we find that lesions are picked up on the encephalogram, by X-ray and other scientific instruments. These developments are of tremendous importance in delineating the areas of the brain in which operations are to be undertaken and in picking up lesions of vessels in the brain.
If I may illustrate a point concerning the mystery of the brain, I would say it has been proven that the silent areas of the brain may contain a great deal of information. Indeed, they may be the storehouse of the knowledge that has been accumulated over the years. This knowledge is stored there and may be recalled and unfolded like a movie film. It has been established that by touching or stimulating electrically certain areas of the brain a patient may, if he is an auctioneer for instance and under deep anaesthesia, start off an auction. In order to correlate some of this data and bring it all together we need a centre which would be acceptable to all and which would contain all the data in the world accumulated from all the parts of the world. This, in my opinion, will be a major forward step in the advancement of scientific knowledge of the brain, mental diseases and so forth. For these reasons, I hope this bill will be passed without delay.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on miscellaneous private bills.

Mr. Stuart Fleming (Okanagan-Revelstolce) moved: the second reading of Bill No. S-ll, respecting the Canadian General Council of the Boy Scouts Association.
He said: Mr. Speaker, the purpose of this bill is essentially very simple. It is to change the name of the Canadian General Council of the Boy Scouts Association, in English, to Boy Scouts of Canada or, in French, Scouts du Canada. Although this appears to be a very simple thing and perhaps would require little explanation, there is a greater significance to this change in view of what has been happening in the boy scout movement in Canada during the years since the last war.
If one looks at the explanatory note, one will find that the present name, the Canadian General Council of the Boy Scouts Association, was established when this association was, in effect, a branch of the Boy Scouts Association incorporated by royal charter in London, England, in 1912, Since that time the Canadian boy scout movement has become an

Private Bills
independent body within the international boy scouts conference. The retention of the old name could lead to contradictions and misunderstandings as it does not indicate the independence of the Canadian body.
I think that this is a particularly appropriate year for this action to be taken because on January 27 the boy scouts headquarters moved into its new building in Ottawa which had been long dreamed of, long planned for and worked toward. This building will enable the association to conduct its affairs with even greater efficiency than in the past and also enable it to expand the services which a membership in Canada of approximately 300,000 now requires. It is a rather interesting statistic that in Canada today, a relatively small nation in population, there are 300,000 boy scouts, wolf cubs and their voluntary leaders. This number is growing rapidly. I think it is interesting also to note that in July of this year 3,500 boy scouts from all parts of Canada will be in Ottawa to take part in the Canadian jamboree. There will be in attendance representatives of the Boy Scouts of America, and probably some from Mexico and the other countries of the Americas.
In referring to this matter of the growth of the organization, I would place particular emphasis on the Canadianization of the organization, although I do not do so in any narrow nationalistic sense. It is appropriate, I believe, to consider exactly the place that scouting is taking in the lives of the people all across Canada. I think it is interesting to realize that the movement is now about 50 years old in Canada. As a matter of fact, scouts and wolf cubs are so familiar to us in all our communities that we pretty much take them for granted. We perhaps overlook the fact that this large organization could not continue to exist unless it had the sympathy, understanding and co-operation of individual citizens in every community in which it was established.
A portion of the funds of the association is earned by the boy scouts and wolf cubs through their various ventures and a substantial proportion is obtained from individual citizen subscriptions. Without this assistance the movement could not continue.
We have several thousand men and women acting as voluntary leaders and devoting many hundreds of hours during the year to the training of these boy scouts and wolf cubs. We should realize that this association with its national, provincial, district and city headquarters at various places throughout the country is maintaining a high standard of training for the youth of this country. We should realize that the training standards are jealously guarded by the Canadian association. Training programs for leaders have become widespread and a

greater number of adults each year are spending their spare time in an effort to maintain the standard at this high level. I feel it is also important to realize that this effort will only be successful if the people engaged in public life take the time to examine the standards, aims and objectives of organizations such as the Boy Scouts Association. I feel that private citizens should also consider the contribution they can make toward the continued successful operation of this valuable movement.
Boy scout and wolf cub groups exist in every province and in every territory in Canada. Many of the members of this organi-ation have distinguished themselves over the years in many fields. The boy scout movement is essentially an international organization of brotherhood which has as an objective the developing of self-reliance. But during times of war former boy scouts have served well and I am sure the younger boys will continue to do so.
I feel that the underlying significance of this move to change the name is an effort to emphasize a program that has been accelerated during the years since the war. This effort has been fostered by a sense of Cana-dianism in regard to the scout program. There has been no departure from the principles of scouting as laid down by Lord Baden Powell in 1908. The objectives vary in different areas and here in Canada we must keep in mind the geographic and climatic conditions of our country. There is in existence, a program an object of which is to promote out-of-doors activities during 12 months of the year. Only a few years ago, I was somewhat surprised when I found myself learning how to camp under canvas in the mountains of British Columbia in January. I felt that this was a marvellous objective for young boys. I was not too sure that it was a marvellous thing for myself. In any event it is as a result of the efforts of the leaders that this program is continuing in a way that provides leadership and training for Canadian youth.
All of the things I have mentioned justify our attention and support. I believe that the change in name as suggested at this time emphasizes to the members of the movement as well as to the public in general that the boy scouts of Canada are endeavouring to contribute to those things we in Canada like to regard as distinctively Canadian.


Herbert Wilfred Herridge: Mr. Speaker, as a scout some 60 years ago and scoutmaster some 42 years ago, may I say this.


James MacKerras Macdonnell: Did the hon. member say 60 years?


Herbert Wilfred Herridge: Yes, nearly 60 years ago as a scout and 42 years ago as a scoutmaster. I can give my political benediction to all that the member for Okanagan-Revel-stoke (Mr. Fleming) has said in respect of the Boy Scouts Association. I think that is all that is necessary for me to say, Mr. Speaker.


Mr. O. J. Godin (Nickel Bell):: Mr. Speaker, I should like to join with the hon. member for Okanagan-Revelstoke (Mr. Fleming) and the hon. member for Kootenay-West (Mr. Herridge) in their congratulations to the organization whose name is being considered by us today. There is a suggestion that the name be changed from The Canadian General Council of the Boy Scouts Association. There is no doubt in any member's mind that these individuals perform wonderful work for the young people of Canada, and assist our youth in realizing their many ambitions. I rise at this time to place on the record certain problems this application faces. Perhaps these problems are not grave in nature but nevertheless they exist. I do not profess to know much about the Boy Scouts Association although I have admiration for the movement as I am sure have many hon. members. I have learned a great deal about the activities of this organization from my brother who has for many years been a scoutmaster.
I feel sure that the hon. member who placed this bill before the house is aware that it was studied by the Senate committee on private bills during which time certain matters were discussed in harmony. I feel that it is my duty to inform the members of this house of these problems, so that when they are again before us in some form or another we will recall this information.
Mr. Speaker, the problem is a simple one. There has been for some years now a similar organization known as the Federation of Catholic Boy Scouts of Canada. I understand this organization has many troops in different sections of the provinces of Quebec and Ontario. Hon. members will perhaps realize that in a proposal to change a name it is perhaps not usual to adopt a French translation as well. The French translation of the proposed name is Scouts du Canada. This is not a literal translation of the English name, and for that reason there is some doubt in the minds of the French promoters of this movement. This doubt exists among the French and Catholic groups who feel that within a short period of time they will be in a position to request a charter, something which, of course, is the privilege of any association. When this step is taken this organization will require the French name which is 90205-6-159J
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Scouts du Canada. I observe that the word "boy" is struck out in the translation. I make these remarks knowing very well that there is the greatest harmony between these groups which have been in operation and close affiliation for quite a few years.
I think it is important that hon. members realize this fact. If at any time in the future an association which is doing similar work applies for a charter, it could not be refused because the name is similar in some way to the French translation asked for today. I think all hon. members will realize the significance of this matter.
In this house we have possibly a special problem. We are a house which represents a bilingual country. We have no rules or regulations in this regard. We have in the past given approval to associations being incorporated and there has been no request for a translation. An official name has been requested. It is not customary to ask for a translation. I think hon. members realize that if it were possible to accept the translation of the short English phrase it would satisfy the proper function of this group which has been in existence and has done such wonderful work throughout the years. We would thereby protect any similar group of Canadians having the same endeavours in mind, and in that way there would be the recognition of the bilingual factor which we recognize is very special to Canada.
I make these remarks with the greatest frankness and with the desire to create the greatest possible harmony. There is no doubt that the Scouts of Canada, Scouts du Canada, by whatever name we may call them, will promote in Canada all these wonderful things which the hon. member for Okanagan-Revelstoke (Mr. Fleming) mentioned to the house.
I should like to put this statement on the record. If the bill is read the second time and is referred to the committee which studies these private bills, I should want to make sure that all hon. members were informed of the situation, especially if the house felt it should grant the total application, that is to say the English name and the French name which is slightly different. If it granted both-something which is not usual in incorporations under the statutes of Canada-and a similar association later applied for a like name, possibly with the French appellation, hon. members would recall the debate today so that the association in the future would not be deprived of a right that we must agree it has, as have all other associations.

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Mr. G. H. Aiken (Parry Sound-Muskoka):: Mr. Speaker, on March 23, 1959, I had the privilege of introducing Bill No. S-13 on behalf of the hon. member for Okanagan-Revel-stoke (Mr. Fleming) concerning the holdings of real estate by the Boy Scouts Association.
This bill is comparatively simple. We have only a few minutes in which to deal with this matter, but I should like to point out two significant factors in it. The change of name includes the saving clauses which would prevent any legal difficulties in connection with such a change. The most obvious matter is that the name is short and made less difficult than the former nomenclature, namely the Canadian General Council of the Boy Scouts Association. Shortening it up to "the Boy Scouts of Canada" will facilitate easy use of the name and it will be designated in such a way that it will be well known to all Canadians.
The second significant fact is that the new name removes any suggestion that the Canadian association is a branch or subsidiary of the British association. We know that in 1914 scouting was permitted by numerous provincial councils, but in June of that year the Canadian general council, with headquarters at Ottawa, was incorporated. That is the name under which the association has gone until the present time.
The present change to simply "Boy Scouts of Canada" will complete that change-over and will make it quite clear that the Canadian association is an autonomous unit in the boy scouts organizations of the world.


Hon. W. J. Browne (Solicitor General):: Mr. Speaker, everybody will be pleased to see the change of name from "the Canadian General Council of the Boy Scouts Association" to the simple one of "Boy Scouts of Canada", which is the name by which this organization is generally known.
I rise particularly to say that as I look around this House of Commons today I note that there are not many who can boast, as did the hon. member for Kootenay West (Mr. Herridge), of the long period of membership that he mentioned. I think he said he was a member 60 years ago.


Herbert Wilfred Herridge: Nearly 60 years ago.


Mr. Browne (Si. John's West):: But in private conversation I understood from him that he joined the movement in 1906.


Herbert Wilfred Herridge: Yes.


John Ferguson Browne: I should like to say also that I have the honour of early membership. I think it must be the earliest in Canada. It was in the fall of 1908 that I joined a boy scout group

in St. John's, Newfoundland. I think it must have been about the time that it was introduced in the mainland of Canada, or earlier. It was introduced into Newfoundland by a Church of England clergyman who had just come from England. I looked it up at one time and I believe that was the year it was given recognition as an organization, although it may have been working unofficially when my friend the hon. member for Kootenay West joined a couple of years earlier.


Mr. Deputy Speaker:: Is the house ready for the question?


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on miscellaneous private bills.
At six o'clock the house took recess.
[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.

[Stage Direction]
The house resumed consideration of the motion of the Prime Minister (Mr. Diefen-baker):
That it is expedient that the houses of parliament do approve the convention on the organization for economic co-operation and development, supplementary protocol No. 1 to the convention on the organization for economic co-operation and development, supplementary protocol No. 2 to the convention on the organization for economic co-operation and development, and the memorandum of understanding on the application of article XV of the convention on the organization for economic co-operation and development, all of which were signed in Paris on December 14, 1960; and that this house do approve the above agreements.
Lester Bowles Pearson: Mr. Speaker, at five o'clock I was discussing how I thought the organization for economic co-operation and development, the convention establishing which we are being asked to approve, could operate so as if not to ensure, at least to assist in ensuring that the European movement toward economic consolidation should take the right course; that consolidation and unity should not result in the raising of barriers against countries outside either the European free trade area or, more importantly, the European common market.
There have been worries and indeed some indications of danger on that score from the two sources which I mentioned, namely the averaging method used in setting the common market tariff against non-member

Economic Co-operation and Development
countries and the range of commodities for which duties established by the common market are fixed by negotiation.
In the first case, fears have been expressed -and perhaps there is some ground for them -that the increase in the German and Benelux tariffs that resulted from this averaging method will hurt outside countries more than the reduction in the French and Italian rates will help them by the application of the same averaging method.
It is true as the minister and hon. members will know, that the first 10 per cent cut inside the common market on internal tariffs on the way to completely removing these tariffs over the years was applied, I think without conditions, to the GATT countries, but the second 10 per cent cut which I believe took place in July of 1960-and the minister will correct me if I am wrong-was not so extended although members of the common market could voluntarily extend that 10 per cent cut if they so desired. I think that the Netherlands is the only country that has done so.
It is now fairly clear, in my opinion, that if there is to be a further reduction of that kind it is to be extended to countries like Canada and the United States, GATT countries outside the common market only, if they will take reciprocal action in reducing their tariff toward common market countries. There is therefore a problem here which perhaps the O.E.C.D. will be able to take into consideration when it begins operation.
The second danger, namely the fixing by negotiation of duties for certain commodities, presents another problem. The duties in this respect include those on some commodities of great importance to Canada, such as basic raw and industrial materials. They are fixed at such levels that production within the common market may well develop with a consequent diversion of purchases from outside to inside suppliers. We have fears on this score particularly in connection with agricultural products.
The executive secretary of GATT in dealing with this subject has expressed the view that suppliers outside the common market will probably have a decreasing share of this market for agricultural commodities. That forecast was made presumably on plans to fix minimum prices for such products within the community regardless of conditions on the world markets and to protect these minimum prices by levies, quotas, controls and all that sort of thing.
No doubt it is considerations of this kind which are responsible for some of the fears I have expressed and which are being expressed in Canada. I believe it would be helpful indeed if the government would give
its own indication of the validity and importance of these fears and tell us what might be the effect on our exports. An appraisal of this kind given before this resolution is passed would be of assistance.
Before I leave that point, in turning to the more encouraging side I want to place on record a statement made by the president of the commission of the European economic community, Walter Hallstein, who said:
Not only must we continue, and perhaps increase, our present rate of economic growth. Not only must we prove that a free society is competitive. We must also help to stabilize and enlarge the markets we provide for the world's producers of raw materials, and, as the developing countries achieve greater industrial production, so we must develop, with them and accept from them, increasing quantities of manufactures.
The common market should develop along those lines. We would then have little to fear and much to hope from that kind of development.
Perhaps I could also say a word on the organization of the European free trade area and its possible effect on Canada. This free trade area, as we know, includes the United Kingdom. I am glad to say that an increasing percentage of our exports is now going to that market. Most of our exports to the United Kingdom, as part of the European free trade area, which lately have proved so important to us, will not be affected by any proposed arrangements inside the free trade area but there are other important exports which will meet increasing competition in the United Kingdom market as a result of the development of this free trade area.
This situation would be unfortunate at a time when we are doing everything we can to increase our exports to that market which has not only a value in itself but has-I was going to call it an incidental value, though it is more than that-the additional value of making us less dependent on the United States market.
We can all take satisfaction in the fact that our exports to the United Kingdom have increased. They have gone ahead during 1960. Whether we are able to continue this increase in our exports to the United Kingdom will depend on two things. It will depend in part on our willingness to import from them and not to put obstructions in the way of British exports to this country. It will also depend on the ability of the United Kingdom to buy anywhere because of growing exchange difficulties in that country. Although we hope this will not happen, those difficulties may interfere with our continued increase of sales in that market.
Great Britain's trade surplus is declining at the present time. In 1958 it was 800 million, in 1959 it was 140 million and in 1960

Economic Co-operation and Development it was estimated at only 50 million. To correct that situation which is causing a good deal of anxiety in the United Kingdom there are indications not only that the U.K. may have to take some kind of action against Canadian and other dollar imports. I hope it will not be done by reimposition of any of the controls from which we have been happily free in the last year or two. Rather I hope that- and this is equally important to Canada-the United Kingdom may feel impelled to move into the orbit of the common market. Certainly the information that one gets from the press is that the association of the United Kingdom with the common market is now being more closely considered than before. I know there are difficulties in regard to the United Kingdom coming into the common market; they are mainly difficulties arising out of agricultural trade, but there are ways by which those difficulties could be overcome. If they are overcome, and if the United Kingdom does move across the channel into this market, we would have to be careful indeed of the effect of this on our own interests.
Only this morning, as reported in the New York Times, the Lord Privy Seal of the United Kingdom, Mr. Edward Heath, made a statement as follows:
Edward Heath, Lord Privy Seal, Informed the six common market governments-
Presumably this would be yesterday.
-that Britain was willing to accept a common or "harmonized" external tariff on non-farm goods as part of a settlement.
That had been the key demand of the common market. Mr. Heath went on to say -and these words have a great significance for our country-that this, according to the press, was a fundamental change of principle in the United Kingdom position.
It would be interesting indeed to hear from the government whether they have any comment to make on what a member of the British cabinet called a fundamental change in the British position in respect of association with the common market.
I should like to put a little more of this report on the record because it is of such great significance. The report in the New York Times goes on to say:
Mr. Heath's proposal excluded agriculture. It also apparently left intact the present system of preferential tariffs for goods imported into Britain from the British commonwealth. However, Mr. Heath said Britain would have no objection to a reduction of the preferences her exports enjoy in commonwealth markets if the Six wanted to start negotiations with the commonwealth toward that end.
I cannot imagine anything much more important than that development announced only within the last few days, in British policy toward the common market. There was

no reference to this matter by the Prime Minister or the Minister of Finance but it would be interesting to get their comments on it.
It was not long ago that the Minister of Finance expressed great doubt indeed about the United Kingdom association with the common market, and he made some observations which have been interpreted as taking a strong position in regard to any move on the part of the United Kingdom for closer economic ties with the common market. May I say, Mr. Speaker, that a member of the British cabinet has now indicated that those closer ties are about to be negotiated.
Last November, at Ste. Adele, the Minister of Finance had this to say:
It is difficult for us to see how any accommodation which the United Kingdom might make with the Six could fail to damage to some degree, and perhaps seriously, Canadian interests.
Well, these negotiations are now taking place. The minister went on to say:
The ability of the Canadian government to maintain existing preferences in the Canadian market in favour of the United Kingdom would inevitably be affected by changes in the access of Canadian goods to the United Kingdom.
This development, which will undoubtedly have significance with respect to the organization about which we are talking about, can be one of great hope, and it can be one of danger to Canada. In my opinion, it involves- and I do not think I am using too strong words when I say this-a challenge to Canada's international economic policies. It seems to me there are four quite distinct lines of approach which a Canadian government could follow in meeting this situation. The first way would be to move in the direction of economic self-sufficiency through increased protectionism. The second way would be to move in the direction of economic integration with the United States. The third way would be to rely on GATT as the foundation of our trade policy and hope to achieve multilateralism in trade through further rounds of tariff negotiations. One of those rounds is under way now, I believe, in Geneva. The fourth way-and the one I think is the best way-is to move toward closer co-operation with Europe with the establishment of an Atlantic freer trade area as a long term goal of Canadian international economic policy to be achieved stage by stage.
So far as alternative one is concerned- and there is some indication that this is the government's preferred way, namely making ourselves economically more self-sufficient, moving toward economic nationalism-that way may provide a tempting short run answer to our difficulties. It may be the way, equally tempting, to Washington; but the experience of the 1930's showed that this

approach is sterile and self-defeating. You get indications of this approach in Washington at the present time in the hearings that are now being held there in regard to the approval of the very organization that we are being asked to approve in this House of Commons, where there is developing very strong opposition, no doubt fomented by certain pressure groups, against the ratification of this very convention.
The second alternative I mentioned was economic integration with the United States. We saw press reports of a proposal made not long ago in Toronto by a former member of the administration in Washington, namely Mr. McElroy, who put this proposal forward as a very responsible and serious way out of our economic difficulties. He put forward what he called a North American common market. The United States today is our most important single customer, of course. But the political and other kinds of anxiety caused by our economic relations with that country are more likely to be intensified than to be weakened and removed through seeking this solution of our increased difficulty with that country alone. That does not mean, of course, that we should eliminate the possibility of the closest possible trade relations with the United States as part of a wider Atlantic association. Indeed, our dependence on the United States would be lessened rather than increased if we could fashion a newer and wider economic association on an Atlantic basis of which the United States would become an indispensable part. While there may be in Washington influences which are leading in the opposite direction on the way to greater economic self-sufficiency, there are also in this new administration in Washington forces which I hope and believe are moving in the direction toward Atlantic coordination and freer trade within the Atlantic area.
The third alternative, Mr. Speaker, is reliance on GATT. Of course we ought to take full advantage of any further opportunities we have in Geneva for GATT negotiations and for accomplishing further reductions in tariff. I would be the first to agree that GATT has accomplished a great deal over the years in establishing the rule of law in trading relations, in making tariff increases difficult of achievement and in bringing about more extremely important general tariff decreases. During the post-war period GATT has undoubtedly been the chief instrument in tariff reduction and the liberalization of trade, but the question now arises whether GATT can make much further progress in this direction. In my view, and this will be shown in the negotiations at Geneva within the next weeks and months, a new approach
Economic Co-operation and Development outside GATT, by GATT countries in the Atlantic area, if you like, is required under the present circumstances. A new impetus, approach, or initiative should be taken and that new approach can best be taken by the Atlantic countries.
That brings me to the fourth possibility which I mentioned and which I think is the best possibility, namely that of working toward closer economic association between Europe on the one hand and North America on the other, which should take expression in the freeing of trade to the greatest possible extent stage by stage and steadily over the years on an Atlantic basis. That, Mr. Speaker, is not only the challenge but the hope of the future in international economic policy and I do not think that anything less than that will meet the challenge we face.
I express in this house the hope that the government will use its influence in the organization for economic co-operation and development in order to achieve this particular objective. O.E.C.D. could be the beginning of a new trade grouping to embrace the European economic community, the European free trade area, the United States, Canada and, through special arrangements, other free world countries which would like to join in the association. After all, if the European economic community can make arrangements with respect to countries outside that community in order to bring them in, so also could an enlarged Atlantic free trade area be able to make arrangements with countries outside the area so it would not develop in a discriminatory way, which is something, of course, that should be avoided.
That possibility, and it is a stimulating and exciting one, of something to be achieved in the long run, has, it seems to me, occurred to the Minister of Finance (Mr. Fleming) only to be quickly rejected by him because in his speech at Ste. Adele last November he had this to say:
When O.E.C.D. is established it will assume the functions of the trade committee. However, this should not be taken to mean that O.E.C.D. represents an accommodation between the North American and European countries, in an arrangement which will discriminate against the rest of the world. On the contrary, the core of the new body's activity will be consultation and discussion of general economic policies within the framework of the GATT and the international monetary fund.
Mr. Speaker, I think we can go further than that in O.E.C.D. and I hope we will do so. In contrast to that very cautious and limited view taken by the minister on that occasion, let me quote what the minister of trade and industry of West Germany had to say on this point of the extension of the European economic community to include Atlantic
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Economic Co-operation and Development countries. Last November Dr. Erhard was interviewed by Bruce Hutchison and he was asked this question by Mr. Hutchison:
Do you believe the methods of the common market could be extended to include North America in an Atlantic free trade area?
Dr. Erhard's answer was: "In principle, yes". He went on to say that it would have to be brought about in two stages, that first you would have to bring in the European free trade area, including the United Kingdom, and some progress is being made in that direction, and then afterwards North America. He went on to say that Germany would help to make this possible by agreeing to special arrangements to cover commonwealth preferences, which he admitted are a difficulty. He said he believed that it was not only desirable but absolutely necessary for Great Britain to join the European common market. Then he used these words which I think are the heart of the matter:
It is not a question of finding technical solutions but a political will.
Europe cannot develop toward unity alone. He ended by saying:
It will be sufficiently strong only within the framework of the Atlantic community.
We on this side, Mr. Speaker, have been advocating consideration of an Atlantic free trade area since the fall of 1957 as a result of important changes which occurred in the world before and after that time. In our view that is the only kind of international economic association which will not only meet the challenge of our own necessity for expanding production and trade but will also meet the economic challenge of the communist bloc.
We have not had much support for that view in the house. It was only a few days ago that the Minister of Trade and Commerce (Mr. Hees) in Montreal jeered at the idea of an Atlantic free trade area in which Canada would be a member. But this, Mr. Speaker, must be the objective toward which we work in the present circumstances. When we put forward this idea it has been laughed at as imaginary, idealistic and unrealistic just as the European common market was regarded ten years ago, but nevertheless some distinguished advocates have come out in support of it. I refer to Mr. Adlai Stevenson, governor Rockefeller, Mr. Erhard whom I have mentioned, the prime minister of Denmark and many other western leaders who have come to the same view. In Canada the Canadian Labour Congress and farm organizations now support the idea of expanding trade on an Atlantic basis.
Surely, Mr. Speaker, Canada has a wonderful opportunity to take the lead in initiating and pushing this idea in this new organization


that we will hope to support when the discussion on this resolution is completed. Canada can take a leading part in this organization in the direction I have just outlined. Because the words are more fitting than any I could find to support this idea, perhaps I might quote Mr. Bruce Hutchison in an article on this subject on December 14, 1960, in which he had this to say:
The lesson of these events-
He is referring to the development of the European economic community and the European free trade area.
-is perfectly clear. Somehow, without any narrow, doctrinaire logic but with flexible, pragmatic methods and by reasonable stages, the principles that made the European six the most prosperous area of the free world must be spread through the whole North Atlantic community and beyond.


John George Diefenbaker: Will the hon. gentleman allow a question? A moment ago he picked up a slip of paper which apparently had on it a statement to which he made reference. The statement was that the Minister of Trade and Commerce had jeered at any proposal for an Atlantic trading arrangement. I wonder whether the hon. member has that slip of paper because I should like to know to what he made reference.


Lester Bowles Pearson: I was referring to a report in the Montreal Star of a meeting in Montreal on February 13, about which there was also a report on the radio. It was tc the effect that the Minister of Trade and Commerce had criticized a top Liberal spokesman-that was the hon. member for Essex East (Mr. Martin)-for advocating an Atlantic free trade area recently and had said that such an agreement would result in the shutting down of many Canadian factories and mass unemployment. On the radio report there was a good deal of additional detail as to the minister's attitude and what the minister had said, that if we kept pushing this visionary scheme of an Atlantic free trade area we would put people out of work in Canada at the present time and that would be a fine way of curing unemployment. I think that is not an unfair paraphrase of the attitude of the minister.
Of course, the answer to that is simply that this is the kind of thing that will have to be done stage by stage, as I have emphasized, over the years. The same thing could have been said about the European common market ten years ago, namely that if the European countries come together, if they abolish tariffs between them as they are doing, they will put people out of work in their own country. Instead of that happening, they have proceeded stage by stage in the reduction and eventual elimination of tariffs and in the last

two years they have made that area the most prosperous trading area in the world. I suggest the same technique, based on the same principle and applied over the wider Atlantic area might, over the years, have an equally desirable result. This is the time, of all times, when we need that result both nationally and internationally.
This is what Mr. Hutchison said, Mr. Speaker, in one of his articles on this matter and I should like to subscribe to this statement:
If the process of regional splintering goes on, and the splinters, when formed, restrict one another's trade, then Canada will find itself ground between them.
Our national identity in the end will only be safe within the widest possible grouping of free nations trading abundantly.


Hazen Robert Argue: The resolution introduced by the Prime Minister (Mr. Diefenbaker), Mr. Speaker, asking parliament to ratify the organization for economic cooperation and development is undoubtedly an important one and I am sure that it will receive the approval of the members of this house. This organization, as members are well aware, is composed of some 20 countries that will come together under the rules set out in this document to consult and to consider ways and means of improving trading relations, improving the national economy and providing aid to underdeveloped countries.
The purposes of the organization are set forth in part in article 1 as follows:
The aims of the Organization for Economic Co-operation and Development (hereinafter called the "Organization") shall be to promote policies designed:
(a)	to achieve the highest sustainable economic growth and employment and a rising standard of living in member countries, while maintaining financial stability, and thus to contribute to the development of the world economy;
I feel that the impetus for this kind of organization has come largely from the success of the countries involved in O.E.E.C. and the common market. They have shown, by consultation and by common programs, that they have been able to raise their standards of living substantially. The fact of the matter is that their standards of living have gone up at a great rate, so successful have they been in arranging their economic affairs. It has been the lack of growth of the countries on the North American continent that have given the impetus to the development of this kind of organization for consultation and for the drawing up of plans.
The O.E.E.C. has been successful in that the countries comprising this organization have made a marvellous recovery in recent years. I am quoting now from an article in the 90205-6-160
Economic Co-operation and Development Regina Leader-Post of October 8, 1960 in which is set forth some of the accomplishments of O.E.E.C.:
As an indication of the growth of O.E.E.C. countries during the 1948-58 period their gross national production has risen 62 per cent, industrial production, 95 per cent, volume of imports from the rest of the world, 56 per cent, volume of exports to the countries of the world 130 per cent, volume of intra-European trade 183 per cent, and population has risen 9 per cent.
There are new developments in Europe today such as the common market and the outer seven. These developments not only show great promise for the countries involved but they pose certain definite dangers for the Canadian economy. I am certain that this kind of organization in which Canada can consult with other member nations can be helpful in working out arrangements so that the welfare of our own nation may be better assured in the years to come. The nations involved in O.E.C.D. comprise not only the nations that belong to NATO but certain additional nations. Over the years many of us have hoped that under article 2 of the NATO treaty economic co-operation and economic arrangements within the NATO organization would be achieved. This development would help the member nations in an economic way. Article 2 has largely been a failure. Economic co-operation has not been forthcoming. NATO has become more and more a military organization and little else.
As a result of the failure of NATO to take advantage of article 2, the organization now under discussion has been made necessary. If O.E.C.D. is a success, as all of us hope it will be, then the more certainty there is that in the years ahead NATO will be a military organization and article 2 will continue to be a part of the treaty that is not being used. I can see definite advantages in the development of O.E.C.D. rather than the development of article 2 under NATO. Nations are coming into O.E.C.D. that are not attached to NATO. It has been said that such countries as Yugoslavia and Finland are showing an interest in O.E.C.D. They wish to become connected with this organization, either in the capacity of observers or associate members.
I feel that such an organization is much more likely to make a contribution to the peaceful relations of the world than would be possible under NATO. I think O.E.C.D., in the provision of economic aid to member nations or to nations outside of the organization, is much more likely to be successful than is the NATO organization in the provision of this economic aid. After all, the underdeveloped countries of Africa and Asia have felt that NATO was a strictly military organization and to accept any assistance from this organization would make them a part of the

Economic Co-operation and Development cold war struggle. These nations, in our opinion, are much more likely to accept aid from O.E.C.D. We feel, therefore, that this is another reason why this organization deserves the support of all members of this house.
I feel that we should be making a mistake if we believed that the establishment of this organization would correct some of the great trading problems that face this nation or correct some of our own internal economic problems. After all, this organization is just a consultative organization. There are no economic agreements flowing from this organization. Within this organization there is no plan for more trade or for the solving of unemployment. There is merely at this time machinery for consultation and the establishment or continuation of a large number of committees that will look into various economic questions. Mr. Speaker, I think we should be all the more interested in the purposes of this organization because it sets as one of its purposes the maintenance of a high level of employment. Certainly Canada needs a high level of employment at this time.
Perhaps through this organization the government can learn ways and means of dealing with the economic problems that face our nation both internally and in the field of international trade. I do not believe there is in the present constitution any provision for a consultative assembly or for a parliamentary organization. I think a consultative assembly or a parliamentary organization would be a useful addition to the committees that are established under this treaty. I would hope that in the days ahead as the organization unfolds and develops there may be a consultative assembly to which parliamentary representation may be made.
We are greatly interested in the effect of the common market on Canada. We are interested in finding out if we can the Canadian government's policy in relation to the common market. We were disturbed when, the government of the United Kingdom having offered to Canada the possibility of establishing a free trade area, our government shied away and refused to come forward with any policy as far as the development of a free trade with the United Kingdom was concerned. The common market poses a threat to Canada. The nations in the common market have been taking, over the years, some 30 per cent of Canadian exports. Our markets for these exports on the common market are not assured and there seems to be every possibility that the United Kingdom in the days ahead might join the common market. If this should happen it will

pose a very serious threat to Canadian exports and to our Canadian economy.
At this time the development of widespread consultation among the nations of the Atlantic community is necessary. We think this organization can play a useful role. We look forward to the reduction of trade barriers in this larger group of nations. We think that the destiny of Canada depends to a large extent on the expansion of trade, and the expansion of exports to the various nations of the world. We believe that within this organization we can expect that there will be an improvement in trade relations among the nations concerned. We welcome the resolution and we shall lend our support to the establishment of this organization. We do point out that it is merely a consultative organization and that for the development of the Canadian economy our government must develop new and concrete policies, to which this organization at this time will be of very little help.


Mr. C. W. Carter (Burin-Burgeo):: Mr. Speaker, this resolution requires parliament to ratify an agreement which will bring into existence a new organization to be known as the organization for economic co-operation and development. This new organization will replace a somewhat similar organization which was established I believe in 1948. As you look over the membership of this organization you will find that probably the main difference between the new organization and the old one, which was known as the organization for economic co-operation, is that the organization which will be set up in consequence of this resolution will consist of 20 members instead of 18. The two new members that will be added are Canada and the United States.
The aims of this new organization are highly commendable. They are set forth in article 1 as follows:
(a)	to achieve the highest sustainable economic growth and employment and a rising standard of living in member countries, while maintaining financial stability, and thus to contribute to the development of the world economy;
(b)	to contribute to sound economic expansion in member as well as non-member countries in the process of economic development;
(c)	to contribute to the expansion of world trade on a multilateral, non-discriminatory basis in accordance with international obligations.
These are worthy and challenging objectives but whether they will be attained or not will, in my opinion, depend on the willingness of the member countries to commit themselves to a greater measure of co-operation and even sacrifice than has been evident in the past. If we look at those membership countries we find that 13 soon found it necessary to form smaller groups outside

the main organization. We have six of them banded together in what is known as the European common market or the inner six. Seven more of them are banded together in the European free trade association-


Mr. Grafftey:: Tell us something new.


Chesley William Carter: -commonly referred to as the outer seven. The fact that this large group of nations had to break up into smaller groups is, I think, evidence that they were unable to solve their most pressing problems as members of that larger group.
As we look back over the history of trading groups the prospects are, in my opinion, not too optimistic.


William Heward Grafftey: The Liberals are never optimistic, are they? They are pessimistic, in fact.


An hon. Member:: Une malade.


William Heward Grafftey: Yes, une malade.


Chesley William Carter: My hon. and juvenile friend is entitled to his little joke and I should not wish to interfere with his fun at this moment. However, this is a rather serious topic and I am trying to deal with it in a serious manner.
Hon. members will remember that not very long ago the government of Canada was criticized for adhering too rigidly to what is known as GATT. As has already been pointed out this evening, GATT obtained a good many benefits for its member nations but it fell far short of what was expected of it. It fell far short of expectations because it contained a good many loopholes and too many member countries were willing to take advantage of the escape hatches.
We can also think back to the North Atlantic Treaty Organization. There were hopes that once NATO had completed its organization to deal with immediate defence problems it would then develop into a trading community. That hope also has been dashed. If we wish to come nearer home I suppose we only have to think back to NORAD, because I do not think any member of this house will assert that, as far as sharing of defence production is concerned, the NORAD agreement has fulfilled our expectations. Therefore I can assure the hon. member for Brome-Missisquoi (Mr. Grafftey) that history is not too reassuring on this particular point.
These high hopes we had in the case of GATT, NATO and NORAD have foundered, and they have all foundered on the rock of self-interest. If this new organization which we are discussing today is not to meet the same fate, we must find a purpose greater 90205-6-160J
Economic Co-operation and Development than self-interest on which every member country can unite and to which every member country can commit itself.
This afternoon the Prime Minister (Mr. Diefenbaker) said it was his hope that through this organization member countries would make a full contribution to a world community. I am sure we all share that hope, but let us not deceive ourselves that this objective is going to be accomplished merely by setting up another organization. If there is any comment to be made I think it should be that perhaps we have too many organizations overlapping and all trying to do the same job. Perhaps it is a case of too many cooks spoiling the broth.
Let us not forget this point. If this organization is to fulfil our hopes in making the fullest contribution to a world community, in the final analysis the matter boils down to individuals. First of all it boils down to the people who are responsible for the industry and commerce of the member countries. Many of the nations included in this membership, particularly Canada, the United States, the United Kingdom, west Germany and others are countries which are pledged, at least politically, to a system of free enterprise. It means that those who are responsible for the workings of free enterprise in our country and in other countries must themselves find a purpose greater than self-interest.
Free enterprise has a great many good points. It has developed mass-production techniques. It has produced a quantity of cheap goods and made them available on a wide scale to many people at reasonable prices. It has encouraged a spirit of adventure and the development of genius and invention. These things are all good, but let us not forget that free enterprise also has its faults. While it has accomplished much, it has also led to labour troubles, to bitterness, to class war, and in many cases to a misuse of materials and of natural wealth.


William Heward Grafftey: Mr. Speaker, would the hon. member permit a question?


Chesley William Carter: Not right now, thank you.


Lionel Chevrier: The hon. member received the answer he deserved.


William Heward Grafftey: I don't blame him.


An hon. Member:: He could not answer.


William Heward Grafftey: He is not very fast-thinking on his feet; I don't blame him.


Mr. Deputy Speaker:: Order.


Chesley William Carter: I think we must examine our free enterprise system and be prepared to put right many of the things that are wrong with it. Perhaps that process may go much
2518	HOUSE OF
Economic Co-operation and Development deeper than we realize at the moment and in the final analysis it will boil down to individual decisions that in one way or another affect our self-interest.
While we support this resolution and hope that all the benefits that can flow from this new organization will be realized, let us not lose sight of the fact that the prerequisite for that success is the finding of a purpose higher than self interest on which we can all unite to give everything we have and which we all can pursue with full commitment.


William Heward Grafftey: Mr. Speaker, I have no intention of speaking at length at this point but the hon. member who has just taken his seat has made one statement-consciously or subconsciously-


Mr. Hodgson:: Unconsciously.


William Heward Grafftey: -which I personally cannot let go by. The hon. member said that the free enterprise system in Canada had created class warfare. That is an utterly ridiculous statement. If there is any one thing that this country has lacked in its historical and economic context, it is class warfare.


Chesley William Carter: Mr. Speaker, I rise on a point of order-


William Heward Grafftey: This government has keynoted co-operation between industry and labour and we have no class warfare whatever.


Chesley William Carter: Mr. Speaker, on a point of order-


Mr. Deputy Speaker:: Order. Is the hon. member for Burin-Burgeo raising a point of order?


Chesley William Carter: Mr. Speaker, I must object to the hon. member's putting into my mouth words which I did not utter.


Mr. Deputy Speaker:: I suggest to the hon. member for Burin-Burgeo that if he feels he should correct a misinterpretation placed on his remarks, the time at which to do so would be when the hon. member from Brome-Missisquoi has completed his remarks. The hon. member cannot interrupt the hon. gentleman who has the floor.


Lionel Chevrier: On the point of order, Mr. Speaker, which has been raised by the hon. member for Burin-Burgeo-


William Heward Grafftey: I have not finished my remarks.


Lionel Chevrier: -I think it is within the right of an hon. member to explain what his statement was if he thinks that another hon. member is misinterpreting the statement.


Mr. Deputy Speaker:: I feel exactly as does the hon. member for Laurier except that I suggested that the right time for the hon. member for Burin-Burgeo to raise this point of order was after the hon. member for Brome-Missisquoi had completed his remarks.


Lionel Chevrier: With respect, Mr. Speaker, I disagree with your ruling.


Mr. Deputy Speaker:: That is my interpretation of the rule.


Lionel Chevrier: Mr. Speaker, I wish to discuss this point and I hope Your Honour will allow me to do so. In discussing it I want to say this. It is permissible for an hon. member to rise at the time another hon. member rises to point out the difficulty in which the statement made by another hon. member-in this instance by the hon. member for Brome-Missisquoi-places him.
Another matter I should like to bring to Your Honour's attention is this. The discussion in which the hon. member for Brome-Missisquoi has engaged is not relevant to the resolution which is before the house.


Mr. Deputy Speaker:: That is another point of order and perhaps we should settle one point at a time. The hon. member will be familiar with standing order No. 37 (1) which reads as follows:
37. (1) No member may speak twice to a question except in explanation of a material part of his speech which may have been misquoted or misunderstood-
I believe it has been the constant practice in the past to hold that the time to take advantage of this rule is after an hon. member has resumed his seat. Otherwise he would go against the rule that nobody shall interrupt any hon. member who has the floor without first obtaining the hon. gentleman's permission.


Lionel Chevrier: I disagree with Your Honour, respectfully.


Mr. Deputy Speaker:: I would indicate to the hon. member that he cannot express his disagreement in this way.


Lionel Chevrier: I do not think it is against the rules, sir, to do what I have done. If I have transgressed against the rules, I wish Your Honour would point out to me wherein I have done so.
I am rising at this time on the other point of order which I raised a moment ago, namely that the matters the hon. member for Brome-Missisquoi has been discussing are not matters which are relevant to the resolution now before the house. I hope Your Honour will see fit to apply the rule in so far as that matter goes.


Mr. Deputy Speaker:: I agree that if the hon. member for Brome-Missisquoi continued for long in the vein in which he started he would be out of order; but it is customary, I think, to allow an hon. member to reply to a statement made by a previous speaker. If the hon. member were to discuss only this point, he would be out of order, of course; but I think he should be allowed at this time to comment on the statement made by the hon. member for Burin-Burgeo.


Chesley William Carter: On the point of order, Mr. Speaker-


William Heward Grafftey: Mr. Speaker, I had the floor-


Chesley William Carter: Mr. Speaker,-


William Heward Grafftey: I believe it is the rule that I should be allowed to continue. I have the floor, Mr. Speaker.


Mr. Deputy Speaker:: I recognize the hon. member for Burin-Burgeo.


Chesley William Carter: Mr. Speaker, I can quite understand that it would be right for the hon. member to_ comment on a statement that I made, but is it in order for the hon. gentleman to comment on a statement I did not make?


Mr. Deputy Speaker:: The hon. member for Burin-Burgeo will have his opportunity to discuss that matter, but that is not a point of order.


William Heward Grafftey: I am not rising on a point of order, Mr. Speaker. I am rising to conclude the brief remarks I started to make. I believe that when the record is read tomorrow what I am saying will be borne out.
The hon. member who has just taken his seat said that the free enterprise system has produced class warfare, period. The record will show that tomorrow.
As a Canadian, I say that one of the reasons why I am proud to live in Canada is that we do not have class warfare and this is owing to the co-operation that exists between labour and industry. I believe that an irresponsible statement such as that made by the hon. member is ridiculous in the Canadian context and must be refuted. I will not talk about party politics at this moment. I would say that this state of affairs exists and has existed under all governments, including the present government and the past government. For the hon. member to suggest that class warfare exists in our country, is, in my view, both ridiculous and unhelpful.


Clayton Wesley Hodgson: The hon. member said it.


Chesley William Carter: I was speaking without notes, Mr. Speaker, but I know what I said. I did
Economic Co-operation and Development not say that the free enterprise system produced class warfare in Canada. I was speaking generally in the historic sense and indicating that from the advent of free enterprise in different parts of the world where the free enterprise system is operating class warfare had developed. My hon. friend took my words and applied them to Canada only.


Clayton Wesley Hodgson: The hon. member had better move over among the socialists.


Mr. Erhari Regier (Burnaby-Coquitlam):: Mr. Speaker, I also intend to support the resolution now before the house. However, I should like to make some brief observations in this respect.
I agree with the statement made by my leader to the effect that this new organization for economic co-operation and development will in effect replace article 2 of NATO.
In this house and the other place we have an organization known as the Canadian NATO parliamentarians' association. I believe it would be proper if that association would reconstitute itself in order to be known as the Canadian NATO parliamentarians' association in support of the aims and ideals of O.E.C.D. because the association was originally organized to lend support to the implementation of article 2 of NATO. That association ought now to be reconstituted as an association in support of the furtherance of the aims of O.E.C.D. However, my main reason for rising is that I have given considerable thought to article 1 of the convention. Article 1 lists the aims of the organization for economic co-operation and development. Aim (a) reads:
To achieve the highest sustainable economic growth and employment and a rising standard of living in member countries, while maintaining financial stability, and thus to contribute to the development of the world economy.
It is my contention that at the same time as we are being asked to subscribe to this convention our government stands guilty of a violation of the very first aim listed in the convention, because no one can claim-and I do not think the government would do so- that we have reached anywhere near the highest sustainable economic growth in our nation. We are simply marking time in our national productivity. Canadian agriculture is even being advised to produce less. Canadian industrialists are working not around the clock but on short weeks. They are locking up their plants for as long as one month, ostensibly for purposes of retooling. Many of our industries are locked up completely. If, as the convention says, Canada is to contribute to the development of the world economy, we certainly will be unable to do so if we continue to insist that we can afford
2520	HOUSE OF COMMONS
Economic Co-operation and Development to have over halt a million unemployed in our country and if we can have Canadian agriculture producing at a rate much below its capabilities.
I find it a little hard to agree to a convention when I realize that we are violating the very first aim listed. Let us look at the next aim listed. We are pledged:
To contribute to sound economic expansion in member as well as non-member countries in the process of economic development.
We note, as do many Canadians, with regret that our government is reducing its annual contribution to the development of the underdeveloped areas of the world. I believe our contribution this year is less than it was last year by a number of millions of dollars, and we certainly are guilty of not obeying the spirit of this aim either.
Under the last aim listed in article 1 we pledge ourselves:
To contribute to the expansion of world trade on a multilateral, non-discriminatory basis in accordance with international obligations.
The Minister of Finance (Mr. Fleming) has before the house a resolution which will in effect increase Canadian tariffs on imported goods. How that ties in with asking us in the same week to subscribe to a convention in which we pledged ourselves to make our contribution to the expansion of world trade on a multilateral basis is difficult indeed for me to understand. In one item of legislation we are asked to increase tariffs. In the next item of legislation we are asked to give our pledge that we will encourage expansion of world trade on a multilateral basis.
May I return for only a moment to our pledge under aim (b). I have a return which was supplied to me in the House of Commons on November 23 last. I asked this question:
As of December 31, 1959, what was the estimated extent of foreign investment in Canada, and what was the estimated extent of Canadian investment outside of Canada?
The answer I received reads as follows:
As of December 31, 1959, the value of foreign long term investments in Canada is estimated at $20.7 billion and the value of Canadian long term capital investments outside of Canada is estimated at $5.5 billion.
We are importers of capital at a time when we are pledging ourselves to do what we can to make investment capital available in greater amounts to other nations of the world.
I have also a list, in a reply I received on the same day, of our contributions abroad, and it states that in 1959 the federal government gifts abroad totalled $71 million and federal government loans abroad totalled $1.4 million, apart from an increase in Canada's quota in the international monetary fund involving payments of $239 million including $177 million in notes.
[Mr. Regier.l
I notice in the annual report of the international development bank that for every $1 that Canada has invested in the international development bank, as a result of that investment $2 was spent in Canada for the purchase of Canadian goods. If we want to make our economy move, international aid is one way of doing it; it is one way of making our economy healthy and causing it to move ahead. This money is not lost to us; it is not lost to our economy. The supplying of international aid creates employment for Canadians here in making the capital goods that the underdeveloped nations of the world need.
I notice that for every $1 invested by the United Kingdom in the international development bank, $3 worth of goods were purchased in the United Kingdom in connection with the project for which the invested money was used. It is therefore good business, and an aid to our economy, for us greatly to enhance our overseas assistance. I hope the day is not far distant when Canada will meet the recommendations of the United Nations in this respect and that we shall decide to aid underdeveloped nations at least to the extent of one per cent of our gross national production. At the present time our rate is less than one fifth of one per cent and yet we are potentially the richest people on earth and our standard of living takes second place only to that of the United States. In gifts abroad we ought to be spending, or we ought to have spent in 1959 a minimum of $345 million rather than $71 million. That would have been one per cent of our gross national product.
As I said before, I regret to note that this year the government is planning on doing even less than it has been doing in the last number of years, and that the estimates have been reduced in this regard. Therefore, I feel that when we are asked to subscribe to a convention which lists aims (a), (b) and (c) we ought not to have to admit to ourselves that we stand already in violation of these three aims. If we are going to have unemployment, if we are going to have curtailed production, we will not have the wealth that is necessary for us to make our proper contribution on the world scene today. In addition, if we are going to raise our tariffs we ought not to pledge that we are going to support increased multilateral trade among the nations.


Paul Joseph James Martin: Mr. Speaker, I am sure the house will agree with the Prime Minister (Mr. Diefenbaker) that the matter which he has presented to the house today, is one that possesses at least a great potential importance. If the expectations for

the new organization embraced in the convention which we are asked to adopt, should be realized, it could mean a great deal not only for the United States, Canada and the other 18 member states of the organization but also, from the point of view of an intensification in the political and economic unity of Europe and, as suggested by the Leader of the Opposition (Mr. Pearson), I would hope a much wider area covered by the phrase, an Atlantic freer trade grouping of nations.
But in supporting the resolution in its present form I think we must not make the mistake of attributing to it qualities that it does not possess. Undoubtedly many did expect and anticipate for this organization a greater flexibility in its provisions; and on that account a greater effectiveness in dealing with the problem it was designed to meet. That problem, as I see it, concerns the enabling of certain countries not members of the two existing European economic blocs to enjoy a liaison in the first place with those two blocs, and in the course of time to evolve an arrangement which will permit the nonparticipating nations to enjoy satisfactory trading relations with the common market and with the European free trade association.
Undoubtedly what Mr. Dillon had in mind a year and a half ago was to provide through O.E.C.D. a nexus or a liaison between the common market in particular and the United States and Canada. To the extent that his efforts have succeeded I think we owe him a great debt for the successful negotiations which may largely be attributed to his efforts. These negotiations began when he was under secretary of state and were achieved when he became secretary of the treasury in the government of the United States.
I think, however, in order to understand fully the merits and weaknesses of the convention, as it is now presented, one must look at the Canadian scene. Certainly if we are to judge it at all, we must judge the convention first of all in terms of our own interests and then, of course, in terms of its effectiveness in meeting a problem that engulfs all the free nations at this critical time in the history of the world. The fact is that very real dangers do exist under present world trading arrangements. If we in Canada are to avoid these dangers it is absolutely essential that our policies be clearly outlined for all the world to see.
I think we may well ask the government today, what is Canadian policy in this regard at the present time? Are we consciously moving toward greater protectionism with the intention presumably of becoming economically self-sufficient or more economically selfsufficient? Are we still in favour of a freer multilateral trading world or are our policies
Economic Co-operation and Development directed toward closer economic integration with the United States? The Minister of Finance (Mr. Fleming) in the public pronouncements he has made from time to time has given us reason to believe that government policy with regard to the responses to these three questions is ambiguous. I have before me a statement made by a distinguished and intelligent Canadian businessman who has expressed his concern in this regard. I refer to Mr. R. H. Fowler of Montreal who said:
It is difficult to discover, except in most general terms, what Canada's attitude is toward the common market and the outer seven trading blocs in Europe. I suggest that, wherever you turn in this field, there is uncertainty and vagueness both in official Canadian policy and in private industrial attitudes on trading questions.


Donald Methuen Fleming: What was the date?


Paul Joseph James Martin: This was last fall. I continue:
Whatever the democratic processes are that should operate to develop national trading policies, they do not seem to be working very effectively in Canada at the moment.
This complaint of Mr. Fowler is not a single complaint. It is to be found not only in the positions taken by parties in this house but in the positions taken by businessmen and others throughout the country. One minute we are led to believe that the Minister of Finance is against the common market in Europe; and if we are to judge from the speech he made at Ste. Adele as reported by the Canadian press on November 18 there is no doubt that what he has said on some occasions in Canada is consistent with the attitude that he was reported as having taken toward the common market in his discussions with the chancellor of the exchequer a few months ago in the United Kingdom.


Lionel Chevrier: That was a remarkable speech he made.


Paul Joseph James Martin: If we examine the speech made by the Minister of Trade and Commerce (Mr. Hees) about ten days ago in Montreal, we will find that he too, although he is Minister of Trade and Commerce, has his doubts about the common market, about a multilateral trading world, and about the desirability of removing economic discrimination, although we learn from the morning papers today that his deputy minister, in a speech delivered yesterday in Montreal, took the position that these things deserve our careful attention. Indeed, as I intend to show before I conclude, the deputy minister of trade and commerce regards the common market as both an opportunity and a challenge for Canada. The Minister of Trade and Commerce, of course, notwithstanding the fact that he was one of the co-signatories to the
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Economic Co-operation and Development convention on behalf of Canada, I believe, looks upon these instruments, according to some of his pronouncements, as media that should not be encouraged by Canada.
Undoubtedly the common market does hold dangers for Canada in terms of some of its trading aspects. Certain of our goods undoubtedly will suffer in the short term. In the long term certain of our products will stand to obtain an advantage. But this much is clear. Having in mind the problems that beset the western world at the present time, involving conflict with the tremendous economic drive that the Soviet union and its satellite powers are making, we cannot help but encourage any effort that seeks to bring about the unification of Europe, something that we have been striving for in the western world since the end of the first world war, and which Mr. Churchill himself said was an essential element in the foundation not only of European unity but also of world peace.
A few moments ago I put forward some questions with regard to Canadian policy at the present time. I suggested that the answers to three questions are varied, depending upon which speech is made by which minister in which month and on which occasion in which country. The fact is that before we can have a clear policy we must have certain objectives. I suggest to the house that there are three broad objectives which Canada must pursue if we are to meet our challenges in this shrinking world. We must have economic growth and stability in Canada, unfettered by the threat of economic domination from the United States or, for that matter, from any country. We must assist other countries of the free world in achieving economic growth and stability in order that we may meet the east-west challenge. We must do everything within our power to assist the underdeveloped nations of the world to raise their economic development under freedom in order to meet the north-south challenge.
Undoubtedly, the greatest threat to our trading interests is the growing trend toward regionalism, whether it be in Europe or Latin America or even the attempts at certain regionalism right on the North American continent itself. But be that as it may, we cannot overlook the fact that certain developments of the greatest consequence have taken place in Europe. I refer to the Six and the Seven. We cannot stand still in these currents, no matter what the Minister of Finance (Mr. Fleming) may say or may have said. I feel that the direction in which we should be proceeding is clear. We in North America must work to associate ourselves with the unity of Europe, and not only with the unity


of Europe but with the unity of nations that are like-minded and are prepared to share in the building of that unity.
This is what the Leader of the Opposition (Mr. Pearson) had in mind today. This is what he had in mind when, on other occasions, he has spoken about the desirability of expanding the unity that now exists in such blocs as the common market to take in other Atlantic countries and even to go beyond that, by embracing countries like Australia, New Zealand, Japan or any other country that is prepared to recognize the essential requirement for economic and political peace at this time, through multilateral trade arrangements. When the Leader of the Opposition spoke on this theme last March he concluded what he had to say by observing, "One thing is certain: If we want to become more independent and less dependent, then we must become more interdependent."
I am not so naive as to fail to recognize that there are difficulties in building such an area as an Atlantic free trade area. This is not the same thing as the common market. This is not the same thing which Mr. McElroy, the former secretary of defence in the United States, proposed in Toronto a short time ago when he proposed a common market between Canada and the United States. I am not talking about that matter, and that is not what the Leader of the Opposition was talking about. That is a special arrangement that would have to be examined with the greatest care, having in mind the interests of all parts of the two countries concerned. But if we are going to take into account the implications of the cold war now, we must recognize that if the free nations are to face increasingly severe economic competition from the Soviet bloc they must proceed along the lines suggested by the Leader of the Opposition today and on other occasions, both in this house and elsewhere.
The statement today by the Minister of Finance makes it apparent that there is not full agreement between what he had to say and what Mr. Dillon said, when the latter appeared before the Senate of the United States on February 14 last. This may result from the fact that Mr. Dillon was confronted with a particular problem in that country in connection with ratification, and found it necessary to give an emphasis which the Minister of Finance did not give today. It is only fair to say, however, that while I do find a different emphasis in the statements made by Mr. Dillon and the Minister of Finance, both are agreed on the threefold objective of O.E.C.D. They agree that it will be a major forum for efforts to harmonize financial and economic policies for the growth

and stability of most of the industrialized nations of the world whose economic behaviour significantly influences the course of the world economy and the trend of international payments. Second, it will provide a solid framework for intensive and frequent international consultation on the financial and monetary policies which must be pursued in order to achieve and maintain a better balance in the international payments position.
By the way, Mr. Speaker, that is one of the main arguments the United States officials offered to congress with regard to this matter, because O.E.C.D. confers on the United States a better chance of maintaining a balance in the international payments position which confronts that country. I suggest to the Minister of Finance that that may well be one of the reasons, apart from the general reasons I have given why Canada should want to see this particular convention ratified early.
Third, the secretary of the treasury points out that O.E.C.D. will bring into being an organization of vital importance for assisting, on a co-operative basis, the development of the countries of the world. The last objective is an important one, because there are certain nations now, notably West Germany and Japan, which do not contribute to the underdeveloped countries anything like the extent which their own economies would justify and permit. The United States and Canada have been, I believe, relatively generous in the assistance they have provided bilaterally to the underdeveloped countries of the world through the Colombo plan. I do not for one moment say that there is not more that we could do. But other countries, likewise, have an obligation, particularly certain of the European nations, and that obligation is imposed on them not only in relation to the particular countries with whom they have had an historic commercial connection, but in relation to the underdeveloped countries of the world as well.
Is O.E.C.D. to completely replace the implications and the intentions originally provided under article 2 of the North Atlantic Treaty Organization? It is now a matter of record that the United States regards NATO as essentially a defensive organization. I share fully the view of the Leader of the Opposition that strong and continued support must be given to NATO in the critical situation that confronts us at this time. Instead of lessening our support for NATO in any way, we must make every effort to make NATO a stronger organization to meet the challenge presented. There can be no shirking of our responsibilities in NATO, but
Economic Co-operation and Development we in Canada believe that NATO would be a stronger organization if more attention had been paid to the directions of article 2 in that treaty and if there had been some recognition and some acknowledgement made by the United States, that one of the ways of building up a strong political defensive alliance was to recognize that all nations in that alliance had not only political but economic problems, economic objectives and economic concerns as well. It is suggested now, because of the sponsorship of O.E.C.D. by Mr. Dillon, that what the government of the United States really proposes is that whatever might have been done under article 2 of the NATO treaty might now be done under the new organization, namely O.E.C.D. It is suggested that NATO's economic role now is as dead as a dodo. That is the current opinion of some in Washington.
It would be well if we had from the Minister of Finance (Mr. Fleming) some assurance today in that regard. How does the United States look upon the O.E.C.D? Does it look upon it as a means of escaping the clear desirabilities in article 2 of the North Atlantic Treaty Organization? It may be that, because the new organization will cover a number of countries not in NATO, such as Ireland and Spain, the intention is to create a much wider constituency of interest, and to see that the aims originally intended to be covered are embraced by O.E.C.D. itself.
Mr. Speaker, it is true that the new organization is to have an executive, the secretary general, who many in this house know in the person of Mr. Kristensen, the former distinguished minister of finance in Denmark, and a former professor of one of that country's illustrious universities. I am sure the Minister of Finance was justified in saying that there is perhaps no man in this particular field better endowed and likely to be more dedicated to the prosecution of the objectives of O.E.C.D. But I think that we must take into account certain facts, and those facts are that the new body has no new executive and will have few fixed obligations. It will be less powerful than O.E.E.C. although I fully agree with the Minister of Finance that Canada and the United States have the right to participate much more directly in the new organization than they did in O.E.E.C.
However, one of the reasons that O.E.C.D. will be less powerful is the reluctance of France and the United States to co-ordinate their economic policies fully with other countries.
The minister said nothing about this matter in his statement today. He did not tell us that the agreement before us represents a compromise which, in the view of the United States government, would not compel the
2524	HOUSE OF
Economic Co-operation and Development government of that country to co-ordinate its actions with others except when it wanted to do so. That lack makes the organization at least in its present constituent terms less powerful and less effective than was the case when the full form and the full plan had been exposed to the world about a year and a half ago by Mr. Dillon himself.
One may join with other members, such as the one who has just spoken, in asking if we are now to ascertain from this new organization that there will be imposed on governments the aim to achieve the highest sustainable economic growth and employment and a rising standard of living in not only member countries but in one's own country. We have had no evidence from the government today of its determination to provide for an increase in the standard of living or to provide for a reduction in the unemployment which confronts our country in more serious proportions now than it does any one of the other 19 members of this organization. We have not heard a word about this matter from the Minister of Finance today. The Minister of Finance of course dodges this question continually. He has been dodging now for almost two and one quarter months. In his baby budget he made only one proposal which was designed to relieve unemployment. I refer to the provision for double depreciation in what he calls chronic unemployment areas and what I call depressed areas.


Some hon. Members:: Order.


Paul Joseph James Martin: My hon. friends say order. If we are going to provide for improvement in employment conditions in member countries of O.E.C.D. the way to do that most effectively is to give an example by doing that very thing here at home.
We have heard nothing from the minister today about that most remarkable statement made by the Minister of Trade and Commerce (Mr. Hees) on February 13.


An hon. Member:: Where is he?


Paul Joseph James Martin: I should think that the Minister of Trade and Commerce, as one of the signatories, would have participated in this debate. He may have some preoccupation in the public interest that takes him elsewhere. But it is inconceivable that the Minister of Trade and Commerce-one of the men who signed this particular document on behalf of our country; one who criticizes the common market; one who criticizes a freer political trade area-does not make a statement about this important matter now before us. He more than anyone else has a definite responsibility to do so. I am glad to place his


statement of February 13 alongside that of his deputy minister which is as follows:
The European Economic Community poses both 'a great challenge and a great opportunity for Canadian business', James A. Roberts, federal deputy minister of trade and commerce declared here yesterday.
The challenge for Canada, Mr. Roberts claimed, consisted of maintaining access to the common market on terms "at least as favourable" as those enjoyed presently in the individual markets of the six nations comprising the E.E.C.
This, he said, would enable Canada to share fully in the benefits of the economic development and market growth of what already "Is the world's largest trading unit".
This statement appears in today's Montreal Gazette. One of the main reasons for the establishment of O.E.C.D. is to provide liaison for Canada and the United States to the common market; posed in these challenging terms by the deputy minister of trade and commerce and repudiated by his own minister on February 13 last. But, of course, we were not reminded of these things today by the Minister of Finance.
Article 6 of the treaty provides for the procedures in connection with the adoption of recommendations and the making of decisions. Unless the organization otherwise agrees unanimously for special cases, decisions shall be taken and recommendations shall be made by mutual agreement of all the members. It is true that no decision shall be binding on any member until it has complied with the requirement of its own constitutional procedures, but the other members can agree that such a decision shall apply provisionally to them. Nevertheless, if a nation wants to do so it can veto a decision of the organization or of the council. The Minister of Finance should tell us whether this is simply to be an organization-


Lionel Chevrier: He will not do so.


Paul Joseph James Martin: -of sovereign states exercising their sovereignty in every instance based on national considerations and not on the interests of the 20 members of the group.


William Moore Benidickson: And related to GATT.


Paul Joseph James Martin: And related to GATT. On the positive side we were told by those who took part-I refer to Mr. Ball in particular-in the discussions in the United States senate; that the Kennedy administration attaches the utmost importance to O.E.C.D. because it gives the United States the chance to participate as of right in discussions between the members of the common market and the Outer Seven, and to engage in those discussions in a way that will prevent the two rival groups in Europe

from settling their differences by arrangements that would damage the interests of the United States. Second, the United States wants it to be a forum. We agree with that view. There should be a place for consultation and discussion.
But if the organization is going to be restrained in the sense in which the words now provide, then the hopes for this organization as contained in the statement of the Minister of Finance are not justified; that is, that this organization could well become historically almost as important as NATO itself.


Donald Methuen Fleming: Who said that?


Paul Joseph James Martin: He said this organization could become-


Donald Methuen Fleming: Mr. Speaker, may I ask the hon. member who said that?


Paul Joseph James Martin: The Minister of Finance.


Donald Methuen Fleming: The Minister of Finance said no such thing.


Paul Joseph James Martin: The Minister of Finance was misreported again.


Donald Methuen Fleming: I have been misreported again by the hon. member for Essex East (Mr. Martin), as usual.


Paul Joseph James Martin: This organization could become almost as important as NATO, if there were a measure of flexibility, that would permit all nations to take into acount the collective interest rather than merely the interest of any one particular country. As the United States is the most powerful country in the whole group, assurances from that quarter would have a very salutary effect. I am sure that Mr. Dillon would like to give these assurances, but he is faced in his own country with a situation that I suppose does not lend itself to any effort on his part to make this constitutional arrangement in O.E.C.D. more flexible than is now the case.
I say to the minister that this is in principle a desirable convention. We will support it because it does lay the foundation of an organization which can lead the western world, and, we hope, other countries as well in the kind of direction that will provide a background for political stability and peace in the world. But the organization as at present constituted does not fully warrant that expectation in its present terms alone.
I say to the Minister of Finance that the position of Canada in putting forward this convention would be stronger if the government itself had today given us its clear views about the common market, and about what we may expect from it both in terms of positive and negative results. If we had
Business of the House
received from the Minister of Finance himself the kind of leadership in regard to this matter which every other western country except Canada has given, I am sure the strong sponsorship which he has given to this resolution today would have been accepted without any criticism whatsoever.
The trouble with the Minister of Finance is that he is never prepared in this house to say what he is reported as having said outside this country.


Lionel Chevrier: Hear, hear.


Paul Joseph James Martin: What he said in England is not what he said today.


Donald Methuen Fleming: It certainly is.


Paul Joseph James Martin: The minister says, "It certainly is". What he said today is not what he said the other day at Ste. Adele-


Donald Methuen Fleming: Of course it is.


Paul Joseph James Martin: -as reported in the Toronto Telegram, his own paper, of November 18. But in spite of all the shortcomings of the Minister of Finance, we welcome the positive advantages of this convention.


Mr. Speaker:: Is the house ready for the question?


Some hon. Members:: Yes.


Mr. Speaker:: Is it the pleasure of the house to adopt the motion?


[Stage Direction]
Motion agreed to.
Some hon. Members:: Ten o'clock.


Mr. Speaker:: Is it agreed that I call it ten o'clock?


Some hon. Members:: Agreed.



BUSINESS OF THE HOUSE

Lionel Chevrier: May I inquire from the house leader what the business is for the rest of the week, and perhaps when announcing the business we might have some indication of what we will be doing on Monday.


Gordon Minto Churchill: Tomorrow we should like to start with a resolution dealing with amendments to the pension bill. The resolution will appear in Votes and Proceedings tomorrow. If the house will consent, with that short notice, to accepting the resolution, which is necessary because certain financial obligations are incurred by reason of the amendments, we could proceed with the pension bill itself, which is the first item on the order paper.
The pension bill would then be considered in committee of the whole house, at which time I will move amendments in accordance

Business of the House
with the recommendations made by the standing committee on veterans affairs. If that item is completed, we will then take up item No. 11 on today's order paper, which is the continuation of the debate on the resolution introduced by the Minister of Agriculture dealing with agricultural development.
On Thursday we would commence with the budget resolutions. If they are concluded during the course of that day we would then take up the estimates of the Department of Agriculture. On Friday we would deal with the estimates of the Department of Agriculture. Monday would be private members' day.


Lionel Chevrier: It was brought to my attention just before the house leader announced
the business that there was some difficulty in connection with the amendments to the pension bill. I can assure the house leader at once that we on this side of the house give our consent to considering the bill as has been outlined.


Herbert Wilfred Herridge: Mr. Speaker, this group is also very willing to agree to the minister's proposal in this respect.


Mr. Speaker:: In view of what has been said, would the house wish to now order that short notice be accepted tomorrow?


Some hon. Members:: Agreed.


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

[Stage Direction]
STATEMENT BY RIGHT HON. JOHN G. DIEFENBAKER, P.C.,	Q.C., M.P.,
PRIME MINISTER OF CANADA, TO THE DOMINION-PROVINCIAL CONFERENCE, THURSDAY, FEBRUARY 23/61
I welcome you to this resumed session of the conference. My colleagues and I appreciate that you have come at a season when it is difficult for you to leave your capitals because of the meetings of your respective legislatures or the preparations for them. The fact that all are here is a testimony to the importance of the business before the conference.
Je vous souhaite la bienvenue a cette reprise de notre conference. Mes collegues et moi savons bien qu'il vous a fallu vous arranger pour venir a Ottawa a un moment de l'annee ou il vous est difficile a tous de quitter vos propres capitales, soit parce que les assemblies legislatives sont en session, soit parce que vous etes en train de vous y preparer. Le fait que vous soyez tous venus a cette conference souligne l'importance des questions que nous allons discuter.
All will be agreed that it is desirable that decisions be taken soon with respect to the fiscal arrangements for the period to follow March 31st, 1962, the necessary legislation for which the Federal Government hopes and desires to introduce at the present session of Parliament.
This is the third stage of the Conference which opened last July and resumed in October. The discussion of the fiscal relations between the Federal and Provincial Governments, and of other related matters, has throughout benefited each of us. Each and all Governments have serious financial problems. Each must recognize its heavy responsibilities and at the same time the obligation to take into account the problems of the others who are here. The Dominion Government fully recognizes the burdens and responsibilities resting not only on Provincial Governments but on municipal authorities as well and takes into account the sources of funds that are available to the Provinces and to their creations, the municipalities.
The Federal Government has given proof of its recognition of the financial problems resting on the Provinces and the municipalities and of its desire to aid them. It has enlarged tremendously the payments made out of the Federal Treasury to or for the benefit of the Provinces. Indeed, the conditional and unconditional payments and abatements provided by the Federal Government
in the present fiscal year amount to $1,283 million compared to $664 million four years ago. The Federal payments and abatements to or for the benefit of the Provinces have thus practically doubled in this short period. In thus enlarging the aid to the Provinces and thereby easing the burden on Provinces and municipalities, the Federal Government has incurred substantial budgetary deficits. The Provinces must recognize that the Federal Government has burdens too, and must in its policies retain the confidence of the investing public.
The July meeting was largely devoted to having the Provinces state their positions and their claims. In aggregate the claims advanced by them would have increased the financial burdens on the Federal treasury by more than $2 billion per annum, a responsibility which the Federal Government is in no position to assume. At the October meeting, I advanced on behalf of the Federal Government certain suggestions intended for discussion, rather than as firm proposals. All the Premiers commented in detail upon them. At the close of the October meeting, we undertook to take into consideration the views expressed by the Premiers. We have done so. The flexible attitude exhibited by the Federal Government was commented on favourably as the October meeting approached its close. We have endeavoured to apply a like flexible attitude to the further intensive study made since then of our mutual problems in the fiscal area.
The two principal elements in fiscal relations between the Federal and Provincial Governments, which we have fully recognized in previous discussions, have been the sharing of the three direct tax fields which the Dominion and the Provinces jointly occupy, and the equalization arrangements by which Parliament provides direct assistance to those Provinces that are in a weaker fiscal position than others. Some means must be found for dealing with both of these aspects. In particular, the Federal Government agrees that the principle of equalization must be preserved. Furthermore, the element of stabilization will be retained. The proposal which I would now submit on behalf of the Dominion Government will take these
[Stage Direction]
elements into account and the new arrangements will cover a period of five years.
The joint occupation by the Federal and Provincial Governments of the three tax fields-personal income taxes, corporation income taxes and succession duties-inevitably creates problems. The present system of tax rentals has achieved, in the case of the eight renting Provinces, a measure of tax uniformity and has simplified collection. The tax rental agreements, however, have severely restricted the Provincial Governments in meeting their financial problems and have deprived them of the necessary flexibility. Moreover, both before and after entering into the rental agreements with the Federal Government, the Provinces have complained that the rental payments to them are quite inadequate.
The agreements which they signed, with effect April 1st, 1957, defined the rent in the following proportions:
(a)	10 per cent of the yield from the personal income tax,
(b)	9 percentage points of corporate taxable income, and
(c)	50 per cent of the yield from the succession duty or similar tax.
The present Federal Government took account of these complaints even though the agreements were in effect and binding and, without obligation to do so, Parliament raised from 10 to 13 per cent the Provincial share of the yield from the personal income tax effective April 1st, 1958. In the intervening three fiscal years, this increase has added $191 million to Provincial revenues and has added equivalent cost to the Federal Treasury.
The discussions last year have made it clear that it would be difficult to reach agreement upon another such rental formula, and equally clear that the Provinces should have more freedom than the tax rental system offered in their view for them to meet their financial needs.
Accordingly, the Federal Government proposes to discontinue the tax rental system when it expires on March 31st, 1962. It will thus be open to and up to any of the provinces to impose whatever taxes, in the three jointly occupied fields, they consider to be necessary to meet their respective financial responsibilities. They will exercise their constitutional right to impose, vary and adjust their levies from time to time as may be necessary in the light of their responsibilities to their Provincial taxpayers and without recourse to the Federal Government. Thus there will be a return to the active responsibilities which the Constitution confers upon both levels of government under the Federal system.
The termination of the tax rental system does not mean, however, that there cannot be a simplified or unified system of tax collection with the advantages it offers. The Federal Government is prepared to undertake the collection of the personal income tax or the corporation tax, or both, for any Provinces which so desire, on condition that the Province under its laws defines the tax base, i.e., taxable income, to be identical at all times with the Federal definition. It will, of course, rest entirely with each Province to establish the rates of the tax which it will impose. One joint return form will be employed for both Federal and Provincial taxes, thus simplifying the task of the taxpayer. Although this service will cost some millions of dollars, it will be provided by the Federal Government to the Provinces without charge.
Parliament has replaced the Dominion succession duty with an estate tax. The Provinces do not possess the constitutional power to enact an estate tax which the Federal Government could collect on their behalf. The Federal Government has no desire to undertake the collection of a Provincial succession duty along with its estate tax because a succession duty involves many detailed problems, both for the taxpayer and for the administration, which it was intended to avoid by adopting the estate tax. The Federal government will, in the case of any Province which chooses to impose a succession duty or similar tax, pay to such Province half of the yield from the Federal estate tax in that Province, calculated in the same way as under the present rental agreements. Should any Province levy a succession duty, we shall be prepared to make the same abatement as at present.
Returning to the Provinces the responsibility to levy their own direct taxes raises the question as to the extent of withdrawal by the Federal Government from the personal and corporation income tax fields. The Federal Government has given very careful consideration to this question. It must continue to discharge its vast responsibilities, to provide equalization payments and also to pay the Federal share of the many programmes now jointly borne by both levels of govern ment, which this year amount to some $44t million. It is simply not possible for the Federal Government to discharge these responsibilities and at the same time comply with the demands of some Provinces for mathematically equal sharing in the personal income tax and corporation tax. The Federal Government, after intensive study and consideration, has decided that it should not

withdraw from the corporation tax field beyond the scale of the abatements now allowed in the law. It will, however, withdraw progressively and substantially from the personal income tax field in favour of the Provinces. There are good reasons for this choice. The yield from the corporation tax is subject to wider fluctuations than the yield from the tax on personal income, which has shown a steady rate of growth. The latter is, therefore, a much more reliable form of tax for the Provinces to use. Moreover, the standard rate already provided for in the corporation tax is proportionately larger than that in the personal income tax and corporation profits are generally regarded as somewhat more national in scope and origin than personal incomes and therefore more appropriate for taxation by the Dominion.
Under the system of tax collection rather than rental agreements, there will no longer be abatements. The Federal withdrawal will take the form of a straight federal tax reduction. It will then rest with each Provincial Government to determine its rates of tax in these fields.
Accordingly the Federal Government will ask Parliament for legislation to provide, after April 1st, 1962:
(a)	for payment to any Province not imposing a succession duty or similar tax, of 50 per cent of the yield from time to time from the Federal estate tax in that Province;
(b)	for reducing the Federal corporation tax by the present 9 percentage points of taxable income, which would be a diminution in the federal tax of about 22 per cent;
(c)	for reducing the Federal personal income tax progressively as follows:
(i)	for the first year by 16 per cent of its level at that time,
(ii)	for the second year by 17 per cent,
(iii)	for the third year by 18 per cent,
(iv)	for the fourth year by 19 per cent, and
(v)	for the final year by 20 per cent.
With respect both to corporation and personal income taxes, the proposal is to reduce the rates below levels that would otherwise prevail at the times specified. Parliament cannot bind itself for five years in advance not to vary the rates of income taxes. It may be essential in the national interest to introduce various budgetary changes that are now unpredictable.
In terms of comparison with the tax rental formula of 10-9-50, which came into effect on April 1st, 1957, and the existing formula of 13-9-50 introduced by the present Federal Government, the formula now proposed will by 1966 become a 20-9-50 formula. Moreover, there will be no restriction on the freedom of each Province to establish its rates of tax as it may choose.
At present the equalization formula is based upon raising the per capita yields of standard taxes to the average of the two Provinces with the highest per capita yield. The Federal Government is convinced that this formula needs to be improved in two respects if it is to serve the purpose over the long run of meeting fiscal need on the part of those Provinces in a relatively weak fiscal position, while preserving equity for all. The present formula disregards sources of Provincial revenue other than the three standard direct taxes. The present Government has had to supplement it by introducing the Atlantic Provinces Adjustment Grants as it has proven to be an inadequate base for determining fiscal need. Furthermore, it entirely ignores the wide variation in the revenue derived from natural resources. In the interests of equity and fairness, we now propose that for the purpose of determining equalization payments, the formula should include not only the yields from three standard taxes (with the increasing rates for personal income tax outlined above) but as well one half of the three-year moving average of gross natural resource revenues as determined by the Dominion Bureau of Statistics. The reason only half of these revenues is provided is to make allowance for the variation in the rates of tax or charge imposed by various Provinces, and to avoid discouraging the development of these sources of revenue. As well, this will permit account being taken of these revenues which arise from the disposal of resources in a manner that should not be brought fully to account in respect of any particular year.
The second principal change that we intend to introduce is to equalize over this broader base I have described, up to the national average of the revenues in question rather than up to the yield in the two highest yielding Provinces. We believe that the combination of these two factors will produce a more equitable result over a long period.
Accordingly the equalization formula will be based on the national average per capita return from a combination of the standard taxes at the progressively increased rates as proposed and 50 per cent of the three-year average of natural resource revenue. The equalization payments will thus ensure to each province the national average return from these revenue sources and will grow as revenues expand.
In order to ensure that the equalization payments calculated on this broader base up to the national average shall not leave any Province worse off than under the present arrangements, we propose to incorporate into the equalization formula two guarantees:
(a) No Province entitled to equalization under the national average formula shall be
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worse off than it would be under a continuation of the present equalization formula and tax rental agreements, including the Atlantic Provinces Adjustment Grants. Thus Provinces with substantial fiscal need are fully protected.
(b) No Province will receive less in total than it has received on the average in the final two years of the current agreements.
These guarantees will ensure not only that the equalization factor shall increase in general in accordance with the national average of the yield of these major revenue sources, but that it will increase for those Provinces with greater fiscal need as rapidly as it would have increased under the existent agreements.
The Atlantic Provinces Adjustment Grants, introduced by the present Federal Government effective April 1st, 1958, have carried the principle of meeting fiscal need farther than it had ever been carried before. The sum of $100 million was appropriated by Parliament to be paid to the four Atlantic Provinces over a four-year period at the rate of $25 million per annum on the basis agreed upon by them, viz., $7J million each to Nova Scotia, New Brunswick and Newfoundland and $2J million to Prince Edward Island. In the three intervening years, a total of $75 million has been paid to the Atlantic Provinces as follows: $22J million each to Nova Scotia, New Brunswick and Newfoundland and $7J million to Prince Edward Island. The existing Federal legislation will continue these grants for one further year.
The Federal Government believes that the Atlantic Provinces Adjustment Grants have rendered an enduring service to the Atlantic area in assisting the Governments of each of the Provinces to improve the standard of services to their respective people. The grants have also performed an inestimable role in meeting the problem of Provincial fiscal need in its more acute form. The Federal Government, therefore, proposes to continue the Atlantic Provinces Adjustment Grants, and to increase them, effective April 1st, 1962, from $25 to $35 million per annum for the ensuing five years, with the basis of distribution among the four Provinces being left for them to determine by agreement.
The payments to Newfoundland for the purpose of assisting Canada's newest Province to raise the level of its public services to that prevailing in the other three Atlantic Provinces will be continued for the five-year period at the present rate of $8 million per annum, over and above Newfoundland's share of the Atlantic Provinces Adjustment Grants.
At the meetings in October, emphasis was placed upon the stabilization element in the present arrangements which assures Provinces
that their revenue from the rental value of the standard tax rates plus equalization will not in any year be permitted to fall below 95 per cent of the average of the two preceding years. We are prepared to incorporate a like stabilization element in the new arrangements.
We have given further thought to the means of achieving reciprocity of treatment in the position of Provincial Crown corporations and agencies under Federal sales and excise taxes and the position of Federal corporations and agencies under Provincial direct taxes on purchases. We are prepared to waive Federal immunity from taxation and instruct Federal corporations and agencies to pay Provincial purchase taxes and other similar taxes, on the understanding that Provincial corporations and agencies will be subject to Federal sales and excise taxes. We think that this is an equitable arrangement, being in accordance with the general principles followed in regard to the payment of Federal taxes on purchases by Federal departments. We think it is better than reciprocal exemptions as an administrative and accounting arrangement, preserving as it will a fairer relationship between Crown corporations and agencies in general and private businesses.
During the period covered by the current agreements, companies engaged in the forest industries in British Columbia and in Ontario have borne a considerably higher burden of tax rates than other industries. This is because of the combined effect of Federal income taxes and Provincial logging taxes. When the present arrangements were established, it was thought that the logging taxes would provide an alternative method of compensating the Provinces in some measure for the alienation of the natural resources in question. As events have turned out, however, the taxes have become excessive. It is, of course, recognized that the Province of Ontario is not subject to the commitments which were included in the current agreements for Provinces renting their Corporation taxes. There would appear to be no good purpose served by attempting to apportion responsibility for the situation that has been created by the interaction of the taxes of two governments. It is nroposed instead that the Federal Government and the Provinces in question should seek agreement by which each will make a concession in the interest of resolving this problem.
The Federal Government will continue to pay to the Provinces to March 31st, 1962, half of the Federal income tax from corporations engaged in the distribution or generation and distribution to the public of electric energy, gas or steam.

It is again proposed that all joint Federal-Provincial programmes involving conditional grants or the sharing of cost be re-examined by the Continuing Committee of Officials with a view to consolidation, simplification and co-ordination where possible. To such programmes the Federal Government in the present fiscal year is contributing an estimated $440 million, as compared with $111 million four years ago. The Federal payments will increase vastly next year as the result of Quebec's adherence to the hospital insurance plan and other cost-sharing programmes; it is estimated that the total of these payments will reach $550 million.
The Federal Government proposes to ask Parliament to relinquish the remaining Federal legislative control over School Lands and School Lands Funds in Manitoba, Saskatchewan and Alberta. Authority will be sought to enter into amending agreements with these three Provinces to delete Section 7 of the present agreements so as to confer upon these Provinces complete authority over their School Lands and their School Lands Funds.
The foregoing proposal is submitted by the Federal Government in the belief that it will form a satisfactory and workable basis for harmonious Dominion-Provincial fiscal relations for the five-year period commencing April 1st, 1962, and that it will contribute materially to the goals of strengthening the Provinces and through them the municipalities to meet their several responsibilities and will equalize opportunity among Canadians in all parts of this great country.
The Federal Government believes that these proposals represent a greatly improved plan of Federal-Provincial fiscal arrangements. In summary:
First: we have provided at Federal expense for a considerable increase in the Provincial share of the personal income tax. The additional Federal withdrawal from this tax field, by the final year of the arrangements, will have raised the Provincial share by more than 40 per cent above present levels. The proposed Federal withdrawals in the three shared tax fields are such that without increasing the over-all level of taxes, the Provinces can, by the end of the period, be assured of one-fifth of all personal income tax collections, more than one-fifth of all corporation income tax, and one-half of the estates tax. Considering the heavy responsibilities of the Federal Government, we consider this to be a generous proposal. In addition, the Provinces will be quite free to impose the rates of taxation which they find necessary and thus to
increase the Provincial share of these tax fields beyond the amount represented by the Federal withdrawal.
Second: we have combined this greater freedom for the Provinces with procedures which offer the hope of simplicity and uniformity. We have done this by offering to collect without charge any of the above taxes at the rates the Provinces wish to impose, laying on them only this one single restriction that the tax base on which they impose their taxes must at all times correspond with that defined in Federal statutes. This we hope will greatly simplify the task of the Provinces and the problem for the taxpayers and will give the advantages of freedom while preserving administrative simplicity and efficiency.
Third: we have combined arrangements to guarantee greater flexibility and freedom in provincial finance with an improved formula for equalization which meets the problem of disparities in the field of Provincial revenues more completely and more realistically. The inclusion of a part of natural resource revenue in this formula recognizes and corrects in a practical way one of the greatest financial disabilities of some of the Provinces. There is no other single revenue source which we could have added to the equalization formula which would have done so much to equalize revenue sources or contributed so much to equity in the calculation of fiscal need. Our decision to move the basis of equalization to the national average is based on financial realism. Naturally Provinces like individuals would prefer to be equalized to the top, but no one can seriously contend that equalization to the top is a practicable goal.
Fourth: in addition to the recognition of the need for equalization based on a broader concept of equality and fiscal need, we have made additional, separate and special recognition of the peculiar disabilities of the Atlantic region. We have done so by increasing the level of these grants by 40 per cent.
We are convinced that this new framework and these main aspects of our proposals should assure a new era of harmonious Dominion-Provincial fiscal relations. These proposals are new in spirit but rest upon the sound principles of financial responsibility and independence of governments. We believe that they will contribute materially to the financial strength and independence of the Provinces and their municipalities and to equality of opportunity for Canadians in all parts of this great country. They will help us all to meet the tasks ahead. I commend them to your earnest consideration.
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Wednesday, March 1, 1961


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Mr. J. W. Murphy (Lambton West) presented the first report of the special committee on research, and moved that the report be concurred in.
Motion agreed to.