1961-07-03

Hon. J. W. Pickersgill (Bonavisia-Twillin-gale) moved: for leave to introduce Bill No. C-119, to amend the Canadian Bill of Rights.


Some hon. Members:: Explain.


John Whitney Pickersgill: Mr. Speaker, this bill is being introduced at the present time because I have recently had my attention drawn to the case of a naturalized Canadian citizen of German origin with a Canadian born wife and three Canadian born children who is obliged to live abroad by the nature of his employment as one of the greatest living authorities in his field. Unless the law is changed this Canadian citizen will be deprived of his citizenship under section 18 of the citizenship act, though no similar penalty would attach to a natural born Canadian citizen in the same circumstances.
The effect of the bill, if passed, would be to place naturalized citizens on a basis of complete legal equality with natural born citizens of Canada. Since all parties in the house have at one time or another advocated equality of Canadian citizenship, and since the present law works an injustice against naturalized citizens, I would hope that the house might see fit to dispose of this bill favourably before the present session is concluded.


Mr. Speaker:: Order. The hon. member's explanation is now becoming advocacy of the bill. I think he should limit himself to explanation.


Hon. E. D. Fulton (Minister of Justice):: At
the risk of lengthening the explanation, may I ask the hon. gentleman if there are any other purposes, effects or implications of the bill he proposes to introduce.


John Whitney Pickersgill: I had intended to add that I hoped the Minister of Citizenship and Immigration, until this bill has been disposed of by parliament, would not deprive any Canadian of citizenship under section 18 of the act. That was all I had intended to add.


Edmund Davie Fulton: And there are no other effects or implications?


John Whitney Pickersgill: I will not give a legal interpretation. The minister can do that himself.
Motion agreed to and bill read the first time.



INCOME TAX ACT

Hon. Donald M. Fleming (Minister of Finance) moved: for leave to introduce Bill No. C-120, to amend the Income Tax Act.
He said: Pursuant to the report of the committee of ways and means which was adopted in the house on Friday, June 30, I ask leave now to introduce a bill to amend the Income Tax Act.


Mr. Speaker:: Is it the pleasure of the house that the hon. member shall have leave to present the said bill?


John Whitney Pickersgill: Before the minister is given leave, I wonder whether I could ask him if the bill is ready for distribution in both official languages.


Donald Methuen Fleming: I understand that the bill is ready for distribution. I speak subject to correction with regard to the French edition, but I will make immediate inquiries. I know there are copies of the bill in English immediately available.


Mr. W. M. Benidickson (Kenora-Rainy River):: In view of the approach of the adjournment of this session, may I ask what is in the bill that was not announced in the budget resolutions?


Donald Methuen Fleming: The hon. member will have a copy of the bill in a moment, and I think that would be the best way to meet his inquiry. The bill is the usual type of bill to amend the Income Tax Act following the budget resolutions.
Motion agreed to and bill read the first time.



CANADIAN CENTENNIAL


Right Hon. J. G. Diefenbaker (Prime Minister) moved: that the house go into committee at the next sitting to consider the following resolution, which has been recommended to the house by His Excellency:

Motion for Papers
That it is expedient to introduce a measure respecting the observance of the centennial of confederation in Canada and in relation thereto,-
1.	To provide for the constitution of a corporation called the national centennial administration;
2.	To provide for the establishment of a national conference on Canada's centennial;
3.	To provide for the objects, purposes and powers of the administration and of the conference; and
4.	To enact such financial provisions as may be necessary to accomplish the purposes of the act.


[Stage Direction]
Motion agreed to.


Donald Methuen Fleming: that the house go into committee of the whole later this day to consider the following proposed resolution, which has been recommended to the house by His Excellency:
That it is expedient to bring in a measure to authorize the Canadian National Railway Company to make capital expenditures in the year 1961 not exceeding $178,900,000 and to make certain capital expenditures and enter into certain contracts prior to July 1, 1962; to authorize the national company to issue securities to provide amounts required for the authorized expenditures; to provide that, except as expressly provided, the aggregate principal amount of securities outstanding at any time shall not exceed $76,800,000; to authorize the governor in council to guarantee the principal and interest of securities issued by the company for the purpose aforesaid; to authorize the Minister of Finance to make loans to the said company secured by such securities and not exceeding $76,800,000 in principal amount to enable the said company to meet such expenditures and with authority to give financial aid and assistance to other companies of the national system; and to provide further in respect of the refunding of matured, maturing and callable obligations of the said company, for the issue of securities guaranteed by the Dominion of Canada, to an aggregate principal amount not exceeding $230,000,000 in lieu of the present amount of $200,000,000.


Mr. Speaker:: Has the minister unanimous consent to move this motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.


[Stage Direction]
Motion No. 154
Mr. Mcllraiih:: For a copy of all correspondence exchanged between the Minister of Justice and the minister of lands and forests of the province of British Columbia on the subject of the Columbia river power development since January 1, 1961.


Edmund Davie Fulton: Mr. Speaker, I would have to express some reservations with regard to this motion. The greater part of the correspondence referred to relates to details which it was understood

would have to be determined between Canada and British Columbia before the treaty could be brought into effect, and it would not be appropriate to produce such correspondence at this stage. However, there is some correspondence not of a confidential nature, being formal advice to British Columbia of the conclusion of negotiations and our intention to sign the treaty with their knowledge and approval, and their acknowledgment of this correspondence.
I would be prepared to accept this motion and, subject to ascertaining the attitude of the British Columbia government, produce the correspondence I latterly referred to.


Mr. Speaker:: Does the hon. member accept the reservation expressed by the minister?


George James McIlraith: Yes, Mr. Speaker.


Mr. Speaker:: Subject to the limitation expressed by the Minister of Justice, is it the pleasure of the house to adopt the motion?


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier (Laurier):: Mr. Speaker, may I direct a question to the Prime Minister and ask whether it is a fact that the under secretary of state has handed in his resignation and, if so, on what date?


John George Diefenbaker: Mr. Speaker, the other day when a question was asked in this regard I said I had no knowledge of this matter. I became aware only on Saturday that the resignation was being considered. I received today a letter dated July 1, 1961, written by the under secretary of state, and with the leave of the house I shall read that letter:
Ottawa, July 1, 1961
Dear Mr. Prime Minister,
As I wish to return to private practice of law, I hereby tender to you, and through you, to his excellency the governor general in council, my resignation, to become effective on September 5, 1961, as under secretary of state and deputy registrar general and also as member of the copyright appeal board. I would refer in this connection to sections 3 (1) and 6 (1) of the Department of State Act, c. 77 R.S.C. 1952, to section 50 of the Copyright Act, c. 55 R.S.C. 1952, to order in council P.C. 265, of January 19, 1949 and to order in council P.C. 2283, of May 9, 1949.
As the Secretary of State well knows, the only reason for my resignation is my desire to take advantage of an offer, which I consider quite interesting, to return to law practice. I think I can say that my relations with you, with my minister

and his predecessors and with the government generally and my own colleagues have been excellent. No wonder, therefore, that it was with considerable hesitation and regret that I took the decision which I did. I shall always cherish the memory of my nearly twenty-three years' service with the government of Canada (more than ten in the Department of Justice and the rest in the Department of the Secretary of State), to which I owe invaluable training and knowledge.
I would like, incidentally, to take this opportunity to thank you and the government for the recent increase in my salary. It is perhaps an unfortunate coincidence that I reached my decision to resign soon thereafter.
I sincerely thank you, sir, and your colleagues for the confidence with which you have honoured me.
Yours very truly, Charles Stein.
P.S.: Though I have marked this letter "Confidential", I need hardly say that, as far as I am concerned, you are quite at liberty, sir, to quote it publicly in whole or In part, should you deem it appropriate.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. Hazen Argue (Assiniboia):: There is a question I should like to direct to the Prime Minister.


Some hon. Members:: Oh, oh.


Hazen Robert Argue: Perhaps I should be concerned, Mr. Speaker, that the welcome back seems stronger from one part of the house than from the other.


An hon. Member:: How long are you staying?


Hazen Robert Argue: I have a question that I should like to direct to the Prime Minister. In view of the national emergency which the disastrous crop conditions in the prairie provinces constitute, will the government consider declaring this a disaster area so that additional moneys may be paid to farmers who suffer total crop loss as well as to livestock producers who also suffer widespread loss of income?


John George Diefenbaker: Lest there be any misunderstanding, Mr. Speaker, may I say that I join in the welcome by the opposition to the hon. gentleman newly returned from the fields of prophecy.
Concerning the western situation may I say that during his absence-his enforced absence, I know-this matter has received very full consideration. On Sunday, representatives of the federal government, namely the Minister of Agriculture and the Minister of National Defence, met with the ministers of agriculture of the three western 90205-6-467
Inquiries of the Ministry provinces. The whole situation is being carefully canvassed and considered.


Hazen Robert Argue: If I may do so, 1 should like to put my question in another away. Has the government given any consideration to declaring this a disaster area so that in addition to prairie farm assistance, moneys may be paid to farmers directly? I do not recall any statement having been made on this point.


John George Diefenbaker: The matter is not a novelty. It has been raised previously. All these matters are under consideration.



NORTHWESTERN ONTARIO


[Stage Direction]
On the orders of the day:
Mr. Huberi Badanai (Fort William):: Mr. Speaker, I wish to direct a question to the Minister of Forestry. In view of the disastrous fires raging in the forests of northwestern Ontario, with half a million acres involved, including the destruction of various logging and tourist camps and the closing of five mines in the Red Lake district, is the minister in a position to inform the house whether his department has taken any measure of assistance to the area?


Hon. H. J. Flemming (Minister of Forestry):: Mr. Speaker, I appreciate the courtesy of the hon. gentleman in sending me a copy of the question. I can quite understand his interest, concern, and even anxiety in connection with the very serious situation referred to in his question. The official answer, I might say, is as follows.
The Department of Forestry has not participated directly in fighting forest fires in the area referred to. Our contribution to the provinces in forest fire protection has been restricted to research programs and financial assistance under the agreements toward capital expenditures required for fire protection, including purchase of equipment, construction of ranger stations, lookout towers, roads and trails and the like. We are watching the situation with great concern, but up to date no representations have been received from the province of Ontario, which is responsible for the protection of its forests, for any extra assistance.


William Moore Benidickson: I should like to ask a supplementary question of the Minister of Labour. In view of the high unemployment in the area, has the Minister of Labour considered whether his department might encourage the employment of men in this area to fight this catastrophe?

Inquiries of the Ministry


Hon. Michael Slarr (Minister of Labour):: Mr. Speaker, of course my department, through the national employment service, is at all times encouraging employers to hire people for work that is available.



FISHERIES


[Stage Direction]
On the orders of the day:
Mrs. Margaret Macdonald (Kings):: Mr. Speaker, I should like to ask the Minister of Fisheries whether he can yet make a statement concerning the fishing season in lobster district 7B.


Hon. J. A. MacLean (Minister of Fisheries):: Mr. Speaker, I wish to thank the hon. member for giving me notice of her intention to ask this question. I have been keeping a very close watch on the lobster fisheries, as the opening in this district in particular was so long delayed by ice conditions this spring. Fishing was very slow at first but has picked up remarkably well, and by July 5, the official date of closing, the average catch throughout the whole district will be almost that of a normal year. There are, of course, local areas which are exceptions to this, but even in these areas the catches will not be much below average, and the districts must be considered as whole units.
I would add that the requests received that no further extension be granted far outnumber those requests for a further extension. Accordingly, Mr. Speaker, there will be no further extension granted beyond July 5 in lobster districts 7A and 7B.



COMBINES


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I wish to address a question to the Minister of Justice. I might emphasize, in fairness, that this is not a conspiracy. Members of the cabinet do not indulge in conspiracies with the hon. member for Kootenay West.
Has the minister or any of his officials received complaints or information to the effect that Community Concerts of Canada, Limited, a subsidiary of Community Concerts, Incorporated, of New York, has such a monopoly or near monopoly of the entertainment field that talented Canadian artists not willing to pay tribute to this organization are, in effect, denied an opportunity to be heard in their own land?


Edmund Davie Fulton: Mr. Speaker, I thank the hon. gentleman for the notice of his intention to ask this question, which I certainly never heard before that there might be a conspiracy. I have to advise the hon. member that according to my information no such complaint or information has been received, not recently at any rate.


Herbert Wilfred Herridge: Mr. Speaker, could I ask the minister a supplementary question. Would he ask the director of the combines investigation branch just to look into this matter?


Edmund Davie Fulton: Mr. Speaker, on receipt of notice of the question I did check with the director, and it was as a result of his information that I said we have not received such a complaint in the recent past. I think I recall some time ago having the matter brought to my attention and I believe the correspondence was replied to, but certainly nothing of recent date has come to my attention or been received in the branch.


Mr. Speaker:: Perhaps I should say that my suggestion that an earlier question and answer sounded like a conspiracy was no more serious than the question to which it referred.
(Translation):



TRANSPORT


[Stage Direction]
On the orders of the day:
Lionel Chevrier: Mr. Speaker, I wish to direct a question to the Minister of Transport.
On June 8 last, the minister indicated that his department had decided to offer for industrial purposes part of the Soulanges canal for a period of one month. Now that the 30 day period has expired, could the minister indicate whether he has received any offers from industrial firms for that part of the Soulanges canal which is known as Pointe Cascades? In the affirmative, what are those offers? In the negative, is he now prepared to surrender the whole canal property to the government of the province of Quebec?


Hon. Leon Balcer (Minister of Transport):: Mr. Speaker, all I can say to the hon. member for the time being is that we did receive offers. We are considering them and will reach a decision within two or three days.


Lionel Chevrier: A supplementary question. Could the minister indicate what type of offer is under consideration, and how many workers would be likely to be employed by the industries involved?


Léon Balcer: Mr. Speaker, I think this last question should rather be placed on the order paper.
(Text):



TRANS-CANADA AIR LINES REQUEST FOR REPORT ON LABOUR DISPUTE

[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: Mr. Speaker, I wonder whether I might direct a question to the Minister of Labour and ask him whether he is in a position to report to the house about the negotiations or lack of negotiations between the air line flight attendants association and Trans-Canada Air Lines.


Michael Starr: Mr. Speaker, at this time I can only say that discussions seeking a settlement of this dispute between the representatives of the flight attendants union and the officials of Trans-Canada Air Lines were broken off on Friday. However, officials of my department are in touch with both parties, and it is hoped that discussions will be resumed soon. In view of that fact, Mr. Speaker, I feel it is not desirable to comment further in respect to this situation at this time.


Frank Howard: Mr. Speaker, I should like to ask a supplementary question. I wonder whether the minister could indicate whether either of the parties has indicated or set a date as to either a lockout or a strike.


Michael Starr: It was my understanding that a date was to be arrived at today. Any announcement which may have been made in that regard has not been drawn to my attention.


Frank Howard: Mr. Speaker, has the Minister Df Transport any knowledge of steps taken oy Trans-Canada Air Lines to replace its present stewardesses and hostesses with untrained personnel? Is this in keeping with our concept of protection and safety of passengers?


Léon Balcer: Mr. Speaker, all I know about this is what I have read in the newspapers. I would not care to comment on newspaper articles.



CAPE BRETON


[Stage Direction]
On the orders of the day:
John Whitney Pickersgill: Mr. Speaker, in the absence of the Minister of Mines and Technical Surveys I should like to ask the Prime Minister whether the federal government made a proposal to the 90205-6-4674
Inquiries of the Ministry Dominion Coal Company of the Dominion Steel and Coal Corporation for stretching out the work at the Florence mines in Cape Breton, and, if so, what attitude was taken by the company?


John George Diefenbaker: Mr. Speaker, I shall take that question as notice.


John Whitney Pickersgill: Mr. Speaker, perhaps I could ask the Prime Minister a supplementary question to be taken as notice at the same time. Will the Prime Minister take note of the dispatch in the Halifax Chronicle-Herald of July 1, to this effect that the Minister of Mines and Technical Surveys informed the Chronicle-Herald that the company had declined the federal proposition as impractical?



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Hazen Robert Argue: Mr. Speaker, I should like to direct a question to the right hon. Prime Minister. Has the Prime Minister received a letter from Mr. J. F. Holland, president of the Manitoba pharmaceutical association, protesting the fact that no member of the pharmaceutical profession has been included on the royal commission on health care? If so, is consideration being given to adding an additional member from that profession?


John George Diefenbaker: Mr. Speaker, I cannot state with assurance that the particular person to whom the hon. member has referred has communicated with me, but there have been communications received from the pharmaceutical association to that effect. I suggest that the reason for the non-inclusion of a representative of that profession is the simple fact that having regard to all the considerations before the government in determining the members of a commission and the various professions which might consider, and with good reason, that they should be included, they cannot all be included. However, the pharmaceutical association, as pointed out in a letter directed to one of its officials will have every opportunity of placing before the commission, to the fullest extent, any suggestions, recommendations and ideas that association has in mind, and will also be given the opportunity to place before the commission in the fullest detail, all those things which would have been placed before it had it been possible to include not only a representative of the pharmaceutical association on the royal

Inquiries of the Ministry commission but also representatives of one or two other groups which have sought membership thereon.


Hon. Paul Martin (Essex East):: Mr. Speaker, I should like to ask a supplementary question. In view of the fact that the announcement in respect to this royal commission was made on December 18, 1960, has the Prime Minister any comment to make regarding a statement attributed to the chairman of that royal commission to the effect that there would be no report available before two years from the date of the first sitting?


John George Diefenbaker: Mr. Speaker, I have no comment to make on that. So far as the commission is concerned, I am very hopeful there will be a preliminary report available at a much earlier date, because after all we are most anxious to have any recommendations that it may make in regard to this important matter.


Paul Joseph James Martin: I thank the Prime Minister.



INDUSTRY


[Stage Direction]
On the orders of the day:
Mr. Erharl Regier (Burnaby-Coquillam):: Mr. Speaker, I should like to ask the Prime Minister whether any action is being planned by the government to prevent the newly established practice of automobile factories in Canada sending motors to the United States for repair purposes, thus robbing Canadian workers of employment which they have enjoyed over a long period of years.


John George Diefenbaker: Mr. Speaker, the hon, gentleman gave me notice of that question and I had the answer available on Saturday, but in his absence did not give it. I am not in a position to give that answer now except to say the Canadian automobiles chamber of commerce stated that there is no foundation for that question; that the four leading Canadian automobile factories are indeed carrying out their repair work in Canada. So far as the Volkswagen company is concerned, it is making plans and provisions for such work to be done here as well.



AIRPORTS


[Stage Direction]
On the orders of the day:
Mr. Harold Hicks (Fraser Valley):: Mr. Speaker, I should like to inquire of the Minister of Transport whether he can inform the 
house if the proposed development of the Pitt Meadows airport has got under way yet and, if not, what is the proposed starting date?


Léon Balcer: Mr. Speaker, this matter has been submitted to treasury board, and as soon as a decision on principle is reached there the department will be in a position to start work on this air field when the needs of aviation in the Vancouver area justify this undertaking.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
William Moore Benidickson: Mr. Speaker, I should like to direct a question to the Minister of Finance. In view of the fact that the minister presented a bill to amend the Income Tax Act consisting of 36 pages just a few moments ago, would the minister indicate why first reading of this bill was not given, as is usual in this house, immediately after the resolution relating thereto was approved?


Mr. Speaker:: Order. I question the propriety of the hon. member when he refers to matters relating to a first reading, because first reading of a bill is not a debatable matter. If the hon. member wishes to complain about the procedure that has been followed I suppose he is entitled to do so when the bill comes before this house, but this would not appear to be the appropriate time.


William Moore Benidickson: Mr. Speaker, on a point of privilege I should like to raise a question as to whether it is the intention of the Minister of Finance to ask that this bill be proceeded with before the proposed adjournment of this session of parliament. I should also like to ask whether the items contained in the 36 page bill which has just been presented to us this morning have been made known-


Mr. Churchill:: What is the purpose of your question?


William Moore Benidickson: -prior to this time to the taxpayers concerned, and to those individuals who concern themselves with taxpayers' interests, such as the Canadian tax foundation, the Canadian chamber of commerce-


Gordon Minto Churchill: There is no privilege involved here.


William Moore Benidickson: -and accountants and lawyers.


Mr. Speaker:: Order. I suppose the hon. member is entitled to ask a question relating

to the business of the house, but he will recall that the house has given leave for second reading of this bill some time later this day.


John Whitney Pickersgill: Not later this day.


William Moore Benidickson: No, not later this day.


Mr. Speaker:: I beg your pardon, at the next sitting of the house. However, what the hon. member is asking of the minister now is, in effect, when he proposes to proceed with second reading. Perhaps if the hon. member wishes to ask that question it would be appropriate for him to do so.


Donald Methuen Fleming: Mr. Speaker, that will, of course, be a matter to be arranged with the leader of the house and announced when we are considering the business of the house. However,
1 do wish to correct one very serious misstatement made by the hon. member. He said it was the practice to introduce Income Tax Act bills immediately after the budget resolution respecting the Income Tax Act had been reported. He is quite mistaken in that.


William Moore Benidickson: I said almost always.


Donald Methuen Fleming: I can remember one occasion when one of my predecessors, at a time when the hon. member was, as I recall it, parliamentary assistant to the minister of finance, allowed a week or more to expire between the report of the resolution and the introduction of the bill.


William Moore Benidickson: Yes, but not approaching an adjournment.



CANADIAN NATIONAL RAILWAYS


Lionel Chevrier: May I
direct a question to the Minister of Transport having to do with the resolution on the order paper concerning the measure authorizing capital expenditure for the Canadian National Railway. Is that bill ready for distribution?


Léon Balcer: Mr. Speaker, the resolution has been agreed to. The bill will be brought before the house when the government decides to bring it in.


William Moore Benidickson: What does the minister mean by "agreed to"?


George James McIlraith: Mr. Speaker, I should like to ask the house leader a question. Bearing in mind that the indication as to business for today included the Canadian National Railways financing bill, which was given first reading this morning-


Some hon. Members:: No.
Inquiries of the Ministry


George James McIlraith: The resolution was dealt with this morning. I should like the house leader to indicate whether it is intended to proceed with the bill today. I have reference to his indication of the business for today as found toward the bottom of the first column on page Y393 of Hansard. Would the house leader clarify what measure he had in mind there and what stage of consideration?


Gordon Minto Churchill: The house has already given consent to proceed with consideration of the resolution later today.


William Moore Benidickson: But we did not agree to the resolution.


John Whitney Pickersgill: On a point of order, Mr. Speaker, I do not think any such consent has been given. As will be seen from the order paper, the motion was to go into committee of the whole at the next sitting, and that was passed without any discussion or any qualification.


Mr. Bell (Carleion):: The Speaker asked for unanimous consent for consideration later this day.


Donald Methuen Fleming: Mr. Speaker, you expressly dealt with this matter. You put the resolution with unanimous consent, and you paused to wait for any objections, that the resolution be taken up later this day. That is the resolution that was passed by unanimous consent.


John Whitney Pickersgill: In the circumstances I think I owe Your Honour an apology, and I make it at once.


George James McIlraith: I am seeking to have the house leader clarify how far he intends to go with this measure today. That was the purpose of my question.


Donald Methuen Fleming: Mr. Speaker, this is a resolution standing on the order paper in my name. We hope to carry it just as far today as the house is prepared to go. The resolution is ready for debate and the bill is ready to be introduced as soon as the resolution is adopted. If the house wishes to proceed to the later stages of the bill today, we will be very happy indeed if the house will do so.


George James McIlraith: I want to thank the Minister of Finance for now giving the information I was seeking to get. I had understood from the earlier answer that the bill was not going to be proceeded with.


William Moore Benidickson: The resolution only came forward on June 30.


George James McIlraith: I was seeking to find out if the bill was ready and what the plan of
7402	HOUSE OF
Inquiries of the Ministry the government was as to when it would come forward for consideration.


Paul Joseph James Martin: A supplementary question, Mr. Speaker. Is the bill in fact ready? I ask that of the Minister of Finance.


Donald Methuen Fleming: Mr. Speaker, the bill is in fact ready.


William Moore Benidickson: The income tax bill was not ready at the same stage.


Mr. Marlin (Essex Easl):: May I ask the
minister a further question. In doing so I want to compliment him upon his tremendous imitative powers, and I trust he will imitate as well in substance as in form. Will the minister tell the house whether the bill is ready and prepared in French and in English as well?


Donald Methuen Fleming: Yes, Mr. Speaker, the bill is ready and prepared in French and English as well.


Lionel Chevrier: May I ask the Minister of Finance whether the bill will be filibustered in the same way as the Pine Point railway measure?


Mr. Speaker:: Order. I think we should proceed to the orders of the day before dancing as well as singing takes place.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Paul Joseph James Martin: Mr. Speaker, I should like to ask a question of the Secretary of State for External Affairs based upon a United Press report that instructions were agreed upon by the British and Soviet co-chairmen on Saturday after seven weeks of hassling, and that a move to give the international control commission of Laos more air and ground equipment to supervise the cease fire ran into new trouble yesterday when Canadian objections stopped the fresh instructions half way to Vientiane.
Is the minister in a position to say that the basis for the Canadian objection was as further reported, that the instructions given by the two co-chairmen would have afforded to one member of the commission a veto that, in the opinion of Canada, would have limited the successful operation of the commission in Laos?


Hon. Howard C. Green (Secretary of Stale for External Affairs):: Mr. Speaker, on Thursday of last week the co-chairmen met with the representatives of Canada, India and Poland to discuss the provision of helicopters, 

light aircraft, road transport and other essential equipment for the truce supervisory commission in Laos. At this meeting the Canadian representative took the position that the commission should be given the authority to obtain the equipment it requires from whatever source it considers best, by purchase if necessary and that such equipment must be entirely under the commission's control and at its disposal at all times.
Newspaper accounts of the results of that meeting are misleading in that they indicate that agreement had been reached by the co-chairmen that equipment would be under the commission's own control. The implication was that the commission was to be provided with equipment, but in fact all that happened at the meeting was a co-chairmen's decision to send yet another request for information to Vientiane without taking any practical steps to make equipment available. In addition, the objectional features were retained, namely the dependence upon the agreement of the parties in Laos and the failure to take cognizance of offers already made. I refer to the offers by the United States and by France.
The Canadian representative has continued to argue vigorously that steps should be taken to enable the commission to obtain the essential equipment it needs without further delay so that it may be in a position to carry out an effective supervision of the cease-fire. As I pointed out earlier, both at Geneva and in my statement to the house on June 23, the commission would be rendered impotent and ineffective if it is made dependent on the Laotian parties for the transport it requires to carry out its task.
The government is continuing its efforts to ensure that suitable arrangements are made to provide the commission with the aircraft and other equipment it requires. The responsibility for providing this equipment rests, of course, on the two co-chairmen of the Geneva conference, namely the United Kingdom and the Soviet union. There must be clear-cut action on their part if equipment is to be supplied, and supplied under the control of the commission. Canada will do her best to see that this commission functions effectively, but under present conditions the Canadian people would be quite wrong to expect that the commission can do its job properly.



UNITED NATIONS


[Stage Direction]
On the orders of the day:
Hazen Robert Argue: Mr. Speaker,
I should like to address a question to the Secretary of State for External Affairs. Can

he give us any information on conditions in Angola at the present time? More particularly, would he care to comment on the statement of the premier of Portugal that Portugal has no intention of complying with the United Nations security council resolution calling for a halt to repressive measures in Angola?


Howard Charles Green: I dealt with the situation in Angola last week during the absence of the hon. member for Assiniboia. There has been a committee, I think of five nations, set up by the United Nations to investigate the whole situation in Angola. That commission has not yet reported. There is very little doubt that this whole situation will be one of the main topics discussed at the next meeting of the general assembly of the United Nations. Canada made her position perfectly clear by voting for the setting up of this committee.


Hazen Robert Argue: A supplementary question. Can the minister comment on the statement of the premier of Portugal that any attack on its policies in Africa constitutes an attack on NATO?


Howard Charles Green: Well, Mr. Speaker, that is not the opinion of the Canadian government.



SHIPPING


[Stage Direction]
On the orders of the day:
John Whitney Pickersgill: Mr. Speaker, I should like to ask the Minister of Transport whether, since over seven months have elapsed since the policy was first announced and the two weeks that he gave himself have also elapsed, the minister is now in a position to lay before the house the regulations governing aid for shipbuilding.


Léon Balcer: Not yet, Mr. Speaker.


John Whitney Pickersgill: Since I asked my question of the Minister of Transport I have had an opportunity of looking at Hansard, and I should now like to ask him whether he has any comment on the answer he gave to my similar question last Monday, June 26, when he said, as reported at page 7038 of Hansard:
Mr. Speaker, just about a week ago I said in the house that these regulations should be ready within two weeks or ten days. They will be ready in accordance with what I said last week.
What is the reason for the new delay?


Léon Balcer: Mr. Speaker, I am an optimist and I must confess that I was one, two or three days ahead of the time. I am just
Inquiries of the Ministry as anxious as anybody in the house to have these regulations completed. It is an extremely complicated document to draft, and at least seven or eight people were working on it all week long. The regulations will be ready very soon.


John Whitney Pickersgill: Could I ask the minister if he does not think it would be better to get the regulations ready before announcing policy?


Some hon. Members:: Order.


Mr. Speaker:: Order.



TRANSPORT


[Stage Direction]
On the orders of the day:
Lionel Chevrier: May I
direct a question to the Minister of Transport. Has the agreement between the Canadian National Railways, Consolidated Mining and Smelting Company Limited and Pine Point Mines Limited been completed? I refer to the agreement upon which the resolution which the minister introduced the other day was based. Are the negotiations concerning this agreement completed?


Léon Balcer: No, Mr. Speaker, negotiations are not completed. Discussions have been going on for a long time. All the major points have been cleared. There is only one minor matter that has still to be agreed to, but it has nothing to do with the main principle of the agreement. It is only a detail matter and should be dealt with very shortly.


Lionel Chevrier: Does the minister not think that by the introduction of the resolution and then the bill-


Mr. Speaker:: Order. The matter about which the hon. member is now inquiring would more properly come up on the resolution or the bill when it comes up rather than now. It is rather a matter for argument.


Lionel Chevrier: I asked the question on Saturday and I was told that I should ask the question when the Minister of Transport was in his seat. Now that the minister is in his seat some other reasons are given why I cannot pursue the matter. I have obtained one answer. I should like to ask a supplementary question. I will not ask it unless I am permitted.


Mr. Speaker:: The reason I objected to the question basically was that it was an argument rather than a question. If the hon. member has a supplementary question to

Excise Act
clarify the answer which the minister has given, which was an answer to his original question, I will permit it.


Lionel Chevrier: I will ask the supplementary question, if I may. Does the minister intend to introduce the bill in the house for discussion and consideration even though the agreement is not completed?


Léon Balcer: Mr. Speaker, the bill will be introduced when the government places it on the order paper.



CRIMINAL CODE


Edmund Davie Fulton: the second reading of and concurrence in the amendment made by the Senate to Bill No. C-92, to amend the Criminal Code (capital murder).


[Stage Direction]
Motion agreed to, amendment read the second time and concurred in.

Donald Methuen Fleming: the second reading of Bill No. C-115, to amend the Excise Act.


William Moore Benidickson: What about the Criminal Code amendment? I thought that was announced as the first item.


Edmund Davie Fulton: It has just been passed while my hon. friend was otherwise engaged.


William Moore Benidickson: Mr. Speaker-


Paul Joseph James Martin: Mr. Speaker, the hon. gentleman-


Mr. Speaker:: Order. The hon. member for Kenora-Rainy River.


William Moore Benidickson: Mr. Speaker, the resolution preceding the introduction of this bill was discussed last Thursday night. It has to do with a minor amendment in respect of cigarettes. The hon. member for Trinity spoke effectively, I thought, on Thursday night. I refer all hon. members to his remarks, which I will not repeat, concerning the great promises that were made by the government to the tobacco industry in the election campaign of 1958. The measure now before us is a very small mouse by way of legislative enactment when one compares it with the statements made by the Prime Minister in that election campaign, quoted by the hon. member for Trinity, to those interested in this industry.
The Minister of Finance has indicated that this measure is generally endorsed by the tobacco growers. I do not for a moment

propose to criticize it. I simply wish to ask some of the government members from tobacco growing areas, perhaps the hon. member for Brantford (Mr. Wratten), where the Prime Minister's speech was delivered in 1958 and in which he obviously attempted to entice the voters by indicating that his government would do something in a very important way for the benefit of this industry, to comment on the picayune nature of the amendments in this bill.


Mr. Speaker:: Is the house ready for the question? Order. I must inform the house that if the minister speaks now he will close the debate.


Hon. L. B. Pearson (Leader of the Opposiiion):: Mr. Speaker, can the minister when he speaks give any indication of the evidence on which a statement could be based that this provision would increase the use of tobacco, and is it also a fact that the tobacco companies have denied that this will happen? Will the minister also indicate whether the tobacco companies have all been in favour of this change and, if not, why they have some doubts about it?


Donald Methuen Fleming: Mr. Speaker, we were over all these points-


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


Lester Bowles Pearson: That does not make any difference. I have asked the minister a question. The fact that we may have talked about the matter before surely does not exempt him from replying to my question.


Donald Methuen Fleming: It is evident that the Leader of the Opposition feels under no obligation to be acquainted with what has already been said. It is all on record. I said that the points have been raised, and I will be glad to go over them again as I did on Thursday evening when we were previously on this measure. This measure has been asked for and warmly welcomed by the tobacco growers. It has been estimated that this measure is likely, as I said at that time, to increase the consumption of tobacco by an additional ten million pounds per annum, by reason of putting more tobacco in each cigarette.
Now, Mr. Speaker, as I said on Thursday evening in reply to similar questions, of the tobacco companies, one company has been asking for this provision for several years, has been urging it strongly for several years. One other tobacco company, since the resolution was announced in the budget speech, has asked that it be not proceeded with, and,

alternatively, asked for a delay in the effective date until July 1, 1962, to afford more time to instal the machinery to make the longer cigarettes. Another tobacco firm has asked simply for a deferment of the effective date until July 1 to allow them to instal the machinery.
These are the representations we have had. An amendment which I introduced, and which was approved in the committee of ways and means and then in the house last Thursday evening, constituted a compromise in relation to the effective date. It will be recalled that the original resolution proposed that the effective date of the change be made January 1, 1962 to allow all the firms some six months for the purpose of accommodating themselves and their equipment to the change. A further three months have been added to that time by the amendment, so these firms now have nine months in which to accommodate themselves and their equipment to the change.
I may say in reply to the hon. member for Kenora-Rainy River that this measure has been urged on us by representatives of the tobacco growers. Let there be no doubt in his mind that it is warmly welcomed by them.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Chown in the chair.
On clause 1-Schedule amended.
William Moore Benidickson: The minister has indicated, Mr. Chairman, he has determined that this provision should not become effective on the date originally announced, that is January 1, 1962, but should be deferred until April 1, 1962. If these budget amendments are of consequence to the industry and to the growers of raw tobacco, as the minister says they are, why is it that we have a delayed budget, delayed by three months past the normal date? We know that the minister is industrious, that he is prepared to review these matters, and does. Why is it that only after he introduces his budget does he find it necessary to amend his intention as indicated in clause 2 of the bill to the extent of three months?
This is an important industry. What has been lacking in the liaison between the Department of Finance, the government and the industry which left the government in ignorance to the extent that they did not realize that without the necessary amendment to the budget proposals, a deferment of three months, some of these manufacturers would be embarrassed? Why was there a lack of liaison, a lack of information and the long delayed budget that required this amendment? Why did the minister not know this provision 90205-6-468
Excise Act
would have a deleterious effect upon at least two of the principal cigarette manufacturers in this country?


Donald Methuen Fleming: Mr. Chairman, there has been no delay and there has been no lack of proper liaison. We did not go out and tell the manufacturers that we were going to introduce a change in this commodity tax. We received representations on the subject, and we would not have been discharging our duty in the proper constitutional manner if we had entered into discussions on the basis of this amendment being introduced. We receive representations and we make calculations. In this case we allowed six months for adjustment to the change, and that appeared to be adequate.
However, we have received representations from two quarters since asking for more time to acquire the machinery to equip their plants for this purpose. We have met this request part way. We chose the date of April 1 because it is still ahead of planting time. The request of the manufacturers would have taken us beyond the planting season, to July. This is a measure introduced not to benefit particular companies but to benefit the tobacco growers.


Lester Bowles Pearson: I asked the minister a few moments ago about the possibility of this change resulting in an increase in the production of tobacco, which is something of great importance to the growers. He has said it is estimated that the increase might be as high as ten million pounds. I would ask the minister who made that estimate.


Donald Methuen Fleming: The representations in relation to the anticipated increase in the consumption of tobacco have been made to us both by the flue cured tobacco growers and also by one of the manufacturers. It is a matter that has been the occasion of representations.


Lester Bowles Pearson: Is it a fact that other manufacturers have indicated to the minister that this change is not likely to result in any increase in the production of tobacco?


Donald Methuen Fleming: One manufacturer, to my knowledge, has within the last week expressed that opinion.


Paul Joseph James Martin: What tobacco growers organization has indicated that this would mean an increase of nine million or ten million pounds?


Donald Methuen Fleming: The Ontario flue cured tobacco growers association.


Paul Joseph James Martin: I doubt that.


Donald Methuen Fleming: I am not tying it to a specific figure; I say that we had representations from them that this plan would

Excise Act
lead to an expansion of consumption. We had representations from one of the manufacturers, and this manufacturer was quite definite in his estimate. The representations of the Ontario flue cured tobacco association were also quite clear that this would result in a very substantial increase in tobacco consumption in Canada.


Paul Joseph James Martin: I said I doubt that.


Donald Methuen Fleming: Do you know more than they do?


Paul Joseph James Martin: I know more than the minister does about this subject, Mr. Chairman. I doubt that any tobacco organization has made representations of that kind at all. That is what I said.


Donald Methuen Fleming: I made the statement that representatives of the Ontario flue cured tobacco growers association have represented to me in my office, in my hearing, in my presence, that this measure would result in a substantial increase in the consumption of tobacco in Canada. They gave me a demonstration of how it would work out.


Lester Bowles Pearson: The minister just said it was estimated that there would be an increase of 10 million pounds. Now he says "a substantial increase".


Paul Joseph James Martin: Yes.


Donald Methuen Fleming: Mr. Chairman, I made it quite clear that we have had representations, as I said, from both the flue cured tobacco growers association and a manufacturer that this would result in a substantial increase. I said further that the manufacturer estimated it would result in an increase of 10 million pounds annually in consumption. I said also that the Ontario flue cured tobacco growers association had supported the representation that this would result in a substantial increase. Here is what the brief of the Ontario flue cured tobacco growers marketing board contained:
This extra amount of tobacco could mean the sale of an additional 6 million to 8 million pounds of raw leaf tobacco annually for an added income to tobacco producers of $3 million to $4 million.


Paul Joseph James Martin: It "could mean" that.


Donald Methuen Fleming: To continue:
To further trace it down, it could mean about $1,000 more income each year to each Ontario tobacco producer.


Paul Joseph James Martin: Precisely. They did not say it would; they said it could. That is altogether different from what the minister told this committee today and on Saturday.


Lester Bowles Pearson: It now appears that the facts are that the producers organization said that it could mean a substantial increase. It appears that one company has said it would mean an increase of presumably 10 million pounds, while another company has said it would mean no increase at all in their view.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
Title agreed to.
Bill reported.
The Acting Speaker (Mr. Chown):: When shall the bill be read the third time? By leave, now?


Some hon. Members:: Agreed.


Donald Methuen Fleming: third reading of the bill.
Motion agreed to and bill read the third time and passed.



EXCISE TAX ACT

Donald Methuen Fleming: the second reading of Bill No. C-118, to amend the Excise Tax Act.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Chown in the chair.
On clause 1-Tax on premiums in respect of insurance with British or foreign company.
William Moore Benidickson: In connection with the amendments to the Excise Tax Act involved here may I say this. We well know that the principal item of tax reduction relates to the elimination of the 75 per cent tax on automobiles. There are a number of other items in the bill. I wonder whether the minister, having given us a figure as to the tax loss forecast on the automobile tax, which I think he said was $55 million for the current fiscal year and would be perhaps $100 million in a full fiscal year-


Donald Methuen Fleming: Mr. Chairman, I suggest that we deal with this matter under clause 7, subsection 1. There is a consequential amendment in clause 4 of the bill, but the principal clause in relation to the repeal of the excise tax on motor cars is clause 7, subsection 1.


William Moore Benidickson: I am aware of that fact, Mr. Chairman. However, I made the observation I did because I thought the minister should give us a general review of all the items that will be affected by the proposed changes and indicate with respect to each one the possible dollar value in tax concession

that is involved here in a budget that he described, a week before he presented it, as an expansionist budget.


Donald Methuen Fleming: I do not think this is the time or the place to undertake a review of that kind. It was done in the course of the presentation of the budget speech. In that speech there is a chapter beginning at page 6662 under the heading "Sales and Excise Taxes". Then, of course, later in the speech I dealt with changes in revenue in the chapter entitled "The 1961-62 Balance of Ways and Means", commencing at page 6665.


Paul Joseph James Martin: It was not a
speech; it was a book.


William Moore Benidickson: I am, of course, familiar with that. We are now, however, as members of parliament looking in a detailed way at the proposals of the minister when he introduces in parliament a bill to make effective the matters to which he referred in that long speech on June 20. In courtesy to this committee which is going into detail I think he should give us the type of information I have requested, namely the estimate given to him by officials after long study, as I well know, as to the consequence to the treasury of the reductions in sales tax that relate to the various items that appear in the schedule and the clauses of the bill we are now reviewing.


Thomas Miller Bell: Would that procedure not be preferable under each clause of the bill?


William Moore Benidickson: I could rise on each item and ask the same question, but I thought it would make for more orderly procedure if the minister would perhaps expand a bit on the statement that I agree he made in a restricted way on June 20. I have, of course, noted his remarks as found at page 6662 of Hansard.


Donald Methuen Fleming: I draw the attention of the hon. member to what I said in the budget speech as found in the second column of page 6665:
The effect of the proposed changes in sales and excise taxes will be $66 million in a full year and $55 million in 1961-62.
I shall be pleased to give the hon. gentleman the estimate with respect to each of these changes in order. I may say that on the first clause, the one with which we are dealing now, the revenue increase is likely to be insignificant. The present tax produces about $16,000 per year.


William Moore Benidickson: I take it that the minister is referring to his broad remarks and that he refuses to give details with respect to individual proposals.
90205-6-468J
Excise Tax Act


Donald Methuen Fleming: Not at all, Mr. Chairman; I said the very opposite. I said I would be prepared to give the estimates with respect to each of these matters as we come to them in an orderly way in the bill. We are dealing with clause 1. I have given the estimate available on the effects of the changes in clause 1.


William Moore Benidickson: As reported on page 6665 of Hansard, the minister in his speech on budget night, to which he has referred me, said concerning the amendments that relate to this bill:
The effect of the proposed changes in sales and excise taxes will be $66 million in a full year and $55 million in 1961-62. The total tax reductions therefore will be-
The minister included some concessions with regard to income tax and said the total tax reductions would be about $100 million in a full year. I say that, having before us at this time the details of his proposals with respect to the Excise Tax Act, it would be orderly, proper and informative to hear from the minister, apart from the automobile tax concession, his estimate in dollar., of the tax reductions that will be involved in the principal items. Most of them appear in the schedule. They do not appear in clauses of the bill; they appear in an amendment to a complicated section, and I wonder whether we could have a little more detail from the minister as to the principal tax concessions that he thinks are involved in the bill he has placed before us.


Donald Methuen Fleming: Mr. Chairman, I have already given the hon. member the aggregate result, which is the total that he asked for. I have also indicated that we are prepared to give him in detail the estimate with respect to each of these matters in the orderly and usual way when we come to them.
I may say in general, however, that the other changes apart from the excise tax on motor cars balance themselves out, broadly speaking, in their revenue effects. There are some further exemptions proposed in the clauses. There are some cases where an in. crease in the tax is involved. Adding together the increases and the exemptions we have a balancing. So that in the result the estimated loss of revenue, as I indicated in the budget speech, is $55 million for the present year and $66 million in a full year. As to any particular detail with regard to any of these changes, we will be glad to furnish it to the hon. member as we come to each item. I have already given the information concerning the revenue implications of clause 1.


George James McIlraith: Mr. Chairman, I understood the minister to indicate that this provision

Excise Tax Act
contained in clause 1 would bring a relatively small amount of revenue to the treasury. Then what is the purpose of the clause?


Donald Methuen Fleming: To stop a manifest injustice to Canadian insurance companies and Canadian insurance agents. I may say-


George James McIlraith: Would the minister explain the injustice again?


Donald Methuen Fleming: What we are trying to reach and penalize here is the practice of some persons of writing insurance on property or risks in Canada with companies that are not authorized1 to do business in Canada, or with companies that are authorized to do business in Canada but through persons who are not agents qualified to do business in Canada.
I dealt with this problem in the budget speech. We have reason to believe that something of this kind has been going on. We have not been able to ascertain precisely its scale, but it is enough to have given rise to strong representations from insurance agents as well as insurance companies lawfully authorized to do business in Canada.
I point out that if the result of this proposed tax to be applied in such cases were to yield a substantial revenue it would not accomplish the result we are seeking to achieve here, because we wish to put a stop to a practice that we think is very unfair and improper.


George James McIlraith: I thank the minister for his explanation. That is what I wanted him to state for the record. I think I can properly add the comment that the section is mainly applicable to fire insurance and automobile insurance, as I understand it. Is that correct?


Donald Methuen Fleming: It is to apply to all classes of insurance with the exceptions stated here, which are life insurance, personal accident insurance, sickness insurance or insurance against marine risks, and insurance against nuclear risks to the extent that such insurance against nuclear risks is not available in Canada.


George James McIlraith: And to clear up the situation in order to protect Canadian insurance companies and Canadian underwriters; that is the purpose of the amendment?


Donald Methuen Fleming: Yes. There is reason to believe that Canadian companies are losing premiums and Canadian insurance agents are losing commissions that they would otherwise gain if this business were properly written in Canada.


William Moore Benidickson: Mr. Chairman, I think the minister indicated that he felt it is related to recent discussions held at a high level
[Mr. Mcllraith.)
across the country concerning foreign ownership of some of our important corporations. Did the minister indicate that he felt perhaps some of our foreign owned corporations had ignored Canadian insurance opportunities and had rather automatically, on a package basis, insured their Canadian subsidiaries through their own foreign insurance agencies, and this is a step to discourage that practice? Is that part of the aim of this amendment?


Donald Methuen Fleming: It certainly is. It is designed to do more than discourage that, Mr. Chairman; it is designed to put a stop, as far as it is possible to do so, to the writing of insurance outside Canada on risks of this kind in Canada, either through companies that are not authorized to do business in Canada or through companies that are authorized to do business in Canada but through agents who are not authorized to do business in Canada. I dealt with the matter, I think rather fully, in the budget speech. It is to be found at page 6663 of Hansard.


William Moore Benidickson: Mr. Chairman, would the minister indicate whether he has considered the application of this amendment in a particular way to, say, the Allstate company, which I think is a subsidiary of Sears-Roe-buck of the United States? We discussed the inroads of this company in the insurance business in the estimates committee. Would the minister say whether this type of business, which undertakes insurance offerings in a retail store, in its relationship to Canadian consumers, is involved in the amendments before us?


Donald Methuen Fleming: Mr. Chairman, I do not think it would be proper on my part to comment on the business operations of any particular company designated by name. In the budget speech I think I made quite clear the circumstances which have given rise to this amendment and the purposes that we have in mind. I said:
There appears to be an Increasing tendency on the part of non-resident corporations carrying on business in Canada, and also Canadian corporations which are controlled outside of Canada, to arrange their fire and casualty insurance in respect of risks in Canada either with insurers which are not authorized to transact the business of insurance in Canada or with insurers that are so authorized but through agents or brokers located outside Canada. Undoubtedly these practices stem from a desire to make all insurance arrangements at the head office of the corporation or at the head office of the parent corporation, as the case may be, rather than from any lack of adequate insurance facilities in Canada.


William Moore Benidickson: Mr. Chairman, surely the minister has given consideration to the number of people who have insured themselves

through the Allstate company, shall I say as one illustration? I understand that one of our prominent business houses, the ex Robert Simpson company, by reason of an association with the Sears organization in Toronto, provides a retail store service selling automobile insurance. It has made some progress in selling insurance which I understand is really taken care of finally by the head office in Chicago. Will this service be affected, and does this measure relate to insurance policies that have been purchased by a great number of Canadians from the Allstate company?


Donald Methuen Fleming: Mr. Chairman, that would depend on the extent to which the company in question is authorized and licensed to do business in Canada, and the extent to which those individuals who are transacting the business immediately over the counter are so authorized and qualified.
Clauses 1 to 3 inclusive agreed to.
On clause 4.


George James McIlraith: With respect to clause 4, I take it we can discuss anything which can be discussed under it under clause 7?


Mr. Bell (Carleton):: That is right, and I think clause 7 is the better clause for the discussion which my hon. friend has in mind.
Clauses 4 and 5 agreed to.
On clause 6-Joint and several ability of licensed purchaser and vendor.


George James McIlraith: Mr. Chairman, with reference to clause 6 would the parliamentary secretary tell me when section 68 was added to the act? Perhaps I could indicate the basis for asking that question, which is that I have before me what purports to be an up to date act, but it does not include this section.


Richard Albert Bell: Mr. Chairman, the only information I have in this regard has relation to the marginal note in the last consolidation which shows it as new in 1959; chapter 23, section 10.


George James McIlraith: If the parliamentary secretary has it before him and it is not too lengthy, I wonder if he would mind reading it. I obtained what I thought was the excise tax act with amendments up to date but section 68 is not included.


Richard Albert Bell: Would the hon. gentleman like section 68 put on the record?


George James McIlraith: Yes.


Thomas Miller Bell: Section 68 reads as follows:
Where a purchaser of goods from a wholesaler, producer, manufacturer or importer has falsely represented that the goods were intended for a
Excise Tax Act
use rendering them exempt from tax under any provision of this act, the wholesaler, producer, manufacturer or importer, as the case may be is entitled to recover from the purchaser the taxes paid by him under this act in respect of those goods.


[Stage Direction]
Clause agreed to.
On clause 7.
William Moore Benidickson: Mr. Chairman, in respect to clause 7 the committee will note, as has been noted by the observations of the member for Ottawa West, that we are a little short of information on the righthand page of the bill, because clause 7 says:
Section 1 of schedule I to the said act is repealed.
There is no explanatory note in this regard. In view of the fact that this bill has come to us, as all will admit, with very little advance notice, perhaps the parliamentary secretary will now provide that information which is not provided in the bill, and perhaps in particular, in respect to subclause 2 of clause 7, he could indicate the volume of trade relating to these lighters, because I understand there is an increase in the protection which will provide that the duty in no case will be less than 10 cents per article. Perhaps he could also indicate who will be affected in our trade relations by this proposal and the volume of business we do, not only on the export side but on the import side, with the important trading nations involved?


Richard Albert Bell: Mr. Chairman, as a result of the hon. member's experience as parliamentary assistant to the minister of finance, I am sure he will remember that it has never been the practice to provide explanatory notes in relation to schedules of bills. It has been the uniform practice not to put in explanatory notes. In fact the budget resolutions which precede such bills are the explanatory notes. I will be glad to draw my hon. friend's attention to the particular budget resolution which applies in each case. Subclause 2 to which he refers, relates to resolution No. 4.
The hon. member has asked a question in relation to the volume of trade and I might say that in recent years the average has been just under or over 5 million lighters sold each year. I have the breakdown here for the three years 1957, 1958 and 1959. I will give these figures indicating the year, the imports, the domestic production and then the totals. In 1957 the imports amounted to 3,747,924 and the domestic to 618,869, totalling 4,364,793; 1958, 4,145,292 and 541,266, making a total of 4,686,558.


William Moore Benidickson: I take it the second figure relates to domestic?

Excise Tax Act


Thomas Miller Bell: Yes, the second figure relates to domestic. In 1959 imports amounted to 4,714,800 and the domestic to 642,182, making a total of 5,356,982.


William Moore Benidickson: Mr. Chairman, the parliamentary secretary did not indicate our trading partner which might be most affected by this proposed change.


Richard Albert Bell: I think our imports are mainly from Japan and the United States.


John Whitney Pickersgill: Mr. Chairman, I wonder whether the parliamentary secretary could tell us what the range of cost is in regard to these items, because the impact of the import will vary and will depend a good deal upon the sale price average.


Thomas Miller Bell: Mr. Chairman, my understanding is that the average duty paid value of an imported lighter is in the vicinity of 25 cents, while the average value of a Canadian made lighter is about $1.60. In respect to domestic lighters under the general rate of 10 per cent the excise tax has been as much as six to seven times the amount which was borne by imported lighters.


John Whitney Pickersgill: In other words what the government is seeking to do here is to impose something more in the nature of a specific tax rather than a percentage tax?


Thomas Miller Bell: It is endeavouring to equalize the situation as between imported and domestic lighters.


Paul Joseph James Martin: It amounts to a 40 per cent tax.


[Stage Direction]
Clause agreed to.
On clause 8.
Herbert Wilfred Herridge: Mr. Chairman, in respect to this clause I should like to say a word or two regarding two articles mentioned on page 5 of the bill, shingles and prepared roofing for buildings. In the district which I represent we grow a very high quality red cedar and there has developed in recent years quite a good industry for the sale of split cedar shakes- not singles, but split cedar shakes. Would those split cedar shakes which are sold commercially to people who want to build in most instances quite expensive homes, and are very popular, be considered as shingles or as prepared roofing for buildings?


Richard Albert Bell: May I say to the hon. gentleman that the only change made in this particular part of the schedule is to delete therefrom the word "doors". As it previously read it was "lumber, sash, doors." Doors are being eliminated and, as the hon. gentleman will see by reference to page 4, are put in a separate category with door and window

screens. Therefore there is no change in the situation. As to the particular matter to which the hon. gentleman refers, I am told that in any event they would be exempt.


John Whitney Pickersgill: Mr. Chairman, I should like to make a suggestion to the minister with respect to the items mentioned here, which of course vary a great deal. In view of the fact that the hon. member for Kenora-Rainy River indicated at the resolution stage, in the cooperation we extended at that time that we would expect full explanation of these items on the bill, I think we should take each of the items separately and have an explanation of each from the parliamentary secretary so we can see what the real implications are and so that there will be something on Hansard for the public to see.


William Moore Benidickson: That was part of my purpose originally. We are dealing with building materials in clause 8. I think the officers of the Canadian Construction Association have indicated that these professed reductions in taxation are really inconsequential to that industry. They may be valuable in that they conform to reductions which have taken place in the past and therefore there is no disagreement between one type of product that goes into construction and another. But in so far as any expansionist program of the government is concerned in its tax reductions announced in the current budget, what actual expansion is likely to occur in trade and in production of those items which are referred to under the heading of building materials?


Richard Albert Bell: Mr. Chairman, if it is the wish of the committee to adopt the suggestion of the hon. gentleman from Bona-vista-Twillingate I think it would be satisfactory. The changes, of course, in this schedule are only those which are indicated in the bill by the black marginal line. We might, if it is the wish of the committee, deal with each of those separately. My hon. friend from Kenora-Rainy River has suggested that these are not of great value.


William Moore Benidickson: I say the construction industry president said that.


Richard Albert Bell: With that I would take immediate issue and say many of these are of very substantial value to the building industry, as will be apparent as we go along. My hon. friend chooses to use the word "expansionist". This is a word which I venture to suggest to him applies, and applies very vividly, to the whole of this budget. These are only part of the whole budget which in its essence is the word he used.


John Whitney Pickersgill: The parliamentary secretary has mentioned an expansionist budget. Of course he could not have chosen a more opportune time to use that word, since the first word in this clause is "blowers". Perhaps the parliamentary secretary would do a little blowing and show just precisely what the expansion is in "blowers for use in warm air systems for the heating of buildings". This is the expression used in the clause. I think it may be appropriate because I suspect, sir, that is a pretty good description of this expansionist budget.


Gordon Campbell Chown: Shall clause 8
carry?


John Whitney Pickersgill: I thought the parliamentary secretary was going to explain this item.


Richard Albert Bell: I shall be glad to. The particular change here relates to blowers for use in warm air systems for the heating of buildings. This subclause proposes to make all blowers used in warm air heating systems unconditionally exempt from sales tax. The present administrative practice is that such blowers when sold with furnaces are regarded as a component of these furnaces and held to be exempt from sales tax. This is because schedule III provides a sales tax exemption for furnaces for the heating of buildings. However, the recent change in the form of construction of some of the warm air heating systems puts the blower in the duct work some distance away from the furnace. As a result the blower is purchased separately and is no longer regarded as a part of the furnace, and thus it becomes taxable. The proposed exemption specifically mentioning blowers will ensure that all blowers receive the same sales tax treatment whether sold with or without furnaces.
This is likely to mean a revenue loss of $40,000 approximately. As the committee will see, really what it does is to remove an anomaly that arises by reason of the new type of hot air furnace.


Gordon Campbell Chown: Shall clause 8 carry?


John Whitney Pickersgill: No. I thought we were going to call these items one by one?


Herbert Wilfred Herridge: Mr. Chairman, I have a couple of questions referring to page 6 of this clause.


John Whitney Pickersgill: Would my hon. friend not agree that we should take them up consecutively? We have taken blowers; now we come to doors. I think we would make much more progress if we could do this consecutively. If Your Honour would refer to each of the items, perhaps by the first word, then we could have an explanation from the parliamentary secretary about what it involves,
Excise Tax Act
because there was no debate at the resolution stage and there really ought to be an explanation in Hansard of what is involved.


Richard Albert Bell: The next item deals with doors for buildings and door and window screens. This is purely for clarification purposes and to make clear that the doors are doors for buildings. It was put in previously with lumber, sash and so on, and doubt arose as to whether other forms of doors were included or whether it was simply doors for buildings.


John Whitney Pickersgill: What other forms of doors did the parliamentary secretary have in mind?


Richard Albert Bell: There are all kinds of doors, even doors for trailers, I suppose.


John Whitney Pickersgill: It is very easy to say there are all kinds of doors. Which type of door is taxable?


An hon. Member:: A door to a cell.


Richard Albert Bell: I refer to a door in some moving vehicle such as a trailer, which is not intended to be covered by any item which is set forth in building materials. This is purely for clarification purposes.


John Whitney Pickersgill: Let us suppose, for example, that a board fence is built around someone's property and he puts a door in that board fence. Would that door be taxable or free?


Richard Albert Bell: I would think that would be a gate and not a door, but if it were held to be a door then this particular section would not apply to it.


George James McIlraith: Is not the point of this change that it clarifies the situation where doors in the former schedule related to lumber and the section now does not relate to lumber, it also relates to other kinds of materials? We have a great many aluminum doors being used in ordinary buildings. Is this not the kind of situation that is attempted to be covered?


Richard Albert Bell: It now covers doors for buildings generally.


John Whitney Pickersgill: There are practical problems that can easily arise. I can illustrate very clearly what they are because it so happens that in my own house in Bonavista bay I have a door which I bought and put on two trestles, and it is my dining table. Would that door be taxable or not? That door was bought as building material. It so happens that it was bought with the other lumber bought to build my house, but it is not part of the building itself. It is not attached to the building and it is not used as a door.

Excise Tax Act
Is that door taxable? Am I going to have some snooper come around some day to collect 10 per cent on that door because it is not hinged to a door frame? This is the sort of thing that does arise.


Thomas Miller Bell: I would have thought the hon. gentleman would have offered to pay tax in relation to that item. If it were bought for an exempt purpose, namely for use as a building material and was converted to another use, then at that stage it would become taxable. I should think the hon. member would be very willing to pay the tax at the time the change in use was entered into.


John Whitney Pickersgill: I think the hon. gentleman has contradicted himself, because at the time I bought it, according to the hon. gentleman's explanation, this door was lumber and therefore was exempt. Therefore I would not consider any tax exigible because of ex post facto legislation of this sort. I am suggesting that this legislation will create situations such as the one I have just described, and that we ought to be very clear that we are not going to create impossible administrative problems for the Department of National Revenue.
How is the lumber merchant who has to collect these taxes going to decide? How is the wholesaler going to decide at the stage at which these taxes are collected? I think the administrative problem here is much greater than the draftsmen seemed to realize when this was drafted. After all, the sales tax is not paid at the retail level. It is paid, as the hon. gentleman knows, at a much earlier stage. How is the person who pays the tax going to know, now that a member of parliament has set the fashion for the use of doors as tables, that this may not become the rage all over the country, and how is the problem going to be dealt with?


Richard Albert Bell: I think the hon. member need have no concern about it having retroactive effect, because if he will look at clause 9 of the bill he will see that the day upon which this clause comes into force is the 21st day of June, 1961. Rather than creating administrative difficulties, as the hon. member seems to fear, the belief is that this will relieve administrative difficulties. I do not think the fact that the hon. member has disclosed what he uses as his dining room table in Bonavista bay is going to create a rage for such tables across the country. I do not think the Department of National Revenue is likely to encounter any difficulty on that ground.


John Whitney Pickersgill: I am genuinely concerned about this matter. I am not in the least concerned about my dining table; I merely used

it as an example. I am genuinely concerned, however, about whether a much greater problem of enforcement is not being created than the problem the government is seeking to solve. In view of the fact that the tax is paid at the level at which it is paid by a person who cannot know what the end use is necessarily going to be, how is it going to be determined that certain of these articles which normally are for the purpose of being incorporated into buildings are not going to be so used and therefore should be taxed, and how indeed is this tax going to be collected?


Richard Albert Bell: This is actually a relieving section involving the widening of the present exemption. I think it must be recognized by the hon. member that the use for other purposes of doors designed primarily for buildings would be very limited indeed, and that really any problem in the administration of such other uses does not in fact arise.


John Whitney Pickersgill: Would it not be simpler just to put in the words "doors and door and window screens" and not put in this limitation with respect to use in buildings? I really do agree with the parliamentary secretary's last observation that the number of people who use doors or window screens for other purposes than for buildings is so small and the amount of tax that would be lost is so infinitesimally small that creating this distinction is simply going to create a lot of involuntary lawbreakers.
Screens are used for other purposes. As hon. members know, I was brought up on a homestead and we used screens and windows in cold frames. They were not part of a building, and surely we are not going to go around trying to collect the tiny amount of tax involved in these cases. Would it not be better to strike out "for buildings" altogether and simply say "doors and door and window screens"?


Thomas Miller Bell: The situation then would be that this clause would relate to and be dependent upon the heading "building materials". The hon. gentleman realizes that in this particular schedule we are dealing only with building materials. There are a lot of other components including vehicles and apparatus generally that have doors. It might well be said that there are forms of mouse traps that have doors.


John Whitney Pickersgill: They are not doors that are building materials.


Thomas Miller Bell: Trains and airplanes have doors. The intention here is to make clear that these are doors for buildings so that we do not have to rely wholly upon

the simple heading of "building materials". I think the hon. member would concede that it would be bad drafting practice if one had to rely wholly upon a heading to provide the limitation within the sections which follow that particular heading.


John Whitney Pickersgill: I can see that the parliamentary secretary would have some point if the heading were not there, but obviously motor car doors or train doors would not be building materials at all, so that would explain itself. I am really quite seriously troubled by the idea of saying "doors for buildings" if it is intended to be construed as meaning doors that are used in buildings; but if it is intended to apply to every door that might be used for a building then I would not see any difficulty.
For example, from time to time I have seen doors of a certain kind used on delivery vans. They are the same kind of doors that are used in some buildings. I should think it would be the height of nonsense for the Department of National Revenue to be paying high salaries to people to go around and collect tax on the handful of doors used in the country for that sort of purpose.
If we are quite clear that what is meant by this language is doors that are capable of being used on buildings; doors that are, in other words, really building materials, and that all of them are exempt, then I would have no further quarrel, but if there is going to be some attempt made to collect the tax in the case of doors of that kind that are not actually incorporated into a building you are going to have an absolutely impossible administrative situation, and parliament should not allow these things to develop if they can be envisaged in advance. Perhaps it is not the function of an opposition to do so, but in this case I am trying to save the government from another embarrassment in addition to the many it already has.
At one o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 2.30 p.m.
Richard Albert Bell: When the committee recessed at one o'clock the hon. member for Bonavista-Twillingate had raised a number of questions relating to the item dealing with doors for buildings, and had suggested that perhaps we might rely entirely upon the heading of this clause for building materials. My hon. friend shakes his head, but at least that is how I interpreted the hon. gentleman's comment.
Excise Tax Act
I should like to say only that this is designed to simplify generally the administration. There are many types of doors which are not doors for buildings. The intention here, of course, is not to pursue in detail, as one could not do, those doors which are designed generally for buildings. This whole schedule has many end use items. Indeed, practically each of them is of an end use character. If one were to pursue each one to the nth degree of course it would become administratively impossible.
This amendment will enable the department to rely upon the section itself and not rely only upon the heading. In this way it will provide for administrative simplicity, as well as make it clear that it does not apply to those types of doors mentioned this morning, for mouse traps, trains and trailers, all types of doors which are not intended to be covered by the particular item under building materials.


William Moore Benidickson: Disregarding the reference to mouse traps, this morning reference was made to the fact that doors apply to trailers. When I occupied the position of parliamentary assistant to the minister of finance I think I exerted some influence in securing a reduction in cost to the consumers who purchased trailers. At that time we had indeed an expansionist program. At that time workers were moving across the country seeking and finding work. I refer to miners, construction, hydro workers and others. Under those circumstances it was most important, if they were to occupy temporary dwellings, that they should have the lowest possible tax impost on their housing arrangements. As one coming from northern Ontario I felt this was important.
In so far as trailers are concerned, as a result of the feeling that the consumer should be of some importance, an important reduction in the sales tax was arranged. This morning when we came to this item of doors for buildings it was a representative of the government who referred with some disdain to mobile homes.


Richard Albert Bell: Not at all.


William Moore Benidickson: Trailers, shall I say.


Richard Albert Bell: For illustration only.


William Moore Benidickson: For illustration only, but I want to say that when the economy was expanding people tend to join new industries and live in what I thought was referred to disdainfully by the parliamentary secretary as trailers. Inevitably annexes are added to these trailers. A tax reduction was provided on trailers some years ago, for which I take some credit. How would the doors for these annexes now be treated? I feel that they

Excise Tax Act
would be out of court because this morning the representative of the government spoke rather assertively about trailers.
In the resource industries of this country, in the new areas of development, it has now become a practice that people bring in trailers for the purposes of having adequate dwelling places and then, as permanency is assured, they must add to the trailers and they put on annexes. As to doors and window screens with respect to such annexes as those with which I am familiar in all this new resource development area, are these items going to be denied the tax exemption? The hon. member for Bonavista-Twillingate very properly advanced the suggestion this morning that this defining language

and I am thinking particularly of the words "for buildings"-could perhaps be discarded. I say this because I am familiar with the kind of dwellings that have developed when there was real expansion in this economy and when people were living in trailers such as those to which the parliamentary secretary referred this morning.


Richard Albert Bell: If the hon. gentleman is speaking of that essential and significant type of annex of which I think he is speaking, then it obviously is a building which has very high utility, and doors for such a building I think would unquestionably be exempt. The hon. gentleman has spoken of me as being disdainful of trailers. How he could have reached that conclusion I really do not know. I think it only illustrates the fact that he was grasping in some way at a straw in order to criticize this particular section of the legislation. The hon. gentleman knows, of course, that at the present time there is in the schedule an exemption which applies to trailers, and which reads as follows:
Seventy five per cent of the sale price if manufactured in Canada, or 75 per cent of the duty paid value if imported, of trailers for use as homes.
That is the existing exemption.


William Moore Benidickson: That is something I was influential in bringing into force.


Richard Albert Bell: The hon. gentleman takes the credit for that and I will not deny him the bow which he gives to himself in relation to it. I am glad that he had that influence in those days.


An hon. Member:: We are glad to know he did something.


Richard Albert Bell: The hon. gentleman is an old favourite of mine, so I will not pursue that matter further. I would only say to him that the type of annex to which he refers, and which has a type of door with an exterior turn knob and an interior hook, I am sure would qualify under this exemption.


William Moore Benidickson: I am very glad to have that assurance, Mr. Chairman, for this reason. Where there is some assurance of employment we know what happens. Everyone who experiences the movement to his constituency of these trailer camp workers knows that if there is a continuance of employment they require what I would call annexes to the custom built trailer machine and the doors that apply to it. I am glad to be assured that the doors and the window screens, if needed by these people, will have the tax exemption, although the parliamentary secretary this morning rather gave the indication that trailer people were the kind of people who had doors that would not be covered under this item.


Gordon Campbell Chown: Is the committee ready to proceed to the consideration of ducts for warm air?


John Whitney Pickersgill: No, Mr. Chairman. I think I still have a word or two to say about doors, particularly since the hon. member for Carleton has brought in the question of end use. If we could have an assurance that the government intends that all doors that are sold as building materials are going to be exempt, or that all doors that really are building materials are going to be exempt, and that there is not going to be any foolish effort to find out that a door here or there may have been used as a table or a screen here or there may have been used in a garden for a cold frame, or a window used for that purpose, I think it would be of assistance; in other words, that the wholesaler or the manufacturer from whom the tax is collected, knowing that this is a building material, will know that it is exempt from tax and will not later on have someone come and try to collect the tax because the end use was not the use that is normally given to the article. If that assurance were given I think it would not be worth while pursuing the matter any further. If the parliamentary secretary could give that kind of assurance I think it would be reassuring to those from whom the tax will be collected.


Richard Albert Bell: I can give my hon. friend that assurance immediately. There is certainly no intention of following each particular door. The only qualification at all that I would make is that if suddenly a rage developed, as a result of what my hon. friend said this morning, and people generally in cottages across the country were to adopt doors as a new form of dining room tables, there might have to be reconsideration of the matter. But I say to my hon. friend that there is no intention of following through at all. When a door is made ostensibly and obviously for the purpose of being incorporated into a building, then the odd case where it may be

put to some other use is not going to be followed through. If suddenly some new technique developed and it was used for other purposes, that would have to be considered and reported to parliament.


Gordon Campbell Chown: Ducts for warm air.


John Whitney Pickersgill: Perhaps the parliamentary secretary would give his explanation of this item.


Richard Albert Bell: Yes, I should be glad to do so. This really adds ventilation systems to the exemption. All finished ducts for warm air and ventilation systems will hereafter be exempt from sales tax. The exemption will not apply to sheet metal or other metals or hardware which enter into the manufacture of these ducts. That is the situation at present in relation to the more limited exemption. The committee will recall that in 1960 an exemption from sales tax was provided for:
Ducts for warm air systems for heating buildings, but not including materials used in their manufacture:
Subsequently difficulty was encountered by the industry in attempting to ascertain what portion of a manufacturer's output actually qualified for the exemption. The problem arose when some ducts were incorporated in ventilation systems, in which instance they were ruled to be taxable. To differentiate between taxable and non-taxable ductsi became a troublesome and costly operation for the industry. The proposed change will do away with the problem by exempting all ducts for warm air and ventilation systems for buildings. As I have mentioned before, the materials entering into the manufacture of these ducts remain taxable, but the value added by the transformation of these materials into ducts will be exempt from sales tax. In other words it does away with a tax on the labour and other aspects which are needed to transform them into the finished product. The expectation is that the extension of this existing exemption, applying only as it now does to the warm air ducts, to ventilation will amount to some $70,000 in a full year.


William Moore Benidickson: Tax concession?


Thomas Miller Bell: Tax concession.


John Whitney Pickersgill: This definitely is a new concession.


Richard Albert Bell: Yes.


Gordon Campbell Chown: Will the parliamentary secretary proceed with fuel tanks now?


John Whitney Pickersgill: I hope that we may have the same explanation with respect to fuel tanks.
Excise Tax Act


Richard Albert Bell: The purpose of this subclause is to provide that propane bulk tanks be given the same sales tax treatment as that enjoyed by fuel oil tanks when both types of tanks are used with furnaces for the heating of buildings and are directly connected with such furnaces.


William Moore Benidickson: What would it cost in a full year?


Richard Albert Bell: In a full year it is expected it will cost about $175,000.


Gordon Campbell Chown: Would the parliamentary secretary now go on to lumber, and so on.


Richard Albert Bell: As I explained this morning, Mr. Chairman, this involves no change except the removal of doors from the particular section. That is the matter upon which we had considerable discussion earlier.


William Moore Benidickson: The next item we get to, Mr. Chairman, is precast concrete piles, and so on. To what extent are we voting a tax loss here, a tax gain to the taxpayer?


Richard Albert Bell: It is expected to be a tax loss of about $75,000 in the full year.


Gordon Campbell Chown: Have we covered precast concrete piles now to the satisfaction of the committee? Agreed?


Some hon. Members:: Agreed.


Gordon Campbell Chown: We go on now to
page 6, item (g).


John Whitney Pickersgill: No, Mr. Chairman; I think the next item is prepared dry concrete mixes.


Richard Albert Bell: This section recommends that the existing sales tax exemption for "cement and additives for concrete" be extended to dry concrete mixes. These dry concrete mixes may incorporate two or more of the following ingredients, sand, gravel, cement and additives for concrete, all of which are now individually exempt. They may also contain a bonding agent, which is taxable. These ingredients may be packaged separately or mixed in one compound, but in any case they are sold as a unit and are ready for use and have been considered to be taxable.
As concrete made on the site or premixed, wet concrete is not taxable it is intended to provide similar treatment for dry concrete mixes and all materials which enter into their manufacture. The revenue consideration would be very difficult to estimate. It is probably not large, but I do not have any actual estimate for the committee. In the consideration of the balance of ways and means no actual estimate has been given.

Excise Tax Act


William Moore Benidickson: On the next item, Mr. Chairman-


John Whitney Pickersgill: Mr. Chairman, I wonder whether my hon. friend would permit me to ask another question on this matter. Could the parliamentary secretary say whether these dry concrete mixes are made in Canada or whether they are imported?


Richard Albert Bell: They are made in Canada.


John Whitney Pickersgill: Exclusively?


Richard Albert Bell: In large part. I am not able to give the proportion, but in large part they are made in Canada.


George James McIlraith: And they are becoming very popular.


Richard Albert Bell: And they are becoming very popular, as my hon. friend from Ottawa West says.


Mr. McBain:: Mr. Chairman, I wonder if we might revert to the subject of fuel tanks. I had to be unavoidably absent to answer a telephone call. My question is, are propane tanks that are used for the curing of tobacco, which are connected to a tobacco kiln, exempt from this taxation?


Richard Albert Bell: I am informed that they do not come under the particular section that is involved here, but they do come under another schedule of the act dealing with machinery and apparatus that in the opinion of the minister are to be used directly in the process of manufacture or production of goods.


James Alexander McBain: Will they be exempt from taxation under that other clause?


Richard Albert Bell: I am so advised.


Mr. Habel:: Mr. Chairman, I rose on this item when the matter was previously under discussion, but I forgot this question.


Richard Albert Bell: Is the hon. member on the item concerning fuel tanks?


Joseph-Alphonse-Anaclet Habel: Yes. The government, which calls itself expansionist this year, certainly must have expanded to a certain extent because last year the hon. member for Nickel Belt was urging that this exemption be given. Our riding will indeed be pleased to see that at least this year the government has expanded enough to accept what was suggested by the opposition last year.


Richard Albert Bell: The hon. gentleman will appreciate, of course, that the government is glad to take advice no matter from what source it comes.


Joseph-Alphonse-Anaclet Habel: Not always.


Gordon Campbell Chown: Would the parliamentary secretary proceed now to the item on page 6, milk and cream bottles, milk and cream cans.


William Moore Benidickson: No, Mr. Chairman. We were hoping to have an explanation with respect to prepared roofings for buildings.


Richard Albert Bell: This is only for clarification, Mr. Chairman. The exemption adds the words "for buildings" to this exemption, so that it clarifies what obviously is the case in view of the fact that the item appears under the heading "building materials". This will be administered in the same way as I have indicated to the committee will be the case in respect to doors. The word "exclusive" is not used; therefore a follow-up check in each case is not in contemplation.


William Moore Benidickson: What would be the effect on tax revenue?


Richard Albert Bell: I think it will be impossible to make any forecast. This really does not change the law in any way. This is simply a clarification. There is in fact no change in the revenue situation.


Gordon Campbell Chown: Is the committee ready for the item on milk containers?


William Moore Benidickson: Mr. Chairman, the next item is room thermostats. Is this significant in trade?


Richard Albert Bell: No.


William Moore Benidickson: Is it significant in an expansionist budget, and to what extent is tax relief involved in this item?


Richard Albert Bell: This is significant to the industry concerned, very much so, and is greatly welcomed by that industry. The position is that it involves a reduction in sales tax revenue which will be from $25,000 to $40,000 in a full year. The position is that this particular section proposes that all thermostats for use with permanent heating systems for the heating of buildings be exempt from sales tax.
The present administrative practice is to regard thermostatic controls sold with furnaces as components of those furnaces. As such they are exempt from sales tax under the general exemption for furnaces for the heating of buildings. However, when thermostats are sold independently they are taxable. In the session of 1960 a sales tax exemption was provided for electric heating equipment for use on a system using 200 volts or greater and permanently installed as part of an electrical heating system for buildings. However, the exemption specifically precluded from its benefits all wiring leading to and from such

electrical equipment as well as other materials connected to it. This resulted in thermostatic controls on this type of equipment being ruled as taxable.
The exemption proposed under this subclause will render all thermostats for use with permanent heating systems and materials entering into their manufacture, exempt from sale tax. Consequently thermostats for permanent heating equipment sold independently of furnaces will become exempt. As I have indicated, it involves a loss in revenue of between $25,000 and $40,000 a year.


William Moore Benidickson: Could I ask the parliamentary secretary whether these thermostats are made in Canada in the main, or are they mostly imported?


Richard Albert Bell: They are made mainly in Canada, I am advised.


Gordon Campbell Chown: Would the parliamentary secretary go on with the item on page 6 concerning milk and cream bottles, etc.


John Whitney Pickersgill: Mr. Chairman, before we go on to subsection 2, I should like to ask one question for clarification. Does this subsection 1 as reworded include all the items under building materials? That is to say, is this the complete law so far as the exemption of building materials from sales tax is concerned?


Richard Albert Bell: Mr. Chairman, this reproduces the old section as it deals with building materials, and includes all changes to which attention has now been drawn.


William Moore Benidickson: How much does the overall tax forsaken amount to in dollars? I heard the figure $40,000 mentioned in respect to one item but very little about the others, and should like to know what is involved.


Richard Albert Bell: Mr. Chairman, there is a substantial amount involved. The amount involved in respect to blowers for furnaces is $40,000; in respect to thermostats, $25,000 to $40,000; in respect to fuel tanks, $175,000; in respect to air conditioning ducts, $70,000; concrete piles, $75,000, amounting in total to something in the neighbourhood of between $400,000 to $500,000 per year. I might say that this has been welcomed very greatly by the industry.


William Moore Benidickson: Their spokesmen have said it is minimal.


John Whitney Pickersgill: Mr. Chairman, I want to make sure that any taxpayers who want to know what the exempted items are can be sure that so far as building materials are concerned, they are all specified in this subsection?
Excise Tax Act


Richard Albert Bell: I believe the hon. gentleman is correct.


Gordon Campbell Chown: Shall the item in respect to milk and cream bottles, milk and cream cans and milk and cream plastic bags carry?


Richard Albert Bell: Mr. Chairman, this item simply extends the existing exemptions for containers for milk and cream to cover the new type of container, namely plastic bags.


George James McIlraith: Mr. Chairman, the extensions I think will be welcome to the extent that they will help to relieve the pressure of higher costs on what are already becoming expensive products, and I refer to milk, cream and butter. Unfortunately while we have a very difficult situation in the dairy industry at the same time milk in its fluid form for consumption and butter are expensive products from the point of view of the consumer, and any extension in the exemption, such as the one contained here, will be welcomed. However, there is one point which is of concern to me and I should like the parliamentary secretary to clarify it. It will be noted that milk and cream bottles are exempted from excise tax, but paper cartons are not exempted, at least under this section. Are they exempted under any other section, and if they are, under what section?


Richard Albert Bell: Mr. Chairman, they are exempted under the usual coverings section.


George James McIlraith: Would the parliamentary secretary read that exemption?


Richard Albert Bell: Those cartons are exempted under the section we are now dealing with, and particularly under the phrase "usual coverings or usual containers to be used exclusively for covering or containing goods not subject to consumption or sales tax". This does not include coverings designed for dispensing goods for sale or designed for repeated use, but again that is subject to certain exceptions and the hon. gentlemen will see that bottles, cans and now plastic bags are among those exceptions. There being no exception in relation to those cardboard containers, so they fall under the general heading.


George James McIlraith: As I heard the clause read, Mr. Chairman, it does not seem to be as simple as the hon. member suggests. I hope his explanation is full and complete, but as I understand the general words at the conclusion of paragraph (g) they refer to materials to be used exclusively in the manufacture of the foregoing coverings and containers not subject to consumption or sales tax.

Excise Tax Act


Thomas Miller Bell: I think if the hon.
gentleman follows down that page he will note that the exceptions relate to those types of coverings and containers which are designed for repeated use. The ordinary cardboard container to which we have become accustomed is not designed for repeated use, so it comes under the general coverings section at the beginning.


George James McIlraith: I understand the usual
coverings to be limited to those items set out and enumerated by letters.


Thomas Miller Bell: Oh, no.


George James McIlraith: If I am not right in that then of course that clarifies the position.


Thomas Miller Bell: The hon. gentleman I think has this in fact in reverse. This section applies to the usual coverings and does not include usual coverings which are designed for repeated use except the enumerated coverings. I think that is where the only difference of opinion can lie. The cardboard cartons are not designed for repeated use.


George James McIlraith: I am sorry to be persistent on this point, but I take it that the parliamentary secretary is trying to explain that cartons come under an earlier part of the schedule, where we are dealing with coverings or containers designed for dispensing goods?


Thomas Miller Bell: No, these particular containers come within the first two and a half lines of the section in respect of usual coverings or usual containers to be used exclusively for covering or containing goods not subject to consumption or sales tax. Subsequent portions of this section deal only with those coverings which are designed for dispensing goods for sale or for repeated use. (Translation):


Mr. Boulanger:: What will be the amount to the farmers of this exemption from sales tax for milk bottles and plastic bags? (Text):


Thomas Miller Bell: Mr. Chairman, it would be very difficult to give a specific figure as to the actual losses in revenue which will result. These plastic containers for milk and cream have only come into use very recently and are not used to any great extent across the country now. Indeed, I think they are in use in only a few localities. It seemed very appropriate to put them in the same position as the usual type of container. As I have said, it would be very difficult to say exactly what the amount of revenue loss would be by reason of this inclusion. (Translation):


Samuel Boulanger: Was there a tax before on milk and cream glass bottles, in other words, on ordinary bottles?
[Mr. Mcllraith.)
(Text):


Thomas Miller Bell: Oh, no, of the ordinary type. If this amendment were not introduced there would be a tax upon milk and cream plastic bags because they are not interpreted as coming within the existing exemption in regard to milk and cream bottles and milk and cream cans. Actually this is a widening of the exemption and will be helpful to the dairy industry in both its aspects, to the farmer and to the retailer.


John Whitney Pickersgill: Has the tax collector in fact been collecting the taxes up to now, or is this just in anticipation of the fact that these plastic bags may be taxable?


Thomas Miller Bell: This is a new article just coming into use, and my understanding is that those which have been used are subject to tax.


John Whitney Pickersgill: That is not an answer to the question I asked.


Thomas Miller Bell: I am advised that in respect of those which have been used to the present time there has been a tax charged in conformity with the laws enacted by parliament, and the tax has been collected.


John Whitney Pickersgill: Could the parliamentary secretary find out how much in toto has been collected in taxes in this regard?


Thomas Miller Bell: That would be very difficult to do. One would have to go back over a considerable number of sales tax reports. I will see whether there is any information available in this regard and, if so, send it to my hon. friend.


John Whitney Pickersgill: That should not take very long, because the parliamentary secretary has suggested that this is a new article just coming into use and presumably there are not more than one or two manufacturers in Canada from whom the tax in this regard is collected. If the department's records are as up to date as they should be it should not take very long to find out approximately how much has been collected.


Thomas Miller Bell: I assure the hon. member that the department's records are up to date in all particulars. I shall see what the situation is and endeavour-


John Whitney Pickersgill: Including Jean Talon
hospital?


Thomas Miller Bell: On another occasion
1	will debate that matter with my hon. friend.


William Moore Benidickson: I take it that item (g) of clause 2 deals with a specialized field. The parliamentary secretary to the minister says that this was not previously covered in clause
2	of schedule 3 of the act. I refer to the usual exemption. Is the parliamentary secretary

saying that this amendment is required for the purpose of making clear that milk and cream bottles, milk and cream cans, milk and cream plastic bags and materials to be used exclusively in the manufacture of those articles from now on will be exempt from sales tax, which was not the case under the previous legislation having to do with usual coverage?


Thomas Miller Bell: Yes, that is correct, Mr. Chairman. These plastic bags for the sale of milk and cream do not come within the existing classification, which speaks of bottles and cans. They equally do not come within the first general section which I read earlier in response to the question of the hon. gentleman from Ottawa West, which deals with disposable coverings and containers. This item, therefore, gives a tax concession which has not heretofore existed.


William Moore Benidickson: We are dealing here with a throw-away article as against an article for repeated use?


Richard Albert Bell: I am advised that these particular articles come within the classification relating to dispensing goods for sale.


William Moore Benidickson: Throw-aways.


Richard Albert Bell: Yes.


Gordon Campbell Chown: Is the committee ready to discuss feeds for poultry, cattle and other stock and for fur bearing or laboratory animals?


William Moore Benidickson: Perhaps we can have an
explanation.


Richard Albert Bell: I knew what my hon. friend was going to ask about this. Perhaps I could describe the clause as an act for the relief of the parliamentary secretary from embarrassment, because in Hansard of 1960, at page 4674, in reply to a question from the hon. member for Kenora-Rainy River, I told him that the restriction which was then applied to animals "whose pelts have commercial value" would be removed. Then when the bill was up, at page 4853 of Hansard of 1960, I hid my blushes and told the house that the draftsmen thought the words should be retained to conform to what had been in the resolution. I went on at that time and added these words:
I am advised, however, that the presence of these words in the bill in fact imposes no restriction on the exemption.
Later, at page 4854, I said:
Therefore, while my answer was erroneous the net effect is the same and in fact there is no real restriction on the exemption by the continuation of the particular words.
After the 1960 amendment was passed it was discovered that there were special feeds
Excise Tax Act
sold for mice and rats and hamsters which are used for testing purposes in laboratories. Consequently the second statement which I made to the house was not fully accurate. Some of those feeds are found to be taxable under the existing exemption. This proposed exemption will provided freedom from sales tax for all feeds for fur bearing animals. I can only say to the committee that I very deeply regret that I should have unintentionally misled the committee of the house last year, and I describe this clause again as an act for the relief of the parliamentary secretary from embarrassment.


William Moore Benidickson: As the parliamentary
secretary was good enough to point out, I raised this question in the house last year. I do not think it involves anything of great consequence to our taxpayers. I appreciate the parliamentary secretary's generosity in pointing out an inaccuracy that may have been involved in his explanation at the committee stage of the budget resolutions and the bills consequent thereon last year. It is my understanding that from the announcement of the budget resolutions the Department of Finance and the Department of National Revenue generally interpret the imposition of taxes upon individual taxpayers according to the intent of the resolution and its administration. Has the Department of National Revenue administered the sales tax in accordance with what the parliamentary secretary says was his intent last year or, on the contrary, have they felt obliged to ask for an amendment to the legislation because they felt that the interpretation of the statute last year did not give them the authority to tax in the way that is provided for in the legislation before us?


Richard Albert Bell: I regret to have to advise the hon. gentleman that the Department of National Revenue did not take the words of the parliamentary secretary, or give them the value which he would have liked to attach to them, and they have interpreted the law strictly in relation to the item. I should add perhaps that the draft, in order to make absolutely clear what is intended, adds the words "or laboratory" after the words "fur bearing animals". This is not in the resolution, and this makes it absolutely clear what is intended in respect of it.


John Whitney Pickersgill: I think the parliamentary secretary may unwittingly have got himself in for another lot of embarrassment. Of course I am not a draftsman and obviously neither is he, but it seems to me that again it is a question of end use. If it means that feeds for animals that might be laboratory animals are not to be taxable, whether the hamster is

Excise Tax Act
used for laboratory purposes or is a pet, then I do not think he moved in any difficulty; but if the tax collector is going to try to collect the tax from children who have hams-sters as pets but not in the case where the feed is fed to hamsters in the laboratories, I say this would be a shocking waste of the bureaucrat's time and this attempt to tax the pets of our children would be absurd.


Richard Albert Bell: I am not sure whether I can define a hamster as either a furbearing or a laboratory animal, but it is either. In either case, whichever it may be, food of the type referred to here would be exempt.


John Whitney Pickersgill: In other words there is not going to be any attempt made to tax the food of white mice if they are owned by children and are not in a laboratory.


Richard Albert Bell: No, not at all.


John Whitney Pickersgill: The minister is quite sure after his experience last year that the language is such that that will not be the unexpected result, as happened last year?


Richard Albert Bell: The hon. gentleman will notice that this does not say "for use in a laboratory". It says "laboratory animals".


John Whitney Pickersgill: That does raise a nice question of semantics. "Laboratory" is not an adjective; it is a noun. What is a laboratory animal? Has the hon. gentleman looked at the dictionary to find out what a laboratory animals is? Would it not be a lot simpler to say "or other animals" and cut out all these attempts to qualify; or is the hon. gentleman afraid that it might include food for some kind of animal that the treasury is very anxious to tax? I cannot really conceive of any kind of animal food, apart from those that are here stated, that anyone would want to tax. What kind of animals that are neither fur bearing nor laboratory animals, whatever a laboratory animal is, eat food that is subject to tax where the treasury is going to lose something? It just seems to me that there is a lot of nonsense here, to quote the minister's second favourite word.


William Moore Benidickson: Does the parliamentary secretary not think this language with reference to laboratory animals is unnecessarily overstated? It will not produce for the crown revenue of consequence and it might make lawbreakers out of some of us who encourage our children to have poultry, cattle and other stock as a hobby, and who perhaps might be ignorant of the obligation to pay a tax for feed. In particular, is it not a possibility that the vendor of these feeds is unnecessarily put under an obligation to question all purchasers in order to see that this technical language is adhered to?


Thomas Miller Bell: The committee seems to be under a misapprehension as to the purpose of the amendment, which is to expand, not to contract.


John Whitney Pickersgill: That is exactly what I said.


Richard Albert Bell: The situation is that most foods for animal pets come under the section of the Excise Tax Act dealing with foodstuffs; under the provision with respect to meats, canned, frozen, smoked or dried; under the provision respecting biscuits, which covers dog biscuits and things of that kind. This particular section has provided an exemption on feeds for poultry, cattle and other stock and for fur bearing animals whose pelts have commercial value. We are eliminating the words "whose pelts have commercial value". We are broadening the provision to cover all fur bearing animals whether or not their pelts have commercial value. We are adding to it because there are some animals which are not fur bearing. We are adding the words "or laboratory". What we are doing is expanding the exemption very considerably, and I think the committee should have regard to that fact.


John Whitney Pickersgill: I do not agree with that statement at all. The parliamentary secretary said that last year he thought it included laboratory animals, so he is not expanding it very much. He is only expanding it to include laboratory animals, but I put this question to him. Apart from fur bearing animals or laboratory animals, what animals are there whose feed it is still proposed to tax? What kind of animals are these; snakes, snails? With respect to any animal that has any fur, it is obviously clear that the food for ;it cannot be taxed, and the food for any animal used in a laboratory cannot be taxed. The feed for poultry, cattle and other stock cannot be taxed. What are these mysterious animals on which the treasury is going to collect a tax to help the minister pay his deficit? What are these animals? Name them. If there are none, strike out the adjectives altogether so that it will read "feeds for poultry, cattle and other stock and for animals". Then there will be no doubt. It will be simple, and it will not turn the tax collectors into schizophrenics trying to figure out whether a particular animal is a taxable animal or a non-taxable animal.


Thomas Miller Bell: If the hon. gentleman were correct he could take no exception to the draftsmanship as it stands. If there are in fact no fur bearing or laboratory animals which are not exempt, then the hon. member has no case and he should be satisfied to let it stand as it is.


William Moore Benidickson: We rely on the good intentions of the administration in office for full information in matters of this kind. What are the classes that might be taxable and which are excluded under this definition? I think the administration owes it to the opposition, because of the administration's relationship with the officials of the taxing departments, to tell us why we have this kind of definition.


Thomas Miller Bell: Mr. Chairman, this is one of those situations which grow. It may be that there are comparatively few or, indeed, there may be none. I can only say to hon. gentleman opposite that as a result of the best consideration which was given to the matter by the Department of National Revenue and by the draftsmen of the bill, this seemed to be a reasonable approach to the matter. I have tried to be completely and absolutely frank with the committee and to indicate the position in which I found myself last year. It may be that the dropping of those words would accomplish the desired result, but without detailed consideration of that point by the department and by the draftsmen of the bill I would feel reluctant so to do.


John Whitney Pickersgill: Would this include bird seed? A bird is not a fur bearing animal, and many birds are not laboratory animals. Is bird seed to be taxable? Would it include food for goldfish?


Thomas Miller Bell: I am not clear about goldfish but bird seed is exempt under another section, I am advised, and I think probably feed for goldfish-


John Whitney Pickersgill: What about goldfish? How much does the treasury collect from the tax on food for goldfish?


William Moore Benidickson: How much does the treasury want to collect?


Thomas Miller Bell: I am sorry, Mr. Chairman, I do not have that information this afternoon. I am not sure what the position is with respect to goldfish. I can ask as many questions as hon. gentlemen opposite in relation to this matter. It is obviously not possible to answer all questions of that type on each particular item that may be before the committee.


John Whitney Pickersgill: What we are doing here is making the tax laws of the country. We are saying what people have to pay into the treasury, and surely we should know-


Thomas Miller Bell: The hon. member seems to be more interested in goldfish than anything else.
Excise Tax Act


John Whitney Pickersgill: I know this government hates to have to explain its conduct at any time in any circumstances. We have had plenty of evidence of that in very recent times with respect to much more important things than goldfish, but that is no excuse for loosely drafted legislation. The parliamentary secretary has admitted that this part was pretty loosely drafted last year, and he has given a very frank explanation which I think does him credit. I am not criticizing him at all. I am saying that the language is still loose and still uncertain. If the treasury does not know of any animal feed for any animals that they want to tax, they do not need to put these adjectives in at all. All they need to do is to say feed for poultry, cattle, other stock and for animals. Then, there would be do doubt about it. The tax collector would not have to scratch his head and wonder if this animal was fur bearing or a laboratory animal or a pet or what it was.
I say, in the interests of clarity, unless there is some large lot of animal foods for some kind of mysterious animal that the parliamentary secretary has not heard about-perhaps pink elephants, but I suppose they are fur bearing, I do not know-why use restrictive language? Surely the government had something in mind in using these adjectival phrases to restrict the legislation. What is it? What are these animals? I think we ought to know or else we ought to say there will be no tax on food for animals, and let it go at that. Then, the law would be simple and clear and everybody would understand it. At lot of problems of administration could not arise.


William Moore Benidickson: Perhaps the parliamentary secretary would give consideration to this suggestion. I think the restrictive language is unnecessary. In the absence of any evidence that we are going to get important tax revenues by not having a broadened phraseology such as that suggested by the hon. member for Bonavista-Twillingate, why could we not have no reference in the introductory words that might apply to pet fish, inconsequential as that might be to the tax revenues? Let us make it clear that those who buy feeds for these purposes are not going to be lawbreakers. Let us make it clear for the vendor of all these feeds that he knows where he stands when he sells all these feeds, that they are tax exempt.
Perhaps before we conclude some of the clauses, the parliamentary secretary who has in front of him the officials of the Department of Finance and the Department of National Revenue, could give reconsideration to the matter, and my suggestion would be that we allow this clause to stand.

Excise Tax Act


Thomas Miller Bell: The hon. member for Kenora-Rainy River, of course, knows very well how these exemptions arise. They arise from representations which are made from time to time by people in the industry who are affected. The only representation which was made subsequent to the amendment which was passed last year, and which in itself extended the exemption considerably, was one which was made on behalf of those who are producing certain feeds for mice, rats and hamsters in laboratories. They found they were caught under the very expanded language which existed at that time. It was to meet their situation, and the only situation of which the Department of National Revenue is aware, that this amended language was adopted. If there were other situations, and I think there probably are none, they could be met easily as has been done in this instance.
This is being done to meet particular circumstances. Hon. gentlemen opposite, I think, should recognize that there has been, on the part of those who have been involved in this question, the utmost good faith in attempting to be frank and straightforward and honourable with the committee. Apparently that is not the way to get along.


John Whitney Pickersgill: Mr. Chairman, I resent that statement by the parliamentary secretary very much. It is our duty as an opposition-of course the hon. gentleman never had the advantage of sitting in the opposition-to ensure so far as we are able that the tax laws are in clear and simple language. Here is one particular law that was not in clear and simple language last year and which resulted in a misunderstanding and, as the hon. gentleman described, embarrassment for himself. He is now seeking to correct this situation by adopting other language that is not clear and simple and which is almost certainly going to result in further embarrassment.
There is one simple way to clear this whole thing up. The hon. gentleman has in front of him one of the officers from the Department of National Revenue. Let the parliamentary secretary tell us of any animal food that is taxed at the present time except those foods for laboratory animals. Surely the department knows what it is taxing, and if there is no other animal food being taxed, then there should not be a tax instituted by wording of a restrictive character. If he would drop these two adjectives so that the provision would just refer to animals, then the whole thing would be clear and there would not be any possibility of a situation arising in the next 12 months such as that which has arisen in the last 12 months. It seems to me this is a reasonable request and a simple

proposition. If food for goldfish or some other animals is being taxed, and the government still want it to be taxed, surely they know what it is, they know where the tax is being collected, and they should tell us.


Richard Albert Bell: It is quite obvious, Mr. Chairman, to the hon. gentlemen that I have consulted with the officials who are here. So far as fur bearing or laboratory animals are concerned, they are not able to give me any exact illustration. It may be that there are some animals in zoos, I do not know. Such officials as are here are not, of course, engaged in the day to day, immediate administration of these items. This provision has been considered in some detail and, with respect, I suggest to the hon. gentlemen that there having been one, solitary representation in relation to it, they ought to be satisfied to allow the measure to pass on its present basis without further ado.


William Moore Benidickson: The parliamentary secretary made reference to zoos. So far as I know zoos are almost always under the jurisdiction of organizations that are non-profit organizations. Certainly, we would not want to impose a sales tax on food for animals in the zoos of this country. I think we should encourage those organizations that have this interest and encourage them to enlarge their stable in these zoos. He thought that perhaps zoos might not be exempted.


Richard Albert Bell: I said there might be; I am not in a position to tell my hon. friend. I shall be glad to get him any type of information he wishes in relation to the proposal. If my hon. friend wants to examine the problem in relation to goldfish or any of these details, I shall be glad to get him all the information in due course.


William Moore Benidickson: My suggestion to the parliamentary secretary was that he accept the suggestion made by the hon. member for Bonavista-Twillingate and be willing to eliminate the restrictive words in this new paragraph. This new paragraph in connection with feeds for animals involve four lines of definition-too wordy. My suggestion also was that we could go on with other clauses of this bill and that the parliamentary secretary might, in due time, feel that inasmuch as there was no consequential product that would become taxable because of the restriction of the language, he might allow this clause to stand until the language is clarified. Who is interested in taxing mice, rats, hamsters, pet fish and so on? Let us not have in parliament this restriction of language, if we have intent, that would make a possibility that some of these irrelevant items might be exempt from tax.


Gordon Campbell Chown: Is the committee ready to go on to the next item?


Some hon. Members:: Carried.


Gordon Campbell Chown: It is on page 7, "Preparations, chemicals, or poisons".


Herbert Wilfred Herridge: Mr. Chairman, I thought we were on "Feeds for poultry, cattle and other stock".


Gordon Campbell Chown: Yes. That was the item we just had under consideration.


Herbert Wilfred Herridge: I wish to deal for a moment with this next item "Forest products when produced and sold by the individual settler or farmer" because I am interested in it.


Thomas Miller Bell: May I say to the hon. gentleman that there is no change in that at all.


Herbert Wilfred Herridge: I wanted to ask just a question or two because I represent some farmers who sell from 1 million to 2 million or 3 million feet of lumber and timber materials a year. I want to ask whether these are exempt:	all lumber produced under these
circumstances in any quantity, timbers, pulp-wood, cordwood for stove purposes, poles, fence posts, piling, ties, cedar boughs, ornamental trees, bean poles, float logs, boom-sticks and shakebolts. I want to make certain that they all come under that classification.


Thomas Miller Bell: The hon. gentleman has mentioned a great number of articles of the forest. All the first ones which I followed I am assured are exempt. Then I confess that I got lost with the hon. gentleman's list. I think the hon. gentleman would not wish me to give legal opinions on the floor of the House of Commons. I should be glad to get the hon. gentleman all the necessary information. Indeed I think most of the items he has mentioned, if not all of them, are exempt. With such a long list it is very difficult to follow them all.


Herbert Wilfred Herridge: I wish to point out that they are all forest products produced and sold by individual settlers or farmers in my constituency. Every one of the items I have mentioned is in that category. I just asked the question:	Do they come under this
clause? They are all forest products, every one of them. I mentioned cedar boughs, for instance.


Thomas Miller Bell: I did not catch the item mentioned by the hon. member.


Herbert Wilfred Herridge: I mentioned cedar boughs, b-o-u-g-h-s. They clip two or three feet off the end of the cedar bough and they ship them to the undertakers in the various towns and the cities on the prairies. They are used
Excise Tax Act
for ornamental purposes. As to bean poles, there is quite a market for them now, for stringer beans, scarlet runners and things of that kind. Then there are float logs; they are cedar logs supplied for holding up floats on which machinery is placed. Then there are boomsticks. Boomsticks are logs supplied for forming bag booms.


John Whitney Pickersgill: Such as they have on the Ottawa river.


Herbert Wilfred Herridge: Then there are shakebolts. They are split sections of cedar logs averaging from two feet to three feet in length from which shakes are later split or sawn. However, they are forest products. I mention the matter because this was brought to my attention and some question was raised about this clause. Then there are railroad ties. I think we are fairly certain of the more or less stable products. However, there are some products here that are not manufactured or not sold generally by farmers from their woodlots and so on, but these products are all sold by settlers or farmers in my constituency off the forested portion of their properties.


Richard Albert Bell: May I say first that there has been no amendment to this particular section, and I do not know whether we are in order in discussing it. The general heading is "Forest products when produced and sold by the individual settler or farmer". The hon. gentleman can interpret that as well as I can. He then mentions a long list of items. Some of them are not produced in my constituency. I am not familiar with them. I would not wish on the floor of the House of Commons to seek to give an opinion in respect of the tax status of each of those items. If they come within the generic heading "Forest products when produced and sold by the individual settler or farmer", then obviously they are tax exempt.
I am sure the hon. gentleman will be fair enough to realize that when he mentions a particular type of forest product with which I am not familiar, it will perhaps be difficult for me to give him a specific answer in relation to it. From listening to the list, so far as I can see I would say the products he mentions probably are all exempt. However, I should be glad to make a detailed inquiry on his behalf, particularly in view of the fact that this item is not being amended by the proposed legislation.


Herbert Wilfred Herridge: I wish the parliamentary secretary would do that. I can assure him that they are all forest products and that

Excise Tax Act
they are all produced by settlers or individual farmers. I wanted to be quite certain about one or two of them which are rather unusual.


Richard Albert Bell: If that be the case, then there could be no question that they are sales tax exempt.


Gordon Campbell Chown: We now turn to page 7, "Preparations, chemicals or poisons".
(Translation):


Samuel Boulanger: Mr. Chairman, could the parliamentary secretary to the Minister of Finance (Mr. Bell) tell the house if chemicals used in the production of poisons for pest control purposes in agriculture or horticulture are exempt from excise tax? Could he also tell us if the materials that are used in the production of poisons against small animals such as rats and field mice that gnaw fruit trees in winter are exempt from that same tax?


Thomas Miller Bell: Yes, Mr. Chairman.


Samuel Boulanger: I asked the question because the text is not clear. In fact, it reads as follows:
-for pest control purposes-
Can we consider small animals like rats and field mice as pests? If I understand correctly, a pest-


Mr. Morissetfe:: You know what a pest is.


Samuel Boulanger: It is an animal which resembles the hon. member who has just spoken. (Text):


Richard Albert Bell: I have not the French text in front of me. In the English version the language is "poisons for pest control". That certainly would clearly cover what the hon. member has in mind. I would think that the word "parasite", en frangais, would cover it as well.


Gordon Campbell Chown: The next item for consideration is-


John Whitney Pickersgill: The parliamentary secretary has not told us how much of this is really new.


Richard Albert Bell: This paragraph clarifies the existing exemption for and I quote:
Preparations, chemicals or poisons for pest control purposes in agriculture or horticulture and materials for use exclusively in the manufacture thereof.
This exemption was intended as a relief for the farmer by providing an exemption for poisons and insecticides. Recently the manufacturers have claimed that it is applicable to a number of pharmaceuticals on the

ground that their use in treating skin diseases and internal disorders caused by bacteria, internal parasites and similar infections is, in fact, the control of a pest. This interpretation would broaden the existing exemption beyond what was originally intended and would also exempt drugs and medicines which are taxable when used in the treatment of human and animal diseases. The particular amendment is for the purpose of clarification and assuring that it conforms with what was the original intention of parliament.


Gordon Campbell Chown: The next item, as I was pointing out, is "Self-propelled, selfunloading forage wagons". Is there any explanation on the part of the parliamentary secretary?


Richard Albert Bell: This covers a reasonably newly designed item of farm machinery and adds that to farm machinery exemption. It exempts a self-propelled wagon fitted with a mechanical device for unloading. The use of the equipment of course, as hon. gentlemen realize, speeds up the operation of transporting forage from the field and unloading it in a storage location. These vehicles have not been produced in Canada to any extent until quite recently.
Generally items of farm machinery are exempt from sales tax. They are covered by the wording of tariff items 409 and 409a and some other items which are listed in schedule III of the Excise Tax Act. However these particular forage wagons did not qualify under the wording of the tariff item and special mention is made in schedule III to make them exempt. It is very difficult to determine what the result of the exemption may be upon the revenue. It is probably not large, but it could be considerable if the popularity of these vehicles grows. (Translation):


Samuel Boulanger: Will the exemption from excise tax on this machinery result in an increase in the price of milk? As you know, in the past three years, the price of milk has come down 40 or 45 cents per hundred pounds.
(Text):


Richard Albert Bell: Mr. Chairman, I confess I am unable to relate what the hon. gentleman says, dealing with the price of milk, to the sales tax exemption on forage wagons. This sales tax exemption will reduce the cost of production for farmers, and by reducing the cost of production for farmers it will, I hope, enable them to make a larger profit. I think it has nothing to do with what the selling price of milk may be.


William Moore Benidickson: In subclause 3 of clause 8 of this bill we are dealing with items under the heading "farm and forest". In the budget

presented by the Minister of Finance, on the tariff side-and we have not had an opportunity to come to that yet-there are porposals which in the opinion of the Canadian Federation of Agriculture will increase the cost of production in agriculture, about which the parliamentary secretary just mentioned. I refer to the increase in tariff protection on nails.
In so far as the "farm and forest" schedule is concerned, belatedly referring it back to subclause 1 "building materials", what is the consistency in the proposals advanced now, relating sales tax to tariff? What is the consistency of certain reductions in schedule III under the heading "farm and forest" in relation to our discussion on certain items of reduction under the schedule "building materials" in subclause 1?
Would the parliamentary secretary explain to the committee, so that we may explain it to the farming community and answer the brief presented by the Canadian Federation of Agriculture, why on the other side of the tax field, the tariff side, after this budget, it is likely that for instance the cost of nails to the farmer will increase? What is the relationship between reductions under this "farm and forest" schedule and the other side of the budget picture which, in the opinion of the Canadian Federation of Agriculture, involves farmers in increased costs because of an increase in the price of nails?


Thomas Miller Bell: Mr. Chairman, as I understand the hon. gentleman's comment it is that in another bill there is an increase in tariff. The hon. gentleman wants me to reconcile an increase in tariff on nails with the elimination of sales tax on self-propelled forage wagons.


William Moore Benidickson: No, on the whole of subsection 3.


Richard Albert Bell: The hon. gentleman is giving me a rather considerable task in asking me to reconcile those matters, which in my submission to the committee do not really relate. When we come to the question of the Customs Tariff and the item dealing with nails I will be glad to discuss that matter with the hon. gentleman, or the minister will be glad to discuss it with him, and I believe will satisfy him that the action proposed in respect of nails is one which is to the advantage of all Canadians, the producers of nails and the consumers of nails alike. I think at this stage, when we are dealing with self-propelled forage wagons, that is about all I can say.


William Moore Benidickson: I was not, of course, directing my comment to the item related to self-propelled forage wagons, preparations,
Excise Tax Act
chemicals, or feeds for poultry. I was referring to the heading of the subsection, which covers sales tax benefits or otherwise that are available to farm and forest people.
I simply thought it appropriate at this stage to ask the parliamentary secretary about the other side of the budget picture, when under another bill that will come before us, perhaps tomorrow, added protection will be given to the manufacturers of nails which has been protested by the farming community. I thought it quite appropriate, when we are dealing with certain eliminations of sales tax in the farm and forest field, to ask how this will compensate in dollars and cents value the farming community in relation to an impost they expect as a result of the tarif increase on nails.


Richard Albert Bell: The whole situation with respect to nails will be dealt with in the committee when we reach the Customs Tariff. I will be glad to discuss the matter with the hon. gentleman at that time.


Gordon Campbell Chown: Shall we now proceed to the item dealing with additives for fuel oil for heating, etc.?


John Whitney Pickersgill: Mr. Chairman, before we go to the particular items under that heading of "miscellaneous" I should like for a moment to express the disappointment I think is felt by everyone connected with the fishing industry because of the omission of certain tax relief they have been seeking in order to put the fishing industry on a somewhat comparable basis with other primary industries in the country.
The minister received representations from the Fisheries Council of Canada long before the budget with respect to certain changes they hoped would be made in the sales tax in this particular legislation. There was, as the minister well knows, a change made in 1939 with regard to diesel fuel supplied to draggers and trawlers measuring at least 45 feet in length and licensed by the Department of Fisheries. It is very difficult for those engaged in the fishing industry to understand why the fuel oil used by fishermen who can afford a boat measuring 45 feet or longer should be exempt from sales tax and it should not be the case with smaller boats.
There was a great hope that the fishermen of these smaller boats which cannot make a five-day voyage would be treated on the same basis as fishermen with larger vessels. I cannot find anything in the language here that would suggest this change has been made.
I am not an expert on this matter but just want to be sure that this request has been refused. I would be even happier if told that I am not reading the bill carefully enough

Excise Tax Act
and that in fact it has been done. If that is the case, I will sit down at once and allow the parliamentary secretary to tell me so.
There was also representation made that the excise tax on diesel fuel oil used in internal combustion engines to generate electricity for commercial fishing industries should be dropped, as has been the case in regard to certain other primary industries. Again I make the same remark in that regard; if by any chance I have not found the change and it is here, I would be very happy indeed to hear about it. If there is no change in that regard then I must express regret that it has not been changed. This was done in respect to the logging and mining industries and it is very hard for fishermen to understand why they should not be treated in the same way. I am sure the parliamentary secretary can understand that feeling.


Thomas Miller Bell: He is very anxious to go fishing anyway.


John Whitney Pickersgill: I beg your pardon?


Thomas Miller Bell: The parliamentary secretary is very anxious to go fishing.


John Whitney Pickersgill: The parliamentary secretary is no more anxious to go fishing than the member for Bonavista-Twillingate is anxious to go to the fishing parts of this country instead of sitting here. I should like to be able to go and tell the fishermen that the government at long last has met some of the requests of the fishing industry. If it has I do not want to waste the time of the committee, but if it has not I want to make a plea that in the next budget, if we are ever to have another budget from this government-


George James McIlraith: You will not.


John Whitney Pickersgill: -the government should do just what it has failed to do this year, that is, to pay some attention to the representations received from the fisheries council.


William Moore Benidickson: They will not have
another chance. This is their last chance.


John Whitney Pickersgill: This is something that is not of very great interest to the fishing industries in my constituency and perhaps in any part of Newfoundland, but it is of importance to certain northern fisheries in which an hon. member accused me the other day of taking no interest at a time when we were debating the Pine Point railway, which is apparently another vision like the Columbia river, according to what we were told this morning. The fisheries council asked that the sales and excise taxes be removed from certain vehicles such as snowmobiles and track type vehicles for use in respect of the northern

fisheries in the wintertime. I cannot find in this bill any indication that this change has been made, but I would be very glad if told that this has been done. If it has not been done 1 hope if there is another budget presented by this government that consideration will be given to this change.
I know that the parliamentary secretary does not like any reference to nails.


Thomas Miller Bell: Only on appropriate occasions.


John Whitney Pickersgill: I suggest this is an appropriate occasion. According to the brief presented by the Fisheries Council of Canada nails are plentifully used in the construction of sardine weirs and lobster traps and, therefore, a request was made that nails for this purpose should also be exempted from tax. It does seem to me that the time has arrived when some attention should be given to these requests of the fisheries council. I take this opportunity to record those requests and to say that I hope they will not be ignored much longer.


Thomas Miller Bell: Mr. Chairman, the particular section with which we are now dealing has reference to only two matters, additives to fuel oil and seismic shot hole casings, and does not deal with the matters to which the hon. gentleman has referred. Those matters are not new matters. I believe they have been referred to governments for some period of time, and I have no doubt that when my hon. friend occupied a position on the treasury benches representations in respect to these matters were made to him.


John Whitney Pickersgill: I can assure the hon. gentleman that they were not, because at that time there was no exemption in respect of diesel fuel used by the lumber and mining industries, and it is only because of this exemption to the lumber and mining industries that the fishermen find it impossible to understand why they are not to be treated equally. This is a matter that has arisen since the present government came into office.
In respect to the question regarding this northern equipment, I am not able to say for sure whether representations were made five years ago, but I would be very doubtful that they were. There has been great development each year in the kind of machinery used for this purpose.
Regarding the other questions, I am not sure there was ever any such representation made before, but I would be very surprised to find that there was.


Richard Albert Bell: From what the hon. gentleman said earlier he realizes there is a

very serious end use problem in relation to some of the matters he has raised.


John Whitney Pickersgill: I am very well aware of that fact, but hope that the hon. gentleman is not insinuating that fishermen, if they had a tax exemption, would use diesel oil to go on holidays, because the average fisherman operating a small vessel must work all the time during the fishing season to make a living and does not have the opportunity of taking a pleasure cruise.


Richard Albert Bell: I make no insinuations at all.


William Moore Benidickson: Mr. Chairman, we are dealing with a clause of the excise tax bill which is headed "Miscellaneous". We in the opposition do not receive regularly all the representations which are made to the government, in the course of a year, prior to its presentation of a budget. I should like the parliamentary secretary to give this committee, during the consideration of these items, information as to what representations have been made by individuals interested in the matter of the cost of living, particularly the less well off sectors of the economy, in respect to sales tax on food products such as margarine. I should like the parliamentary secretary to tell us whether the government has received representations throughout the year and what decisions have been made in this regard. I can find nothing included in this bill changing the sales tax in respect to margarine, and should like to know the reason why this has not been changed.
I should also like to ask the parliamentary secretary whether or not representations have been received during the year from soft drink manufacturers regarding the elimination of sales tax on their products and, if so, I should like to know why those representations have not caused this administration to revise the law in this respect.


Richard Albert Bell: The hon. gentleman has dealt with two hardy perennial matters. The first deals with margarine and, as the hon. gentleman has said, there is no change in this bill in that regard. I was interested in noting that the hon. gentleman apparently advocated the elimination of sales tax on margarine and trust he was speaking in that respect for his party.


William Moore Benidickson: I did not say that at all. I asked for information in regard to whether the government had received representations of this kind.


Richard Albert Bell: As the hon. gentleman knows, during the years he was parliamentary secretary representations were received in this regard and they continue to be received.
Excise Tax Act
Representations also have been received in regard to the sales tax on soft drinks but the decision is as indicated in the bill before the committee.


William Moore Benidickson: No action.
(Translation) :


Samuel Boulanger: Are we now on item 4, page 7 of the English version?


The Chairman:: We are now on the fuel
oil item.
(Text):


Samuel Boulanger: I did not refer to this item, but the item which has reference to materials such as drain tile not exceeding four inches in diameter. I should like to ask the parliamentary secretary why this has been limited to drain tile not exceeding four inches, because many farmers use much larger tiles in the construction of culverts, and would appreciate an exemption of tax in that regard.


Richard Albert Bell: In respect of this item, Mr. Chairman, there is no change. It will be remembered that I dealt with the matter before the committee last year. My recollection is that there is another item. Drain tiles for agricultural purposes are exempt whatever their diameter may be.


William Moore Benidickson: What page is that?


Richard Albert Bell: It is page 30 of the consolidation of August, 1960 of the Excise Tax Act.


Samuel Boulanger: Since last year-


Richard Albert Bell: I think it has an earlier history. I was informed on this when it was before the committee last year. Because this is not a new item I have not informed myself this year. I cannot give the hon. gentleman the exact date. I shall be glad to look into it and write my hon. friend.


Samuel Boulanger: Last year, or it may be two years ago, I was in contact with a farmer who paid a tax on tile especially for drainage. I made representations at that time.


Richard Albert Bell: I think this goes back to an earlier date than that but I would have to look into the details.


George James McIlraith: Some time prior to the 1957 revision.


Richard Albert Bell: I think it goes back quite a little time. "Drain tile for agricultural purposes" as an exemption goes back quite a few years.


William Moore Benidickson: The hon. member raises quite an important point. I have had questions about this from my own riding. I refer the parliamentary secretary to the bill before us. This, of course, refers to present law. In subparagraph (3) he will find reference

Excise Tax Act
to drain tiles for agricultural purposes. When we come to consider subparagraph (4) on page 7 of the bill before us we shall see a reference to drain tiles not exceeding four inches in inside diameter and 12 inches in length. Perhaps at a convenient time the parliamentary secretary would explain to the hon. member who raised this question the difference between the exemption in one subparagraph and the other.


Thomas Miller Bell: If they are drain tile for agricultural purposes they are exempt whatever their diameter and whatever their length. If they are for other purposes, then they are exempt only if they do not exceed four inches in inside diameter and 12 inches in length.


George James McIlraith: That is right.


Jacques Flynn: Shall we proceed with the next item having to do with seismic shot-hole casing and materials used in the manufacture thereof?


Richard Albert Bell: Mr. Chairman, I confess that until this was raised I did not know what a seismic shot-hole casing was. It is something that is used in tests to register vibration waves from underground explosions set off to determine the nature of subsoil geological formations in locations where oil and gas reserves are likely to be found. Recently a Canadian manufacturer commenced manufacturing these casings out of wax saturated paper.
This product competes with similar imported articles of steel which are not subject to sales tax as they enter Canada under tariff item 399a or 848, enumerated in schedule III to the Excise Tax Act. Under existing legislation, the Canadian product is subject to sales tax while the imported article is exempt from the levy. The proposed amendment will rectify the situation by making all seismic shot-hole casing and the materials used in its manufacture exempt from sales tax.


Jacques Flynn: Shall we proceed with the next item having to do with laminated timber for bridges which is to be found on page 8 of the bill?


Richard Albert Bell: Mr. Chairman, this is simply to provide for equal treatment between the various types of materials which are used in bridges.
Municipalities are exempt from sales tax on their purchases of structural steel and aluminum for bridges and precast concrete shapes for bridges in public highway systems. However, sawn and glued laminated timber which is often used in bridge construction as a material alternative to structural steel and

aluminum has been held to be taxable. From a competitive point of view, sawn and glued laminated timber is just as strong and durable as structural steel and aluminum, or so I am advised, and it is said to offer the advantage of lower maintenance costs. It would appear that a number of municipalities have shown interest in using it instead of its metal counterparts.
The exemption of laminated timber purchased by municipalities for incorporation in bridge structures would put this product on the same sales tax basis as its competitors, aluminum and steel. Moreover the materials entering into the manufacture of laminated timber such as glue and other required chemicals will also be exempt.


William Moore Benidickson: We are dealing here in a broad way, Mr. Chairman, with the portion of schedule III of the act which refers to exemptions of sales tax for municipalities. I recall very vividly that when the Minister of Finance was in opposition he was a very strong spokesman for the idea that all the goods sold to or imported by municipalities for their own use and not for resale should not be subject to federal sales tax. Under the present regime we have had very few exemptions. Indeed, we have had increases in the over-all sales tax. It has gone from 10 per cent to 11 per cent on the items that are not covered here, and some others. Before we pass this paragraph we should hear from the spokesmen for the administration about their present views with respect to the propriety of taxing goods sold to or imported by municipalities for their own use and not for resale and in particular when a greater impost is involved today on some items than was the case in 1956 and 1957, when the Minister of Finance and others had so much to say about the injustice of taxing items purchased by municipalities and school boards which were subject to federal sales tax.


Richard Albert Bell: I have already dealt with the only item which is actually changed in this particular schedule; but the hon. member is, of course, well aware of the rather substantial number of items which have been changed since 1957. The Minister of Finance has been responsible for the inclusion in this particular schedule of a large number of items which have meant a great deal to municipalities across Canada.


William Moore Benidickson: But the Minister of
Finance said none of them should be subject to tax.


[Stage Direction]
Clause agreed to.
Clause 9 agreed to.
Title agreed to.
Bill reported.
Mr. Deputy Speaker:: When shall the bill be read the third time?


John Whitney Pickersgill: At the next sitting of the house.



WAYS AND MEANS

[Stage Direction]
The house in committee of ways and means, Mr. Flynn in the chair.

Donald Methuen Fleming: Resolved, that the schedule to Bill C-116, an act to amend the Customs Tariff, now before the house, be amended by adding thereto the following:
Tariff item 209e, potassium chloride, British preferential tariff, free, most-favoured-nation tariff, free, general tariff, 25 per cent, (applicable July 3, 1961 to December 31, 1963);
Tariff item 210i, sodium hypochlorite in solution, British preferential tariff, 15 per cent, mostfavoured-nation tariff, 20 per cent, general tariff, 30 per cent, (applicable July 3, 1961 to December 31, 1963);
Tariff item 263e, compounds of tetramethyl lead, in which tetramethyl lead is the preponderant constituent by weight, British preferential tariff, 12| per cent, most-favoured-nation tariff, 12) per cent, general tariff, 25 per cent, (applicable July 3, 1961 to December 31, 1963).


Jacques Flynn: For the information of hon. members, this resolution is printed at page 4 of Votes and Proceedings for Friday, June 30, 1961.


Donald Methuen Fleming: Mr. Chairman, the house was good enough to permit me to offer a word of explanation of this particular item on Saturday morning. The explanation is to be found at page 7352 of Hansard. In the budget speech I made reference to the fact that there were negotiations pending under the provisions of GATT with respect to sodium hypochlorite laundry bleach and I hoped that the negotiations might be concluded prior to the passage of the resolutions in the committee of ways and means. Actually the resolutions were reported out of the committee at noon on Friday. On Friday afternoon I received a message from Mr. Hector McKinnon, who has been conducting negotiations with the representatives of the United States at Geneva on this subject, that he had arrived at a package deal. It is contained in the amendment now put forward and which is to be found on page 4 of Votes and Proceedings of June 30.
In effect we are proposing three temporary items. The committee is aware that at the present time the tariff board is conducting under a reference a review of all the items in the Customs Tariff pertaining to chemicals. It was thought desirable that, pending this review of the entire chemical section of the tariff, the rates that have been applicable to sodium hypochlorite hitherto according to 90205-6-469
Customs Tariff
the general understanding should continue. However, we observe that there are three items involved here. As I say, these represent a package agreement with the United States in this regard.
Each of these items is temporary. Each of the three comes into effect, it is proposed, on July 3, 1961, and continues in effect until December 31, 1963. By that time it is expected that we shall have the report of the tariff board following its review of the whole field of chemicals and we shall be in a position then, with the assistance of the board's recommendations, to deal with these and other items.
The procedure on these matters, I am told, is that if the committee of ways and means approves this amendment the committee then reports the resolution as adopted and then I shall introduce a motion in the house to refer this amendment to the committee of the whole on the bill which is to follow.


William Moore Benidickson: Mr. Chairman, I think the minister would be the first to agree that this notice comes late to us. I think it is appropriate perhaps that these provisions should be incorporated in the amendments to the Customs Tariff. I take it that we will have full opportunity for debate in the same way as we will with respect to all the schedules that are associated with Bill No. C-116 amending the Customs Tariff.


Donald Methuen Fleming: That is quite so. When these various steps are taken it will be just as though the resolution had been reported last Friday with this addition to it. When we are in committee of the whole on the bill to amend the Customs Tariff, this will be introduced there and will be open to debate in committee of the whole.
Resolution reported and concurred in and referred to the committee of the whole on Bill No. C-116, to amend the Customs Tariff.



Donald Methuen Fleming: the second reading of Bill No. C-116, to amend the Customs Tariff.


John Whitney Pickersgill: Mr. Speaker, 1 wish to make a very few observations with regard to the fishing industry on the second reading of this bill along lines similar to those I made in committee on the excise tax bill and to draw attention to the recommendations that were made to the minister on February 16 by the Fisheries Council of Canada. I have a copy of their letter in my hand at the present time. I should like to save the time of the committee by reading certain sections of this letter and by making their requests my own.

Customs Tariff
The fisheries council points out that the fishing industry derives two thirds of its income from sales made in the export market. Indeed, so far as I know there is no industry that depends more for its prosperity on the export market than the fishing industry does. One half of its total income is derived from sales in the United States. This really gives emphasis to two points, first, that the industry must sell on world markets in competition with other large fish producing nations and, second, that in the fishery we are very dependent on the United States market.
Then the letter goes on to point out how increasingly difficult it is in that industry to compete with countries such as Iceland, France, Norway, Denmark, Japan and Peru which have lower standards of living and where the degree of subsidization of the fishing industry exceeds anything ever thought of in Canada. This is simply to emphasize the fact that the fishing industry, if it is to survive at all much less provide a decent income for those engaged in it, has to be competitive. It is true also that the costs, as the fisheries council points out, have been advancing faster than the prices received for the product. That is not true in every case but in most cases.
One of the difficulties is that there has been inability to modernize the fleet, particularly on the east coast, and notwithstanding the announcements made repeatedly by the government they still have not brought forward their regulations for the aid they propose to give in this field. I am not going into the problems we have with competition right in our own waters because this is not really strictly relevant.
I go on from there to the budget proposals that were made to the minister so far as the Customs Tariff is concerned. I have already said something about those so far as excise tax is concerned. I should like to run over them briefly. The first was with respect to tariff item 682 which provides for the free entry of fishing nets and nets of all kinds. This is an item which is bound under GATT and the fisheries council was disturbed that there might be some attempt made to impose a tariff in this respect. However, I understand that fear was not in fact realized, I am happy to say.
Then, they went on to make representations with respect to some items that had a duty that should not have a duty. I want to say in general terms at this point that it does seem to me the time has come when the fishing industry should be put on a genuine basis of equality with the farm industry in respect of its instruments of production. This ought to be our goal. I come to these particular items.
[Mr. Pickersgill.l
One was trawl doors. I am not going into the details of them. Another item was inflatable life rafts and a third was aluminum fishboxes and pen boards. It seems to me that, in view of the importance of these items in the export industry, there was a very good case for giving consideration to them.
Under tariff item 418, they ask that certain changes should be made in respect of machinery and apparatus and parts thereof for use exclusively in the manufacture of fishmeal, liquid fish and fish solubles, stock and poultry food and fertilizers from fish and waste products thereof. They endorse certain suggestions for negotiations under GATT in this regard.
The next item was a proposal for a change in item 21 lx. Then there was another suggestion with respect to vessels, item 439g. There was another in respect of cordage in combination with metal strands; another with respect to recording paper. I am not going to take the time of the committee to read these. There was another very important one with respect to salt fish driers. I may say that there is nothing more important than getting the cost of salt fish driers down to the lowest possible figure because our whole competitive position in the salt fish market depends on getting the cost of our product down to a competitive level with other producers.
I have in my hand a bulletin of the Fisheries Council of Canada, which appeared on June 26. The fisheries council was very disappointed in the budget so far as the Customs Tariff was concerned. They said that action taken in respect of the duty on anchors ignored the advice of the council. It should be made clear that the duty would not apply to commercial fishermen. In future there will be a 15 per cent duty applied on all anchors of less than 40 pounds in weight from the commonwealth or most favoured nation countries. Those weighing 40 pounds or more will continue to come in duty free. Surely, this government is not so much in need of revenue that it has to apply a duty on small anchors.
Then, of course, there was the admission of live trout for commercial trout farms. The council was pleased with that but it is not going to help the fishing industry generally very much. Machinery for use in making nets or netting is placed on the free list from most favoured nation countries, a reduction from a 5 per cent rate, for which they were glad. They said these were the only tariff changes of any direct interest to the fishing industry. I do feel, sir, that anyone who like me represents a community that is dependent on the fishing industry for its livelihood, is justified in expressing the disappointment

that the fishing industry is not treated in the same way that the farmers are treated in respect of taxes.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Flynn in the chair.
On clause 1-British preferential tariff.
George James McIlraith: The minister did deal with this at the resolution stage, but to be quite clear I take it that the term "specified port" is wide enough to include all places, whether seaport or airport, as the case may be.


Donald Methuen Fleming: That is the purpose of the clause.


William Moore Benidickson: I take it that, by the provisions of clause 1, we are just regularizing what has been the practice, and whether or not goods came in by air at one port or another it has been the practice of the department to grant the British preferential tariff. We are just making sure now that if an import arrives by air or otherwise it will receive the same classification as if it had been brought in at one of the lake or seaports, is that correct?


Donald Methuen Fleming: That is correct; this modernizes the clause in keeping with the practice that, in fairness, has been observed.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
On clause 3-Schedule A amended.
William Moore Benidickson: I should like your ruling, Mr. Chairman, as to when we will have an opportunity of considering the various items in the schedule. We did deal with some items at the resolution stage, and I, for one, have no more questions in respect of the items we discussed last Thursday. Is it appropriate now to consider item by item the amendments to the Customs Tariff schedule that relate to resolution No. 3, or would we do so after carrying this clause and coming to the schedule?


Donald Methuen Fleming: It might facilitate the discussion, now that we have reached clause 3, if we turned now, before completing consideration of clauses 3 and 4, to the schedule and dealt with the schedule. I shall have, as I indicated earlier, an amendment to add another part, being part IV of the schedule.


George James McIlraith: I take it the items in the schedule would be called item by item.


Donald Methuen Fleming: If that is the wish of the committee.
90205-6-469i
Customs Tariff


Jacques Flynn: I shall call the items in the schedule, part I, item 522.


Donald Methuen Fleming: Part I relates to the textile items and we spent some considerable time in committee on these. I think the committee might be willing to take this part a page at a time.


William Moore Benidickson: In connection with part I,
I think last Thursday the minister indicated that these items involved some renegotiation of our commitments under GATT and that the quid pro quo was to be found in this part. I think the minister also indicated to us then that perhaps, in so far as trade volume was concerned, tariff item 568 represented the major item, namely the knitted garment item. We had a fairly full discussion about this item and I am not going to be repetitious. However, I take it that we have here in a package the result of the desire of Canada to renegotiate after certain tariff board recommendations have come down: I take it that we have here the changes that the government believes necessary as a result of those tariff board recommendations. We also have in the same package the tariff changes with respect to textiles that are necessary because we had certain obligations to other trading nations in GATT and they are all contained in this part I. Am I right in that assumption?


Donald Methuen Fleming: Yes. Part I consists entirely of textile items in the tariff. As I explained the other night, these changes arise out of three reports made by the tariff board. They have all been the subject of negotiation with the countries in whose favour these items were bound. The result is that we have arrived at agreement under the terms of GATT. This is a case where the compensation to which other countries were entitled was found entirely within the scope of the changes proposed. In other words, we have here a balance or, as I have called it, a package deal satisfactory to the countries which are interested under GATT in the terms of our tariff on textiles.


William Moore Benidickson: May I say this just for clarification? I wish to be completely assured that, when the government acted after receiving the reports of the tariff board with respect to textiles and when it felt obliged under its treaty obligations to deal with other countries, every quid pro quo which adjusts our tariff import rates with respect to textiles is to be found in the section with which we are now dealing. Am I right in that assumption? In other words, we are not trading textiles for apples or other products in any shape or form here?

Customs Tariff


Donald Methuen Fleming: These items all relate to textiles, Mr. Chairman. The textile items have all been concentrated in this particular part I of the schedule to the bill. There are none but textile items involved here. This contains the entire package deal made in accordance with the provisions of GATT in relation to the changes in the textile items in the tariff.


William Moore Benidickson: I think the latter part of the minister's statement is clear. However, I want to be absolutely sure that, in so far as any opportunities given to exporters of products other than textiles are concerned, we cannot find elsewhere in these schedules anything that relates to the changes that the minister proposes to us with respect to textiles other than in this package.


George James McIlraith: Perhaps I could expedite matters by asking one or two questions which are on my mind but which are not fully applicable to the first item. I can specify the items as I go along and put the question now.
In the new schedule before us I noticed considerable reference to the end use as a method of defining the item for tariff purposes. It is a practice which, as a matter of principle, is probably quite undesirable but which unfortunately is necessary in the kind of society in which we live. For that reason I have no particular objection to it, although it does not make for a tidy way of enacting legislation.
I would draw the minister's attention to item 534c which reads as follows:
Blankets, blanketing and lapping for use by textile manufacturers on machines used in the manufacture of textiles.
I think everyone will agree that it is desirable to help the textile industry in its production costs and this is apparently an attempt to do so, as the items are free under the British preferential tariff, free under the most-favoured-nation tariff, and free under the general tariff. My question on that item is this. Is any of this material covered by this item manufactured in Canada? Also, from which country do the imports come? That is to say, do they come from countries under the British preferential tariff, the most-favoured-nation tariff or the general tariff?
Then the next item with which I am concerned, namely item 562j, reads as follows:
Bolting cloth for sifting flour in flour mills.
This is a wholly new item. It is free under the British preferential tariff, free under the most-favoured-nation tariff and the general tariff is 45 per cent. If this item is free under the most-favoured-nation tariff and free under the British preferential tariff, I take it that it

is not made in Canada. If it is not made in Canada, why do we apply such a high tariff rate against it as that shown in the general tariff column?
If I understand correctly from the method of defining the item by reference to the end use of the product, our interest would be to assist the flour milling firms; and that interest would be to assist them in order to enable them to keep down the cost of flour both to the Canadian consumers and for export. In both areas I think all hon. members will agree that it is desirable that the cost of flour be kept down. We have just had an increase in the flour prices as a result of this very budget with which we are dealing. It is also well recognized that our flour milling firms are having great difficulty in the export field. Can the minister explain that apparent inconsistency in item 562j?


Donald Methuen Fleming: First of all, may I comment on the matter of end use items. I suppose it would be a happier world for those who have to draw tariff items or administer them if it were not necessary at times to have resort to the so-called end use items. However, the fact is that, distasteful as it sometimes is to legislate in terms of end use, it is the only way very often in which to achieve justice, and to accomplish the goal desired by parliament. So far as these items in the present bill are concerned, I am informed that there has not been any extension of the end use principle, so that there should not be any more difficulty in administration in this regard than there has been hitherto.
The first item mentioned by the hon. member was item 534c. Here the principal source of imports is the United States. The United Kingdom is second, and it is a relatively small second in comparison with the volume and value of imports coming from the United States. In this case the change was requested by Canadian blanket manufacturers to preclude the possibility of blankets and blanketing being imported by Canadian manufacturers for further processing into blankets, clothing and other manufactured articles for resale. In relation to 562j-


George James McIlraith: Mr. Chairman, just before the minister leaves item 534c could I put another subsidiary question to him. Is any of this material made in Canada?


Donald Methuen Fleming: I understand it is not.


William Moore Benidickson: That is why it is free.


Donald Methuen Fleming: Item 562j, bolting cloth for sifting flour in flour mills. I am informed that this material is not made in Canada. The leading countries which have been the source of these imports have been

Switzerland and the United States, both of which have most-favoured-nation status. So that in this item we have now the proposal for free entry for B.P. and m.f.n. rates. The general tariff is of little consequence because so far as I know there is nothing coming into Canada under the general item anyway.


George James McIlraith: And nothing made in
Canada?


Donald Methuen Fleming: No; I mentioned that earlier.


George James McIlraith: I just do not understand the logic of this. If we do not make in Canada bolting cloth for sifting flour in flour mills, and we draft the item in the language in which it is drafted, surely our interest is to enable these flour mills to get the cheapest possible bolting cloth they can.
I realize there is very little importing done under the general tariff, but surely if it is free under the most-favoured-nation and British preferential tariffs we should not put this prohibitive general tariff on it in case some country that we are not aware of at the moment does start production of this cloth, and our interest is in getting the cloth in at the cheapest possible price for the flour mills.


Donald Methuen Fleming: We are getting the cloth at the cheapest possible price now by reason of free entry under the B.P. and m.f.n. rates. This is the way in which we establish the fact that value is attached to the m.f.n. rate when we negotiate. The fact that the general rate is 45 per cent is not hurting anybody now because I am told there are no imports, or virtually no imports from the general rate countries. This is the way we establish the value of concessions to those countries that are on an m.f.n. basis.


George James McIlraith: In other words the minister is using some gentle persuasion to have them move into the most-favoured-nation groupings or to bargain with us for better concessions for admission of our products into their countries. If that is the case I have no quarrel with the minister on this occasion.


William Moore Benidickson: On that point, I take it that this 45 per cent rate would perhaps be important in connection with our outlook on trade, say with China or Russia. Russia is not in the most-favoured-nation tariff group, is it?


Donald Methuen Fleming: Both Russia and China enjoy most-favoured-nation status.


Jacques Flynn: Shall page 3 of the schedule carry?


Some hon. Members:: Carried.


Jacques Flynn: Shall page 4 carry?
Customs Tariff


Some hon. Members:: Carried.


Jacques Flynn: Shall part II of the schedule carry?


William Moore Benidickson: With regard to part II,
I think the minister indicated that this involved additional international negotiations under our treaty arrangements. Would the minister explain a little further the quid pro quo basis? I should like a more detailed explanation than the minister gave in his budget speech.


Donald Methuen Fleming: As I pointed out on Thursday evening when we were dealing with this matter in the committee of ways and means, the items that are embraced within part II of the schedule to the bill are items that are bound under GATT and the changes in the rates that are bound under GATT of course have been negotiated. Agreement has been reached with all of the countries in whose favour these items were bound. There have been various individual discussions and there have been negotiations which have resulted in agreement. The terms of agreement are found entirely within the terms of part II of the schedule. In other words, while there have been various discussions with respect to different items, we have in the end arrived at an agreement and part II embraces the totality of both the increases and the concessions, so that we have arrived at a series of agreements in regard to such items with the countries in whose favour they were bound.


Jacques Flynn: Shall part II carry?


William Moore Benidickson: No, Mr. Chairman. With respect to textiles-[DOT]


Donald Methuen Fleming: There is nothing here respecting textiles.


William Moore Benidickson: No, but with respect to textiles we were informed that the trading involved concessions on our part. As compensation we paid solely by concession, relating to textile items. With respect to the items in this schedule could the minister indicate what were the principal items of Canadian export where there was a necessity to make a concession in order to make it more advantageous to certain producers in Canada. I ask this question in light of these changes in rates.
I refer primarily of the items relating to poultry. In order to increase our impost against imports of poultry, what industries which normally exported products from Canada were given a less advantageous position in the export market?


Donald Methuen Fleming: Mr. Chairman, we can put aside the poultry item at once. The poultry item was the subject of separate negotiation entirely and here we have a rate

Customs Tariff
with respect to eviscerated poultry and a rate with respect to live poultry. This is all it is, a package deal negotiated with the United States, so that we now have reciprocity in rates. As I am sure the hon. member is aware, this has been hailed by Canadian poultry producers as being of very great advantage to them.
As to the other items on which increases are involved, may I say that as a result of various negotiations we have agreement with respect to all of those. The hon. member can go through the list and find where the decreases are which we used as concessions. The hon. member asks his question as though these were export items. That is not the basis, Mr. Chairman. Many of these are items on which there is no export by Canadians. This is a matter of our having obtained agreement on the part of these countries to our increasing the tariff on other items in part II in return for decreases in the items that I am now about to read: 9b, quails partridges and squabs; 105k, mint flavoured pineapples; 152e pineapple juice; 187c, photographic dry plates; 197h, filter paper for use in the manufacture of vacuum bags.


William Moore Benidickson: What are the dollar values of imports of this item?


Donald Methuen Fleming: May I just complete the list?
It continues:	199m, paper backing for
carpets; 425b, engines and parts for power mowers; 427e, machines and parts for making cigars and cigarettes; 438h (2), motorcycles with an engine capacity of more than 250cc.; 463d, lenses and shutters for projectors; 658, video tape not including video taped commercials.
Those are the concessions in return for which we have obtained agreement to the increase in the other items.
(Translation):


Samuel Boulanger: Has there been any change with respect to the tariff on turkey eggs for hatching?
(Text):


Donald Methuen Fleming: There is no change m the tariff on turkey eggs, Mr. Chairman. Turkey poults, baby ducklings and goslings are classified under item 9c. Baby chicks are classified under 9d. There is no change in the rates on either item.
(Translation):


Samuel Boulanger: Have the Quebec and eastern Ontario poultry farmers not asked the minister to change the tariff on turkey eggs for hatching?
(Text):


Donald Methuen Fleming: Mr. Chairman, we have had representations from some of those engaged in the business of producing turkey

hatching eggs seeking an increase in the duty thereon, but I am told that there have been some differences of view among those in the business with regard to an increase in the tariff protection in respect to turkey eggs for hatching.


William Moore Benidickson: Mr. Chairman, I thought the minister in his last statement intended to indicate first of all that the poultry items resolved themselves by the concession back and forth within that trade group. I think he referred to item 425a and said that perhaps in this schedule power lawn mowers represented a concession we had given. In so far as the first item is concerned, it looks to me to be the very opposite, that we have increased our tariff rates. Then, with respect to item 427e, automatic machines-


Thomas Miller Bell: I think it is item 425b to which the hon. gentleman should be referring.


William Moore Benidickson: I thought the minister referred to item 425a, and then said the concession had regard to item 425b, air cooled internal combustion engines. What was the over-all involvement to the trade regarding the renegotiation of this particular part of the amendment?


Donald Methuen Fleming: Mr. Chairman,
there is one correction I should like to make in my remarks made earlier. I may have given the committee to understand that the items on poultry had been completely balanced. That is not so. We have, of course, a substantial advantage in the changes made here for Canadian poultry producers, and this was part of the wider negotiations which included some of the items which I have read to the committee as being items upon which we made concessions in order to obtain the substantial advantage which is provided here in respect of poultry.
The hon. member asked a question in respect of item 425b. I am told that there are no import statistics available in this regard. I might say that our purpose with respect to items 425a and 425b was to enable Canadian producers of these power lawn mowers to compete more effectively with the foreign competition to which they have been subject. Many of these parts were found not to be made in Canada. This result has been achieved by a reduction in the tariff on parts and an increase in the tariff on finished machines and will result in the production of more of the finished machines in Canada.


William Moore Benidickson: That would be the explanation in regard to the reduction in the tariff in relation to item 425b (2) where the rate for the most-favoured-nation, and I assume that

is the United States, goes down from 15 per cent to 10 per cent. Would that be largely the components of the item?


Donald Methuen Fleming: Yes.


Jacques Flynn: Shall part II carry?


Some hon. Members:: Carried.


Jacques Flynn: Shall part III carry?


Some hon. Members:: Carried.


Donald Methuen Fleming: Mr. Chairman, I have an amendment which will add a part IV.


William Moore Benidickson: Is that the amendment of which the minister gave notice in Votes and Proceedings?


Donald Methuen Fleming: This is the one
which was discussed earlier this afternoon and is in the same form as that which appears at page 4 of Votes and Proceedings of last Friday. It adds three items to the bill; these will comprise part IV of the schedule. As I say, it is in precisely the same form as in Votes and Proceedings. I shall now ask my colleague the Minister of Defence Production to move it.


Mr. O'Hurley:: Mr. Chairman, I should like to move:
That the schedule to Bill No. C-116, an act to amend the Customs Tariff, be amended by adding thereto the following:


PART IV
[Stage Direction]
Tariff item 209e, potassium chloride, British preferential tariff, free, most-favoured-nation tariff, free, general tariff, 25 per cent, (applicable July 3, 1961 to December 31, 1963);
Tariff item 210i, sodium hypochlorite in solution, British preferential tariff, 15 per cent, mostfavoured-nation tariff, 20 per cent, general tariff, 30 per cent, (applicable July 3, 1961 to December 31, 1963);
Tariff item 263e, compounds of tetramethyl lead, in which tetramethyl lead is the preponderant constituent by weight, British preferential tariff, 12J per cent, most-favoured-nation tariff, 12', per cent, general tariff, 25 per cent, (applicable July 3, 1961 to December 31, 1963).
George James McIlraith: Before the amendment is dealt with, Mr. Chairman, I would like to suggest that we do not have the benefit in respect to this part of the extension of an indication regarding the tariff position prior to the budget. Is the minister in a position to give us that indication now, item by item in relation to each of the three, and explain the significance of the applicable dates regarding the materials described in the three items?


Donald Methuen Fleming: I dealt with the latter point when we were in or going into the committee of ways and means earlier this afternoon. It is done this way so that the items, which are now under review of
Customs Tariff
the tariff board in the chemicals reference, may be the occasion of study by the tariff board, and we may have the benefit of their recommendations before these items expire at the end of December, 1963.


George James McIlraith: What happens when they expire?


Donald Methuen Fleming: They are being made to expire then so that parliament may be in a position to deal with them at that time in the light of the report which is expected to be received from the tariff board prior to that date.


George James McIlraith: Assuming parliament does not do that, what will happen?


Donald Methuen Fleming: The items will then expire.


George James McIlraith: The items will then come in free.


Donald Methuen Fleming: I am going to deal now with the first question asked by the hon. gentleman. I wish to point out that these are all new items being taken out of other items of the Customs Tariff. May I say that the Canadian item in respect to which the tariff has been increased is the middle one, 210i, sodium hypochlorite in solution. The other two, 209e with respect to potassium chloride and 263e relating to compounds of tetramethyl lead, were the items on which we have agreed to reductions in return for agreement on the part of the United States to the increase in the tariff on sodium hypochlorite in solution. To give a comparison, Mr. Chairman, the rates at the present time on potassium chloride are-I will just give the three under the regular headings-free, 15 per cent, 25 per cent, so that it will be seen that the general rate remains unchanged; the m.f.n. is reduced from 15 per cent to free, and the B.P. rate continues free.
On the second item, the present rates are free, 12J per cent, 25 per cent, or free, free, 15 per cent. The alternative figures depend on the size of the bottle in which the sodium hypochlorite comes.


William Moore Benidickson: Is it free to the mostfavoured-nation?


Donald Methuen Fleming: I am going to speak on that. This means that the British preferential rate today is free in both cases and will become 15 per cent. The m.f.n. rate is 12J per cent in one case and free in the other. It will become 20 per cent. The general tariff is 25 per cent in one case and 15 in another, and it becomes 30 per cent.


William Moore Benidickson: For the record, when the minister says "in one case" what does he mean?
743G

Customs Tariff


Donald Methuen Fleming: Depending on the size of the bottle. These two alternatives, for example, depend on the size of the bottle.
With respect to the third item, 263e, the present rates are B.P., 15 per cent; m.f.n., 20 per cent; and general, 25 per cent. Therefore it will be seen that the B.P. rate is reduced from 15 per cent to 12J per cent and the m.f.n. rate from 20 per cent to 12J per cent and the general rate remains unchanged at 25 per cent.


Jacques Flynn: Shall the amendment carry?


William Moore Benidickson: With respect to the amendment, we in the opposition are in an awkward position. This may involve trade of some substance. We are not opposing the amendment. Everyone in the committee knows that we are perhaps approaching an adjournment of the house. The minister made an announcement today concerning this matter. His announcement has not been available to the public. Will the minister indicate to this committee what representations pro and con have come to his knowledge in connection with these items because obviously the rates are rather radically adjusted. The minister indicated they required some negotiation abroad because of our treaty commitments. To what extent has he heard from citizens of the country interested either in increasing the rates or decreasing them? Will he be frank with the committee at this late stage of the session and indicate, particularly to the opposition, what is the consensus in connection with these matters as it has been presented to him?


Donald Methuen Fleming: Mr. Chairman, I hope I shall always be frank with the committee. I made explicit reference to the matter in the budget speech on June 20, so that there has been opportunity for anyone interested in the item to make representations in the light of the statement I made in the budget speech. But one thing that was not completed at the time of the budget speech was the GATT negotiations. I gave the house a full report at the time on the course of the negotiations, and last Saturday I reported the conclusion of the negotiations and the terms of the agreement reached.
As I mentioned earlier, Mr. Chairman, this all arises out of a decision of the Supreme Court of Canada which involved the classification under a particular item of the Canadian tariff of sodium hypochlorite in solution. The decision of the supreme court turned on the classification. The result of the decision was to upset the departmental rulings of recent years on this commodity. The rates that had been applicable were B.P., 15 per 
cent and m.f.n., 20 per cent. This change came right in the middle of the hearings of the tariff board on the chemicals reference, and it was represented to us, and convincingly, that unless the protection were restored it would mean closing down a very large Canadian plant; that in the face of competition the Canadian producers would not be able to carry on; that they would simply have to buy their sodium hypochlorite in solution from the United States. This would involve jobs for a good many Canadians. We felt that the present terms of tariff entry of sodium hypochlorite in solution were fair and reasonable; that is to say, 15 per cent B.P. and 20 per cent m.f.n. We thought it was most regrettable also that this change which denied to our Canadian producers the protection under which they had carried on business for years should be suddenly withdrawn while the whole question was before the tariff board. Therefore the action that we proposed was one that would reinstate the tariff protection but not indefinitely; to put a time limit on it, as we have done in this amendment, so that the whole question can be reviewed at a time when we can be reasonably confident that we will have received the report of the tariff board.
We then set to work to negotiate with the countries concerned. Following extensive negotiations carried on at Geneva by Mr. Hector McKinnon, who is leading the Canadian team in the current GATT negotiations there, and who commands so much esteem and respect on the part of hon. members in all parts of the house, we arrived only last Friday at the agreement. I mentioned the wire from Mr. McKinnon announcing the agreement arrived on Friday afternoon. Therefore we moved just as swiftly as it was possible to do. I put the notice of motion on Votes and Proceedings that afternoon.
Of course, Mr. Chairman, we have had extensive requests for the reinstatement of the rates. Firms and associations that made representations requesting the former rate be reinstated are quite numerous.


[Stage Direction]
Amendment agreed to.
Schedule as amended agreed to.
Clauses 3 and 4 agreed to.
Title agreed to.
Bill reported.
Mr. Speaker:: When shall the said bill be read the third time.


William Moore Benidickson: Next sitting of the house.


INDUSTRIAL DEVELOPMENT BANK ACT
[Stage Direction]
amendments respecting classes of loans,

Donald Methuen Fleming: the second reading of Bill No. C-117, to amend the Industrial Development Bank Act.


George James McIlraith: Mr. Speaker, I have a few very brief remarks to make on this bill. The principle of the bill is to extend the definition of industrial enterprise or, in other words, to extend effectively the authority of the industrial development bank by permitting it to lend to any industry whereas formerly the bank was limited with regard to those classes of industry it could assist. There are other consequential amendments and there is an increase in the amount of money available for lending.
I think all hon. members will agree that it is desirable that the jurisdiction and authority of the bank should be extended. There is no quarrel with that purpose. What concerns me is that the principle involves not merely the extension of the authority of the bank to lend but goes so far as to permit the bank to lend to a business or undertaking of any kind. In other words, there are the widest possible ramifications.
In the final analysis the industrial development bank is using the taxpayers' money to lend to business. The bank has a good record and over the years has done a great deal for the economy of the country. But I for one cannot let second reading pass without expressing my displeasure at the way the principle of extending the activity of the bank is being carried out by the government. For instance, speaking only for myself I cannot accept without a word of protest the principle that the taxpayers' money should be gathered by the taxing authorities and made available through the industrial development bank for lending to any business whatever.
When taxation is bearing so heavily on our people, as it is and of necessity must with our expenditures at such a high level, surely it is not proper that money taken from the taxpayers should be used for lending to any business whatever. It is the principle arising out of the use of that very broad word any that causes me difficulty.
I know it is a bad thing in arguing on a matter of principle to use particular references. It is a poor way to argue but perhaps it does have the merit of bringing attention to the point at issue. Surely our taxpayers are not to be taxed, for instance, for the purpose of making 'heir money available by way of 90205-6-470
3, 1961
Industrial Development Bank Act loans for the development of race tracks, however pleasant these places may be to a great many of us. Surely that is not a desirable principle, and yet that is exactly what is being done by this kind of legislation. Surely it is not desirable that the taxpayers' money should be lent to certain limited types of amusement places which do not meet the requirements of most taxpayers in this country. I could go on and drag in other examples that would probably make the legislation look a little ridiculous in this context. However, I will content myself with illustrating the point as I have and expressing my regret that the government saw fit to use this particular method in the desirable extension of authority under the act. Surely the principle could have been carried out in a better way, in a manner that would more accurately express the wishes of the Canadian people, because it seems to me that this way completely ignores the rights of the taxpayers who are providing the funds.


Mr. Waller Pilman (Peterborough):: Mr. Speaker, in speaking on second reading of the bill may I say that I think there is one point which has not been brought to the attention of the house even though I am sure all hon. members realize it. The president of the industrial development bank is the same Mr. Coyne who has created quite a furor around the house in the last number of weeks. Mr. Coyne is the president of the bank and evidently the government is very happy with the way that the bank has been operated. Evidently Mr. Coyne's policies have been very highly suspect in other areas but so far as the industrial development bank is concerned everything seems to be going fine.
Quite frankly, before the bill comes to a vote I should like to know just what the relationship has been between the Minister of Finance (Mr. Fleming) and the president of the industrial development bank. We know what the relationship has been between the Minister of Finance and the president of the Bank of Canada, but before a measure like this is passed surely we should know whether the president is in agreement with these particular provisions and whether the board of directors was brought into this whole field. In view of the rather astounding revelations which have taken place with regard to the other position of Mr. Coyne over the last number of months, I really wonder exactly what his position would be as president of this particular institution in which we are making such a very great change.
For example, Mr. Coyne has been called restrictionist. As president of the industrial development bank he has increased the amount of money lent by 26 per cent and the

Industrial Development Bank Act number of loans by 24 per cent. It is rather interesting to note that the bank lending rate went from 6J per cent to 7 per cent in September, 1959, and was brought down to 6J per cent again by September 1960. It would seem that the president of the industrial development bank is following the suggestion of the Minister of Finance about lowering interest rates.


George James McIlraith: He is leading.


Walter George Pitman: It appears to me that it is the president of the Bank of Canada who seems to be getting into all the trouble. In the remarks which the minister made to the house he referred to the full support of the government. Evidently the president of the industrial development bank has the full support of the government. The bank has expanded its operations considerably over the past few years. I assume these are the activities of the same Mr. Coyne. The borrowing authority has been extended from three times the aggregate of capital plus reserve funds to five times the aggregate and it would seem that this is the old easy money policy. I should like to know whether Mr. Coyne concurred in this. If he did, certainly here is easy money. Here are the expansionist theories of the Minister of Finance and the government right in the one area where Mr. Coyne reigns supreme. When the minister spoke at the resolution stage he said, as found at page 7312 of Hansard:
-it is the hope of the government that in this way the industrial development bank can also contribute to the retention in Canada of the ownership and control of Canadian businesses.
Mr. Coyne has been wandering right across the country suggesting this and yet the Minister of Finance puts forward the fact that the industrial development bank is going to put Mr. Coyne's views into action by providing opportunities for Canadian businessmen.


Mr. Nesbitt:: Those views are not indigenous to Mr. Coyne alone.


Walter George Pitman: I am sorry, I did not hear that.


Wallace Bickford (Wally) Nesbitt: Those views do not entirely belong to Mr. Coyne alone.


Walter George Pitman: These were certainly some of the main points Mr. Coyne was making in his speeches and it was evidently his speeches which were causing a great deal of embarrassment to the government. We can only assume that some of these ideas were the ones which brought about the concern of the men on the treasury benches. I do not like to open the hatch to a debate on Mr. Coyne, especially when we are going to hear a great deal about him tomorrow. Nevertheless, I think there are some interesting aspects to

this whole business when we realize that we are going about the process of extending the scope of the industrial development bank. We are in the process of extending the amount of money the bank would have to lend under a president whom we have been told is completely incompetent. I feel this is rather disturbing. Is Mr. Coyne going to remain as president of the industrial development bank? In the annual report, he is listed as president, not because he is president of the Bank of Canada but simply because he is president. I rather suspect he is president of the industrial development bank because he is president of the Bank of Canada.
The office of president of the industrial development bank is not included in the legislation which we are going to be reviewing once again tomorrow. I feel this is a matter of great interest in connection with the bill now before us. We should have a full explanation as to what the position is in regard to Mr. Coyne, not as president of the Bank of Canada but as president of the industrial development bank. It would seem to me that the confidence of the business community is at stake. Certainly, I should like to know whether or not the board of directors and the president of the industrial development bank were made aware of the government's scheme. We are told that Mr. Coyne did not even know what was in the budget until he opened his newspaper the next morning, at which time evidently he was at Stratford.
We have before us a bill to change an enterprise under the jurisdiction of a man who does not even know what is going to happen to that enterprise. Has he been told how the scope of the bank is going to be extended? I think the hon. member for Ottawa West (Mr. Mcllraith) had a very good point. I wonder what Mr. Coyne would say? He has been the head of the organization for six and a half years and he must know something about the activities of this bank, where its weaknesses lie, and so on. We understand from the minister that Mr. Coyne knew nothing of what was in the budget. Presumably, he did not know what was going to happen to the industrial development bank either. While we are discussing this bill during the next few minutes I hope we will hear about Mr. Coyne, not so much as president of the Bank of Canada but as president of the industrial development bank.


Herbert Wilfred Herridge: I rise just briefly, Mr. Speaker, to express our support of this measure because, in our opinion, it is an extension of the use of social capital for the development of this country and its

enterprises. I suppose that basically the purpose of the bill is to extend the definition of industrial enterprise to include an industry, trade or business of any kind. I am pleased to see this amendment proposed. Personally, 1 have had some knowledge, from a local point of view, of the application or administration of the industrial development bank and the purpose it has served, particularly in the forest industry in the area which 1 have the honour to represent.
For a considerable time, Mr. Speaker, I have considered it was somewhat limited in its scope and opportunities for making loans or various grants to industries or businesses. I have been under the impression that the larger companies, on the whole, have been best able to take advantage of this legislation. I trust that the amendments contained in this bill will mean that the bank will have an opportunity in the future to assist to a greater extent than in the past the medium and small sized businesses in the country.
I am pleased also to note the increase in capital to $50 million, and consequently the increase that can be made in aggregate loans, investments, guarantees and other liabilities. In considering this bill, I am somewhat inclined to be parochial in my approach. I can see great opportunities for the, shall I say, very sound application of the terms of this bill to the district which I have the honour to represent, to a number of industries and businesses that have been denied that opportunity to date. I am thinking particularly of the development of tourist resorts and places that provide recreational facilities, things of that type. When the minister replies, I should like him to give us a little more information in that connection. Will these amendments make it possible to assist that type of industry or business, whatever you like to call it?
In conclusion, let me say that I believe this is a progressive step and we support it.


Mr. Harris Rogers (Red Deer):: Mr. Speaker, I should like to say a few words in support of these amendments and the Minister of Finance (Mr. Fleming). I have been interested in this subject for some time. When the minister introduced the resolution last Friday, as recorded at page 7310 of Hansard, he gave a full explanation of this measure. I would hope, unlike the hon. member for Ottawa West (Mr. Mcllraith), that this bill would not take too long to pass.
The question that arises in my mind is, is this the answer to many of our problems? Will it go far enough? I should like to quote a part of the resolution which introduced this measure:
90205-6-470i
3, 1961
Industrial Development Bank Act That it is expedient to introduce a measure to amend the Industrial Development Bank Act to enlarge the classes of loans that may be made under the act so as to include therein all business enterprises without limitation as to the kind of business carried on.
Now, in analysing that part of the resolution, I should think that this would empower the bank to take at least a calculated risk in connection with applications that envisage, for instance, the development of our resources and which would help our unemployment problem. In addition, this measure would aid Canadian control of companies. For instance, I have one company in mind that is very dear to my heart, the Alberta Pulp Mill. This company is composed of 46 sound businessmen who have spent upwards of $200,000 in making surveys on the ground and from the air of certain timber limits. They have made application and will get a licence for 6,000 square miles of a species of white spruce which they tell me will compare with that in any area on the North American continent. At the moment, this company is at the stage where it needs from $150,000 to $200,000 to get a feasibility report. This money is available in the United States but it does mean losing Canadian control. There may be some risk involved, but I think it is a calculated risk.
On the other hand, there have been three feasibility reports made in this area by the same engineers, and they tell me that this particular area is better than either of the others. I hope that these amendments will provide a means for developing our own resources so that Canadians will be employed and Canadian control of the companies will be maintained. I think that this is something that we must foster, for the reason that I think we are lacking in this respect. If we ever want to attract Canadian money into our own resources, I think this is setting a pattern that can be followed.


William Moore Benidickson: Mr. Speaker, last Friday when the resolution was before us the Leader of the Opposition (Mr. Pearson) indicated that we in this party would certainly have no objection to this legislation. Indeed we have advocated this type of thing for some time. In my remarks in connection with the budget I mentioned that, if we had in this country an expansionist government, I was surprised that in the legislative program announced last November there was no reference to expanding in this desirable field.
The hon. member who has just taken his seat, namely the hon. member for Red Deer (Mr. Rogers) asked the question: Will this bill go far enough? That is indeed an interesting question. It relates to the expansionist

Industrial Development Bank Act idea that this administration may have had at the time they asked us to assemble here last November and the fact that we find nine months later that something as important as this only now comes before us. What has happened in this cabinet which is supposed to be a cabinet that had some vision and some expansionist tendencies as outlined by the Minister of Finance (Mr. Fleming) so recently? Rumours have been going around that they had done some thinking along the lines of expansion beyond what is presented to us in this bill. I refer to a date as far back as February 18, 1961, when the Financial Post contained an article under the heading "Ottawa Studies Plan to Lend Risk Capital".
From its Ottawa staff, the Financial Post surmised that specific proposals for setting up a new $1 billion national development corporation which could supply risk capital for Canadian ventures were before the cabinet. What has happened to that proposal in an expansionist government referred to by the Minister of Finance just prior to the introduction of his budget? This article went on to say that it was believed that this corporation to be sponsored by the government would be intended to take a far more aggressive role than the industrial development bank, a federal agency established in 1944 to fill what appeared to be a gap in the existing financial machinery of this country, according to official descriptions of its position. Is this not a puny effort if this proposal was considered by an expansionist government in February as suggested by this article?
To indicate that it was not only one of our friends in the press gallery who had heard of this activity, I refer to another. I refer to an article of Mr. Peter Dempson of the Toronto Telegram which is not unfriendly to the present administration. His report dated May 25, prior to the budget, states this:
One of the main provisions in the budget will be the financing of a national development fund, designed to stimulate the economy and create jobs. Reports have suggested the fund may run from $500 million to $1 billion.
We have the result. We have this bill. This advancement in the role of the industrial development bank, is of course, approved on this side. It is in accord with a resolution of this party presented in January at our national rally. It does not go as far as we suggested in our resolution at that time. However, it is significant that the government did not have it in mind when they proposed legislation for this session last November. It is also significant that it appears to be in the Coyne budget presented to the Minister of Finance last February, although some of the items in the Coyne budget are not acceptable to those of us on this side. However, what

surprises me is this, and I hope that the minister, when he replies, will give us information on this point. We are increasing-and I say we agree to increase it-the capital of the industrial development bank. But what is the obligation with respect to non-budgetary transactions and net cash requirements of the government for the current fiscal year as a result of this decision? At page 6666 of Hansard I note in the budget speech of the minister a reference to his cash requirements. Hon. members will recollect that it was a cash requirement beyond the budgetary items of $1 billion.


Donald Methuen Fleming: Not in addition to the budget.


William Moore Benidickson: A cash requirement including the deficit.


Donald Methuen Fleming: Including the
deficit.


William Moore Benidickson: It was a cash requirement including the deficit of $1 billion. There was, of course, this interesting dash. There is just an item of a dash in connection with exchange fund liabilities; no figure is given for that item. But regardless of that, I find nothing here that relates to the supply of capital, either on a budgetary basis or a cash basis, during the fiscal year for the industrial development bank and its proposed expansion which would be in accord with the bill before us.
I ask the minister to tell us something about that matter. Is this going to be printing press money that supplies the capital that will be available under the terms of this statute or in what way is this to be financed through the Bank of Canada? It is known to this house that, at our rally and following the rally in January of this year, this party took the position that the industrial development bank should be separated from the Bank of Canada. I find here that in the bill-and of course, we shall discuss the individual clauses later

there is a continuation of the stipulation that the executive committee of the bank will be those persons who happen to belong to the executive committee of the Bank of Canada. I hope that hon. members of the house will seriously consider whether that is a desirable feature which should continue in the legislation concerning the industrial development bank.
I conclude by saying again that we approve the enlargement of lending opportunities of this bank. I compliment the administration for enlarging the area of entitlement of businesses which may obtain loans from the bank. Last year, and I think the year before, I had on the order paper a

bill to amend the Industrial Development Bank Act for the purpose of enlarging borrowers' entitlement. This measure goes even further than my amendment.
While we approve this bill in principle,
I do hope the Minister of Finance will explain to the house how the capital is to be provided; how the loan money is to be provided; whether or not this involves real money provided by the government in addition to the statement on non-budgetary transactions and net cash requirements referred to at page 6666 of Hansard; whether this involves printing press money, and so on.


Donald Methuen Fleming: Mr. Speaker-


John Whitney Pickersgill: Mr. Speaker, if no one else wishes to take part in the debate there are a few observations I should like to make to support what has been said by my hon. friend from Kenora-Rainy River, particularly with respect to the regional aspect of the activities of the industrial development bank.
I recall very well that when the industrial development bank was first established in 1944 by the Mackenzie King government as part of its program for reconstruction after the war and for maintenance of the full employment which continued after the war until 1957 there was a great deal of criticism from those hon. gentlemen opposite now sitting on the treasury benches but who were on this side of the house at that time. There were a few of them. Their criticism was that this was more or less socialistic; that it was interfering with the legitimate scope of the chartered banks and other lending institutions, and that it should be viewed with a great deal of concern.
Notwithstanding those criticisms the Mackenzie King government went ahead with this legislation. We find, as in so many other things, that after four years of floundering around in uncertainty this government comes along and says these excellent measures that were put into operation by the Liberal government can now be improved and extended. They hope that by doing that they will get for themselves the credit for these measures.
We get this from these great latter day apostles of free enterprise. Perhaps that slogan we got from the Prime Minister (Mr. Diefen-baker) after his return from London on that occasion when he had to have two planes to make sure he got here for the Tory convention-that slogan of free enterprise against socialism-did not apply in this field. I say this because we now find these great apostles of free enterprise, led by that great champion of Bay street, the present Minister of Finance, (Mr. Fleming), asking us to extend the scope of the industrial development bank
3, 1S61
Industrial Development Bank Act across the whole spectrum of lending for every conceivable legitimate purpose. I assume certain illegitimate activities would still be viewed with some disfavour in the lending policy of the industrial development bank.
I think it is worth underlining that there is quite a difference between the profession of hon. gentlemen opposite on the hustings in these great windy speeches that are made from time to time and the kind of measures they bring before us in this house.


An hon. Member:: We are listening to one now.


John Whitney Pickersgill: This measure was designed originally-and I trust it will be used in the future-only to supplement the existing private lending institutions. I do not think, with the bankrupt state of the treasury of this country at the present time, the government would be justified in seeking to supplant private lending institutions.


Mr. Macdonnell:: The minister made that all clear the other day.


John Whitney Pickersgill: The minister's words are so inconsistent with the conduct of the government that there are very few objective people in this country who pay much attention any more to the minister's words. We are seeking to find out what the line of action of the minister is going to be, not his words.
It seems to me the industrial development bank has filled and will continue to fill a useful purpose in providing lending money in a field that is at the present time not adequately covered by any of the existing private institutions. But I do not think that in a desperate effort to regain the confidence of certain sections of the community, which this government has so obviously lost, it should with this or any other institution indulge in reckless lending of public money for unsound projects. I think that kind of warning needs to be made at a time when we approve in principle what is after all only an extension of a Liberal measure. Mr. Speaker, there are certain other observations I have to make. In order to be consecutive in dealing with them, may I call it six o'clock? I see it is six o'clock.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 7.30 p.m.
John Whitney Pickersgill: Mr. Speaker, when we adjourned for dinner I had just concluded certain general observations of a more or
7442	HOUSE OF
Industrial Development Bank, Act less historical character about the industrial development bank and had recalled that it was part of a great program for the transformation of our economy from wartime to peacetime under Mr. Mackenzie King, Mr. Ilsley and Mr. C. D. Howe, which worked perhaps better than any similar transformation in any other country of the world, and which laid the foundation for 12 years of full employment in this country and a steadily expanding economy which, unfortunately, has not been continued in the past four years.
I also pointed out that at the time the industrial development bank was established those of the hon. gentlemen opposite who were here at that time had very grave misgivings about it because they regarded it as a rather dangerous experiment of state intervention in the field of lending. It is interesting to note now that they are seeking to expand its powers under the flag of free enterprise.
I did not rise primarily to give this historical review and to put this in its proper perspective so much as to refer to one difficulty inherent in the Canadian economy and in the nature of our country, and to draw attention to the fact that we have constantly to take thought to overcome this difficulty. That difficulty is that there is in our financial and commercial world a constant tendency to centralize, which a wise government presided over by wise ministers and by a wise treasury should always seek to offset. This has had to be done in the fields of taxation through equalization; and in the field of making capital available, it has to be done through a great variety of devices, of which the industrial development bank is one.
If the industrial development bank is to be governed by purely commercial criteria in the allotment of its loans it will in fact be doing little more than duplicating or replacing private lending institutions. If it is to perform a useful function in our society it will have to do more than supply middle term capital which was one of the original purposes. It will have to seek to provide capital in such areas and ways that it will tend to offset to some degree the tendency to financial centralization which is, as I say, a thoroughly natural feature of our economy, but one which, if we are to have a healthy economy with reasonable equality of opportunity and advantage across the country we must constantly seek to offset.
In suggesting that I am not suggesting any argument on behalf of state ownership or anything that may even be vaguely described as socialism. I merely suggest that the principle of equalization, which has been followed by every constructive government from


Sir John A. Macdonald down to the present, is one which should constantly and conscientiously be followed.
I know as well as anyone how difficult it is to do this effectively because there is no doubt that, other things being equal, it is much easier to start an effective industry within 40 miles of Montreal or Toronto than within 40 miles of St. John's, Newfoundland, or in the province of Saskatchewan, or some other relatively sparsely settled part of the country where one must overcome the disabilities of transportation, small markets, and so on.
As I say, if the industrial development bank is to be governed by purely commercial criteria, practically all its lending will be done in central Canada and that is certainly not desirable. I suggest it is very important that it should focus its interest primarily on two sectors of the economy. First, it should focus on small businesses which are not operating on a scale where they can go themselves directly into the capital market offering bonds or debentures, or where they have other forms of ready access to private capital. It should concentrate primarily on those businesses which are not large enough to bear the additional expense of floating their own loans, but which are soundly run and which have real opportunities for expansion and which can fill a need sometimes very much more effectively than much larger businesses because there are people involved who are more directly interested in getting results. In other words, properly conceived this can promote real private enterprise as opposed to large scale corporate endeavour in a very effective way. That is one area.
The other area is in respect to regional development. It is even harder to accomplish results in this area. Very often the scale of loans required by businesses in this field is so low that it really would not be worth while for the bank to engage in the activity. I know this from personal experience which I have had with potential borrowers in the province of Newfoundland. Two or three cases have come to my notice over the years I have represented Bonavista-Twillingate. I know that these applications were made to the industrial development bank and the view taken by the bank was that these looked like pretty sound propositions but the amount of the loan was so small and the cost of necessary supervision of the loan so high that it was not worth while to make the loan. Yet at the same time these loans were required for a longer period than that for which the chartered banks normally lend. I do feel that in this field some technique should be worked out which I do not think has been worked out yet. This

need is not being met-though another very important one is by these government guaranteed loans to small businesses that were inaugurated a few months ago-and it will not be met by the industrial development bank under its existing practices. But I would think there might be some possibility of having some co-operative arrangement between the chartered banks and the industrial development bank whereby the chartered banks, which have their branches all over the country could act as agents for the industrial development bank in assessing and supervising some of the smaller loans so that it would not be necessary for the industrial development bank to have a staff of its own for the purpose and all the travelling expenses and other charges of that sort which would increase the overhead and make unsatisfactory top heavy arrangements. If the commercial banker felt that the risk was good enough that his bank was prepared to provide the annual working capital for the business which was required and if he were satisfied that it looked like a business that was good for expansion, the industrial development bank would not just automatically take their word but would at least count on the chartered banks or credit unions in certain cases supervising these loans and in that way cut down the cost of the overhead.
There is one thing that I think anyone who has had any experience in government or with any large scale organization must become impressed with all the time and that is the great necessity of avoiding unnecessary overhead expenditures. There is always a tendency to have too many people producing too many files and checking up too often. I sometimes think that we could reduce taxes and reduce the cost of government a great deal more if we were willing to take a chance a little oftener on some things and had far less of the accounting and checking than we have at the present time on small matters. I know, of course, what a scandal can be made if someone purloins $20 from the treasury, but sometimes you know you really wonder whether you should spend $500 or $1,000 a year on the off-chance that someone will get $20 from the treasury once in a while. A great deal of that sort of thing does go on in government no matter who is in the government.
As I say, if this industrial development bank, extending its scope over a much wider range of business, is going to have a real impact it has to take perhaps a little more risk than it has been taking up to now. The fact is, of course, it has been very well and prudently run by very able people. It is quite evident that the government must have that
Industrial Development Bank Act view because notwithstanding what the government is seeking to do with the president of the industrial development bank at the present time they still want the president of it to go on running the bank. I am not advocating recklessness or imprudence at all; quite the contrary. But I am saying that perhaps a somewhat greater degree of calculated risk will have to be taken if indeed these amendments are to realize that greater degree of expansion which Mr. Coyne was anxious to have when he recommended these changes to the government, which the government has now seen fit to bring before us and ask us to approve.
As I say, the measure of the expansion will be the measure of a reasonable degree of risk taken in this venture. I suggest that where the greatest risks should be taken are in the two areas I have mentioned: first, in the provision of capital for relatively small businesses that have not got the scope, and necessarily have not got it, to raise capital that large businesses do have by floating their own bonds and debentures; second, in seeking to offset this tendency toward commercial and financial centralization which is, as I say, an inevitable aspect of the kind of country we have and which it should always be the duty of every statesmanlike government to seek to offset.


Wallace Bickford (Wally) Nesbitt: Mr. Speaker, I have just a few observations on the bill which relates to a subject that has been of interest to myself and I know to a number of other hon. members of the house. It has been pointed out by the previous speaker and by others that the industrial development bank as it exists at the present time and as it has existed over the years has not been entirely satisfactory. While it may have been in the first place, in later years I do not feel that it has met the needs of the community or of the country and for that reason these very welcome changes to the act have been made.
It has always been my understanding that the original intention of the act was that the industrial development bank should supplement ordinary commercial credit channels. However, certainly in many instances, this has not been the case. I know that many of us around here have heard that it is much easier for companies to get loans from the commercial banks than it ever was to get them from the industrial development bank in the past. I heard one person put it rather picturesquely. He said it was easier to get teeth out of a hen than it was to get a loan from the industrial development bank. That may perhaps be stretching the point a little
7444	HOUSE OF
Industrial Development Bank Act but it does reflect the view of the public in general toward this institution.
Other hon. members have pointed out some of the advantages of the changes in the act. I do not wish to take up the time of the house in dwelling on and repeating them. It is very-fine and very commendable indeed to have all businesses included. The amendments to the act will be of great assistance. They will provide much greater assistance to small and medium-sized businesses and the like. There is one important point that I do not think has been dealt with. I refer to the fact that under the new terms, as I undersand them, we will be able not only to provide additional financing for the development of our resources but will also help to keep our resources in Canadian hands, which is certainly most important.
There are a great many resources in this country. Our primary industries include mining in all its branches, forest industries and the like. Many of these industries have very good propositions from time to time but many have difficulty in raising capital through the ordinary commercial channels. As all hon. members know, there can be only a limited amount of risk capital available in a country like Canada because of our small population and the limited savings of our people. Countries such as the United States and others in Europe have much larger amounts of money available for risk capital. Many parts of the world, for political reasons and others, are not places in which people wish to invest their money. I think everybody knows this is a self-evident fact, but I think it sometimes does not hurt to repeat it. There are few countries in the world where people from abroad can invest their money with a great degree of safety. Canada is certainly one of those countries, probably the leading one. In many other parts of the world where people used to invest risk capital they are not anxious to do so now. Some governments have recently become pretty nationalistic and are expropriating capital, and the political climate in those countries is not good for such ventures. As a result people from abroad are looking to this country, and have been as we all know, as a place in which to invest risk capital. I should like to cite one example. I will not name the company because that would probably not be fair. In 1958 a company was formed in one of the eastern Canadian provinces and it had very large proven deposits of a highly valuable mineral. It was a little difficult to obtain credit from the normal sources at that time for reasons which hon. members will know, and this particular company applied to the industrial development bank for assistance.


It is my understanding that, to say the least, they were given a very cursory hearing and turned down.
The result was that this particular mining company had to turn to United States and European capital which was obtained very quickly, but the situation now is that ownership and control of this great and very valuable resource is completely in foreign hands. What is more, the terms under which capital was borrowed to develop the mine were such that in the opinion of many the resource was virtually stolen.
It is just this kind of thing that the amendments to the act will now prevent. They will do so in two ways. In one case it may be done by the guaranteeing of the bonds of a company, as is already done by some provincial governments, and if the industrial development bank can guarantee the bonds of a company it may provide sufficient capital to go ahead with the enterprise. In the case of a larger enterprise, as may well happen on many occasions, the fact that the bonds and perhaps other current and long term liabilities of the company are guaranteed will greatly facilitate the sale of common or preferred shares in such a company because once the long or short term liabilities are guaranteed by the industrial development bank the element of risk disappears to a great extent with the result that additional capital is made more easily available.
There is always a limited amount of risk capital available in a country like Canada but there is always additional capital available for less risky projects. If the liabilities of these companies which are attempting to develop our resources should be guaranteed, it would make it much easier for them to obtain additional capital right here in Canada rather than having to go abroad to find capital, thus losing control of the resource as took place in the example to which I referred. As I have already said, I think the amendments to the act are most commendable and will do a great deal to develop our own resources and keep them in the hands of Canadians.


Paul Joseph James Martin: Mr. Speaker, before the Minister of Finance (Mr. Fleming) makes a speech I wonder whether I could put a question to him which he could answer in the course of his remarks. In view of the character of the bill and the fact that it is of considerable importance and has many clauses, it would seem to me that the proper course in accordance with regular practice would be for the bill to be sent to the banking and commerce committee. In that event I would hope it would be possible for

us to ask the president of the industrial development bank to come before that committee to give his views with regard to the bill and possibly, if the minister would graciously allow, his comments on other matters as well. At any rate, it might be possible for certain members of that committee, who are alert, vigilant and concerned with the public interest, to put questions to him on matters that might have some relationship to the industrial development bank bill.


Lionel Chevrier: Mr. Speaker, I should like also to follow the suggestion of the hon. member for Essex East (Mr. Martin) and put a question to the minister which he can answer when he replies.
I take it this is the measure that provides for an increase in the resources of the bank from $160 million to $400 million as announced in the budget. I should like the minister to direct his attention to this question when he replies. What provision, if any, is made in this legislation for depressed areas? In other words, it seemed to us that in increasing the resources of the bank by a substantial amount as is being done in the legislation some consideration should be given to assisting depressed areas.
The minister will remember that at one time he announced a policy having to do with assistance over a period of one year to industries which would locate in depressed areas. I asked the Secretary of State (Mr. Dorion) the other day when he spoke on the budget how many industries had established themselves in these depressed areas and he was unable to give me a reply although he said that the Minister of Finance (Mr. Fleming) had given some indication as to the number of companies that had applied for assistance. I think he did give the number of applicants but I am sure the house would be quite interested in the effect of the policy which the minister announced earlier.
The point in which I am interested now is, what provision is made in this legislation to come to the assistance of depressed areas by means of special depreciation and otherwise? Would the minister also be good enough to tell us the number of industries that did establish themselves in depressed areas by virtue of the earlier announcement made by the Minister of Labour (Mr. Starr) and also concurred in, I believe, by the Minister of Trade and Commerce (Mr. Hees) and the Minister of Finance?


Mr. Deputy Speaker:: I must inform the house that if the minister speaks now he will close the debate.
3, 1961
Industrial Development Bank Act


Donald Methuen Fleming: Mr. Speaker, I must confess to some surprise at some of the statements that have been made in the course of this debate having regard to the course of the debate at the resolution stage on June 30. I began by being surprised at the views expressed by the hon. member for Ottawa West (Mr. Mcllraith). He may not have been aware that the Leader of the Opposition (Mr. Pearson) speaking on the resolution stage of this measure on June 30, said, as found at page 7312 of Hansard:
.. . we on this side have been advocating for some time now an expansion of the functions and activities of this very useful piece of machinery ...
The hon. member for Ottawa West expressed some concern at the removal of the limitations written into the present act and defining those industries that may qualify for loans from the industrial development bank. He seemed to expect that the bank was now going to lend money to race courses.
The act has hitherto defined in fairly explicit terms those industrial enterprises which qualify for loans under the act. There are four categories of them and in the course of administration those categories have become rather rigidly interpreted. There have been many requests for the removal of those rigidities and a widening of the scope of those industries which qualify for loans from the bank. This is part of the background.
When the government proposes in this measure to remove the existing limitations on the industries which qualify, it is not necessary for the hon. member to assume that the result is going to be the throwing around of public money on things like race courses. There are many enterprises that certainly regard themselves as equally worthy of loans from the industrial development bank as those that have been defined hitherto as qualifying. There have been many of them. For instance, rural telephone companies have not qualified. Then, there are the enterprises that are engaged in the tourist industry. There have been many requests for loans for motels, hotels and tourist establishments, and so one could go on. I mention these examples, Mr. Speaker, to disabuse the minds of hon. members of the idea that the enlargement of the scope of qualifying industrial enterprises under this bill is intended to embrace things that might be regarded by some people as frivolous. This is a serious attempt to make the industrial development bank more serviceable to the Canadian economy.
Now, sir, it should not be thought, either, that the bank in exercising the wide powers conferred upon it under this measure is going to throw to the winds those proper considerations and that discretion which any banker ought to observe. I have been at pains to

Industrial Development Bank Act stress this fact both in the budget speech and in speaking to the resolution on June 30. The bank must still use a banker's judgment and decide whether or not applicants are really creditworthy. In this regard, let me say that there is here no thought of just casting away the proper restraint.
However, at the same time I must say, hearkening to some of the comments made by the hon. member for Oxford (Mr. Nesbitt) that there has been not a little criticism directed at the operations of the industrial development bank. It is the hope of the government that with the enlargement of the powers under this act, the enlargement of the lending resources of the bank and the enlargement of the definition of industrial enterprises which may qualify for loans under the act, the bank will be in a position, as I have said, to be more serviceable to the Canadian economy.
There is no thought, Mr. Speaker, of having the bank duplicate existing credit facilities. The hon. member for Bonavista-Twillin-gate (Mr. Pickersgill) evidently was not acquainted with what I endeavoured to say on this matter at the resolution stage on June 30. I was at some pains then to stress the fact that this institution, because it has access to public funds, should not be duplicating the facilities offered by private institutions. I recall to the minds of hon. members the fact that these safeguards are written right into this act itself. This is not something that is left to the good judgment of those who are administering the affairs of the bank. This is a safeguard that is written right into the terms of the act itself and it abides there. It is not changed by this present amending bill. Section 15 of the act reads:
(1) Subject to section 14, where In the opinion of the board
(a)	a person is engaged or about to engage in an industrial enterprise in Canada,
(b)	credit or other financial resources would not otherwise be available on reasonable terms and conditions,
An applicant who goes to the industrial development bank must establish, and it is proper that he should establish, that credit or other financial resources are not otherwise available to him on reasonable terms and conditions. If he is able to obtain commercial credit from a chartered bank, that is where he should go. If a large industry is able to meet its capital needs in the financial market, it is to the financial market that it should go. This institution is intended, and in its functions and scope is still intended, to fill what is otherwise a gap in the credit institutions of this country. It is not intended to duplicate the functions of the chartered banks in extending commercial credit for short

periods. It is not intended to duplicate or provide substitute credit facilities for those larger institutions which are in a position to raise money by bond or debenture issues on the market. This institution is intended principally to provide for those small and medium size institutions, loans in an area and for a term not otherwise available.
The hon. member for Laurier (Mr. Chevrier) asked about the application of the lending provisions of this act in regions where there has been an inadequate development of secondary industry. He has not acquainted himself with what I endeavoured to say on this subject at the resolution stage on June 30. At that time we heard a very effective plea by the hon. member for Inverness-Richmond (Mr. MacLellan) for the exercise of the functions of the bank in relation to assistance for the development of secondary industries in areas like his in Nova Scotia. In commenting on the submission made by the hon. member, I was at pains to stress that this ought to be regarded as one of the functions of the industrial development bank. I alluded to the fact that in the last five years the number of local offices of the industrial development bank has been enlarged from four to thirteen. This enlargement has been carried out with a view to making the services of the bank available in those regions on a much more local basis than had previously been possible.
For my part, I welcome this expansion of the localizing effect of the increase in the number of branches. It will enable those who are giving local administration to the affairs of the bank to be more intelligently acquainted with the needs of the local areas. I entirely endorse the plea made on Friday by the hon. member for Inverness-Richmond, that the functions of this bank should be directed consciously toward assisting in the provision of the needed credit for the development of secondary industry in those areas.
There were several other questions asked about the way in which the increase in capital is to be met. The answer is right in the terms of the bill itself, but the rules of the house preclude me from drawing attention to the specific provisions of the clauses of the bill. However, the answers are there. The purpose of this measure was praised by all sections of the house last Friday. I hope the measure will continue to enjoy the support of hon. members in all parts of the house.


Paul Joseph James Martin: May I ask the
minister if he will be good enough to deal with the question which I asked.


Donald Methuen Fleming: I overlooked the question asked by the hon. member for Essex East, and I will give him the benefit of the doubt and assume for the moment that the

question was seriously asked. It is the hope of the government that following second reading of the bill the house shall resolve itself into committee of the whole and proceed at once with consideration of the bill. It is not a long bill. If we follow the course of the discussion of this bill, including last Friday's debate on the resolution stage, we find it is not a contentious bill. It is a bill that is very clear. Having regard to the fact that its principle and its purpose have been supported by members in all parts of the house I think, on reflection, hon. members will agree it would be needless delay to refer the bill to a standing select committee.


Paul Joseph James Martin: Does the minister refuse to let the bill go before a committee because that will afford members an opportunity to ask the governor of the Bank of Canada, who is president of the industrial development bank, to give them the benefit of his experience?


Donald Methuen Fleming: The reasons for following the normal course of the house in these matters are clear. I think the house is not likely to be distracted by the unusual course that the hon. member for Essex East temptingly invites the house to take.


Paul Joseph James Martin: It is the normal course.


Lionel Chevrier: I asked the minister a question to which he failed to reply.


Donald Methuen Fleming: This is not the
committee, Mr. Speaker. I answered the question of the hon. member.


Lionel Chevrier: No.


Donald Methuen Fleming: We are dealing here with an amendment to the Industrial Development Bank Act. The hon. member wished to ask some questions about another measure altogether. We must ask that here, and in the committee, we deal with the bill.


Lionel Chevrier: I am sure the minister
omitted to reply to one question which I put to him, Mr. Speaker. He dealt with one of the questions I had asked but he did not deal with the other one.


Donald Methuen Fleming: I will deal with questions in committee.


Mr. Deputy Speaker:: Order. When the bill is considered in committee the hon. member will have an opportunity to put his questions.
Is it the pleasure of the house to adopt the motion?
Motion agreed to and bill read the second time.
3. 1961	7447
Industrial Development Bank Act


Donald Methuen Fleming: that the house go into committee on the bill.


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


John Whitney Pickersgill: On division.


Mr. Deputy Speaker:: Carried on division.


William Moore Benidickson: There are unanswered questions. That is why it was agreed to on division.
Motion agreed to on division and the house went into committee thereon, Mr. Flynn in the chair.
On clause 1-"Industrial enterprise".


Lionel Chevrier: In his reply to a question which I put to the minister earlier, he said that it ought to be one of the functions of the bank to provide assistance to the development of secondary industry in depressed areas. The question I asked earlier had to do with an announcement made by the Minister of Labour some weeks or months ago having to do with assistance to depressed areas and also the statement made by the Minister of Finance during the budget debate. I wonder whether the minister would answer the question which was this. How many industries have in fact established themselves in depressed areas because of the assistance given by the government to those industries which would receive accelerated depreciation for a year over a period of three years?


Donald Methuen Fleming: The hon. member is asking about something, of course, that lies outside the scope of this bill. He is asking about a measure that was introduced and announced in the budget of December 20, 1960. I have not the precise figures. That measure is not administered by the department of which I have the honour to be minister. It is administered under the Department of Trade and Commerce. In my budget speech I gave some indication of the quickening interest that has been shown in the accelerated depreciation provisions that were there offered. However, that is in the budget speech. I have not specific information about the number of industries that are established.


Lionel Chevrier: The minister is quite right, Mr. Chairman. The question I put to him is outside of the scope of this measure. But on the other hand, since under this measure the minister says it ought to be one of the functions of the bank to come to the assistance and development of secondary industries in depressed areas we are naturally-


Donald Methuen Fleming: I think I said "in areas in which secondary industry had not been developed". I did not use the expression "depressed areas".

Industrial Development Bank Act


Lionel Chevrier: I took it down and I thought the minister had used it. However, it is not of immediate consequence at the moment. The point is that I think the committee would be interested in knowing what has been the benefit of the earlier measure, because it is not inconsistent with what is happening here. It is true that the minister put on record the number of applications that had been received from industry. While I realize that he has not at his finger tips the number of industries that have taken advantage of the measure I wonder whether, during the course of the discussion, the minister could not obtain this information for the committee.


Donald Methuen Fleming: I doubt it, Mr. Chairman. I am sure my colleague the Minister of Trade and Commerce will be glad to supply any information that the hon. member for Laurier or any other hon. member may wish in that regard. However, I have not that information here. It is not in my department. I may say that there will be proper occasion for hon. members to obtain that information.


George James McIlraith: I wish to take advantage of this opportunity to deal with something that took place during my absence when the minister was making his concluding remarks on second reading. In the course of which reference was made to what I had said this afternoon. I perhaps should explain to the committee the reason for my absence. Mr. Speaker was presiding over a meeting of the committee dealing with the procedure of the house and I was summoned to attend that meeting. I attended it, as I thought was my duty, but it meant that I was absent while the minister was replying on second reading. In that reply I am told that he made reference to the position I had taken as to the principle of the bill. If I am correctly informed, he stated the position that I was supposed to have taken quite differently from what the facts warrant.


Donald Methuen Fleming: Mr. Chairman, the hon. member has been misinformed.


George James McIlraith: I would ask the minister to wait until he hears me out before deciding whether or not I have been misinformed. If the belligerent little minister could observe the rules of the house and have some manners in debate, perhaps we could get on more expeditiously.


Donald Methuen Fleming: Stick to the facts.


George James McIlraith: I will stick to the facts and I will debate the point. It is relevant to this clause. I will insist on the right to have the point stated. Although I have not had an opportunity of seeing the minister's remarks


in print because it is not possible to do so under the rules of the house, I am told that the minister represented me as having taken a position that was inconsistent with that which was taken by the Leader of the Opposition when he spoke on second reading of this bill. However unpleasant it may be to the minister to hear this, the rest of the committee is entitled to hear it. May I say that the position I took was wholly consistent with that of the Leader of the Opposition. If the minister had done me the honour of paying attention to my remarks when I was making them, he would have known this. I had made it clear that I thought the objective of the bill was wholly desirable but I expressed regret that, in achieving that desirable objective or seeking to bring it about, he had expressed the bill in the language used in it.
I had gone on to point out that the widening of the activities of the industrial development bank took place under this bill in two main ways. One was by increasing the amount of money available for them and the other was in increasing the types of business or enterprise to which they could make loans by redefinition of the term "industrial enterprise" in clause 1 of the bill. I had expressed regret that in that redefinition he had chosen this particular method because, in addition to achieving the wholly desirable objective of making more money available to this bank for the laudable purposes for which it is provided, he had done it by way of making any industry, trade or other business available as potential borrowers.
I had pointed out that this use of the word any had opened up the possibility of using taxpayers' money by way of loan for certain types of business which did not contribute anything substantial to the economy of this country or to the development of the country and which I was sure hon. members on all sides of the house would not wish to see helped with taxpayers' money. That was the point I had made. There is nothing in that point inconsistent with the remarks made by the Leader of the Opposition on second reading. I thought I owed it to the committee to make that perfectly clear.
As I said at the outset of my remarks, I regret that I was not able to be in the house when the minister was making his remarks so that I could have heard them precisely, but with the vicissitudes of the business of the house being conducted as it is and, as perhaps of necessity it must be, during the closing days of this part of the session, I could not help being absent. I hope the apology in that respect is accepted.


Herbert Wilfred Herridge: Mr. Chairman, I was absent for 40 minutes attending the same committee

as the hon. gentleman who has just resumed his seat. I have just one question to ask the minister. Was this amending bill, and particularly the clause that applies to all businesses without limitation, introduced by the government on the recommendation of the president of the industrial development bank or is it the result of the minister's own observation of circumstances in the country and the application of the industrial development bank?


Donald Methuen Fleming: Mr. Chairman, it is introduced as a result of a government decision but there have been discussions with the authorities of the bank.


Paul Joseph James Martin: Mr. Chairman, a few moments ago I raised a matter to which the minister did not immediately address himself. He gave the impression that he did not regard the suggestion as a serious one and dismissed it somewhat summarily. I believe it is an important suggestion and I am going to renew it at this time.
First of all I want to say that, as the Leader of the Opposition indicated, the principle of this bill is one which we strongly support, not only because of the improvements that are made in the operations of the industrial development bank but because our own experience has indicated that the bill in its original form served a useful purpose and in the light of existing economic conditions in the country the improvements are calculated to meet the new economic situation that faces us.
There have been many complaints, of course, about the administration of the industrial development bank. It has been charged by would-be borrowers and others that the bank exercised a restrictionist policy and on that account it was not possible for them to get the kind of credit they required to enable them to maintain their industrial enterprises.
It would be interesting, in the light of the kind of experience that the bank will have in the future, for hon. members to know in much greater detail than we have had from the minister what has been the experience of the bank in the past with regard to this matter. There is an office of the industrial development bank in the city of London which I suppose is intended to serve the district from London to Windsor and from London to Hamilton. The minister, in mentioning that there would be four new branches in the bank's operations, did not say what other places-


Donald Methuen Fleming: I did not say
there would be four new branches.
3, 1961
Industrial Development Bank Act


Paul Joseph James Martin: I understood there would be four new branches.


Donald Methuen Fleming: I did not say that.


Paul Joseph James Martin: Then perhaps the minister would be good enough to tell us what he did say. I certainly understood him to say there would be four new branches and the purpose of the enlargement of the operations of the bank was to meet local conditions in the country more effectively than has hitherto been the case.


Donald Methuen Fleming: I said that in the last five years the number of branches had increased from four to 13.


Paul Joseph James Martin: I thank the minister. He says now that the number of branches which have been in existence will continue and there will be no addition to their number. I had hoped that in view of the fact that an effort is being made in my own city of Windsor to get new industry, and particularly a whole series of small industries, the importance of that city would be recognized in any new branches that were going to be set up. However the minister indicates that there are not going to be any new branches.
As I say, there have been complaints about the criteria established by the bank in the past in the loans it has made to enterprises covered by this bill. The minister has said that a new spirit is to be engendered in the administration of the industrial development bank; an attempt is going to be made to recognize special conditions and special situations. One would hope that the special situations the hon. gentleman had in mind would be those chronically depressed areas in the country that come within the mischief of the minister's anaemic double depreciation program announced in the baby budget and about which we have heard so little ever since.
Because we want to make sure that the criteria to be established in the future meet the conditions and the objectives laid down by the minister in the statement he made a few moments ago I think we must have more information than is now available to us. It is all very well for a minister of the crown piloting a bill of this sort through the house to speak generously and perhaps even extravagantly of his intentions. It is all very well for the Minister of Finance to say that under this administration an attempt is going to be made to bring the potential power of this measure into areas where such credit has not been available at the hands of the crown. However, one often finds that the declarations made by members of a government before

Industrial Development Bank Act an act is passed are not in practice fully supported by those who are called upon to administer the act once it is passed. That certainly might well be the case in the future. One way of determining that would be to know in advance what criteria are going to be employed. Is special attention going to be paid to chronically unemployed areas? Is an attempt going to be made to use this measure to provide for an alleviation of unemployment in areas that are depressed? 'Is this bill really going to meet the very laudable objectives which the minister has postulated? I suggest that one way of getting an answer to this series of questions would be for the minister to agree to send this bill to the banking and commerce committee.
The minister has turned down that request. He made the perfectly obvious remark that the bill would ultimately go to the committee of the whole. Of course every hon. member was aware of that procedure. The question was whether the bill would go to a standing committee of the house, and that is certainly not an unusual request. Bills much less complicated than this which have been introduced by the minister have been sent to the banking and commerce committee. The minister the other day sent to that committee a group of bills having to do with trust companies and the like. We had a very valuable discussion in that committee. That discussion certainly elicited information which had not been forthcoming from the minister in his statements in this house.
I am sure that if we had before that committee on this bill the new directors, particularly the new directors who are now in the government service, as well as the old directors now in the government service, we would have a much more detailed description of their intended functions. We would have a more precise appreciation of the criteria which they would employ than we have obtained from the minister. We would have an opportunity of ascertaining in greater detail and with greater precision why loans in the past, under some of the very same authority now provided in this bill, have not been extended. We would be able particularly to ascertain what are going to be the future intentions of the directors in this regard.
The deputy minister of trade and commerce, or whoever happens to be the deputy minister at the time, is going to be made a director. I think that is a wise suggestion. It would be very useful to have him give us an indication of the plans, in the light of the pronouncement made by the Minister of Trade and Commerce with regard to the increase in Canada's export trade, because many of the industries that can benefit from this kind of legislation will be industries, as


I know from my own community, of the smaller type seeking outlets in Canada's external markets.
It would also, of course, be interesting to learn from the president of the bank what his experience has been with regard to the administration of this act and the criteria he, as president of the bank, envisages for the operations in the future. After all, the governor of the Bank of Canada continues to be the president of the industrial development bank. Notwithstanding the vicissitudes which may have crept into the structure of the government of Canada within recent weeks the present governor of the Bank of Canada continues to be the president of the industrial development bank.
We are entitled as members of parliament to have from that individual an accounting of his stewardship and administration as head of this bank as well as an indication of the kind of policy he and his colleagues on the board of directors intend to pursue in furthering the objectives of this bank in respect of which the lending facilities are to be increased from $100 million to $400 million. That represents a very large increase and surely we are entitled to have from those who are going to administer this an indication of how they are going to apply it particularly in the chronically unemployed areas such as those I have mentioned.
It cannot be argued that the minister has satisfied the committee or the house in respect to the kind of question I am asking now. Surely he cannot deny us the opportunity of eliciting further information in this regard. What objection can there be to having this bill sent to the banking and commerce committee in accordance with our traditional practice? I can very well envisage what the minister would say if he were in the opposition and this situation were confronting another administration. I can recall some of the declamations which he has made in the past in respect to matters involving the same kind of principle that now agitates me. How he would have complained about the treatment of parliament by the government if the government of that day had restricted its responses only to those who were actually in the executive arm of government.
The Minister of Finance is a busy man and could not possibly know all that one would expect an administrator of the industrial development bank to know. This measure can be a very important measure for improving our economic conditions, for alleviating unemployment, for setting in motion the productive processes of much new industry in Canada, but the only way that can be done

is by industry learning, through the members of the banking and commerce committee, what the intentions of the administrators are.
It is all very well for the minister to take the position that he has laid down the very broad lines involved in this legislation but it is not the broad lines we want; we want the details which the Minister of Finance has not given. He has spoken in laudatory terms of the general intentions but he has not given us any indication as to the character of industry that will be assisted. He has not told us of the percentage of an applicant's capital set-up which will be required, for instance, to make it possible for that industry to qualify. What are the criteria in that regard? How much equity will an industry be required to have before that industry will be able to qualify for a loan under this act?
In clause 3 of the bill-


Donald Methuen Fleming: We have not
reached that yet.


Paul Joseph James Martin: I know that, but I say that in clause 3 of the bill provision is being made for by-laws of the company, yet the minister has not told us about those. Provision will be made for regulations governing the administration of this act but we have had no indication as to what those regulations will be. These questions are the kind which normally, under our system of government, are answered in an appropriate standing committee of this house.
I ask the Minister of Finance once again to allow this bill to go to the committee where we can obtain the kind of answers which we have not been receiving from the minister in the general statements which he has made. If the minister takes the position that he cannot send this bill to the committee because the present head of the industrial development bank is the governor of the Bank of Canada, I suggest that is not a response to which the approval of this house can be given.
The law of this country is such that the present governor continues to be the president of the industrial development bank, and whatever his opportunity may be for future public service is not the question involved. The question is, what has been his experience? He must have had something to do with the framing of this bill because it is inconceivable that the Minister of Finance should have created a bill increasing the available amount of money for credit purposes from $100 million to $400 million without it having been discussed with the members of the board of directors of the industrial development bank. Undoubtedly the board of directors as presently constituted have discussed this matter,
3, 1961	7451
Industrial Development Bank Act and undoubtedly they have made recommendations to the minister with regard to the increase in the amount of credit to be provided under this amending bill.
That being the case, Mr. Chairman, what possible reason could the minister have for not allowing this bill to go to the standing committee of this house thereby affording to members of that committee the opportunity of finding out from the directors, and particularly from the president who has had such close and intimate association with this bank, the answers to these important questions. There can be no reason but one, and I shall not suggest that reason.
I ask the minister, in the interests of giving to this country the kind of information which we are entitled to have, to recognize what our practice has been, to recognize what he himself has done with regard to many bills of lesser importance than this during the course of the present session when he sent those bills to the standing committee. If that has been done in the past why can it not be done with regard to a measure about which the minister says he has such high hopes, and about which we too have high hopes?
There is to be the kind of administration necessary to make this act as effective as the minister would like it to be, but he will not be administering it; it will be administered while he is preoccupied with all sorts of other questions. That being the case, once again I make an appeal to him to recognize the rights of hon. members to have further information which can only be obtained apparently through one of the standing committees of this house. The minister should not hesitate or at all be concerned about letting the president of the industrial development bank come to the committee at least for the purpose of discussing the amendments proposed to this act. He could put all the reservations he wishes on the scope of questioning, which will be considered by this house. I ask him to distinguish this bill from another bill and to recognize that the governor of the bank can supply hon. members with information which the minister thus far has not given them.


Donald Methuen Fleming: Mr. Chairman, the remarks of the hon. member, as he must well know, are entirely out of order. The house has already decided that this bill should go to the committee of the whole. That is the decision of the house and it is binding. It is not open to the hon. member to raise arguments in the committee that the house should have taken a course different from the one which it took in referring this bill to the committee of the whole. Therefore I submit his remarks are out of order. It is here we

Industrial Development Bank Act are following the normal course and here that hon. members are to be given such information as the committee may require with reference to the terms of this particular measure.
Some hon. members opposite made statements that might lead one to think that they were the fathers of the ideas in the bill;-


Paul Joseph James Martin: That is right.


Donald Methuen Fleming: that there was strong support for the bill on their part. There was even a suggestion that at the national convention of the Liberal party in January, such ideas as have found their way into this bill for enlarging the scope, usefulness and resources of the industrial development bank had been adopted here. If I am to interpret the remarks of the hon. member for Essex East now he is questioning the measure at every turn. He is not prepared-


Paul Joseph James Martin: There is no questioning of this measure at all.


Donald Methuen Fleming: Then, why does he put up this smokescreen? Let us go ahead with this measure which he seemed to favour at one stage of the day but which seems to have lost his favour now. He said in one breath that hon. members opposite favour the bill.


Paul Joseph James Martin: We favour the principle of this bill very much.


Donald Methuen Fleming: The hon. member for Bonavista-Twillingate announced on his part that the bill was adopted on division so it is quite clear he was not for the principle of the bill.


John Whitney Pickersgill: On a question of privilege, sir, the minister has made a statement which is totally false.


Donald Methuen Fleming: The hon. member said "on division".


John Whitney Pickersgill: Your Honour asked whether this bill should be sent to the committee of the whole and I said "on division". I said "on division" precisely because the minister had refused the request of my hon. friend from Essex East that the bill should not be sent immediately to the committee of the whole but should be sent, as it should have been and as it would have been in any other session, to the banking and commerce committee. The only reason it is not being sent, as every member of this committee knows, is that the minister is afraid to have the president of the industrial development bank appear before that standing committee. For the minister to get up and make totally false statements about the attitude taken by other hon. members in this committee does him no particular credit.


Donald Methuen Fleming: Mr. Chairman, it will add nothing to the weight to be attached to the remarks of the hon. gentleman who has just taken his seat for him now to suggest that he was not putting himself on record squarely "on division" a while ago. He was heard on this question.


Paul Joseph James Martin: He explained
why.


Donald Methuen Fleming: All right, then. If the hon. gentleman is in favour of the bill now can we not go on with it without having the hon. member for Essex East seek to divert us from proceeding with a measure which I thought at one stage he was supporting?


John Whitney Pickersgill: Mr. Chairman, the hon. gentleman has once more twisted and turned and tried to change the record. No one in this house opposed the second reading of this bill. It passed unanimously and no one said "on division"; but when Your Honour pul the subsequent motion that it be sent to the committee of the whole, a motion which is purely procedural and which was the procedure which the government was using to evade responsibility, I said "on division". I said "on division" because we want this bill to go to the banking and commerce committee so that we will be sure it will do what the Liberal party in its rally wanted it to do, namely to be genuinely expansionist, and not reflect the phoney kind of wordy expansion which is the only expansion we have ever got from the Minister of Finance, and that only since June 14.


Donald Methuen Fleming: If the hon. membei for Bonavista-Twillingate is questioning the terms of the measure, which are the terms in which parliament is called upon tc legislate, we shall have an opportunity later on to put him on record on it.


Walter George Pitman: Mr. Chairman, I shall not let my remarks wander out of order, but I do wish to state my sincere regret that this house has taken this decision; that it is not sending this bill to the banking and commerce committee.


Paul Joseph James Martin: Will the hon. gentleman permit a question?


Walter George Pitman: Yes.


Paul Joseph James Martin: I am sure the hon. member recognizes it is the case that there is nothing to prevent the house taking a decision now that this bill be sent to the banking and commerce committee.


Walter George Pitman: I say this. I support the hon. member for Essex East most sincerely in his contention.
The Minister of Finance stood in his place just a few minutes ago and said that he was surprised that we on this side of the house did not know certain things. The hon. member for Ottawa West had to come back into the house and redefine what he had said. The only way that we can get this kind of information is in a committee.
We have had a great deal of criticism. The hon. member for Oxford, the hon. member for Parry Sound-Muskoka and the hon. member for Halton all rose in their places and said that in the past the bank had not been doing the things it should be doing. Therefore, we want the bill, which the Minister of Finance says is going to provide employment, to go before the committee.
There are a number of things which I think the committee of the whole should know. For example, why was it that the bank made a profit of nearly $2 million last year and yet wrote off only $35,000 in bad debts. This is a very small amount in terms of the amount of risk involved. I think that a bank which is being supported by the government of Canada should be willing to take risks. This is what hon. members are saying in the house and yet the minister will not allow us to bring before the committee the president of the industrial development bank who happens also to be the governor of the Bank of Canada. He will not allow us to question this man with some freedom in order to find out what things have been going wrong with the administration of the act in the past so that they can be rectified in the future.
There are a number of things we would like to know. The character of the president of the industrial development bank has been virtually assassinated in this house. Yet, it would appear that his proposals were accepted by this government when it came to revising and amending this act. I think we on this side are justified in asking why the government is going to accept the proposals of the president of the industrial development bank and why, on the other hand, it considers that he was completely incompetent when it came to running the Bank of Canada. I think we should know to what extent there has been rapport among the Minister of Finance this government and the president of the industrial development bank.


William Moore Benidickson: Who appoints the directors?


Walter George Pitman: That is a very good point, Mr. Chairman. Hon. gentlemen opposite have appointed those directors. They will not allow
3, 1961	7453
Industrial Development Bank Act them to be summoned before the committee so that they can be examined.
This house is entitled to information. The House of Commons is not here to be common; it is here to lead common people in the solution of their common problems. This can be done only when members of the House of Commons have information. The only place they can obtain this information is in a committee of this house set up for that purpose.
What the hon. member for Essex East is suggesting is not an irrational delaying tactic. It would take only one or two meetings, perhaps two or three days. It appears that we are going to be here for a few days in July. It would take a very short time to find out exactly what has been going wrong with this legislation, why there has been criticism from all sides of the house. In fact, this is the strange part of it. More criticism has been voiced to the right of Mr. Speaker than has been voiced on this side of the house. At least three members from the other side stood in their places and criticized the bank for what it has not done. I do not think one member of the opposition has done this. Everything that has been said on this side of the house has been of a laudatory nature and we have sought fuller information. We have said that in the past the industrial development bank has performed a great service but that, on the other hand, we felt there should be an opportunity to provide a better service. There have been other suggestions from this side of the house having to do with regional development and the development of depressed areas. This government will not even accept the possibility that perhaps there may be a few people who could give some suggestions with respect to this bill which might well give more employment in depressed areas and which might well help the economies of these regions which today are not enjoying the same degree of prosperity as other parts of Canada.
The government is engaging in a form of closure, although I hate to use that word. It is depriving the members of this house of the knowledge necessary to fully inform them of the affairs of this country.


Lionel Chevrier: Mr. Chairman, I should like to join with the hon. member for Essex East and the hon. member for Peterborough-


Gordon Minto Churchill: One party.


Lionel Chevrier: -in trying to impress upon the minister certain points which I believe have already been brought forcefully to his attention but on which I should like to insist. It strikes me that the Minister of Finance is being highly technical tonight. He has said

Industrial Development Bank Act to the committee on several occasions that what we are discussing is entirely out of order.


Donald Methuen Fleming: It is.


Lionel Chevrier: I say to him and those who sit behind him that it is not out of order. We are perfectly within our rights in dealing with this matter, having regard to what the minister has already said. The minister said earlier that it ought to be-he did not say it would be-one of the functions of the bank to assist secondary industry particularly in depressed areas in this country.


Donald Methuen Fleming: I did not use the
expression "depressed areas" at all.


Lionel Chevrier: That is why I say the minister is being very technical in objecting to what is being put to him from this side of the house. After all, if it is the intention of the government to use the bank as an instrument to come to the assistance of secondary industry, whether it be in depressed areas or elsewhere, then there should be no objection on the part of the minister in submitting this matter to the banking and commerce committee. My experience has been that these matters are referred to that committee from time to time and here is an occasion when there should be no objection whatever on the part of the Minister of Finance.
The present president of the industrial development bank has not resigned from that office. He has not been asked by the Minister of Finance to resign from that position. Therefore there should be no objection to calling him before a committee so that the country will know what the government has in mind with reference to assistance to secondary industry, with reference to what the minister said ought to be one of the functions of the bank, the assistance of depressed areas.
Let me say to the minister and to his colleagues on the other side of the house that it is quite proper at any time in the proceedings for the minister and the government to determine that a matter, notwithstanding that it is in committee of the whole, should be referred to another committee, for instance, the banking and commerce committee, so that the measure can be studied. It seems to us that that would be the only logical step in this instance. It seems to us that that would be a way for the government to show its sincerity because the president of the bank could then be called as a witness and we could examine him on what the bank has in mind with reference to depressed areas. If that is not done, then we will not know what is in the mind of the government. We will not know what is in the mind of the bank with


reference to these all important matters, most of which have been referred to in the budget. I ask the minister again to reconsider the situation and to accept the suggestion made by the hon. member for Essex East and submit the bill to the banking and commerce committee.


Donald Methuen Fleming: Mr. Chairman, I ask you to regard the situation in which we find ourselves. It was a decision of the house that this bill be referred to the committee of the whole for consideration and the purpose of such consideration is not to debate another course or to open up the decision that the house has taken but so that the house may in committee of the whole review the clauses of the bill seriatim. What we have listened to has not been a discussion of the bill but an attack on the decision of the house. _It does not rest with any of the committees of the house, whether they be select committees or committees of the whole house, to attack a decision of the house itself. We are sitting in committee of the whole on the bill because the house has so decided and I would respectfully submit that this discussion is out of order and we should now be discussing clause 1 of the bill.


William Moore Benidickson: Mr. Chairman-


Jacques Flynn: Is the hon. member speaking to the point of order?


William Moore Benidickson: I did not think there was a point of order. I am speaking generally with respect to clause 1. I wish to indicate in speaking to clause 1-


Jacques Flynn: Order. The minister has raised a point of order and has apparently asked the Chair to make a ruling. If we are through with the discussion which has taken place and the committee is now proceeding to discuss clause 1, the chairman will not have to make any ruling, which might be the best course to follow.
(Translation):


Mr. Caron:: 
Jacques Flynn: It seems to me that the committee has been directed by the house to study the bill clause by clause, and that is the only duty of the committee. It could be put to the house, of course, to refer the bill to a special committee instead of to the committee of the whole but the committee of the whole has been directed to proceed with the study of this bill clause by clause.
I would not rule that all the remarks that have been made were out of order, but I would say that to discuss only whether we should consider the bill in committee of the whole now would certainly not be relevant.


Paul Joseph James Martin: Mr. Chairman, I had risen to speak to the point of order and perhaps you will allow me to say something now. The doctrine which the Minister of Finance has laid down is, I think, so unusual-


Richard Albert Bell: Sound.


Paul Joseph James Martin: -that I am surprised that even he would have put it forward. I cannot lay my hands on the particular reference and I may be wrong but I think that on one occasion the present Secretary of State for External Affairs, who was no mean parliamentarian when in the ranks of the opposition, did this very thing on a bill that came before the house some years ago.
I may be wrong in identifying the Secretary of State for External Affairs.


Howard Charles Green: I think you are.


Paul Joseph James Martin: The minister says that he thinks I am. I was trying to pay him a left-handed compliment and the compliment still stands. I am glad he is in the house because he will be able to give the Minister of Finance the kind of advice that will perhaps enable the Minister of Finance to secure quicker passage of this measure than would otherwise be the case.
It is true that the house did decide on division that we would go into committee of the whole and discuss this bill, but I would submit that on the first clause it is open to any hon. member at any time to suggest that there are considerations which the house might wish to reconsider and that as a result of those new factors or further elucidations the house might wish to reverse its decision. There is certainly nothing in the rules that prevents the house reversing its decision.
We are not saying that the decision taken by the house on the procedural point is objectionable. All we are saying is this. After further consideration, does the minister not
3.	1961	7455
Industrial Development Bank Act think that for the reasons that have been further given this bill should be sent to the banking and commerce committee? It would certainly be in order for me to propose that we rise and report progress to consider this particular matter and to give the government an opportunity to look into the arguments that have been made in favour of this proposal. That would certainly be perfectly in order. If that is in order, what can be regarded as out of order in the suggestion that is being made on the first clause of the bill that we reconsider the procedural decision and that we send the bill to the banking and commerce committee? I do not know of any rule that precludes this interpretation. I would be very grateful if Your Honour could indicate where in our rules it is suggested that, on the first clause of a bill, it is not open to the house to suggest that we might have a reconsideration of the procedural decision made a few moments ago and that the bill, contrary to that decision and contrary to the earlier intention of the house, be sent to the banking and commerce committee.
I know of no rule which precludes that. I would be grateful if you could indicate such a rule. The Minister of Finance has produced no authority. He has made a blind assertion, as he always does on procedural questions, as though his mere observation had all the quality of an infallible judgment. I say to Your Honour that if he could advance some reasons for the position the Minister of Finance takes, that would be a different matter. I would be very surprised if there is anything in our rules which would render out of order a proposal that has been made that this matter be referred to the banking and commerce committee so that the governor of the Bank of Canada, the president of the industrial development bank, one of those who has assisted in the formulation of this measure, be heard by the banking and commerce committee, thus affording us an opportunity of examination which is not open at the present time.


John Whitney Pickersgill: If I may speak to the point of order as well and recall to the mind of the Secretary of State for External Affairs what I have frequently referred to in this house since I came over to this side and he went over to that side of the house, as the well known Howard Green rule, I would say that this rule is that on clause 1 of a bill there was allowed a general consideration of all the circumstances. I do not think a month ever went by in all the years the Secretary of State for External Affairs sat on this side that he did not reiterate what I call the Howard Green rule with varying degrees of eloquence and force. I can remember very

Industrial Development Bank Act few occasions when he did not succeed in getting his way by sheer weight of words and by his persistent personality.
It seems to me that with the weight of that precedent and with the weight of the author of that precedent here in the committee this evening, the suggestion of the Minister of Finance should not be followed. As the hon. member for Essex East has said, the minister considers himself much more infallible than the Pope and, as a matter of fact, is almost invariably wrong, as Your Honour has found in your own experience because there has been no minister in the history of the Canadian parliament who has been overruled by the Chair so often as the present Minister of Finance on points of order.


James MacKerras Macdonnell: This is irresponsible.


John Whitney Pickersgill: This is a historical fact and it can easily be verified by checking the rulings, but I admit it is slightly irrelevant.
What is relevant is that my hon. friends have been asserting from this side of the house that they cannot give to this measure the kind of detailed and careful examination that it evidently requires unless we can call before a committee those people who have been carrying out these operations which have been so unsatisfactory to certain backbenchers opposite as the hon. member for Peterborough pointed out. In this way, we could find out why these operations have been unsatisfactory to hon. gentlemen opposite. It was not anyone on this side of the house who complained of the abuses in the administration of the industrial development bank. It was the backbenchers over there who were complaining.


Jacques Flynn: Would the hon. member please discuss the point of order?


John Whitney Pickersgill: Precisely, sir, the point of order is that it is surely competent to us on this side of the house to suggest that if we are to do our duty as members conscientiously and give to this bill the kind of attention which hon. members opposite seem to think it requires, then we have to have witnesses before us who can speak at first hand, not at second hand as the Minister of Finance does; and not only at second hand but I think it would not be an exaggeration to say with some prejudice in this particular case.
It does seem to me, sir, that to suggest we cannot propose this procedure, and to suggest that in proposing it we are opposing the bill, is seeking to deny a measure of freedom of speech at which I am sure Your Honour would not wish to connive.


Mr. Campbell (Siormont):: May I speak to the point of order? If we are going to submit the decisions of the house to review every

ten minutes, then we are going to reduce the whole procedure of this house to absurdity and we will not be out of here before Christmas. How often do hon. gentlemen opposite wish to revise the decisions of the house?


Jacques Flynn: The house has adopted the motion of the Minister of Finance that the Speaker leave the chair for the house to resolve itself into committee of the whole on the bill. This is the first point. Going into committee of the whole on the bill means that this committee has the power to consider the bill clause by clause and rule 59 (2) applies which says that speeches in committee of the whole must be strictly relevant to the item or clause under consideration. This is the only mandate of the committee to consider the bill clause by clause.
Of course, the house itself can change the decision which it has made. At the time the motion was put it could have been defeated. There may be other opportunities to submit the idea of the hon. member for Essex East which others have indicated they would like to support. However, this could not be done in the committee of the whole.
There remains only one point which has been raised by the hon. member for Bonavista-Twillingate and that is as to the scope of the discussion on clause 1 of the bill. I know that the practice has grown over the years of allowing a certain degree of latitude in the discussion of clause 1. Of course, this has not changed the rule which calls for strict relevancy. I do not believe any chairman or Speaker has indicated that even this would allow a discussion as wide as the one which takes place on second reading. I am quite sure, in any event, that I am not taking away from any member any essential right in saying that the discussion of the decision which the house has taken on this bill is out of order in committee of the whole. I do not think I am preventing any member from using all his rights at the proper time.
I would hope that the discussion would be confined to the bill. The only thing the committee can do is report the bill or report progress thereon.


Alexis Pierre Caron: In order to make the procedure completely in order, I move:
That the committee rise, report progress and ask the house to refer the bill to the banking and commerce committee for further study.


Jacques Flynn: It seems obvious to me that part of the motion is out of order. I think the hon. member may move that the committee rise and report progress and request leave to sit again at the next sitting of the house, but the reference of the bill

to the banking and commerce committee for further study is something for the house to decide.


Alexis Pierre Caron: I think, Mr. Chairman, the committee always has the right to make suggestions to the house. We do not order the house, but we report progress and ask the house to do something. We are not ordering the house but are requesting the house to take this decision. This is a point which has been taken up in the committee and the committee has a right to report exactly what has been done in the committee. I do not believe that it is out of order. I think it is within the standing order of the house.


Gordon Minto Churchill: You are out of order.


Alexis Pierre Caron: That is what you say.


Gordon Minto Churchill: Question.


Jacques Flynn: I have indicated a view as to part of the amendment. The hon. member has not convinced me that I was wrong. If nobody objects, I will put the amendment "as is".


Donald Methuen Fleming: The motion is
clearly out of order, Mr. Chairman.


Alexis Pierre Caron: How is that?


Jacques Flynn: This is my view. Otherwise the hon. member may delete the last part of his motion.


Alexis Pierre Caron: I am just asking; I am not ordering.


Jacques Flynn: I am suggesting; I am not ordering either. I am suggesting that the hon. member delete some words contained in his motion so that it will be in order.


Alexis Pierre Caron: I think it is within the standing order.


Jacques Flynn: If the hon. member insists on leaving the words in the motion, I shall have to declare his motion out of order.


Paul Joseph James Martin: Mr. Chairman, I believe that the government should have an opportunity of considering the proposal I made, namely that this bill be referred to the banking and commerce committee-


Some hon. Members:: Oh, oh.


Paul Joseph James Martin: -so that the governor of the Bank of Canada might be heard.


Donald Methuen Fleming: Order.


Paul Joseph James Martin: For that reason I move:
That the committee rise and report progress.
3.	1961
Industrial Development Bank Act


Mr. Browne (St. John's West):: I suggest that the hon. member is out of order as we have just had a similar motion, and it can be moved only once.


Paul Joseph James Martin: No.


Lionel Chevrier: No. That motion is perfectly in order.


Jacques Flynn: Order. The other motion was ruled out of order because of something else. The motion made by the hon. member for Essex East is not debatable. I will therefore put it to the committee now.
Motion (Mr. Martin, Essex East) negatived: Yeas 21; nays 62.


Jacques Flynn: I declare the motion lost.


George James McIlraith: May I draw your attention, Mr. Chairman, to a matter arising out of the vote. I think it is not desirable that the practice of permitting members, after those who voted for a motion have been counted, to come in and join the ones who are voting against it. I merely draw your attention to that practice and express the hope that you will indicate that it is not in order.


Jacques Flynn: I think the rule is clear that when the question has been put no member should enter the chamber or leave his place.
Shall clause 1 carry?


William Moore Benidickson: Mr. Chairman, I regret that I am not allowed to discuss the question of referring this important bill to the banking and commerce committee. However, I wish to say that, as we all know, this bill follows not an announcement of a legislative program as far back as last November, as would be announced in the speech from the throne but it was announced and referred to by the Minister of Finance when he made his late budget speech on June 20. Earlier tonight the hon. member for Bonavista-Twillingate referred to the style of the Minister of Finance of twisting and turning in some of his arguments. Before we proceed too far with respect to some of the clauses of this bill, I wish to give a good illustration of the kind of twisting and turning of which the Minister of Finance is capable. I refer to page 6646 and 6647 of Hansard where, in the budget speech of the Minister of Finance, we find in bold letters reference to the industrial development bank. As found at page 6646 of Hansard the minister stated as follows:
The scale of the bank's lending to small and medium sized businesses has been expanding rapidly. In its last fiscal year the bank made 740 loans amounting to $38 million, as compared with 221 totalling $17 million five years earlier.

Industrial Development Bank Act


An hon. Member:: What is the matter with that?


William Moore Benidickson: What is the matter with that? I say it is twisting and turning. If one looks at the last available report provided to us by the industrial development bank one can see immediately the special pleading, the rather dishonest pleading, that is contained in those words given to us on budget night.


Some hon. Members:: Order.


Donald Methuen Fleming: Mr. Chairman, the hon. member has said that dishonest words were used to the house in the budget speech.


Some hon. Members:: No.


Donald Methuen Fleming: The hon. member just used those words.


John Whitney Pickersgill: Dishonest pleading.


Donald Methuen Fleming: He said dishonest words were used in the budget speech. That is clearly unparliamentary and I ask that the hon. member be required to withdraw that remark.


William Moore Benidickson: If the minister quibbles, Mr. Chairman, I am perfectly prepared to take away the word "dishonest" and I will say. "improper pleading". I say that it was twisting and turning, when he referred to the proposed amendments to the Industrial Development Bank Act, to quote figures in the way he quoted them. I will illustrate why I am making this statement. In this special pleading on budget night the minister referred to the loan approvals of the industrial development bank for the year ended 1955, when they amounted to $17 million. But did he tell his colleagues in this house or tell the country that in the following year, namely 1956, the total loan approvals of the industrial development bank amounted to $39 million?


Joseph-Alphonse-Anaclet Habel: He would not say that.


William Moore Benidickson: He did not say that. Of course, he was not responsible for the bank or the directors of the bank in 1956. When the minister is speaking on budget night I think he should give the people of this country the full facts. As I observe the last available report, in no year during the successive four years reported here have there been loan approvals by the industrial development bank to equal those in 1956 which the minister in his statement skipped and overlooked. In the final year of 1960, when we had a considerable increase in gross national product, even if not in real terms, the loan approvals by the industrial development bank were still lower than they were

in the last year of the previous administration, namely 1956. I say that was special pleading. I say that his words which I have quoted from Hansard as contained in his budget speech were not a proper presentation by any minister of finance when he indicates that he proposes to enlarge the authority of a bank and give some statistical quotations in that important speech to the nation.
In addition to that I wish to refer to the matter of the authority of the government with respect to interest rates charged by this crown corporation. I raised this matter two or three weeks ago. Again I say that the minister was twisting and turning because he interrupted my speech and attempted to take credit for going to the commercial banks of this country and getting a very slight reduction in the prime rate of borrowing within the last few weeks.
I raised the question: why does not the government, which is in control of the industrial development bank and Central Mortgage and Housing Corporation, reduce its interest rates in this field? The minister said, "We recently reduced our rates to borrowers from the industrial development bank". I was lucky enough to have in front of me a record that the last reduction of the interest rate of the industrial development bank in connection with lending to institutions which seek its resources was not recent; it was last September, long before the minister takes credit for going to the commercial banks, saying that he nudged them into a reduction of their rate to borrowers.
Therefore I say that before we get too far in discussion of the clauses of this bill we should ask the minister why he chose 1955 as his yardstick when he said there had been a great advance from $17 million to $38 million in 1960. Why in this much publicized speech did he not refer to the fact that in 1956 the lending by the industrial development bank actually exceeded the last year under his guidance?
The minister nominates the directors and I assume, knowing he is a man of initiative, energy and a fair amount of pugnacity, he has a great deal to do with the progress of this bank. I say it was misleading to this house to use the figures he did use in his budget speech, and I think that is no guide to us when we are asked to expand the lending powers of the bank.
In addition to that, when I spoke on second reading I thought I asked a very important question, which has not yet been referred to. I asked: where are the funds going to come from which are to enlarge the capital of this bank, not only the capital stock of the bank but the scale under which the

bank will operate? I think that was a pertinent question. I asked: is this going to come out of the printing presses of this nation or is it going to come out of a responsible monetary policy of the government? That was a pertinent question and it has not yet been referred to by the Minister of Finance.


Donald Methuen Fleming: Mr. Chairman, it was referred to. It was precisely that question I had in mind when I said the answer was in the bill. If the hon. member will take the trouble to read the bill he will find his answer there.


William Moore Benidickson: Oh, I have read the bill.


Donald Methuen Fleming: But the hon. member chose to ask the question without bothering to find the answer in the bill. It was his question I had in mind-


William Moore Benidickson: I have read clauses 6 and 7.


Donald Methuen Fleming: -when I said the rules of the house preclude me from referring to the clauses of the bill.
Mr. Chairman, the hon. member has worked himself up into quite a lather tonight with the statistics which I gave in the budget speech. He must have in his hand the annual report of the Bank of Canada and I think he has been engaging in a little twisting and turning here.
The hon. member read only part of my statement from the budget speech. Even when he got around to referring to it, he read only part of the sentence. In that sentence I not only dealt with the amounts but I dealt with the number of loans, and he chose just conveniently to drop from the reading of the sentence what I said about the number of loans. This is the sentence from my budget speech, appearing in the first column on page 6647 of Hansard for June 20:
In its last fiscal year the bank made 740 loans amounting to $38 million, as compared with 221 totalling $17 million five years earlier.
That is the complete sentence. The hon. member did not choose to make any comparison in the number of loans. Had he chosen to be fair with the committee he would have, I think, gone on to say that the number of loans in the year he has chosen to talk about, 1956, was only 349. That was the increase from 1955 to 1956, from a total of 221 to 349. I was drawing attention to the fact that the number in the last fiscal year ended September 30, 1960, was 740, so there has been a steady increase.
When the hon. member picks out the year 1956 he is not picking out a typical year or a year that illustrates the upward trend over the years. He picked a year which was a flash
3,	1361	7459
Industrial Development Bank Act in the pan, because in that particular year there were abnormal loans made to commercial air services. They amounted in that year, 1956, to $11,406,000. That was the reason why in that particular year, with abnormally large loans to commercial air services, there was a swollen result. What happened the next year? Loans made to commercial air services dropped back to $3,742,000. In 1958 the amount was $158,000.
The year the hon. member put forward was not a typical year at all. I was giving information to indicate the growth in the operations of the bank for the information of the house.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
On clause 3-Directors' fees.
William Moore Benidickson: Clause 3 has reference to directors' fees. We realize that the personnel of the board will be enlarged; we also see it is possible, under the by-laws of the bank, to set the aggregate amount of the fees paid to directors. I think when this statute is up for review the minister should indicate what these by-laws are at present.


Donald Methuen Fleming: I beg your pardon?


William Moore Benidickson: What are the by-laws at present? I do not want details as to individual directors or anything of that kind, but what are the by-laws under which directors formerly, in the aggregate, could have received $10,000?


Donald Methuen Fleming: The by-laws set the fee of a director at $100 for attending a directors' meeting, and they set the fee at $50 for attending a meeting of the executive committee. Of course those directors who are officials of either the Bank of Canada or the government do not qualify for those fees.


John Whitney Pickersgill: I should like to ask one question on this clause relating to directors' fees. Are these directors' fees to be entirely under the control of the bank or is the government going to have anything to say about them?


Donald Methuen Fleming: Mr. Chairman, section 11, subsection (2) of the act provides that no by-law is effective until approved by the governor in council, and upon becoming effective it shall be published in the Canada Gazette.


John Whitney Pickersgill: In other words it is the governor in council which decides in the final analysis what these fees are going to be, even though, as I understand it, they are not paid out of the treasury but out of the profits of the bank?

Industrial Development Bank Act


Donald Methuen Fleming: The board of directors of the bank passes the by-laws which provide the fees payable to the directors, but the section which I have read provides that no by-law is effective until approved by the governor in council.


John Whitney Pickersgill: I am asking the minister if the directors fees are to be paid out of the funds of the bank or out of the treasury of Canada.


Donald Methuen Fleming: They are to be paid out of the funds of the industrial development bank.


John Whitney Pickersgill: Why does the government feel it is necessary for the governor in council to determine what these fees shall be beyond the figure of $20,000? Perhaps I have not made my question very clear. The minister is asking parliament to say that the fees paid to directors shall not exceed $20,000 in any fiscal year. That is a reasonable provision for parliament to make. Surely if the government is going to appoint the kind of individuals as directors of this bank, within the scope of a $20,000 fee, those individuals ought to be able to make decisions instead of requiring the time of the cabinet to decide precisely what these things should be. I wonder why the minister feels it is necessary to have this kind of provision.


Donald Methuen Fleming: Mr. Chairman, section 11, subsection (2) was passed by this parliament at the session of 1944-45. It is part of that act which won such plaudits from the hon. member in his speech earlier in the day. This government has great respect for parliament and does not propose to take away from parliament or ask parliament to reduce any of its authority. It has commended itself to the wisdom of parliament from the enactment of this measure 17 years ago that the by-laws passed by the board require the approval of the governor in council, and the present government is not asking for any change in that provision.


John Whitney Pickersgill: Mr. Chairman, I must say that I am singularly unimpressed with that argument because the effect of it is that the bill Mr. Ilsley recommended to this parliament in 1940 was so perfect that it should not be amended at all.
There is no doubt that when this institution was set up for the first time as a new institution, as a bold experiment which hon. gentlemen opposite regarded at that time as bordering upon socialism, and which they now praise so highly and wish to extend, the governor in council quite rightly felt that parliament ought to keep an eye on how it got started, and so on. As the minister has just

said, it has been going for 17 years. During those 17 years the number of details which the governor in council must consider have increased vastly. No one knows that better than I do, because I was secretary to the cabinet at one time, and I know that it is a great mistake to have unimportant details occupying the time of ministers. When things become detailed and established it is far better to put the responsibility on someone and deal with that individual if he does not discharge that responsibility properly. It seems to me that to have by-laws of this nature dealing with the sum of $20,000 distributed over a number of directors who are going to be lending $400 million, shows a singular lack of perspective in light of the problems which the cabinet today has to face. I suggest to the minister that there is no earthly reason why details of this sort should occupy the time of anyone except the directors, if competent directors are to be appointed. If competent directors are not going to be appointed then they certainly should not be entrusted with the lending of $400 million.


Donald Methuen Fleming: The government is quite satisfied with provisions of section 11, subsection (2) and is not asking parliament to amend it in the manner indicated by the hon. member for the purpose of removing the requirement that the cabinet shall approve bylaws passed by the board of directors of the bank.


Lionel Chevrier: Mr. Chairman, may I inquire of the minister how the directors fees are ascertained at the moment?


Donald Methuen Fleming: Mr. Speaker, I just gave that information to the hon. member for Kenora-Rainy River within the last two or three minutes.


Lionel Chevrier: Did you give the amount of
the fees?


Donald Methuen Fleming: Yes.


Lionel Chevrier: I beg your pardon.


William Moore Benidickson: Mr. Chairman, the purpose of clause 3 is to add a mandatory director, the deputy minister of trade and commerce. It should also be noted that the deputy minister of finance is also, and has been, what I refer to as a mandatory director of the industrial development bank. Would the minister indicate to the committee his views as to responsibilities of these deputy ministers appointed under this clause regarding the reporting to ministers of the crown with respect to the meetings of the directors of a crown company of this nature?


Donald Methuen Fleming: Mr. Chairman, in adopting clause 2 of the bill the committee is approving the proposal that there be additions to the executive committee. Clause 3 deals with the payment of fees for attendance at meetings of the board by persons other than those who are officials of the bank or of the government. The deputy ministers, and there are now to be two on the board, will sit with the governor and deputy governor of the bank and two directors from outside both the bank and government services, who will be drawn from business. This enlarged executive committee then will, in the opinion of the government, be a much more effective committee for the transaction of the business of the bank than has been the committee of four hitherto. It is expected that the committee will become much more active than it has been, holding more meetings, and that is part of the reason for the increase in the maximum provided in clause 3.


William Moore Benidickson: The Minister of Trade and Commerce is not with us tonight. However his deputy is to be added to the board and we cannot ask that minister what he expects in the way of responsibility on the part of his deputy relating to reports on meetings of the industrial development bank. However, what does the Minister of Finance expect from his deputy in a routine way in relation to the matter of reporting on decisions made by the board of directors?


Donald Methuen Fleming: Well, the deputy minister is expected to act responsibly in relation to this particular, as in relation to his other duties whether it is a matter of ordinary routine business coming before the executive committee of the industrial development bank or whether it is special business coming before that executive committee.


William Moore Benidickson: Does the deputy minister of finance, who has been for a long time what I refer to as a mandatory director of the industrial development bank, report to the Minister of Finance in a routine way by perhaps sending him copies of the minutes of the directors' meetings as they take place?


Donald Methuen Fleming: No, Mr. Chairman, it is not the practice of either this bank or the Bank of Canada to send out copies of these minutes.


Jacques Flynn: Shall clause 3 carry? (Translation):


Joseph-Alphonse-Anaclet Habel: I notice, Mr. Chairman, that this government, which was elected because it promised to cut expenses, now ask us to increase the aggregate amount of the fees 90205-6-471
3. 1961	7461
Industrial Development Bank Act paid to the directors of the industrial development bank from $10,000 to $20,000. That proves how inconsistent this government is.


Donald Methuen Fleming: Mr. Chairman, there will be more members in that committee. Moreover, the committee intends to meet much more frequently.


Samuel Boulanger: I hope that when the question of fees for the members of parliament are discussed, the minister will be as generous.
(Text):


Jacques Flynn: Shall clause 3 carry?


[Stage Direction]
Clause agreed to.
On clause 4-Executive committee of the board.
Alexis Pierre Caron: I should like to ask the minister why the words "the person for the time being holding the office of deputy minister of trade and commerce" appear in the clause? Why do they not simply say "the person holding the office of deputy minister of trade and commerce"?


William Moore Benidickson: Another head to fall.


Donald Methuen Fleming: Because the draftsman of the legislation considered it proper to make reference to the deputy minister to make clear it is not the man who happens to be deputy minister at the time the legislation is passed but the man who from time to time or at any particular time holds the office of deputy minister; in other words, it is an appointment ex officio.


Alexis Pierre Caron: If they wanted that why did they not say "from time to time may be deputy minister of trade and commerce" instead of "for the time being"? It seems to me that since it is expressed in that way it might be possible to simply put him out if they are not satisfied with his decisions and put somebody else in.


Donald Methuen Fleming: It is perfectly
obvious that what the draftsman, an experienced and competent man, had in mind is that ex officio the deputy minister becomes a member of the executive committee of the industrial development bank and when he ceases to be deputy minister he thereupon ipso facto ceases to be a member of the executive committee of the industrial development bank.


Alexis Pierre Caron: Would it not be easier, then, to say "ex officio" instead of "for the time being"? I am not a lawyer. It may be that lawyers find ways to put certain things. It may not be difficult for them but it may be difficult for others to understand what is meant. They are used to going to court to

Industrial Development Bank Act fight over things and they want loopholes somewhere. If the draftsman meant "ex officio" he should have put in "ex officio" or "from time to time" instead of "for the time being".


Donald Methuen Fleming: This is the usual expression in such cases, Mr. Chairman.


William Moore Benidickson: Clause 4 is very important, in that most of us realize that the final decisions in this enlarged financial institution will be made not by the directors who may provide a little window dressing. They might meet no more than six or seven times a year, if that often. The final decisions will perhaps be under the jurisdiction of the executive committee.
As I indicated when I spoke on second reading, this party would like to see a separation of the industrial development bank from the Bank of Canada. That is not provided in this bill. But bearing that in mind, I should like to know just how close is the link between the executive committee of the industrial development bank and the Bank of Canada? I take it that the directors of the Bank of Canada who comprise the executive committee of the bank do not necessarily have to be permanent employees of the Bank of Canada. But unless one is a member of the executive committee of the Bank of Canada I take it that one is not eligible to be on the executive committee of the industrial development bank.
Will the minister explain to us his policy with respect to appointments of the directors of the Bank of Canada and the opportunity for directors whose names will appear on the report of the industrial development bank in some substantial number ever to have any place on the executive committee of the industrial development bank?


Donald Methuen Fleming: Mr. Chairman, the hon. member can familiarize himself with the provisions of the statute. He knows, I am sure, from having read the Bank of Canada Act, that the executive committee of the Bank of Canada consists of the governor, the deputy governor, the deputy minister of finance and one member of the board selected by the board. The executive committee of the industrial development bank hitherto has been the same as the executive committee of the Bank of Canada. We are proposing now to enlarge it by the addition of two members, one being the deputy minister of trade and commerce, the other being an additional member from the board of the Bank of Canada. It will now become an executive committee of six.


William Moore Benidickson: Since the resignation of Mr. Bryden, who is a member of the executive committee of the Bank of Canada in his place who is not a permanent official?


Donald Methuen Fleming: Mr. Bruce Hill, M.C.


[Stage Direction]
Clause agreed to.
Clause 5 agreed to.
On clause 6-Capitalization.
Paul Joseph James Martin: Mr. Chairman, subclause 2 of this clause provides that the Bank of Canada shall subscribe a certain amount of money. I should like to ascertain from the minister whether this clause and other clauses of the bill were discussed by him with the governor of the Bank of Canada.


Donald Methuen Fleming: I did not discuss clauses specifically with the governor of the Bank of Canada. The governor of the Bank of Canada was consulted with regard to the proposals in general and approved certain of them. Obviously, Mr. Chairman, I cannot disclose what particular views the governor expressed because they are given in confidence; but the proposals in general were discussed with the governor. He was consulted about them.


Paul Joseph James Martin: The minister says that these proposals in a general way were discussed with the governor of the Bank of Canada. The minister, however, did not answer my question. My question was whether the minister himself discussed these proposals in a general way with the governor of the Bank of Canada? When the minister is replying perhaps he would give an indication to the committee about what time of the year this discussion took place with the governor of the Bank of Canada. Did it take place directly? If it did not take place directly, what time did it take place vicariously?


Donald Methuen Fleming: Mr. Chairman, the particular meeting to which I refer and at which the governor and I were both present took place I would judge about six weeks ago, or around that time. I can look up the date precisely. It is a matter of record. It was a meeting attended by a number of persons. Apart from that, I did not have occasion to discuss this measure personally with the governor but there was consultation with the governor through the usual channels.


Murdo William Martin: Will the minister say whether these discussions took place between May 16 and May 30, or was it before May 16?


Donald Methuen Fleming: Oh, yes, Mr. Chairman, before that. But if the hon. member is

very anxious to know the date of this I think I can ascertain it. I do not like to see him suffer from frustrated curiosity, Mr. Chairman.


Paul Joseph James Martin: I thank the minister for his great concern about my interests. I should like to have the date because I think it might have a very important bearing on matters that engage the attention of this house. Could the minister say that this bill was inspired as a result of a document submitted by the governor of the Bank of Canada about the middle of February, a document which has-


Donald Methuen Fleming: No.


Paul Joseph James Martin: May I identify the document? The minister is so eager to reply. I have not even identified the document. I said a document that was sent to him some time about the middle of February and a document which was made available for public scrutiny by the governor of the Bank of Canada a few days ago. In that document of the governor of the Bank of Canada I am sure that the minister found confirmation, if not inspiration, for the bill that is before us, and since the minister has great confidence in the governor because the governor as president of the industrial development bank continues to be a member of the board of directors, I would have thought that the minister at least owes to the governor of the Bank of Canada the attributing to him of those suggestions which find their incorporation in this measure. I think a tribute from the Minister of Finance to the governor of the Bank of Canada along this line would reveal the generous quality of the minister's mind and heart, and this is an opportunity for him to rise above controversy and pay credit where credit is due.


Donald Methuen Fleming: Mr. Chairman,
nothing ever gives the Minister of Finance greater pleasure than to pay credit where credit is due. I think we have just witnessed an amazing demonstration of modesty on the part of the hon. member for Essex East. I suggest, Mr. Chairman, that you do not lay too much store by this sudden outburst of modesty on the part of the hon. member for Essex East because I am quite sure that in a less offhand moment he will be back, probably before this bill has run its course, claiming that he himself is the source, author and inspiration for the ideas in the bill.


Paul Joseph James Martin: The minister has a vision into the future that I recognize sometimes serves him well and it may be that there is some modicum of truth in what he is saying but I am certainly not going to be 90205-6-47 li
Industrial Development Bank Act the one who is going to attest to that. I simply want to say that the minister presents a bill under which the governor of the Bank of Canada, still the governor of the Bank of Canada under the law of this country, is to serve as president of the industrial development bank, a function which he now exercises, and I am inviting the minister to say whether or not at this particular juncture he does not feel it desirable, in the light of this document of the middle of February, to acknowledge the proper paternity of this bill.
After all, this is a measure of the greatest importance. It is a measure which, as the minister said some time ago during the course of our discussion tonight, offers potential assistance to industrial enterprises in this country. We are entitled to know, if we cannot obtain it through interrogations in a standing committee of the house, whether or not only in general discussions but in other discussions there has been the closest collaboration between the Minister of Finance and the governor of the bank in this matter. If there was not, it would be amazing to find the Minister of Finance piloting a bill tonight authorizing that the present governor of the Bank of Canada shall continue as president of the industrial development bank. If there was not that close collaboration and if the minister did not have confidence in the governor of the Bank of Canada, he would owe this house the duty of explaining why he continues to have the governor of the Bank of Canada remain as president of the industrial development bank.
The minister can only take the position that he has confidence in the governor of the bank. If he has no confidence, then he has no right to ask this house to continue as president of the industrial development bank the governor of the Bank of Canada. We conclude, therefore, that because the minister continues the governor in that capacity he has confidence in the governor and has confidence in the recommendations that the governor has made with respect to this particular bill. If this is not the situation, now is the time for the minister to tell us. He can sit there looking at me with that benevolent smile that sometimes covers his countenance, but this is legislation of the greatest importance and he owes it to the Canadian people to say whether my statement of the facts is correct.
I assume that the minister has confidence in the governor of the Bank of Canada; otherwise he would not continue him as president of the industrial development bank. I assume, moreover, that the minister has consulted the governor not only in a general way but on the essential details of this bill in connection
7464	HOUSE OF
Industrial Development Bank Act with which the governor is to continue as the presiding officer of the board of directors. Let the minister deny now that he has no confidence in the governor of the Bank of Canada. If the minister stays in his seat and makes no reply, as he may well do and as he has done on other occasions, then we will conclude that the minister has no confidence in the governor. If that conclusion is drawn, then the minister will stand indicted for bringing forward a bill under which the president of the bank continues in that capacity.
The minister cannot have it both ways. He is caught in a dilemma tonight. He is caught in a dilemma and his ministerial colleagues are caught in that dilemma with him. They have been criticizing the governor of the Bank of Canada and are about to take steps to strip him of his office. Yet they come to this house tonight asking us to pass this bill and included in the provisions of the bill is a recommendation that there be a board of directors and that on that board of directors is to be found as the continuing president of the industrial development bank the present governor of the Bank of Canada. The minister cannot laugh that off. I am sure that the minister forgot-


Jacques Flynn: Order. May I remind the hon. member that clause 6 deals only with the capitalization of the industrial development bank.


Paul Joseph James Martin: With great respect, Mr. Chairman, I say to you that this clause is a clause in which the Bank of Canada is called upon to subscribe a very considerable amount of money. That can only have been done with the authorization of the governor of the bank. We have now elicited from the Minister of Finance that there has been general consultation. The point that I am making now, having extracted that reply from the Minister of Finance, is whether or not he has confidence in the present governor for the purpose of this act. If he does not have that confidence, then I say that the minister has no right to ask the house to pass a bill providing for the inclusion of the governor of the Bank of Canada as president of the industrial development bank. I submit that is very relevant to this particular clause and the minister should not be allowed to refuse to reply under the guise that what I have said is not relevant or not in order.


Donald Methuen Fleming: Mr. Chairman, I am sure there are many times when all of us think that the hon. member for Essex East really missed his calling. No circus performer could have outdone him in this latest exhibition. He asks me to say whether this


flight of his imagination represents a statement of fact. I say it is not a statement of fact. It is just about as foreign to fact as any of the statements that the hon. member makes from time to time.


Paul Joseph James Martin: What is not a statement of fact?


Donald Methuen Fleming: Everything you said. There is nothing in the bill that says that the governor of the Bank of Canada is to continue as president of the industrial development bank. The hon. member would have those who read the record or have the fortune or misfortune to listen to his speech believe that this bill contains such a provision. It does not, and when the parliament of Canada sees fit to act on another measure and the term of office of the governor of the Bank of Canada comes to a close his term of office as president of the industrial development bank will ipso facto at the same time come to an end. He holds the office of president of the industrial development bank simply ex officio as governor of the Bank of Canada. That is very, very plain and I am sure the hon. member well knows that simple fact.
The hon. gentleman talks about consultations. I said that I sat in on one meeting at which the governor of the bank was present when the general proposals of this measure were discussed. I do not recall the exact date but it was probably about a couple of months ago, in that range. I did not have any further discussions with the governor about it. As for his memorandum of last February, which he improperly made public recently, I say that while he made a reference to the functions of the industrial development bank, this present measure does not correspond precisely with the proposals that the governor put forward in that memorandum. What is more, he was not the only person who was putting forward suggestions for the revision of the basic terms of the Industrial Development Bank Act to make that bank more effective in serving the needs of the Canadian economy. There were many people putting forward such suggestions, including many people in the government and members in this house supporting the government. The hon. member for Essex East does not need to arrogate to himself the inspiration for suggesting that the industrial development bank might be improved, nor need he ride on the coat tails of the governor of the Bank of Canada.


Paul Joseph James Martin: We have had an amazing statement from the Minister of Finance. The minister is apparently piloting legislation, the terms of which he has not

read or of which he has not a full appreciation. He speaks of coming events. The Minister of Finance has no authority, even though he may be a member of a government with a large majority in this house, to envision what course this parliament will take with regard to other measures or a particular measure that may be coming before it tomorrow. The fact is that we must presume that everyone in this house will give careful, conscientious and responsible consideration to any bill that will be presented by the minister tomorrow.


Donald Methuen Fleming: Why don't you give this bill such consideration?


Paul Joseph James Martin: The minister has no right to arrogate to himself a knowledge of what will happen. The fact is that at the present time, under the law passed by this parliament, the governor of the Bank of Canada is still the governor of the Bank of Canada. No words of the Minister of Finance by way of prophecy, by way of expression of his venom and hatred and his hostility, can change the law of the country.


Donald Methuen Fleming: Mr. Chairman, it is quite unparliamentary for an hon. member, as the hon. member must know, to impute hatred to any member of this house. I make it quite clear that there is no hatred toward anybody in my soul.


Paul Joseph James Martin: I will withdraw. If that offends the minister, I will say he has not in his soul the qualities that constitute hatred. I will say this: The Minister of Finance, by his manner in approaching this problem tonight and on other occasions, has revealed a hostility toward the governor of the Bank of Canada that is not warranted by the declared facts given to this house over the course of the last few days.


Donald Methuen Fleming: That is a false accusation.


Gordon Minto Churchill: Are you going to make the same speech tomorrow?


Paul Joseph James Martin: My hon. friend says something about the same speech tomorrow. The Minister of Veterans Affairs is a member of a government which, I know, does not like anyone in the opposition to stand up for the rights of individuals in this free country.


Jacques Flynn: Order; may I suggest to the hon. member that this discussion is entirely irrelevant. I submit that we will not be able to avoid anticipating another debate if we continue in this vein. I would say there is nothing in this bill that concerns the governor of the Bank of Canada because those provisions of the Industrial Development
Industrial Development Bank Act Bank Act which concern the governor of the Bank of Canada are not being amended by this bill. I suggest to the committee generally, therefore, that we might make more progress if we discussed the bill which is properly before the committee.


Paul Joseph James Martin: I accept your suggestion and I was provoked into this extraneous argument only by the irrelevancy of the Minister of Finance.
The argument I was making a few moments ago before we had this irrelevant intervention, was that the minister owes it to the committee to say if he has confidence in the governor of the bank. Otherwise, he could not have brought before us this bill tonight. I would remind the committee of the provisions of clause 3 of this bill.


Thomas Miller Bell: We are dealing with clause 6.


Paul Joseph James Martin: I am now dealing with the question relating to the point of order and also to the argument that I made with regard to clause 6. Clause 3 provides:
The directors, other than the governor and deputy governor of the Bank of Canada, the deputy minister of finance and the deputy minister of trade and commerce, are entitled to receive for attendance at meetings of the board and meetings of the executive committee such fees as may be fixed by the by-laws of the bank, but the aggregate amount of the fees paid to all directors exclusive of expenses shall not exceed twenty thousand dollars in any fiscal year.
In the clause we are now discussing, clause 6, provision is made that the Bank of Canada shall subscribe for the said 500,000 shares at par and shall pay the amount of such subscription at such times and in such amounts as the board may determine. The present governor of the bank is a member of that board. The present governor of the bank is covered by the provisions of clause 3 which I have already recited. The minister owes it to the committee to say whether or not he has confidence in this governor or he has no right to bring forward this bill which provides for the inclusion of the present governor. The minister cannot for one moment argue that he has the right to anticipate events which may or may not take place. The minister must assume that the law of the land shall be respected and the law of the land makes provision for the governor of the Bank of Canada as president of the industrial development bank.
A few moments ago the minister made the argument that I was engaged in an argument of fiction. I say to him that there is no fiction in clause 3. There is no fiction in clause 6. The provisions therein contained deal with the Bank of Canada and with the governor of the bank. The minister must tell the committee now whether or not he has sufficient
7468	HOUSE OF
Industrial Development Bank Act confidence in the present governor to warrant that gentleman retaining the trust of this parliament under the provisions of this bill. This is as clear a situation as could possibly be revealed and the minister must tell the committee now whether or not he has that confidence. If he has no confidence in the governor, then he should say so. In that event, he should repeal clause 3 of the bill; that is the situation.


Jacques Flynn: Order; the hon. member indicated that he was accepting the ruling of the Chair, but afterwards discussed its validity. I must, therefore, point out to him that in my view clause 3 does not change anything so far as the governor of the Bank of Canada is concerned.


Paul Joseph James Martin: Of course not, Mr. Chairman. That is the whole point.


Jacques Flynn: It was for this reason I indicated it was not relevant to discuss the functions of the governor or even the person occupying this post because this bill changes nothing in the Industrial Development Bank Act in so far as the governor of the Bank of Canada is concerned and his functions in this bank. I again beg the committee to try to be relevant in discussing this clause 6. It seems to me that in due course all these matters will be discussed in a more appropriate fashion.


Paul Joseph James Martin: Mr. Chairman, you are not suggesting, I take it, that I have not the right to ask the Minister of Finance if he has confidence in an official who is going to exercise a position of trust under this act, and who happens to be the governor of the Bank of Canada?


Jacques Flynn: The hon. member for Essex East knows that it is not in accordance with the practice to put questions to the Chair. However, if it is by way of elucidation of the ruling I have made, I would say that he would have the right to put that question but not when we are discussing the bill.


John Whitney Pickersgill: I have been looking at the speech from the throne in order to see whether we have in it any indication that any legislation of this sort was to be expected at the present session of parliament and I find here a reference to a measure. Perhaps it would be better to read it and use the language which the government put in the mouth of His Excellency:
My ministers are convinced that additional medium term credit facilities for small businesses would enable many private projects to go forward this winter all across Canada, providing substantial additional employment. Moreover, this addition to our credit legislation will constitute a continuing stimulus to the growth of Canadian private enterprise.


William Moore Benidickson: That was in the blue baby budget.


John Whitney Pickersgill: I take it that the reference was to the bill that we considered before Christmas and before the baby budget, namely the bill to establish guaranteed bank loans to assist small business. The question I should like to ask the minister is whether at the time that legislation was brought before the house the government had in contemplation the need of this present legislation that is now being brought before the house. If the answer to my first question is in the negative,-as I assume it is, as otherwise I imagine that the government would1 have put that into the speech from the throne as well-when did the government reach the conclusion, and for what reason, that in addition to these guaranteed bank loans this increased capital in the industrial development bank to be supplied by the Bank of Canada was also necessary? In other words, when did the government come to the conclusion that this particular measure was necessary?


William Moore Benidickson: They were not expansionists in November.


Donald Methuen Fleming: Clause 6 concerns the increase in capitalization of the industrial development bank and the subscriptions in terms of shares.


Some hon. Members:: Carried.


George James McIlraith: Is the minister going to answer the question?


Donald Methuen Fleming: I have no intention of disclosing what goes on in cabinet.


George James McIlraith: The minister has an obligation to the house-


An hon. Member:: Sit down.


Jacques Flynn: Order.


George James McIlraith: In the throne speech the house was led to believe-


Jacques Flynn: Order. May I suggest to the hon. member for Bonavista-Twillingate that this question is not relevant to clause 6. This is another side issue. This clause deals only with the capitalization and whether it should be increased as suggested by the proposed new section 12.


John Whitney Pickersgill: Surely, Mr. Chairman, I cannot have heard you aright. Here we are being asked to authorize an increase in the use of funds. It is true that they are not coming out of the treasury but are coming out of an institution which is owned by the people of Canada, namely the Bank of Canada. Although the shares are held by the Minister of Finance the capital is owned by the people

of Canada. This parliament is being asked to increase that capital. I cannot believe that Your Honour suggests to me that I cannot ask why it is being increased and when the government reached the conclusion that an increase was necessary.
For the minister to suggest that to answer those questions would be to disclose secrets of the cabinet is simply not correct. If I talked in the way the minister did, I would say that it is nonsense and rubbish. I am not asking the minister to reveal who was for it and who was against it or what the arguments pro and con were in the cabinet, as that would be quite improper. I am asking when the government reached the conclusion that this additional capital for the industrial development bank was necessary as a supplement to the other legislation brought into this parliament last November.


Mr. Monieiih (Perth):: What has that to do with the matter?


John Whitney Pickersgill: The hon. gentleman wants to know what that has to do with the matter?


Jay Waldo Monteith: Yes.


John Whitney Pickersgill: This is a perfectly proper matter for debate. I think we should like to know-


Jacques Flynn: I agree with the hon. member that the question, as he has just put it, would be relevant.


John Whitney Pickersgill: I was sure that Your
Honour did so; and it is relevant. I should like to know when this idea dawned upon the government that this measure was necessary in addition to the measure that we were asked to adopt last November. Surely this measure was just as necessary last November as was the other measure.


An hon. Member:: Read Hansard.


John Whitney Pickersgill: Or did the government not think it was necessary? Or is this measure being introduced because the government feels that the other measure has not yielded the results that were expected? This is the point that I am trying to get at. I should like to know when the government came to the conclusion that this particular legislation was really necessary, and what new circumstances, between November and June, when this was introduced, arose which led the government to that conclusion. After all, the government is asking us for our approval. They are the suppliants. We are entitled to be told what these new circumstances are that led them to this conclusion. That is all I am asking the minister.


Some hon. Members:: Carried.
Industrial Development Bank Act


John Whitney Pickersgill: Surely we are going to have some answer about the crucial clause in this whole bill.


Donald Methuen Fleming: The reasons for asking the house to legislate for the purpose of amending the Industrial Development Bank Act in the terms of this bill have been given to the house first in the budget speech, then in the discussion on the resolution stage on June 30 and again today. All hon. members are aware of the reasons. As a matter of fact, last Friday members in all parts of the house, including the Leader of the Opposition spoke warmly in approbation of this measure and the terms of it. The hon. member apparently does not wish this measure to be passed tonight.


George James McIlraith: Order.


Donald Methuen Fleming: We have had endless repetition and irrelevancies tonight. One would have thought, Mr. Chairman, that last Friday the house was ready to deal with this bill with expedition because everybody seemed to declare himself for it. But tonight we have been everywhere but on the bill.


George James McIlraith: Everybody has been on the bill but the minister.


Donald Methuen Fleming: After due consideration of this question and of all the many questions related to it, the government reached its conclusion to submit this measure to the house in the proper time and that was announced in the budget speech on June 20.


John Whitney Pickersgill: I just want to draw your attention to the fact that the minister has made one of those usual speeches of his in which he shows his great disrespect for anyone else's opinion in this parliament except his own and in which he constantly asserts that everybody knows these things and therefore it is not necessary to state what they are.


Donald Methuen Fleming: I should have made one exception.


John Whitney Pickersgill: The plain fact is, of course, that my friend the Leader of the Opposition was the only member of the Liberal party who spoke on this measure at the resolution stage, and he was the only member who spoke because he wanted to see the bill. We approved the principle of this bill. We approved it at the Liberal rally last January because last January the Liberal party thought this kind of measure was necessary. At that time the government did not think so. At that time the government had not had this new vision of expansion that suddenly dawned upon the Minister of Finance on June 14, that red letter day.
7468	HOUSE OF
Industrial Development Bank Act Mr. Fleming (Eglinion): If you are for it, why do you hold it up?


John Whitney Pickersgill: Of course, the minister will recall an occasion when a great expansionist measure-the last great expansionist measure that there was before this parliament-was into this house and when the minister was himself one of those who did his best to prevent that project which maintained full employment for another year in this country. The minister actually had to leave the house because he defied the Chair in his efforts to prevent that project.


Donald Methuen Fleming: No.


Some hon. Members:: Sit down.


An hon. Member:: Filibuster.


Jacques Flynn: Order. May I again ask hon. members to make an effort to discuss clause 6 of the bill and not take every opportunity to discuss extraneous matters.


John Whitney Pickersgill: 
Some hon. Members:: Hear, hear.


John Whitney Pickersgill: -when he was professing to uphold the rights of parliament for which he now has so little regard. The minister should tell us when and why he or the government came to the conclusion that this measure was necessary, and what the new circumstances were between November and June. That is the kind of information we are perfectly entitled to have in this committee before making available this very large sum of public money.


Mr. Campbell (Stormont):: Mr. Chairman, may I ask a question of the hon. member who has just resumed his seat?


John Whitney Pickersgill: Certainly.


Grant Campbell: I regret to say the hon. member has refused to answer my question of a previous day as to whether he is still supporting Mr. Coyne in his bid for leadership of the Liberal party.


John Whitney Pickersgill: I thought the hon. gentleman was going to ask a question, sir, but (Mr. Pickersgill.]

he has not. I have asked the Minister of Finance a question that has relevancy to the bill before us and I suggest the Minister of Finance should reply to the question.


Donald Methuen Fleming: I have already done so, Mr. Chairman.


William Moore Benidickson: Apparently the Minister of Finance is not going to answer the very important question asked by the hon. member for Bonavista-Twillingate. I have referred to this matter previously. I wish to raise this question, and I do so with all modesty. I do not claim to know how the Bank of Canada shall subscribe for the shares as provided in clause 6 amending section 12(2). It reads:
The Bank of Canada shall subscribe for the said 500,000 shares at par and shall pay the amount of such subscription at such times and in such amounts as the board may determine.
The board, of course, is the board of directors of the bank. This committee is surely interested in this clause and the subsequent clause, which I think are the two most important clauses in the bill. The explanatory note with respect to clause 6 says:
The purpose of this amendment is to increase the authorized capital of the bank from $25 million to $50 million.
Then we have to read a bit beyond into clause 7.


Donald Methuen Fleming: Go ahead and take up the rest of the time.


William Moore Benidickson: We find in clause 7-


Donald Methuen Fleming: Stall till 10.30.


John Whitney Pickersgill: Respect for parliament.


William Moore Benidickson: -that there is a reference to the liability of the bank-


Donald Methuen Fleming: This is obstruction.


William Moore Benidickson: -which goes from three times to five times the aggregate amount of the paid up capital, etc. As a very modest member of this committee-


Donald Methuen Fleming: Looking at the clock.


William Moore Benidickson: -I am hoping that the minister will explain to us, no matter who is governor of this bank, whether it is the present-


An hon. Member:: Time-killer Bill.


William Moore Benidickson: governor or someone else, just how the Bank of Canada-and we are all modest and uninformed people in some of these financial matters-is going to subscribe for the additional $25 million involved. What kind of money do they use? Do they use money that they print, or where

does it come from? Does it come from borrowings that are provided by the government of Canada; and if provided by the government of Canada, why does it not appear in the budget statement with respect to cash required in the current fiscal year?
Then of course we want to know where five times the amount of capital is going to come from. Is this going to come from, as I said originally, the printing presses of the country, or what is the basis of subscribing to this capital? I thought the minister was rather rude to me when he said, "Look at the bill". I am now looking at clauses 6 and 7 -


An hon. Member:: One minute to go, Bill.


William Moore Benidickson: -and I am perfectly in order in asking the Minister of Finance to explain, in layman's language, I hope, how the Bank of Canada is going to subscribe $25 million. Where does the money come from? In what manner is it provided? I am of course anticipating, but in clause 7 we have this multiple of five times the amount of the paid up capital that is provided for in clause 6. Will the minister explain to all of us interested in this very important financial transaction just how this operates.


Donald Methuen Fleming: Mr. Chairman, I will be pleased to answer the question which the hon. member has now asked three times in the same speech. The money that is to be provided here is an additional $25 million. The legislation imposes the duty upon the Bank of Canada to provide this additional capital. The money will be provided, in obedience to the legislation enacted by this parliament, in the currency of Canada in the manner determined by the bank in accordance with section 12 of the act as amended by clause 6 of this bill.
3, 1961	7469
Business of the House


William Moore Benidickson: Does that mean the printing presses?


Jacques Flynn: Shall clause 6 carry?


Some hon. Members:: Carried.


Some hon. Members:: Ten thirty.


Donald Methuen Fleming: A fine example of deliberate obstruction by those opposite who want to hold up the passage of this bill. Deliberate obstruction.


Some hon. Members:: Oh, oh.
Progress reported.



BUSINESS OF THE HOUSE

Lionel Chevrier: Mr. Speaker, I take it that tomorrow we will deal with the Bank of Canada Act, as announced earlier. If we complete consideration of that act what business will the house take thereafter?


Gordon Minto Churchill: Tomorrow we will start with such third readings as appear on the order paper, followed by the Bank of Canada Act which is Bill No. C-114; then a continuation of the study of the Industrial Development Bank Act amendment, Bill No. C-117; then the C.N.R. financing resolution which is on the order paper today; the Civil Service Act, which is Bill No. C-71, and Bill No. C-72 dealing with the Customs Tariff.


William Moore Benidickson: Would the house leader indicate whether or not the government is yet in a position to inform the public of its tax intentions related to the Income Tax Act?


Gordon Minto Churchill: I am outlining the order of business only for tomorrow, Mr. Speaker.
At 10.30 p.m. the house adjourned, without question put, pursuant to special order.
90205-6-472

Tuesday, July 4, 1961