1961-05-15

PRIVILEGE


[Stage Direction]
"FINANCIAL post"
Mr. Frank Howard (Skeena):: Mr. Speaker, I rise on a question of privilege concerning an editorial in the Financial Post of May 13, 1961, which in my opinion is irresponsible, somewhat libellous and in at least one respect not true. The editorial reads:
It's outrageous that 469 divorce petitions are stalled in parliament, and likely to remain stalled indefinitely, by a blockading operation conducted by two M.P.'s.
Most Canadians agree that these petitions, all coming from Quebec and Newfoundland, should not [DOT]be parliament's business at all. A federal court should handle them if these two provinces are not willing to empower their own courts to dissolve marriages.
But years of argument have not yet persuaded any Canadian government to sponsor reform in the system; and there is not the slightest immediate chance of reform.
In these circumstances, the continuation of last year's indiscriminate filibuster against all divorce bills by two C.C.F.'ers, Frank Howard and Arnold Peters, is a cheap political stunt. It's a callous and brutal stunt because it will force 469 Canadian couples to stay unhappily married when, presumably, there is conclusive evidence that they ought to be divorced.
I would point out that the so-called "blockading operation", as it is termed in the editorial, is occasioned not by any activity of the hon. member for Timiskaming or myself but is occasioned in the first instance by the refusal of the Senate to deal with a particular bill that was sent to it-


Mr. Deputy Speaker:: Order. I agree that there may be a question of privilege concerning the hon. member, but I think he should restrict his remarks to the point having to do with his own conduct and not refer to the other place.


Frank Howard: Very well. The remarks about which I wish to complain are the reference to the continuation of the blockade of last year being carried on by myself and the hon. member for Timiskaming. You will know, Mr. Speaker, that on no occasion this session have we dealt with the divorce bills currently on the order paper, for the reason that they have not been advanced. The sponsor of these bills has requested that they stand, and the house has agreed unanimously that they 90205-6-304
should stand. I think the editorial is a reflection upon the actions of the hon. member for Timiskaming and myself, because we have not engaged in any discussion whatsoever of any of these divorce bills.


Mr. Chown:: What about the Aurora Pipe Line Company bill?


Frank Howard: If my friend wants to get involved in a discussion about building that pipe line, we can do that tomorrow.



CIVIL DEFENCE


Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, at the time of the national exercise on civil defence or just prior thereto I stated that I would give a statement regarding the findings and the experiences of those who participated in that exercise. The purpose of the exercise was not only to practice and test the emergency measures which are necessary for national survival and continuity of government, but in particular to identify gaps in existing plans and preparations.
I think the initial report indicates that the exercise served its purpose adequately. Sirens were sounded in a number of communities across the country. Siren coverage is rapidly being increased and many more areas will, within the next year, have these warning devices.
The early stages of the exercise in Ottawa went as planned and certain emergency procedures of government were practised. The signal authorizing the sounding of the alert took only 39 seconds from the time it was sent to the provincial centres by the federal warning centre until the last acknowledgement was received from the provincial warning centres.
The exercise in the central headquarters at Camp Petawawa showed considerable improvement in preparations and capabilities over 1960, and revealed that in an emergency the basic elements of government could be operated. However, I would be less than frank if I did not point out that the efficiency of the operation was less than is requisite, and much remains to be done in the fields of departmental emergency planning, advance preparation of executive orders and policy directives, staff training, organization of staff to work effectively in emergency

Civil Defence
facilities, and further improvement in communications. These problems will receive urgent attention.
First reports from the regional centres which were set up indicate that the exercise went well in the provinces. Federal personnel close to the maximum numbers planned participated. Provincial participation varied considerably, depending upon the stage of provincial planning and preparation in this field. Provincial governments were represented in most provinces, and in so far as the federal government was concerned it was represented in most of the provinces either by cabinet ministers or by parliamentary secretaries.
At the central headquarters at Petawawa several federal ministers were at work in connection with their emergency assignments. I should like to say a special word of commendation for the observers, the hon. member for Richelieu-Vercheres (Mr. Cardin) and the hon. member for Vancouver East (Mr. Winch).
Many hundreds of persons in the service of government at all levels played an active part. At the central headquarters alone almost 200 took part. Besides the activity by federal and provincial personnel at regional headquarters in the provinces, some 500 municipalities throughout Canada also took part.
Many gaps were revealed in the plans and preparations. I feel, however, that a considerable advance in the knowledge of the problems to be faced has been achieved, and that all concerned are better prepared to play their part should a real emergency arise. So far as the gaps are concerned, every effort will be made to fill them and to remove any evidence of weaknesses revealed during the course of the exercise.


Hon. L. B. Pearson (Leader of ihe Opposition):: Mr. Speaker, if, unfortunately, civil defence is necessary in the world in which we live, it is important that it should be planned and organized as effectively as possible. As the Prime Minister has pointed out, the operation in question has shown that there is a great deal to be done in that regard. Civil defence is important, but policies in all countries to make civil defence unnecessary are even more important.


Mr. Harold E. Winch (Vancouver East):: Mr. Speaker, in view of the fact that it is the policy of the government to endeavour to establish an organization for civil defence and to spend considerable money on it, it is perhaps a good thing that the recent exercise referred to was held. I cannot help but say that the Prime Minister must have been on an exercise different from the one I was on, in view of what he said a few moments ago.

I was grateful for the opportunity of serving as an observer. There is no opportunity at this time to discuss all the experiences of the exercise, but in my estimation the exercise disclosed not only many minor but many major gaps. I was interested in knowing that the attack was supposed to be realistic. I gathered that from the statement made by the Prime Minister the day previous to the exercise. The attack was to be realistic in order to demonstrate what might happen under certain circumstances. The attack was all by manned bombers except for the latter portion, during which two missiles were discharged.
The major gap disclosed by the operation was this. Outside of the few cabinet ministers, parliamentary secretaries, and two private members from the opposition, the government and the House of Commons were completely wiped out. That may be a good thing.


Mr. Maclnnis:: That is your only chance.


Harold Edward Winch: It is obvious, on the basis of this realistic exercise, that there should be considerable discussion of it in this chamber.
I	hope when certain estimates are before the house all hon. members will participate in a discussion of this subject. On behalf of this group I take the position that we are not supposed to keep to ourselves exactly what we observed, especially in terms of gaps in the operation, but that these things should be mentioned and discussed.
In commenting on the remarks of the Prime Minister I feel I must say that something is definitely wrong in this country and in the world if we have to have civil defence. Let us hope that sanity will prevail and that something will be done as speedily as possible in other fields so that our money, effort and brains can be directed to the introduction of useful and productive measures and policies.


John George Diefenbaker: I cannot add anything to what has been said, Mr. Speaker. Both the Leader of the Opposition and the hon. member for Vancouver East mentioned the fact that every effort should be made to bring about peace, thereby denying the necessity of civil defence. That is not only their view but the view of this government, which has pressed very strongly to bring about disarmament while at the same time having to maintain defences until disarmament is attained.


EXTERNAL AFFAIRS
John George Diefenbaker: Mr. Speaker, I think I should say a word at this time respecting Laos. On May
II	the international supervisory commission for Laos was able to report to the United

Kingdom and Soviet governments, as cochairmen of the Geneva conference of 1954, that the principal parties to the recent hostilities had ordered their troops to cease fire from 8 a.m. local time on May 3, and that since that time there has been a general and demonstrable cessation of hostilities. The commission is satisfied that a state of de facto cease fire exists throughout Laos.
Despite the commission's report, which was available last Friday, the opening of the conference has been delayed because of disagreement over the seating of Pathet Lao representatives on an equal footing with the representatives of the government headed by Souvanna Phouma, which is recognized by the communist powers, and the royal government of Vientiane. Some countries have taken the position that to concede equal status to the Pathet Lao would prejudge the central issue of the conference and place them on a footing to which as representatives of a paramilitary organization they were not entitled.
There have been suggestions that the conference should be allowed to proceed, dealing first with such practical matters as the question of the cease fire, leaving time for the Laotian parties to agree among themselves on a government for Laos and representation at the conference. Another suggestion has been that any delegation should be permitted to invite any Laotian group to participate in the conference as observers without prejudice to the ultimate composition of the government to be formed in connection with a political settlement. While this formula was acceptable to the principal powers, it has not yet been * agreed to by the representatives of the royal government, and consequently there is still doubt as to when the conference will be able to begin its work.
In view of all the circumstances I think I should advise the house that the Secretary of State for External Affairs, who expected to return to Canada tomorrow, will be remaining in Geneva, and that the earliest possible date for his return, short of a complete breakdown of the conference, will be the end of the week. He had a number of appointments here during the latter part of the week, I believe on Thursday, Friday and Saturday. Those appointments will be cancelled in view of the situation prevailing at Geneva.


Lester Bowles Pearson: Mr. Speaker, I think all hon. members will be interested in what the Prime Minister has said about this important and difficult conference which is, we hope, about to begin in Geneva. There were two difficulties in the way of the conference. One was the arrangement of a cease fire.
90205-6-3041
Canada Elections Act
That difficulty seems to have been overcome although, according to the press, the cease fire apparently is a rather uneasy one at the present time. The other difficulty which apparently has not yet been overcome is concerned with the representation of Laos itself at the conference. It is unfortunate that agreement could not be reached between the two inviting governments-I refer to the government of the U.K. and the government of the U.S.S.R.-as to the representation of Laos before the conference was convened. It is to be hoped that agreement can be reached with a minimum of delay so that this conference, which may be so important for peace and political settlement in this sensitive area, can get to work.
It is reassuring to hear from the Prime Minister that Canada will be represented at the early part of this conference, notwithstanding this delay, by the Secretary of State for External Affairs. This is a conference of foreign ministers and no doubt the Secretary of State for External Affairs felt that he should make his own contribution to it in that capacity.


Mr. H. W. Herridge (Kooienay West):: Mr. Speaker, speaking for this group I wish to say we are glad to hear of the cease fire being a fact, or a near fact, and we certainly wish the coming conference every success. We know that the Canadian representatives will make their usual constructive and commendable contribution to this most important conference, working toward an end we are all seeking.



CANADA ELECTIONS ACT


Mr. Frank McGee (York-Scarborough) moved: for leave to introduce Bill C-91, to amend the Canada Elections Act (information to electors).


Some hon. Members:: Explain.


Frank Charles McGee: Mr. Speaker, in order to promote broader participation on the part of the Canadian public in the matter of election or campaign fund expenses, clearly a program of public education is required. To complement such a program a change is also required in the elections act to place in the hands of the public information necessary to make such contributions.
I might say in passing, Mr. Speaker, that such a program was undertaken in the United States in 1958, and produced a substantially increased and a much broader based participation in that country. Also, this would remove some of the compulsion features in the so-called New party program

Motions for Papers
being put forward in this field, compulsion in the sense of compelling a union member to contribute to a party which he has no intention of supporting.
Motion agreed to and bill read the first time.



CRIMINAL CODE


Hon. E. D. Fullon (Minister of Justice) moved: for leave to introduce Bill No. C-92, to amend the Criminal Code (capital murder).


Some hon. Members:: Explain.


Edmund Davie Fulton: Mr. Speaker, the purpose of this bill is to revise the provisions of the Criminal Code dealing with the death penalty and also the provisions dealing with the trial of a person charged with an offence for which the penalty is death.
The provisions relate primarily to the crime of murder, and the effect is to divide murder into two types, capital and noncapital. Under the proposed legislation the death penalty will attach only to murder of a planned and deliberate character, or to killing in the course of committing a crime of a nature importing the elements of deliberation or stealth. In such case only the person who committed the act resulting in death, or who counselled or procured it, would be subject to the death penalty.
The bill also makes changes in the provisions regarding the plea to be entered by a person charged with an offence for which the penalty may be death, and provides automatic review by the court of appeal of any case where the death penalty has been imposed. There are other consequential and related provisions.
Motion agreed to and bill read the first time.



MOTIONS FOR PAPERS


[Stage Direction]
Motion No. 123-Mr. Howard:
For a copy of telegrams, correspondence, and other documents exchanged between the government, the restrictive trade practices commission, or the combines investigation branch, and any person, organization, or company since January 1, 1961, regarding the question of hearings by the restrictive trade practices commission concerning the selling and pricing policies of certain pharmaceutical houses in respect of new types of drugs.
Edmund Davie Fulton: Mr. Speaker, the documents asked for are those that relate to or are filed in proceedings before the restrictive trade practices commission which, as I have already explained to the house on more than one occasion during

the last two weeks, specifically on May 3, May 4 and May 10, are intended by parliament, under the Combines Investigation Act, to be conducted in private unless otherwise ordered by the chairman of the commission. No such order has been made by the chairman in this instance and, except to the extent that the chairman so orders, or details of submissions are included in the final report of the commission, which will be made public, the contents of such documents which parliament has intended to be private ought not to be disclosed. The correspondence referred to in this motion will have been exchanged between the commission and those to whom the commission wrote in connection with submissions to be made at the hearings and in many cases contain details submitted in reply. Therefore I cannot accept the address for production of the documents in question.


Frank Howard: Mr. Speaker, I feel that is stretching things quite a bit.


Mr. Deputy Speaker:: Does the hon. member wish the question put?


Frank Howard: Yes, Mr. Speaker; I wish you would put the question, please.



COMBINES INVESTIGATION, RAW FISH, B.C.

[Stage Direction]
Motion No. 124-Mr. Howard:
For a copy of the statement of evidence by Mr. T. D. MacDonald, director of investigation and research of the combines investigation branch, in the matter of an inquiry into the production, purchase, and sale of raw fish in British Columbia.
Edmund Davie Fulton: Mr. Speaker, I have already objected to an identical motion on the same subject made by the hon. member for Skeena on June 24, 1959.
My objection can be found in the revised Hansard at page 5085. I refused then to table the statement of evidence because the act makes it clear that it was the intention of parliament that proceedings and inquiries should be conducted in private unless otherwise specifically ordered by the chairman of the commission.
The house then sustained the objection. No change in the situation has since taken place that would call for any modification. I am therefore unable to accept the motion, and under the circumstances I wonder whether the hon. member would consider withdrawing it.


Mr. Mcllrailh:: What page?


Edmund Davie Fulton: Page 5085, June 24, 1959.


Frank Howard: It is my understanding that the house did not sustain the objection of the minister at that time but that I agreed to withdraw the motion. I did not realize then, as I do now, that there is so much secrecy
Division
in the operations of the government, and I would ask you, Mr. Speaker, to put the motion, please.


Edmund Davie Fulton: On a question of privilege, I have ignored such remarks from the hon. member before but I do not think I can continue to do so. They are quite improper, and a reflection on members of the house. It is not the government or members who have ruled that these inquiries should be conducted in private. It is the statute passed by parliament.


Frank Howard: If I may speak on the question of privilege raised by the Minister of Justice, I would point out that the rules of the house prohibit the Minister of Justice from interpreting statutes. It is considered that he is not competent to do so. What the minister is now doing is interpreting the Combines Investigation Act, and in my opinion it does not say what he has just said.


Edmund Davie Fulton: I can certainly understand what the statute means when it uses the words "in private", even if the hon. member does not.



JOB ADVERTISEMENTS IN U.K.

[Stage Direction]
Motion No. 125-Mr. Deschaleleis:
For a copy of a complete list of occupations or jobs offered or published in the United Kingdom by the Department of Citizenship and Immigration in the years 1959 and 1960.
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 in his capacity as Secretary of State for External Affairs. In the light of a recent decision by the United States courts limiting to the amount of $8,300 the liability of an air carrier on an international flight, under the Warsaw convention to which Canada is a signatory, as reported in the Financial Post of May 13, does the government intend to make representations through its delegates at I.C.A.O. or at some other international level to amend the Warsaw convention?


John George Diefenbaker: Mr. Speaker, the hon. gentleman gave me notice of his question. The Warsaw convention limits the liability of an air carrier on an international flight to the amount of $8,300. On August 16, 1956 Canada signed the Hague protocol, which was opened for signature on September 28, 1955. The purpose of the Hague protocol, which incidentally requires ratification by 30 states
I Mr. Fulton.]
before coming into effect, is to double the amount of the liability established under the Warsaw convention. To date only 19 states have ratified the convention. As the house will know, five and a half years have gone by from the time it was opened for signature.
A factor having an influence on the government's decision to ratify will be the likelihood of sufficient countries ratifying the protocol to bring it into effect. However, I can say that ratification is under consideration. Nevertheless, I know the hon. gentleman will realize that when only 19 of the requisite minimum of 30 have actually ratified, there is not too much hope of the protocol coming into effect.


Lionel Chevrier: If I may, I should like to ask this additional question. Does the Prime Minister not think that if Canada were to ratify it, that might lead others to follow its example?


John George Diefenbaker: Others often do so, Your Honour. I can only say that the matter is receiving consideration. If ratification takes place I would hope that the expectation of the hon. member would be achieved.



DOMINION-PROVINCIAL RELATIONS RESERVATION OF PROVINCIAL BILLS BY LIEUTENANT GOVERNORS

[Stage Direction]
On the orders of the day:
Mr. Hazen Argue (Assiniboia):: Mr. Speaker, I should like to direct a question to the Prime Minister. On May 5 he informed the house that the government was giving consideration to the formulating of formal instructions that could be sent to lieutenant governors regarding the reservation by lieutenant governors of provincial bills. Can the Prime Minister say whether those instructions have now been formulated?


John George Diefenbaker: No instructions to that effect have as yet been sent, nor has a decision been made in this regard.



SHIPPING


[Stage Direction]
On the orders of the day:
Mr. J. P. Deschatelets (Maisonneuve-Rose-moni):: Mr. Speaker, I should like to address a question to the Minister of Trade and Commerce or, in his absence, to his parliamentary secretary. Has the minister or his parliamentary secretary read a press report this morning concerning the seizure of the Cuban freighter Fundador in Quebec for failure to pay for half a million dollars worth of merchandize sold to Cuba? If so, has the minister any comment to make?


Mr. E. L. Morris (Parliamentary Secretary to the Minister of Trade and Commerce):: Mr. Speaker, the newspaper clipping has been drawn to my attention. I will take the question as notice.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Hon. J. W. Pickersgill (Bonavisia-Twillin-gate):: Mr. Speaker, in the absence of the Minister of Agriculture and both his parliamentary secretaries, I wonder whether I could ask the Acting Minister of Agriculture whether the government has any definite plans to provide relief to potato growers in the maritime provinces, who have suffered losses owing to rot. If so, can the minister inform the house what those plans are?


Hon. D. S. Harkness (Acting Minister of Agriculture):: Mr. Speaker, I think the hon. member will realize that I am not familiar with the subject matter of this question. However, I shall be glad to take the question as notice and provide an answer tomorrow or as soon as possible.



TRANS-CANADA AIR LINES NUMBER OF PILOTS USED IN VANGUARD AIRCRAFT

[Stage Direction]
On the orders of the day:
Lionel Chevrier: I wish to direct a question to the Minister of Transport. Is he aware of the fact that the Canadian airline pilots association have protested strongly against the decision of Trans-Canada Air Lines to fly its Vanguards on the New York and Chicago runs with only two men in the cockpit, as compared with three on United States lines using the same aircraft? What do the officers of this department intend to do about this problem, which appears to be a serious one?


Hon. Leon Balcer (Minister of Transport):: Mr. Speaker, I am aware of this fact. As it is a matter between the management of T.C.A. and its employees, it is a matter for collective bargaining. The government is watching the situation with a great deal of attention. However, it is a matter for the T.C.A. management. I will pass along the representations of the hon. member.


Lionel Chevrier: If I may, I should like to ask a supplementary question. Is it not also a matter of the safety of an aircraft, as to whether three pilots or two pilots should fly
Inquiries of the Ministry it? That would be a technical matter for the Department of Transport officials to determine.


Léon Balcer: Yes, Mr. Speaker; as far as the regulation of it is concerned, it comes under the regulating powers of the Department of Transport, which has issued an order in this particular case. I have nothing to add at the present time.


Mr. E. J. Broome (Vancouver South):: wish to ask a supplementary question having regard to the statement that the United States air lines using the same plane carry three pilots. Can the minister check as to whether any United States air line is using the same plane?


Léon Balcer: It is a fact that no United States air lines are flying Vanguards at the present time.


Hon. Paul Hellyer (Trinity):: I have a further supplementary question. Can the minister say whether the department has assured itself that the traffic conditions at Chicago and New York, which are the points under question, are such that two pilots are competent to manage a large aircraft in those flight areas?


Léon Balcer: Mr. Speaker, this is a technical decision to be taken by technicians. Whatever factors those technicians have taken into consideration are matters that I am afraid I cannot spell out at this time. However, as I stated we are following this matter very closely. When a decision was reached it was based on a technical assessment of this particular situation.



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. J. A. McGrath (St. John's East):: Mr. Speaker, I wish to direct a question to the Prime Minister. Can he tell the house whether there is any further information available on the plight of Canadian missionaries in Cuba?


John George Diefenbaker: Mr. Speaker, the Canadian embassy in Havana visited the Colon area and reports that conditions there regarding the priests and nuns have improved. I have some expectation that within the next few days there may be something further to report in this connection. The only Canadian who was in custody last week, namely John Darling, was released on Thursday or Friday.

Inquiries of the Ministry INDIAN AFFAIRS


SARNIA, ONT.    REPORTED INTENTION TO SURRENDER CROWN RIGHTS
[Stage Direction]
On the orders of the day:
Mr. John Charlton (Parliamentary Secretary to the Minister of Citizenship and Immigration):: Mr. Speaker, referring to the question asked on Friday last, May 12 by the hon. member for Peterborough, as found at page 4715 of Hansard, may I say that the answer is as follows.
By order in council P.C. 1961-680 of May 11, 1961, the governor in council returned to reserve status lands that were surrendered for purposes of Dimensional Investments Limited but not resold by that company. Such lands will be administered as before under the provisions of the Indian Act. Nothing beyond this has been under consideration.


THE BUDGET
[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: Mr. Speaker, may I ask the
Minister of Finance whether he is in a position to give the house any indication of the date or even the approximate date of the budget?


Hon. Donald M. Fleming (Minister of Finance):: Mr. Speaker, it will not be possible to bring the budget down this month.


Hazen Robert Argue: After the by-elections.


George James McIlraith: Now we know.


OLD AGE SECURITY
[Stage Direction]
On the orders of the day:
Mr. Erhart Regier (Burnaby-Coquitlam):: Mr. Speaker, I should like to ask the Minister of National Health and Welfare whether he is yet in a position to advise the house of the government's intentions as to action as a result of the Clark report.


Hon. J. W. Monteith (Minister of National Health and Welfare):: Mr. Speaker, I
answered a similar question very recently. I cannot give the exact date or reference in Hansard. However I indicated that it was being studied.


Hazen Robert Argue: I have a supplementary question. Can the minister say whether the government has decided to introduce legislation in this field during this session?


Jay Waldo Monteith: Mr. Speaker, I
have nothing to add to what I said on a previous occasion.


Hazen Robert Argue: The minister never knows anything.


CRIMINAL CODE
[Stage Direction]
Hon. E. D. Fulton (for the Minister of Agriculture), moved the second reading of Bill No. C-89, to amend the Criminal Code (race meetings).
He said: Section 178 of the Criminal Code provides that parimutuel betting may be conducted on horse racing tracks if the parimutuel betting is under the supervision of an officer appointed by the Minister of Agriculture. The section also stipulates the amount of racing which may be conducted by a racing association each year. The purpose of this bill is to amend the present provisions of the act with respect to the number of days of running racing which an association may conduct and the number of trotting races each day.
With respect to running races, an association may, under the present provisions of the section, hold one meet of 14 consecutive legal racing days or two meets of up to seven days each, with a minimum of 20 days between the two meets. While this permits an association to conduct 14 days of racing, the provision that if two meets are held neither shall consist of more than seven racing days has, in some instances, prevented an association from taking advantage of the authorized 14 days of racing. If, for example, an association scheduled a first meeting of four racing days, the second meeting would be restricted to seven racing days, making a total of only 11 such days of racing.
The proposed amendment would permit an association to schedule either one meeting of 14 days or two meetings of any length so long as the combined total of the two meetings does not exceed 14 days. The amendment merely provides more flexibility to associations in scheduling their race meetings. It does not increase the amount of racing which each association is now authorized to conduct, and the present provision that there shall not be more than eight races on each day continues in effect.
The second part of the amendment deals with trotting and pacing races. The present provisions with respect to the number of events which can be conducted in one day is rather complicated, with varying provisions for races, heats and dashes.
In trotting race parlance a dash is a complete event within itself. Races may be made up of a varying number of heats, with the
[Stage Direction]
same horses racing in each heat. The section at present authorizes four combinations of races, heats and dashes in any one racing day. There may be eight races or dashes, which is a total of eight events; or there may be two dashes and four heat races of two heats each, which is a total of ten events; or there may be four heat races of three heats each; which is a total of 12 events; or there may be six heat races of two heats each, which is also a total of 12 events.
This authority for varying combinations of dashes, races and heats has proven to be cumbersome and to create difficulties both for racing associations and for the administration. The purpose of the proposed amendment is to simplify the authority for the number of authorized races and to provide that not more than ten races, or events, will be held in any one day. Racing associations will then be free to adjust their scheduling of races, heats and dashes within that total authority. As in the case of the amendment with respect to running races, there is no increase in the total number of racing events which are now authorized under the section.
In this matter we are, of course, concerned with the humane factor with respect to the horses to the same extent as with the amount of parimutuel betting which is authorized. Since the amendments will not increase the number of events now authorized, but merely provide for more flexibility in scheduling those events, it is considered that both interests are adequately protected in the amendments.
Mr. Speaker, before resuming my seat I think I should simply say that traditionally the responsibility for legislation dealing with this part of the Criminal Code-that is, that part concerned with parimutuel betting and horse racing-has been that of the Minister of Agriculture. The fact that I am speaking today on second reading should not be taken as any departure from that principle. I am speaking on behalf of the Minister of Agriculture, in whose name the bill stands, during his absence in the furtherance of his productive efforts to sell more Canadian wheat.
John Whitney Pickersgill: Where is he?


Lester Bowles Pearson: Mr. Speaker, we on this side do not intend to object to this bill dealing with horse racing, notwithstanding my own Methodist ministerial background. As no question of political principle seems to be involved in the bill, we do not see any reason for delaying it by discussing it.


Frank Howard: Mr. Speaker, I think we all know, even though we may disagree with it, that Canada's economic
Criminal Code
philosophy, with which this government agrees and propounds from time to time, is one which is classified generally as free enterprise. The expressions made on a number of occasions by hon. members in this house are that a free enterprise is the paramount thing and must govern our every walk of life; that an individual should have the inalienable right to invest his life savings in enterprises in order to bring to people those things which add to our social and cultural values and understandings. If the individual, following his own individual initiative, is allowed to bring it to full play we have greater employment, lower prices, the quality of our goods and services is better, and the market place is the arena which is a sufficient check and balance against abuses of the system itself.
This particular bill does to a degree smack of state control and bureaucratic interference and influence over the right of individual citizens to pursue their free enterprise tendencies to the fullest extent. The remarks I have just made could of course very well have come from any Conservative hon. member in this house, and have come from them on many, many occasions in the past on other matters. Apparently, though, there is an adulteration of those principles in this particular instance, and perhaps an expression on the part of the government that the general public does not need some protection against the abuses that arise out of this so-called free enterprise system.
It would seem to me-although perhaps this does not fall within the jurisdiction of the Minister of Justice, though he did get off a bit on the selling of wheat and perhaps I will be able to make a comment or two in some other field-that perhaps it would have been much more appropriate, in view of the incongruities which exist in so far as our gambling laws are concerned, if some amendments could have been brought in to deal with the questions of bingos, lotteries and the other types of ticket selling raffles which I am sure every hon. member of this house has engaged in at some time or another. In fact I think some of us have promoted or precipitated certain forms of gambling in order to advance pre-election campaigns, but I think it would have been more appropriate if the-


Mr. Chambers:: The unions will be more effective for raising money.


Frank Howard: It would be inappropriate to do it at this time, and I am not prepared to enter into the field of where my friend and his party get their campaign funds from, but I am quite sure there are far more nefarious

Criminal Code
strings attached to the donors to his party than are or ever will be attached to those who donate to my party.


Paul Theodore Hellyer: But you admit there will be nefarious strings attached to gifts from some of your supporters.


Frank Howard: I have not admitted anything of the sort.


Paul Theodore Hellyer: That is just what you said.


John Whitney Pickersgill: That is what you said.


Frank Howard: I am not one of those who a few moments ago violated his own principles in connection with something which at an earlier time he did not agree with. Obviously the influence of a former minister of fisheries is still prevalent in this party, and-


John Whitney Pickersgill: Mr. Speaker, I rise on a question of privilege. The hon. gentleman has made a reflection on certain hon. members of this house who did not choose to vote for a motion that he put forward in this house two years ago and on which there was no division. Therefore it is quite impossible for the hon. gentleman to know, unless he has some insight that is not given to the rest of us, how other hon. members would have voted.
The plain fact of the matter is that the hon. gentleman knew, when he introduced that motion, that the information for which he was asking was barred by statute of this parliament, and it would be my submission that the motion should never have appeared on the order paper for that reason. In any case, we believe in upholding the laws passed by parliament and not trying to undermine them.


Frank Howard: Mr. Speaker, if I could speak on the question of privilege, I of course would not attempt to guess what the hon. member for Bonavista-Twillingate intends to do on any occasion, because there is a great deal of inconsistency on his part and on the part of the Liberal party. Just a few days ago- I could not find it immediately in Hansard or in Votes and Proceedings-an hon. member of the Liberal party stood up in this house and moved a similar motion in regard to the drug industry.


Mr. Deputy Speaker:: Order.


Lester Bowles Pearson: That was a different motion.


Mr. Deputy Speaker:: Order. I think we should come back to a consideration of horse racing.


Paul Theodore Hellyer: The reason we are so far behind is because his party is so far back in the race.


Mr. Peters:: Why don't you stand up and make a speech?


Paul Theodore Hellyer: Why don't you say something when you do stand up?


William Arnold Peters: You have not said anything standing up or sitting down.


Mr. Deputy Speaker:: Order.


Frank Howard: Mr. Speaker, there is no doubt that betting on horse races is similar to betting on the Liberal party; one is going to lose his money either way. I suggest it would be more appropriate for the government to have brought in amending legislation, in respect of the Criminal Code of a type dealing with all forms of gambling, apart from the political type.


Erhart Regier: Mr. Speaker, I should like to say a limited number of words on my own behalf in regard to the amendment now before us. I oppose any form of gambling whatsoever. I believe the amendment now before us will aid and abet the interests of the horse racing industry. In other words, it will make the betting that takes place at race courses a little more lucrative to the organizations which look after horse racing. I believe Canadian people are being led down the garden path in the matter of horse racing, in the matter of bingo games, and in regard to all other forms of gambling, in that they are being led to believe that they can get something for nothing. I oppose gambling on horse racing and on all other forms of games. I oppose horse racing also because I suspect it is a little on the inhumane side because it involves cruelty to animals.
Mr. Speaker, I must plead guilty in that I have purchased lottery tickets-perhaps more than I should have-but I feel that if and when I buy lottery tickets or place a bet on a horse race, I should be informed through the law that I am acting illegally and assisting to lower the morality of the people of our nation.


Mr. W. C. Henderson (Cariboo):: Mr. Speaker, I should like to say a few words about horse racing. I do not believe there is anyone in this house, with the possible exception of the hon. member for Victoria (Ont.) (Mr. Hodgson) who knows more about racing than I do. I attended the Kentucky derby last week and saw 100,000 people having fun at the races. I managed a fair at Dawson Creek, British Columbia, where we had race meetings supervised by the Royal Canadian Mounted Police, and I have never seen anything wrong or anyone receive any wrong treatment. I do not drink, and the only bad habi!

I have is that I like to gamble, by betting a few dollars, but I suggest that is my business.
I have never seen a population starving, or anything of that nature, because of horse racing, and I have been to all kinds of race meets. I attended the race meetings at San Bernardino, California, one winter. That meeting lasted all winter. Millionaires at those meetings spend a lot of money, with the result that many people are employed. I should like hon. members to know that a boy who looks after a race horse receives between $300 and $400 a month. This is a most lucrative way of making a living, and I suggest there is not a nicer one.
So I say to my hon. friend, who has such tough luck at the bingo games, that I am not in favour of his argument at all. The hon. member for Victoria (Ont.) races horses. He has a big stable of horses, and you will never meet a finer man than that hon. member. I am in favour of horse racing and in favour of the people who raise horses.
Many individuals make a living raising horses. There are many farms in Ontario where horses are raised, from which colts are sold, and the individuals in the business of raising those horses probably have nothing to do with racing at all. Those people raise the colts for sale, and I suggest it is a very nice profession. The racing of horses is certainly not inhumane, and I ask the hon. member for Burnaby-Coquitlam if he has ever seen a jockey fall off a horse at a race track when the horse stopped and complained about it? I suggest that the horse just went right on running.
Mr. Speaker, I am not going to say any more in this regard, as I am sure all hon. members know how I feel about these things.


Some hon. Members:: Hear, hear.


Lester Bowles Pearson: Mr. Speaker, may I ask the hon. gentleman a question before he resumes his seat?


Walter Clarence Henderson: Certainly.


Lester Bowles Pearson: Would it be fair to state that what the hon. member is actually saying is that he would like to see more and more horses on the payroll?


Walter Clarence Henderson: Mr. Speaker, we used that particular horse during the election campaign some years ago.


[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.
William Arnold Peters: Mr. Chairman, I do not have much experience in regard to horse racing, and I should perhaps direct my question to
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the hon. member for Cariboo rather than the minister, but I should like to ask whether the proposed changes will have any effect on the number of meetings which can be held in neighbouring communities. I have no personal objection to horse racing, if the meetings are held on week ends, but in my area, where meetings are held in communities close to the Quebec border, there are races held at different towns a day or two apart, using the same horses and normally attended by the same people. This type of exchange goes on for a good part of the summer. I should like to know whether, under these new regulations, there can be only two meetings in one area, or ten meetings, or what effect the regulations will have as to the number of horse races taking place in areas similar to the area to which I have referred.


Edmund Davie Fulton: Mr. Chairman, in circumstances such as the hon. member has suggested, there would be different associations holding the different meetings. One association can only hold one meeting at one place. Therefore if there were other meetings being held nearby at the same time, those meetings would be held under the auspices of different associations.
The purpose of this bill, simply stated, is to provide flexibility in respect of the total number of days of racing which may be carried on by one association. It is not intended to increase the number of meets but to make the situation more flexible by providing that one association can hold not more than 14 days' racing in a combination of two meetings, such as four days and ten days, or eight days and six days, as the case may be.


William Arnold Peters: Mr. Chairman, to use a concrete example, if racing takes place one day at Earlton, the next day at Ville Marie, the next day at Noranda, the following day at Val d'Or, all under the auspices of one association, how many days is considered to be a meeting and what effect will this change have? I am interested in this subject because in my area we have a very short racing season, and in providing horse racing in each of the different areas there is a good deal of travel involved because of the distance between the towns. There is also a provincial boundary involved. I am wondering whether the new regulations will prohibit horse racing on the basis I have described.


Edmund Davie Fulton: No, it would not Mr. Chairman. On the basis of what the hon. member has said, if such circumstances did exist-I think he mentioned five places in which racing would be held on five consecutive days, but at a different place each day-they could

Criminal Code
only exist with respect to harness racing, not running races. There would be no prohibition of that situation under the proposed amendment.


Mr. Caron:: The amendment refers to-
. .. racing during any such meeting to be held on consecutive days on which racing may be lawfully carried on-
Can the minister tell me whether if they are not consecutive days, they are excluded? Is the racing excluded if there is an interval of, say, two days?


Edmund Davie Fulton: Is my hon. friend speaking of running races or harness races?


Alexis Pierre Caron: Harness races.


Edmund Davie Fulton: No; I am informed that they could have an interlude of a day or more in between, and they could go on then afterwards to complete their full quota of 14 days. In the case of harness racing the days need not be consecutive. It is only with respect to the running races that the days must be consecutive.


Frank Howard: It seems to me that there are two or three race tracks in the lower mainland of Vancouver, and the racing season appears to run throughout the whole summer, if I am not mistaken, perhaps for a period of say 60 days. In view of the act as it stands now, why is this permitted? Is it because the races are sponsored by more than one association that they can carry on?


Edmund Davie Fulton: That is correct; different associations holding charters may set their meets consecutively, or so time them that one follows the other.


Frank Howard: Are there any prohibitions or sanctions with regard to the structure of certain racing associations? Can they be interlocking? Can the same people be members of two associations?


Edmund Davie Fulton: I am advised that one person may be a director of more than one association. The limitation on the association itself is that it must have had a charter or been incorporated prior to 1947, and also have held meetings at which there was parimutuel betting under the control of the Minister of Agriculture between 1938 and 1947. In other words, no association which was not incorporated before 1947 is allowed to hold race meetings.


Frank Howard: No new ones can enter the field and hold race meetings?


Edmund Davie Fulton: 
Frank Howard: Under what authority are they incorporated or given a charter at the moment? I refer to the ones that were incorporated prior to 1947.


Edmund Davie Fulton: They were mostly provincial charters. The information I have is that, so far as we know, there are only two federal charters, so they are nearly all provincial charters. Even so, to qualify they must have had their charter before 1947.


Frank Howard: It seems a bit odd to me.


Edmund Davie Fulton: That is in the code now, and the provision is not being touched by this amendment.


Frank Howard: It just seems odd to me. In this particular field we are maintaining the status quo as it was in 1947, subject to incorporation by special act of this parliament or of any legislature, and we are also restricting the number of days during which any one association can function. We are also limiting the total period of time, so that one association holding races cannot hold them for a period of more than 14 days. What would be apt to occur if we were to have this open ended and not have the restriction in so far as the number of days are concerned? Is it the thought of the minister or the government that this might allow one or other of the associations to reach such a state of affairs that it would have a virtual controlling influence over the whole of the racing season and therefore be in a monopoly position in so far as the holding of races is concerned? Is the desire to have some sort of competitive element at work?


Edmund Davie Fulton: There are, I believe, two primary reasons for this provision limiting the number of days. One of them is so that no one association can hog the whole field. The other is in part a matter of enforcement and control. It will be appreciated that parimutuel betting can only be carried on where these things come under the control of the minister, and the R.C.M. police must be there to supervise the betting. Well, we do not have unlimited personnel; therefore we must have some limitation. Consequently it is a combination of the two factors; a desire not to see a situation where one association hogs the field and, second, the practical matter of providing the personnel to supervise the betting.


Frank Howard: This desire to limit or control competition and ensure that one association does not get in a monopoly position and thus be in a position to exploit the entire field may be commendable, but in so far as the R.C.M. police are concerned in supervising the parimutuel betting system, are the R.C.M. police there on all occasions? Are they there

during each day and during each of the races? How do they conduct the investigation or checking to ensure that whatever they want to ensure takes place?


Edmund Davie Fulton: I am informed that there are regulations which prescribe that the R.C.M. police shall be present during the course of any period when parimutuel betting is being conducted.


Frank Howard: For argument's sake, in the case of a community such as Vancouver which has race tracks operating in the summer season, or for a period of two months, are the R.C.M. police there on each day of those two months during which racing takes place?


Edmund Davie Fulton: If there is betting the answer is yes.


Frank Howard: Well, then, how does this limitation make enforcement easier, if the R.C.M. police have to be there in any event?


Edmund Davie Fulton: Well, I would think the answer to that is fairly simple, for my hon. friend has said, for instance, that under his hypothetical case racing is carried on for two months. Presumably that is the maximum time for which it can be carried on in view of the number of existing associations and the limitation of the number of days upon which they may each hold race meetings. If we did not have that limit, other associations would come in or existing associations could hold longer meetings, and the R.C.M.P. would have to be present during that longer period.


Frank Howard: I had in mind maintaining the status quo of 1947, but not the limitation of 14 days. If you have a limitation with respect to the period of time, say a two or three month period, it might allow anyone to enter the field and I can foresee that you would have racing on Christmas day and every other day of the year. I just wanted to get that clear in my mind.


Edmund Davie Fulton: My hon. friend has given a case where racing is carried on for two months. That could be done by four associations under their respective 14 days each, making a total of 56 days. If we did not have that limitation one association could carry on racing for 365 days.


Mr. Pigeon:: I should like to ask a question of the minister. How much revenue has the federal government received from racing over the last two or three years?


Edmund Davie Fulton: The information I have is that in 1956-57 the revenue was $533,000, in round figures; in 1957-58, $573,000; in 1958-59, $646,000; in 1959-60, $673,000, and the forecast for this year is $710,000.
Criminal Code


Frank Howard: To what degree does this meet or does it more than meet the expenses of the R.C.M.P. in providing surveillance for these operations?


Edmund Davie Fulton: I am informed that at least during the years I have referred to there has been a surplus, and in recent years the surplus of revenue over expenditure has been in the neighbourhood of $18,000 to $20,000.


Frank Howard: This is the only organization or individual I know of that makes money at race tracks.


William Arnold Peters: Is it safe to say that the legislation does not apply to any meetings where parimutuel betting is not official? In other words, the small race meetings held throughout the country where there is some form of betting but no formal parimutuel betting do not come under this provision.


Edmund Davie Fulton: Indeed they do not. The Criminal Code provides that betting at race tracks may take place only under the supervision of the minister, that it must be parimutuel betting, it can only take place at races carried on in accordance with the provisions which are incorporated in this legislation. It may only be parimutuel betting, and it is only permitted at authorized race meetings.


Louis-Joseph Pigeon: How many race tracks are there in each province of Canada?


Edmund Davie Fulton: I do not have that information here for the purpose of this amendment, but I would be glad to get it and provide it to the hon. member.


Frank Howard: What would be the relationship of race associations of this nature with the Combines Investigation Act and the activities under the act if the occasion arose when there was considered to be some conflict?


Edmund Davie Fulton: It is difficult for me to see that the activities of racing associations would come under the surveillance of the director of investigation and research. I am informed that it is a highly competitive business or occupation and, as the hon. member will appreciate, not only is it regulated precisely by the Criminal Code but where betting does take place it can only take place under the control and supervision of the Minister of Agriculture. Therefore I cannot visualize at the moment how any situation would arise which would be of concern under the Combines Investigation Act.


[Stage Direction]
Clause agreed to.
Title agreed to.
Bill reported.
[Stage Direction]
Railways and Shipping Committee
Mr. Depuly Speaker:: When shall the said bill be read the third time? Now, by leave?


Some hon. Members:: Now.


Paul Theodore Hellyer: Next sitting.


Mr. Deputy Speaker:: Next sitting of the house.


Edmund Davie Fulton: Mr. Speaker, if the bill is not to be read the third time now may I crave the indulgence of the house to correct some information I gave in the committee. I think I said that the excess of revenue over expenditure was $18,000 to $20,000. I am advised that I left out one figure, that it should have been $118,000 to $120,000 per annum.


Frank Howard: That makes it even more lucrative. Maybe you are engaging in sin.


RAILWAYS, AIR LINES AND SHIPPING ESTABLISHMENT OF COMMITTEE ON RAILWAYS, AIR LINES AND SHIPPING OWNED AND CONTROLLED BY THE GOVERNMENT
[Stage Direction]
The house resumed, from Monday, February 27, consideration of the motion of Mr. Balcer:
That a sessional committee on railways, air lines and shipping owned and controlled by the government be appointed to consider the accounts, estimates and bills relating to the Canadian National Railway and Trans-Canada Air Lines, saving always the power of the committee of supply in relation to the voting of public moneys, and to consider the pension rights of existing or retired Canadian National Railway employees with respect to anomalies which may have resulted from breaks in the continuity of service, and also to consider the arrangements for turn around benefits for employees of the Canadian National Railway, and the said committee should be empowered to send for persons, papers and records and to report from time to time, and that notwithstanding standing order 67, the said committee shall consist of 26 members.
Some hon. Members:: Carried.


An hon. Member:: One o'clock.
At one o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 2.30 p.m.
Mr. D. M. Fisher (Port Arthur):: When this debate closed at ten o'clock several weeks ago I had just been challenged by the hon. member for Kenora-Rainy River on two points. The first was with reference to the word "rationalization" which I had used, and the need for rationalization in railway operations in this country. He wanted to know what I meant by that. Then he challenged

me to indicate what rationalization would mean in terms of the number of jobs available.
There was a definition in today's issue of the Globe and Mail of the word "rationalization". They said it implies rational or reasonable scientific organization of industry to ensure the best use of labour, material and the machinery of production. The editorial goes on to say that this just means the reign of common sense. I suggest to the hon. member for Kenora-Rainy River that if he will look at the statistics for the Canadian National and Canadian Pacific railways he will discover that since 1956 approximately 25,000 jobs have disappeared on the Canadian National Railways and approximately 16,000 jobs have disappeared on the Canadian Pacific Railway.
Now, this surely underlines the importance of some kind of analysis to ascertain where the railways are going. Whether or not the hon. member for Kenora-Rainy River likes it, railway jobs are disappearing. I insist that what we need to find out is the rate of attrition, and some means of restoring some stability for the railway employees as a whole. The productivity increase resulting from the use of new equipment means fewer jobs. Surely we can stage these changes so they mean less dislocation than we have seen. It is not a question of saying to the railways that they cannot lay off any more men; the men need jobs. This is going to happen, but it could be put on a reasonable basis. It seems to me that the railways, the unions and the government could consult together to see if these changes could not be put on a reasonable basis.
It seems to me that the MacPherson commission report, which has been tabled since we were last discussing the matter, has given the railways a breathing space of perhaps five to eight years in which they can adjust to these new conditions. However, let no member of the house deceive himself; the MacPherson commission and its recommendations, in themselves, are not going to have any effect of lessening this trend toward a decline in jobs. Any member who has had a divisional point in his constituency is aware of the fact that the use of new equipment is having an effect on employment.
I insist that this is one of the things at which we have to look in connection with the C.N.R., and try to find out from Mr. Gordon when he is before the committee what arrangements are being made to stage these lay-offs and this decline in the working force. The figures are startling to anyone who realizes that the Canadian Pacific and Canadian National railways between them in the last four years-this is not counting 1961-

have seen the loss of employment opportunities for over 40,000 people. This represents a healthy chunk of our working force, when you recognize that about five years ago almost 200,000 people were employed by the railways and within another five years we are likely to be down to about 100,000. This gives you some idea of the impact on the country.
One of the things about which we want to hear from Mr. Gordon when he appears before this committee is this matter of the Canadian National getting into the trucking business. A little over a year ago the Canadian National announced that it had purchased four truck lines. The thing that bothers me is that over the year-this is as I understand it-not a single one of these deals has been completed. I have information that indicates that several of these lines are losing money at the rate of $40,000 to $50,000 a month. We want the background information as to how the Canadian National got into this trucking business, and why they went into it in the way they did by using such different methods from those followed by the Canadian Pacific Railway in connection with Smith Transport.
There are countless questions that I think Mr. Gordon will be facing. I only hope that all members of the committee will try to find out where the Canadian National Railway is going in such fields as trucking and employment. I am sure the hon. member for Laurier will join in these deliberations. We should like to know whether we can ever hope for anything better than these huge deficits Mr. Gordon and his management seem to keep building up.
The last point I would mention is the need for a more thorough explanation of the change in the pension system that was introduced by Canadian National Railways this year. It seems to me from my information that this is somewhat of a bookkeeping entry that makes the financial statement of the railway look about $10 million better than it actually is.
During the last few weeks, Mr. Speaker, I have spent a great deal of time reading over the last 10 committee reports when Mr. Gordon appeared before the committee. We have had some very able members of parliament, including the Minister of Justice and the hon. member for York West, who when they were in opposition seemed to have a great time having a go at Mr. Gordon. In the past there has been a very keen interest displayed by opposition members, but it seems to me that in those 10 years Mr. Gordon has always managed to play a superior Hamlet to that of the members of parliament.
This may be what one would expect because, after all, in money terms, he seems
Freight Rates Reduction Act to be worth seven and half times what each one of us is worth. I call on all members of the committee to use all their zeal to see if we cannot this year get a little deeper into the roots of the Canadian National Railways to find out why this railway is not doing better than it is, despite the fact it has had this vigorous, dramatic, and I might almost say romantic leadership since 1950.


[Stage Direction]
Motion agreed to.

Léon Balcer: that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure to amend the Freight Rates Reduction Act to extend for not more than twelve months the period during which the revised rates under the said act shall be applicable and to increase the authorized expenditure under the act by an additional twenty million dollars.
Motion agreed to and the house went into committee, Mr. Chown in the chair.


Léon Balcer: Mr. Chairman, I am sorry to say that I have not as yet received my file on this subject. However, the committee has seen the wording of the resolution as it appears on the order paper. The last time the Freight Rates Reduction Act was amended my predecessor, the then minister of transport, moved for an extension of that act of 12 months and an increase of $15 million. The reason for that amendment was that the government had decided that the whole matter of the railways would have to be reviewed by a commission known as the MacPherson commission which was to make a complete survey of the situation of railroading in Canada. The MacPherson commission started its sittings, and even at that time my predecessor hoped it would be in a position to make a final report within 12 months. Unfortunately, however, for various reasons this report could not be produced within that time. That was the reason this Freight Rates Reduction Act was extended.
The first volume of the MacPherson commission report came before the public only a few weeks ago. At that time we made sure that the shippers in Canada and the Canadian public would not be hurt by the fact that the MacPherson commission report had been produced so late. Also, as hon. members know, what was produced was only the first volume of that report; there are still two other volumes to come. The purpose of the Freight Rates Reduction Act, as the committee knows, was to reduce, first of all by 7 per cent, the

Freight Rates Reduction Act freight rate increase which had been requested by the railways and had been agreed to by the board of transport commissioners.
This decision of the board of transport commissioners had been appealed by eight of the Canadian provinces. Following that appeal the government decided to bring down this bill. This bill had for its main purpose the provision of $20 million to the railways to permit them to effect a reduction of no less than 7 per cent, which made the previous increase not more than 10 per cent. In actual practice, after the board of transport commissioners had time to assess the real impact of this reduction of $20 million they made a decision to further reduce this freight rate increase by another 2 per cent. As a result shippers were to pay only 8 per cent because of this further reduction.
This further amendment to the Freight Rates Reduction Act will have the effect of postponing for another 12 months this full increase of 17 per cent. In the meantime the government will have a chance to consider the recommendations contained in the first volume of the MacPherson commission report. We shall also be given the opportunity of waiting for the second and third volumes. The first volume contains some extremely important statements concerning matters affecting the railways that depended mostly on legislative action by various governments, our predecessors or ourselves. The second volume will deal mostly with regional aspects, regional anomalies and regional problems that affect the welfare of our railroads in Canada. That is why the government has decided to carry on for up to another 12 months this Freight Rates Reduction Act, and has also decided to vote another $20 million to take care of this difference between 8 per cent and 17 per cent.
This is a general outline of this resolution. When the bill is brought down hon. members will find that it contains provision to take care of the period between today and April 30 next. I know that hon. members opposite have asked what the government was going to do about the matter or what was going to happen in this period; whether the railways were going to be reimbursed for the amount of money they will lose because freight rates were not increased by the full 17 per cent. The bill will look after this matter, and will ensure that the railways and the shippers will not be taxed more than they would have been taxed if this present amendment had been brought in prior to April 30.
I therefore recommend to the committee that this resolution be adopted. It is my intention, after second reading of the bill, to move that it be referred to the standing committee on railways, canals and telegraph


lines, as were the amendments to this bill last year and the year before. I therefore recommend the adoption of this resolution.


Lionel Chevrier: Mr. Chairman, I am sure the committee has listened with great interest to the statement the minister has made in connection with this resolution which is now before us. The resolution is a simple one. It concerns the extension of an act which was passed by this house on an earlier occasion, known as the Freight Rates Reduction Act. It can be divided into two parts; first, the extension of the act for a period of 12 months, and second, the increase in the subsidy to the total of $55 million over the three periods that the act has been in operation.
I would remind the minister that in his statement a moment ago he said the last time the act had been amended by his predecessor it was extended for a period of 12 months. My recollection is that the extension was for a period of nine and not 12 months. The minister has also said-and he will correct me if I am wrong-that the object of bringing in this resolution now is to give the government a breathing spell in order to allow them to consider the recommendations in the first volume of the report of the royal commission on transportation, together with the other two volumes which will be coming in due course.
If I am right in the inference which I obtained from what the minister said, I take it that there will be no legislation based on the report of the royal commission on transportation during the course of the present session. I say this because if the intention is to extend this act for a period of 12 months in order to give the government time to consider the recommendations of the royal commission, I take it there is not much hope of such legislation during the course of the present session of parliament.


Léon Balcer: Mr. Chairman, may I just interject a word here. I do not want to mislead the committee. Actually I stated that this amendment will be for up to 12 months, but any time it were necessary to interrupt the provisions of this act, it could be done. I do not say it will last for 12 months, but it will be up to a maximum of 12 months.


Lionel Chevrier: Mr. Chairman, I thank the minister for the statement he has made. The minister now indicates that while the extension is for 12 months, it may be interrupted during the course of that 12 month period by legislation which would be brought down to deal with the situation in accordance with the recommendations of the royal commission on transportation.

I must at the outset of my remarks deprecate the manner in which the government has dealt with this particular piece of legislation. The reason for that statement is that no intention was indicated by the government until the last days of the month of April. The prior act expired on April 30, and up until a day or two before that date there was no indication by the government to either the railways or the shippers of what the government intended to do in this situation. Therefore it was clear that the mind of the government either was not made up, or the government had entirely forgotten that the act was coming to an end on April 30, 1961. This is indicated not only from the questions asked in the house but also from information which anyone can obtain at the board of transport commissioners, because while the committee knows that the board of transport commissioners cannot make freight rates retroactive, the railways may, if they wish, file a tariff in reduction of rates.
The information I have in my possession is that the railways did file a tariff on or about April 28 which, because the government had not made up its mind, indicated as alternatives either (1) a tariff seeking to increase freight rates to the 17 per cent which was authorized on November 18, 1958, or (2) maintaining the freight rates at the level contained in the act of 1960, namely with the 8 per cent increase. Therefore I do not think there is any doubt that up until that time the government had not made up its mind what it intended to do.
That is indicative of the attitude of the government on this whole problem. I should like to put on record some of the statements made by the Prime Minister during the campaign of 1957. At Drumheller, Alberta, on May 18, 1957, in the Canadian Press report in the Montreal Gazette the Prime Minister is quoted as saying:
On freight rates, he said that a rate pattern discriminatory to the west has been made worse by recent increases. This had struck "an almost paralysing blow" to industrial development in the west.
And according to the Toronto Globe and Mail of May 20, 1957:
He said a Conservative government would equalize freight rates as far as possible to help both agriculture and industry on the prairies compete with the rest of Canada.
Then again during the campaign of 1958, according to a Canadian Press report in the Windsor Daily Star of February 14, 1958, the Prime Minister said:
On freight rates, Mr. Diefenbaker spelled out for the first time his government's apparent intention on the increase granted in January by the board of transport commissioners.
Freight Rates Reduction Act
I would ask the committee to pay particular attention to this passage:
"We said before we were in power that freight rates were unjustifiably high when raised horizontally. Did we act? When the board allowed an increase we held it up because it couldn't be justifiably brought into existence on the basis the increase was provided".
What happened after this statement was made was that an application was made by the railways of Canada to the board of transport commissioners to increase freight rates to the extent of 17 per cent. That application was granted by the board but there was an appeal to the cabinet by the provinces and others under the requisite section of the Railway Act and the appeal to the cabinet from that decision was granted.
Therefore, notwithstanding the words of the Prime Minister in his campaigning of 1958, the high freight rates about which he complained, and the horizontal increases, were worsened to the extent of 17 per cent.


Mr. Jones:: This is what the subsidy was for.


Lionel Chevrier: I will come to that in a moment. Does not my friend who has just interrupted me realize that either the Prime Minister meant it when he said "Did we act to stop this increase?", or he did not. He did suspend it for a time, but then the cabinet, after consideration, allowed the freight rate increase of 17 per cent to go into effect.


Edmund Davie Fulton: And immediately introduced a subsidy to reduce that increase.


Lionel Chevrier: Therefore he did not carry out his promise in this connection.


Henry Frank Jones: Mr. Chairman, I think my hon. friend will agree that a royal commission was immediately set up to take care of the problem.


Edmund Davie Fulton: A subsidy was introduced.


Lionel Chevrier: I will tell the hon. member when the royal commission came into being. It was quite some time after that. I intend to put on the record, step by step, exactly what was done in connection with this matter.


Henry Frank Jones: A royal commission was set up to investigate it and a subsidy was immediately introduced following that.


Jacques Flynn: Order.


John Whitney Pickersgill: What subsidy?


Edmund Davie Fulton: It was the roll back subsidy which is now being extended.


John Whitney Pickersgill: That only covered part of the increase.


Jacques Flynn: Order.

Freight Rates Reduction Act


Lionel Chevrier: I will deal with the roll back subsidy in a moment. I hope the Minister of Justice will enter this debate and tell us just how the statements made by both the Prime Minister and the Secretary of State for External Affairs, in his capacity as Acting Prime Minister, have been carried out. Incidentally, I have sent a note to the Prime Minister's office advising him that I intend to deal with this matter now.


Lester Bowles Pearson: Where is he?


Lionel Chevrier: Neither of those statements have been carried out by this government.


Edmund Davie Fulton: Would the hon. member permit me to say that it is quite true he sent a note to the Prime Minister's office but I should tell him that it reached the Prime Minister's office almost coincidentally with my hon. friend's intervention in this debate, and after the Prime Minister was involved in another engagement which prevents him from being here at the present time.


Lionel Chevrier: I hope the Prime Minister will not enter this house on another occasion, as he has done before, and say that I have taken advantage of his absence to make a statement when he was not present. At any time the Prime Minister was not present he was, as the Minister of Justice has said, away on other important business-I am sure the Prime Minister cannot always be here-but he should not say that statements are made in this house in his absence with the implication that they are made intentionally then.
To carry on, if I may-I have only limited time-after that the cabinet decided to dismiss this appeal and allow the 17 per cent increase to go into effect, and the Secretary of State for External Affairs in his capacity as Acting Prime Minister made the following statement, which I should like to put on the record; and I draw this particularly to the attention of the Minister of Justice, who interrupted me a moment ago. The statement is dated November 26, 1958 and reads in part as follows:
The Honourable Howard Green, Acting Prime Minister, issued the following statement today on behalf of the government:
On the hearing of the appeal from the decision of the board of transport commissioners awarding the railways an increase in freight rates in order to meet a proposed increase in wages, it was agreed by the eight provinces and the railways
(1)	that the wage increases are reasonable
(2)	that a railway strike would be a national disaster and must be avoided.
They disagreed on the propriety of the action of the board of transport commissioners in basing an increase in freight rates on an anticipated wage increase which had not been unconditionally agreed upon by the railways and their employees; the provinces asked that the order made by the board be disallowed on this ground.
[The Chairman.]
We consider that, in future, the railways and their employees must come to a definite agreement before a wage increase should be accepted by the board of transport commissioners as the basis for an increase in freight rates, otherwise the board, as it foresaw itself, is apt to be forced into making Judgments about wage settlements which are not its proper responsibility. In the present case we are not allowing the appeal on this ground because to do so at this stage would precipitate a nation wide strike over an increase in wages as recommended by a conciliation board which increase neither the railways nor the provinces have resisted or will resist.
Then, Mr. Chairman, I draw the following words of the Acting Prime Minister to this committee:
The suggestion was made that these wage increases should be paid from the federal treasury. We do not intend to embark upon a policy of subsidizing wage increases; there would be no end to demands on all governments if such a policy were adopted.
What is this bill we are dealing with now, and what was the freight rate reduction bill of 1959-60, if not a subsidy?


Léon Balcer: This is not a subsidy in respect of wages.


Lionel Chevrier: How do the words of the Acting Prime Minister compare with the legislation which is now before this committee and which was also then before the house? The statement continues as follows:
It is however recognized by the government that there are serious inequities in the present freight rate structure which have both contributed to, and been aggravated by, the system of horizontal rate increases. The government has already indicated its intention to move toward a solution of these problems.
It was only after that, namely May 13, 1959 -quite some time after-that the order in council establishing the royal commission on transportation was set up.
I should like to make two points clear in respect of that statement made by the Acting Prime Minister. The first point is, that exactly what he said the government should not do is being done in this legislation. The second point is-


Léon Balcer: This has nothing to do with wages.


Lionel Chevrier: I am not talking about wages now, I am talking about subsidies.


Léon Balcer: You said before it was a wage subsidy, but it is not a wage subsidy.


John Whitney Pickersgill: When is a subsidy not a subsidy?


Lionel Chevrier: I did not say that at all. I quoted the words of the Acting Prime Minister, who said that.


An hon. Member:: You are all mixed up.


Lionel Chevrier: Some hon. member on the other side suggests I am all mixed up, but I would suggest that the government has never been in such a chaotic state so far as freight rates are concerned as it is at the moment.
The Acting Prime Minister complained about the injustice and inequities in respect of horizontal rate increases. That statement was made three and a half to four years ago, and what has been done to do away with the inequities of horizontal freight rate increase? I suggest they have been worsened, first of all by the 17 per cent increase in freight rates, and then worsened again in connection with the extended 8 per cent change in respect of subsidies under the Freight Rates Reduction Act in 1959-60 and now again under this measure. So that the position, in so far as inequities of horizontal increases in freight rates are concerned, is much worse now in 1961 than it was when the Acting Prime Minister made his statement. There is no doubt that in respect of this act, as well as in respect of the whole field of freight rates, the government has certainly made a complete mess of it.
There are one or two other matters which I feel I should direct to the attention of the committee. The order in council setting up the commission, P.C. 1959-577 dated May 13, 1959 had, amongst others, the two following objectives to consider:
(a)	Inequities in the freight rates structure, their incidence upon the various regions of Canada and the legislative and other changes that can and should be made, in furtherance of national economic policy, to remove or alleviate such inequities;
(b)	The obligations and limitations imposed upon railways by law for reasons of public policy, and what can and should be done to ensure a more equitable distribution of any burden which may be found to result therefrom.
The first objective of the royal commission on transportation was to remove the inequities in the freight rate structure. Has anything been done in this respect? I ask the minister to indicate whether the government, since it came into office in 1957, has done anything to remove the inequities of the freight rate structure.


Léon Balcer: That is precisely why we set up the royal commission, to investigate this whole matter.


Lionel Chevrier: That is not what the Prime Minister said. I placed his words on record the other day and I will do so again. When we were discussing the continuation of the work of the railway employees in November of last year the Prime Minister indicated quite clearly one of the reasons the royal commission was established. At page 359 of Hansard for November 30, 1960 the Prime Minister had the following to say:
Freight Rates Reduction Act
The reason we say we are waiting for the report of the royal commission is this. It will make its report as to the means whereby these discriminatory rates may be avoided.
Has it done that? I asked the question a moment ago. That is the reason this is being done. Well, the Prime Minister said:
It will make its report as to the means whereby these discriminatory rates may be avoided. Legislation will then be introduced in order to equalize opportunity across Canada. The freeze will then be taken off and the railway companies may then make an application to the board of transport commissioners to raise the freight rates and to take into consideration the agreements now in existence between the employers and the unions back to January 1, 1960.
Four things were set out by the Prime Minister. Not one of them has been accomplished. First, the inequities would be removed by the report of the royal commission. Next, freight rates would be equalized across the country. Third, the freeze would be lifted; and fourth, the railways could apply for increased freight rates.


Léon Balcer: We will still have that.


Lionel Chevrier: That was all to take place before May 15.


Lester Bowles Pearson: That is so.


Lionel Chevrier: The position is quite clear. There is no doubt in the minds of those who have given this matter any study what was in the mind of the Prime Minister. He made it quite clear, as indicated in the words I have quoted. There is no doubt that the Prime Minister expected and anticipated a report by the royal commission at that time. There is no doubt he thought that a formula, as he said, would be found whereby the strike might be averted, but instead of that-


Mr. Browne (Vancouver-Kingsway):: It was
averted; the dispute was settled.


Lionel Chevrier: Of course it was. And from the commission has come a four-pronged recommendation involving subsidies to the extent of $100 million. It is a recommendation for subsidies notwithstanding that the Minister of Labour said that he was against subsidization in this respect.


John Ferguson Browne: For
wages.


Mr. Starr:: May I interject a word here, so there will be no misunderstanding. I made a statement in respect of subsidization of wages. There is no recommendation in the royal commission report at all with respect to wages.


Lester Bowles Pearson: It's to give them the money for something else.

Freight Rates Reduction Act


Lionel Chevrier: So there will be no misunderstanding about what the Minister of Labour said, I quote from his statement in Hansard of November 30, 1960, at page 347:
Some of those who have suggested implementation of the majority report have also suggested subsidies to the railways. The Prime Minister has clearly expressed the basic weakness of such action. Once such a course was embarked upon this might again provide an undesirable precedent. The dangers inherent in such a solution must surely be obvious. Such a course might well be an easy way out, but in time it would be the hard way of settling such a dispute.
In the case of the Canadian National Railways the taxpayers of this country are already being called upon to make up huge deficits. To require the Canadian taxpayer to subsidize the operating costs of the Canadian Pacific Railway Company would be setting a most dangerous and costly precedent.
Did the Minister of Labour make this statement?


Michael Starr: Yes, I made it in respect of any wage settlement.


Lionel Chevrier: I have the admission from the Minister of Labour that he made this statement. The threatened strike has been settled. The presidents of both railways have clearly indicated that they have to get the money to pay the increased wages. Where is the money to come from? I have repeatedly asked this question. The government ought to be in a position to tell us. Of course it must come in some form or other, unless the deficit of the Canadian National Railways is to be increased by its proportion of the $40 million required to pay this increase in wages. Therefore the subsidization policy which was being condemned by the Acting Prime Minister, the Secretary of State for External Affairs, in November, 1958, the subsidization policy which is condemned by the Prime Minister, the subsidization policy which is condemned by the Minister of Labour-


Michael Starr: In respect of wages.


Lionel Chevrier: All right, I will add that- in respect of wages, must of necessity be considered at the present time by the government. I ask again-


John Whitney Pickersgill: It has been promised to the railways.


Lionel Chevrier: I ask again, as I have asked before, how is this going to be implemented? How is one of the recommendations of the royal commission on transportation going to be implemented? Is it going to be implemented by way of legislation? If it is, the minister had better hurry up, because after all parliament is entitled to an intelligent discussion of this whole matter, and if it is the intention of the

government to bring this session to a close at the end of June or early in July it will not be possible to do this.
The other alternative is for the government to bring in a subsidy to cover this increase in wages. Will the government do this? I think the committee and the country are entitled to know how this matter is to be dealt with, and thus far we have had no indication.


Léon Balcer: Mr. Chairman-


Lionel Chevrier: Does the minister want to ask me a question?


Léon Balcer: I should like to ask a question.


Lionel Chevrier: Fine; I will yield.


Léon Balcer: Is there anything in the first volume of the MacPherson report recommending subsidies of $100 million which says that if the government pays such a subsidy it will be paid to meet the wage bills of the two railways? Can the hon. member point to any page of the MacPherson report which says that?


Lionel Chevrier: No, I cannot. It is not recommended. I will admit at once there is no recommendation along that line in the MacPherson report, and I think it was excluded from the report; but will the minister answer this question? If it is not to be found in the $100 million or so recommended by the royal commission on transportation, where is it to be found?


Léon Balcer: The intention of the MacPherson report as stated by the commission is to create an atmosphere and put the railways in a position where they will be able to meet their various obligations and also expand and develop as they should. If the government implements any of the recommendations of the MacPherson report, or if the government introduces legislation based on parts of the MacPherson report, it will be with that thought in mind and it will not be, as the hon. member for Laurier says, a subsidy to meet the last wage increase.


Lionel Chevrier: What the minister says
simply confirms the argument that I am attempting to develop. A moment ago he said the government must have a breathing space in which to think this whole matter over, but that breathing space is certainly going to last more than a couple of months. Then, I ask, meanwhile where is the money going to come from if not by way of another $1 item or another subsidy item in the supplementary estimates at the end of the session to meet this particular problem? This is a matter which the government cannot get away from. It is a matter on which parliament is entitled to have some information. It is a matter

on which absolutely no light has been thrown either by the Minister of Labour, the Minister of Transport or the Prime Minister himself. On the contrary, the statements they have made indicate quite clearly that there is going to be no policy of subsidization, although the measure now before us is subsidization for wages.


Léon Balcer: Subsidies for the shippers.


Lester Bowles Pearson: How are you going to get the money for the wages?


John Whitney Pickersgill: This is subsidization for wages.


Lionel Chevrier: I am worried about parliament. I think parliament is entitled to know. I think parliament should not be kept in the dark. I think the government should tell us, as the Prime Minister told us on November 30 what would be done; that legislation would be introduced to implement the recommendations of the royal commission, that the freight rate freeze would be lifted, and that the unions would be able to bargain with their employers, in accordance with the agreements. That is what he said. None of that is being done. It would have been much better if he had not said anything in that particular respect.
Then when he spoke on television the other night he said that the government was responsible for the settling of the strike. I do not know what the government did to settle the strike. It certainly did not take an active part in the settlement. In answer to a question which was put to him earlier, before the strike was settled, the Prime Minister made it quite clear that he had invited the parties to get together, and his reply was that the government had not been successful at that time in getting them together. That is what I am complaining about, if my hon. friend wants to know.
Before this debate is concluded I think we should get a clear indication from the minister and the government of what is going to happen. So far as the retroactive date of this legislation is concerned, I think any comment I have to make in that respect will have to await the bill. I believe it is advisable, as has been recommended, that this matter be referred to the committee on railways, canals and telegraph lines so that the trucking industry and the provinces, if they feel so disposed, can make recommendations in this respect.
I want to point particularly to two things. The first is the chaotic situation in which the transportation situation now is because of the indecision and hesitation of the government. The second is the fact that the
Freight Rates Reduction Act government did not realize that this particular act was coming to an end on April 30 of this year and took no steps to introduce this legislation until the dying days of the month of April, contrary to what was done on previous occasions when notice was given to shippers, the railways, the board of transport commissioners and the country as to what they could expect. After all, it is the board of transport commissioners that fixes the rates by order, and the board cannot make rates retroactive. As the Leader of the Opposition points out to me, it is contrary to the pledge on the part of the government. So I say that the government has failed on these two counts.


Douglas Mason Fisher: Mr. Chairman, we support this resolution as we have on the two previous occasions when similar resolutions have been before us. We will vote for it, but this does not mean that our approval is not conditioned by the view that it is a palliative and an expedient on a very short range basis. I should like to emphasize the criticisms that have just been made which it seems to me are to this effect, that this is another example of the procrastination, posturing and indefiniteness of the government with respect to its policy in the field of transportation.
The hon. member for Laurier is sceptical about the past record of the government in relation to the railways. He pointed out that before the election in March, 1958, the government put a freeze on freight rates. As the hon. member for Assiniboia has said on former occasions, this was a brave act. But once the election was over and the railways came back with a further application the freeze disappeared and we had this subsidy. I think hon. members should be aware that the subsidy is extended to the Canadian National Railways, a publicly owned organization, and to the Canadian Pacific Railway, a private organization.
The whole idea of the subsidy was conceived in those dark months in the fall of 1958 when, according to rumours, the present Minister of Veterans Affairs led a revolt in the cabinet against the whole idea of freight rate increases. There have been press reports as to what occurred. As I remember, the Prime Minister was out of the country and the then minister of public works was in charge. There was quite a little battle over the matter, and this legislation was the solution.
Apparently $20 million was all that the western members of the cabinet were able to pry out of the Minister of Finance. It was recognized by all members who followed the legislation that the subsidy was not adequate to meet the increase and was only

Freight Rates Reduction Act a partial or half-way measure. The hon. member for Laurier has indicated by quotations from what the Prime Minister has said in the past that there have been many inconsistencies in his arguments. I hate to read from old records, but there is one paragraph in the announcement made by the former minister of transport when he first introduced this legislation which I think underlines the point made by the hon. member for Laurier. As found on page 2208 of Hansard of March 24, 1959 he said:
As hon. members know, the government has indicated its intention of proceeding with a comprehensive inquiry into matters affecting the railways. The proposed legislation therefore limits the assistance to a 12-month period, when it is hoped a report will be available to the government.
I point out that this was over two years ago. This is the capacity of foresight that the government seems to have. Over two years ago the minister predicted a report in about a year's time, and the report actually appeared another year later. In other words, it took two years instead of one and we now have only part of the report. At that time the minister went on to say:
Consideration will then be given-
That is, when the report is available.
-to means of further relieving the unfair discriminatory burden of the freight rates structure.
We do not know what the steps are going to be but it is quite apparent that we are not going. to get this legislation this session unless we work all through the summer and have a fall session. I have indicated previously that I feel we are on the eve of a general election. It seems to me that this kind of part-way measure is just a means of clearing the way for a general election without really revealing the government's policy. I should like the minister to tell us whether they feel it is possible for them to go ahead on the freight rates matter with only one volume of the MacPherson commission report. If it is not, when do they feel they can act to rationalize or equalize the whole freight rates question? One cannot help but be cynical or sceptical of their record in view of the way they have diddled and dawdled along with the transportation question.
The matter of the strike that was averted by the settlement between the railways and the unions a few weeks ago is another very good indicator of how the government has procrastinated with regard to the transportation problem. We were glad to see a settlement, but we are left with unanswered questions which it seems to me will be still floating around during a general election.


From the reaction of railway employees I know that the heat is off now and their sensitivity is sinking. It is much less keen that it was a month ago and, politically speaking, this is an ideal situation for the government in relation to an election.
However, the settlement does not really answer the problem that other speakers have brought up; where is the money coming from for the raise? It is not going to come from this legislation, because this is just a partial palliative; and since the railways have only signed a two year contract with the unions and since the contract runs out at the end of this year, we are going to be involved next year again in the same dreary round of conciliation boards, high cost reports and analyses and frustration on the part of everyone in relation to the railway problem.
I could point out to the minister, for example, that the Canadian National and Canadian Pacific got together and approached the Woods Gordon Company. This company turned out a rather extensive report, which I have read, which would supply the railways with a standard approach to entering into wage negotiations. The minister knows, if he has read the Milvain report, Judge Milvain really threw that extensive report right out the window. I hear now through the grapevine that the railways are right back with Woods Gordon again. They have assigned this organization to do another study in the same field. This is an example of the continual frustration and expense that is involved when you do not have a clear transportation pattern or picture presented to you by the government.
The general satisfaction that is felt in most parts of the country over the fact the royal commission report is now available must be tempered by the fact we have had no real indication from the government as to its response to these recommendations. The response of the country as a whole has been generally favourable, except perhaps in western Canada where there are still some very vivid criticisms of the recommendations in relation to the grain rates. Here again, as every member from the west knows, the Crowsnest pass rate is a fundamental political issue in western Canada. This is a bread and butter issue, and it seems to me that the government has moved itself into a situation where it has not answered the question of what is involved in the report on the Crowsnest pass rates. The government has not indicated what it is going to do about this recommendation. Consequently, the whole election in western Canada is going to be fought in a bit of a vacuum or will be surrounded by mystery.

I saw an excellent editorial in the Manitoba Co-Operator for April 29 of this year dealing with the transportation commission. The editorial stresses that the western farmer must take a new look at the recommendations, not only in relation to the subsidy for grain rates but also the matter of passenger service abandonment and branch line abandonment. The Co-Operator stressed the dissenting report of Mr. Gobeil and said it made very good sense to them. He raised a fundamental question about the Crowsnest pass rates which should be answered. The keynote here which I bring to the attention of the minister is that in western Canada the royal commission report has not removed the suspicions with which the people look at the Canadian Pacific Railway. I hope the minister has noted what the commissioners say about the Canadian Pacific Railway's case in connection with the grain issue. Certainly, the Canadian Pacific did not prove that they suffered a tremendous loss through the carriage of grain. I am sure western Canadian members will have some views to express on this question. I am not asking on their behalf but on behalf of this group for a statement from the minister regarding the government's position in so far as the commission's recommendations with regard to the Canadian Pacific Railway are concerned.
There is one question that I think troubles many members and has been troubling them for a long time. The Canadian Pacific Railway pension situation is not nearly as attractive or decent in relation to former employees as is that of the Canadian National Railways. On a previous occasion the Prime Minister indicated that our committee on railways was going to go into this whole pension matter. I imagine all members have received representations from the various organizations representing borth former Canadian National and Canadian Pacific employees. You might ask, Mr. Chairman, what relevance this has to this measure. Previously, we have had a very wide ranging debate on such measures, and I should like to suggest it is time we asked the government what it intends to do to bring the Canadian Pacific into line on this pension issue. It is worth while to ask this question because this measure we are discussing relates to a subsidy not only for the shippers but also for the Canadian Pacific Railway.
There is one other factor with which I wish the minister to deal at this time. The hon. member for Humboldt-Melfort has a bill on the order paper for the purpose of bringing rapeseed within the meaning of the term "grain", in order that it can gain the advantage of certain rates. Since I have been a member of the house, this issue has been
Freight Rates Reduction Act brought up every year by the representatives from that particular region. It seems to me that this is another part of the transportation picture to which we should have an answer at this stage. Why is it the government does not feel it can give this particular product the benefits of the subsidies that are now in existence in so far as freight rates are concerned? The debate on this measure, Mr. Chairman, will probably be a relatively short one. I ask the minister if, before it concludes, he could not give us some kind of projected schedule as to when we will get legislation that represents conclusions drawn from this MacPherson report. I should like him to be as frank and as candid as he possibly can because the whole matter of the wage increases that will be sought fairly soon, we can be sure, by the railway unions-perhaps toward the end of this year-will result again in a climate of dissent and disagreement, and a feeling of uneasiness will again be abroad in the country. This may be done after a general election has taken place, but it seems to me that an honest government would do its best to lay its cards on the table before we have an election.


Walter Clarence Henderson: Would you say this was not an honest government?


Douglas Mason Fisher: I did not say that at all. I just said that I thought an honest government would lay its cards on the table before it went to the people on an issue as big as this which affects as much of the country as this does. We have been very much disturbed by this whole freight rate question. The region I represent, the bridge region, has been up in the air. This region made very strong representations to the MacPherson commission. We know that the prairie provinces spent thousands and thousands of dollars for counsel and presentations to the commission. British Columbia is vitally involved. Their member of this commission entered a dissenting report. We feel that in this kind of situation the honest government is the government that puts its cards on the table so that we know what it plans to do and when it plans to do it.
One aspect of this question was brought up by the hon. member for Laurier. He asked where the money is coming from to pay the wage increases. Is there going to be a later subsidy? As I indicated, this measure is only a palliative.
In reply to the hon. member for Cariboo, I would say that I would not go around labeling any government either honest or dishonest except in a specific situation. Surely, this is a specific situation that calls for honesty. All I can point out is that the transport minister, when he first introduced this legislation, was
4824	HOUSE OF
Freight Rates Reduction Act mistaken in his estimate as to how long it was going to take and what was going to flow from the government's policy. I think if the hon. member checks Hansard he will find this government said it expected to be able to act in one year. Instead, we have had one postponement and then another postponement. Here we are, over two years later, and we still are not in a position to know the policy or direction in which we are going. This is not an accusation of dishonesty, it is an accusation of procrastination and indecisiveness, of not being able to really plan the legislative future. I do not see how the hon. member could disagree with this analysis, even if he does support the government. If he wants to make the kind of contribution he can make perhaps more effectively in the caucus than here, I suggest that he along with other members keep pressing in caucus for the transportation policy of this government. I refer to the policy that it hopes to take to the people and not this short range palliative.


Mr. Granger:: I should like to say a few words while this resolution is being debated. Freight rates have an important bearing upon the cost of living and the conduct of business in Newfoundland and, in fact, in all the Atlantic provinces. We are a considerable distance away from the industrial centre of Canada. As I have pointed out previously, we in Newfoundland import practically everything we use, everything we wear and most of what we eat. Freight rates are therefore of vital importance to those of us who live in Newfoundland and in the Atlantic provinces; and any statements made with regard to freight rates or any legislation passed in relation thereto must command our intense interest. Our economy depends, to perhaps a greater extent than that of any other part of Canada, on the cost of moving goods.
I should like to call attention to an advertisement which must have been very appealing at the time it appeared because of the interest taken in this matter by the part of Canada from which I come. I refer to an advertisement which appeared in the Halifax Chronicle-Herald of June 8, 1957. The advertisement was appropriately edged in black and blue and it urged maritimers to vote Progressive Conservative. It contained this pledge:
We are committed to the original pledge given to our people at the time of confederation that freight rates would be adjusted and transportation facilities would be provided so that our geographic position would not prejudice our producers in having reasonable access to the markets of Canada.
That was a noble sentiment and it no doubt affected advantageously the political fortunes of some hon. members. But what in fact happened? What happened was this, if I may


make a brief resume of subsequent events. The board of transport commissioners allowed or approved an increase of 17 per cent. In 1959, parliament cut this figure down to 10 per cent and later, in the next year, cut it to 8 per cent, paying the difference between that figure and 17 per cent. I suppose the idea now, if my understanding of it is correct, is that parliament will approve the payment of the difference to the railways so that they will still get 17 per cent in order to meet their wage bills.
Be that as it may, the cost of transportation is still up and it bears very heavily on a section of Canada which is least able to pay high costs. By virtue of our geographic position on the eastern seaboard there is a longer haul to get vital supplies in, the goods manufactured in central Canada, the things that are used in normal daily existence, as I mentioned previously, such as food, clothing and so on. These things have to be brought in to Newfoundland from various parts of Canada. They have to be loaded at the port of North Sydney, unloaded at Port aux Basques and loaded on railway cars or perhaps loaded on ships for various ports and unloaded again. Any way you look at it, the cost of transportation is bound to be high unless effect is given to this principle which appears in the advertisement I mentioned and which reads:
-freight rates would be adjusted and transportation facilities would be provided so that our geographic position would not prejudice our producers-
And so on. It would appear from the record that this has not been done and that the Atlantic provinces still suffer from freight rates which are too high and which bear unequally on a part of Canada which provides an important market for the rest of Canada.


Mr. Phillips:: How did that situation occur?


Charles Ronald McKay Granger: I beg the hon. member's pardon? How did what situation occur?


Orville H. Phillips: How did discrimination in freight rates occur?


Charles Ronald McKay Granger: All I have to say in answer to that question is this. The discrimination has not been removed in accordance with the pledge of the party of the hon. member; and the fact is that a part of Canada which is important economically to the rest of Canada has its own purchasing power reduced and its economic expansion curtailed because of a freight rate scale which is too high. I would ask the minister to keep this matter in mind and to remember that there is real advantage in a policy such as this, to quote again from the pledge:

-that freight rates would be adjusted and transportation facilities would be provided so that our geographic position would not prejudice our producers in having reasonable access to the markets of Canada.


Lester Bowles Pearson: I do not wish to prolong this discussion as there will be an opportunity to speak again when the bill founded on this resolution is introduced. At that time we shall be able to make our position known with regard to the details of the legislation which is now contemplated. However, in view of the minister's introduction of this resolution and the importance of the principle involved in it, I wish to say something at this time.
In the first place I should like to reiterate and emphasize what my friend the hon. member for Laurier said a few moments ago, namely that when the Prime Minister and the present government took office in 1957 they were pledged to the elimination of horizontal freight rate increases. There can be no doubt about that pledge. At that time the Prime Minister made it perfectly clear that he would stop all these inequitable freight rate increases and would bring in an alternative policy which would be far more effective in dealing with the problem than the device of horizontal increases.
We soon learned what this pledge meant. The threat of the strike in 1958 made that matter perfectly clear; the fact that there would be no such long range policy introduced. On November 27, 1958, the government provided for a horizontal increase of 17 per cent with a view no doubt to preventing the strike. Our position as a party at that time was made perfectly clear in a statement then released and I do not wish to repeat it now. It may be necessary to put it on the record later. This increase was compensated, in part, by legislation reaffirming and introducing again the principle of subsidies, which brought down the impact of the increase by, I think it was 9 per cent. But it left the principle itself intact.
That legislation has been renewed. We are now being asked to renew it again. As my hon. friend from Port Arthur pointed out, this is itself proof that the government in the years since has had no long range policy to put before the house in respect of this important matter.
Of course, the minister will say, "Oh, well, we set up a royal commission to deal with this matter", and the recommendations of this royal commission will no doubt in due course be implemented. I think we were told in the house the other day that it is the intention of the government to implement them in part-at least in part.
However, it is quite clear that whatever may be the intentions of the government 90205-6-305
Freight Rates Reduction Act with regard to the recommendations of this particular royal commission, those intentions cannot be carried out to deal with the present situation in which the railways now find themselves, having a few days ago accepted the recommendations of the conciliation board in regard to wage increases.
We have been asking the minister how the railways are going to meet this new obligation which they told us through the government last November and December they could not possibly meet, that they were not in a position to meet. The minister says, "Oh, these recommendations will in due course put the railways on their feet. They will make possible improvements in railway management. Operations will be more economical and they will be able to get out of some uneconomic activities. As a result of this they will be in a better position to raise wages to the level which is demanded".
But this is not going to help the railways meet this particular demand which they have accepted. As a result of their acceptance a strike was prevented in May on exactly the same basis as we suggested last November it should be prevented. Therefore we ask the minister, when he winds up this discussion, to tell us how the railways are going to do now, in respect of this matter, something they found it quite impossible to do last December.
Last November and December when this matter was being debated, spokesmen for the government, the Prime Minister and the Minister of Labour, made it quite clear that the attitude would be that taken by the Acting Prime Minister, in 1958 I think it was; that subsidies would not be resorted to as a way out of these difficulties. This was still going to be the decision of the government-no subsidies. We need not put anything more on the record on that score.
The minister now says, "Subsidies specifically tied in to wage increases are one thing, but subsidies for something else as recommended in a royal commission report are different". But a subsidy used by the railway for one purpose can help that same railway in some other respect; in connection with wage increases or anything else, because it is quite clear that if you help the railway in one direction you will help it in another.
The government's position is that the railways should not be assisted through subsidy but that wage increases-and I want to be fair to the minister in this-should be made possible, when desirable, by the removal of discriminatory freight rates. That was the position taken, we know, by the government in November and December. But having taken that position, the Prime Minister said this would be done through the royal commission
4826	HOUSE OF
Freight Rates Reduction Act in time to be effective before the strike deadline of May 15. There can be no doubt about that, and there is no use of the minister or anybody else trying to tell the committee that what the Prime Minister had in mind was that ultimately these things would be corrected, discriminations would be removed and everything would be all right in the future.
I say this because the Prime Minister's words are so clear that there can be no reason for any misunderstanding. I am going to read them. At page 359 of Hansard of November 30, 1960, the Prime Minister is reported as having said:
The reason we say we are waiting for the report of the royal commission is this. It will make its report as to the means whereby these discriminatory rates may he avoided. Legislation will then be introduced in order to equalize opportunity across Canada.
All this would be done to avoid a railway strike. Then the Prime Minister went on:
The companies may then make an application to the hoard of transport commissioners to raise the freight rates and to take into consideration the agreements now in existence between the employers and the unions back to January 1, 1960.
If that were not clear enough, the Prime Minister repeated it on December 1 at page 370 of Hansard. This time he put the date in at which these things would be done, he said, "By next May 15-". Not May 15, 1962, 1963 or whenever the royal commission will have completed all its work, but he said:
By next May 15, without the sacrifice of anything except a postponement, every railway employee will be in a position through his bargaining agent to come to an agreement with the railway company. The railway company will be able to apply to the board of transport commissioners. The freeze will be lifted and the Canadian people, in the normal run of events, will then have to pay extra freight rates in order to meet the increased wage levels, just as they have to pay to meet all other types and varieties of expenditure.
So I ask the minister, when he replies, to tell us whether this is the situation now? Of course it is not; it has not been so. The strike was prevented, but not on the basis stated by the Prime Minister in those two excerpts from Hansard which I have just read. There can be no doubt about that.
Something else has happened. A great mystery has developed as to how this was done, and perhaps the minister will enlighten us in due course as to that mystery and what has been done to make it possible for the railways to do in May what they said they could not do in December. Perhaps the government is going to put a $1 item in the supplementary estimates which will make it easier.
There is something else which certainly should be brought to the attention of this committee. I regret doing this while the


Prime Minister is not here, because it is a report in the press which refers directly to a statement made by the Prime Minister. However, it is a statement to which a good deal of attention has been given and which has not been corrected, so far as I know.
It deals with the resolution which was put on the order paper-the resolution which we are now discussing-and more particularly in regard to the retroactivity of the legislation which was required because of the carelessness of the government in not bringing in this legislation before April 30.
There is a Canadian Press story about this dated April 25 and I quote from it:
Prime Minister Diefenbaker said Friday-
This was not in the house, but outside, I believe:
-legislation to extend the $20 million a year rollback subsidy on freight rates will be made retroactive to May 1 when it is passed by parliament.
It is obvious that this has to be done because it was not brought in when it should have been. Then the story goes on:
Present legislation authorizing the subsidy, under which the federal treasury has put up $35 million in the last 21 months to counteract a 17 per cent freight rate increase granted in 1958, expires Sunday night.
That is the $35 million to take the place of this long range policy that the Prime Minister was going to introduce in 1957. Then the story goes on, and this is the important and astonishing part of it. It is almost impossible to believe that this is accurate. Here it is, however:
Mr. Diefenbaker was asked whether it would be necessary for parb'ament to act on the extension today in order to assure there is no lapse.
He said the government notice given the commons earlier this week would act in the same way as a budget proposal which becomes effective when it is announced, subject to later parliamentary approval.
I should be glad to hear the minister answer that statement which is attributed to the Prime Minister and not changed or corrected since that time; which lays down the incredible doctrine that legislation of this kind, which is to be made retroactive, because it is the same as a budget resolution, becomes automatically retroactive, when it is passed, to the date the resolution was put on the order paper. This is something entirely new to constitutional law and parliamentary practice. To give the impression, through a story of that kind in the Canadian press, that whether we bring this legislation in after April 30 or not, when the legislation is passed it becomes retroactive in the same form as a budget resolution, to the date of its introduction, is, to use the politest words I can find,

misleading to anyone who reads the story. I would be very glad indeed to have the minister deal with this particular aspect of this particular resolution.
As I have said, Mr. Chairman, when the resolution is passed and the legislation is before the house, we will all have an opportunity to give it the kind of examination it deserves. Meanwhile, we have the right and duty at this time to express our disappointment, in and condemnation of, the government for, in May, 1961, introducing legislation to carry on for another year, or whatever term it may be, a policy which the government itself said in 1957 was wrong and would be changed if it were given the opportunity to make the change.


Herbert Wilfred Herridge: Mr. Chairman, I should like to speak very briefly in respect of this legislation, and I take this opportunity of doing so because this resolution provides for the continuance of subsidies.
I rise now to speak very briefly in respect of two matters which are of importance to many individuals in British Columbia; first, having regard to the injustice suffered by certain pensioners of the Canadian Pacific Railway who were retired prior to January 1, 1953. This matter has been brought before the house repeatedly by members of this group, as well as other members of the house, and the situation has been fully explained. I do not at this time intend to take up the time of the committee by going into detail. Suffice it to say that regardless of the concern of members of this house, and representations made in this house, as well as the indication on different occasions that the minister would look into the matter, to date no action has been taken to remedy this situation.
During the debate regarding the postponement of the strike which threatened to occur on September 1, 1960, this matter was again brought to the attention of the Prime Minister who promised at that time that a special committee would be set up to deal with this question and to hear directly from the workers concerned in an attempt to find a solution to the problem. So far as I know there has been no action taken to date in respect of that promise.
The hon. member for Port Arthur raised this question on that occasion in his usual eloquent, inspiring and informative manner, but I should like to take the opportunity again of raising this point, because it is a matter of great concern, and because we are dealing with the question of subsidies to railways, paid for by the people of Canada through the government of Canada which has a responsibility to take action to correct this injustice which the pensioners have suffered.
90205-6-305J
Freight Rates Reduction Act I trust that the minister will inform the committee whether any consideration has been given to the problem that is of concern to the workers involved so that they may appear personally, or by representation, before a special committee to explain the circumstances of their problem.
Having made those few remarks regarding this matter, I should now like to raise, as I have done on a number of other occasions, the question of equalizing freight rates. I am prompted to do so by a letter dated April 24, 1961 I received from a Mr. C. W. Brazier, who was counsel to the province of British Columbia in respect of freight rates matters. I should like to quote portions of this letter. Mr. Brazier writes as follows:
Ee: Royal Commission on Transportation.
In line with the policy of keeping the members of parliament from British Columbia informed as to the position of the provincial government on transportation matters, I would like to comment briefly on volume 1 of the report of the royal commission on transportation which was released on April 10, 1961.
I presume that this committee will give some consideration to this report at a later time. Mr. Brazier goes on to say:
First of all I must state that the provincial government is gratified at the over-all approach of the report to the railway problem. I believe the commission has placed the problem in its proper context-"the unequal impact of competition across the nation," the inequities arising therefrom, "the inability of the railways to adjust to competition because of the yoke of organization, plant and service suited to another age," all aggravated by burdens imposed by public policy and the reluctance of railway management to accept new concepts demanded by new conditions.
I think that is a very fair and reasonable observation with respect to volume 1 of the royal commission's report. The letter goes on as follows:
It is my opinion that the analyses of the issues made by the commission are fundamentally sound-
Perhaps I should point out that I know Mr. Brazier very well, indeed. As a matter of fact, he was a partner of mine in business, and I say that in rather a subdued voice. He writes as follows:
It is my opinion that the analyses of the issues made by the commission are fundamentally sound and that the measures proposed to overcome the problems are timely, constructed and geared to present and future needs of the railways and the nation.
I am very glad to see that Mr. Brazier takes that point of view after making a study of the report, with a great deal of experience in freight rates questions, and as representative of the government of British Columbia for a number of years.
He then goes on to say:
It is gratifying to note that the basic position of the province of British Columbia advanced in two briefs-

Freight Rates Reduction Act I have a copy here. Then he goes on as follows:
-and the final argument (of which all members of the House of Commons have copies) has been sustained in the report of the commission.
I am very pleased to see that the royal commission has paid attention to the representations and the representatives of the government of British Columbia in respect of this question. Mr. Brazier goes on in his letter to say:
Without detracting in any way from the importance of volume 1 of the report, I would like to raise one or two points of concern. It is not clear what position the commission has taken with respect to the $20 million "rollback" subsidy provided for by the Freight Rates Reduction Act, except to indicate that the removal of certain public obligations will relieve the exposed shipper from some pressure for increases in rates.
I presume that the minister will, in his reply, deal with the query contained in that paragraph in respect of the $20 million rollback. The letter then goes on:
While I am of the opinion that subsidies of a general nature such as provided for by the Freight Rates Reduction Act should be made available to all modes of transportation, the legislation itself was a clear cut recognition of the plight of the "captive" railway shipper. It is quite natural that the fate of the "rollback" subsidy which is due to expire on April 30 is of great concern to the province of British Columbia. It is my opinion that this subsidy should be continued until alternative legislation is passed to serve the same function.
I should suggest also that this is of particular importance to the lumber industry of British Columbia and, on that account, we are very glad to see this legislation. Mr. Brazier then goes on to say:
Another problem of great interest to British Columbia and the Peace river district of Alberta is the application of subsidies to the Pacific Great Eastern Railway. Shippers on the P.G.E. have not shared directly in the Freight Rates Reduction Act and have thus been discriminated against in so far as normally rated traffic is concerned. Any reduction in rate due to competition with other railways has been absorbed by the P.G.E.
I should like the minister to comment in regard to that statement made by Mr. Brazier when the minister is concluding the debate on this resolution. Mr. Brazier then goes on to say:
It is important for me to point out that while the P.G.E. has no branch line problem it still has to maintain a passenger service and to move export grain at the low export rates. As the national railway plant is rationalized in line with the recommendations of the commission more grain will be shipped on the P.G.E. from Alberta as this will be the cheapest and shortest haul. I feel that this is a problem which deserves your close attention.
I should like the minister to comment on the points made in this letter when he concludes this debate.

I have one other matter to bring to the attention of the committee, Mr. Chairman, and on which to express my opinion. I refer to the responsibility of the railways so far as the general public is concerned. What I have in mind is the reduction of passenger service on the Kettle valley railway by the Canadian Pacific Railway Company to which reduction people in my constituency and in east Kootenay as well object very much. I cannot see why those people are denied this opportunity. They are not asking for very much. They are simply asking for daily service with the present Budd car plus a combination cafe and sleeping car so that persons who wish to take a berth or a bedroom when going to the coast or returning would have that opportunity and an opportunity to sleep in a decent and civilized manner.
I cannot see why the railroad divorces its freight earnings from its passenger earnings. That section of the railroad is very profitable to the Canadian Pacific Railway Company and yet they insist on this reduction of passenger service on the excuse that it does not pay. Perhaps the passenger service does not pay but the freight service certainly does and the people of my constituency, including chambers of commerce, trade unions, farm organizations and other people believe that the earnings of the railway, both freight and passenger, should be considered in the interests of the communities. In addition to that, the most profitable investment the Canadian Pacific Railway Company ever made, the Consolidated Mining and Smelting Company, is in this area. This is where it makes a considerable portion of its profits and yet the railroad insists on divorcing its railroad activities from its .other activities. We are of the opinion they should all be considered together. Whatever the opinion may be in that respect, the people I represent, and I am speaking very largely for the population, believe that, in view of the freight earnings in the district, in view of the interest of the Canadian Pacific in the district, there should be at least a daily service from Vancouver to Lethbridge over the Kettle valley and a combination cafe and sleeping car attached to the present Budd car. This is not asking very much when one considers the wealth that is produced in that area and the profits that go to the Canadian Pacific as a result of industrial activity in that area.
In the present circumstances we believe that the company is not accepting its responsibilities to the area concerned. In view of the fact that this government under this legislation and other legislation, and indirectly the people of Canada, are subsidizing this and other operations of this company,

we do urge that the government do everything possible to see that this situation is remedied.


Mr. Badanai:: Mr. Chairman, my purpose in rising to participate in this debate is to try to strike a blow for northwestern Ontario in its fight against freight rate discrimination. I cannot help but sound a note of disappointment at the government's failure to introduce this legislation sooner. We are led to believe that we are now on the last lap of this session, and if we are to end it around the end of June, then not much time remains to give proper consideration to matters of such great importance as our railways and freight rates.
The level of the freight rate structure brought about by the successive increases implemented during the post-war years has commanded increasing attention during the past year. The Freight Rates Reduction Act provided for a subsidy not exceeding $20 million for one year only, to reduce the burden of the 17 per cent increase in freight rates which the board authorized to become effective on December 1, 1958. On July 10, 1959, the board issued a further order substituting an increase of 10 per cent for the 17 per cent and directed that the adjusted rates be not increased for one year unless otherwise permitted by the board. At the time the legislation was passed the Prime Minister announced the appointment of a royal commission on transportation and the Minister of Transport stated that the government would not permit any further general increase in freight rates for an indefinite period, ostensibly pending the report of the royal commission.
I would imagine that the royal commission on transportation report of 92 pages has been and is being scrutinized by the government. It is an important report and one which requires many hours of close study because the recommendations contained therein are of such a nature that they could easily affect every facet of our economy. The report comprises 92 pages of technical data, and it includes also a minority report, mostly concerned with details of the Crowsnest rates on exports of grain. These Crowsnest rates are one of the biggest items within which a substantial area of disagreement may be found.
I am not at all sure that the continuation of these abnormally low rates, in the light of present day costs which are conservatively 10 times higher than they were when these rates were set, are justified. However, Mr. Chairman, I do not propose to develop an argument against them at this time. All I say is that this feature should be a matter deserving deep study.
There is the problem of regional freight rates, and the regional freight rates structures
Freight Rates Reduction Act with respect to which some sections of the country, such as northwestern Ontario as an example, have borne the brunt of discrimination for years. This should be one of the first matters to be considered when freight rates adjustments are made. I think it should be one of the duties of the government to bring forth a recommendation which will end such rank discrimination once and for all.
At page 29 of the report there is reference to the limitation of regulations consistent with public interest and fair treatment in all ways to all carriers.
At page 71 of the same report there is a statement on increases of rates to the effect that no one can or should guarantee that the revenue of any competitive business will be adequate. This is just as true of competitive transportation as of any other business.
Incidentally, the predecessor of the present Minister of Transport as reported at page 2208 of Hansard of 1959 had this to say in answer to a question:
Consideration will then be given to means of further relieving the unfair discriminatory burden of the freight rate structure. In the meantime the government does not propose to permit any further general increase in railway freight rates.
In that statement he definitely said that discrimination would be done away with and that a new era would come upon us so far as railway freight rates are concerned. The royal commission report has now been in the hands of the government for several months and we are awaiting the results of its study.


Léon Balcer: On a point of order, the report has not been in the hands of the government for many months. I would not like hon. members to be under that impression. We just received it.


Lionel Chevrier: It has certainly been there for weeks.


Edmund Davie Fulton: There is quite a difference, is there not?


John Whitney Pickersgill: More than a month, anyway.


An hon. Member:: The usual state of Liberal accuracy.


Paul Theodore Hellyer: It would not make any difference to this government.


John Whitney Pickersgill: The Prime Minister promised it would be there before the 31st of March.


Léon Balcer: It was a free commission. It was not run by the government.


Hubert Badanai: I accept the minister's correction. If he says it is only several weeks I will accept his statement. I was under the

Freight Rates Reduction Act impression it was longer. However, I may be wrong. In any event, we are now waiting lor the results, what the government will recommend and what it will not. In the meantime, and ever since the appointment of the commission over a year ago, freight rates have been in a freeze.
On numerous occasions, and more recently when the case of northwestern Ontario for more equitable rates based on common sense was presented to the royal commission sitting in the court house of the city of Port Arthur, we have pointed out that increases amounting to 157 per cent have been awarded the railways during the past 11 years and the result in high cost of freight has meant the loss of business and the discouragement of business in this area of Ontario. For the benefit of those who wonder why one section of Ontario protests high freight rates that are accepted in another section of the province of Ontario, the reason is that southern Ontario does not have to pay for the long haul around the great lakes. In this respect northwestern Ontario's position is more comparable with that of the prairie provinces where virtually all freight is long haul business.
Mr. Neil Edmenstone, vice president of Steep Rock iron mines, speaking before a chamber of commerce meeting at Fort William on March 22, 1961, had this to say:
We need freight rates that make economic sense to this area which will permit us to thrive and compete while permitting the railways to do the same. If the railways won't do it, then the government must act to do it. There are policies being mooted which would stop dead in its tracks the biggest development northwestern Ontario has ever had or may have for a long time to come.
The Prime Minister, speaking at Fredericton last December, made the statement that the government was against the railroads meeting union wage demands by increasing freight rates, and he went on to say:
We acted in the continuation of the operations of the railways without unfairness or injustice. Additional time was provided by the government's action to enable the royal commission to bring about equalization of opportunity everywhere in Canada.
Further on he added this significant statement:
To have allowed the railways to increase freight rates on a horizontal basis would have been to increase discrimination rates that now exist which deny the Atlantic provinces the possibility of expansion.
That is precisely the problem of northwestern Ontario. The situation there parallels that of the maritimes. I wish to cite several examples to show how this discrimination works to the detriment not only of the manufacturers but also the consumers. On a 30,000-pound car of canned foods from Chatham,
iMr. Badanai.]
Ontario, winter freight rates are as follows and, incidentally, they do not include heating charges: Chatham to Marathon or Geraldton, a distance of 783 miles, $1.57 per 100 pounds. The distance from Chatham to Fort William or Porth Arthur is 981 miles and the rate is $1.57 per 100 pounds. From Chatham to Atikokan, Ontario, the distance is 1,056 miles and the rate is $1.90 per 100 pounds. From Chatham to Winnipeg the distance is 1,400 miles and the rate is $1.65 per 100 pounds. You will notice the difference there. From Chatham to Atikokan the charge is $1.90 per 100 pounds for a distance of 1,056 miles and from Chatham to Winnipeg, a distance of 1,400 miles, or 344 miles farther, the rate is $1.65, which is much lower on a longer haul.
From Chatham to Regina, a distance of 1,756 miles, the rate is $3.01 per 100 pounds. From Chatham to Vancouver, a distance of 2,864 miles, the rate is $1.80 per 100 pounds. In other words, it costs less to send 100 pounds of canned goods from Chatham, Ontario, to Vancouver than it does to send 100 pounds of the same canned goods from Chatham to Atikokan although the mileage in the latter case is only a little more than one third.
If cars of canned goods roll to the lakehead for distribution and are hauled back to Geraldton or Marathon there is a further charge of $1.37 per 100 pounds for this 200-mile haul. This means that it actually costs 85 cents to freight one case of 24-15 ounce tins weighing 29 pounds from the canning plant to Marathon or Geraldton and this 85 cents represents a further cost of 32 per cent.
To take another example, one case of corn containing 24-15 ounce tins and costing $2.60 f.o.b. factory would cost $3.45 per case f.o.b. Geraldton or Marathon. Whereas a retailer will sell this corn in Chatham to the consuming public at two tins for 27 cents his counterpart in Marathon or Geraldton 783 miles away would of necessity have to sell it at two tins for 35 cents. These examples, and I could cite others, will suffice to indicate the discrepancies in these rates. These examples only show the vicious impact on the cost of living in northwestern Ontario which by no stretch of the imagination can be condoned any longer. The freight rate on a basic commodity such as wheat, which is subject to world market competition, could not be related in any way to the domestic market. Internal freight rates agreements should be made to enable the transportation companies to assess their rightful tariff, and then every section of Canada will carry its proper share of the load. The establishment of a fair freight rate structure for northwestern Ontario in general, and the lakehead area in

particular, is the key to the development and prosperity of this often forgotten but very important section of the province of Ontario.
This committee will recall, Mr. Chairman, the removal to Montreal of the passenger bus manufacturing facilities from the Canadian Car plant at Fort William. This was not caused by competition from General Motors, as was suggested by the hon. member for Port Arthur a few weeks ago but rather came about because of freight rate inequalities. We do not yet have the advantage of numerous adequate highways which would allow many of our important industries to obtain competitive rates. In addition, there are not too many examples of agreed rates in this territory. Horizontal freight rate increases have a harsher effect upon northwestern Ontario than is generally the case in many other parts of Canada. These conditions have meant that our small businesses, forced to use class rates extensively, bear an increasingly large percentage of the burden. Our people also bear this burden because everyone, directly or indirectly, pays freight rates which often amount to more annually than one's tax bill. We know two things about our present economy. It is distinguished by higher than average costs and higher than average unemployment. Each of these aspects is related, and both are related to high freight costs.
The rate structure as a whole is very sensitive to changes, and often a seemingly realistic adjustment can boomerang in the most unexpected place and manner. For example, the removal of the mountain differential looked good to British Columbia. However, it resulted in the cancellation of some reasonable commodity rates on British Columbia lumber to the Canadian lakehead, and raised that rate by 19 cents per 100 pounds. This was the start of conditions about which our industry has complained so bitterly. Our lumber and wood operators believe they can prove that the present rate structure is out of line with the development of their businesses and the development of the community.
The lakehead cities of Fort William and Port Arthur are situated in what has come to be called northwestern Ontario. In terms of railway mileage, these cities are 419 miles from Winnipeg, 551 miles from Sudbury and 810 miles from Toronto. This huge region, over 225,000 square miles in area, is crossed by the transcontinental line of Canadian National in its north centre, by the Canadian Pacific in its south centre, and by a line of Canadian National along its southern edge west of the lakehead. In freight rate terms, the western region begins at Fort William and at Armstrong to the north on the Canadian
Freight Rates Reduction Act National. Traditionally the lakehead cities have been the gateway to the west. Aside from this transportation aspect of our economy, the region's main industries and activities centre on the forests and the mines. The products are largely pulpwood, lumber, plywood, paper and poles, iron ore and base metals. Northwestern Ontario's case relating to freight rates stems from the effects of horizontal increases since 1948. These increases, as I have already pointed out, have amounted to 157 per cent. The cumulative effect of these increases has worked to the marked disadvantage of our territory where long distances make for high freight costs, inordinately increased by the percentage basis.
We are submitting to the government the importance of adjustments in these rates. As I have pointed out, this region has been more or less neglected for the past several years. I trust that the minister will have some answers to these questions when he sums up at the end of this debate, and that he will give some thought to the case of northwestern Ontario, a region which I am representing here at least in part because my own constituency is largely dependent upon industries which are seriously affected by freight rates.


John Whitney Pickersgill: Mr. Chairman, I do not intend to repeat the points that have already been made by the hon. member for Laurier and the Leader of the Opposition. I do intend, in somewhat different language and for the sake of emphasis, to repeat a point that was made by the hon. member for Grand Falls-White Bay-Labrador.
First, I want to say something directly about the measure that is before us in view of the interjections that were made by the Minister of Labour and the Minister of Transport earlier this afternoon. The government did not see fit to bring the measure before parliament before it came into effect. These ministers say that what we are being asked to vote now, this $20 million for the year beginning May 1, is not a subsidy to support wages. This, of course, is just a fiction. Everybody knows that the 17 per cent freight rate increase was made in 1958 to meet the increase in wages. Everybody knows that the government allowed the 17 per cent increase to come into effect, and then decided that the shippers would pay part of it and the taxpayers would pay the rest of it. This is what happened. If one calls that a subsidy for some purpose other than for wages, one is just playing with words. It is true it is not a direct subsidy for wages but it is subsidy which is paid because wages went up. In consequence of wages going up, the board of transport commissioners allowed freight rates to

Freight Rates Reduction Act go up horizontally, notwithstanding the fact the Prime Minister promised in 1957 that we would have no more horizontal increases if the people voted for him. This was just another of those promises about which we have heard so much, but not recently, and about which hon. gentlemen opposite hate to be reminded.
The fact of the matter is that we should call a spade a spade. The government should not pretend things are not what they are because the government is not fooling anybody. This $20 million is a straight subsidy resulting from a freight rate increase which resulted from a wage increase. In other words, it is a subsidy for a wage increase. Why it was all right to provide a subsidy in respect of this matter, and why it became suddenly so wicked last November and December, it is rather difficult for people whose minds move reasonably logically to understand.
Having said that, Mr. Chairman, may I say that I think we also ought to remember that this legislation has been brought in because of another promise which was made by the Prime Minister and which he was unable or unwilling to keep. As the Leader of the Opposition pointed out following the hon. member for Laurier, the Prime Minister last November promised that a solution of this problem would be found; he promised that there would be no wage subsidy and that a solution would be found by the Mac-Pherson commission which would enable the railway labour dispute which could not be settled last December, to be settled before May 15. The Prime Minister also promised that he would bring in legislation to create conditions that would make that settlement possible. There has been no legislation. There has been no change whatsoever from the situation with which we were faced last November and December.


An hon. Member:: The strike has been settled.


John Whitney Pickersgill: There never was a strike. I might say to the hon. gentleman that there never was a strike to settle. Last November the government brought in legislation to compel the men to go on working. That is why there was not a strike last December. There has not been a strike this May because the railways decided in May to accept the precise terms which the Liberal party in November said it would recommend, namely the recommendations of the Milvain report.


Léon Balcer: And compulsory arbitration.


John Whitney Pickersgill: If nothing else was changed, and if no solution was offered by the Mac-Pherson report, why were the railways able to accede in May of this year-as the Leader

of the Opposition asked a few moments ago -to what they said it was impossible to accede to last December? The Prime Minister told us in December about a solution which was up Mr. MacPherson's sleeve but which would be down by March 31. When Mr. Mac-Pherson about the middle of April produced his report there was no solution and there has been no legislation. Yet the railway labour dispute was settled, as I say, on the basis recommended by the official opposition last November. It was settled precisely on that basis, namely on the basis of the Milvain report.
I could believe that Mr. Gordon was ordered to do that because, after all, Mr. Gordon is an employee of the government of Canada. They can give him orders and he must either accept those orders or resign; that is if he has anything to resign about at the moment, a matter which seems to be in some doubt. However, I do not think the government can give orders to Mr. Crump; at least I would be rather surprised if they can do so. Therefore any reasonable person will assume, as I do, that they gave Mr. Crump something else than an order. I think they gave him an assurance that certain things would be done.


Léon Balcer: Things are done in a straightforward way today, not by any back door method as was the situation when the Liberals were in power. There is no under the table deal.


John Whitney Pickersgill: I am going to deal with that matter. Let the hon. gentleman wait a moment. I am going to reach that matter.


Edmund Davie Fulton: The hon. member is making insulting innuendos.


John Whitney Pickersgill: I am not making insulting innuendos at all. I am putting on the record what has been said about this matter. On May 5, as found at page 4401 of Hansard, I asked the Prime Minister this question:
Could I ask the Prime Minister to give an assurance that no prior undertaking of any description was given to the railway company before the settlement was reached yesterday?
Here is the Prime Minister's reply given in that courteous manner which so endears him to the house and to the country:


John George Diefenbaker: I say with the greatest joviality to the hon. gentleman that the experiences he used to have when he was a member of the government of a former day are not being repeated by this government.
I can tell you the experiences I had with Mr. St. Laurent. Mr. St. Laurent did not use double talk like that. When you asked Mr. St. Laurent a question, he gave a courteous and straightforward answer to it and he did not reflect on his predecessors who were no longer

in the house. The plain fact is that if Mr. St. Laurent had been asked a question like that in this house he would have said yes or no. We can only assume that the reason the Prime Minister did not say yes or no was that he was not willing to tell us what the arrangement was and yet he did not want to say there was no arrangement as there is an arrangement. That is the only inference one can draw from this kind of answer. Then I went on to ask this question:
I wonder if the Prime Minister could not now give a categorical answer to a simple, straightforward question.
Once more there was the usual courteous reply by the Prime Minister: silence.


Edmund Davie Fulton: Where is the inference?


John Whitney Pickersgill: Where is what inference?


Edmund Davie Fulton: The inference you have drawn.


John Whitney Pickersgill: The inference I have drawn is that an assurance was given to the Canadian Pacific Railway.


Edmund Davie Fulton: Where in the answer is there any justification for that inference?


John Whitney Pickersgill: Since the minister is asking the question, may I say this. In my view, if there were no such assurance the Prime Minister would say simply and in a straightforward manner, "There was no such assurance". Because he obviously evaded the question and because the railways have said they cannot find the money themselves, I think we are entitled to assume that they had such an assurance, either expressed or implied. If there is any respect for parliament in this government which professes to have so much respect for it, I think parliament should be told what that assurance was.
Parliament was told by the Prime Minister in the most categorical fashion last November and December that the royal commission was going to provide a solution to this problem. To my simple way of looking at it, the royal commission has provided no solution to this problem. If it has done so, will the government please tell us now what that solution is? Earlier, in reply to my hon. friend from Laurier, the Minister of Transport said that the subsidies which have been recommended by Mr. MacPherson's commission were not for the purpose of subsidizing wages. That is quite true. But if the government should, in its wisdom, some time before the end of this session bring in legislation or an item in the estimates in order to provide some of these subsidies, there is nothing to prevent the railways from using them, not for the purpose Mr. MacPherson recommended but, as my hon. friend from Laurier said, in order to meet this deficiency in revenue 90205-6-306
Freight Rates Reduction Act because of the increased wage rates. But at least parliament ought to be told what we are being asked to do and why we are being asked to do it.
If the government are going to bring in legislation to give a further subsidy to the railways, why could it not have been done today? Why could it not have been brought in with this measure instead of bringing two measures before the house? Why could we not have dealt with the whole problem at once? Is it because the government, as usual, do not know what on earth to do about the problem or is it because they wish to wait until the last day of the session, as they have done with many another controversial thing in every session since 1958, in the hope that they can get it through without much scrutiny and without much debate? I say, Mr. Chairman, that to bring in this stopgap measure that was brought in in 1959 and again last year-a stopgap measure that was to last only until the MacPherson commission had made its report-and now to bring it in again, and at the same time to refuse to tell the house and the country what their plans are is conduct that I do not understand. If the government have no respect for the house, surely they have some respect for the country. Surely we are entitled to know, as the representatives of the people, what the government's plans are for dealing with this urgent, grave and difficult problem.
I want to say a word, and just a word, about the measure as it affects another promise made by this government, the promise my hon. friend from Grand Falls-White Bay-Labrador read to the committee earlier. Of course, this was in that high noon of promises in May of 1957. These are the promises that hon. gentlemen opposite would like to forget; they hate to have them mentioned.


Edmund Davie Fulton: Not at all. We have fulfilled most of them.


John Whitney Pickersgill: These are the famous Atlantic resolutions-


An hon. Member:: We have to leave something for you to talk about.


John Whitney Pickersgill: -which, as my hon. friend from Grand Falls-White Bay-Labrador said, are edged in black and blue and are badly bruised.


Edmund Davie Fulton: It was you that was badly bruised; you forget that.


John Whitney Pickersgill: The hon. gentleman sounds more aggrieved than I do at the moment. For one who is supposed to have been bruised, I would stack up my cheerfulness against his any day.

Freight Rates Reduction Act


Some hon. Members:: Oh, oh.


Lionel Chevrier: Thistledown.


John Whitney Pickersgill: When I have your attention again, sir; when you can afford to give me your attention again, sir-


Mr. Ricard:: When the hon. member for Laurier stops making noises.


Jacques Flynn: I would inform the hon. member that I have not missed a word he has said.


John Whitney Pickersgill: I was not suggesting any reflection on Your Honour. I was suggesting Your Honour's attention was being distracted by hon. members opposite.


Some hon. Members:: Oh, oh.


Jacques Flynn: Order.


John Whitney Pickersgill: I come back to this solemn pledge which hon. gentlemen opposite are very anxious not to have me read:
We are committed to the original pledge given to our people at the time of confederation that freight rates would be adjusted-
I emphasize those words "that freight rates would be adjusted":
-and transportation facilities would be provided so that our geographic position would not prejudice our producers having reasonable access to the markets of Canada.
I admit that the word "adjusted" is an equivocal word. I do not know whether it was deliberately put there to give hon. gentlemen an out; but I suggest that everybody in the Atlantic provinces who read that thought that if freight rates were going to be adjusted, they were not going to be adjusted upward. I think they were intended to believe, and they did believe-if they believed it at all; and I am afraid a lot of them did-that this meant freight rates were going to go down.


Donald MacInnis: It still makes better reading than something you could not get across. Walter Gordon stopped you.


John Whitney Pickersgill: The hon. gentleman from Cape Breton South is erupting. When his eruption is over, sir, I will continue. It will be recalled that one of the last acts of the previous government was to increase the advantages to the Atlantic provinces under the Maritime Freight Rates Act.
I would also point out that the only action taken by the present government with respect to freight rate adjustments has been to increase freight rates, and to increase them horizontally. That increase is still being continued by the present government, not at the

full level recommended by the board of transport commissioners but at something about half that level, and the taxpayers are paying the rest.


John Ferguson Browne: Mr. Chairman, I had not intended to make any remarks on this particular item because I think my views as to subsidizing the railroads are well known. However, after the outrageous anti-labour speech that has been made by the hon. member for Bonavista-Twillingate I think I must make a few remarks.


John Whitney Pickersgill: Anti-labour?


John Ferguson Browne: Of
course, it is not surprising, knowing his affinity with the premier of Newfoundland and his regard for labour, that the hon. member's attitude should be such as it is. However, I was absolutely amazed to hear him attribute all the ills of the railroads and our transportation system to the employees of the railroads.
The hon. member says it does not matter how you disguise it; it does not matter what you want to do for the railroads in the form of a subsidy, it is entirely the fault of the railroad employees and nobody else. It does not make any difference that they might have been operating passenger services that are uneconomical; it does not make any difference that they might be hauling grain below what it costs them to do it; it does not make any difference that they might be forced to operate uneconomical branch lines; the hon. member says that if a penny is paid to the railroads it is the fault of labour and nobody else. He says that every ill of the railroads is the fault of the employees.
I am absolutely surprised to hear a statement like that, not only from the hon. member for Bonavista-Twillingate but it has been implied all the way through by his colleague, the hon. member for Laurier, only the hon. member got up and put it a little more clearly than he did. I suppose a lot of it stems from their great disappointment that the rail strike was settled in the first place.


Lionel Chevrier: It was settled on the basis we recommended.


John Ferguson Browne: Oh, Mr. Chairman, the basis that was recommended by the opposition and the hon. member for Laurier was compulsory arbitration-


Lionel Chevrier: It was not.


John Ferguson Browne: 
John Whitney Pickersgill: Yours was compulsion without arbitration.


John Ferguson Browne: I am
sure the employees of the railroads will be pretty well pleased to have the promise of the Prime Minister that their rates will be back dated to January 1, 1960. They will not lose a cent of pay, which they would have lost had they gone on strike. I do not think there will be any complaint from these employees, and as one hon. member of this house I can say I have heard very little complaint from railway employees since then.
If this government had taken the course of compulsory arbitration suggested by the Liberal party I am sure it would have taken away for all time the rights of the employees on the railroads to strike. We must remember that when the Liberal party was in power in 1950 this was their solution to the thing, to propose compulsory arbitration notwithstanding the fact that labour was entirely opposed to it.
Had the present government taken that course suggested by the opposition, compulsory arbitration would have been established for any dispute on the railways. There can be no doubt that had that happened there would have been the same suggestion on the part of the Liberal party to impose compulsory arbitration when any other serious labour dispute came about.
I am not going to deal any further with this particular subsidy except to say that I am concerned about it being continued again. I pointed out to the house when it was first instituted that subsides are very difficult to discontinue once they are started. This is now the third time that we are dealing with this particular question. I think the concern I had at that time has been shown to be not unfounded.
However, I realize the position the government is in through having just received the report of the royal commission on transportation, and having received only the first volume of that report. It was suggested by one hon. member of the opposition that the government has had this report for months and had done nothing about it. Then the suggestion got down to weeks, and it finally turns out to be less than a month that the government has had this first volume in their hands, and they have only the first volume of the report.
When we consider the actions of hon. members of the Liberal party when they were in office, they show a great deal more concern now for the passage of time than they did at that time. A difficult question such as this cannot be resolved in the space of a few weeks. I can only come to the conclusion that 90205-6-306J
Freight Rates Reduction Act most of the concern of hon. members of the opposition was caused by the fact that the railway strike was settled.


John Whitney Pickersgill: Mr. Chairman, I did not wish to interrupt the hon. gentleman, but of course he made statements about what I had said that were so out of accord with the facts that it is very hard to believe the hon. gentleman was even listening to what I had to say.
I said-and I want to repeat it-that the subsidy we are now being asked to vote is a subsidy which has been historically and as a matter of fact occasioned by an increase in railway rates, which in turn was given to the railways to meet an increase in wages in 1958. I do not think those facts are in any dispute anywhere, and this parliament-


John Ferguson Browne: That
is what you say.


John Whitney Pickersgill: I did not interrupt the hon. gentleman; perhaps he would allow me to make my correction. This parliament has decided twice, and is now being asked to decide a third time, that part of that increase in freight rates to pay those increased wages should be paid out of the treasury of Canada.
I suggest to call that what it is, is what we ought to do here. We should tell the truth about what we are doing and not pretend it is something different from what it is. If that is an attack on labour then I am afraid I have made an attack on labour. However, I should remind that hon. gentleman that last December, when he voted to compel these men to go back to work at the old wages, the Liberal party protested because we on this side felt those employees were entitled to the increase in wages recommended by Judge Milvain. I do not think the hon. gentleman will confuse the people concerned by his distortion of the facts.


Léon Balcer: Mr. Chairman, we have heard some very interesting statements this afternoon in respect of this proposed legislation, especially those made by the hon. member for Vancouver East. Some hon. members raised some very interesting points, and the official opposition have taken an air of great offence to the fact that we are bringing this legislation in at the present time. Before I deal with the resolution itself, I should like to be fair and set the record straight by calling this committee's attention to some figures, about which we heard, a few minutes ago, from the hon. member for Bonavista-Twillin-gate. He suggested that the present government was responsible for increases in freight rates and that this government was not the friend of the people of Canada on this account.

Freight Rates Reduction Act


John Whitney Pickersgill: I did not say that. I just said there were increases in freight rates.


Léon Balcer: Yes, and you made a big thing of it. I should just like to present certain figures, at this time, which I am not pulling out of a hat, in respect of those figures quoted this afternoon. I suggest by looking at the varying proportions regarding freight rate increases we will then have a clearer picture in respect of which government is more concerned with the welfare of Canadian citizens as far as freight rates are concerned.
Since 1945 freight rates have increased by 157 per cent. One hundred and forty per cent of this increase occurred during the time my hon. friend was a minister under the Liberal regime. During the Conservative administration-that is during the last four years-the only increase which has been allowed was to the extent of 10 per cent, which was later reduced to 8 per cent. In other words, the total increase of 17J per cent was originally decreased to 10 per cent, and then to 8 per cent. The government has also frozen all increases; this policy is still in effect. I suggest that this government has shown the people of Canada what it thought of the great burden of freight rates in various parts of the country. This government has looked into the matter seriously and has gone out of its way in an attempt to help the shippers of various regions of Canada, who have had to face these freight rate increases.


Lionel Chevrier: Mr. Chairman, would the minister place on the record, in the same manner as he has done in respect of the previous administration, the amount of increase imposed under the Conservative regime which preceded the Liberal government?


Egan Chambers: Why not go back to the Sir John A. Macdonald regime?


John Whitney Pickersgill: That would not be any more irrelevant than what the minister has done.


Léon Balcer: I do not have the figures at hand.


Lionel Chevrier: Oh, but you could get them quite easily.


Edmund Davie Fulton: We are talking about a floor to prevent rates from going up.


Léon Balcer: Yes.


An hon. Member:: He is just drawing a red herring.


Lionel Chevrier: Surely this is a bright red herring.


Léon Balcer: Mr. Chairman, I must say that I am very impressed by the difference between 147 per cent and 10 per cent.

The hon. member for Laurier made a great fuss this afternoon about the fact that this amendment was being brought forward after April 30, and that the house was taken by surprise. He seemed to be suggesting that there was some kind of plot involved. I should like to remind the committee that the hon. member asked me a question, and I am sure he remembers it very well, prior to April 30, to which I replied that legislation was to be brought in to take care of the few days existing between April 30 and the time approval was given to this bill. I remember also being asked what was to happen in respect of the new rate which was filed by the railways, and I told the house that both railway presidents had written to me stating that these freight rates would not be applied. I would suggest, therefore, that not one single Canadian will have suffered any harm, in any way, shape or form as a result of this legislation being brought in at the present time. I should also suggest that the resolution was placed on the order paper before April 30, so no one was taken by surprise.
We wanted to act in a fashion which would permit both labour and management complete freedom to discuss these problems in an attempt to settle them in a manner that would be in accordance with the collective bargaining traditions of this government. We were very pleased to find that we did not have to impose any compulsory arbitration measures on one side or the other, because management and labour had come to an agreement. It has been suggested here this afternoon that the official opposition was disappointed because of that sudden settlement, however, I must say that we on this side quite freely admit that we are extremely pleased, and suggest that the rest of the people of Canada are extremely pleased, that the strike did not take place.


Edmund Davie Fulton: Because of the efforts of the minister.


Léon Balcer: The Minister of Labour.
We have also this afternoon heard many expressions of criticism of the fact that the first report of the royal commission on transportation has been tabled now for one or two weeks, and that the government has as yet not introduced any legislation to implement the recommendations contained in that report. I suggest that my hon. friends opposite know very well that recommendations contained in reports of royal commissions are not dealt with in a matter of two or three days. This report is an extremely important one to be followed and complemented by two further volumes. Having read the first volume I feel that volume II will have a great impact on transportation in Canada.

Earlier in the afternoon, the hon. members for Fort William and Bonavista-Twillingate, as well as some others, referred to the problems which face the shippers in various regions of this country. As indicated by volume I of the MacPherson report, volume II will deal with the burden of freight rates on a comparison basis, as they affect different sections of the country. It is also the intention of the commission to include in volume II of its report recommendations concerning special transportation problems. I think it will be extremely important to see the two further volumes of the report of the royal commission on transportation.
My friend the hon. member for Bonavista-Twillingate, in his unique fashion, this afternoon tried to build up a great plot on the part of the Prime Minister in his dealings with the railways' presidents. Maybe that is what happened a few years ago, but that is not the way things are done now. What happened is that the management of the railways and labour got together and discussed their problem, after the first volume of the royal commission report on transportation had been tabled. I remember the Prime Minister stating in November that the report of the royal commission on transportation would have quite a bearing on any discussion between the railways and labour. Of course, I am convinced that the report must have had quite a bearing on their discussion. We could tell by the opinions expressed both by Mr. Crump and Mr. Gordon, when the first volume of the report was published, that they were impressed by the first volume of the report. They expressed their satisfaction with many aspects of the report, and I am quite sure that it must have been one of the big factors in the railways deciding to meet the majority recommendation of the Milvain report. Of course, it was a decision taken freely by the presidents, by Mr. Hall and by the other labour leaders who signed the settlement agreement on behalf of the two parties.


Mr. O'Hurley:: I say to the hon. member for Bonavista-Twillingate that things have changed.


John Whitney Pickersgill: They have.


Léon Balcer: This afternoon my friends on the opposition side of the house have talked quite a bit about various undertakings that the Prime Minister gave during the last two election campaigns. It is a fact that the Prime Minister has dealt quite extensively with this problem of transportation and the inequities that were existing in Canada at that time and between regions, between types of transportation and between commodities and classes of goods of that kind.
Freight Rates Reduction Act The Prime Minister promised that his government would do something about this and that is why we appointed the royal commission to deal precisely with those injustices and anomalies and to make sure that Canadians from one end of the country to the other would be receiving the same treatment as far as freight rates and railway transportation are concerned.
The royal commission has produced its first report and the government of course is considering the first volume. It contains extremely interesting recommendations concerning aspects of the railway problem and the government is of course giving considerable study to the first volume of the report.
Since the report has been tabled the Prime Minister, in answering questions raised by my hon. friends, has said that we can expect interim legislation to be brought forward which will be based on certain parts of the MacPherson report. The government will certainly take into consideration the study made by the commissioners and of the principle expressed by them but, of course, before adopting any part of the report the government wishes to give it the most careful consideration and also wishes to consider its impact on Canada as a whole and on the taxpayers as a whole. We wish to do something which will not be just a stopgap, which will not be just a palliative, but something which will help railway transportation in Canada in the years ahead, and I do not think there is any government so well qualified to do it as the present one.


Lionel Chevrier: Before we dispose of this matter I wonder whether the minister would reply to a few questions, which I think is customary on an occasion such as this. The minister has made it quite clear that it will take some time to implement the recommendations of the royal commission. One of the questions I should like to ask him is this. Does the minister intend to bring in legislation this session implementing the recommendations contained in the first volume of the MacPherson report?


Léon Balcer: I think I have just covered that point. This point was covered by the Prime Minister. He said that the house could expect interim legislation based on the report, and that will implement


Lionel Chevrier: This session?


Léon Balcer: It was quite possible, but it has to be announced in the house at the proper time. I have not the actual quotation of the Prime Minister right here, but at the present time the government is considering this report and we intend to bring in interim

Freight Rates Reduction Act legislation or at least legislation based on the MacPherson report, even if it does not implement the whole report.


Lionel Chevrier: I understand, and I thank the minister for the answer. Will it be legislation by an item in the estimates, as is being done in the case of the shipping policy, or will it be legislation in the nature of the resolution which is now before us?


Léon Balcer: I do not know. The government has not made its decision known, but when it has the house will know at the proper time.


Lionel Chevrier: The minister was asked one question to which he has not replied, and it had to do with the manner in which the settlement of the railway dispute will be implemented. Will it be by way of a subsidy introduced in the house or how will it be done?


Léon Balcer: We have nothing to do with this, Mr. Chairman. As I said earlier, both sides decided freely to settle this dispute. The railways probably came to the conclusion that it was the best deal they could make and so did labour. Therefore, they came to a settlement together, but there was no question of the government giving them a subsidy to meet their wage bills.


Harold Edward Winch: That is the point I want to make.


Lionel Chevrier: May I just follow up with one more question and then I will yield. It follows from the answer which the minister has given that there is no intention on the part of the government to introduce legislation, including a subsidy to the railways, which will allow them to implement the settlement which was made to prevent a strike?


Léon Balcer: I think the hon. member is rather twisting my words. If the railways decide that our legislation or our action improves their position to the point where they are better off and it is easier for them to pay their wage bills, that is up to the railways. But we have no intention of bringing in legislation to meet the wage bill of this last strike settlement. As a government we have no intention of doing that.


Harold Edward Winch: Mr. Chairman, I have listened with interest to the minister during the last hour, and all that he has said does not make sense, and especially is that true of what he said in the last five minutes. Here is the situation. For 14 months the "non-ops" had been in negotiation with the C.N.R. and the C.P.R. and they could get no agreement whatsoever. They were prepared to settle for 14

cents but asked for 25, but they could get no satisfaction whatsoever from the Canadian National and the Canadian Pacific. They could get no satisfaction from the railways, so right in the last hours the government brought in legislation not to give the "non-ops" any increase but to prevent a strike. The men carried on for a period of six months during which they could not strike. We read reports in the newspapers about what was supposed to be going on but we could get no answer from the Prime Minister or the government side as to what was taking place.
However, again in the last few hours the C.P.R. and the C.N.R. accepted exactly what the union had agreed to seven months ago and which the government would not give them by legislation. The minister is saying now that in the last 24 hours before the settlement the C.N.R. and the C.P.R. had no indication from or understanding with the government of Canada. I am going to say that this is the most extraordinary situation I have known in my 30 years in the trade union movement. What miracle happened? What happened before the bill was introduced last December and what has happened now?
I am going to be very blunt about the matter. Having in mind what happened last December after 14 months of negotiation and what has happened now, I believe that there must have been some kind of direction or indication by or promise from the government. I should like to ask the minister to give the committee certain very important information. From the time the government froze freight rates by order in council, can th minister tell us what the C.N.R. and the C.P.R. maintain their losses have been because of the freeze on freight rates? What has been the cost to the government of subsidies for freight rates and for payments because of increases in wages since that time?
I will put it this way. Since the government has been in office what has been the loss that the government has incurred under legislation or order in council by reason of subsidies to offset the freezing of freight rates and to take care of increases in wages, and what is the position of the government now with regard to subsidies declared or yet to be declared for the railways of Canada? I have an idea, and I mean this, that we are not being given the entire picture at this time. We agree with the minister that nobody wanted a strike. We all support anything that will prevent a strike, but I say to the minister quite bluntly that we have not got the picture yet but we are going to get it. I say that more money is going to be asked for by the government either by way of a subsidy on freight rates or a subsidy

for wages. I ask the minister now to tell us what has gone on since the Conservative government took office and what he anticipates the government will be requesting the House of Commons to pay the railways of Canada either directly or indirectly.


Léon Balcer: Mr. Chairman, in answer to the first question raised by the hon. member, I simply wish to repeat that labour and management settled the dispute of their own free will. With respect to any indication of a wage subsidy or what have you, no statement of any kind has been made by the government. I am not as surprised as the hon. member is at the decision of the railways to change their stand at the last hour. It has happened before, and I am afraid I have no information as to what was behind their decision. They have taken the decision of their own free will. It has been suggested to me from other sources that it must have been because of the reaction to the first volume of the report of the royal commission on transportation. I think that makes a lot of sense but neither Mr. Crump nor Mr. Gordon has told me and I do not think they have told anyone. I think this is strictly a matter of a settlement that has been arrived at by free collective bargaining, and I do not see anything so extraordinary about that.


Harold Edward Winch: Will the minister say now that the change in attitude by the two railways was not in any way brought about because of any commitment given by the government?


Léon Balcer: No. I do not know of any commitments. I said that earlier and I think that should have cleared the situation as far as hon. members are concerned. The hon. member has also asked me for various amounts with regard to subsidies and freight rate increases. These are all figures that he will be in a very good position to obtain as soon as the bill is sent to the committee. I do not have these figures in front of me but I am quite sure he can ask for them in the committee.


Lionel Chevrier: I do not think the minister gave a categorical negative answer to the hon. member for Vancouver East in connection with a commitment, and I repeat the question. I think the minister should indicate to this committee categorically whether or not a commitment was given by the government of Canada to the Canadian National Railways or to the Canadian Pacific Railway that the implementation of a certain part of the recommendations contained in volume I of the report of the royal commission on transportation would be brought in this session and that the railways could, if they so desired, use
Freight Rates Reduction Act that money which was earmarked for specific purposes to meet the position brought about by the settlement of the strike.


Léon Balcer: Again, Mr. Chairman, I should like to refer my hon. friend to the statement that was made in the house by the Prime Minister who stated very clearly, I think, what the intention of the government was with respect to the implementation of the Mac-Pherson report. On May 5 the Prime Minister was asked this question by the hon. member for Laurier as reported at page 4399 of Hansard:
May I ask the Prime Minister or the Minister of Labour whether any arrangement has been made between the government and the railways in connection with the funds with which these increases will be met?
The Prime Minister's reply was as follows:
Mr. Speaker, when the government is in a position to do so it will bring before the house, as I have already pointed out, such legislation as may be acceptable to the government in conformity with some parts, not all, of the recommendations made by the MacPherson commission.
I have nothing to add to that statement.


Lionel Chevrier: That was not my question, Mr. Chairman, and I am not going to pursue it unduly. However, I thought from the answer which the minister made to the hon. member for Vancouver East-if I am wrong in this impression I hope the minister will correct me

that he said, categorically no, the railways had been given no undertaking, that out of the moneys coming from the implementation of the recommendations of the MacPherson report they could settle the dispute.


Léon Balcer: I want this to be very clear. There was no undertaking on the part of the government so far as the wage settlement was concerned.


Harold Edward Winch: The minister says there was no undertaking given by the government so far as the wage settlement was concerned. Will the minister now tell the committee what was the arrangement that was made between the government, the Canadian National and the Canadian Pacific which, after 14 months during which the railways rejected-


Léon Balcer: There was nothing other than what has been said in the house during this session. That is all. I have just read what the Prime Minister has said so far as the recommendations of the MacPherson commission are concerned. So far as the question just asked by my friend is concerned, there was nothing else but what has been stated in the house.


Harold Edward Winch: I may be naive but I hope I am not that naive after all these years. I am sorry, Mr. Chairman, if I have to continue this discussion. I just cannot be that

Freight Rates Reduction Act naive. For the past two years we have been confronted in this house with problems relating to railway transportation. The "non-ops" unions have been in negotiation for over 14 months. Last December we came within hours of having a strike. The railways and the government both refused to do anything about the arbitration report.


Mr. Smith (Simcoe North):: I rise on a point of order, Mr. Chairman. We have heard cross-examination on matters dealing with railway wages, and it was my understanding that this measure related to freight assistance. It seems to me that wages or the settlement of a strike are not topics that are in order.


Harold Edward Winch: I am not discussing wages, sir, I am discussing the freight bill. If the hon. member is trying to stop me from speaking, why did he not get up and try to stop members of his own party when they spoke on the same matter?
This has been one of the most serious problems before this House of Commons. The "non-ops" unions have been in the process of negotiation for 14 months. Just a few hours before a strike was called the government introduced a bill and there was no strike. We are now in the month of May. Right up until almost the deadline set for the strike-the minister knows it because the press covered it-the Canadian National and Canadian Pacific refused to settle just as they did in December. Then, just out of the blue and with only a few hours to go, the railways accept the conciliation report which they had rejected for 14 months.
I am going to ask the minister an honest and sincere question. Neither he nor anyone else in this house can tell me that after 14 months of refusing to accept the plea of the Prime Minister last December, refusing to accept the plea of the Prime Minister last month, the railways suddenly went overboard and accepted the entire 14 cent increase. I just cannot believe that Mr. Crump and Mr. Gordon all of a sudden discovered that they were wrong and they should do something about it. I am saying, Mr. Chairman, that there had to be something between the government and the railways. What was it? Perhaps it did not concern wages but related to decisions on the recommendations of the royal commission. Would the minister be honest enough now to tell us if the decision-


Léon Balcer: I have told the hon. member five times already.


Harold Edward Winch: -of the railways was based on any indication given to Mr. Crump or Mr. Gordon that they had better sign an agreement now? I should like the minister to


answer that because if anything happens in the future I should like to have him on record now. I am glad the strike was settled.


Léon Balcer: I am beginning to think that the hon. member is just as sorry as the official opposition that the strike is over. I will answer his question for the sixth time by saying that there was nothing else but what has been said in the house; that is all.


Mr. Batten:: I did not intend to take part in this debate. I thought the hon. member for Grand Falls-White Bay-Labrador and the hon. member for Bonavista-Twillingate had covered the case for Newfoundland thoroughly. However, following the remarks made by the minister, I feel I should like to make a few remarks in addition to what those hon. members had to say.
We in Newfoundland are in a difficult position so far as freight rates are concerned. Transportation has always been a very difficult problem for us. We live in an area where, when freight rates are increased, we have very few other modes of transportation to which we can turn as may be the case in some other provinces. The result is that if freight rates are increased we still have to have most of our commodities transported by train or by the Canadian National boats. We live in a province where over 9 per cent of everything we purchase has to be sent into the province. Each year from the mainland of Canada we bring in $250 million worth of various types of commodities. Newfoundland is at the end of the line, and every time there is a percentage increase in freight rates, the percentage increase for Newfoundland is much greater because the rate we pay is higher. However, the point I want to make is this. Stripped of all the verbiage we have had this afternoon, and regardless of what acts have been passed in the last two or three years, the fact still remains that for every freight dollar we paid before 1958, in Newfoundland and the maritime provinces, we now pay $1.08.


Lionel Chevrier: There is another matter
which I should like to bring to the attention of the minister and it is this. On February 23, 1961, the board of transport commissioners granted an increase in freight rates of 25 per cent in what are known as the Atlantic and west grain rates, the movement of grain from bay ports to Halifax and Saint John, and that increase has been suspended by the cabinet by order in council which I think was effective March 30 and it is to come to an end early in July. As the minister knows, this legislation is for a period of 12 months. What will happen to these rates? Will they be covered by this legislation or are they rates that are not considered under this measure?


Léon Balcer: I do not know what will be the decision of the government at that time. At the present time the order is suspended by government action. I could not say at the present time what will be the attitude of the government on July 3.


Lionel Chevrier: The point is this. These are rates known as class and commodity rates. This legislation deals with class and commodity rates but not with competitive rates. I therefore think the question is in order. Will the grain rates that have been increased 25 per cent be covered by this legislation on July 3 to be exact, when the other matter expires?


Léon Balcer: When the bill is before the committee, I think the experts of the board of transport commissioners will be present and they will be only too glad to answer the questions asked by the hon. member.


Jacques Flynn: Shall the resolution carry?


Some hon. Members:: Agreed.
Resolution reported and concurred in.
Mr. Balcer thereupon moved for leave to introduce Bill No. C-93, to amend the Freight Rates Reduction Act.
Motion agreed to and bill read the first time.


CANADIAN NATIONAL RAILWAYS ACT
Léon Balcer: that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure to amend the Canadian National Railways Act to increase the number of members of the board of directors of the Canadian National Railway Company from seven to twelve.
Motion agreed to and the house went into committee, Mr. Flynn in the chair.


Léon Balcer: The resolution before the committee is to approve the introduction of a bill to amend the Canadian National Railways Act which would increase the number of directors of the company from seven to 12.
The committee will recall that the third and final report of last year's sessional committee on railways, air lines and shipping recommended that the government might consider the advisability of strengthening the board of directors of the Canadian National Railways by adding to its present number. In the light of this unanimous recommendation, the government reached the conclusion that parliament should be asked to pass the appropriate legislation. The increase to 12 will
Canadian National Railways Act provide for broader representation on the board, and I feel sure the resolution will commend itself to the committee.
With the permission of the committee, I should like to make a short review of the history of the board of directors of the Canadian National Railway Company. Chapter 13, statutes of Canada, 1919, authorized the organization of the Canadian National Railway Company to operate the Canadian Northern Railway lines, the Canadian Government Railway lines and any other railway lines as should be entrusted to it from time to time by order in council.
The statute provided that the directors be appointed by the governor in council and their number was to be not less than five and not more than 15. Chapter 6, statutes of Canada, 1931, provided for the possible appointment of 17 directors instead of 15 as originally limited by chapter 13 of the statutes of 1919.
Order in council P.C. 2094 of October 4, 1922 appointed nine directors of the Canadian National Railway Company to fulfil the intentions of the above-mentioned legislation. The railway was operated with nine directors in 1923, and in 1924, the directors were increased to 13 and remained at 13 until December 24, 1930, at which time two additional directors were appointed making a total of 15. In 1931 two additional directors were appointed bringing the total to 17. From 1932 to December 30, 1933, the board consisted of 16 directors.
Chapter 33 of the statutes of Canada, 1933, being the Canadian National-Canadian Pacific Act, authorized the governor in council to vacate the existing board of directors of the Canadian National Railway Company and to appoint in their place three trustees. A board of trustees were appointed effective from December 30, 1933, consisting of three trustees under the chairmanship of the Hon. Charles Fullerton to replace the board of directors. This board functioned until October 1, 1936.
Under chapter 25, statutes of Canada, 1936, the Canadian National-Canadian Pacific Act was amended which authorized the governor in council to replace the board of trustees of the Canadian National Railway Company by seven directors.
The seven directors were appointed October 1, 1936, and the number of directors has remained at seven up to the present date. Since the amendment of the Canadian National Railways Act in 1955, the authority for appointment of the board of directors of the railway has been included therein, being section 6 of chapter 29, statutes of 1955.
Under the present legislation the directors are appointed by the governor in council for a term not exceeding three years but a director at any time may be removed for cause.

Canadian National Railways Act The salaries of the directors are paid by Canadian National Railways and the amount is fixed by the governor in council.
Mr. Chairman, as I said earlier in my statement, the increase in the number of directors to 12 will provide for broader representation on the board. If we look at the boards of directors of major railways in North America and the mileage operated by these railways, we find that the Canadian National Railways is certainly in an anomalous position in that it has a very small number of directors for the mileage it operates.
As hon. members know, there are seven directors on the board of directors of Canadian National Railways. This railway operates 26,329 miles. If we compare this with Canadian Pacific Railway, they have a board of 24 directors and operate 17,000 miles.
If we look at the short list I have here, the Baltimore & Ohio Railroad Company has 12 directors and operates only 7,000 miles. The New York Central Railroad Company has 15 directors and operates 14,000 miles. The Pennsylvania Railroad Company has 18 directors and operates 16,000 miles. The Southern Pacific Company has 16 directors and operates 13,000 miles. The Union Pacific Railroad Company has 17 directors and operates 11,000 miles.
This shows that of the six railways I have listed, the one with the smallest board of directors is the Baltimore & Ohio Railroad Company, with 12 directors, and it operates only about one quarter of the mileage operated by Canadian National Railways.
Therefore I think this proposal of the government will certainly help the Canadian National Railways' management in that it will give broader geographic representation and also a broader representation as far as the average Canadian activity is concerned.


Lionel Chevrier: Mr. Chairman, the minister began by saying this was a unanimous decision of the committee. I must challenge that remark. It is true that there is a recommendation of the committee on railways, air lines and shipping that the government might consider the advisability of strengthening the board of directors of the Canadian National Railways by adding to its present number, but it does not follow that because this recommendation is there it is a unanimous decision.
I for one, had I been at the final meeting, would certainly not have approved of it, because there was nothing in the minutes of the committee which indicated that a conclusion of this nature would be arrived at. One has only to read-


Léon Balcer: Mr. Chairman, perhaps we might say it was unanimous as far as the members who were present were concerned.
[Mr. Balcer.1


Lionel Chevrier: Mr. Chairman, if the minister wants to put it that way, I would counter with this. Why, then, was not an earlier recommendation of the committee implemented? I refer to a recommendation made by myself and approved by all the members- that one was unanimous-having to do with the establishment of an economic survey of the St. Lawrence seaway on regional areas of Canada. I have asked repeatedly in the House of Commons why it was not done and failed to receive any satisfactory answer. But it was approved by the committee.
The point I am making now is that because a recommendation is contained in a report, that is not a reason for it being implemented and I challenge the statement of the minister at once. I do so because I know full well that the minister's predecessor, the present Minister of Trade and Commerce, was opposed to it. Representations which I received when I was in office indicated that he and the then government were opposed to it.
Perhaps I may put on Hansard the short discussion which took place in the committee concerning this matter, which is evidence of the fact that the minister's predecessor was opposed to it. For instance, at page 153 of the committee's proceedings last year the hon. member for Port Arthur is reported as having asked this question:
I would like to ask the minister-
This was the present minister's predecessor:
__if he is satisfied with the board of directors of
the Canadian National Railways?


Mr. Hees:: Yes.


Douglas Mason Fisher: I beg your pardon?


George Harris Hees: I said I was satisfied with the directors of the C.N.R.


Mr. Benidickson:: Are you satisfied that the
number of directors is adequate, having regard to the fact that the rival company, the C.P.R.- and I have raised this in the house-has a very large board, with tremendous connections with potential freight right across the country. Is the minister satisfied that the board of seven which we have is adequate in relation to the competitive advantage that I see in the C.P.R. of having a large board? I do not know how many there are, but I would imagine there are about 25-all with connections for producing freight.


An hon. Member:: And with shares.


William Moore Benidickson: I think some of them have very few shares. I am quite satisfied that our seven directors hold shares in Canada, as Canada and that is their job. However, I do not think that it is a large enough group to keep in touch with potential suppliers of business to the C.N.R. I have raised this in the house before.


Jacques Flynn: Did you raise it before your party went out of power?


William Moore Benidickson: Yes, I have done that, and I think I have done it with my former minister, who is sitting beside me, Mr. Chevrier. I still think it is a valid suggestion and I raise it to the minister. Will you consider it?


George Harris Hees: I have had no reason to believe that the present number of directors is not adequate.


Jacques Flynn: This minister is as hard to convince as yours was.

That certainly does not indicate that there was unanimity in the committee about increasing the board of directors of the Canadian National Railways.
Mr. Chairman, may I call it six o'clock?
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 7.30 p.m.
Lionel Chevrier: Mr. Chairman, when the
committee adjourned at six o'clock I was saying that it ill-behooved the minister to put this legislation forward on the basis of a committee recommendation. I think this is a matter which must be accompanied by reasons other than that and, of course, the government must take responsibility for this legislation.
The point that came to my mind as I listened to the minister earlier today is, has the management of the Canadian National Railways asked for this increase in the number of directors? The minister likes to say in the House of Commons that he does not direct the affairs of the Canadian National Railways but that it administers its own affairs, and that he represents it and reports on its behalf in the house. That is a position which I think all hon. members will accept. However, I think the minister should tell us whether the management of the Canadian National Railways has recommended an increase in the directorship from seven to 12. I would certainly be interested in knowing whether that is the case or not. I should also be interested in knowing when this decision was arrived at because, certainly when we were in the committee on railways, air lines and shipping last year, there was not the slightest intention expressed by his predecessor of increasing the directorship. In fact, he made it quite clear where he stood so far as the number of directors was concerned. I put that stand on the record earlier, and feel it is not necessary for me to repeat it now. We on this side of the house will oppose this legislation.


Ernest James Broome: Mr. Chairman, would the hon. member permit a question?


Lionel Chevrier: Yes, Mr. Chairman.


Ernest James Broome: Will the hon. member extend that position to the hon. member for Kenora-Rainy River?


Lionel Chevrier: I think the hon. gentleman will have to direct his question to him.
I have placed on the record part of the discussion which took place in that committee last year. There was no doubt where the previous minister of transport stood in regard
Canadian National Railways Act to this question at that time. There certainly was no doubt where the hon. member for Laurier stood, and where he has always stood in this regard-he resisted this particular type of legislation when he was in office.
Mr. Chairman, if there ever was a time when this legislation ought not to be introduced, that time is now. There are 720,000 people out of work in Canada today and, notwithstanding that situation, this government introduces legislation to increase the directorship from seven to 12. Twelve per cent of the labour force is out of work. There has never been more unemployment in Canada during the last 20 years than there is now, and there is no greater unemployment in any industrial country in the western world than there is in this country. Notwithstanding that position the government has decided to increase the board of directors of the Canadian National Railways.


An hon. Member:: What has that got to do with this bill?


Mr. Macdonnell:: Would the hon. member permit a question, Mr. Chairman?


Lionel Chevrier: I certainly will and, if I can hear the hon. gentleman, will be glad to answer.


James MacKerras Macdonnell: I shall do the best I can. I find myself unable to follow the argument which is being presented, and perhaps the hon. member would explain it. Why the incidence of unemployment should be an argument against this increase, I do not yet understand because, if the object of the act, namely to increase the efficiency of the railways is achieved, then it should help alleviate unemployment.


Lionel Chevrier: The answer to that question is that I consider the statement I have made, as well as the question which the hon. gentleman has asked, as a serious one, unlike some interjections of hon. gentlemen who have been interrupting, and my answer is this. When there is substantial unemployment, particularly in respect of one of the railways of Canada, surely that is not the time to increase the board of directors where the fees are very substantial, as the hon. member knows.
In dealing again with the point which the hon. member for Greenwood has raised, there has been a substantial decrease in the number of employees of the Canadian National Railways, to the extent of 5,000 per year for the last four years. The member for Port Arthur put some figures on the record earlier today in connection with the Freight Rates Reduction Act having to do with diminution or attrition of employment in the Canadian National Railways, which were greater than those I have mentioned. Whether those figures

Canadian National Railways Act are correct or not, I do not know, but let us assume that there has been at least-


Donald MacInnis: The statement you have just completed contains an admission that you do not know whether or not your own figures are correct.


Lionel Chevrier: That type of interruption is made by an hon. member who most of the time-


Donald MacInnis: Which you never answer, though.


Lionel Chevrier: -speaks from temper rather than from logic. I welcome these interruptions because I see that these suggestions arouse the ire of hon. members. Apparently they would like this measure to go through without any objection. I see some very serious objections to it and I intend to put them on Hansard.
I was going on to say that from the figures I have been able to obtain it appears that there has been a diminution or attrition in the number of employees of Canadian National Railways of at least 5,000 per year in the last four years. Yet while this is going on the government is increasing the number of directors. While men are being laid off directors are being added to the board. While men are without work directors are being increased on the board. While men are without employment on Canadian National Railways, it takes more men to administer the railway.
There has also been a fairly substantial reorganization of the various districts of Canadian National Railways recently. I am told this is in an effort to curtail expenditure, a move, incidentally, which is extremely unpopular with the men and with the public. On one occasion the hon. member for Levis gave some indication of what the railway reorganization has meant in his area and how this move has upset the workers in that region and changed the pattern which had existed for many, many years. Notwithstanding that reorganization, it is still found necessary by the government to increase the board of directors.
The deficit of Canadian National Railways this year is probably one of the highest in its history. The estimate given for 1961 is not too encouraging. What it will be I am unable to say but it will certainly be substantial, and if the recommendations of the royal commission on transportation or part thereof are not implemented then, of course, the deficit will reach astronomical figures. While that position exists in the Canadian National Railways the government thinks it is necessary to have more directors look after the business of the company.


If you have a small board such as exists now it seems to me that each director will take a greater responsibility than if there are more directors. It seems to me that each director will feel that he has a greater share of the responsibility if there are seven such directors than if there are 12. Again, I ask the question, what will be the calibre of these directors? Is the calibre going to be higher than in the case of the board of broadcast governors, for instance, where one director has had to resign because of obvious reasons? Will the same calibre of men be chosen here as in that instance?
There is, of course, another very serious matter to which consideration must be given and that is territorial representation. That question is inevitably going to arise if the directorship is increased. This question is going to arise if the number of directors is such that there is likely to be more than one representative for each province, and that is, of course, what is going to happen here. Twelve directors will mean that there will be more than one director for each province. When there is one director from each province it seems to me that unquestionably there is a solemn duty to represent the interests of that province without, of course, neglecting the national interest. If there are two from a province you may well find that sectional divisions will arise.
Then there is the question of the representation of the province of Quebec if there are 12 directors. With 12 directors it will be expected that the province of Quebec will be accorded equitable representation having regard to its population. If it does not get such representation I need hardly tell the minister that he will hear about it in due course because he has repeatedly stated that the C.N.R. was not fair and just to his province. I am not going to put on the record the statement he has made. I have used it before and I do not think this is the opportune time to repeat it. But I do tell him that with these additional five directors he will be face to face with the problem of additional representation in his own province, whether there will be three directors or whether there will be less, and he will have to meet that problem.
It seems to me that the directors ought to be appointed from the point of view of their competence rather than from the point of view of geographical and political interests. There is no doubt that with 12 directors there will have to be geographical representation, and, so far as political interest is concerned, if the same pattern is followed here as is followed elsewhere I suppose that consideration will be given to that as well.

There are some who say that the Canadian Pacific Railway has a large board of directors and why should not Canadian National Railways likewise have a large board? I think there is a very important distinction to be drawn here between a crown corporation such as Canadian National Railways and national corporations. I believe they think it is necessary to have larger boards but in my opinion that is not so in the case of Canadian National Railways. Directors are appointed to the board of the Canadian Pacific Railway for various and obvious reasons. I can think of one such directors, whose name I shall not mention, who has been appointed to the Canadian Pacific board because of the tremendous business that will ensue to that railway, and I presume that applies to others too. From all this it seems to me that a great distinction exists between the Canadian Pacific Railway and the Canadian National Railways.
The question of regional representation, which I mentioned in passing a moment ago, is also of considerable importance. If you have two or more directors from a region or two directors from a province there is likely to be a clash of interests which would not exist if there were but one from the province or one from a region. For these and other reasons which will be submitted to the committee on behalf of the opposition we will oppose this measure.


Douglas Mason Fisher: Mr. Chairman, the minister has indicated that this measure is brought forward as a result of the recommendation of the sessional committee on railways, air lines and shipping, of which I was a member, along with the hon. member for Laurier. As I remember it, the recommendation was unanimous, and it was strongly supported by one of the colleagues of the hon. member for Laurier, the hon. member for Kenora-Rainy River.
It is always of some interest when a government accepts a recommendation of a committee. I like to see it. I do not like to be critical of the reasons why they may choose to do something like this. Some people who do not look at the government with favour suggest this is just another place in which to stick a few political friends. I thought that note was in the argument of the hon. member for Laurier when he indicated that if we looked at the B.B.G. as an example, we would have some indication there. But as one who supported the idea of the committee, both in the full committee and when we were meeting in camera to produce the report, I indicate that we are going to support the measure although I do not feel that it may necessarily mean too much.
Canadian National Railways Act
The main recommendation for this move, as I understood it in the committee, was one which I do not think the hon. member for Laurier went into fully enough, and that was the idea that by getting a larger and more representative board it might be possible, not so much to have a better check on the C.N.R. as to bring to the C.N.R. management a greater guidance and expertise in various fields that originate traffic or understand traffic and in a complementary way for these people to bring the knowledge that they may have that may lead to the C.N.R. getting more traffic not only from competitors such as the C.P.R. but from competitors such as truck firms.
The argument of the hon. member for Laurier that somehow this is going to create regional problems really does not hit dead centre at all because when you look at the board of directors of the C.N.R. you find that Mr. Bickle has recently died, but the men who are on that board, it seems to me, give a very incomplete representation regionally. I know in our part of the country where the railway tends to be the biggest employer we would very much like to know that we had someone on that board who was more cognizant in a general way of the Canadian National Railways' role in our area than these particular men who are on the board at the present time.
It seems to me the hon. member for Laurier dismissed too quickly the list of people who are directors of the Canadian Pacific Railway and the effect that they have of bringing business and support to that railway. If any of the hon. members have had the opportunity of reading the first volume of the history of the Canadian National Railways, produced a few months ago by Colonel Stevens, they will quickly deduce that there has been a very close connection between railways and banks and investment houses and trust companies ever since railroading got under way. The relationship between the Canadian Pacific Railway and the Bank of Montreal has been something that you just take for granted. It seems to me regrettable that in the kind of economy we have with respect to certain features of it you have a situation where you have congeries or constellations of financial, investment and manufacturing establishments interlocked through directorships. It seem to me silly to oppose probably Canada's greatest company taking advantage of this kind of relationship.
I can say this without saying that I think this kind of interlocking structure is the ideal situation, but it is quite apparent when you run through the directors of the Canadian Pacific Railway where you find such names

Canadian National Railways Act as Harry Arkle, London, England, L. J. Bel-nap, Montreal, Sir George Bolton, London, England, George W. Bourke, Montreal, Hon. F. Philippe Brais, Montreal, Cyril F. H. Carson, Toronto, Hon. J. V. Clyne, Vancouver, N. R. Crump, Montreal, Robert J. Dinning, Edmonton, R. A. Emerson, Montreal, G. Blair Gordon, Montreal, G. Arnold Hart, Montreal, Louis L. Lang, Waterloo, H. H. Lank, Montreal, R. S. McLaughlin, Oshawa, Ross H. McMaster, Montreal, Sir Edward Peacock, London, England, H. E. Sellers, Winnipeg, Howard C. Sheperd, New York, Ian D. Sinclair, Montreal, H. Greville Smith, Montreal, Harold M. Turner, Toronto, H. G. Welsford, Montreal, Henry S. Wingate, New York.
This points out not only the representation that the C.P.R. shareholders have in relation to United States and British investment in the company but also the links that the C.P.R. has with classes that originate and develop a great deal of the traffic that is carried on the road. I see no reason why this attempt should not be made. But having said this, I would point out there is a bit of an anomaly here in that last year in the sessional committee I asked the present Minister of Trade and Commerce whether he was satisfied with the board of directors of the Canadian National Railways and his reply was:
I said I was satisfied with the directors of the C.N.R.
Then, the hon. member for Kenora-Rainy River asked this question:
Are you satisfied that the number of directors is adequate, having regard to the fact that the rival company, the C.P.R.-and I have raised this in the house-has a very large board, with tremendous connections with potential freight right across the country. Is the minister satisfied that the board of seven which we have is adequate in relation to the competitive advantage that I see in the C.P.R. of having a large board? I do not know how many there are, but I would imagine there are about 25-all with connections for producing freight.
Then, the hon. member went on:
I think some of them have very few shares. I am quite satisfied that our seven directors hold shares in Canada, as Canada and that is their job. However, I do not think that it is a large enough group to keep in touch with potential suppliers of business to the C.N.R. I have raised this matter in the house before.
The committee chairman asked:
Did you raise it before your party went out of power?


William Moore Benidickson: Yes, I have done that, and I think I have done it with my former minister, who is sitting beside me, Mr. Chevrier. I still think it is a valid suggestion and I raise it to the minister. Will you consider it?


George Harris Hees: I have had no reason to believe that the present number of directors is not adequate.


Jacques Flynn: This minister is as hard to convince as yours was.


Lionel Chevrier: May I tell the hon. member that I put all that on the record before six o'clock.


Douglas Mason Fisher: Before six o'clock? I thought I was here listening.


Heber Edgar Smith: You were not.


Douglas Mason Fisher: I was within the environs.


Heber Edgar Smith: You were not listening.


Douglas Mason Fisher: I offer my apologies in this regard. The point I want to make is that a year ago the then minister was not convinced. Evidently the committee report convinced him and in this sense there is no point, it seems to me, in making a great issue out of it and we will accept it. But there is one aspect of the board of directors that I should like to touch on.
Several times in the last three years I have made a request to the committee that the directors be brought before our committee so that we could talk to them and every time Mr. Gordon has raised strenuous objections. He has read out past statements of the relationship between the president of the railway and the board and he has indicated he does not think this is a proper procedure. But I wonder how long we can go on having confidence in a board, whether it is six or 12, when we get these endless records of deficits and we cannot talk to the board of directors and cannot ask them what are the reasons why the company seems to be making decisions that are supposed to take us out of a bad financial position but seem to put the company further in debt. I can give an example to the minister. The Canadian National Railways a little over two years ago decided to go into trucking. This seemed to be following the pattern of the Canadian Pacific. Now, obviously, somebody sold that policy to the board of directors, but I should like to know why the particular policy was sold to the board of directors?


Jacques Flynn: Order. The hon. member himself has explained that what he is discussing now is irrelevant because he has pointed out that whether the number of directors be six or 12 he would like to know certain things. I would suggest to him that questions on that subject would be better put before the committee that this house has agreed should be set up.


Douglas Mason Fisher: I just wanted to underline to the minister that the fact the number of directors is being increased does not subdue the curiosity one might have about the functions of the directors. On this point, I am strictly relevant. I feel that a larger board, especially if the selection is well made, stands

much more chance, it seems to me, of being suspicious and critical of the management. This is what I should like to see for a period in the history of the Canadian National Railways, a board that would be very critical of the management. I think when one calls for fresh people at the top of the management, that is the time to also call for fresh people on the board of directors. I hope, for that reason, the minister will act very quickly when this legislation is passed, as I assume it will be, to get a new board.
I would suggest that at that time serious consideration be given to an argument that has been placed before us regarding another crown corporation, the Canadian Broadcasting Corporation. I refer to the whole question of the relationship of the permanent employees of the company who, at the same time, are on the board, such as Mr. Ouimet or Mr. Gordon, for example, and the role that they have within the board of directors. I know the hon. member for Greenwood and the hon. member for Simcoe North, I think it is, have often put these questions. I am not trying to interpret their point of view, but I know they have views on this question as to the role of someone who is a senior official of the company and, at the same time, on the board of directors. I know the suspicion has been brought forward in relation to the C.B.C. that the two continuing persons on the board of directors have an advantage when they are speaking to the board about policies which, perhaps, they would not have if the board were somewhat removed from them.
The government has not renewed the appointment of Mr. Donald Gordon as chairman of the board of directors. We have this new legislation before us. One of the most noted of the directors has recently died. It seems to me, therefore, that the minister will have a grand opportunity to bring in not only new faces but to consider allowing the 12 members of the newly constituted board to choose a chairman rather than allowing the president to be reappointed by the government. I do not know what statutory changes that would require, but the suggestion seems to me to be worthy of consideration. The conclusion one gathers from glancing through the 25 year history of the Canadian Pacific and the 25 year history of the Canadian National in statistical returns can be only superficial if one is a layman. However, there are a number of factors I should like to see the board of directors take into consideration. One is the fact that the Canadian Pacific has had more success in keeping down the relationship between payroll and total expenditures than has the Canadian National. I think that we need a
15, 1961
Canadian National Railways Act candid summation of this by the board of directors and the presentation of some kind of information to this house on this particular matter.
There are quite a number of indications in a comparison between the two railways which would lead one to believe all has not been well with the management of the Canadian National in terms of efficiency. I am a believer in public enterprise. I think it can be very good, and I do not think it has to take a back seat to private enterprise. However, the figures with which one is faced when one compares the Canadian National with the Canadian Pacific can only lead a fairly gullible layman like me to be very critical of the management and directors of Canadian National Railways. I would hope, for that reason that the people who would come from across the country to form this larger board would take a fresh look at the Canadian National and, if this government will not remove Mr. Gordon, ascertain whether or not his performance can be jacked up.


Ernest James Broome: Mr. Chairman, we have just heard the hon. member for Laurier in this debate make a series of remarks which I think have been more fitting if they were found in "Alice in Wonderland", because they lack logic; they lack common sense. They were full of fantasy. I agree with the hon. member for Port Arthur when he says that the committee's report was unanimous. We heard nothing from the hon. member for Laurier when we were meeting in camera discussing this subject. We did not hear very much from him in respect of this point in the open committee meetings. The committee's report was unanimous in so far as the recommendation for an increase in the number of directors was concerned. We did not state the number. In fact, I believe that the increase from seven to 12 is too small an increase and I shall advance reasons why I think that way.
Perhaps it is unfortunate that we have a free enterprise company to compare with this crown corporation. However, the comparison is certainly an interesting one. The Canadian Pacific has a 24 member board of directors and seven members of the executive committee. So far no speaker mentioned the executive committee. The executive committee is a committee which ratifies the actions of the senior executive of the company, in this case Mr. Donald Gordon. We were told there was an executive committee of three and that the composition of the executive committee could be different each month. There would be three directors, that is two directors and the president.

Canadian National Railways Act
We were also treated to a dissertation by the hon. member for Laurier on how the Canadian National Railway was set up. It would be a free enterprise company which would operate outside of the control of the department. The minister would report to parliament on behalf of the company but would have nothing to say about its operations. This provision was made in order to give the company all the advantages of a free enterprise operation and to keep it free of restrictions. The purpose was to enable Canadian National to compete with Canadian Pacific. We have seen the measure of their competition in the balance sheets. These balance sheets reveal that something is sadly lacking some place in the organization.
We were told in the committee, coming back to the setting up of this company, that it was not for politicians or members of parliament to put their noses into the business of this company, that this was part of the function of the management and we were simply there to receive the report of the management on the way the railway had been operated. Whether the company had good public relations with its employees, with its customers and with the general public of Canada, did not matter; we were there simply to receive reports. Last year, for the first time, this committee came out with some suggestions. This government has a record of having good work performed by the committees. I refer hon. members, in this regard, to the estimates committee, the public accounts committee and many other committees that have made suggestions which have been acted upon and adopted by the government, suggestions which have been good. These suggestions have come from the rank and file members of this house. We are operating in a way that the former government did not know, and it is apparent that we-


Jean-Paul Deschatelets: Why don't you talk about the industrial relations committee?


Ernest James Broome: Why don't you get yourself on the committee and get in there and do some work; that is the way in which you can do some useful work instead of criticizing all the time. We are making contributions, whereas contributions on the part of the members of the Liberal party are notably lacking. They have been so dragooned over the years that they have not an original thought left, none of them.


John Whitney Pickersgill: The hon. member is getting excited.


Ernest James Broome: The hon. member laughs because he knows as a former minister how well he did his job. To come back to the

composition of the board of directors may I say this. The hon. member for Port Arthur is quite right. It was requested that the directors appear before the committee, but for various reasons it was felt that they should not do so. But they did come up with this operation which has all the advantages of free enterprise and has none of the disadvantages, not one. In a free enterprise system, if your management is not competent or if your management does not produce the results you wish you change them, because they report to the shareholders and the shareholders are interested in the efficient operation of the company.
In this case, the management reports to the executive committee and if the executive committee is not in agreement with the management, management can change that executive committee. The executive committee of the Canadian National Railways are three, and they need not be the same three except for the president. The executive committee of the Canadian Pacific are seven out of a total board of directors of 24. We have on the C.N.R. three out of a total board of seven. If you wish to talk about the officers you find that in the C.N.R. we have 43 officers and in the C.P.R. we have 19 officers. If you want to talk about railway operations only, leaving out ancillary operations of the C.P.R., and if you wish to compare the railway operations, what do you find? This is what you find, and I will give the round figures. In the C.N.R. in 1960 there was total operating revenue of $963 million; operating expenses, $955 million; net revenue, $7.5 million. The C.P.R. in the same period, 1960, there were revenues of $457 million; expenses of $423 million and net earnings of close to $34 million. If you want to go back to 1959, you find on the C.N.R. $740 million on the revenue side, $720 million on the expenses side and $19 million on the revenue side. On the C.P.R. in the same period you find $477 million of revenue, $441 million of expenses and $36 million of net earnings from railway operations alone.
The hon. member for Laurier felt that in this time of unemployment the directorship should not be increased. The Liberals would bring in unemployment no matter what we are discussing. They have got to drag in unemployment on everything, they can think of nothing else. The hon. member brings in unemployment and he refers to the substantial fees of the directors. I may say frankly that I do not think the fees of the directors of the C.N.R. are high enough. They certainly are not substantial. In this the hon. member for Laurier is not any more accurate than he was when he raised a question in the house this morning with regard

to the Vanguard and wanted to know why the T.C.A. did not have the same number of pilots on the Vanguard as there are on Vanguard operations in the United States where none operate.


Lionel Chevrier: What has this to do with the question?


Ernest James Broome: This is a bad day for the hon. member.


Lionel Chevrier: On the contrary.


Ernest James Broome: The hon. member is out of step with the facts. He is out of step with his own party or, rather, responsible members of it. He talks about curtailing expenses on the part of the public, he says that the public are against curtailing C.N.R. expenses and by inference that means that the public desire that there should be a deficit on the part of the C.N.R. This is what it means. He means that the C.N.R. is not to be made a profitable, efficient operation. He says that they should go further into the hole than they are now going, that nothing should be done, and that if this increase in the board of directors is of advantage to this railway he, the hon. member for Laurier, is against it. That is the only inference that can be drawn. Let me tell the hon. member for Laurier that the taxpayers of Canada want the C.N.R. to be a good, well run, efficient operation.


Lionel Chevrier: So does everybody.


Ernest James Broome: He had better-


Lionel Chevrier: The hon. member is talking through his hat.


Ernest James Broome: -keep in mind that the public know that we have had deficits totalling hundreds of millions of dollars. We must try to improve the management of this operation, and to do so not from the point of view of operations alone, but also from the point of view of relations with the public and their employees, and they certainly need better relations in those two fields. This government proposes to increase the number of members among other things in order to do this.
Then we get into this funny story about 12 members and how you break them up among the provinces, how will you do justice to Quebec and what the Minister of Transport has said on previous occasions in this regard, according to the hon. member for Laurier. What I say to the minister is this: "Pick the best men you can across Canada regardless of where they live". We are fed up with this sort of gobbledygook from the Liberals. Let the minister pick good men and we will have a chance of having a good
Canadian National Railways Act operation for once. We never would have this under the thinking of the hon. member for Laurier.


Lionel Chevrier: Pick good Tories.


Ernest James Broome: He talked about representation according to population; so we divide up the people of Canada and this part will be entitled to half a director, that part to a director and another part to a third of a director. This is fantasy and fairyland talk. I am rather ashamed of the hon. member for Laurier for the part he took in this debate because up to this time I have had a sincere liking for the hon. gentleman. I have thought that he made a remarkably fine contribution to the debates in this House of Commons. Tonight I have changed my mind. I hope tomorrow the hon. member will reverse this stand he has taken and that I shall be able to maintain my former high opinion of him.
Not only should this resolution increase the number of directors, but later on the minister should set out that the C.N.R. shall have a strong functioning executive committee of the board of directors. I should like to draw to the attention of the minister the fact that of a C.P.R. executive committee of seven, three are officers of the company, namely the chairman and president and two vice presidents; and of the 24 directors of the C.P.R., 12 are from Montreal. I realize that there are certain variations that we would have to have in a crown operated company but we do not have to get into sectionalism. We do not have a company where each city such as Regina, Vancouver, Calgary, Winnipeg and Halifax must be represented. We need broad regional representation. This is the governing criterion. I therefore say to the minister that this is good, well-thought-out legislation which gives confidence to the committees of this house to do a better and better job, whether the Liberals like it or not. It gives a chance to take the C.N.R., with which I do not believe any of us are satisfied, and to put at the head of it a board of directors which will do a job, will exercise a certain amount of control, will give guidance and will help this railroad to do the job the people of Canada want it to do.


Lionel Chevrier: I think it is the practice, Mr. Chairman, when an hon. gentleman makes statements, such as those which have been made by the hon. member for Vancouver South, interpreting statements made by another hon. member, to take issue with them immediately. I take issue with the hon. gentleman because of the interpretation which he put on remarks which I made.

Canadian National Railways Act


Ernest James Broome: Hansard will show. I have a note.


Lionel Chevrier: All the hon. member need do is read Hansard and he will find out clearly, in black and white, what was said. I do not need the hon. member for Vancouver South to put words in my mouth to the effect that I am in favour of larger and larger deficits. That is not the case. That was not my statement, and the hon. member should know better than to misrepresent what was said by another hon. member.


Ernest James Broome: On a question of privilege, Mr. Chairman, Hansard will give the story. The hon. member for Laurier is saying that I misrepresented him. I have a note here which says, "curtailing of expenditure on the part of the C.N.R. was not in the public interest", or words to that effect.


An hon. Member:: Who sent you the note?


Lionel Chevrier: Then the hon. member had better read carefully in Hansard what was said, or he had better listen to what is said by the hon. member for Laurier. He either was not listening or he was asleep.


Jean-Paul Deschatelets: He was asleep.


Lionel Chevrier: I made no such statement as the hon. member has suggested.


Ernest James Broome: You said nothing about curtailing expenditure? You did not use those words?


Lionel Chevrier: Will you resume your seat. I gave you an opportunity to speak and I did not interrupt you.


Jacques Flynn: Order.


Lionel Chevrier: Yes, Mr. Chairman, I should be addressing the Chair, and I will do so. However, I made it quite clear that there was a deficit of the C.N.R. which amounted to somewhere in the neighbourhood of $65 million, and perhaps it would be higher because of the subsidies required, and I said this was not the time to increase the directors. That is the statement I made. My hon. friend should not be attempting, by the remarks he made, to misrepresent what other hon. members of the house have said, as he did a moment ago.
Then my hon. friend ridiculed the idea that this had anything to do with employment. I say to him that it has a great deal to do with employment. I say to him that when employment is being reduced on Canadian National Railways, this is not the time to increase the directorship.


Ernest James Broome: May I ask the hon. member a question?


Lionel Chevrier: Yes.


Ernest James Broome: Do you mean it is not the time to increase the directorship because they will become more efficient, or what is the reason behind that statement?


Lionel Chevrier: The reason behind the statement is this, that when there is a curtailment or an attrition of employees on the Canadian National Railways it is not opportune to increase the number of directors to administer the affairs of the Canadian National Railways. That is the point I was making.
Then, Mr. Chairman, my hon. friend complained about what had taken place in the committee. My intervention in committee, which I put on record, is quite clear. My hon. friend asked a question with reference to that matter, and I told him to ask the hon. member for Kenora-Rainy River. It may well be that he is in favour of increased directorship, and that is his responsibility. But saying that there was unanimity with reference to this resolution is not correct, because I was not present at the meeting.


Ernest James Broome: That is right, and-


Lionel Chevrier: Just a moment. Had I been present at the meeting I would have opposed it, as I have opposed it down through the years; as the hon. member's own government has opposed it through the predecessor of the present minister. He has opposed it. I am sure that if the management were asked for their views, they would say exactly what we on this side of the house are saying. There may be a time when it will be necessary to increase the board of directors, but that time is not now.


Ernest James Broome: Mr. Chairman, I should just like to correct one thing. The hon. member for Laurier says there was not unanimity in the committee because he was not there, because if he had been there he would have opposed it, and therefore all of us who were there were not unanimous.
This, I beg to say, is exactly the type of reasoning he has used throughout his remarks in this debate. This is the reasoning, that had he been there he would have opposed it; he was not there, and therefore it was not unanimous.


Lionel Chevrier: A great argument.


James MacKerras Macdonnell: Mr. Chairman, I think the ground has been pretty fully covered and there is very little left for me to say. I wish to say at the outset that I am in favour of increasing the number of directors. Indeed, as another hon. member has already said, I would be very glad if the number of directors were raised above the present proposed number.
There are two reasons, I think, for having directors. One is that if the Almighty is

kind you may get directors who are helpful in the management of the railway. The other more obvious and more certain reason is that if you are wise in your appointments you will get people who, by their prestige, and so on, will raise the reputation of the railway in the eyes of the business community and who through their business connections will bring business to the railway.
The hon. member for Port Arthur has pointed this out. He has said that perhaps it is not a situation that we think is ideal, but at any rate it is practical and inevitable and there is nothing improper about it. Incidentally, I can see no reason whatsoever why a crown corporation should not make full use of directors just as well as a private corporation.
In the authority we have set up for a national productivity council we have tried to get the best businessmen we can and the best labour men we can. They have been glad to come and serve.
I am not going to go through the objections which the hon. member for Laurier raised, except for one or two. I did find it difficult to follow him when he said that because this is a time of unemployment we should not be increasing the expenses of the railway.
No one wants to increase them by a dollar, of course. However, what we are talking about would at the most mean a few tens of thousands of dollars; perhaps less than that. If we were wise and got people who were worth their salt, they might very well make suggestions and bring business which would result in hundreds of thousands, and perhaps millions of dollars of business being brought to the railway. If I may say so with deference to the hon. member for Laurier, his point in this respect seemed to me to be quite unreal.
One thing he did not say, which I was glad he did not say and I was afraid he might say, was that these appointments will be political, and will not be good appointments.
In my opinion the appointments that have been made are excellent. Mr. E. W. Bickle died regretted by everybody. I think he was a great asset to the railway. We have no reason to think that we will not get other men of the same calibre. If we can get such people, we should do so, and I do not see any reason why we should not. People like this would play a real part in building up the railway.
One point has been made which is real and which should not be ignored. I know nothing about this, but I think this statement was made by the hon. member for Laurier. The hon. member said that the full-time officials of the railway would not be so keen to get additions to the board.
15, 1961
Canadian National Railways Act
Here I am just thinking out loud. I can imagine that if the executive heads thought they were going to have let loose on them a lot of undesirable people who could not contribute, they might very well not want them. But I would bet my shirt that a man like Gordon-whom I regard as a great businessman-if you matched him with men of his own ability on that board, I venture to say he would be glad to have them.


Mr. Horner (Jasper-Edson):: Mr. Chairman, we have heard an interesting political speech by the hon. member for Laurier. I must say that the Liberal party must be getting right down to the bottom of the barrel to try and make political advantage of a simple measure like this. But everybody certainly on this side of the house, and I am sure this applies to the hon. member for Port Arthur, is trying to do something about the C.N.R. to make it a more efficient operation.
I, too, have sat on the sessional committee. It was my understanding that this was a unanimous recommendation of the committee. Certainly we are very sorry that the hon. member for Laurier could not be there for all the committee meetings. However, at the same time we have to spend some time in these committees, we bring in recommendations and we are very pleased to see the government accepting this one.
I do not accept his premise that the management of the C.N.R. should be asked whether or not they would like an addition to the board of directors. It is my contention that perhaps we need a stronger, more efficient board of directors. I like the suggestion put forward by the hon. member for Vancouver South, of an effective and perhaps little larger executive committee to scrutinize the decisions made by the officers of the C.N.R.
I think enough has been said about the foolishness of the argument of the hon. member for Laurier with regard to unemployment. I have one other remark I should like to interject here, that they have enough vice presidents now in the C.N.R. that they could lay off half a dozen without missing them very much. If they added some competent men from various parts of the country this might very well have the effect of providing management the stimulus that is required to make this railway run more efficiently, and to improve public relations, both with employees and members of the public, assisting the taxpayers in their problem of running this state owned railway.
I thought it rather amazing that the hon. member for Port Arthur, being the good socialist that he is, was apparently having a few agonizing pains because the free enterprise operation of the Canadian Pacific

Canadian National Railways Act Railway was better. I think one of the reasons why that fact exists is because the management of the Canadian National Railways has, like some senior civil servants, been burdened by red tape. They might be able to do a more efficient job if they were aware of the fact that there was to be a searching inquiry made by a sessional committee of the House of Commons. In this regard, I am sure it will come to pass that we will acquire greater detailed information in respect of the operations of the railway, because this is the only overriding scrutiny to which management is subject.	[DOT]
Apparently another reason why the hon. member for Laurier spoke today against an increase in the directorship of the Canadian National Railways was because there had been reorganization of the railroads in respect of several districts, and for some reason or other it would be detrimental to this organization to have an increase in the directorship.
I am unable to follow his thinking in that regard, because it seems to me that with this reorganization, it is vitally important that we have an increase in the board of directors. I am thinking particularly in regard to railway companies operating in northern Alberta. The Northern Alberta Railways is 50 per cent owned by the Canadian National Railways and very seldom has any representation on the Canadian National Railways' board of directors, yet the N.A.R. management makes decisions, or does not make them, as the case may be, and there is no check in this regard.
It seems to me, as I said at the outset, that the Liberal party, particularly the hon. member for Laurier, has been more effective at other times when there was something to take issue with, but the hon. members of that party tonight have been on very flimsy ground when they suggest they are opposed to this proposed legislation because the representation would not be proper geographically. The hon. member for Laurier has tried the old dodge of divide and conquer-if things are not right in Quebec, or western Canada, or other places, it will be bad politically. This was the impression he left with me. I am very sorry he has created that impression because I think it is an extremely weak position on the part of the official opposition. I suggest that this government be commended for accepting the recommendations of the committee, and I personally hope it will continue to do so in future.


John Whitney Pickersgill: Mr. Chairman, I had not intended to say anything about this particular measure regarding whether there should be 12 or seven directors. I do not think it is of major importance, and I do not believe the

hon. member for Laurier feels that it is a major matter. On the other hand, I think we both feel, as do most hon. members on this side of the house, that at a time when the president of the United States is visiting this country; at a time when we have the kind of economic crisis with which we are faced today in this country, we should be concerned with problems of more gravity. What have we been doing in this house today? We have been dealing with horse racing and dealing with the reneval of a stopgap bill regarding the rollback subsides to the railways because the government cannot make up its mind about this and what we are now dealing with is at best, a purely ancillary sort of thing which has been on the order paper for months. In other words, we are being asked to sit these long hours, not to consider the grave situation which faces this country today, but to deal with trivial things like this.


Some hon. Members:: Hear, hear.


John Whitney Pickersgill: I say again that this is a pretty fair sample of the way this government is running this country, and an example of the kind of consideration it gives to managing the business of this country.


Harold Edward Winch: Who has done all the talking about it?


John Whitney Pickersgill: I have explained to hon. gentlemen that I was speaking solely because of the speeches of the hon. gentleman for Vancouver South and the hon. gentleman for Jasper-Edson which really had nothing to do with whether there should be 12 directors or seven, but fundamentally were attacks on the management of the Canadian National Railways. What those hon. members have said is that the government is not doing its duty in supervising the Canadian National Railways properly; that the government was allowing the Canadian National Railways to get away with murder, and that is why they are supporting this bill. This is the inference I drew from the remarks made by those two hon. gentlemen. I do not want to be unfair to anyone, and if those hon. gentleman feel that is an unfair inference to draw they may say so. The hon. member for Vancouver South referred to the deficits of the Canadian National Railways which were getting higher and higher. I suggest there is nothing new about that situation because since there has been a Canadian National Railways, whenever there has been a Tory government, the deficits of that railway went higher and higher. Whether that is coincidence or cause and effect, I do not know, but it is the fact. I suggest the reason for that situation is that we have a Tory government rather than because we have seven instead of 12 directors.

If the management of the Canadian National Railways is as bad as the hon. member for Vancouver South and Jasper-Edson say it is, the government ought to have guts enough to change it. I do not think it is as bad as that, but if it is, the government should have the guts to change it, and I suggest they will not be changing it very much by appointing 12 directors rather than seven. Probably all that will result from this change will be that five Tory heelers will now have something to do with their spare time.


Mr. Baldwin:: Mr. Chairman, I hate to follow speakers on the government side and to pour salt on the wounds which they have exposed under the intellectual armour of the hon. member for Laurier, but shall have to do so later. First, however, having listened to the hon. member for Bonavista-Twillin-gate, I am amazed that-if he is really sincere in the position he takes, that this is a small trivial matter-he felt it was necessary to make any intervention at all in this debate.


John Whitney Pickersgill: I explained why I intervened.


Gerald William Baldwin: The hon. member may have explained to the satisfaction of some members, but I doubt if the majority of hon. members of this committee have been satisfied.
Having heard the hon. member for Laurier earlier today, and again recently, in connection with the very grave problems which he relates to the railways of this country, I thought that any measure at all by which this government could attempt to remedy the situation would be acceptable. I suggest one way of doing that is to attack this problem by organizing some change in the administration of the C.N.R.
I was disappointed, as was the hon. member for Vancouver South, in the attitude taken by the hon. member for Laurier on two instances. I was disappointed first in the stand he took when he opened the discussion on behalf of the opposition and, second, having listened to the very logical and devastating argument made by the hon. member for Vancouver South, I was satisfied that the hon. member for Laurier, in his second statement tonight, was going to tell us he had changed his mind, and that he was now convinced that this was a good and logical bill which the opposition was now going to accept. I was very much surprised that he did not do this.
Mr. Chairman, I will deal first with two of the points which were raised by the hon. member for Laurier. He suggested, as a possible reason why this bill should not be introduced, the fact that the previous minister of transport was not convinced, at the
Canadian National Railways Act time it was discussed by the sessional committee last year, that this was an essential move. I do not know what took place in that committee, as I was not there, but will accept the statement read into the record by the hon. member. However, surely that is one of the trade-marks of this government and of this party'-it is prepared at any time to accept recommendations of a committee when it can be shown that changes in policy, in legislation, and in programs are necessary and desirable. That is the trade-mark of the progressive thinking of the Progressive Conservative party. When changes are required we are prepared to advocate them, to put them in the form of legislation and to place them in the statute books of the country.
Second, the hon. member for Laurier was somewhat critical of what he thought might be the calibre of any new appointments which might be made provided this resolution and the legislation which will be based on it are passed. I think this is a place where the hon. member and members of his party should be very sensitive. After all, when a party has held office for 22 years it becomes tottering, sluggish, lazy and complacent. I always think of that analogy of the line .of extinct volcanoes, which may well reflect the position of the previous government. That type of government is reflected in the appointments which they make. At this time I am certainly not going to specifically criticize the management of the Canadian National or any of the crown corporations, but in the dying days of a government which has held power for many years there is a tendency to make appointments which I fear are not in the best interests of the country; and certainly the balance sheet of the Canadian National Railways, as it has been presented to this House of Commons from year to year, is the best indication of this fact.
I think of a crown corporation where you have an executive who is a permanent member of the directorate and where you have other directors who meet from time to time. There is a strong tendency-the likelihood is most extreme-that as this board meets, the policies advocated by the executive will be passed down to the directors without too much consideration. There should a continual change of directors. There should be a board of directors whose attitude is, "I am from Missouri; I must be shown that this is right and proper". I am satisfied that there has been too little of that in the past. This is one of the reasons why the position of this crown corporation has come to where it is today. I think we need fresh blood, new thinking and a new approach.
I certainly would go along with those hon. members who have suggested that we might

Canadian National Railways Act seriously think of increasing the membership of the board of directors not to 12, but to a larger number. For example, I heard the hon. member for Jasper-Edson speak of the situation of the Northern Alberta Railway. That railway consists of approximately 1,400 miles, and for many years it has had no representation at all on the board of directors. This is an isolated but self-sufficient railway, and it should have some measure of representation on the board. I am not suggesting, for example, that 1,400 miles of railway, in relation to the total mileage of the C.N.R., would justify the Northern Alberta Railway having a separate director, or that the area which the Northern Alberta Railway serves ought to have a separate director, but this sort of reasoning seems to me sound and reasonable. We have not had enough of it in the past.
There is another reason I want to touch on as to the necessity for this change. Anyone who has examined the recommendations contained in the first report of the royal commission on transportation must be struck by their approach to this matter on a regional basis. For example, two of the recommendations which they make deal with the elimination in course of time of passenger traffic in certain areas and on certain lines where it has proven to be uneconomic. The same situation prevails also with regard to freight traffic in what they call low density traffic areas. The suggestion there is that an annual subsidy of $13 million should be payable over a period of 15 years. There has been a recommendation, also, that subsidies totalling some $62 million, subsequently scaled down in five years to 20 per cent of that amount, should be payable in respect of the elimination of the passenger traffic. Now surely, Mr. Chairman, that requires representation on the board of directors on a more varied, more regional basis so that those directors when they come to the board meetings should be able to reflect the thinking and the situation in their particular areas.
When it is necessary for the management of the Canadian National-and I assume the management of the Canadian Pacific-to make various applications to the board of transport commissioners with regard to the gradual elimination of those services, they should be made after adequate knowledge is brought to the board by a director or directors who have some indication of the feelings of the people in that area, who have some knowledge of the economic conditions and are prepared to place this knowledge and information and make their position clear in the board meetings. For this reason, if for no other, it is my sincere opinion that this legislation, when brought before the House of Commons, will

be most timely and will be very effective in helping the Canadian National Railways to deal with the very vexatious problems which will confront them if and when they are required to implement these portions of the MacPherson royal commission report.


John Ferguson Browne: Mr. Chairman, the ground has been pretty well gone over as to the merits of appointing a greater number of directors to the board of the Canadian National Railways. There were, however, a few remarks made by the hon. member for Laurier that caused me some concern. As I recollect his remarks, he said to the minister he did not think the fact that a committee had recommended this was much of a reason for going ahead and doing it. It is a well-known fact that under the previous government committees did not play the part that they are playing at the present time. It has been the aim of the Prime Minister and the present government to build up the amount of work done and the contribution made to our proceedings by committees.
I feel the members of the Liberal party must have some great concern about this because, after all, their own work was put into that committee; they had some members on the committee and during the time that we discussed this matter I do not recall any objection being taken by any one of them. The hon. member for Laurier said he was not there or he certainly would have objected. But none of the other members objected to it and they were there.
Of course, the report was made to the house and there was another opportunity if the opposition wanted to object to it, at that time. I find it strange that we have not heard from any of the members of that party who were on the committee and endorsed the report. I would have thought there would have been a little more freedom within the Liberal party now that they are out of office. We know that that party had some rigidity while they were in office. I would have thought that certainly a party in opposition would have a backbencher who would be free to stand in his place and say something. I say it is very unusual that we have not seen any members of the committee from that party stand up and either agree or disagree with the hon. member for Laurier. I think that a further contribution would be made to this debate if we heard from some of those members who sat with us on the committee. Are they now going to get up and tell us we wasted our time sitting there; that they do not really think committees are much use after all. I do hope the government is not going to be in any way influenced by them.

I am sure the members of the Conservative party commend the government for the action it took to strengthen our committees and to enable backbenchers of the house to make some contribution to the proceedings of the house.


George James McIlraith: Did the hon. member say "strengthen"?


John Ferguson Browne: If the
hon. member for Ottawa West has something to say now will he get up and take part in the debate and say what he thinks of the contribution of the members of his party in relation to the committee, the work which the hon. member for Laurier has said was useless, that they did not know what they were doing. In any event, committees really have not much to do with it, anyway.
I am not going to go over the arguments that have been made as to the merits of appointing directors. Of course, the suggestion made by the hon. member for Laurier that because employment on the railroad is going down we should not have an increase in directors is so ridiculous it is only an oddity because anyone who thinks about it would surely think if there would be any reason for strengthening the board of directors of the railway it would be that very fact. I cannot think of any thing that would cause us to want to make more efficient the management of the railway than that very thing, to try to protect the employment of the persons engaged on the railroad.
It was pointed out, of course, that in the case of other similar companies they all had much larger and more diversified boards of directors, and nobody has really got up to dispute that or to give any logical reasons why the C.N.R. board should not be enlarged. On the other hand, we have heard all the excellent reasons why it should be. I hope we will hear from some of the members of the Liberal party who served on that committee. I am most concerned that they should just say nothing and allow the remarks of the hon. member for Laurier to go unchallenged because this would make it appear that that committee was really wasting its time and that its recommendations should not be heeded.


Douglas Mason Fisher: Mr. Chairman, the hon. member for Jasper-Edson placed an interpretation on my remarks and since it is popular today to put a gloss on the position that other people take for you may I say that I believe he indicated that I was agonized perhaps because as a socialist I find the C.P.R. doing better than the C.N.R. I want to put my view in a nutshell. The hon. member for Bonavista-Twillingate said that two members
Canadian National Railways Act of the government were in effect making criticism of the management of the C.N.R. I am not taking that interpretation from it, but this is what I mean. I do not want the fact that I criticize the management of the C.N.R. to stand either as a reflection upon the employees in the main or to add to any merits that the C.P.R. may have.
When you have three divisional points in your constituency on one line and two on another you come to know some of the employees, and I do not believe that the ordinary brakeman, conductor or maintenance of way man on either railway is inefficient or bad or poor. I see very little to choose between them. The comparison I have in mind has to do with the statistics. Mr. Gordon always tells us that there is no point in comparing the statistics, that you cannot look at the C.N.R. and the C.P.R. We are gullible. We do not know. We cannot stand up against Mr. Gordon.
I pointed out this afternoon that for ten years he has been coming before committees and in the past the best M.P.s in the house have taken him on and he has always been able to confound them. He always makes an annual plea about free enterprise, that the C.N.R. is to be treated as a private corporation. Then he always manages to put over a homily about how you cannot really compare the C.N.R. and the C.P.R. Then we get another little homily that certain information cannot be revealed because that will impede the competitive position of the C.N.R. Quite frankly, Mr. Gordon may consider that I have a great deal of crust and gall and am probably wickedly irresponsible in saying that I have grave doubts about the management of Canadian National Railways. The fact remains, however, that I have this suspicion. We have recurring large deficits. As far as the railway workers throughout the country are concerned they are a morose group of wage earners. It is also my hunch that there is an unpopular public response to the railway.
Having said these things, may I say that I welcome the increase in the number of directors. There are other changes I would welcome more. When the board of directors is duly constituted I suggest that they should take a good look and find some means of comparison that we with our resources as members of parliament cannot find. There is a very definite legal fiction in relation to this whole business of the C.N.R. reporting to parliament rather than to the government. It seems to me that one of the things this house needs to do is to make up its mind that it is a legal fiction because if any member of parliament who is on the committee feels that with our present resources he is

Farm Improvement Loans Act really capable of making a good analysis of Canadian National Railways, I think he has another think coming.
This being the case, it seems to me that we want to examine what I call this legal fiction that the C.N.R. is actually responsible to parliament in the sense that it reports to one of parliament's microcosms, the sessional committee on railways, air lines and shipping. This is the main reason why I welcome the idea of more directors. It may not be worth a hoot but I welcome the idea that we are going to have more directors and that they are going to be drawn from more places and have a greater variety of backgrounds. Maybe we can get some inkling as to why this huge mammoth concern is in the difficulties it is when, as so many people are fond of saying, it has this magnificent president and this great management team at the top.
Resolution reported.


Léon Balcer: that the resolution be concurred in.


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


Lionel Chevrier: On division.


John Whitney Pickersgill: On division.
Motion agreed to on division and resolution concurred in.
Mr. Balcer thereupon moved for leave to introduce Bill No. C-94, to amend the Canadian National Railways Act.
Motion agreed to and bill read the first time.


FARM IMPROVEMENT LOANS ACT
Donald Methuen Fleming: that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure to amend the Farm Improvement Loans Act to provide that the maximum amount of bank loans made during the period ending on the 30th day of June, 1962 shall be four hundred million dollars, an increase of one hundred million dollars.
Motion agreed to and the house went into committee, Mr. Chown in the chair.


Donald Methuen Fleming: Mr. Chairman, the purpose of this resolution is to permit the introduction of a bill to amend the Farm Improvement Loans Act. The bill is very brief. In a word the amendment provides for an increase of $100 million in the aggregate principal amount of guaranteed loans which may be made by all of the chartered banks during the existing lending period, April 1, 1959, to June 30, 1962.

The limit on guaranteed loans under the act now established in the legislation for this period is $300 million, and it is proposed to increase that amount to $400 million. From April 1, 1959, which is the commencement date of the current lending period, until February 28 last a total of 134,200 loans had been made amounting in round figures to $194 million. Lending has exceeded earlier expectations and there remains just over $100 million in this authorized lending pool for the remaining 16 months of this present term. If present lending trends continue, this amount will be insufficient to cover the total of loans which may be made between now and the end of the lending period.
The amendment is designed to ensure that an adequate supply of credit will be available to Canadian farmers for farm improvement purposes under the legislation. Hon. members will, I am sure, be gratified to know that the credit facilities provided by the act have proved so valuable and have been so widely used by Canadian farmers. I might refer hon. members to the annual report under the act for the year 1960, which has been tabled. The report indicates that there has been a substantial increase in lending during recent years and that the total of loans for 1960 of approximately $102 million represents an all-time annual record.
The bill to be founded upon the resolution, Mr. Chairman, is very brief. It will change one word in the act. This is the word "three" in section 5(d) of the act as amended in 1959 by chapter 25 of the statutes of that year. The bill will change the word "three" to "four".


John Whitney Pickersgill: The Minister of Finance, I am sure, will be gratified to learn that for once I quite agree wholeheartedly with something he is doing in this house. We on this side of the house are exceedingly proud of this piece of legislation which was part of the reconstruction program introduced by the Mackenzie King government and by that great finance minister, Hon. J. L. Ilsley, at the end of the war. The fact that this legislation is continuing to serve the Canadian people well, particularly that community to which it was directed, and has served as a model for another bill the minister introduced earlier this session that we also had pleasure in supporting, is I think a matter of gratification to a party which, according to the Globe and Mail, provides the ideas in this house.


Herbert Wilfred Herridge: I rise to express our support for this resolution. I might say that we are rather pleased to notice that the minister comes before the committee, according to the act, to get authority to guarantee this 10 per cent of the additional funds that are required.

We are very glad that they are required. We support this measure wholeheartedly because it has played a very important part in the years since it was first made effective in assisting and developing the economic family farm. I think the experience of the administration since the act was given effect proves this piece of legislation has been very valuable to the farmers in this country who needed short term or intermediate credit.
I know quite a number of farmers in my own constituency who have utilized this act. I see that, according to the report, the purposes of the loans are, the purchase of implements-there is a considerable increase in that

the improvement and renovation of farm buildings; the purchase of livestock; the clearing and breaking of land-this is a section in which I am particularly interested and I will come back to it in a few minutes -and miscellaneous developments. According to the report, a remarkably low loss ratio is shown, about one tenth of 1 per cent. I think that is a remarkably low loss ratio. When the minister replies, I should like him to inform the committee what the loss ratio is on commercial loans from the banks under ordinary circumstances. The comparison would be very interesting. I think the loss ratio demonstrates the stability of the investments and the fact that the money is being loaned wisely.
First of all, I want to make a suggestion that I have made previously in connection with the clearing and breaking of land. I believe that farmers who borrow money to clear and break land should receive the same exemptions for the money expended in that direction as the gas and pipe line companies or oil companies receive under the Income Tax Act on the basis that they are bringing natural resources into production. I do urge the minister to give some consideration to this suggestion. I think the farmer who increases our agricultural production by breaking or clearing land, draining land or in some cases diking land, should receive the same consideration as these other companies under the Income Tax Act. I feel there are valid reasons for the consideration of these representations.
I should like to ask the minister if he has received any representations or suggestions from farm organizations in the last year in respect of the improvement of the administration of this act.


Donald Methuen Fleming: I do not recall receiving any.


Herbert Wilfred Herridge: Has the minister received any suggestions from the banks for the improvement or amendment of the legislation?


Donald Methuen Fleming: Not recently.
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Farm Improvement Loans Act


Herbert Wilfred Herridge: Has he received any suggestions for improvement of the act from his own officials?


Donald Methuen Fleming: I think the legislation has been working satisfactorily. The hon. member is aware that these are government guaranteed bank loans and, so far as the officials of the department are concerned they are concerned with the administration of a loan toward which the crown stands in the relationship of a guarantor and not the original lender.


Herbert Wilfred Herridge: Then I should like the minister, when he replies, to inform the committee what the normal procedure is when the government has to meet the guarantee for a certain loan. What is done then to attempt recovery of the loan after the government has met the guarantee? I am not quite clear about that.
I should like to know what information is sent out to farm organizations, and what advertising is done. The one criticism I have to make is that some bank managers are not quite alert in this respect. I have a letter on my desk which I received yesterday from a local bank manager who is interested in a dairyman who wants to take advantage of this act. The bank manager has informed him about it and told the dairyman what can be done. In other cases, however, I find bank managers are not fully acquainted with the benefits of the legislation or do not take the time to inform local farmers and farm organizations of the advantages of this act. What is done in the way of advertising? Does the Minister of Finance make a practice-I think it would be a good one-of making certain that the farm organizations receive literature? I am not suggesting that every organization should receive this literature, but the provincial sections of national organizations should receive it. Then, too, sufficient copies of the annual report should be sent to each local farm organization such as the Canadian Federation of Agriculture branches, dairy organizations, livestock organizations and organizations of fruit growers, so that they would be distributed to the members. I think-that would be very valuable.
I think the act could be utilized to an even greater extent. My major criticism is that a number of farmers I meet are not aware of this act. I cannot understand it. I think there is really a lack of information so far as local organizations are concerned.
Those are the remarks I have to make at this stage. Like the hon. member for Bona-vista-Twillingate, we find we are a sort of happy family in supporting this legislation

Farm Improvement Loans Act tonight. The suggestions I make are made in a good spirit, and I should like to hear from the minister.


Donald Methuen Fleming: The hon. member has asked about several points. As hon. members are aware, this legislation has been in existence now for some 17 years. It has been amended from time to time. It was originally introduced with a limit on the term of years for which it was in effect and with, of course, a ceiling on the extent of crown liability. This period has been moved forward. As the hon. member will recall, in 1959 we brought amendments before the house and those amendments enlarged the scope of the act. They moved forward the lending period. They fixed the total of permissible loans at $300 million and enlarged the maximum individual loan from the figure of $5,000, as it had been previously, to $7,500. These amendments have been very well received and have undoubtedly proved their usefulness to the Canadian people.
As to making the available facilities of the act known, I think it may be said that the facilities of this legislation are well known to the Canadian farmer today. It is a well established credit facility available to him. Pamphlets have been available through the rural branches of the chartered banks for a long time explaining the features of the act and the facilities that are available under its terms to the farmer.
The hon. member asks about the way in which the guarantee is administered. The act, of course, stipulates the total of loans that may be made in pursuance of its provisions. This total is not a revolving fund. It is a total of loans permitted in the particular lending period. In the earlier years of the act these were three-year periods. In 1959 we made the present period of three years and three months in order to bring it to June 30, 1962, which was thought to be a more convenient date for the house in the course of its sittings. The legislation fixes the extent of the crown's liability as guarantor in the 10 per cent provision which is to be found in section 4, subsection 1 of the act.
As to the guarantee itself, these loans, of course, are made by the banks and the individual branch bank is responsible for reviewing the suitability of the applicant and his eligibility for a loan. The ordinary tests as to credit worthiness of the applicant are in the hands of the local branch managers to enforce. Then the loans made under the act by the bank are reported to the department. Regular reports are submitted to the department and a record is kept there of the loans. There must be a record, of course, in order
[Mr. Herridge.l

to be sure that the operations are carried on within the limits of and according to the terms established by the legislation.
When a default occurs it is, of course, the responsibility of the lending bank concerned to endeavour to enforce the terms of the loan. It is only when the bank has failed in its efforts to remedy the default that the claim would be made in pursuance of the guarantee. When the claim is made on the guarantee it is only after the bank has exhausted its normal remedies in its endeavours to collect, that the loan liability would be discharged by the guarantor, namely the crown. In that event the crown is subrogated to the rights of the lending bank so that if there were opportunity for recovery against the borrower, in that case the crown would be in a position to exercise the rights that had previously accrued to the bank under the terms of the loan. That is the procedure.
The hon. member for Kootenay West has pointed out the loss record under this legislation as being quite a remarkable one. The 1960 annual report at page 4 contains this instructive paragraph:
Losses under this legislation continue to be low. During the year-
That is the year 1960.
-209 claims for a total of $167,406 were paid. Since the inception of the legislation 1,752 claims have been paid for a total of $1,192,594. On the basis of a total of $1,013,782,362 lent, the loss ratio is approximately one tenth of 1 per cent.
Recoveries of claims paid to date amount to $100,605.
To paraphrase what has been there stated in the report, the aggregate of loans made under this legislation since 1944 exceeds $1 billion. Yet in the 16 years of operation the number of claims on which default has been made with a resulting claim under the guarantee is just 1,752. The crown has paid in pursuance of its guarantees a total of $1,192,594; and the crown having paid out under its guarantees sums totalling that figure has made recoveries of $100,605.


Herbert Wilfred Herridge: There is just one question that I overlooked and I hope the minister will not mind my asking it now. Has the minister recently received any representations from farm organizations with respect to any amendments to the legislation?


Donald Methuen Fleming: No; none that I am aware of. I think it is an indication of the fact that the legislation is working very satisfactorily.


Mr. Gundlock:: When I speak on agriculture matters, I find that I am repeating myself. It seems that invariably I follow the hon. member for Bonavista-Twillingate and the hon. member for Kootenay West and it

has been a pleasure to do so. The hon. member for Bonavista-Twillingate indicated his happiness over the fact that during a certain period this original bill was instituted. I can only say that during another certain period the bill has been made most effective.
Following the hon. member for Kootenay West I have only this to say. I certainly agree with him and I enjoy his support. I just wish to state, putting it in simple language, that this increase of 25 per cent in the matter of farm improvement loans is to me a great step forward.
Recently, in other places connected with this house we have been told that this is a most wonderful piece of legislation, although possibly a little bit less than what it could be. I may say frankly that I refer to certain machine companies in certain discussions with regard to farm machinery prices. Time and time again it was stated by those particular companies that this very act itself had contributed much to the welfare of Canadian agriculture in particular. Their only comment was that it did not go quite far enough. I repeat what I said previously. I am very happly to bring this matter to the attention of the committee. The final over-all figure is increased.
There again I would call this statement to the attention of the very quiet group in the corner. They have so often talked about interest rates. On several occasions in the committee it was pointed out to us, and very reluctantly as a matter of fact, that the equipment companies do make arrangements to finance farm machinery purchases, and of course the rates of interest are from 10 to 11 per cent.
Mr. Chairman, in rising tonight in committee to support this measure we all realize that the rate of interest is 5 per cent. Most certainly we must all commend the government for increasing the total amount available under this measure to Canadian agriculture for the purchase of farm machinery, livestock and all the way down the line.
This means more aid and more support to Canadian agriculture, which particularly relates-and I again endorse some of the things said by hon. members who have spoken before me in this committee-to the small family farm. This question has come up so many times previously that I am not going to go into it and take the time of the committee tonight. However, by way of emphasis I should again like to say that this increase in the total amount most certainly enlarges the aid to and contributes to the betterment of the family farmer in Canada.
What I said the other night in supporting another bill might bear repetition at this time. It is certainly our duty to support the 90205-6-307i
Farm Improvement Loans Act Canadian family farm, because as I emphasized at that time it is my conviction-and this has been borne out more and more as the legislation of this government takes form; perhaps not in completion, but as it takes form- that we can compete, and compete economically, particularly in light of the fact that such legislation is continually being brought forward and improved. In saying that I speak with all deference as a Canadian family farmer.


Hazen Robert Argue: Mr. Chairman, hon. members of the committee have been very much in agreement on this resolution and the hon. member for Bonavista-Twillingate made a speech in which he commended the government for having continued Liberal policy.
I have noticed a tendency in the Department of Agriculture that when they are continuing what is really legislation that has already been placed on the statute books, they usually make some announcements about improvements that they say are exceedingly important and far-reaching. Then they change the title of the act in order that everyone will forget that the basic act had been passed by a former administration.
Although the Minister of Finance has not done this, I wonder why he has resisted this temptation, because he could have upped the extent of the provisions. He might have extended the definition of livestock to include other birds and animals that are not contained in the definition. He might have changed the title so we would forget that this act had been amended and improved.
The Minister of Finance might have changed the name of the act. It has been called the Farm Improvement Loans Act; he might have called it the farm development act, or the farm bank credit act, and then we could have forgotten the bad record of the former administration-


James MacKerras Macdonnell: The minister does not want to take away the simple pleasures of the opposition.


Hazen Robert Argue: I am glad the Minister of Finance takes this very practical attitude and has not changed the name of the act. However, I think there are certain improvements that could be made in the act.
We are very pleased that the government is increasing the aggregate sum that may be loaned by the banks with this guarantee. I think that not only the lending history under this act demonstrates that this move should be made, but information coming to us in the agricultural committee indicates that this particular act should be used much more extensively than has been the case.
One of the witnesses before the agricultural committee, a witness for the farm implement

Farm Improvement Loans Act dealers, was asked a question, if I remember correctly, as to what proportion of loans for financing the purchase of farm implements was made under this act. His reply was 25 per cent. Therefore according to this gentleman 75 per cent of the money loaned for the purchase of farm implements is either provided by the implement companies themselves, by finance companies, or perhaps to some extent by credit unions.


Heber Edgar Smith: Not necessarily.


Hazen Robert Argue: My hon. friend can make his speech later. He says, "Not necessarily". I think it follows from that statement that a very large proportion of the implements being sold today are being financed by the companies themselves.
I would be interested in obtaining information on this particular point if the Minister of Finance has that information. I do think it is an important point in assessing the relative value of this legislation. We are all in favour of it and we think it is good legislation. We are not quarrelling with it. However, it would be interesting, if the minister has this information, to know what proportion of farm implements are being purchased through financing under this act, or alternatively are financed by the implement companies themselves through their own credit corporations.


Donald Methuen Fleming: Mr. Chairman, I certainly have not the figures on those points, but I can say to the hon. member that approximately 80 per cent of the loans made under the terms of this act are used for the purpose of assisting in the purchase of implements.


Hazen Robert Argue: Of course, the minister understands very well that he is not answering my question. All he is saying is that this act in the main is used for the financing of farm implements. However, the minister does not have the information and I am not being critical.


Heber Edgar Smith: May I ask the
hon. member a question?


Hazen Robert Argue: Surely.


Heber Edgar Smith: Does the hon. member suggest that all loans made by banks for the purchase of farm implements are made under the terms of this act and that none are made on the normal security of debtor and creditor?


Hazen Robert Argue: No, I would not say they are, but I would think the vast proportion are made under this act. If the hon. gentleman has information on this point that he can give the committee, I would certainly be pleased to hear it. My own impression at

least, from talking to farmers, is that farm implement loans are generally financed under this act.


Deane Roscoe Gundlock: Would the hon. member permit a question?


Hazen Robert Argue: Certainly.


Deane Roscoe Gundlock: Are you speaking for western Canada?


Hazen Robert Argue: I am speaking about western Canada, yes. The figure I referred to was given to the committee. I do not know that it applied particularly to western Canada.
However, there has been growing up in recent years a practice by farm implement companies themselves to finance a very substantial proportion of their own farm implement sales.
This is of course important to them and it is important to the dealers, because it makes it possible for them to make sales that perhaps otherwise would not be made. But it is very expensive for the farmer; it means a higher cost for the financing of farm implements. We were told the rates were in the neighbourhood of 12 per cent, and certainly to finance farm implements through the farm implement companies themselves would cost twice as much-perhaps more than twice as much-as the cost under this legislation.
I think it is very much in order that we should increase the total amount of money that may be loaned under this act in the hope that the banks will be lenient, that they will promote this kind of loan, and that the implement companies and the farmers will make use of these facilities. I think there is probably a tendency on the part of banks to make loans with guaranteed higher interest rates, although I understand they have changed this policy. I certainly think it is correct to say, with the existence of policy generally restricting bank credit, banks will put the squeeze or lid on this kind of loan, and enforce the same kind of control as is enforced in respect of other types of loans.
This is good legislation and should be continued. I feel there will be ample money available under the act to cover loan needs of agricultural producers. I repeat again now, something which I have stated in discussions of this type of measure in the past, that I feel very strongly that guarantees which are given to banks, under this and other legislation, should be given to credit unions.
The minister may say that credit unions have not asked for this type of legislation. He may also say, as he has said before, that credit unions are not under the jurisdiction of the federal government. He may be able to give many reasons why he disagrees with the suggestion I have made. I made this

proposal when another bill was before the house guaranteeing bank loans to small businesses, and the minister of finance, of that day, said that credit union spokesmen and representatives had not asked for this type of guarantee. I feel those representatives were a little slow and not perhaps completely up to date regarding the matter, because after that legislation had gone through the House of Commons and was before the banking committee of the other place, representatives of a co-operative union said that under certain circumstances they would like these guarantees to apply to them. While the minister was absolutely right when he said that credit unions had not asked for this guarantee, they did ask for-not full guarantees across the board-guarantees under certain circumstances. I am sure the day will arrive when guarantees under this kind of legislation will be given to credit unions. I think the fact of the matter is that not only has the government itself been reluctant to provide this type of guarantee, the credit unions themselves have been slow in asking for it and in coming to the conclusion that it should apply to them.


Heber Edgar Smith: Mr. Chairman, may I ask the hon. member another question? Would credit unions be willing to lend money at the same rate of interest provided under this legislation?


Hazen Robert Argue: To secure an answer to that question, I feel we should direct it to the credit unions themselves. Perhaps we could also ask whether guarantees would be given to credit unions if the interest rates were higher, but only the minister can state government policy. Credit unions provide loans at something more than 5 per cent, and they provide insurance on the loans. That is certainly something which is worth while.


Mr. MacLellan:: Mr. Chairman, I should like to ask the hon. member a question. Is the hon. member intimating that the Conservative government is smarter and further ahead than credit union management?


Hazen Robert Argue: If the hon. member wishes to take that implication from what I have said, he may. I do not think it was inferred. I think credit union representatives are ahead of the minister, but the minister was correct in saying that they had not asked for guarantees.
I feel that guarantees such as are provided under this act should also be made available to credit unions. The hon. member asks whether credit unions will lend the money at this low rate of interest; I am not sure that they can, because credit unions in the area from which I come are lending money at rates of interest in excess of this. Some
Farm Improvement Loans Act charge about 7 per cent interest, but they pay patronage dividends. They pay dividends to the individuals who borrow the money. However, I do feel that credit unions, at least under certain circumstances, would be able to lend money at this rate of interest, but they should be allowed to speak for themselves. I think representatives of credit unions should be allowed to appear before the banking and commerce committee in order to explain to members of parliament why they should or should not like guarantees such as are provided under this and other acts. I look forward to the day when credit unions in this country are given the same kind of guarantees as are given to banks. I look forward to the day when credit unions occupy an even larger portion of the lending field and, in fact, become the people's bank, owned and operated by membership, and feel that when that day arrives they will carry out a very useful service providing money at rates of interest certainly lower than the rates of interest now being charged by small loans companies after having paid dividends. I refer to interest rates much lower than those charged now by implement companies.
I suggest also that banks should be more lenient in the provision of loans under this act. I feel it is a disgrace to the banking system, to the government and to parliament, that institutions, charging interest rates of 10 or 12 per cent, should be occupying, to a larger and larger degree, that area of farm implement lending.
The interest rate provided by this legislation is very reasonable. The resolution which was introduced when the last amendments to this act were made did not initially contain a limit on interest of 5 per cent. Some hon. members worked very hard to have the 5 per cent limit placed in that legislation, and we are very glad that this has been done, and feel this is the kind of interest rate that should be provided.


Walter Clarence Henderson: Mr. Chairman, I should like to say a few words about this resolution. I believe this is wonderful legislation. Increasing money for loans from $300 million to $400 million will be of great assistance to the young farmers in the Peace river district of my constituency. In that area we have 1 million fertile acres, the finest land in the world. Wheat grown in that area has five times won the championship of the world at the Chicago exhibition, which finally barred one Herman Trellee from entering a sample from the Peace river country.
Not long ago we had people from the United States coming into the area buying up the ranch land. Young farmers want to

Farm Improvement Loans Act buy their fathers out because they have cultivated the land, worked it and know exactly how to farm it. They wish to stay in the farming business and, to do so, like to buy out the old man, and the old man wants to go into town to retire. These old gentlemen are in the age group that I am in, around 70, and are getting too old to do the hard work, and the young fellows want to take over. Naturally they want to take over those farms on which they have been raised and have made a living and the farming methods for which they understand. I suggest that no one is a better farmer than the boy who has been raised on the farm.
The Peace river country, as I have said, is wonderful country consisting of a million acres. When I look out over the Ottawa countryside and see this stony land it makes my heart bleed. These are good hard working people, and that country would be an asset to Canada. Land is a thing that is needed. We need more money. The sum of $400 million is fine, but let us get it up to $500 million.
Like the last speaker, I think the co-operatives should come under this legislation. We have one of the largest co-operatives in Canada at Dawson Creek. Hon. members can check and see whether I am right. Some hon. members laugh, but we have the largest cooperative store in Canada. We are not out in the bush, you know; we are located in the finest farming country you ever saw. Those people came in just the other day with 2,600 ewes. They lost 14 bringing them in. If we can kill off New Zealand in so far as their lambs are concerned, why we can raise all of the lambs necessary for all of western and eastern Canada.
I just wish to compliment the minister on this fine resolution and I hope we get more money still. Thank you.


Mr. Horner (Acadia):: I should like to say a few words on this particular resolution. I realize that it may well be a necessity because of the amount of loans made in the past two years. The sum of $98 million was borrowed in 1959 and $101 million in 1960. If another $100 million, or a little more, is loaned in the coming year we shall well exceed the limit which, as I understand it, is now $300 million. Therefore this legislation is certainly a necessity. The maximum amount must be increased to $400 million.
In looking over the report of the farm improvement loans board tabled in the house by the minister I find that on page 7 it suggests that the banks have given the fullest co-operation toward meeting the credit requirements of agriculture generally. Before the committee on agriculture the farm implement dealers suggested that as early as

May 1959 they sought other ways to provide credit for farmers to purchase agricultural machinery. This is interesting because in 1958 this government increased the amount of the loans, as has been mentioned already, from $5,000 to $7,500. It is interesting to note on page 10 of the 1960 annual report that the loans jumped from $69 million in 1957 to $90 million in 1958, to $98 million in 1959 and to $101 million in 1960.
Five years before the maximum was increased the maximum amount loaned out in any one year never exceeded $70 million. Certainly, the extension of the amount loanable from $5,000 to $7,500 did give quite an advantage to a large number of farmers with respect to the amount of the loan for the purchase of agricultural machinery. It certainly was welcomed by the machine companies themselves.
I had grave doubts, Mr. Chairman, and wondered whether perhaps this would not simply allow the well established farmer to borrow more money. I am pleased to see that, according to the annual report of 1960, at page 4, there were 28,774 borrowers who had not previously obtained farm improvement loans. I think this is a welcome figure and it accounts for 42 per cent of the number of loans made. Therefore, I might suggest that perhaps new farmers are coming into the borrowing field at all times, and perhaps more farmers are taking advantage of the Farm Improvement Loans Act.
I might say that at times I have been a bit disturbed about how this legislation is administered and how the operations of some banks have limited the amount of the loan under the act. I notice in the 1959 report that the Bank of Commerce loaned less money in 1959 than in 1958. It was one of those banks that was perhaps lending money, or lending a greater share of its money, to more lucrative business. I think that to a greater extent the banks could lend money to farmers who, through necessity or a desire to get ahead, have branched out and accepted part-time jobs besides their farm work. Some banks have a tendency to limit loans to this type of parttime farmer, and other tenant farmers have found it difficult to borrow money because they do not have a secure title to the land. They may have a long term lease of it, but the banks have been reluctant to lend to them because in the next year or two they may be somewhere else or in some other farming community or district.
I notice that on page 7 of the annual report it is suggested that the terms of the loans and the rate are 5 per cent per annum. The hon. member for Assiniboia suggested that when this measure was brought into the house in 1958 there was some suggestion of changing

the interest rate. Well, he was mixed up as usual. What he was referring to was the Farm Credit Corporation and not the Farm Improvement Loans Act. I am not really surprised because the hon. member for Assiniboia has been taken in this house to be an agricultural expert. But he is so far away from the farm that I do not think he could tell a tractor from a combine, let alone a kernel of wheat from a kernel of barley. Therefore, it is quite normal to expect him to get mixed up between a Farm Credit Corporation loan and a farm improvement loan, which are two different things entirely. The one is a loan from the government, the other is a loan through the bank for a smaller amount, mainly toward the purchase of machinery.
The hon. member went on to talk about credit unions and co-operatives taking advantage of this legislation. I do not think there would be any objection to that if they became a chartered bank and loaned at the same interest rate. I do know the farmers would welcome another lending institution from which to borrow. I know the credit unions are sometimes short of lending money but some of the large co-operatives have quite a bit and are able to back a lot of insurance companies and so on, particularly those in Saskatchewan. Therefore, they might well have the financial resources to enable them to become a chartered bank, or set up a chartered bank and get under this act. I do not know, but I would welcome it if they did.
One of the things that I should like to see taken into greater consideration under this act while they are expanding the amount to be loaned under it is a change in the attitude of banks toward lending money toward the purchase of machinery. Some of the banks have a tendency to lend money toward the purchase of new machinery or practically new machinery. I know it is difficult for a farmer. He might see a tractor that is five years old. A lot of five year old tractors are pretty good machines and they could be picked up at pretty reasonable prices; but it is sometimes difficult for a farmer to get a farm improvement loan on a five year old tractor. Banks are a little hesitant about putting out the money. They would like to see the farmer purchase a new tractor, and they would give a farm improvement loan on a new tractor. But oftentimes a farmer can borrow a lot cheaper on a five year old tractor and he can buy it a lot cheaper. I realize that you can pick up many lines of machinery that are one, two, three years old. But when you get in the five to ten year class, a lot of bankers are very reluctant to lend under this act on these particular types of machines.
I also notice in the annual report that a greater number of loans are being made for
Farm, Improvement Loans Act livestock. Actually, in the past three or four years, whether we like it or not, the cow has become a very stable sort of financial investment for farmers, particularly in western Canada and, I might say, in all of Canada. There is no safer place to invest a dollar bill than in a cow. I think the banks could make a substantially greater amount of loans toward livestock purchases. Recently a lot of feeder associations have been established which are making loans for the purchase of livestock by cattle feeders and other farmers who wish to purchase livestock but these farmers must pay 6J per cent on the borrowed money. If they could borrow the money under the Farm Improvement Loans Act they would only have to pay 5 per cent interest and the cattle would be theirs. If they decided to keep them for an extra year they would not run into any difficulty if they met their payments on their loans and they would have a greater length of time to pay the money.
I notice that farm improvement loans are repayable within four years but that the maximum period is ten years. I must say that in my experience of farm improvement loans the limit in most cases has been three years although with the extension in the amount that can be borrowed from $5,000 to $7,500 the banks have tried to extend the period to four years and possibly five years. I think it would be a very rare exception where they would extend the period to the maximum of ten years and I wonder how many times they have actually done so.
I was interested in learning that before the agricultural committee one of the farm machinery companies had suggested that 38 per cent of the machines purchased through their dealers in western Canada last year were financed by their own finance company. To me this was a surprising and shocking statement because these farmers were borrowing money at an interest rate of 11 per cent. I would think that if the banks were willing to co-operate and lend to the fullest extent on new and used machinery the great field of machinery financing into which the machinery companies are stepping would be absorbed under the Farm Improvement Loans Act.
Some members may wonder why I emphasize a greater amount of lending for secondhand farm machinery. Today in western Canada, and I think the same holds true for all of Canada, I know that there are two secondhand tractors sold for every new one or possibly three or four in the case of some dealers. Therefore when I look at the annual report and see that 26,000 tractors were purchased last year I wonder how many of those were used machines and how many were new. With respect to used machinery

Farm Improvement Loans Act particularly, the finance companies which are part and parcel of the machine companies are moving into this field at a rapid rate. In fact, some dealers have told me that the only way they can move stock is to find somebody whose credit rating at the bank is not good enough and who is willing to take secondhand machinery such as they have on their lots at the company's terms, which means an interest rate of 11 per cent. Therefore I think the greatest area for expansion under the Farm Improvement Loans Act is to give greater consideration in the case of secondhand machinery and also in the case of livestock loans and permitting farmers to purchase livestock on a three-year basis. To my way of thinking this would be very helpful to anybody wanting to purchase what might be termed a basic herd. Three years is a relatively short period to pay for a basic herd and this period could well be lengthened to the maximum of ten years if the farmer had that kind of credit rating.
A few years ago livestock prices were fluctuating a little more than is the case today. The farmers of western Canada all remember the foot and mouth disease outbreak and the drastic drop in cattle prices after that occurrence. Today, however, there is a floor price on cattle and the market will not depress completely. Therefore there is not nearly the risk in investing money in cattle that there was in 1952 when a great number of feeders in western Canada went completely bankrupt because there was no floor under cattle and prices dropped substantially.
I have very little more to say than that I hope the banks will make a real effort to extend credit in the areas I and other members have mentioned tonight. I hope that the farmers will take greater advantage of the 5 per cent interest rate rather than turning to the finance companies set up by the machinery companies. Last year and in years past the finance companies have been making substantial profits. It might be interesting to note that Traders Finance made as much money as the average chartered bank in Canada.


John Whitney Pickersgill: Mr. Chairman, I am going to raise a point of order. We are being asked to sit exceptionally long hours and I should like to know whether this filibuster is going to go on all evening on this measure on which everyone is agreed and with respect to which the hon. member quite obviously is trying to put in time on something that has no relation whatever to the measure before us.


Henry Frank Jones: On the point of order, is the hon. member for Bonavista-Twillingate going to deny to hon. members in this chamber the same opportunity to speak? Surely he speaks

enough in this chamber. My friend who has the floor is not one of those who has the opportunity to speak every day and when he speaks he usually has something to say-


Lionel Chevrier: He certainly makes a lot of noise.


Henry Frank Jones: -unlike the hon. member for Bonavista-Twillingate who monopolizes a good deal of the time of the house. I suggest that the point of order he has raised is completely spurious.


Lionel Chevrier: I should like to hear the Conservative whip on this point. He has been busy getting people to filibuster.


John (Jack) Henry Horner: Perhaps I have used a little more time than I intended when I got up to speak but this subject is dear to my heart. I have borrowed a lot of money. I have bought a lot of machinery through farm improvement loans. I know what it is like to go to a banker and ask him to extend me credit under this act. In fact, I would say I have taken the fullest advantage of the act, and I know some of the difficulties farmers are having in borrowing money under the act.
The hon. member for Bonavista-Twillingate objects to members speaking in this house. Whenever a government member speaks he says we are filibustering some piece of legislation. It is the same thing in committees. I have sat in committees with him such as the broadcasting committee. If government members speak they are wasting time or filibustering something or asking frivolous questions. The hon. member interjected with a rude point of order that I was not speaking to the particular legislation. Actually I thought I was. I was suggesting some fields that could well be covered by the banks in lending this extended amount of money. I beg to differ with the hon. member for Bonavista-Twillingate. I suggest I was speaking to the resolution. I realize that the hon. member cannot grasp and does not know anything with respect to what I am talking about.


John Whitney Pickersgill: I agree.


John (Jack) Henry Horner: That is quite understandable because he knows very little about a lot of things pertaining to western Canada and agriculture in particular. I hope I have not bored him too much. Maybe if he will study what I have said about farm improvement loans he will glean some information from my remarks. I think I have said about all I wish to say, Mr. Chairman.


Lionel Chevrier: On the point of order that was raised by the hon. member for Bonavista-Twillingate, may I say that I am sure the committee realizes there was nothing personal

in the remarks he made. He made an interjection which he had every right to make. It was quite obvious to those of us who sit on this side of the house that my good friend, my distinguished friend, the whip on the other side was whipping up members in order to get them to filibuster this measure. The hon. member for Bonavista-Twillingate was quite right when he said that if we are going to be asked to sit long hours in connection with the business of the house, then an unusual length of time should not be taken up in discussing measures and particularly in a repetition of the speeches on these measures, such as has occurred here.


Mr. Palleii:: Since the hon. member brought my name into this discussion, I may say that I feel after his demonstration last Saturday he is the last person who should indicate that the privileges of this house are being abused.


John (Jack) Henry Horner: I should like to speak for a minute to this point of order. It has been suggested that my speech was whipped up by the party whip. No whip ever came to me and asked me to speak on this subject or any other subject. I got up and spoke on this subject for 20 minutes without any notes. I was not making a repetitious speech. I referred to the need for an extension of the provisions of this measure. I corrected several frivolous errors made by the hon. member for Assiniboia. I referred to the need for greater loans on secondhand machinery, and no other member mentioned this topic. I spoke on a subject about which I have more knowledge than you or any other member sitting over there.


John Whitney Pickersgill: I apologize very sincerely to the hon. member for Acadia.


Mr. Bell (Saint John-Albert):: Don't let it happen again.


John Whitney Pickersgill: I apologize very sincerely to the hon. member. I am sure that the hon. member needs no coaching from anyone in this house, and I exonerate the whip from having coached the hon. member for Acadia.


Mr. Kindt:: My intervention may incur the wrath of the hon. member for Laurier and the hon. member for Bonavista-Twillingate, but if they will bear with me for a few minutes I promise not to delay matters much longer.


Lionel Chevrier: No longer.


Lawrence Elliott Kindt: I should like to add to the discussion of this topic because, like the hon. member who spoke before me, this subject is dear to my heart. I have used farm improvement loans many times. I am familiar with the work performed by this measure. I 90205-6-308
Farm Improvement Loans Act want to say that it is doing a grand job in the farming areas of western Canada.
I should like to add a word or two on the need for a greater amount of intermediate credit. The period of the loan should be extended perhaps by a year or two. In other words, the great need of the farm population is intermediate credit. On many occasions bank managers who make loans are inclined to squeeze down the period of repayment of the loan and to make it too short for the farmer to make a return on his operations and repay the loan. I would suggest that if there is one thing the Minister of Finance might take up with the banks, it would be the lengthening of the period of repayment of the loans in order to cope adequately with the need for intermediate credit.
There is one other point I should like to make. The regulations which are written by the farm improvement loan administration contain a provision permitting the bank manager to make loans for the purchase of new buildings. Further along in the same regulations there is a provision which permits bank managers to make loans for the purchase of secondhand buildings. These two provisions are set apart in the regulations. I found in one instance that a mistake had been made by one of the banks in that they turned down the request of a farmer for a loan to purchase a secondhand building. At Claresholm, Alberta, several buildings were offered for sale by the Crown Assets Disposal Corporation. The bank manager in one nearby town turned down a request for a loan simply because he did not read far enough in the regulations to ascertain that a loan could be made under a later section in the regulations.
My only purpose in mentioning this incident is to make a constructive suggestion to the Minister of Finance. When the regulations are rewritten, it would be helpful to have a cross reference on these two particular sections, the one dealing with authority to purchase new buildings and the other dealing with authority to purchase secondhand buildings. These two sections should be brought together by some kind of cross reference in order to avoid the possibility of bank managers making mistakes. I thought I should take up the matter with the Minister of Finance because this cross reference would make a very worth-while addition to any new regulations issued for the guidance of bank managers.
In closing, I want to say that I heartily support the measure which is now before the committee. I feel that one of the finest things this government can do is to increase the amount available for lending under the Farm Improvement Loans Act.

Farm Improvement Loans Act


Mr. Smallwood:: I shall try not to make too long an outburst at this time, but I should like to spend a lew minutes, with the permission of the hon. member for Laurier and the hon. member for Bonavista-Twillingate, in speaking to this measure. This act has proven quite successful in my community. The farmers are using the farm improvement loans to a great extent. They are not having any trouble with the bank. We see the machinery companies charging 11 per cent interest. In most instances when farmers go to these machinery companies their credit is not too good at the banks.
We must admit that we are handling a great deal of the people's money because the government is guaranteeing these loans to the banks. It is the bank's responsibility, therefore, to see that they obtain good security before making these loans. In some parts of the province the farmers use the improvement loan to buy cattle. Then, when they have used the loan to buy cattle they find that they need some new machinery. They buy this through the machinery company and they have to pay a high rate of interest. Thank goodness we are living in a free country. It is the farmer's business whether or not he wants to buy his machinery through these machinery companies and pay a high rate of interest. Some people would like to dictate to us in this country and tell us what we should do. We do not want that to take place.
These farmers who use the credit made available by the machinery companies are also protected by life insurance. There is one instance in particular of which I know where the farmer had bought machinery through the credit of the implement company. Even before taking delivery of the combine he was seized with a heart attack. However, through borrowing money in this way his combine was completely paid for and the wife did not have that debt hanging over her head. On the other hand, if the money had been borrowed through the bank she would have been responsible for this liability. I heard the thought mentioned tonight that the provisions of the act should be extended to buying cattle. I understand from the minister and his assistant that this is the case now. I am quite sure that the farmer can buy livestock today with a farm improvement loan.
I do not want to take any more time of the committee tonight. I would say to the minister that this is a very good legislation and that I am sure that it will be appreciated by the farmers of Canada.


Mr. McIntosh:: Like those who have spoken previously, I do not want to take too much


of the time of the committee tonight. However, I have a few questions that I should like to put to the minister with regard to the mechanics of this act. First I should like to ask the minister what the percentage is of the yearly loss on loans made under the Farm Improvement Loans Act. Has the fund actually cost the people of Canada any money or is the percentage and so on sufficient to carry any losses that have been incurred on the part of the banks? What is the percentage of repossessions? What is the disposition of the balance of the amount owing to the bank? Another question is this. What are the mechanics of the payment from the government to the bank in the case of a bad loan? Is only 10 per cent of the balance paid by the government of Canada or is the entire balance paid by the government of Canada? In the case of a bad loan, what happens when there is a compromise offered by an estate or a brother who may want to take over a loan from one of the family who through illness or some other reason cannot carry on with the commitment? Is there any provision in the act whereby a compromise can be entertained by the bank or by the government? I think those are some of the questions that some of the farmers want answered.


Mr. Winkler:: I have one matter to bring before the committee on the introduction of this resolution with regard to the Farm Improvement Loans Act. While I am on my feet I should also like to state that I believe the restrictions in the terms of the act should be lessened somewhat. I am thinking particularly of the younger people in my area who wish to go on a farm but who find it necessary to become involved in other occupations until such time as they are eligible for this type of support or other loans that may be available to them. I think a broadening of the basis of such loans is warranted because of the record of these payments. When one considers the insignificant amount of money that is lost in the lending process under the act, namely one tenth of 1 per cent. I think the minister could take a broader look at the terms and assist the type of person to which I have made reference.
There is one other important point in relation to these loans which I think should be mentioned. Through experience of the last few years I have seen instances in which the farmer has become indebted through one of these loans on the purchase of machinery and has sustained loss by reason of a fire on his property. In many cases, if his ability to earn money on the farm is greatly limited or restricted, he will not of his own accord procure insurance in order to cover that machinery which has been purchased. Consequently when such a loss is sustained by him, it is

multiplied owing to the fact that he has not seen fit to pay for insurance on this equipment.
I think the minister might also take a look at the possibility of requiring insurance to be placed on such machinery when the loan is made at the bank. On looking at the record of the act over the years, one can see that, having regard to the amount of money that has been loaned, the loss through default has been low. As I stated, the record of repayment is one which I stress again. It has been such that I think the minister might consider broadening the basis on which loans are made particularly, as I have stated, to younger farmers and as a previous speaker pointed out, on the basis of loans for livestock. The risk is very small and it would put a substantial number of these younger farmers on a much more independent basis.


Jacques Flynn: Shall the resolution carry?


Some hon. Members:: Carried.


Jacques Flynn: Shall I report the resolution?
Resolution reported and concurred in.
Mr. Fleming (Eglinton) thereupon moved for leave to introduce Bill No. C-95, to amend the Farm Improvement Loans Act.
Motion agreed to and bill read the first time.


Mr. Deputy Speaker:: When shall the said bill be read a second time? Next sitting of the house.


Donald Methuen Fleming: I wonder whether the house would consider giving second reading to this measure now. The bill changes only one word in the act. It changes the word "three" in section 5 (d) of the act to "four". That is the only change made by the bill in the act.


Lionel Chevrier: We have no objection.


Hazen Robert Argue: Agreed, Mr. Speaker.


Mr. Deputy Speaker:: When shall the said bill be read a second time? By unanimous consent, now.


Donald Methuen Fleming: the second reading of the bill.


[Stage Direction]
Motion agreed to, bill read the second time, considered in committee and reported.
Mr. Deputy Speaker:: When shall the said bill be read a third time?


Some hon. Members:: Now.


Some hon. Members:: Next sitting of the house.
90205-6-308i
War Veterans Allowance Act


John Whitney Pickersgill: Next sitting of the house. We want to hear the Minister of Veterans Affairs (Mr. Churchill).


WAR VETERANS ALLOWANCE ACT
[Stage Direction]
Hon. Gordon Churchill (Minister of Veterans
Affairs) moved that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure to amend the War Veterans Allowance Act, 1952, to increase the monthly rates of allowances and permissible income ceilings; to allow for further exemptions in property and income; to modify certain conditions of service eligibility; to allow for administrative and organizational changes within the board and to provide for certain further changes in connection with the administration of the act.
Motion agreed to and the house went into committee, Mr. Flynn in the chair.
Mr. Churchill:: Mr. Chairman, with only five minutes to go, according to the clock which is opposite me, I wonder whether the committee would prefer to rise, report progress and consider this resolution tomorrow.


Some hon. Members:: Go ahead.


John Whitney Pickersgill: No, go ahead.


Gordon Minto Churchill: I appreciate the interest of all hon. members-


Edmund Davie Fulton: Also their courtesy.


Gordon Minto Churchill: -in legislation of this importance which affects so many veterans across Canada. In the fall of 1957, when certain major changes were being made in the War Veterans Allowance Act, I noticed that the house took about two days discussing the resolution stage, and then a considerable time on second reading. I presume that with a measure of this importance a somewhat similar course of action will be followed this year.
The reason is obvious. There is no hon. member of the House of Commons who is not interested in the problems that affect war veterans. Every province in Canada has its quota of war veterans and there is a great deal of interest by the public generally in the care and attention which is provided by the parliament of Canada for the veterans of former wars.
The War Veterans Allowance Act has been in effect since the year 1930. It was brought in at that time in recognition of something that was known to veterans of the first world war, of the South African war and of the northwest rebellion of 1885, that many men who served in the campaigns of those wars, although not wounded and not eligible for

Business of the House
pension, nevertheless as a result of the hardships they underwent and the exposure to the elements suffered in a way which made it difficult for them in later years to reestablish themselves effectively in society and to continue to earn a living.
Experience has shown that when veterans who have undergone campaigns have reached the age of 60 years or thereabouts they may enter upon rather difficult times whether or not they have been wounded. Therefore the legislation introduced in 1930 was designed to provide some assistance to veterans in that particular category.
During the 30 years this act has been in operation 158,867 veterans and 28,075 widows and orphans have been given assistance. At the present time there are 47,204 veterans on the roll and 19,266 dependents.
The annual charge has risen over the years. I spoke on this subject in the House of Commons on March 7, 1955. At that time 1 reviewed the number of people who were on the war veterans allowance roll. At that particular period the sum of money that was voted by parliament was close to $27 million. Over the years it has increased and in the fiscal year 1956-57 the annual charge was, in round figures, $41 million. In the fiscal year 1959-60 the charge was $57 million.
This gives hon. members an indication of the cost of war veterans allowance over the years and as I continue my remarks tomorrow I will give further details concerning the background of this very useful legislation. I do not know of any piece of legislation apart from the Disabled Persons Act which is more acceptable to veterans across Canada.
Mr. Chairman, may I call it 10.30.
Progress reported.



BUSINESS OF THE HOUSE

Lionel Chevrier: In welcoming the Minister of Veterans Affairs back from the by-election perhaps I could ask him to indicate what the business is for tomorrow.
I think, we have assisted him tremendously today in reducing the order paper substantially. I wonder what business there will be
for tomorrow by way of legislation. I take it that the estimates which were announced in the minister's absence for Wednesday and the remaining part of the week remain as announced.


Gordon Minto Churchill: I thank the hon. member for Laurier for welcoming me back, and I hope he recalls his colleague, the hon. member for Kenora-Rainy River, to the house.


John Whitney Pickersgill: Well, the budget is not until June.


Gordon Minto Churchill: Tomorrow we will have third reading of Bill No. C-89, which was dealt with today, an act to amend the Criminal Code, and third reading of the bill based on the resolution which passed the house a few minutes ago amending the Freight Rates Reduction Act.
That will be followed by second reading of-


Lionel Chevrier: Second reading of the bill concerning the Freight Rates Reduction Act?


Gordon Minto Churchill: Yes, second reading of the bill dealing with the Freight Rates Reduction Act; then second reading of the bill based on the amendment to the Canadian National Railways Act. This will be followed by the resolution in my name dealing with amendments to the War Veterans Allowance Act.
On Wednesday and the following days we will carry on with the estimates of the Department of Transport as announced.


Lionel Chevrier: Did the minister forget third reading of the Farm Improvement Loans Act?


An hon. Member:: No, he mentioned it.


John Whitney Pickersgill: No, he did not.


Lionel Chevrier: No, he did not. Try again.


Gordon Minto Churchill: Perhaps I made a mistake in reading. I should have said, third reading of the bill, with reference to the resolution we dealt with a little while ago, amending the Farm Improvement Loans Act, and then second reading of the bill concerning the Freight Rates Reduction Act.
At 10.30 p.m. the house adjourned, without question put, pursuant to special order.



ANSWER TO QUESTION

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

Mr. Regier: 1.	What was the total amount of estimated unpaid principal on marketable first mortgages held by Central Mortgage and Housing Corporation as of March 31, 1961?
2.	What was the total amount of estimated unpaid principal on non-marketable first mortgages held by Central Mortgage and Housing Corporation as of March 31, 1961?
3.	Of the unpaid principal of these marketable mortgages, what amounts called for what percentage of interest charges?
4.	When Central Mortgage and Housing Corporation sells its interest in a mortgage to another party, does the realization on unpaid principal accrue to the C.M.H.C. for reinvestment or other purposes, or must it be paid back to the consolidated revenue fund of the federal government?
5. Would the Bank of Canada be entitled to purchase above-mentioned securities directly from C.M.H.C.?
6. Would the chartered banks of Canada be entitled to purchase above-mentioned securities directly from C.M.H.C.?
Answer by: Hon. D. J. Walker (Minister of
Public Works):
1.	The National Housing Act provides that Central Mortgage and Housing Corporation may sell any obligation to the corporation that is secured by a first mortgage and may, pursuant to an agreement made with the purchaser, continue to administer the obligation. All of the corporation's mortgage assets
Question
in the amount of $1,389,591,580 are therefore marketable.
2.	For the time being it is not intended to sell mortgages relating to limited dividend loans, rental guarantee loans, primary industry loans, or the corporation's share of joint loans made under previous national housing acts. The total amount of unpaid principal on these loans is $404,456,018, including unpaid principal on loans not yet fully advanced.
3.	4| per cent	
$ 12,446,7095	per	cent	
16,841,0075i per	cent	
25,496,1455J per	cent	
20,090,7696	per	cent	
812,030,7846| per	cent	
98,230,148Total	
$985,135,5624.	By arrangement with the Department of Finance in the light of the current money market, the proceeds of the sale of mortgages will be used by C.M.H.C. either to make new loans or to retire the corporation's indebtedness to the government.5.	The Bank of Canada does not believe it has the statutory power to purchase insured mortgages from Central Mortgage and Housing Corporation.6.	The question of whether an insured mortgage is a proper security for investment by an approved lender depends upon the statutes governing such approved lenders. However, as far as Central Mortgage and Housing Corporation is concerned, the National Housing Act authorizes the corporation to sell insured loans to anyone.
Tuesday, May 16, 1961