1961-01-30

Hon. J. W. Pickersgill (Bonavisia-Twillin-gaie):: Mr. Speaker, I rise on a question of privilege. I spoke too hastily on Friday last when I implied that under the previous government there had been no delays in holding by-elections which had the effect of depriving constituencies of representation for the whole of a session of parliament. I do not want to leave this misinformation uncorrected.
I find there were several cases both before the 1953 general election and the 1957 general election when by-elections were not called, apparently because it was common knowledge that a general election was approaching. But there were two other cases where there was no such extenuating circumstance. The Prime Minister reminded me that Brandon-Souris became vacant late in 1950 and the by-election was not held until June of 1951. That also happened in one of the seats in Queens, Prince Edward Island, at the same time. I doubt whether either of these precedents would commend itself to the government, since in both cases members of the opposition were elected and both members then elected are today ministers of the crown.
In expressing my regret to the house for having misinformed hon. members may I also thank the Prime Minister for the assurance that there will no longer be any similar delays in the calling of by-elections.



MRS. FAIRCLOUGH  CORRECTION OF PRESS REPORT OF SPEECH AT GUELPH, ONT.

Hon. Ellen L. Fairclough (Minister of Citizenship and Immigration):: Mr. Speaker, I rise on a question of privilege with reference to a Canadian Press dispatch reporting an address I delivered to graduate students at the Ontario Agricultural College in Guelph last Friday night. In the first paragraph of this dispatch, which appeared in a number of morning and evening newspapers on Saturday, I am reported to have said that future immigration into Canada would be "limited to persons with a craft, skill or profession".
This paragraph, in which I was incorrectly reported, was subsequently corrected in two later Canadian Press leads, but unfortunately the original story received such widespread circulation that I feel it necessary to set the record straight. The text of my Guelph address is available to the public. I was speaking of the effects of the technological revolution on Canadian agriculture and industry. What I said was quite clear, and I quote:
We certainly shall have to do everything within our power to make it clear to everyone, and especially to our young people, that there is going to be little room for the unskilled or the half-skilled worker in the world of tomorrow. It ought to be quite clear to everybody that employment opportunities-for native Canadians as well as immigrants-are going to be limited in future for people without some kind of trade, skill or profession.
There was nothing in my Guelph speech suggesting that immigration would be restricted to those with skills and trades.



DOMINION-PROVINCIAL CONFERENCE ANNOUNCEMENT OF SUGGESTED DATES FOR RESUMPTION

Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, I wish to inform the house that I have written to the prime ministers of the provinces suggesting that the dominion-provincial conference on fiscal arrangements which adjourned late in October should be resumed. The dates I suggest for the resumption of the conference are February 23 and 24. If these dates are not convenient for a majority of the provincial premiers, then the meeting will be convened on March 23 and 24.



ANNOUNCEMENT OF SALE OF WHEAT

Hon. Alvin Hamillon (Minister of Agriculture):: Mr. Speaker, I should like to make an announcement that has to do with a question asked by the hon. member for Acadia on January 24, 1961, and which can be found on page 1350 of Hansard. The question dealt with the sale of wheat to the U.S.S.R. and was answered by the Prime Minister as follows:
Mr. Speaker, negotiations have been going on with representatives of the government of the U.S.S.R. I am hopeful that agreement will be arrived at in consequence of those negotiations for the sale of 150,000 tons of wheat.

Motions for Papers
At this time I should like to confirm to the house and announce that negotiations have been completed and 200,000 tons or approximately 7.3 million bushels of wheat have been sold to Russia.



LIBRARY OF PARLIAMENT


Hon. Donald M. Fleming (Minister of Finance) moved:: That the report of the civil service commission concerning the position of library accountant, library of parliament, laid upon the table of the house, Thursday, January 26, 1961, be now approved.


[Stage Direction]
Motion agreed to.


[Stage Direction]
Motion No. 37-Mr. Pickersgill (for Mr. Martin, Essex East):
For a copy of all correspondence, telegrams, and other documents exchanged between the Minister of Finance and the national council of the public service of Canada, on the subject of the check off of union dues for federal prevailing rate employees, since January 1, 1960.
Donald Methuen Fleming: Mr. Speaker, there are no correspondence, telegrams or documents within the terms of this motion, and even if there were there would no doubt be a question raised as to privilege. In view of the fact that there are none, no doubt the hon. member would be prepared to withdraw the motion on behalf of the hon. member for Essex East.


John Whitney Pickersgill: I will not ask you to put the motion, Mr. Speaker, and I will leave it to the hon. member for Essex East to decide the other [DOT]question.
Motion stands.



MARKETING OF COARSE GRAINS


[Stage Direction]
Motion No. 40-Mr. Argue:
For a copy of all correspondence, telegrams, and other documents exchanged between the federal government, the Canadian wheat board, and any provincial government, since January 1, 1959, regarding the repeal of provincial legislation respecting the marketing of coarse grains.
Francis Alvin George Hamilton: 
Mr. Speaker:: Subject to the reservation expressed by the minister, is it the pleasure of the house to adopt the motion?


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Mr. Hazen Argue (Assiniboia):: I should like to direct a question to the Minister of Agriculture. Would the minister care to comment on the press report that the government is giving consideration to the distribution of surplus flour and surplus butter to the unemployed of Canada as a relief measure?


Francis Alvin George Hamilton: Mr. Speaker, as I think hon.
gentlemen are aware, this government is always on its toes when it comes to a question of looking after those in need. I may be able to confirm for the hon. member the fact that such a program has been considered for some time, but no announcement will be made until a decision is reached.



TELEVISION ANNOUNCEMENT BY MINISTER RESPECTING PRICE

[Stage Direction]
On the orders of the day:
John Whitney Pickersgill: I wonder if I could ask the Minister of Agriculture whether he could take the house into his confidence concerning the announcement he made on television yesterday about the price of butter?


Francis Alvin George Hamilton: I do not believe there is any secret about the fact we have been in consultation with various representatives of the farm industry such as the National Dairy Council oi Canada, the Canadian dairy farmers and the Canadian Federation of Agriculture. We have had under discussion various proposals to meet this situation of a temporary surplus in butter. We are, quite candidly, exploring the field to ascertain if there cannot be a reduction in price to the consumer in order to bring back the flow of consumption and, at the same time, maintain the income level of the producers which has been built up over the last three years.


John Whitney Pickersgill: Does the minister not think it would be advisable not to make suggestions that would affect the price of commodities until they become policy?



FARM MACHINERY


[Stage Direction]
On the orders of the day:
Hazen Robert Argue: Mr. Speaker, may I direct a question to the Minister of Agriculture. In view of the national interest in the inquiry by the agriculture committee into the very high prices charged for farm machinery, could the minister say when his officials will be in a position to appear before the committee, and when this discussion may be resumed?


Francis Alvin George Hamilton: Mr. Speaker, I can only speak for my officials. They will be ready at any time the committee is ready to hear them.



POLYMER CORPORATION


[Stage Direction]
On the orders of the day:
Mr. G. J. Mcllraith (Ottawa West):: I
should like to direct a question to the Minister of Defence Production based on a press release of his department issued on Saturday announcing the formation of Polymer Corporation (SAF) for the purpose of constructing and operating a specialty rubber plant to be built at Le Wantzenau near Strasbourg, France. My question is this. Does the provision of the estimated capital requirement of $12 million referred to in that press release involve a supplementary budget to that tabled for the Polymer Corporation, or is the capital requirement being met by other means?


Hon. Raymond O'Hurley (Minister of Defence Production):: The press release of Saturday night was issued to coincide with the announcement that was made in France by our ambassador, Mr. Dupuy, who was guest of honour at a luncheon attended by Dr. Row-zee, the president of Polymer, as well as Mr. Wilk and Mr. Fontaine of the Banque de Paris et des Pays-Bas.
In so far as the question asked by the hon. member for Ottawa West is concerned, there will be no supplementary budget for expenses of Polymer in this fiscal year.


George James McIlraith: May I ask a supplementary question, Mr. Speaker. Would the minister advise the house as to what changes, if any, have taken place with respect to the prospective sale of Polymer Corporation from the last announcement he made on August 4, 1960?


Mr. O'Hurley:: I have no other declaration for the time being with regard to the disposal of Polymer. No decision has been reached,
Inquiries of the Ministry but we have decided to allow Polymer to go ahead with this expansion program to meet the demand for synthetic rubber in those places where it is needed, without diminishing in any way the production of synthetic rubber at Sarnia.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: should like to direct a question to the parliamentary secretary to the Minister of Labour. Has the minister received any complaints with respect to the numbers of United States citizens admitted to Canada for employment in the construction of pipe lines in British Columbia? Has the minister also received any complaints with respect to the admission to Canada of United States citizens under what are considered to be false pretences (1) as landed immigrants; (2) as persons allowed to enter for special work because there is no one in Canada supposedly qualified to do this so-called special work? Have these complaints been investigated? If so, can the parliamentary secretary inform the house with what result?


Mr. R. D. Thrasher (Parliamentary Secretary to the Minister of Labour):: Mr. Speaker, I shall be pleased to bring this question to the attention of the minister.


Herbert Wilfred Herridge: Mr. Speaker, I wish to ask a question of the Minister of Citizenship and Immigration. I apologize for not sending her notice, but it has just come to mind.
In view of the fact that the member for Kootenay West on one occasion conducted a successful personal investigation into the validity of certain landed immigrants by proving that they were living in British Columbia and still using their visitors' licences on their cars, would the minister consider asking the R.C.M.P. to check on these people to see whether they are still indicating that they intend to return to the United States and are using the six months' visitors licence while they live in British Columbia?


Ellen Louks Fairclough: Mr. Speaker, I think on reflection the hon. member will realize that the matter of car registration is one for the provincial authorities.
1524	HOUSE OF
Inquiries of the Ministry (Translation):



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
On the orders of the day:
Hon. Leon Balcer (Minister of Transport):: Mr. Speaker, last Tuesday, the hon. member for Hull (Mr. Caron) put to me the following question:
Is the minister aware of the fact that a concessionary at the Ottawa railway station forbids his employees to speak French under penalty of losing their job?
I brought that matter to the knowledge of the Canadian National Railways authorities who inform me that inquiry was made of the concessionary at the Union station and that the latter told them that such instructions had not been issued.
I must add that according to the concessionary, most employees in the restaurant and the newspaper stand are bilingual and no trouble was ever experienced in that regard.


Mr. Alexis Caron (Hull):: Mr. Speaker, I should like to put a supplementary question to the Minister of Transport. Could he tell me whether the inquiry was made of the employees as well as of the employers, because I have been advised since, that the same person had even refused to display certain French papers?
(Text):


Mr. Speaker:: If the hon. member who asked the question is taking responsibility for the statement it would be proper, I should think, to pursue it, but the answer that has been received was in response to a similar question and was quite definite.


Alexis Pierre Caron: I am taking responsibility for what I am saying because of the answer to the question I asked the other day. I think the inquiry has not been completed.
(Translation):


Mr, Balcer:: Mr. Speaker, as far as I
am concerned, the Canadian National authorities have made an investigation following the question asked by my hon. friend. I had requested an inquiry and I have just read the short report received on this subject.
Of course, I have not made this investigation myself since it is not for me to do it. My job is to transmit them the various questions asked in this house.


Alexis Pierre Caron: Another supplementary question, Mr. Speaker. I do not want to blame the minister, but could he not ask for a more thorough inquiry to be conducted among the employees?


Léon Balcer: Certainly, Mr. Speaker.


(Text):



REPORTED U.S. COMMITTEE RECOMMENDATION FOR REDUCED TARIFFS

[Stage Direction]
On the orders of the day:
Mr. W. M. Benidickson (Kenora-Rainy River):: I should like to address a question to the Prime Minister. Has the Prime Minister seen the dispatch by the Ottawa correspondent of the Regina Leader-Post which quotes a new report by a United States Senate committee under the chairmanship of Democratic Senator Magnuson recommending that the United States reduce international trade barriers, and recommending also an extension of tariff negotiating authority to the president, with a provision permitting across the board reductions? If so, does the Prime Minister stand ready to participate in any such negotiations and reductions?


John George Diefenbaker: Mr. Speaker, the particular news item has not been brought to my attention. I do not want to enter into a discussion of a conjectural article.



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. Harold Hicks (Fraser Valley):: I should like very much to make this inquiry of the Minister of Public Works, in view of the fact that the C.P.R. is planning to permanently abandon the Kettle Valley railway from Brodie to Hope, British Columbia, a distance of 50 miles. If permission to do this is granted, would it be possible for this government to turn this right of way, which I believe has been subsidized federally, into a highway making a fifth route through the Coast range to the glorious Fraser valley?


Mr. Speaker:: Order. Before the minister replies may I say this. I think the hon. member who raised the matter indicated that it was a hypothetical question, because he prefaced it by the words "if permission is granted". It seems to me it will be time enough to inquire if and when it has been settled that there will be an abandonment.



TRANS-CANADA AIR LINES   PRAIRIE PROVINCES-INQUIRY AS TO INTERCITY SERVICE

[Stage Direction]
On the orders of the day:
Mr. E. W. Brunsden (Medicine Hat):: Mr. Speaker, with your permission I would like to direct a question to the Minister of Transport. The minister is aware of the growing

Dominion-Provincial Relations
concern in various prairie centres, of which, of course, Medicine Hat is one of the more important, respecting the future of the so-called "milk run" of Trans-Canada Air Lines.
My question is, will the minister give the members of this house from the west his assurance that no steps will be taken leading to any deterioration of the present intercity service before full representations from the newly formed prairie region air committee and other interested organizations in Alberta, Saskatchewan and Manitoba have been heard and studied by him?


Léon Balcer: Mr. Speaker, both my predecessor and I have indicated on a number of occasions that full and careful study will be given to the question of the future of what is known as the T.C.A. prairie milk run. This problem has arisen because of T.C.A. plans for elimination of all D.C.3's from its fleet and the high cost of construction of the secondary prairie airports to Viscount standards, as compared with a relatively low traffic volume on the route.
T.C.A. has been asked to review this problem and report to me on it, and I can give the assurance that this report, when received, will be the subject of very careful consideration by the air transport board, the Department of Transport and myself in accordance with the provisions of the Aeronautics Act, and that any representations received will be carefully studied. If it appears necessary and desirable in dealing with the case, a public hearing may be decided upon.



COMBINES


[Stage Direction]
On the orders of the day:
Hon. E. D. Fulton (Minister of Justice):: Mr. Speaker, on January 25 the hon. member for Kootenay West asked me a question, as reported at pages 1398 and 1399 of Hansard, about the use of eggs as loss leaders in British Columbia.
I would like to inform the house that there have been no complaints in this regard brought to my attention, and if the hon. member has any evidence indicating an offence under the Combines Investigation Act, if he will bring it to the attention of the director of investigation and research the director will consider it carefully to determine whether an inquiry is warranted.


Donald Methuen Fleming: that the house go into committee of supply.



DOMINION-PROVINCIAL RELATIONS  TAX SHARING ARRANGEMENTS

Mr. Lucien Cardin (Richelieu-Vercheres):: Mr. Speaker, it would be entertaining and amusing, if it were not so serious, to study in detail the extent to which the Prime Minister and the members of the government have gone to make the people of Canada believe that the Conservatives are whistling the same tune today that they whistled so melodiously in 1957. One can barely recall- the picture is fading very rapidly-the selfassurance and even the overconfidence of the Prime Minister when he marched across the country all but submerged in the solutions he professed to have to all the problems, national and international. Among other things he led Canadians to believe that he had found the formula to increase social legislation, reduce taxes and balance the budget. Of course no one would suffer from unemployment, not while the Prime Minister was administering the affairs of Canada.
His predictions also contained a very vivid description of the Conservative vision of utopian Canada where full employment would be the order of the day, where our economy would be stabilized and tight money unheard of, where our national defence would be adequately provided for and our trade deficits would be brought into balance. This was the type of tune whistled in 1957 by the Conservatives.
The tune began to change immediately on their taking office. Instead of the self-assured, confident Billy Graham the Canadians had listened to, the Canadian people found that they had elected a very surprised Prime Minister leading an unprepared and bewildered government in the uncompromising intricacies of government administration without any notion whatever as to how they were going to implement any of the promises they had made, let alone how they were going to achieve anything remotely resembling the utopian vision of Canada under a Conservative administration.
The government's first tactic was then to appear to be busy and to be accomplishing things, and a great deal of publicity was given to the Prime Minister's travels abroad and around the world; and the government's statement with respect to a 15 per cent diversion of trade from the United States to the United Kingdom was made on the basis of sensationalism rather than on the basis of the wisdom and soundness of the action involved.
The description by the Minister of Finance of the commonwealth trade conference, which he claimed was a colossal success, can be justified only in terms of propaganda, because that particular trade conference will forever
1526	HOUSE OF
Dominion-Provincial Relations haunt the minister for having refused to accept the offer of a reciprocal free trade area with the United Kingdom. Smoke screen propaganda was the first Conservative tactic employed to camouflage the government's lack of over-all policies.
Then the government resorted to the inheritance tactic, by which means it sought to justify its inaction on the ground that it had inherited its administrative problems from the previous Liberal government, conveniently forgetting, of course, that these were the very problems the Conservatives in 1957 promised to solve.
Next the government tried the naive approach, the "what recession?" and the "what unemployment problem?" approach. When the opposition pointed out the very real dangers to our economy of an ever-increasing number of unemployed the government immediately turned to the "prophets of doom and gloom" and "selling Canada short" tactics. Whenever I hear hon. members opposite criticizing the Liberal opposition and accusing them of undermining the people's confidence in Canada because we dare criticize the government's inaction and lack of policies, I cannot help but recall a certain premier of Quebec who finally convinced himself that he was the province of Quebec. Surely the Prime Minister and members of the government, after so short a term in office, do not now already identify themselves with Canada. Surely the Prime Minister and the members of the government know and understand that Canadians can have-and indeed a number of Canadians do have-a considerable amount of confidence in Canada but no confidence in the government.
The current tactic, of course, is particularly interesting because it is so revealing. It is not as cunning or as imaginative as the other tactics. It is a tactic in which are employed expression of confusion, bewilderment, and exasperation. Perhaps it could be characterized as the "what would you do?" tactic. This tactic, of course, is already burnt out because on all the national urgent problems the Liberal opposition has stated what it would do, to the great discomfort of the government.


Some hon. Members:: Oh, oh.


Louis-Joseph-Lucien Cardin: Of course, Mr. Speaker, hon. members opposite do not have any intention of taking up these suggestions. They prefer to ignore them. However, if the Conservatives really want to find out what the Liberals would do, let the government call an election and we shall be happy to show them.


Some hon. Members:: Oh, oh.


Louis-Joseph-Lucien Cardin: Many people unfortunately not only consider as smart politics the tactics I


have just described, but unfortunately they accept these practices as normal political procedure. I believe-and I feel very strongly about this-that there is no surer way of undermining and indeed destroying the people's confidence in our political system and in our democratic form of government than by the use by a political party, whatever its denomination, of tactics whose aim is primarily to enhance and preserve its political prestige but whose consequences are to mislead and confuse the public on vital urgent national issues so that objective analysis of the problem becomes impossible. Extremely urgent fundamental problems become insoluble simply because the effective solutions might prove unpopular to one or more classes of our social structure; and so as not to jeopardize its popularity, the party merely ignores the solution and jeopardizes the economy instead. Such tactics are not only small politics but are an indescribable injustice to the people who have not only a right but a responsibility to be aware of, to understand and to judge national problems as they really are and not as one political party would like to pretend they are.
The greatest proof that such tactics are not to be taken for smart politics is that in spite of the torrent of words the members of the government have uttered in implementing their successive strategies, none of the urgent problems have been solved and some indeed have become more serious.
Of all the problems facing the government which have not yet been solved I doubt if there is a more fundamental, important, complex or urgent one than that of federal-provincial relations and federal tax-sharing, arrangements.


Some hon. Members:: Oh, oh.


Louis-Joseph-Lucien Cardin: I hope that hon. members opposite are not laughing at the problems involved in federal-provincial relations.


Donald Methuen Fleming: We are laughing at the hon. member.


Louis-Joseph-Lucien Cardin: Apparently the proposals made by the Prime Minister in October can be described as laughing at the problems involved in provincial-federal relations. The federal-provincial tax-sharing agreement criticized so violently by the Conservatives expires in March of 1962, and new fiscal arrangements will have to be provided during this session of parliament as announced in the speech from the throne. Perhaps it might be very timely now to examine a statement made by the Prime Minister in 1957, as reported by the Canadian Press on April 26 of that year:
Mr. Diefenbaker pledged to work out new taxsharing arrangements with the provinces which

would strengthen Canada's federal system and give provinces and municipalities the funds to carry their responsibilities.
He said:
A Conservative government, if elected, would immediately call a federal-provincial conference to settle existing problems. The federal system was threatened by "the centralization complex of the St. Laurent government" and a healthy balance [DOT]of revenues between federal and provincial governments must be assured.
Surely, Mr. Speaker, the Prime Minister [DOT]does not dare to claim that so far he has fulfilled that promise. And how can the Prime Minister now condone and accept, as he is doing, the Liberal principles and the basis on which fiscal arrangements with the provinces were achieved if indeed they were a threat to the federal system, as he claimed they were in 1957? And if they are not a threat, on what grounds can the Prime Minister justify so insidious an accusation on a matter as fundamentally important as federal-provincial relations, an accusation which in fact did undermine the people's confidence in our federal system.
There have been few issues indeed that have been given the Conservative political football treatment more mercilessly than the fundamental and extremely difficult problem of federal-provincial relations. This may gain votes for the Conservative party, but it has not only confused the thinking of Canadians but has made an already difficult problem almost incomprehensible and retarded and jeopardized the progress that has been made so far toward an equitable solution to this extremely urgent problem.
It is only now that Canadians realize that the Conservative accusations were unfounded and unjustified, and that the present fiscal arrangements with the provinces, though admittedly not an ideal solution, were in fact a serious and sound approach to the problem. The government, instead of rejecting the substance of the fiscal arrangements which they criticized so violently, are now speaking of the difficulties and the problems involved which make any alternative solution to those arrangements extremely difficult. The Conservatives, of course, did not speak of those problems nor those difficulties when they were discussing federal-provincial relations in 1957. At that time they were merely content to confuse the issue.
Federal-provincial relations did not arise only with the Rowell-Sirois report of 1940; they were born with confederation. The provinces at that time saw the advantages to be derived by them in a federal system, and it is impossible to conceive that the fundamental principle of confederation could have been based on anything else than on co-operation and understanding between the autonomous
Dominion-Provincial Relations provinces and the federal government. I maintain, Mr. Speaker, that at no time has that principle ever been broken, and that taxsharing arrangements have indeed been an application of that principle.
The exigencies of the war, the demand and urgent need for social legislation, the disparity in the financial resources of the different provinces, the justifiable desire to achieve uniformity in social aid, in the standards of living and in national unity, coupled with the increasing financial demands made within the rapidly expanding provinces and municipalities, presented problems which the fathers of confederation could never have dreamed of and for which they did not adequately provide in the constitution or in the methods of taxation made available to the provinces and to the federal government.
The urgency of the problems, both provincial and federal, and the fact that no clear-cut solution to these problems could be found within the framework of the constitution, made it necessary to resort to the principle of co-operation between the federal government and the provinces to find some alternative solution. That alternative solution was found, Mr. Speaker, when Right Hon. Mr. St. Laurent introduced the tax-sharing arrangements which were so violently criticized by the Conservatives.
It would be useful, I think, to review the provisions of those tax-sharing agreements which, in 1957, the Prime Minister felt were a threat to the federal system. Hon. members will recall that under these agreements, first of all, the provinces were completely free to rent their rights to direct taxation or to levy their own direct taxes and have them collected by the federal government, or, third, to levy and collect their direct taxes without interference.
Second, by this agreement the provinces were enabled to derive more than 20 per cent of urgently needed additional revenues during the first years of the new arrangements as compared with the previous years without imposing double taxation and this percentage, of course, increased substantially in succeeding years.
Third, equalization payments based on the tax yield of the two wealthiest provinces were provided to enable the less wealthy provinces to face their constitutional responsibilities. Such an interprovincial redistribution of revenue, as I said before, is essential to preserve a proper balance within our federal system.
Finally, stabilization payments were offered to the provinces as a guarantee against any

Dominion-Provincial Relations material decline in revenues from the direct tax field that could result from a prolonged recession.
These 1957 fiscal arrangements, Mr. Speaker, were financially advantageous to the provinces. They completely respected the constitutional rights of the provinces and provided to them, especially to the less wealthy provinces, substantially more revenue without double taxation. We do not claim, nor did Right Hon. Mr. St. Laurent ever claim, that these arrangements were the ideal, the complete or the final solution of the federal-provincial problems. But, Mr. Speaker, they did permit both the federal government and the provinces to hurdle what could have become economic and financial disasters in either or both levels of government. And this was done without any of the provinces losing one iota of their sovereignty or autonomy.
It was within the responsibility and the prerogative of the federal government, with the co-operation and authorization of the provinces, to provide the much needed social measures on a uniform basis throughout the country at a time when the economy of most of the provinces could not afford the expenses involved. It has always been the accepted role of the federal government to supply public services which could not be supplied by other levels of government or by private enterprise; but, Mr. Speaker, if the provinces feel they are now ready to assume the responsibility of implementing some of the social measures presenty carried out by the federal government and can guarantee that these measures will continue to be uniform to Canadians in all provinces, then a redistribution of responsibilities as well as of taxes could be considered as the basis of new tax agreements. But the problem has always been whether the provinces could or would add additional responsibilities to their problems of rapid expansion, and whether some uniformity of social legislation would be maintained in all provinces.
A Liberal government, Mr. Speaker, would not object to withdrawing from joint federal-provincial schemes which are now firmly established in the provinces and which the provinces felt they could administer themselves, such as was suggested by the premier of Quebec to the conference in July. To my mind it is part of the federal government's role to co-operate with the provinces in implementing needed legislation and to withdraw when the provinces feel they can carry on alone, but it will be noted that this is the first time a provincial premier has formally expressed his willingness to assume additional financial responsibilities in compensation for additional revenues, and this may

well be the key that might open the door to better federal-provincial relations.
In 1957 the Prime Minister waxed eloquent on the supposedly arrogant attitude of the Liberal government in its dealings with the provinces. In his opening campaign speech in Massey hall, Toronto, on April 25, 1957 he said:
We intend to form a government to immediately convene a dominion-provincial conference to bring about a settlement of these problems, not in the spirit of arrogant domination as displayed by the present government but in the spirit of unity and amity and with mutual tolerance and respect.
He repeated this statement from coast to coast. We shall see, Mr. Speaker, whether the Prime Minister really kept his promises. After the 1957 election a federal-provincial conference was held but was reluctantly convened. It was not convened immediately but in November, 1957. The purpose of the conference was not to bring about a statement of the problem but to get to know one another, and fiscal arrangements were hardly discussed at that particular conference.
Second, it had been agreed at the November conference that there would be a further conference held in the early part of 1958; but the government, in a spirit of amity and tolerance but without consulting the provinces, replaced the conference by a telegram sent to all the provinces containing erroneous calculations made not by the Department of Finance but by Mr. George Gathercole, a top civil servant of the Ontario government.
Third, the Minister of Finance in his brisk and supposedly efficient manner set up a committee on finance consisting of the Minister of Finance and the provincial treasurers to reconsider fiscal problems, and more particularly to consider the request made by the provinces to have the 1957 arrangements revised. The committee met in July and in October of 1959. At this last meeting the Minister of Finance, ignoring the insistent request of the provinces and ignoring the Conservative promises of 1957, amicably announced that the tax-sharing arrangements would not be modified.


Donald Methuen Fleming: Would not be what?


Louis-Joseph-Lucien Cardin: Modified. Fourth, in July, 1960 a new federal-provincial conference was called to negotiate new tax-sharing arrangements which were to become effective in April, 1962, and at that meeting the provinces made several concrete proposals. For the first time at such a conference the province of Quebec, which by the way since June 22 last has finally returned to confederation, through its new premier, Mr. Lesage, put forward an over-all and concrete plan which received

widespread approval from the other provinces. The federal government, however, apparently came to the conference unprepared. It had no proposals to make of its own and, indeed, had no comments to make on the proposals made by the provinces except to say, in a spirit of amity and tolerance, that the premiers' proposals were irresponsible.
Fifth, as hon. members recall, all the federal-provincial conferences began by a public meeting at which the Prime Minister and the premiers made public statements in order to clarify their proposals and their points of view, and after that was done the meetings continued in camera. In October, 1960 the provincial premiers came with prepared statements that they expected to make at the beginning of the conference, but the Prime Minister decided unilaterally that this conference would be held in camera.


John George Diefenbaker: Mr. Speaker, that statement is completely incorrect and I cannot allow it to go unchallenged. I am not concerned about the general statement that has been made so far, but that statement is incorrect. This was an adjournment of the July session. At the July session opening statements were made and there was no objection raised; it was generally agreed that the proper course was to continue as we did in October, that being the resumption of the adjourned July conference.


Louis-Joseph-Lucien Cardin: On that very point, it was the custom at all conferences-


John George Diefenbaker: No.


Louis-Joseph-Lucien Cardin: -for public statements to be made at the beginning. In 1955 there was also a conference in July which was adjourned and reconvened later in the autumn, and at that time public statements were also made by the then prime minister and the premiers of the provinces. I am glad to see that the Prime Minister corrected himself. He started out to say that there had been no objection to having the October conference meet in camera, and he corrected himself by saying that there was general agreement. There had been objections made to holding that particular meeting in camera.


John George Diefenbaker: By whom?


Louis-Joseph-Lucien Cardin: The Prime Minister should know that, of course.


Some hon. Members:: Oh, oh.


Donald Methuen Fleming: On a point of order, reference has been made by the hon. member to the fact that the conference proceeded in camera. He is undertaking to make statements as to what occurred in proceedings conducted
Dominion-Provincial Relations in camera. Under those circumstances I think he owes it to the house to tell the house the source of his information. If I correctly apprehend the position of the hon. member, he has had no direct access to information of this kind, and if he is undertaking to make statements, particularly statements that have been challenged by the Prime Minister, who was at the conference, I think he should tell us the source of his information; because it cannot be anything more than hearsay he is bandying around.


Mr. Speaker:: I disagree with the Minister of Finance that that is a point of order. In accordance with our practice the hon. member who has the floor must, of course, accept the statement of the Prime Minister that he did not decide in advance that the meeting was to be held in camera. That closes that matter. However, in proceeding to discuss what happened at a meeting which was held in camera there is no obligation that I know of to disclose the source of his information. After all, there were a good many people present at the conference, and there will be an opportunity to reply.


Mr. Walker:: Mr. Speaker, it might be that the hon. member is reading from the fables of Lamontagne.


Louis-Joseph-Lucien Cardin: I do not need Lamontagne, the Minister of Public Works (Mr. Walker) or anybody else to tell me what I should say. In accordance with the Prime Minister's intervention a little while ago, let us say there was not unanimous disapproval. Let us say that there was some disagreement with respect to whether or not the meeting should be held in camera. I know for a fact that objections were raised; nevertheless the meeting was held in camera.
So the Prime Minister proceeded in camera, no doubt in a spirit of co-operation, to make known his proposals which he was very sure he wanted to put forward only as suggestions. The premiers decided at that time, of course, that they would want an adjournment until 2.30 to consider the proposals made by the Prime Minister. However, immediately after adjournment of the morning session of the conference and before the premiers had time to study the proposals made by the Prime Minister and to prepare their comments, the Prime Minister issued to the press the proposals he had made in a meeting which, at his own insistence, had been held in camera, leaving the premiers of the provinces obliged to comment publicly on the proposals without having had time to study them. For the Prime Minister, all is vanity and publicity.


Donald Methuen Fleming: All is rot that you are talking about right now.

Dominion-Provincial Relations


Louis-Joseph-Lucien Cardin: You will have an opportunity to debate the question. Surely the Prime Minister is not serious when he claims to have carried out his formal pledge to bring about a settlement of federal-provincial relations, not in a spirit of arrogant domination but in a spirit of unity, amity and with mutual tolerance and respect, when his inaction and his attitude under the circumstances can be described not only as arrogant but as downright insulting to the provinces. But perhaps the greatest breach of the Prime Minister's pledge to settle the problem of federal-provincial relations, and indeed the greatest insult to the provinces, is that the government, in spite of its promises, has evidently after three and a half years not taken the trouble to analyse, study and understand the problems involved in the field of federal-provincial relations. A review of the government's statements at each of the federal-provincial conferences indicates clearly that the government has no over-all plan to solve this problem, and is indeed completely unprepared to negotiate with the provinces.
I would strongly advise the government, Mr. Speaker, not to try to tackle the problem of federal-provincial relations with an ill thought out and off the cuff solution such as the suggestion the Prime Minister made to the provinces at the conference in October. If the government imposes on the provinces the proposal he made at that time they will not only repudiate the magnanimous attitude the Prime Minister displayed in 1957, but they will destroy the basic principles upon which better and sounder federal-provincial relations can be continued.
At a press conference in Winnipeg on May 14, 1957, as reported in the Winnipeg Free Press of that date, the present Prime Minister stated:
The first thing a Conservative government would .do, he said, would be to call a federal-provincial conference which would be held 'in the spirit of confederation' to arrive at a tax rental formula 'more in keeping with the needs of the provinces and municipalities'.
Under recent tax agreements, he said, the provinces have been forced to a 'starved condition'. Municipalities have been placed in a position where property owners are saddled with heavy burden Qf taxation.
He charged that continued centralization of *taxation by the federal government was leaving the municipalities as 'the forgotten people'.
Present tax relations, Mr. Diefenbaker maintained, are a 'haphazard outgrowth' of wartime agreements which don't meet the problems of Canada today. The federal government offered 'cut and dried' plans which the provinces had to accept.
Under a Conservative government, he said, the provinces would have a voice in deciding fiscal terms and the tax agreements would contribute -to national unity.


These indeed, Mr. Speaker, are noble words and noble sentiments, but it is most unfortunate that none of these noble sentiments have been reflected in the least in the proposals the Prime Minister made to the provinces last October. The proposals the Prime Minister made to the provinces in October contain these features:
1.	The federal tax rates in the three shared tax fields would be reduced by the amount of the present standard rates, that is 14, 9 and 50. This proposal has two implications. First, the federal government is not prepared to vacate any additional field of direct taxation in order to enable the provinces to get more revenues from direct taxes without adding to the over-all tax burden. Second, all the provinces will have to levy and collect their direct taxes, as some of them are doing now under the provisions of the present arrangements. The provinces will not be able to make tax rental or tax collection agreements with the federal government as they do now. This would mean that all Canadian taxpayers would have to file two income tax returns, and it would also mean additional costs to the provinces for the collection of taxes.
2.	Federal subsidies, fixed at $220 million per year, would be distributed amongst the provinces to take the place of the present equalization payments, the Atlantic provinces adjustment grants and the special grants to Newfoundland under section 2 of the Newfoundland Additional Grants Act. A new but unspecified formula of distribution of those grants would replace the present one which is based on the average yield of standard direct tax rates in the top two provinces. This represents, in my opinion, a clear repudiation of the equalization principle which the Prime Minister had promised in July to maintain. I shall return to that point later.
3.	Stabilization payments would be based on the yield of the standard taxes in the last two years of the current arrangements, that is in 1960-61 and 1961-62. At present those payments are determined on a moving basis and are based for any one year on tax yields of the two previous years. The change proposed by the federal government means, for all practical purposes, the abandonment of the stabilization principle unless we experience an acute depression in Canada during the next few years.
4.	Reciprocal application of sales and commodity taxes to federal and provincial crown agencies would be provided, but no material changes are proposed with respect to conditional grant and shared cost arrangements.
5.	The use of sales taxes at the retail level by the provinces would be confirmed through

an amendment to the British North America Act. Such a proposal, Mr. Speaker, has very little significance in terms of additional provincial revenues, since all provinces can even now levy such taxes. As a matter of fact seven provinces already do so.
There is, however, one redeeming feature of the Prime Minister's proposals, Mr. Speaker. It is that the federal government has succeeded finally in creating unanimity amongst the provinces. They were unanimously and vehemently against the federal proposals. The Toronto Star of October 27 gave a very succinct and very accurate description of the feeling of the 10 premiers. The headline reads "10 Premiers Turn Thumbs Down on P.M. Offer". In commenting on the proposals this is what the different premiers had to say:
Robiehaud, New Brunswick: Preposterous.
Stanfield, Nova Scotia:	No better off.
Roblin, Manitoba: No good.
Smallwood, Newfoundland: Disillusioned.
Frost, Ontario: Meaningless.
Bennett, British Columbia: Unrealistic.
Shaw, Prince Edward Island: Not in favour.
Douglas, Saskatchewan: Retrograde.
Manning, Alberta: Deceptive.
Lesage, Quebec: Unacceptable.


Donald Methuen Fleming: Will the hon.
member permit a question? Upon what authority does he, as one who did not attend the conference which proceeded in camera, undertake to say that these statements appearing in the Toronto Daily Star are accurate and were made at that conference?


Mr. Denis:: Why don't you deny them yourself?


Louis-Joseph-Lucien Cardin: Suppose we put it the other way. Is the Minister of Finance ready to deny what I have just put forward?


Mr. Speaker:: Order. Unless it is the hon. member's intention to move an amendment, which he has not yet indicated, I shall have to tell him shortly that his time has expired. In other words, the hon. member has unlimited time only if he is moving an amendment, but he has said nothing about an amendment as yet.


Louis-Joseph-Lucien Cardin: I do intend to move an amendment. I am sorry I did not do so sooner.
What happened to the solution the Prime Minister claimed in 1957 would be made in a spirit of amity and mutual respect. The Conservatives also accused the former Liberal administration of adopting a take it or leave it attitude. This government apparently is not even that generous, because it is adopting a leave it attitude; there is nothing the provinces can take in the federal proposals.
In 1957 the Conservatives, especially those who were following Mr. Duplessis in Quebec, 90205-6-07
Dominion-Provincial Relations criticized the Liberal government for taking too large a share of the joint field of direct taxes, thus forcing the provinces into a starved condition. What has this government done, Mr. Speaker? In 1958 the present government increased the provincial share of personal income tax by 3 per cent of the federal rate. But in 1959 the federal government increased its own share of the corporate income tax by an additional 3 per cent tax on profits. I should like to emphasize this point, that the federal share of the joint field of direct taxes is higher in 1960-61 than it would have been in 1957-58 under the provisions of Mr. Harris' budgetary proposals.
Moreover, the present government does not propose to vacate the field of direct taxation any further during the next five years. It has pushed its tax rates as high as it can and now refuses to provide any additional leeway in order to enable the provinces to exercise their rights without adding to an already heavy tax burden. In fact this government asserts that its fiscal needs have a priority over provincial financial requirements.
This refusal to provide additional room for provincial taxes must be related to equalization in order to understand fully what it means to the provinces. As I said before, the federal government, in spite of the firm commitment made by the Prime Minister in July, 1960, now proposes to abandon the principle of equalization and to distribute an unvarying amount of money each year to the provinces. This proposal, Mr. Speaker, I submit is most unfair to most provinces.
This proposal means that the few rich provinces having high tax yields will continue, as at present, to benefit from those increasing yields, but the other provinces will not be able to share further in the country's prosperity. In other words, all provinces except one will be worse off under the new proposal than they would be if the existing arrangements had been simply continued. An undesirable but increasing differential in per capita tax revenue will develop among provinces, and this differential is likely to increase rapidly for another reason. The provinces have been told by the federal government to increase their own direct tax rates if they want more revenues. This procedure might be a possible solution for those few provinces which have a high tax potential, but it will not be possible for most provinces.
We all know, of course, that direct tax yields, and especially the per capita yields from corporate income tax, vary from one province to another. This fact is clearly shown in a table presented by the Minister of Finance last year, which table appears at page

Dominion-Provincial Relations 2230 of Hansard of that year. This table indicates that corporate income tax of 1 per cent would yield per capita in the current fiscal year $2.64 in Ontario, $2.18 in British Columbia, $2.05 in Alberta, $1.97 in Quebec, $1.56 in Manitoba, $1.13 in Saskatchewan, $1.02 in Nova Scotia, 88 cents in New Brunswick, 79 cents in Newfoundland and 54 cents in Prince Edward Island.
As we can see, the per capita yield of such a tax in Prince Edward Island is only 20 per cent of what it is in Ontario. On the basis of a 1 per cent corporation income tax, without equalization, Quebec, for instance, would lose almost $3J million in revenue as compared with Ontario. In order to get the same per capita revenue that Ontario receives from a 1 per cent corporate income tax, Prince Edward Island would have to levy a tax of 5 per cent and Newfoundland would have to impose a tax of 3 J per cent. This comparison indicates how inequitable the federal proposal is when it requires the provinces from now on to finance any addition to their services from their own taxes, without equalization.
For certain provinces, at least, the constitutional power of direct taxation is almost only theoretical; in practice it cannot be used to provide adequate provincial revenues. What will happen, Mr. Speaker, in those provinces as provincial financial requirements increase, under the Conservative proposal which would force the provinces to increase their own taxes without equalization? Those provinces would have to impose prohibitive rates of taxes, or refuse needed improvements in provincial services, or ask the federal government to take over their constitutional responsibilities. None of those solutions is compatible with fairness and the proper balance of our federal system.
In summary, the federal government tells the provinces "We will freeze and maintain the benefits you receive under the tax-sharing arrangements negotiated by the Liberals, but you will not get anything more in the future from a Conservative government". As the Leader of the Opposition stated in Sussex on October 29, by driving the provinces back into double taxation and by refusing to apply in the future the principles of equalization and stabilization, the present government is proposing to undo the progress made in federal-provincial fiscal relations and to return the provinces to the financial strait jacket they were in during the days of R. B. Bennett. From now on, as in the early thirties, all the provinces will be left alone to face their increasing financial responsibilities. This situation is exactly what produced so much inequality among the provinces in the early thirties and caused the acute crisis of our

federal system which was so vividly described in the report of the Rowell-Sirois commission in 1940.
The Liberal party is strongly opposed to the proposal made by the government to the provinces last October. We believe that the basic features of the existing tax-sharing arrangements should be maintained. We also believe that they can be improved in certain respects not by going backward, as the government proposes to do, but by moving forward.
Without going into the details of this complex question, may I say that the general attitude of the Liberal party in this field can be summarized by the following propositions:
1.	We believe in regular consultation with the provinces in order to ensure that priorities in the use of taxes are kept constantly in line with changing conditions and in order to ensure that the provincial governments have adequate revenues with which to provide for their citizens and adequate standard of services and to perform their constitutional obligations. Another important new area for co-operation is in the borrowing operations of municipal, provincial and federal authorities. More regular consultation and closer co-operation require the creation of a permanent federal-provincial secretariat.
2.	We believe that the principle of equalization should be strengthened instead of being abandoned, and that all provinces should receive the same revenue, per head of population, from the direct taxes shared with the federal government. In this way Canadians everywhere would receive an equal share of tax revenues derived from national economic activities and all provinces would be in a better position to face by themselves their constitutional responsibilities.
3.	The principle of stabilization should also be retained and strengthened. Tax revenues fall off if we encounter a serious recession, but there is no lessening of the need for roads, schools and other services provided by the provinces and the municipalities. Stabilization payments in any given year should be related to the revenues of the previous year.
4.	We believe that the permanent programs which had to be started on a shared cost basis by federal and provincial governments and which are now firmly established throughout Canada should be left entirely to the provinces, and that the federal government should evolve appropriate readjustments in its taxes so as to provide for full provincial financing of those programs.
5.	Finally, we believe that adjustment grants should be available on a basis of a formula

Dominion-Provincial Relations
which could be applied to any part of the country, for any province in special fiscal need.
Those, Mr. Speaker, are some of the proposals that we feel should be offered to the provinces and be embodied in the new tax-sharing arrangements. We also believe that current negotiations so far have made little or no progress. We were very happy to hear the Prime Minister announce a federal-provincial meeting for March 23 or 24. Indeed, we are very happy to welcome that announcement. However, I cannot help but state that it is rather confusing that the Prime Minister should make that announcement today about holding a federal-provincial conference in March, when only last Friday, in answer to a question from someone on this side of the house, the Minister of Finance claimed that there would be no convening of the federal-provincial conference in the next two months.


Donald Methuen Fleming: On a question of privilege, Mr. Speaker, I defy the hon. member to read what I actually did say; not this most misleading paraphrase, but to read what I did say.


Mr. Speaker:: The minister is quite within his rights to ask for correction if misquoted and the hon. member yields the floor.


Louis-Joseph-Lucien Cardin: I did not have the statement in my hand, and I want to thank the hon. member for Bonavista-Twillingate for giving it to me. I do recall what was said, and to make the Minister of Finance happy I will read what is in Hansard. This is reported at page 1476 of Hansard:


John Whitney Pickersgill: Mr. Speaker, I would like to ask the Minister of Finance whether any changes whatever are in contemplation with respect to the tax-sharing arrangements with the provinces for the fiscal year 1961-62.


Donald Methuen Fleming: You are in the
wrong column.


Louis-Joseph-Lucien Cardin: I know.


John Whitney Pickersgill: You admit he is right, do you?


Louis-Joseph-Lucien Cardin: I did not want to read the whole thing, but the question from the hon. member for Assiniboia (Mr. Argue) was this:
Mr. Speaker, I wonder whether the minister can inform the house whether a date has been set for a federal-provincial conference involving the provincial premiers in order to deal with fiscal matters?


Donald Methuen Fleming: No, Mr. Speaker.


Hazen Robert Argue: Can the minister say whether a conference will be held within the next month or two?


Donald Methuen Fleming: I would not expect one would be held within the next short period.
90205-6-97*


An hon. Member:: That puts the record straight.


An hon. Member:: Withdraw.


Louis-Joseph-Lucien Cardin: The Minister of Finance makes many interventions and pretends with a very strong voice to be always correct and not to be wrong.


John Whitney Pickersgill: It is crystal clear, as usual.


An hon. Member:: Keep on reading.


Mr. Hamilton (Notre Dame de Grace):: You
must be pretty bad when the hon. member for Bonavista-Twillingate cannot help you.


Louis-Joseph-Lucien Cardin: Since 1957 the provinces have presented their concrete views on several occasions, particularly in July, 1960; but in October the federal government acted like a very bad employer who proposes a reduction in wages in order to counteract demands from his employees for better remuneration. What is needed now are genuine negotiations, conducted, as the Prime Minister so eloquently promised in 1957, "in a spirit of unity, amity and with mutual tolerance and respect". Mere exchanges of views, either through telegrams or letters, are no longer sufficient.
We on this side of the house sincerely hope that the government at such a conference will revise its October proposal in several respects, but more particularly with regard to equalization. The government must recognize that, according to its October proposal, although the present equalization payments would be continued, possibly with a new formula, the principle of equalization itself would cease to apply in future. This becomes clear when we realize that according to the federal proposal, equalization payments would remain fixed and become a form of subsidy, irrespective of future changes in the standard tax rates or in the yield of such rates.
This is a direct repudiation of the equalization principle and is a repudiation of a firm commitment made by the Prime Minister to the provinces at the July conference. Here is what he said then, and this is at page 10 of the proceedings:
I want to make this abundantly clear on behalf of the dominion government, that whatever the ultimate decision may be the principle of equalization must be preserved.
We agree with that fully.


John George Diefenbaker: And reiterated again in October, and followed.


Louis-Joseph-Lucien Cardin: I will go on. The Prime Minister went on to define equalization-
-as a payment by Canada to the provinces to bring the per capita return from the three taxes at standard rates up to the average per capita yield in the two provinces in which per capita

Dominion-Provincial Relations yield is highest. For provinces in which the tax potential is relatively low, this principle is most important.
Then the Prime Minister added:
Again I want to emphasize that the federal government remains firmly committed to the principle of equalization and of financial assistance to those provinces in which incomes and taxable capacity are below those of the richer provinces.


John George Diefenbaker: Hear, hear; and that is still the view.


Louis-Joseph-Lucien Cardin: That is fine. The Prime Minister went on to say:
The government believes that the principle of fiscal aid and equalization to assist the less wealthy provinces stands on its own feet and is accepted on that basis and is quite separate from the question of tax rental or tax sharing.
I am glad to see the Prime Minister nod his head in approval.


John George Diefenbaker: I am in agreement with what you have read from my speech.


Louis-Joseph-Lucien Cardin: I wonder if the Prime Minister will say that when I go on with the other quotations from his speech. This is a firm, clear and inescapable commitment made by the Prime Minister of our country in July, 1960. But at the October conference of 1960 this is what the Prime Minister had to say:
To meet the needs of the provinces with lower tax potential we would therefore-


Donald Methuen Fleming: Mr. Speaker, I would like to ask the hon. member what he is reading from, because there is no official record of the conference.


John Whitney Pickersgill: You do not seem to realize it is a press release.


Donald Methuen Fleming: If he is reading something I think he should be called upon to identify it.


Mr. Speaker:: I think the minister's point is well taken. If the hon. member is purporting to quote from an in camera conference, he should identify the document. In any event he should identify the quotations.


Louis-Joseph-Lucien Cardin: Mr. Speaker, I would like to make this point quite clear. I thought I had made it quite clear. After the meeting in camera at the October conference the Prime Minister released to the press the proposals he had made in camera. I am reading a statement that appeared in the press.


John Whitney Pickersgill: It is right here; October 26.


Louis-Joseph-Lucien Cardin: As a matter of fact I am reading from a press release of the summary of suggestions made by the Prime Minister of Canada to the dominion-provincial conference of October 26, 1960.


Donald Methuen Fleming: The hon. member says he is reading from a newspaper. What newspaper?


Louis-Joseph-Lucien Cardin: It is a release from the Prime Minister's office. What I was trying to say a while ago was that all this information was available at the time of the conference immediately after the session in camera, when the Prime Minister made this public and released it to the press. After that interruption perhaps I can continue to read what the Prime Minister said, not at the July conference but at the October conference of 1960.


Mr. Speaker:: Just so the record may be clear, I take it that the hon. member is not reading what the Prime Minister said at the conference in camera but is reading an extract from a press statement given by the Prime Minister on some date which the hon. member has not yet identified.


Louis-Joseph-Lucien Cardin: Mr. Speaker, I am reading from a summary of suggestions made by the Prime Minister of Canada to the dominion-provincial conference of October 26, 1960. The Prime Minister said:
To meet the needs of the provinces with lower tax potential we would therefore ask parliament to provide equalization payments or their equivalent in a total amount of $220 million a year, which is approximately the scale of the payments this year. The amount so provided will take the place of the present equalization payments, the Atlantic provinces adjustment grants, and the special grants to Newfoundland under section 2 of the Newfoundland Additional Grants Act.
The Prime Minister continued:
Being mindful of the necessity of maintaining a reasonable level of public services in areas of low tax potential, we will ask parliament to provide this sum of money for equalization payments. While we are willing to recommend to parliament that the present scale of equalization payments be made available to the provinces, we have some reservation about the present formula of distribution and would hope that the total might be distributed in such fashion as to give greater weight to provincial fiscal need. If the provinces can all agree on a better or more equitable formula for distribution of this amount, the government will recommend it to parliament, provided that each of the Atlantic provinces gets at least as much from such a provincial formula of distribution as it gets at the present time from the equalization payments, the Atlantic provinces adjustment grant, and the Newfoundland Additional Grants Act.
As I said before, we believe that the only interpretation that can be given to this last statement is that while present equalization payments will be made, the principle of equalization as defined by the Prime Minister in July will not be applied in future. Because of the clear repudiation in October, 1960 of the solemn pledge made by the Prime Minister

in July, 1960 I move, seconded by the hon. member for Gloucester (Mr. Robichaud):
That all the words after the word "that" be struck out and the following substituted therefor:
In view of the fact that the federal government at the October conference (1960) with the provinces proposed fixed subsidies in place of the equalization payments provided under the present tax-sharing arrangements, and that this October proposal is a repudiation of the principle of equalization;
Therefore be it resolved that this house strongly favours the continued application of the principle of equalization of direct tax revenues pledged to the provinces by the Prime Minister at the federal-provincial conference in July, 1960, and defined at the time by the Prime Minister as a payment by Canada to the provinces to bring the per capita return from the three taxes at standard rates up to the average per capita yield in the two provinces in which per capita yield is highest.


Mr. Speaker:: If no hon. member wishes to comment on this proposed amendment, I shall now put it before the house.


Mr. Erhari Regier (Burnaby-Coquitlam):: Mr. Speaker, today we are debating a topic that is very complex indeed. At this time I should like to express the opinion of this group. We intend to support the amendment offered by the official opposition, but in our opinion it is inadequate. It asks only for a continuation in principle of existing arrangements, and does not call for an extension of the basic principle underlying existing do-monion-provincial tax-sharing arrangements. Our amendment to the amendment of the Liberals is going to attempt to underline the need for an extension of the underlying basic principles of these agreements.
In 1867 the fathers of confederation reached an agreement whereby responsibilities and powers of taxation as between the two levels of government were arrived at, and we had emerge the British North America Act. At that time the builders of the Canadian nation, meeting in Prince Edward Island, were unable to see how in the years ahead the responsibilities of our provincial governments were going to grow by leaps and bounds. They also failed to see how in years to come we would have a condition wherein new responsibilities would have to be assumed in the main by our other levels of government and that the revenues of the national government would increase at the same time.
For years the problem has been met, in part at least, by the federal government increasingly assuming a partnership role with the other levels of government. Each year we note how the federal government is in many ways attempting to share the responsibility that was imposed upon the provincial governments by the terms of the British North America Act. Already this session we have had legislation before us under which the federal government will attempt to help
Dominion-Provincial Relations the other level of government in the field of education. There has been a growth in federal participation in the meeting of these new and larger responsibilities that the lower levels of government now have.
The other method devised some years ago was one whereby the provinces agreed to rent out to the federal government certain taxation rights in return for revenue from the federal treasury. We had evolved the taxsharing agreements. There has been a lot of misunderstanding in this matter. The federal government has attempted to assume its fair share of the problems of government. Whenever the federal government has moved in to assist the other level of government in such matters as education, highways, health and welfare and unemployment, there have been protests as to the terms and even as to the basic essence of the tax-sharing agreements that have been arrived at. Obviously the easy solution is that about which we have read and heard much, the return to the provinces of their basic rights to tax in order to enable them to look after their constitutional responsibilities.
That is an easy answer, but it does not resolve the basic problem. It is the attitude of Pontius Pilate washing his hands when faced with a difficult decision. In effect, this latest move in October last whereby the federal government offered to return to the provinces their right in the matter of direct taxation was an adoption of the position of Pontius Pilate, the federal government attempting to wash its hands of a problem at a time when we face grave responsibilities in this regard. I submit that the answer is not easy. However, I also submit that the answer will not be arrived at by unloading the whole problem on to the necks of all provincial governments.
This last move, if it were to be accepted by our provincial governments, has in it implications that we all ought to be aware of. There is a danger, because if the provinces accepted this last offer of the federal government we would have a national government that would find itself unable to deal with problems of recession and depression. It would find itself completely handicapped in dealing with the very difficult problem of unemployment. The national government would find itself in a position where it was completely prevented from lending any effective hand in the matter of national development. It would accentuate the inequalities that exist between the standards of living of Canadians in various provinces of Canada. They would have made no contribution toward resolving the very severe handicap under which our municipalities must now operate. Were this proposal

Dominion-Provincial Relations accepted the national government would immediately realize that it would be completely unable henceforth to assist in the matter of education. It would also find itself unable to resolve problems of regional handicaps under which so many of our Canadian people suffer.
We find, therefore, because of all the dangers involved, that the offer of the government to the provinces is not in the interests of our nation. We realize, of course, that there is a problem, as I said before, and we have been given many assurances. I have looked at the Conservative promises made during the last election, as they are to be found in the compilation that has been referred to so often in this house. I notice that hardly any subject contains so many pledges and so many promises on the part of the then leader of the Conservative party, now the Prime Minister, as this matter of dominion-provincial taxation arrangements, or their fiscal arrangements. There are pages and pages of pledges that were given by the then leader of the Conservative party. In reading through all of them one finds that certainly there is no indication that the Conservatives intended to abdicate their responsibilities in this regard.


Mr. Bell (Carleton):: And they have never done so.


Erhart Regier: In our opinion this latest move of theirs is an abdication of their responsibilities as leaders of our nation. They are intending to throw the difficult situation into the laps of the provinces. We feel that this is completely inadequate, and is exactly the opposite of the essence of their promises made to the Canadian people at that time.
I might simply touch on the matter of interest rates that other levels of governments have to pay. I refer to the Victoria Times of May 22, 1957, where we find that the man who is now our Prime Minister had, this to say, and it, is in quotation marks:
Even the city of Victoria has to pay outrageous rates of interest today.
Again, in his home town of Prince Albert, as reported in the Prince Albert Herald of May 28, 1957, the Prime Minister said:
Prince Albert knows when it borrows that it has to pay an exorbitant rate of interest to the east.
Yet now, if the offer of the government were to be accepted, there would be no possibility of any help on the part of this government, with all the resources at its command, toward relieving the interest burdens that have to be borne by our provinces and municipalities. As a matter of fact, only recently in the baby budget the minister imposed an even higher rate of interest on our

municipalities and our provincial governments, and it is nonsense that our provinces have to be-


Donald Methuen Fleming: I rise on a point of order, Mr. Speaker. The hon. member is now speaking about the budget. The statement he has made about the budget is completely untrue. I take it, Mr. Speaker, that this is not the proper place or time to be discussing the budget. We have had the budget debate.


John Whitney Pickersgill: Mr. Speaker, on the point of order raised by the minister, I wonder whether Your Honour would consider enforcing the rules on the minister as well as on the other members of the house and prevent him from raising these phony points of order which enable him to reply to arguments in debate.


Erhart Regier: On the point of order, the rate that has to be paid by the provincial governments is very much a part of the financial arrangements or, in my submission at least, it ought to be a part of the financial arrangements arrived at between the national government and our provincial governments. I therefore feel, even though there was a reference in the budget to those interest rates and to the borrowings of provincial governments, it is also very much an integral part of the debate now before us. I note in the report-


Mr. Deputy Speaker:: May I rule on the point of order. Of course in my mind the subject matter of the amendment moved by the hon. member seems to me to be somewhat restricted, because it brings into discussion only the principle of equalization of direct tax revenues as they exist today, compared with the proposal made at the last federal-provincial conference, which would freeze them, if my interpretation is correct.


John Whitney Pickersgill: It is.


Mr. Deputy Speaker:: The hon. member knows what I mean. Therefore I do not think it would be appropriate to discuss the whole financial situation of the federal government or even the whole problem of fiscal arrangements with the provinces. Unless I misinterpret the amendment, this is the way I feel the discussion should be limited.


Erhart Regier: I realized, Mr. Speaker, that I might have a little difficulty and I did discuss with a number of members the possible limitations of the debate now going on. However, this very matter of the proposal of the government to freeze the incomes, or the possible incomes, of our provincial governments raises, at least to a certain degree, the effect of this limitation of

the incomes of our provinces. It was for that reason that I brought in the matter of interest rates although I had not intended to pursue it, Mr. Speaker.
It is our contention that dominion-provincial fiscal relations-and I should like to endorse what the Liberal spokesman had to say on this point-ought to be a continuing process; that a permanent organization should be established whereby the growing problems of the two levels of government could be a matter of continuing discussion. I should like to underline his call for the establishment of a dominion-provincial secretariat wherein the minister of this government would preside over continuous meetings with representatives of each of the ten provinces, which would co-ordinate our problems as they have arisen and will continue to arise. We feel that a continuation of the equalization principle is essential in order to give Canadians in all parts of Canada equal opportunities, in order to enable the government to continue to exercise control over the welfare of the national economy.
The proposal of the government would in fact establish within the borders of Canada ten different Canadian nations, and we believe that would be most regrettable. We would find people in Nova Scotia becoming poorer and poorer while other provinces would continue to become wealthier and wealthier. Equal opportunities for all Canadians would then fly out the window. We need a national government that is able to use ways and means to assure to as great extent as is constitutionally possible equal opportunities for all Canadians in all parts of Canada. We also need a continuation of the basic equalization principle in order to enable the national government to exercise a policy of selective development in those areas of Canada where development is most urgently needed.
We also urge a continuation of this principle in order that at least a little more progress can be made toward helping our municipalities meet their growing responsibilities. We have to recognize the need to share our responsibilities no matter where we live in Canada, and the proposal of the government to hand back to the provinces direct powers of taxation would mean nothing more or less than that the wealthier provinces would be enabled thereby to get off the hook of carrying out as Canadians their share of responsibility to those Canadians living in less privileged areas. We do not want to see a return to the provinces of the right to levy their own income taxes. We believe this would bring in its wake many evil results.
Dominion-Provincial Relations
In the new agreements that we hope will be arrived at we should also like to see, in addition to the continuation of the equalization principle, ways and means devised whereby in effect there will not be a penalty imposed on those provinces that desire to be progressive and which introduce legislation of various kinds that other provinces may be years in initiating. What I have in mind particularly is that if a province wants to embark on a prepaid medical care program, ways and means ought to be found whereby that province is not going to be penalized indirectly in the years to come for having undertaken a progressive measure albeit ahead of the rest of the provinces. I have in mind such things as the Trans-Canada Highway Act and a national health insurance plan.
We believe that in addition to the equalization principle the tax-sharing arrangements proposed by the government should embody a new principle, a sharing of the problem of raising the necessary social capital. The federal government has under its control the Bank of Canada, and we feel that our municipalities and provinces should be helped, that the time is overdue for the government to come to the aid of other levels of government in the matter of helping to meet their capital needs.
We also do not like the proposal of the Prime Minister that the existing amount of revenue available for equalization will henceforth be taken and allotted to the provinces. It is our view that by doing so we are getting away from the basic principle into the realm of a Santa Claus prime minister deciding when and how and to which of the provinces he is going to pay additional allowances. I know we already have arrangements whereby we pay additional allowances to certain provinces, but we do not like the abolition of agreements that are based on fundamental principles and the instituting of grants instead whereby the government, according to its whim of the moment, would be able to make what in effect would be hand-outs to what it considered to be needy provinces.
We might thus return to a situation where, if the political complexion of a particular provincial government did not meet with the approval of the government of Canada, the province in question would then be discriminated against. We might again have the five-cent speech of Mackenzie King in the annals of Canadian history; that is to say, unless the people of this province vote into office a provincial government of my liking I can assure them they will not get a nickel out of the national government.

Dominion-Provincial Relations This would be a return to the days of Mr. Duplessis, who decided on his own hook to which parishes he was going to give grants for educational purposes. I am very happy that the new government in the province of Quebec intends, if it has not already done so, to remove this inequity and to enact legislation whereby the parishes will have the right to obtain school grants. We want our provincial governments and the people of Canada to have the right to equal opportunities. We do not want them to have that right only at the pleasure of whoever happens to be prime minister at any particular time in our history.
So far as this matter is concerned, I believe we in Canada have to operate as a team. Let us have a united Canada with a national government working in co-operation with the ten provincial governments. I hope we can end the political competition that has too often been evident in relations between the two levels of government and between particular provinces and the national government. Therefore I move, seconded by the hon. member for Kootenay West (Mr. Herridge):
That the amendment be amended by inserting after the word "resolved" in the first line of paragraph 2, "(a)", and adding to the proposed amendment the following subparagraph:
"(b) and be it further resolved that this house is of the opinion that the present tax-sharing agreements should be extended to provide sufficient federal assistance to the provinces so as to enable them to assist the municipalities in the provision of essential capital services."


Mr. Deputy Speaker:: Before I put the
amendment, would any hon. member care to comment as to its admissibility? I should like to have the guidance of hon. members.


Donald Methuen Fleming: I do not know whether you wish an observation on that point. I think it is quite obvious that this would involve a substantial charge upon the crown, and it may well go outside the scope of the original amendment.


Mr. Deputy Speaker:: I should like to have the views of the house in connection with citation 202 in Beauchesne's fourth edition, paragraph 3. Reference may be made also to May, page 421, in connection with the relevancy of amendments. My worry is that the amendment deals only with the principle involved in equalization payments, which is something quite different from the tax-sharing arrangements. It would seem, therefore, that the subamendment would widen the scope of the discussion. Of course, if the house is agreeable to having it accepted, then I shall abide by that decision.


Erhart Regier: If I may speak to the point of order raised by the minister, I would say that if our subamendment involves a financial burden on the federal government, then the 

amendment also is out of order because it could be argued with equal force that the continuation of the equalization principle would involve a financial burden on the federal government. I feel, therefore, since the amendment has been accepted, the point of order in connection with the subamendment is hardly relevant.
May I point out that the amendment offered by the official opposition asks that the principle of equalization be continued in the federal-provincial tax-sharing arrangements. All we are asking is that the equalization principle be continued and that, in addition, the principle be extended so as to provide sufficient federal assistance to the provinces in the matter of capital services.


Mr. Nowlan:: Mr. Speaker, the amendment speaks of maintaining a principle which has been recognized in the past. The subamendment suggests the extension to a specific field of earmarked funds. There are numerous citations to the effect that an amendment of this kind cannot further encumber the public revenues and I would suggest this subamendment is out of order upon the grounds stated by the Minister of Finance.


Mr. Deputy Speaker:: 
Erhart Regier: I should like to appeal your ruling, Mr. Speaker.


Mr. Deputy Speaker:: Those in favour of sustaining the Chair's decision will please say yea.


Some hon. Members:: Yea.


Mr. Deputy Speaker:: Those opposed will say nay.


Some hon. Members:: Nay.


Mr. Deputy Speaker:: In my opinion the yeas have it.
And more than five members having risen: Mr. Deputy Speaker: Call in the members.
Mr. Speaker put the question as follows: The question is an appeal to the house from a decision of the Chair as follows: Mr. Cardin moved, in amendment to a motion to go into supply, as follows:
"That all the words after the word 'that' be struck out and the following substituted therefor: 'In view of the fact that the federal government at the October conference (1960) with the provinces proposed fixed subsidies in place of the equalization payments provided under the present tax-sharing arrangements, and that this October proposal is a repudiation of the principle of equalization;
Therefore be it resolved that this house strongly favours the continued application of the principle of equalization of direct tax revenues pledged to the provinces by the Prime Minister at the federal-provincial conference in July, 1960, and defined at that time by the Prime Minister as a payment by Canada to the provinces to bring the per capita return from the three taxes at standard rates up to the average per capita yield in the two provinces in which per capita yield is highest.' " Mr. Regier proposed in amendment to the amendment as follows:
"That the amendment be amended by inserting after the word 'resolved' in the first line of paragraph 2, '(a)', and adding to the proposed amendment the following subparagraph:
'(b) and be it further resolved that this house is of the opinion that the present tax-sharing agreements should be extended to provide sufficient federal assistance to the provinces so as to enable them to assist the municipalities in the provision of essential capital services.' "
Whereupon the Chair decided that the amendment was out of order in that it enlarged upon the terms of the amendment as it introduced a subject matter not contained therein and therefore the proposed subamendment was irrelevant as stated at page 421 of May's 16th edition.
Whereupon Mr. Regier appealed to the house from the decision of the Chair.


Mr. Speaker:: I declare the decision of the Chair confirmed.


Donald Methuen Fleming: Mr. Speaker, whatever else may be said today concerning the pitch by the hon. member for Richelieu-Vercheres (Mr. Cardin), it was certainly preceded by a long wind-up.
He undertook to touch on, I suppose, 15 or 20 subjects before he admitted the house to a view of the subject which he was proposing to raise on this supply motion. I suppose all hon. members shared the same impression as the speech proceeded. Probably all began with the assumption that this was another of the compositions of Professor Lamontagne-


John Whitney Pickersgill: Mr. Speaker, I rise on a point of order, a genuine point of order.


An hon. Member:: That is a change.


John Whitney Pickersgill: My point of order is that it is contrary to the rules of the house to reflect upon speeches made by hon. members or to suggest that they were written by someone else.


Donald Methuen Fleming: Mr. Speaker, I think the hon. member spoke too soon, if this is the point on which he is so touchy, because I was going to say that before the speech had ended I think we had all concluded it was so bad that it must have been prepared by the hon. member for Bonavista-Twillingate (Mr. Pickersgill).


Mr. Speaker:: Perhaps in view of the answer it is unnecessary to adjudicate.


John Whitney Pickersgill: I think so.


Donald Methuen Fleming: It is certainly something new, Mr. Speaker, to hear an hon. member, who was not present at a conference that proceeded in camera, rise and assure the house that what he is about to state is an accurate report of what happened at the conference, especially when that report comes from a well-known Liberal newspaper.
I think the accuracy of the hon. member's remarks throughout can well be tested by

the fact that when he did get down to something specific he found himself in the wrong column-I think he was in the wrong column all the way through his speech-and even then he did not get the right words.
Let me say in general terms concerning the speech of the hon. gentleman who introduced this motion that the speech was throughout based on wrong premises. It abounded in erroneous statements of fact. It was misleading in its purport, except in the quotation from the words of the Prime Minister (Mr. Diefenbaker).


John Whitney Pickersgill: Which one?


Donald Methuen Fleming: That was the one
really accurate and reliable portion of his speech. Even if the speech has been accurate, even if it had been based on sound premises, it would have been completely out of date. It has led now to an amendment which is completely misdirected and which has no basis whatsoever.
I make only one comment on the form of the amendment. It is preceded by a preamble. We have not raised this question of order because we want to meet this amendment and invite the house to pass upon what is an invitation by the official opposition to express want of confidence in the government. Let there be no question about the purport of this amendment; it is a want of confidence motion, and therefore we wish to meet it, and meet it head on.
Just in case the point comes up on another occasion, I should like to say that I question whether on an amendment to a supply motion it is proper to introduce a preamble in the amendment.
But there is something more that is involved in the introduction of such an amendment at this time. This is an attempt to jump the gun. This is an attempt to cast into the midst of pending negotiations what is obviously expected to be a very serious obstacle and interference.
I ask you, Mr. Speaker, if you can conceive of a more irresponsible course for any opposition to follow than to attempt to introduce this matter into the realm of debate, while negotiations are still pending and while much of what has passed in negotiation has occurred behind closed doors, and when the opposition has not all the facts. While these negotiations are still proceeding, and when they know it has been proposed that the conference should resume, they now leap into debate and seek to muddy these waters and to follow a course which is calculated to make agreement between the federal and provincial governments more difficult.

I have no doubt whatever that hon. members opposite must have known when they introduced such an amendment at this time, at this particular stage of negotiations, that it would be construed by others outside this house as purporting to prejudice negotiations. We of the federal government are very hopeful of a good agreement being entered into between the federal and provincial governments in keeping with the policy that this government has followed from the moment it was sworn into office of doing justice to the provinces and their municipalities. Having regard to the national interest we shall continue to do in this fiscal field everything that is proper in seeking arrangements for the fiscal period commencing April 1, 1962 that will be fair to all levels of government.
How different was our course five years ago when we were in opposition. Knowing that these matters were proceeding in negotiation and that many of these negotiations were being carried on in camera, we did not seek to muddy the waters. We held the government responsible for the proposals which it brought into the house in the end, as was our duty. We held the government responsible and we attacked those proposals. We divided the house on the legislation by which the federal government of that day sought to place upon the statute books an enactment confirming the terms that the federal government had put forward. That, I think, is the proper course, not to seek to prejudice negotiations at this particular time.
We have heard something this afternoon by way of a review of history from the hon. member for Richelieu-Vercheres which, if it bears any resemblance to the fact and the record, does so, believe me, by pure coincidence. History has been rewritten this afternoon and any resemblance is most difficult to find.
I begin with 1957, with the change of government on June 21 of that year. We came into office and inherited an unholy mess left to us by our predecessors in relation to federal-provincial fiscal relations. Of all the lamentable failures of that previous government I suppose none was worse than in the realm of dominion-provincial fiscal relations, leaving aside for the moment the way in which hon. members opposite sought to destroy the effectiveness of parliament and its dignity.
Let me enlarge on what I have said in regard to the unholy mess they left behind. I suppose never in the history of this country has there been a time marked by greater friction in dominion-provincial relations than 90205-6-98J
Dominion-Provincial Relations was the period of the late days of the former administration, that now long since discredited and unlamented administration.
Agreements had been made by nine provinces pursuant to the Federal-Provincial TaxSharing Arrangements Act enacted by parliament in 1956. Yes, nine provinces had made agreements. Had they done so with any degree of alacrity and enthusiasm? No, Mr. Speaker. The attitude of nearly all the provinces was that they had no alternative, that virtually a pistol had been put to their heads.
We do not need to turn to what Conservative premiers said, nor to what the Conservative opposition of those days in this house had to say. Let me just quote some things that were said by Liberal premiers of that time. These statements have been put on the record of the house before, but let me briefly remind the house of some of these observations.
Let us turn, first, to a statement made by Mr. Campbell, the then Liberal premier of Manitoba. This statement was made on July 23, 1956 in commenting on the course of discussion at the conference of that year and the previous year and the hard and fast, take it or leave it proposals put forward by the stiff-necked federal government of that day. Here are Mr. Campbell's words:
However, Manitoba was still disappointed that so little attention had been paid to the question of the actual financial requirements faced by the provincial governments in the next few years.


John Whitney Pickersgill: Would the minister tell us the source of that quotation?


Donald Methuen Fleming: And again;
It is our recommendation that before any new pattern in federal-provincial relations is adopted a thorough reassessment of the relative responsibilities and revenue sources of the various governments in Canada should be undertaken.


John Whitney Pickersgill: Would the minister say where that was taken from?


Donald Methuen Fleming: Yes. I happen to be reading now from Hansard of February 9, 1959, at page 840, where I had, as I indicated earlier this afternoon, put these statements on the record.


John Whitney Pickersgill: But where did Mr. Campbell utter those words?


Donald Methuen Fleming: The hon. member will find those words at page 840 of Hansard of February 9, 1959.


John Whitney Pickersgill: Mr. Campbell was not a member of this house. Mr. Speaker, I am raising the point of order raised by the Minister of Finance (Mr. Fleming) with respect to the hon. member for Richelieu-Vercheres (Mr. Cardin). It is well known that Mr. Campbell, the former premier of
1542	HOUSE OF
Doviinion-Provincial Relations Manitoba, was never a member of this house and never had an opportunity to put anything on Hansard. What I asked the minister was where he got Mr. Campbell's words which he is now reading and which he placed on Hansard once before.


Donald Methuen Fleming: Mr. Speaker, I am reading from a statement of Mr. Campbell which appears in Hansard. Those words have been placed on the record several times already and the hon. member will find Mr. Campbell's full statements on Hansard as well as the statements I am now about to read.


John Whitney Pickersgill: It is probably fabricated.


Donald Methuen Fleming: Mr. Speaker, I do not know if Your Honour heard the remark made by the hon. member for Bonavista-Twillingate (Mr. Pickersgill) who said, "It is probably fabricated." I ask you, Mr. Speaker, to instruct the hon. member to withdraw that remark.


Some hon. Members:: Shame.


Mr. Speaker:: I did not actually hear the word "fabricated" but as the point has been raised the hon. member will perhaps confirm or deny having used it and if he confirms his use of that word I trust he will do more, as was proposed.


John Whitney Pickersgill: I said, sir, "It was probably fabricated" and I said so to irritate the minister as I have succeeded in doing. I do not really think it was fabricated.


Some hon. Members:: Oh, oh.


John Whitney Pickersgill: I do think, Mr. Speaker, the house is entitled to be told where and when Mr. Campbell said that and not merely to be told that on a previous occasion the minister put that statement on Hansard. The minister has said those words were uttered by Mr. Campbell. A great deal turns upon when they were uttered and in what circumstances. The minister is using them in argument. The house is just as much entitled to know when those words were spoken as it was entitled to know when the words of the Prime Minister (Mr. Diefenbaker) referred to by the hon. member for Richelieu-Vercheres were spoken about which the Minister of Finance asked for confirmation.


Mr. Speaker:: The hon. member has dealt with a point he has raised himself with which I should like to deal later, but in the interval I trust he will not allow to remain on the record the statement that the minister has fabricated a statement. It seems to me that is an accusation that touches upon the dignity of parliament.


John Whitney Pickersgill: Mr. Speaker, if I did not
appear to withdraw handsomely enough, let me now withdraw that statement unreservedly.


Mr. Speaker:: The other point is as to whether an hon. member using a quotation he has previously put on Hansard ought to have to verify its source. I think that verification is a matter or argument rather than of right. It seems to me an hon. member is entitled to quote what he said in Hansard at an earlier time if exception was not taken to it then. It is a basic right of hon. members to refer to previous debates and to read what has been said. It is open to hon. members to challenge whether or not the quotation was correct. It is open to all hon. members to challenge the quotation if they have grounds for doing so.


Donald Methuen Fleming: On the same occasion, Mr. Speaker, I also put on the record this quotation of Premier Matheson of Prince Edward Island, uttered at the same period:
No recognition of a province's fiscal need problem or its tax-raising ability was taken into consideration in the re-allocation or distribution of the tax moneys, but the same old factors were again used in the formula-the gross national product of Canada and the population of the provinces.
Here is what the provincial premier of Alberta had to say:
The federal government has retained for itself the broader and higher-yielding tax fields and, plagued with its financial problems at national level, has failed to recognize the financial needs of its provinces and their municipalities.
We hope that the shift toward centralization of governing authority which has resulted from a complex system of grants will be reversed so that more than ever the decisions can be made by representatives close to the people.
Those are not the words of Conservatives. Those are the words, in two cases, of Liberal provincial premiers and in the third case of a Social Credit provincial premier.
It was not a happy settlement that came into effect on April 1, 1957. It was a series of arrangements that the provinces disliked and denounced and which we, then the official opposition in this house when this legislation was presented by the government in the summer of 1956, attacked and voted against because we said it made inadequate provision for the provinces. That was the situation when we came into office. The agreements were already in existence. We have carried out those agreements to the letter, and we have added very substantially to the payments that have been made to the provinces, whether by way of conditional or unconditional grants, since that time.
In November, 1957 we called the first of what has now become a formidable series of dominion-provincial conferences in the past

three and a half years. One striking fact stood out in that conference. That was that the federal government, this new federal government, was taking an entirely new attitude toward the provinces in such meetings. Gone was the old stiff-necked attitude of the former administration, that take it or leave it attitude which had stood out in their dealings and was demonstrated at the previous conferences. The attitude shown by the new federal government earned the warm-hearted praise of many of those attending the conference representing provinces, and by no means all from provinces with Conservative governments.
Then we come to the early days of 1958 when the federal government moved swiftly to enlarge, and to enlarge substantially, the benefits provided for the provinces. Two outstanding measures were introduced at that time. The first was to increase from 10 per cent to 13 per cent the provincial share of the yield from the personal income tax. The second was the introduction for the first time in history of the Atlantic provinces adjustment grants. Let me say very simply but very emphatically, Mr. Speaker, that had there not been a change of government there would have been no increase from 10 per cent to 13 per cent to the provinces of their share of the yield from the personal income tax, and there never would have been an Atlantic provinces adjustment grant.
These new measures have been in effect now for almost three years. They will complete the third year on March 31 next. The increase from 10 per cent to 13 per cent in the provincial share of the yield from the personal income tax has been in those three years worth to the provinces $200 million in round figures. The provision by way of Atlantic adjustment grants was at the rate of $25 million a year for the four years commencing April 1, 1958. In those three years, then, those three fiscal years that have almost concluded, those grants have been worth $75 million to the four Atlantic provinces. They have been worth $7,500,000 to Prince Edward Island; they have been worth $22,500,000 to each of the other three provinces of Nova Scotia, New Brunswick and Newfoundland. So you see, Mr. Speaker, these additional provisions have been worth to the provinces in those three years, in round figures, about $275 million.
We did not pay these out of any overflowing treasury, Mr. Speaker.


John Whitney Pickersgill: That's for sure.


Donald Methuen Fleming: We did not have any big surplus to pay them out of. In order to aid the provinces and the municipalities
Dominion-Provincial Relations of the country we were prepared to enlarge our deficit and go deeper into the red to help them.
I have said that none of this money would ever have been made available to the provinces had it not been for the change of government. I go farther and say that when we hear these mealy-mouthed assertions about equalization payments, this government has nothing to learn from its predecessors or from the tattered remnant of our predecessors who bedeck the benches opposite.
The fact is, as I have said before in this house on previous occasions, the principle of equalization, by which we mean the principle of assisting provinces in fiscal need, assisting them out of the federal treasury, has been carried farther by this government than was ever done before, much farther than the former government ever dreamed of doing. The Atlantic povinces adjustment grant represents the farthest extension in this country's history of the principle of equalization in terms of meeting fiscal need of provinces. These are simply the provisions that have been made by way of amendment of the Federal-Provincial Tax-Sharing Arrangements Act; but they do not comprehend at all the total of the provisions made by the federal government on behalf of the provinces.
The previous administration claims credit for the increases that were made and that became effective on April 1, 1957. Yes, the agreements that were entered into at that time did provide for certain increases. But who has found the money in budgets year by year to pay those increases, as well as those substantial increases that were introduced, that would never have been made available to the provinces but for the change of government? It is the present federal government; and when hon. members opposite talk about our deficits we say that those who want to be fair in their judgments of such questions ought to be frank enough and just enough to remember that much of our deficit was attributable to the substantial increases year by year in aid to the provinces out of the federal treasury.
This has been placed on record before, Mr. Speaker; I do not need to delay the house in regard to it. You will find it on page 2676 of Hansard of March 31, 1960. You will see there, Mr. Speaker, what has been the total of federal payments to the provinces. I will just segregate for one moment the conditional payments, for the scope and the extent of those additional payments have been greatly enlarged since we came into office, and because of the enlargement of those costsharing programs these have to be paid for. And the federal government has been more generous than any previous government had.

Dominion-Provincial Relations been in offering assistance to the provinces in measures of this kind which fall under provincial jurisdiction, in their establishment and maintenance, and to which the federal government has been permitted to contribute.
If you look at that record, Mr. Speaker, you will find that the federal contribution to the provinces by way of conditional payments in the fiscal year 1956-57 amounted to $111 million. In 1957-58 they rose to $144.8 million; in 1958-59 to $248.1 million; in 195960, according to the then preliminary estimates, $383.3 million and acording to the estimate for 1960-61, $389 million. Since we came into office our contributions to these conditional grants to the provinces have increased more than threefold.
I give now the totals of payments of all kinds, unconditional payments, conditional payments, as well as those payments for the benefit of provincial institutions, namely university grants and grants to municipalities, in the past five years. They are:
Year	Millions of Dollars
1956-	57	
689.41957-	58	
837.21958-	59	
1,037.61959-	60	(preliminary)	
1,252.61960-	61	(estimated)	
1,300.9
You will see, Mr. Speaker, that since we came into office payments out of the federal treasury to the provincial treasuries, whether by way of conditional or unconditional payments or payments to provincial institutions including universities and municipalities, have, speaking in round figures, doubled. Yet these hon. gentlemen opposite have the temerity to come into the house and pretend, and what a hollow pretense it is, to be the champions of justice to the provinces. We have nothing to learn from hon. members opposite about doing justice to the provinces. We want none of the injustices that they did to the provinces and the way in which they went about their work of centralizing power at Ottawa while not being fair to the provinces in fiscal matters.
Therefore, on the record with respect to the present period covered by the Federal-Provincial Tax-Sharing Arrangements Act, the five-year period that runs to March 31, 1962, we say that since the present government came into office there has been a notable improvement. First, there has been a notable improvement in the spirit in which the federal government has met the provinces and understood the problems of the provinces in discharging their constitutional responsibilities. Second, there has been a substantial increase in the amounts provided out of the

federal treasury for the benefit of the provinces and their institutions. Third, the principle of assisting provinces that are in fiscal need has been carried farther than it was ever carried before or dreamt of by our predecessors.
What is the outlook for 1961-62? I would think that the additional 3 per cent in the provincial share of the yield from the personal income tax may be expected in the next fiscal year to amount to somewhere in the neighbourhood of $70 million in round figures. There will be again $25 million to the Atlantic provinces, and the payments out of the federal treasury to the provinces by way of federal contribution to cost-sharing programs will undoubtedly be substantially larger than in any previous year.
Quebec's adherence now to a program of hospital insurance means that the federal treasury in what remains of the present fiscal year will be paying out an additional $13.9 million on that account, and it is estimated that Quebec's adherence to the scheme of hospital insurance will involve additional payments out of the treasury in 1961-62 in excess of $70 million. When people speak of the fact that the estimates for the year 1961-62 show an increase of $222 million over those for 1960-61 let me point out that over $70 million of the increase is accounted for in that way alone.
I pass on to the subject of the preparations for the fiscal arrangements for the period that will begin on April 1, 1962. There have been some half dozen preparatory conferences. Never before has so much effort been expended by the federal and provincial governments in studying the common problems that they face and in laying the groundwork for such arrangements as may be entered into after April 1, 1962. We have had meetings of the continuing committee of officials. There were two conferences of the finance ministers and provincial treasurers and there have been two plenary conferences in 1960 of the Prime Minister and the premiers of all of the provincial governments.
All of these meetings have been helpful. All of these meetings have been carried on in a good spirit. There are, of course, differences. Naturally each government has certain responsibilities which it must discharge in respect of those whom it represents, but the spirit has been good and if hon. members opposite will stop playing politics with this problem-


Some hon. Members:: Oh, oh.


Donald Methuen Fleming: -if they will stop trying to stir up trouble for their mean political purposes then I think we will go along very well in these dominion-provincial

plenary conferences and I think we can look toward something very much better than the provinces ever would have received if there had not been a change of government in 1957.
It sounded strange in the mouth of the hon. member for Richelieu-Vercheres this afternoon to hear him talk about the desire for more regular consultation. What an assertion coming out of the mouth of a member of the opposition, asking for more regular consultation. There has been more consultation already in connection with these proposed arrangements for the fiscal period beginning April 1, 1962 than there was five years ago in connection with those that came into effect in 1957.
What have we heard when we have reported to parliament on these further consultations? We have heard from the opposition only derision when we have talked about meetings of the ministers of finance and provincial treasurers, useful meetings that they were; when we have talked about meetings of the continuing committee of officials, a committee, incidentally, that was not set up by us but was set up by Mr. St. Laurent. This is another action of Mr. St. Laurent that has apparently been repudiated by his successors opposite who have forgotten the very great debt that they owe to Mr. St. Laurent. They would never have sat on the treasury benches had it not been for Mr. St. Laurent and I think it was very shabby treatment that they accorded to Mr. St. Laurent in 1957 and 1958. It is no credit to them now to try to repudiate what Mr. St. Laurent did in setting up this continuing committee of officials.
Let me say a further word now on the subject of the two plenary conferences in 1960, the one held in July and the other in October. These, as I have indicated, were carefully planned conferences. The meeting in July was called principally for the purpose of giving the provinces full opportunity to state their views, their claims, yes, their demands. Of course they readily responded and they did state their demands. As was my duty I had to make some reckoning of what these demands aggregated and I gave the house the figures. I do not need to delay the house now, Mr. Speaker, with those figures, but I can remind the house of the fact that the demands of the provinces were marked by extraordinary diversity.
It would not have been too easy to harmonize all the demands of the provinces. Apart from the problem of conflict in the nature of the demands, there was the problem of cost. If you look back at Hansard for August 10, 1960, page 7930, you will find that
Dominion-Provincial Relations I put on the record just some of the demands that were made upon us. I estimated these demands as there categorized would have cost the federal treasury between $2,080 million and $2,055 million per annum. This was not an exhaustive list.
It is worth recalling what the Winnipeg Free Press had to say at that time on this subject. Here, I expect the hon. member for Bonavista-Twillingate to sit up and take notice because I refer to the Winnipeg Free Press, from which he has never been known yet to derogate. This is an editorial that appeared in the Winnipeg Free Press of August 16, 1960, and I quote:
There is no reason why the provinces' demands should not be met-if the people of the provinces are prepared to pay for them. They cannot, however, expect the federal government to hand out an extra $2 billions every year without getting the money from somewhere. The present federal budget is just under $6 billions. Of this, about $1.5 billions goes for defence, another $1.5 billions to the department of health and welfare-largely for children's allowances and old age and other pensions.
The federal government could, therefore, almost meet the provincial demands by eliminating entirely our spending on defence or by doing away with family allowances and all pensions. Clearly that is impossible.
I interject there and say that it is impossible unless the hon. member for Bonavista-Twillingate is going to propose it.
Equally unattainable is the hope of reducing other government expenditures to anywhere near the point that would free enough money to meet the provinces' requests. The only alternative (outside of printing more money and shoving the country over the edge of the financial precipice) is for Ottawa to raise the extra $2 billions by raising taxes to produce this sum.
To grant the provincial demands would mean an increase of about 40 per cent in the federal budget. That is the amount of increase we could then expect in all the taxes we pay-income, sales, excise and so on. Faced with a tax increase of this proportion, however, it may be that the vast majority of the taxpayers will join with Mr. Fleming in crying "halt" to the premiers' demands,
I am sure that statement will not be attacked by the hon. member for Bonavista-Twillingate.
This afternoon we have heard some curious misinterpretations of the position taken by the Prime Minister at that July conference. If ever a statement was plain, plain for all to read, plain for all to understand, it was the statement made by the Prime Minister at the opening of the conference on July 25. It seems that hon. members opposite are not content to have a plain statement. Instead of interpreting it in accordance with its plain terms we have heard a most interesting but most inaccurate gloss put upon the words of the Prime Minister this afternoon.

Dominion-Provincial Relations
Here are the words of the Prime Minister. Can you imagine anything clearer, more straightforward or more emphatic than these words? What the Prime Minister stated on July 25 is the position of the federal government today and will continue to be the position of the federal government. I quote:
Some provinces have indicated a desire to resume the collection of their own revenue from these tax fields.
He was speaking of the standard taxes, the personal income tax, the corporation tax and the succession duty or estate taxes. He continued:
This raises a question which will have to be considered in the course of this conference hut I want to make this abundantly clear on behalf of the dominion government that whatever the ultimate decision may be the principle of equalization must be preserved.
We had to sit here this afternoon and listen to the hon. member opposite talk as though that statement had never been made.


John Whitney Pickersgill: He quoted it.


Donald Methuen Fleming: Then he proceeded to misinterpret it in a way that would do justice to only the hon. member for Bonavista-Twillingate. I continue the quotation from the Prime Minister's statement:
Equalization, the second component, is a payment by Canada to the provinces to bring the per capita return from the three taxes at standard rates up to the average per capita yield in the two provinces in which per capita yield is highest. For provinces in which the tax potential is relatively low, this principle is the most important.
It might be noted in passing that earlier arrangements did not recognize the principle of equalization explicitly although it was to some extent implicit in the "per capita" basis of payment.
Again I wish to emphasize that the federal government remains firmly committed to the principle of equalization and of financial assistance to those provinces in which incomes and taxable capacity are below those of the richer provinces. Indeed,-I think this is worthy of being pointed out-through the Atlantic provinces adjustment grants, this government has carried this principle further than ever before. Last year the total payments for equalization and other fiscal aid grants amounted to $215 million as compared to $138 million in 1957-58, which was the first fiscal year in which the present act has been in effect.
The government believes that the principle of fiscal aid and equalization to assist the less wealthy provinces stands on its own feet and is accepted on that basis, and is quite separate from the question of tax rental or tax sharing.
I doubt, if any clearer statement has ever been made at a dominion-provincial conference. I do not know how it would be possible for anyone to make a clearer statement than the Prime Minister made on that occasion. That was the position of the government on July 25, 1960, and that is the position of this government on this 30th day of January, 1961. It is the position this

federal government will carry into the further conferences and exchanges that remain to be carried out before the new arrangements are finally consummated.
I come now to the October conference. I have indicated that at the July conference the floor was largely occupied by the provinces in stating their demands. At the October conference, the Prime Minister on behalf of the federal government put forward, not any take it or leave it proposition, no package proposal, but what were described by him and treated throughout the conference as suggestions. This was made very clear at the outset by the Prime Minister. No delegate attending the conference in any capacity was under any misunderstanding of the status of these suggestions. They remained suggestions throughout, and indeed the flexibility of the federal attitude as demonstrated by the Prime Minister in that conference won praise.
So, Mr. Speaker, let us be quite clear about this. When the hon. member for Richelieu-Vercheres this afternoon talked, as he did, about the Prime Minister assuming an arrogant attitude, an attitude that was downright insulting to the provinces, he was talking about something about which he knew nothing. He was making a statement that flew right in the teeth of the fact and of the truth. I hope I have made myself plain, Mr. Speaker. The hon. member for Richelieu-Vercheres rises in this House of Commons today and makes these baseless, irresponsible statements, but no such statements were made by any of the provincial premiers at that conference. Not one of them had anything to say by way of disagreeing with or condemning the attitude taken by the Prime Minister.


John Whitney Pickersgill: Page Mr. Bennett.


Donald Methuen Fleming: Who wants to page Mr. Bennett?


John Whitney Pickersgill: Apparently most of the members of the treasury benches.


Donald Methuen Fleming: Is he an ally of the hon. member for Bonavista-Twillingate? He apparently has not anybody else to summon to his rescue now but Premier Bennett of British Columbia.


John Whitney Pickersgill: You can have him.


Donald Methuen Fleming: What about some of the provinces closer to home, if the peregrinating hon. member for Bonavista-Twillingate has any place that he calls home now in the various provinces? Wherever home may be, let us hope that in his case it will be "Home Sweet Home". However, evidently

he cannot get any help closer to home, wherever his home may be. I therefore leave that subject at that point.


John Whitney Pickersgill: I would.


Donald Methuen Fleming: I do not think I will do so now, Mr. Speaker. Let me make it clear that the hon. member for Bonavista-Twillingate does not know first hand what happened in that conference. If he is upholding what was said this afternoon by the hon. member for Richelieu-Vercheres in attributing to the Prime Minister an attitude that was arrogant or insulting to the provinces I must say to him that he has been misinformed. He is proceeding from a source of information that is not accurate or reliable.


John Whitney Pickersgill: I only read the newspapers.


Donald Methuen Fleming: Then my statement stands, namely that if there is any newspaper or any person that says that the Prime Minister took an attitude at that conference that was arrogant or insulting to the provinces, it or he is resorting to a source that is untrue and unreliable. Let us not have any more nonsense about that matter by hon. members opposite.
The Prime Minister was thanked at the conclusion of that conference by those who were there for the way in which he had conducted the conference. He was thanked for his flexible approach. This was the way in which the provincial premiers reacted to the attitude of the Prime Minister. They did not act in the way in which the hon. member for Richelieu-Vercheres says, based on his lack of knowledge of what occurred there and supported by the hon. member for Bonavista-Twillingate proceeding on his enormous lack of knowledge of what happened at the conference. So much for the attitude.
The federal government through the mouth of the Prime Minister laid before that conference certain suggestions that were discussed freely and at the close of the conference it was indicated that the views put forward by the provinces would be studied and considered. That promise, like all the promises of the government, has been fulfilled to the letter. The views of the provinces have been most carefully reviewed and studied. We have considered those views in the light of their earlier demands, in the light of the federal fiscal position and indeed in the light of all relevant circumstances.
I pointed out that the suggestions put forward by the Prime Minister at that time took account of the demands that had been made in certain provincial quarters for release from what was described in those quarters as a strait-jacket.
Dominion-Provincial Relations
In all of this we sought to have due regard and due respect, which we think any federal government owes, for the sovereignty and autonomy of the provinces as well as for the responsibilities which they carry under the constitution. There was no such thing contemplated as, to use the expression that has fallen from the mouths of some hon. members opposite, a return to the tax jungle. As a matter of fact we said that if in the end a decision were reached that all or any of the provinces were to assume responsibility for levying and collecting taxes, the federal government was prepared to undertake the collection. Hence there will be no question at all about multiplicity of forms or return to a tax jungle. A tax jungle is the sort of thing that I think has existed in the minds of certain hon. members opposite. It certainly is not part of the thinking of the present federal government.
I have indicated the suggestions made by the Prime Minister of what would be involved. There were reasons why the provinces should at that stage have been offered their freedom to make their choice because, as some provinces reminded us, when the tax agreements were first introduced the provinces opposed them. The situation has changed to the extent that some provinces now want the federal government to go on levying and collecting their taxes. At that time I had occasion to point out how far this situation has gone in Canada. It has gone to the point where the provinces in the aggregate are drawing practically one third of their revenues out of the federal treasury.
This point was discussed, namely whether in a country operating under the kind of constitutional system we have that is a sound situation. But if you look at the figures province by province, Mr. Speaker, I think you will see some quite startling percentages. Here are the percentages province by province of payments out of the federal treasury or abatements by way of reduction of federal taxes, and this is an estimate for the present fiscal year, 1960-61:
Province	Percentage
Newfoundland	 68.8
In other words, Mr. Speaker, 68.8 per cent of the revenues of the provincial government of Newfoundland are now drawn from the
federal treasury.
Province	Percentage
Prince Edward	Island	 60.9
Nova Scotia	 55.8
New Brunswick	 55.5
Quebec	 17.4
Ontario	 26.7
Manitoba	 49.2
Saskatchewan	 38.6
Alberta	 30.5
British Columbia	 35.7
Total	 31.5

Dominion-Provincial Relations
In other words, the over-all percentage right across Canada is 31.5 per cent.
Hon. members in the opposition apparently do not think these figures are worthy of the attention of a dominion-provincial conference. We thought they were worthy of the attention of the dominion-provincial conference.
But, as I indicated a while ago, even if the baseless assertions that have been made by the hon. member for Richelieu-Vercheres this afternoon had been true or had been based on fact, they would still be completely out of date. The hon. member completely overlooked the status of the suggestions put forward by the Prime Minister at the October conference. They were not proposals. There was no package put forward as was the case with the St. Laurent government five years ago. These were merely suggestions for which the federal government took what was recognized by the provincial premiers in that conference as a flexible attitude and approach. Then the hon. member for Bonavista-Twillin-gate had this to say. Here is bravery for you. Here is a Canadian Press dispatch from Ottawa, January 11.


John Whitney Pickersgill: What year?


Donald Methuen Fleming: The year is 1961, the year in which the hon. member for Bon-avista-Twillingate was supposed to grow up but did not do so. It reads in part as follows:
J. W. Pickersgill said today the Conservative government is trying to destroy the federal-provincial tax-sharing system which he described as one of the greatest acts of statesmanship of the former Liberal government.
"We Liberals are not going to let them do it," Mr. Pickersgill told the national Liberal rally.
In the face of these thundering words we have just been shaking in our shoes ever since. This is enough to strike terror into the heart of anyone who hears these thundering declarations by the hon. member for Bona-vista-Twillingate. His assertion has no truth in it; it flies in the teeth of fact. When he says that the present federal government is trying to destroy the federal-provincial tax-sharing system he is being truthful only if he puts a completely distorted interpretation on what he means by the federal-provincial tax-sharing system.
Hon. members opposite know this perfectly well. As I said earlier this afternoon, they are trying to jump the gun; they are trying to make speeches to redeem these thundering threats by the hon. member for Bonavista-Twillingate, because he knew perfectly well the status of the suggestions, that these matters were going to be further discussed, and that exchanges were in the course of being prepared. So just to satisfy his ego he puts up the hon. member for Richelieu-Vercheres
[Mr. Fleming (Eglinton) .1
this afternoon to make the speech that the hon. member for Bonavista-Twillingate should have made, if he is prepared to assume paternity for what was uttered here this afternoon, so that his threat as reported in the Canadian Press dispatch that I read might not look to be completely repudiated by his own party. So he jumped the gun and had this speech made this afternoon.
Let me do now what should have been done tomorrow or the next day in the house. The Prime Minister this afternoon stated at the opening of the house that a letter had gone to all provincial premiers proposing a resumption of the conference. That letter, of course, is in the mails and normally it would not be read in the house until received by the provincial premiers. But I think the provincial premiers will understand why it is proper at this moment to read this particular letter, in view of the fact that hon. members opposite in their speeches and in their amendment are seeking to cast the federal government in an entirely false light. It is for that reason, and having regard to the fundamental fairnesses that are involved in the situation, that I should like to read the letter that has gone to all the provincial premiers. It has been signed by the Prime Minister and it reads:
The dominion-provincial plenary conference called to discuss fiscal arrangements for the period following March 31st, 1962, adjourned on October 28th last to meet at the call of the Chair. Is seems appropriate now that steps be taken to reconvene the conference. I propose that the meeting be resumed in Ottawa on February 23rd and 24th.
I am sure that all governments have been studying this important subject further with a view to arriving at a satisfactory and workable understanding. The suggestions which I have placed before the October conference included the principles of equalization based on fiscal need and the stabilization of provincial revenues. The federal government is also prepared to make provision for a growth factor in the equalization formula. It is our hope that agreement may be arrived at on the basis of these principles.
I realize that on account of the sitting of parliament and the legislatures this is a very busy time for us all. I hope, however, that you may find it possible to be present at the reconvened conference on Thursday, February 23rd, commencing at 10.00 a.m. If these dates are not regarded by the majority of the provinces as convenient, I would suggest alternatively March 23rd and 24th.
So the attempt of the opposition this afternoon to cast the government in a false light fails. There is the answer, the vindication of the principle of equalization, the vindication of the principle of stabilization and the acceptance of the concept of the growth factor as attached to the principle of equalization. So everything that has been said by the opposition this afternoon is proved now to have been an utter and hollow sham. The government will proceed with its planned program. It will meet the provinces in conference. It

will discuss their further proposals and submissions, and in the same attitude as has characterized the approach of the federal government previously we will, as the Prime Minister assured the provinces at the October conference-as he had earlier-seek in the true Canadian spirit to arrive at workable and satisfactory accords and understandings.
As has already been indicated to the house, it is the wish of the government to conclude the discussions and conferences in time to present a measure to parliament at this present session to provide the legislative authority for such arrangements as may be entered into with respect to the period commencing April 1, 1962.
One thing I make abundantly clear, that we have at all times stipulated in these conferences

and I repeat it now-that the Atlantic provinces adjustment grants shall be continued and that they shall be continued as Atlantic provinces adjustment grants, not denied their identity, as seems to be the thinking of hon. members opposite. They want to make them merged, blurred and obliterated in some general formula. Well, we have said, and we repeat, that the Atlantic provinces adjustment grants deserve to continue to stand on their own feet, and we propose to continue them. Likewise we shall continue the provision of the $8 million per annum for the province of Newfoundland to assist that province to bring the level of its services up to those of the other provinces.
Mr. Speaker, I see it is six o'clock. I do not wish to retain the house beyond six o'clock. Will you call it six o'clock.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.
Donald Methuen Fleming: Mr. Speaker, at the six o'clock adjournment I was making some reference to the Atlantic provinces adjustment grants and was drawing attention to what seems to be a developing difference between the government and the opposition. I pointed out that there was a very great difference between us at the outset, for the former government made no attempt to introduce any Atlantic provinces adjustment grants or to recognize the special position of the Atlantic area in relation to the problem of fiscal need, and that had there been no change of government there would never have been any such thing as Atlantic provinces adjustment grants.
Let this further distinction be drawn very clearly. Throughout these negotiations the
Dominion-Provincial Relations federal government has maintained very firmly the principle that the Atlantic provinces adjustment grants must be continued. They must be continued as what they can claim to be-Atlantic provinces adjustment grants-a recognition on the part of parliament of the special position of the Atlantic area in relation to this principle of equalization.
The hon. member for Richelieu-Vercheres this afternoon made it quite clear-I take it he was speaking for his party; he was certainly speaking for the hon. member for Bonavista-Twillingate and that probably is the party-that it has now become a policy of the Liberal party to blur out the Atlantic provinces adjustment grants, simply to leave their problem to be taken care of in general terms by some general formula. The public will have its opportunity to decide which policy it wishes. There is a clear difference drawn here between the government and the opposition in this policy. Let there be no doubt. We will stand firm for the continuance of the Atlantic provinces adjustment grants as a separate form of federal aid to this particular area.
I was surprised indeed that this position should have been taken by the Liberal opposition. Perhaps one should not be surprised. They have played politics of late to an increasing degree with everything upon which they have been able to lay their tongues. But at the dominion-provincial plenary conference in 1957 this statement emerged in the agreed communique issued at the conference:
It was generally agreed that the over-all economic position of the Atlantic provinces is now such as to justify some special grants in aid to the governments of those provinces from the federal government.
Note those words, Mr. Speaker:	"some
special grants in aid to the governments of those provinces." That is the position of the government; it maintains special grants in aid for the Atlantic areas.
That leads me to make this comment also in relation to the payments to Newfoundland. We made it equally clear at the conference that regardless of what else might be agreed upon eventually in relation to equalization, stabilization, tax-sharing or anything else, we stipulated the continuance (a) of the Atlantic provinces adjustment grants and (b) the payment of $8 million yearly to the province of Newfoundland. We now have the Liberal party setting up a new policy here, that all of this is to be blurred and submerged. It will be interesting to know what the premier of Newfoundland will have to say about this suggestion that the special provision of $8 million for Newfoundland to enable that province

Dominion-Provincial Relations to help bring the level of its services up to those of the other Atlantic provinces be now blurred and submerged. It will be interesting to hear what he will say when he learns that his political kith and kin in the house are now saying in effect, "Oh well, merge these, submerge them, blur them and just get some general formula of general application."
That is not our position. We say that these are distinct grants and they will continue as distinct grants in the policy of the present government.
I have been conjuring as best I could the reason that has prompted the official opposition to follow the course it did this afternoon. On all previous occasions it was the hon. member for Bonavista-Twillingate who selected himself as the opposition spokesman on dominion-provincial relations. I do not recall any case in which the hon. member has permitted anyone else to share this distinction with him, although I believe last year he permitted the hon. member for Laurier (Mr. Chevrier) to take some part in the debate in relation to the problem of university grants. Always, however, the spokesman on this subject has been the hon. member for Bonavista-Twillingate. Today for some reason or other the hon. member sits back, for the time being at any rate, and it is the distinguished and popular hon. member for Riche-lieu-Vercheres who is permitted to make the speech.
This is an interesting departure from the established tactics. I think we can draw only one conclusion from this departure. It is that the hon. member for Bonavista-Twillingate realized that the course being taken this afternoon by the opposition was so utterly irresponsible that he did not want to have his name tagged on to the amendment. It was generous indeed of the hon. member for Bonavista-Twillingate to be willing on this occasion to share with the hon. member for Richelieu-Vercheres the distinction of being spokesman for the official opposition on matters pertaining to federal-provincial fiscal relations. I suspect, however, that there was an Ethiopian in the woodpile someplace.
It was a striking fact this afternoon that after all the interest displayed by the hon. member for Bonavista-Twillingate, the Leader of the Opposition (Mr. Pearson), and I think one or two others, last Friday, on the subject of the calling of a dominion-provincial conference and the exchange of communications with the provinces, when the Prime Minister on motions this afternoon introduced his statement which one would have thought under any circumstances would be regarded as a very important one, the kind of statement that would have been followed at once, seeing that it was made on 
motions, by a statement from the official opposition and then a statement from the C.C.F. and no doubt questions on the orders of the day, probing for more and more information, there was silence. Did it not strike you as odd today, Mr. Speaker, that silence followed the statement by the Prime Minister. The hon. member for Bonavista-Twillingate had no statement to make. He was the senior member of the official opposition in the house. Their ranks were badly depleted.


John Whitney Pickersgill: But some of us were still here.


Donald Methuen Fleming: This golden opportunity to make some comment he allowed to go by default, a most extraordinary circumstance, Mr. Speaker.


John Whitney Pickersgill: Very suspicious.


Donald Methuen Fleming: There was ample time on the orders of the day. Today the period was rather shorter. From the whole of the official opposition there was not one question on this subject. I think the reason is plain. It is quite plain that the official opposition did not want any more information on this subject before they introduced their amendment and made their speeches. The less information that came out today in regard to the federal government's position the better from their point of view because they wanted to argue as though they were facts which were not facts, and so they wanted no information. They wanted to bring out nothing further in the way of fact or information for the house. They wanted to go ahead and argue this in the hope that no further information would come before the house before they argued their sorry case.
I think this is about as sorry and irresponsible an exhibition on the part of the official opposition as we have seen or, I hope are likely to see for a very long time. Whatever may be said about their demeanour and their performance when the Leader of the Opposition is present, all I have to say is, if this is the best they can do when he is absent, they had better get him back soon or get a message off to Essex East.
I am interested as well in the fact that when the hon. member for Bonavista-Twillingate for a moment allowed his mantle to be worn by one of his colleagues it was a member from the province of Quebec who was permitted to wear it on this occasion. I am left to wonder whether this is by way of giving notice to parliament that there has been a change of position in regard to this matter on the part of Quebec. Does this mean that the province of Quebec now espouses the case for tax rentals and wishes to rent these standard tax fields to the federal government?


Louis-Joseph-Lucien Cardin: May I answer the minister immediately. I was elected to the federal parliament and what I say here has to do with the federal government.


Donald Methuen Fleming: Mr. Speaker, not having had any answer to my question I continue to ask it.


Louis-Joseph-Lucien Cardin: Perhaps the minister should ask Mr. Lesage if he wants an answer.


Donald Methuen Fleming: It is perhaps not amiss for us in this house, when we see the curious tactics adopted by the official opposition today, to wonder whether this is notice, as I have suggested, that the province of Quebec, or the hon. member for Richelieu-Vercheres now thinks that the province of Quebec should rent these standard tax fields to the federal government?


Louis-Joseph-Lucien Cardin: Mr. Speaker, on a question of privilege, not even the Minister of Finance, with all his words, can make me say things that I did not say. I never said any such thing.


Donald Methuen Fleming: Mr. Speaker, I did not say the hon. member said that. I am drawing attention to the fact that with the zeal that the hon. member has demonstrated this afternoon he has assumed the role of spokesman for the official opposition-


Louis-Joseph-Lucien Cardin: The Liberal party.


Donald Methuen Fleming: -on dominion-provincial questions in what was intended, I am sure, by the opposition to be a very important statement and has apparently come out quite strongly on this matter. It is a fair question, I think, on the part of those who followed his statement with great care, to ask if this means that the hon. member for Richelieu-Vercheres has now become a convert to the theory of tax rental, and if he shares with the hon. member for Bon-avista-Twillingate this great enthusiasm for the tax rental system to the point where he thinks that the province of Quebec should change its position and now rent, or propose to rent, these fields of taxation to the federal government if the federal government were prepared to rent them?


Louis-Joseph-Lucien Cardin: I think I can answer that question, and I think the minister should let me answer it. I, as a member of the federal Liberal party, have always been in favour of tax rentals, and I have said so in the past. Regardless of whether the province of Quebec decides to go for tax rentals, my position has never changed since I have sat in this house.
Dominion-Provincial Relations


Donald Methuen Fleming: The hon. member has made it quite clear that he supports a system of tax rentals.


Louis-Joseph-Lucien Cardin: That is correct.


Donald Methuen Fleming: He has not dealt with the point I have raised. Does he advocate rental by the province of Quebec to the federal government of all these three fields of taxation?


Mr. Robichaud:: Mr. Speaker-


Mr. Speaker:: The hon. member for
Gloucester rises on a point of order.


Hédard-J. Robichaud: I wish to raise a point of order. Since when has a minister of the crown been allowed to ask a series of questions of members of the opposition in this house?


Donald Methuen Fleming: Mr. Speaker-


Hédard-J. Robichaud: It is a point of order.


Mr. Speaker:: It seems to be natural in the normal course of debate to ask questions to which one does not expect an answer. I do not know of any rule of the house which compels or prevents another hon. member to answer if the member who asked the questions permits it. I think there is no point of order.


Donald Methuen Fleming: Mr. Speaker, I certainly can no longer expect an answer from the hon. member for Richelieu-Vercheres-


Louis-Joseph-Lucien Cardin: I would be willing to give one.


Donald Methuen Fleming: -because he has said that he is an advocate of the system of tax rentals. He still leaves us wondering whether he advocates that the province of Quebec should rent these tax fields to the federal government.


Louis-Joseph-Lucien Cardin: That is the province's problem, not mine.


Donald Methuen Fleming: Then, we are just where we were. The hon. member still has not answered the question and I suppose we will not even have an answer. We are left then in the position that the official spokesman of the Liberal opposition today on dominion-provincial relations has now proclaimed himself a zealot for the system of tax rentals, but when it comes to a simple question of applying those to the province that he knows best, apparently that is where the answers to the questions end.


Louis-Joseph-Lucien Cardin: Very, very feeble.

Dominion-Provincial Relations


Donald Methuen Fleming: In leaving this question, Mr. Speaker, I can only express the hope that some day courage will rise and that the house will be afforded the opportunity of knowing what is the position of the hon. gentleman in regard to this very simple question that I put to him.


John Whitney Pickersgill: Would the minister permit me to ask him a question?


Donald Methuen Fleming: With pleasure.


John Whitney Pickersgill: Would he tell us what he thinks of Mr. Frost's $100 million inasmuch as the minister comes from the province of Ontario? Let him give a courageous answer to that.


Donald Methuen Fleming: Mr. Speaker, Mr. Frost has throughout been very straightforward in the demands he has made on behalf of the province of Ontario-


Louis-Joseph-Lucien Cardin: So has Mr. Lesage.


Donald Methuen Fleming: -and he has based his demands upon principles that he conceives to be of general application.


Louis-Joseph-Lucien Cardin: So has Mr. Lesage.


Donald Methuen Fleming: I have never
known Premier Frost to advocate one thing for Ontario and something different for the other provinces. I will say this of him, that always what he has advocated has been applied to all provinces. I have not known him, when faced with a question as to whether he stood for something, to run away from the question of whether it did or did not apply to his own province.


John Whitney Pickersgill: I am asking where you stand, not where Mr. Frost stands.


Louis-Joseph-Lucien Cardin: I think the minister had better drop the argument.


Donald Methuen Fleming: May I draw attention now to the terms of the amendment. Earlier, I ventured to express a question with respect to whether it is proper in an amendment to a supply motion to introduce a preamble, but here is a preamble and perhaps I might say a word about it as well as on the operative part of the amendment. The preamble reads as follows:
In view of the fact that the federal government at the October conference (1960) with the provinces proposed fixed subsidies in place of the equalization payments provided under the present tax-sharing arrangements, and that this October proposal is a repudiation of the principle of equalization.
You will note, Mr. Speaker, the fifth word in this amendment. It says, "In view of the 'fact' that". I say that is not a fact. It is an untruth, and this amendment would be much more accurate if it read, "In view of the


untruth that the federal government at the October conference with the provinces proposed fixed subsidies".
It is quite true, that in the course of the group of suggestions that the Prime Minister put forward he made it quite clear that the principle of stabilization was being introduced into the suggestion with respect to equalization so that there would be no such thing as any drop in the amount of equalization that would be guaranteed to the provinces. He also invited the provinces to discuss among themselves how the sum should be distributed among them. In other words, he invited proposals from them. But, to call that a proposal in the sense in which the opposition uses the word "proposal" is, I say, to make this preamble a denial of the fact.
The operative part of the amendment reads as follows:
Therefore be It resolved that this house strongly favours the continued application of the principle of equalization of direct tax revenues pledged to the provinces by the Prime Minister at the federal-provincial conference in July, 1960

And so on.


John Whitney Pickersgill: Read the rest of it.


Donald Methuen Fleming: Very well. The hon. member for Bonavista-Twillingate apparently has not read the rest of it so he asks me to do so. I continue:
-and defined at that time by the Prime Minister as a payment by Canada to the provinces to bring the per capita return from the three taxes at standard rates up to the average per capita yield in the two provinces in which per capita yield is highest.


John Whitney Pickersgill: Are you against that?


Donald Methuen Fleming: That latter part is not a precise statement of the-


John Whitney Pickersgill: It is word for word.


Donald Methuen Fleming: That is not a precise statement of the position in regard to the principle of equalization. The Prime Minister made that firm statement that I quoted this afternoon in regard to equalization. The distribution is, of course, a matter to be agreed upon. As I pointed out at the conference, the principle of equalization is there. The principle of stabilization is there. It is fully recognized, it is fully supported. We have carried the principle of equalization farther than it has ever been carried before. The hon. member has gone beyond and has attempted to say in effect that equalization means just the same thing as it meant in 1957.


John Whitney Pickersgill: Oh, no.


Donald Methuen Fleming: That is what he is asking the house to swallow tonight. So far as the principle of equalization is concerned, the sound principle of using federal revenues to meet the fiscal needs of certain provinces, nothing could be clearer than the statement by the Prime Minister, and I challenge anybody in this house to put in clearer words than did the Prime Minister on July 25 last the firm position taken by the federal government in relation to the principle of equalization, namely the principle of meeting fiscal need in the provinces.


John Whitney Pickersgill: It cannot be done. That is why we used those words.


Donald Methuen Fleming: Pardon?


John Whitney Pickersgill: I said it cannot be done and that is why we used the Prime Minister's precise words as found on page 10 of this document.


Donald Methuen Fleming: The hon. member says it cannot be done. I do not know what the "it" is he is speaking of.


John Whitney Pickersgill: I will explain it to the minister. The minister said that the definition of equalization could not be described more precisely than it was by the Prime Minister. That was our opinion and that is why we used the Prime Minister's precise words taken word for word from the third paragraph on page 10 of the proceedings of the conference, and the minister is now repudiating them.


Donald Methuen Fleming: Mr. Speaker, all that fury deserved a better cause and a stronger foundation.


John Whitney Pickersgill: Read the words.


Donald Methuen Fleming: I read the words this afternoon. The hon. member is seeking to link two passages and put his own interpretation on them.


John Whitney Pickersgill: No, there is no interpretation by me.


Donald Methuen Fleming: Let me make it clear what the Prime Minister said. Here are his words:
-I want to make this abundantly clear on behalf of the dominion government that whatever the ultimate decision may be the principle of equalization must be preserved.
The principle of equalization.


John Whitney Pickersgill: Read the next two sentences.


Donald Methuen Fleming: The next two sentences go on to talk about how equalization is applied.
Equalization, the second component, is a payment by Canada to the provinces to bring the per capita return from the three taxes at standard
Dominion-Provincial Relations rates up to the average per capita yield in the two provinces in which per capita yield is highest. For provinces in which the tax potential is relatively low, this principle is the most important.


John Whitney Pickersgill: Exactly.


Donald Methuen Fleming: If the hon. gentleman is saying that the principle of equalization must always have attached to it the particular application or particular formula that he or his government attached to it in 1956, then I say that is an accretion on the principle of equalization. That is not the principle of equalization. At the conference we had different provinces suggesting changes in the formula, both the formula by which the amount is determined and the formula by which the principle of equalization is distributed among the provinces. No province that I am aware of treats the present formula as the principle of equalization. The principle of equalization is that out of federal revenues provision should be made with a view to helping those provinces that have fiscal need. That is the principle of equalization.


John Whitney Pickersgill: It is not what the Prime Minister said.


Donald Methuen Fleming: It is what the Prime Minister said. The Prime Minister, having stated the adherence of this government to the principle of equalization, pointed out the application of it in the present five-year period and under the present agreements, but no province has said that this is like the laws of the Medes and Persians, that this is immutable. As a matter of fact, I think a number of them, indeed I think the majority of them, asked for changes in formula.


John Whitney Pickersgill: In the rates.


Donald Methuen Fleming: Yes, and they asked for changes in the formula for distribution too. You see, the hon. member for Bonavista-Twillingate was not at the conference. He always talks as though he knew everything but the fact is he does not know what went on there and he is just guessing now. It is simply guesswork in which he is indulging now. He is attempting to put glosses on the statements that no provincial premier would ever attempt to put on.
The provinces do not hold the former Liberal government in the same esteem in which the hon. member for Bonavista-Twillingate holds it. They do not wish to have things continued as they were in 1956 under the Federal-Provincial Tax-Sharing Arrangements Act. They are hoping for something better. They know they have had something better since the changes were made in that legislation at the instance of the present federal government in 1958 and since.
The hon. member for Bonavista-Twil-lingate, then, has written what I would say

Dominion-Provincial Relations is a trumped up amendment. He knows, and no member of the house knows better than he that the government and every member supporting the government is committed to the principle of equalization, the principle of assisting provinces in fiscal need. At the same time he has drawn up this amendment knowing perfectly well it is a want of confidence motion and no member can support this amendment unless he at the same time expresses want of confidence in the government. If anyone else had done this the hon. member would be up denouncing it as trickery. What he is trying to do, you see, is put upon those hon. members who will vote against this amendment the appearance of being opposed to the principle of equalization.
We have seen what has happened before when parties have gone out on the hustings, have turned up Hansard, and tried to draw inferences from votes and from the terms of amendments without telling the whole story. I wish to make this plain statement. If after the vote is taken on this amendment anybody goes out anywhere, at any time, and portrays the government or any member of this house supporting the government as opposed to the principle of equalization he will be doing plain violence to the truth. He knows perfectly well that this is a want of confidence motion. It was introduced as such; it has that as its object.
My final word is on something that is most important in relation to the problems faced at the dominion-provincial level in any field, whether it be political, fiscal or otherwise. It is for this reason I have laid such emphasis today upon the spirit in which the present government has approached this problem of federal-provincial fiscal relations. This spirit was reflected by the federal government at the conferences. This is the spirit in which we intend to continue to carry on our exchanges, our dealings, our negotiations with the provinces of this country. It is the true Canadian spirit. It was in that true Canadian spirit that the Prime Minister, again in this opening statement at the conference on July 25 last, used these words:
We are fully conscious of the fact that the fiscal policy of the federal government has a considerable effect on business in Canada and on the financial position of the provinces and municipalities, and I can assure you this, that in shaping its financial programs the federal government has considered the interests of other governments and of the Canadian economy as a whole.
This year we will be making greatly reduced claims upon the capital market. Our net new borrowings will be about $210 million as compared with about $900 million last year and nearly $1,300 million in the year before that. The result will be that in reducing the volume of federal government borrowing so sharply the problems of provincial and municipal governments and of private

industry are greatly eased in meeting their essential financial requirements in the domestic market.
Our policies are and will continue to be designed to ease pressures on the capital market at a time of business expansion and at the same time resisting inflation.
Our financial policies have helped to reduce the reliance of other governments and private business on foreign capital markets, and the beneficial results are to be seen in the decline in the exchange rate of the Canadian dollar.
Then, later on, he said:
-I hope there will emerge mutually acceptable arrangements or agreements which will govern our financial relations in 1962 and subsequent years. I look forward to a most free, frank and friendly exchange of views.
My colleagues and I are anxious, I repeat, to hear your suggestions and your representations realizing at the same time that this conference will not make the final determination.
While conditions are vastly different from those of the founding fathers their dream of a united Canada has become a reality as the spirit of national unity becomes stronger through the years.
The federal system must be preserved and maintained and without centralization. My hope is that this conference will be a forward step to better things and that in a spirit of friendship and mutual respect we will condition ourselves again to the high ideals of the founding fathers thereby keeping faith with their great concept of a united Canada. We in turn will do our part to share the maintenance of equality of opportunity to Canadians in all provinces.
Those were noble words, Mr. Speaker. They breathed a noble Canadian spirit, and that is the spirit which animates the government of Canada.
(Translation):
Mr. Speaker, we, in the government simply wish to serve the best interests of the whole of Canada, with regard to fiscal relations between the federal government and the provinces.
Our aim is to respect at all times the constitution of the country. We recognize that the provinces have rights and responsibilities of their own which we have respected and shall continue to respect faithfully.
The government is firmly intent on contributing to the national unity of our dear Canada.
(Text) :


Louis-Joseph-Lucien Cardin: I did not want to interrupt the minister's usually verbose and unfathomable speech, but I wonder if he would be kind enough to tell the house whether or not the letter he read this afternoon was sent to the provincial premiers today, and if so at what time. Could he at the same time inform us as to exactly what is meant by the "growth factor" to which he referred in quoting the letter to the premiers, the reference being that a growth factor would be provided for in the equalization formula?


Donald Methuen Fleming: The letters were dispatched by Her Majesty's mail to all provincial premiers today before the house

met. This was made quite clear by the Prime Minister in his statement at the opening today. If the hon. member is not acquainted with the meaning of the words "growth factor", then I am afraid he has not gone very far in his researches into federal-provincial fiscal relations. This is one aspect of the discussions that proceeded in camera with which it is quite evident the hon. member is not familiar. I am sure all of the provinces will know the meaning of the expression "growth factor" and will have no difficulty whatever in correctly interpreting the letter of the Prime Minister.


John Whitney Pickersgill: Mr. Speaker, I think I should begin by congratulating the Minister of Finance (Mr. Fleming) on his first wind-up until six o'clock, at which point he announced he was concluding his speech; then he got his second wind which has been almost entirely pure wind. The minister, however, attempted to misrepresent the amendment before the house.


Donald Methuen Fleming: Mr. Speaker, it is one thing to say "misrepresented" and it is another thing to say "attempted to misrepresent".


Mr. Speaker:: It is sometimes said that an hon. member misrepresents something but to say that he attempts to misrepresent, it seems to me, is contrary to the rules.


John Whitney Pickersgill: I do not think it is a very successful attempt because,-


Some hon. Members:: Withdraw.


John Whitney Pickersgill: -as a matter of fact the minister had to read from the proceedings of the federal-provincial conference.


Mr. Speaker:: I trust that the hon. member will modify the initial statement "attempted to misrepresent".


Some hon. Members:: Withdraw.


John Whitney Pickersgill: For the sake of economy of time I will waste no further time and will withdraw the remark. Unlike the minister, I have limited time of which I have no doubt the minister intends to use as much as he can in his customary manner.
This amendment, as the minister was obliged to admit, in the second part from the words "defined at that time by the Prime Minister" is word for word taken from page 10 of the Prime Minister's (Mr. Diefenbaker) statement to the federal-provincial conference on July 25. It was put in those terms precisely because that seemed to us to be an absolutely accurate definition of the principle of equalization as it seemed to me it was understood by everyone who understood it.


Some hon. Members:: Oh, oh.
Dominion-Provincial Relations


John Whitney Pickersgill: We on this side of the house did not think we could improve on the Prime Minister's words in this particular. What the house is being asked to do, is to endorse the precise definition of equalization given by the Prime Minister. The Minister of Finance suggested that there is some trickery. He said he would not use the word but he said I would have used it if the conditions had been reversed. He said there was some trickery about this amendment. I will tell you, Mr. Speaker, what there is about this amendment. This amendment would never have been moved at all if the Prime Minister had not made his second statement or his suggestions, as the minister now likes to call them, in October which were in contradiction to what the Prime Minister had said in July. It was because of that contradiction that the amendment was moved.


Some hon. Members:: Oh, oh.


John Whitney Pickersgill: I will call some other witnesses than members of the Liberal party on this particular point and some that are quite close to hon. gentlemen opposite on this precise point before I have finished with what I have to say.
I have no doubt that the government was greatly disappointed by this amendment. From what went on today before the orders of the day were reached it was obvious that the government thought the amendment was going to be to advocate the renconvening of the federal-provincial conference. The Prime Minister, with one of those-I will not use the word "tricks"-political devices which are quite legitimate, thought he would forestall that amendment. As a matter of fact, the calling of the federal-provincial conference is surely far less important than is the question of whether the federal-provincial conference, when called, is going to be able to rely upon the plain language the Prime Minister used in July or is going to be offered some substitute for it.
I must say that the terms of the letter are very equivocal. The Minister of Finance says that equalization has something to do with fiscal need. It is true that equalization helps to meet a fiscal need. However, as the minister also pointed out, it does not by any means completely meet it. Otherwise there would be no need for special grants to the Atlantic provinces. The definition of equalization has never been fiscal need. The definition of equalization has been, as the Prime Minister put it, to bring the revenues from the three taxes in all the provinces up to the level of those of the highest two. That is the definition of equalization, and the only definition there has been.

Dominion-Provincial Relations
Either the government is going to stick by what the Prime Minister promised or it is not. We felt that this house ought to affirm that they were going to stick by what the Prime Minister promised in July and what he took away, in the opinion of some observers I think would be hard to laugh off.
I have here from the Winnipeg Free Press, a paper that now seems very dear to the Minister of Finance, of October 29, an account of a statement made by Mr. Roblin, the premier of Manitoba, when he returned from the federal-provincial conference. I do not intend to read all of his account. I simply want to deal with what Mr. Roblin said was the real point at issue. Here is what he said:
The real point at issue between the federal government and Manitoba, Mr. Roblin said, is the equalization principle which aims at giving the poorer provinces parity of revenue with the richest. He spoke out strongly against the federal proposals to freeze equalization payments at last year's level for the full five years of the new tax agreement.
That is Mr. Roblin's statement when he went back to Winnipeg. That is what he understood by the proposal or the suggestion of October. Mr. Roblin is not a stupid man. In fact, he is an extremely intelligent man and I think he understands this subject thoroughly. It will be noted that Mr. Roblin's view of what was proposed or suggested, if the minister prefers his euphemism, in October was precisely the view we took in this amendment. The plain fact is that if you fix the payment, as was suggested in October by the Prime Minister, at $220 million, that amount is the amount paid last year and there would be no growth factor of any description and there certainly would be no equalization in that procedure unless the revenues of the country remained absolutely stable or possibly, as the minister suggested, fell. I cannot think that even this government is so convinced that we are going to have depression conditions for the whole of the next five years that they regard a freezing of last year's payments as an adequate kind of equalization.
The minister in his speech also made something about another point. I do not intend to spend much time on it because it really had nothing directly to do with the amendment but since the minister raised it, I think it ought to be dealt with. He said that the Liberal party was trying to blur out the distinction between the Atlantic province grants, and indeed he also mentioned the payment due to Newfoundland under the constitution, as to which the position of the Liberal party has always been perfectly clear and has never been changed in any way, namely that it is a matter of right which ought not to be mixed up with this other matter at

all but should have been treated quite separately as a matter of right. But I suggest that it is very hard, if you read the Prime Minister's own statement last October, to draw any other conclusion than that this is precisely what the government is trying to do, because here is his second suggestion. This is the operative part:
To meet the needs of the provinces with lower tax potential we would therefore ask parliament to provide equalization payments or their equivalent in a total amount of $220 million a year-[DOT]
When you read the next page you find that $220 million is the sum total of the equalization element of the present payments to the provinces, plus the Atlantic provinces grant, plus the payments that should be made under term 29. That is what it is, but it is all blurred together and it is described in this way:
To meet the needs of the provinces with lower tax potential we would therefore ask parliament to provide equalization payments or their equivalent in a total amount of $220 million a year-
I say that if that is not blurring the thing, I do not know what blurring is. I think it is a good thing that that blurring has now been -and I hope the government does not change its mind again over this-removed tonight by the Minister of Finance.
He said that when this government came into office in 1957 they found federal-provincial financial relations in an unholy mess. If they found them in an unholy mess, that suggests, surely, there was something wrong with the system itself, there was something improper about the system. Yet three years later the Prime Minister goes into the railway committee room here on July 25, 1960 and pledges himself to maintain that very principle of equalization which the Minister of Finance said was in an unholy mess in 1957. I do not know which way you are to have it-


Donald Methuen Fleming: Mr. Speaker-


John Whitney Pickersgill: I do not wish to be interrupted and I intend to continue.


Donald Methuen Fleming: Mr. Speaker, on a point of order, the hon. member has said that I said the principle of equalization was in an unholy mess-


John Whitney Pickersgill: I did not say any such thing.


Donald Methuen Fleming: What I said was that the previous government had left this whole matter of dominion-provincial fiscal relations in an unholy mess.


Mr. Speaker:: The minister rises on a point of order, but what he does is contradict. If he is not satisfied with the interpretation of what he said he may correct it at the end of the speech, unless the hon. member cedes the floor.


John Whitney Pickersgill: I do not cede the floor, and I do not wish to cede the floor, because we have had far too much of this business. I repeat what I said-and it will be found in Hansard that this is what I said in the first place, if the minister had troubled to listen- that the minister had said that we left the whole situation in an unholy mess.


Donald Methuen Fleming: That is not what you said; you said, "the principle of equalization".


John Whitney Pickersgill: That is exactly what I said; and I said that three years later the Prime Minister came and pledged himself to maintain this principle of equalization, which was the principle of the arrangement in 1957 which the hon. gentleman describes as an unholy mess.


Donald Methuen Fleming: Utter sophistry.


Mr. Bell (Carlelon):: A non sequitur.


John Whitney Pickersgill: The minister calls it sophistry. If you have to listen to two hours of sophistry it is pretty hard to deal with some other commodity when you are replying.


Donald Methuen Fleming: Do not misquote me.


John Whitney Pickersgill: The plain fact is that the principle of equalization, as everyone knows or ought to know-though I sometimes wonder whether some of the members on the treasury benches understand the matter at all-


Mr. Henderson:: I do not think you do.


John Whitney Pickersgill: Everyone knows, or ought to know, why the principle of equalization and the present tax sharing legislation were substituted for the old tax rental system in 1957. They were substituted for it in order to make it possible for all provinces to participate. Up until that time the former government of the province of Quebec-and the same attitude is taken by the present government- was not willing to rent their tax fields, and they are still not willing to do so.
However, we took the view that it was unfair to penalize a province on that account. That is why this tax sharing and equalization proposal was made by the St. Laurent government in 1955. Actually it was made formally in 1956; it was put up to the provinces and discussed in the autumn of 1955 and a formal proposal was made publicly and clearly so people could understand it. They did not have to ask questions in 1956 about what the growth factor meant.
The result was that every province accepted it. It is true that they were not content with the amount of money they received. The Minister of Finance suggested that even with the harmony that, he claims, now prevails in this country they would not be content
Dominion-Provincial Relations with the money they are going to receive. It is perfectly obvious that none of them were at all content with what happened last October. Indeed, I have here, and I think perhaps the minister will give to this the same respect he expects me to show for everything that appears in the Winnipeg Free Press a clipping from the Ottawa Journal of October 29, 1960. This is an article written by a newspaper man who has on the whole, I think been pretty friendly to the present government. It is written by Mr. Richard Jackson The heading on this article is:
Conference nowhere on tax deal, Jobless.
This is how it reads:
The federal-provincial conference got nowhere on either a tax deal or unemployment.
Tax negotiations would continue by mail, Prime Minister Diefenbaker has reported, "in an effort to resolve our differences".
There would be another round of talks next year, and, added the Prime Minister with emphasis, there would "have to be agreement before time run out on us all with expiration of the current tax agreements in March of 1962".
Then he goes on-and I will not read this- to say that even more bleak had been the performance of the conference on unemployment. That was the considered judgment of a reputable journalist in a Tory newspaper about that conference in October.
I was astonished that the minister read one paragraph from the Prime Minister's speech in July, where he talked about the federal government making no demands on the capital market, or very slight demands, in the next 12 months. That was based on the hypothesis of his $12 million surplus and not on the unpleasant facts that he was beginning to realize in October about his $300 million or $400 million deficit.


Donald Methuen Fleming: You are quite mistaken.


John Whitney Pickersgill: If the minister thinks he can get any premier to agree that he has made it easier for them to borrow he had better read what Mr. Bennett, Mr. Frost and a few of the rest of them said the day after he brought down his budget. I have some of their remarks here, but it would not be relevant to this debate, much as I would like to remind the Minister of Finance of what Mr. Bennett had to say.
The minister also made a great deal of the immense increase that the federal government, the present government, had made in payments to the provinces under the Federal-Provincial Tax-Sharing Arrangements Act, including therein the Atlantic provinces grants. I admit that those were very welcome additions, and I would not be so silly as to say they were not. I have never at any time, as the minister knows, done anything but praise

Dominion-Provincial Relations the present government for the Atlantic provinces grants. The minister will find nothing that I have ever said to the contrary at any time, because I do like to be accurate about these things.
But I would remind the house and the minister-who knows it very well but never says it-that the change from the old tax rental system to the tax-sharing arrangements act which came into effect on April 1, 1957 resulted in an additional $100 million going to the provinces in the first year of the taxsharing plan over what they had received in the last year under the old arrangement.


Donald Methuen Fleming: Will the hon. member not agree that I referred to that fact this afternoon? I did not mention the amount but I referred to the fact.


John Whitney Pickersgill: It was the first time the minister has ever done that. The minister was careful not to refer to the amount. In the Tory literature that my hon. friends opposite send around the country they always take the last full Liberal year, 1956-57. They claim everything else has been done by the present government. I could bring down that literature and read it to the minister and I shall do so in another debate.
The plain fact is that as a result of the additions that Mr. Harris proposed to this house in relation to the Federal-Provincial Tax-Sharing Arrangements Act of 1956, which came into effect on April 1, 1957, the provinces in the four succeeding years have received well over $400 million more than they would have received if those changes had not been made, and that is compared with the $275 million additional that the minister pointed out had been received by the provinces under changes in the law made by the present government.


Donald Methuen Fleming: And we paid every cent of it.


John Whitney Pickersgill: Out of the minister's own pocket no doubt. The minister says they paid every cent of it. I will tell the minister who paid. The taxpayers of Canada paid.


Donald Methuen Fleming: The hon. member criticized us for having deficits.


John Whitney Pickersgill: The minister also said, "Of course, it was easy for the Liberals to do it because they ran the country well and had a surplus but it was difficult for me because I was running the country so badly that I had a deficit." That is a very slight paraphrase of what the minister said in that respect.


Donald Methuen Fleming: A gross distortion.


John Whitney Pickersgill: And the minister dropped a few tears, of course.


Mr. Graffiey:: The hon. member said that, not the minister.


John Whitney Pickersgill: The minister took a great deal of credit for all these meetings that had been held prior to the meeting that has now been called for February 23 or March 23. Of course, when that meeting takes place there will have been, I believe, exactly the same number of meetings as were held before the 1956 bill was introduced in this house in a previous parliament. Precisely the same number, I believe. The procedure that has been followed has also been very similar indeed.
Notwithstanding the unholy mess we are supposed to have made of it, so far as these conferences are concerned the pattern has been extraordinarily similar as though someone had been-and I suspect someone was- looking up the precedents and telling hon. gentlemen opposite what they should do next. Evidently Mr. Frost thought that because he said in the legislature the other day that it was about the time at which it was customary to receive a letter from Ottawa to say what they would get. They are going to get a letter but it is not going to tell them what they are going to get. It is simply going to tell them that there is a growth factor, undefined. Everyone knows what a growth factor is.


Donald Methuen Fleming: Not the hon. member for Richelieu-Vercheres. That hon. gentleman does not know.


John Whitney Pickersgill: I say without the slightest fear of contradiction that the government does not know what the growth factor is they are going to propose, that they have not yet decided what particular formula they intend to propose. I am not privy to the secrets of the cabinet but I have had a certain amount of experience and I am perfectly sure that if the government knew what is was going to propose to the premiers and if hon. members opposite were not ashamed of it, we would know it too.
The only reason it is described as a growth factor in that letter is that hon. members opposite do not know what formula to propose. They have not made up their minds. They have not decided. They are probably still arguing about it. There would not have been any letter today nor would there have been a growth factor proposed at this time, or for another couple of months as the Minister of Finance indicated on Friday-


Donald Methuen Fleming: The minister did no such thing.


John Whitney Pickersgill: -if the minister had not the impression-


Donald Methuen Fleming: That is utterly untrue.


John Whitney Pickersgill: It is my opinion, and it is a matter of opinion.


Donald Methuen Fleming: The hon. member is flying in the face of the facts.


John Whitney Pickersgill: The minister knows very well that no letter had been written on Friday and no decision had been made on Friday to send a letter today.


Donald Methuen Fleming: How do you know?


John Whitney Pickersgill: The minister knows full well-


Donald Methuen Fleming: That was a reckless statement.


John Whitney Pickersgill: -that no doubt having a shrewd suspicion that this attempt to shortchange the provinces that was made last October would be protested in this house at the first available opportunity, the government thought it would be a clever thing to do to get this letter out today. Oh, I think it was quite a clever thing but it would have been a lot more satisfying to the provinces and to the country if that letter had stated in precise terms what this government was prepared to do in the way that Mr. St. Laurent did when he wrote his letter in January, 1956.


Donald Methuen Fleming: Did the hon. member compose it for Mr. St. Laurent?


John Whitney Pickersgill: The minister took delight in referring to Mr. St. Laurent's attitude. The minister enjoys going back to the speeches made in 1955. He does not read all of them but he does read some of them and draws from them phrases which he uses again and again. He described the Liberal attitude as inflexible and stiff-necked.
The fact is, of course, that after the letter in January, 1956, was sent another conference was held and a very substantial modification was made in that scheme as a result of the representations made by the provinces at that conference, as the Minister of Forestry (Mr. Flemming) will well recall. It is true that all of the modifications the provinces would like to have seen made were not made and I venture to suggest-and here I am echoing the Minister of Finance and for once agreeing with him-that if all the suggestions from all the provincial premiers at these conferences were carried out there would be nothing left in the federal treasury. However, that is not the point at all.


Edwin William Brunsden: Did you tell Mr. Lesage that?
Dominion-Provincial Relations


John Whitney Pickersgill: Of course, Mr. Lesage's proposals were very moderate compared with those made by the premier of Ontario who has the notion, apparently, that Ontario has some kind of prior right to every dollar that is earned by anyone in Ontario, and that any federal taxation levied in that province is, as his favourite organ the Globe and Mail says so often, stolen by them and handed out to people in other provinces to use it extravagantly.
I do not think this view that has been expressed by the Globe and Mail and that is expressed more and more by Mr. Frost will commend itself much to the minister's friends in all the other provinces. It certainly does not commend itself to the leader of the minister's and Prime Minister's party in the province of Saskatchewan because Mr. Pederson, again according to the Winnipeg Free Press of October 29, 1960, made a statement in Regina which is of some interest. The headline reads:
Saskatchewan P.C. chief blasts Dief on tax plan.
The article reads:
Martin Pederson, Saskatchewan Progressive Conservative leader, Thursday condemned Prime Minister Diefenbaker's proposals on new tax collection methods-
There is more to the same effect.
The plain fact is, as Mr. Walter Harris pointed out in his budget speech in 1957 in words that were simple and eloquent, the taxes imposed on the people of Canada by this parliament are imposed upon Canadians, collected from Canadians and spent on Canadians. That is the whole basis of any taxsharing arrangement that we have in this country, without which there can be no unity in this country.
I wish I had unlimited time at my disposal because I should like to read what Sir Wilfrid Laurier and Mr. Fielding had to say about this in 1907, although they did not at that time have some of the modern techniques and notions we now have.
Sir Wilfrid Laurier and Mr. Fielding pointed out at that time that the proper basis of federal subsidies should be a real per capita basis and not the rather extraordinary scheme that there was in the British North America Act, and changes were made in that direction.
The minister objected to something some of my political friends had said about a return to the tax jungle. I lived in the tax jungle and I lived in what was perhaps the worst tax jungle because it was the most honestly run province in Canada in the depression. I refer to the province of Manitoba.
When I was a lecturer at United College in the province of Manitoba we paid a federal income tax and we paid a provincial income

Dominion-Provincial Relations tax, and in addition, a single man paid a 2 per cent wage tax on every dollar he earned if his income was over $480 a year. Every married man paid that wage tax on every dollar he earned if his income was over $960 a year. That tax was imposed by Mr. Bracken. It was imposed by Mr. Bracken because, instead of repudiating the provincial debt, as was done in some other provinces under some Other kinds of governments, or instead of allowing the unemployed to suffer, those who were employed were taxed and taxed very heavily indeed in order to see that there was no undue suffering, no more suffering than was inevitable from unemployment at that time.
But notwithstanding the level of taxation that we had at that time in Manitoba, and notwithstanding the honest efforts made by the government at that time to deal with those problems, it just was not possible with the tax base in that province, any more than it is in at least seven of the provinces of Canada today, to finance on that tax base and have taxes anything like the level they are in Ontario or in British Columbia and to provide anything approaching equal services.
If we do mean that there is to be reasonable equality of opportunity in this country, if we do mean that Canadians are to have an equal chance wherever they live, it can only be done in one of two ways. One is by centralization, by providing all the functions from this parliament here in Ottawa, which we turned our backs on in the Liberal party in 1937 when the Rowell-Sirois commission was appointed-


Donald Methuen Fleming: You turned back again later.


John Whitney Pickersgill: -and the other is, by putting all the provinces in a position by the equalization of the main tax fields to perform those functions by themselves. I am very proud that I belong to a party and belonged to a government that, from the tax jungle of the 1930's, accomplished the equalization that we had accomplished by 1957, which Mr. St. Laurent indicated was not perfect but was better-and every premier agreed with that- than anything that had been suggested up until then. Every one of them agreed with that without exception. I am very proud that I was associated with that policy.
I was very pleased, genuinely pleased, when I went into the railway committee room that day in July, 1960, and heard the Prime Minister make the statement that is in our amendment. I was pleased because I thought, well, they have had some experience now and they have seen the light, they realize that this is a difficult problem and that, until something


really better can be found, this is the best solution and I am going to praise them for it. That is what I intended to do until October. But I could not praise what happened in October any more than Mr. Roblin could, or any more than Mr. Stanfield could, or any more than Mr. Shaw could, or even any more than Mr. Frost could. As I say, it was because of this performance in October that we are debating this motion tonight.


Donald Methuen Fleming: You have brought the same motion in year after year.


John Whitney Pickersgill: If the government is prepared to go right back and say that they really, honestly meant, without equivocation, without interpretation, to carry out the plain words that the Prime Minister used in July, there will certainly be no criticism of the conduct of the government from me. But substitutes, ersatz things like growth factors and other phrases, such as equalization means fiscal need undefined, substitutes of that sort; birds in the bush that has not yet been cleared away in spite of the three and one half years of prodigious bushing are a very poor substitute for the bird in the hand that the provincial governments of this country have had since 1957 and that evidently, when the chips are down, none of them wants to lose.


Mr. R. S. MacLellan (Inverness-Richmond):: Mr. Speaker, I presume that other hon. members were as much surprised as I was to see this amendment brought forward today by the opposition. Indeed, it seems to most hon. members, I am sure, as it does to me, that this whole amendment is a matter of great sound and fury signifying nothing.
Nothing was more obvious when the hon. member for Bonavista-Twillingate (Mr. Pickersgill) was speaking than that all he was doing was setting up a straw man to knock down. His proposition is that the government is not sincere in espousing the principle of equalization, when the facts are clear to everybody that the government has always espoused the principle of equalization. No matter how hard the hon. member for Bonavista-Twillingate tried he could not bring forward one shred of evidence to show that there was any question in anybody's mind about this.


John Whitney Pickersgill: What about Mr. Roblin?


Robert Simpson MacLellan: One thing in particular that surprised me was his reference to how happy he was in July, 1958 when he went into the railway committee room-


John Whitney Pickersgill: It was in 1960.


Robert Simpson MacLellan: -and heard the Prime Minister (Mr. Diefenbaker) there take a firm stand for the principle of equalization

Dominion-Provincial Relations
without any equivocation. There has been equivocation since then. The debate this afternoon as far as the Liberal party is concerned was a matter of knocking down a straw man.
Again I was surprised to see this topic brought forward when it is remembered that in this particular field the record of the Liberal party is worse than it is in any other, and that is saying a lot. If there was one thing more than another which defeated the Liberal party in 1957, it was their record in the field of dominion-provincial relations. Many people would blame the very obvious reluctance on their part to pay a reasonable old age pension to the older citizens in Canada, or the way in which they trampled on parliament in the last days of their arrogant rule. But I believe more than anything else their record in the field of federal-provincial relations defeated the Liberal party in 1957.
In his speech the hon. member for Bona-vista-Twillingate himself admitted that. "None of the provinces", he said, "was satisfied with the arrangements in 1957". Mr. Speaker, I would say that that was a masterpiece of understatement. Actually, what was their record in the year 1956 and before? The most common news items in the papers of those days were those of the provincial treasurers and premiers trekking to Ottawa to beg a few crumbs out of the great surpluses that the Liberal party were piling up in Ottawa to bolster their sagging treasuries. In every situation even though the treasurers of the provinces were very hard up, and their provinces going without much needed essential services, the Liberal government of that day refused and insulted the premiers and treasurers who came forward looking for funds.
This afternoon the Minister of Finance (Mr. Fleming) put on the record the comments of the premiers of Manitoba and Prince Edward Island, both Liberal premiers, in respect of the attitude of the Liberal administration of that day. Certainly in my own province of Nova Scotia there can be no question as to what the niggardly attitude of the previous administration meant to the people of the province. In 1956, and in the years before that, in Nova Scotia we had an educational system coming almost to the brink of collapse because the provincial treasury was too poor to provide decent salaries to the teachers and decent schools for children to be trained in, or proper educational facilities generally. We had a highway system growing at a snail's pace and far short of the traffic requirements. We saw social welfare slipping away behind. Indeed, in some of the Atlantic provinces we
wondered at that time whether some of our governments might not be heading for bankruptcy in an attempt to provide essential services because of lack of help of any responsible nature from the federal government.
When the hon. member for Bonavista-Twil-lingate was speaking today, again speaking under the handicap that he did not have a shred of evidence to support the proposition he was putting forward-


Mr. Martineau:: That would hardly stop him.


Robert Simpson MacLellan: I have noticed, Mr. Speaker, that the louder and longer the tirade of the hon. member for Bonavista-Twillingate the weaker is his argument. Certainly if he proved anything this evening it was not that he really doubted that the government was questioning the principle or the application of the principle of equalization; no, it seemed that he was worried that there might be some possibility of a weakening in the process of centralization at Ottawa, which was the factor upon which the Liberals based their fundamental thinking and their entire philosophy as to federal-provincial relations. If everything could be gathered together at Ottawa and if Ottawa could be in complete control of the provincial treasuries and the financial systems of the provinces, that would suit the hon. member for Bonavista-Twillingate. That was the attitude of the administration of which he was a member a few years ago.
I should like to put on the record a few of the facts in relation to the record of the government in the field of dominion-provincial relations. Certainly it is a record of which the Conservative party, our Prime Minister, and his government can be very proud. In contrast to the days prior to 1957 when the treasury of my province of Nova Scotia was in such dire need, immediately after the government was elected in 1957 it called together the provincial treasurers and increased the provincial share of the income tax by 30 per cent, a very substantial increase. In addition, as has been said, it also provided $100 million over a four-year period in special grants for the development of the Atlantic provinces. When the Minister of Finance was speaking this afternoon he pointed out that between 1956-57 and 1960-61 contributions from the federal government to the provinces more than doubled. They increased from $689.4 million in 1956-57 to $1,300.9 million in 1960-61.
Perhaps more striking are the figures for Nova Scotia, which very much needed the transfusion that the Department of Finance provided in 1957-58 and following years. In 1956-57 unconditional grants to Nova Scotia


Hédard-J. Robichaud: Mr. Speaker, I am sure that every member of this house is rather surprised to learn from the hon. member who has just resumed his seat that conditions are so good in Nova Scotia today. This is quite contrary to statements made in a speech delivered before a group of Conservative women right here in Ottawa on Friday last by one of his colleagues, the hon. member for Halifax (Mr. Morris). This hon. member stated publicly that conditions in Nova Scotia are bad.
The hon. member also stated that there has been no denial of the principle of equalization by the present government, and that the hon. member who moved the amendment, as well as the hon. member for Bonavista-Twillingate (Mr. Pickersgill), did not have any evidence to support their arguments. I know that the amendment introduced this afternoon by the hon. member for Richelieu-Vercheres (Mr. Cardin) is one which affects the needs of all parts of Canada. If the Minister of Finance (Mr. Fleming) had not tried to misrepresent our amendment I think we would be justified in saying that he gave his own version of the amendment which is quite different from ours.
The Minister of Finance, in his long and elaborate speech, said the present government had inherited an unholy mess in the federal-provincial field. We know also that the present government inherited a series of surpluses which have been turned into the worst series of deficits in the history of Canada. We know also that the present government inherited an unemployment insurance fund of $900 million, and that four months from now that fund will be completely depleted as a result of lack of leadership and mismanagement by this government. We know also that the present government inherited about 150,000 unemployed in the month of June, 1957. Since then the number of unemployed in this country has been at least two times, and in certain months three times as high as it was in any month under the previous administration.
We all agree that in order to achieve a high level of prosperity for all Canadians it is essential that the financial resources of the nation be available to provide the national government as well as provincial and municipal
1564	HOUSE OF
Dominion-Provincial Relations governments with adequate revenues to support public services. The need for public services such as roads, schools and other services provided by provincial and municipal governments is increasing yearly and imposing additional demands on those governments. Our growing population in this modern world is demanding more and more assistance, more benefits and more protection against economic and social hazards.
In order to achieve national prosperity, which we also agree is essential to national unity, the Liberal party believes that the principle of equalization in federal-provincial tax arrangements must be upheld, and that Canadians from every part of the country must receive an equal share of the revenues derived from national economic activities. The position of the Conservative party, notwithstanding what was said this afternoon and earlier this evening by the Minister of Finance, is far from being clear and definite on matters of such vital importance as the welfare of our population in every section of the country from one coast to the other.
Reference has been made by the mover of the amendment now under discussion to the ambiguous and contradictory statements made by the present Prime Minister (Mr. Diefenbaker), first on July 25 last and then in October, to the provincial premiers who were convened at the last dominion-provincial conference. They were told then, notwithstanding the denials of the Minister of Finance, that the federal government was prepared to recommend to parliament that the federal tax rates in the three shared tax fields be reduced at the time of the termination of the present tax rental agreement, that is March 31, 1962, by the amount of the present standard rates, that is 14-9-50. I should like to quote the words of the Prime Minister, to which the Minister of Finance objected this afternoon, and I am quoting from a summary of suggestions made by the Prime Minister of Canada to the dominion-provincial conference on October 26, 1960. This document was made public following the Prime Minister's statement to the conference and was given to the press, so it is a public document. I am sure that the Prime Minister cannot deny that these are his exact words as reported in the statement which under his own instructions was handed to the press following that conference. Here are the Prime Minister's words:
To meet the needs of the provinces with lower tax potential we would therefore ask parliament to provide equalization payments or their equivalent in a total amount of $220 million a year, which is approximately the scale of the payments this year.


He went further when he said this:
The amount so provided will take the place of the present equalization payments, the Atlantic provinces adjustment grants, and the special grants to Newfoundland under section 2 of the Newfoundland Additional Grants Act.
He went further and said this:
Being mindful of the necessity of maintaining a reasonable level of public services in areas of low tax potential, we will ask parliament to provide this sum of money for equalization payments.
That is a total of $220 million a year. We were told this afternoon by the Minister of Finance that at no time were such proposals made by the Prime Minister. I have here, Mr. Speaker, the Concise Oxford dictionary. Under the word "suggest" I find this definition: Propose. I wonder whether there is so much difference between a proposal and a suggestion made by the Prime Minister.


John Whitney Pickersgill: You can take a suggestion back more easily.


Hédard-J. Robichaud: Probably so. The hon. member for Inverness-Richmond (Mr. Mac-Lellan) said we had no reason whatsoever to doubt the Prime Minister's sincerity in maintaining the equalization principles. As to this offer that was made by the Prime Minister at the October conference, what would it mean to the various provinces? How would it affect those provinces such as the Atlantic provinces where the economic progress has been retarded by factors beyond the control of those provinces, with the result that the standard of living has fallen behind that of the rest of the country.
The freezing of the present equalization tax rate and the replacement of the present equalization payment to certain provinces including, to use the words of the Prime Minister himself, the Atlantic provinces, adjustment grants and the special grants to Newfoundland to a fixed sum of $220 million per year, as suggested to the provincial premiers in October last, is contrary to the principle of the equalization scheme. This is why we of the Liberal party felt that it was our duty to bring to the attention of the country the statement made by the Prime Minister and to object to the statement and to insist that the principle of equalization be maintained. No wonder the conference ended in failure and no wonder the premiers departed unhappy and dissatisfied and no wonder, Mr. Speaker, the Prime Minister and the Minister of Finance have now changed their minds.
In fact, to limit to $220 million a year the equalization payments to those provinces where the revenue yields are not sufficient to meet the needs of the provincial finance,

and to freeze such payments for a period of five years following March 31, 1962, is nothing else but a deliberate violation of a principle which has been accepted and recognized as just, equitable and practicable for the performance of those functions of national interest that are especially assigned to the federal government under our constitution.
However, I must admit that I am not at all surprised to hear such a proposal coming from the present Prime Minister. It is true-and I repeat this statement-that it is contradictory to the declaration he made on July 25 last when he said that the principle of equalization must be preserved and when he added that the federal government remains firmly committed to that principle. The Prime Minister knows, as does every Canadian taxpayer, that every dollar of federal revenue comes from the pockets of the Canadian taxpayer and that every dollar contributed by the federal treasury in stabilization or equalization payments is contributed by Canadian taxpayers.
As Mr. Harris said in his budget speech of March 14, 1957, as reported at page 2218 of Hansard of that date:
Canadians living in Ontario pay exactly the same rates of tax as are applicable to all other Canadians, and Canadians living in Ontario derive their incomes in considerable part, directly or indirectly, from consumers and producers in other parts of Canada, just as Canadians elsewhere may derive part of their incomes from business activity that takes place in Ontario.
At no time should the federal government give thought to the idea of abandoning the objective of the tax rental agreements which make it possible for all provinces to perform their constitutional functions. The suggestion offered to the provinces by the Prime Minister in October last, namely the freezing of the equalization payments to $220 million, which was supported this afternoon by the Minister of Finance, was nothing else but an offer concealed by an artificial cloud or a smoke screen. It was strategy for a take it or leave it proposal.
If the present government was to remain in power for many years,-


Richard Albert Bell: And it will do so.


Hédard-J. Robichaud: The hon. member says "and it will do so". Time will tell. As I was saying, if the present government was to remain in power for many more years I can well understand how many of the provinces might feel that they are protected by a fixed equalization payment based on the present scale of payments for this year. We all know that during the 1950's, the annual output of the Canadian economy more than doubled in value, rising from $16 billion to $35 billion. The gross national product rose quite steeply in the years 1944-56, despite the short setback 90205-6-99}
Dominion-Provincial Relations in the recession period of 1953-54. It is also a fact that real consumption per capita declined in 1957 and in 1958 and by 1959 it was only fractionally higher than it was in 1956; and this decline happened under a Conservative administration, that of the present government.
For the first nine months of 1960 total output was only 2.9 per cent higher than it was in the corresponding period in 1959, but almost half of this increase can be attributed to higher prices of consumer goods. Those figures cannot be denied because they have just been released in the report of the Canadian Bank of Commerce. Under the continuation of such conditions the suggestion of the Prime Minister might be considered as acceptable to certain provinces. But every right thinking Canadian knows that this government has lost the confidence of the people.


Some hon. Members:: Oh, oh.


Hédard-J. Robichaud: This government has
reached the point where we are back to the Bennett days, where soup lines are being introduced, where surplus food products are being offered to the unemployed.


Paul Raymond Martineau: Mr. Speaker, I rise on a point of order. Although we are now discussing an amendment proposed by our friends opposite concerning federal-provincial relations, the hon. member is now embarking on a complete side issue. Under the circumstances I think the rules should be observed.


Hédard-J. Robichaud: If I may be allowed to do so, I should like to speak to the point of order, Mr. Speaker. I am speaking of the national growth of this country. We know that the tax ratio is being based on the gross national income. We know that the gross national income has an effect on the taxes and on the grants that would be made to the provinces. If the gross national product remains at the present level it would mean that this government will be limited to making payments which were about the equal of what they have been in the last fiscal year.
So I feel that my remarks are absolutely related, just as much as the remarks made by the Minister of Finance, who went far afield and spoke of national defence and so forth. The Canadian public is aware that this government lacks the leadership that is required to maintain the growth which prevailed in the last decade, in most of the 1950's under a Liberal government and which has practically reached a stalemate in the last three years since the present government took office.


Richard Albert Bell: That is just fantasy.


Hédard-J. Robichaud: It is no wonder that the apparent failure of activity to increase at the
1566	HOUSE OF
Dominion-Provincial Relations pace to which business has become accustomed has raised many questions and is causing so much concern in our country at the present time.
As I said earlier, the suggestion of the Prime Minister could be acceptable to certain provinces if, and only if, his government were to remain in office for the next five years; but we all know that such will not be the case.


An hon. Member:: It will.


Hédard-J. Robichaud: Look at the Gallup poll that came out last Saturday. I am sure it gave you reason to worry.
The decade of the 1960's, which has begun on a far less expansive note than marked the beginning of the 1950's will, under a new Liberal administration, and very soon, regain its momentum and mark once more a period of progress and prosperity, a period where the growth of the richer provinces will enable the federal government to help proportionately, and on an equal basis, the poorer ones. This is why most of the provinces, and the Atlantic provinces in particular, cannot accept the Prime Minister's suggestion that the provinces be frozen at the 1960 level-


George Clyde Nowlan: Mr. Speaker, would the hon. member permit a question. Will he tell me what the Atlantic provinces are getting under this decadent and failing government compared to the powerful and prosperous government which was defeated on June 21, 1957.


Hédard-J. Robichaud: Under the present government the Atlantic provinces are in a worse position today than they have been for years. In the Atlantic provinces the number of unemployed today is over 15 per cent of the labour force.


George Clyde Nowlan: The hon. member needs to call a psychiatrist. I will not say the hon. member is falsifying, but he needs a psychiatrist.


Hédard-J. Robichaud: If a psychiatrist be needed I think he could be used on many of the members opposite. That is the situation in the Atlantic provinces today, and I would refer the minister to the situation in Pictou, and everywhere in the Cape Breton area. I know the hon. members opposite cannot keep quiet, because it hurts them to hear these things.
Under the Liberal principle the provinces were protected in case of inflation, while under the proposal made by the Prime Minister in October last-a proposal which he has amended and changed today-the dollar value of the federal payment will shrink by the full amount of such inflation. Such a proposal, if accepted, could destroy the progress made

in the federal-provincial tax-sharing field following the recommendations of the Rowell-Sirois commission of 1937, and the provinces will be compelled to return to the strangling position they were in during the early 1930's in the days of the Bennett regime.
For a sound economy it is important to retain the principle of equalization and also the related principle of stabilization. As I said earlier there is no decrease in the needs for roads, schools and other essential public services provided by provinces and municipalities. Under our constitution it is the responsibility of the federal government to protect the provinces against any serious decline in their revenues from the sharing of taxes.
Our provinces, and our municipalities in particular, are being called upon to undertake capital projects which come within their jurisdiction and responsibility as a fundamental part of our Canadian federation. It is only logical to presume that reasonable men willing and desirous of living in a federation might agree to consider their common fiscal and administrative woes and make every effort to provide a series of working ideas.
This is where lies, and must be retained, the principle of equalization. The need for additional revenues for our municipalities is an urgent one and no one can deny that in order to discharge their constitutional responsibilities our municipalities must have adequate sources of revenue. Everyone must also admit that if the municipalities must exercise their functions under the terms of confederation there should also be in existence a system that would tend to preserve Canadian unity, and not a system that would discriminate against a certain group of Canadians because they happen to reside in certain areas where the standard of living and the economic growth is lagging behind, as compared with that of other sections of the country.



BUSINESS OF THE HOUSE

John Whitney Pickersgill: Mr. Speaker, could the house leader let us know what the program is for the rest of the week.


Mr. Churchill:: Tomorrow we have the continuation of this debate. On Wednesday we will resume the debate on the motion of the Minister of National Revenue to set up a special committee on broadcasting. That will be followed by the budget resolutions. I judge that would carry over Wednesday and Thursday. If we do not complete the budget resolutions on Thursday, we will finish them on Friday. If we complete them on Thursday, on Friday we will take the estimates of one of the departments, which I will announce tomorrow night.


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

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

Mr. Martin (Essex East): 1.	Has the Department of Trade and Commerce been requested to assist a Canadian food manufacturer in Windsor, Ontario, in his efforts to export Chinese-type prepared foods to the United States?
2.	If so: (a) have representations been addressed directly to the minister in this matter by the manufacturer himself or by any body acting on his behalf? (b) has any progress been made in negotiations with the United States government or any of its agencies in this regard? (c) has any agreement yet been reached to permit this Canadian food manufacturer to export his product?
Answer by: Hon. George H. Hees (Minister
of Trade and Commerce):
1.	Yes.
2.	(a) Yes. (b) Yes. (c) Yes. An agreement has now been signed by the Canadian embassy in Washington and the competent U.S. authority. The agreement will take effect when notice of it has been published in the United States federal register. That publication should take place on February 1, enabling the Windsor manufacturer to begin exporting to the United States as of that day.


FEDERAL PREVAILING RATE EMPLOYEES
Mr. Peiers: 1.	What is the basis for determining terms and conditions of work for prevailing rate of pay employees in the government service?
2.	What is the role of the prevailing rate advisory committee?
Questions
3.	Who are its members and what are their positions in the federal government service?
4.	Why are prevailing rate of pay employees required to take the first day of sick leave without pay?
5.	During the month of December, did the minister receive representations on behalf of these employees from any staff association?
6.	If so: (a) what association made these representations? (b) does the government contemplate changing its policy in this?
Answer by:	Hon. Donald M. Fleming
(Minister of Finance):
1.	Terms and conditions of work for prevailing rate employees are determined on the basis of information provided by the Department of Labour resulting from surveys of current practices in outside employment.
2.	The prevailing rate advisory committee provides advice to the treasury board on matters pertaining to working conditions of employees under the prevailing rate employees general regulations, ships' officers regulations, and ships' crews regulations.
3.	A. R. K. Anderson, superintendent of civilian personnel, Department of National Defence; J. R. Baxter, director of administration and personnel services, Department of Transport; Charles Caron, treasury board staff; A. Gagnon, treasury board staff; R. J. Groves, director, organization and personnel, Department of Agriculture; J. F. Maxwell, chief, personnel branch, Department of Public Works; K. R. Scobie, director of pay and standards branch, civil service commission; Bernard Wilson, director, industrial relations branch, Department of Labour.
4.	A waiting period for sickness benefits is the current practice in outside employment.
5.	Yes.
6.	(a) The civil service association of Canada. (b) It is not the practice of the government to reveal information on policy matters.

Tuesday, January 31, 1961	EXPROPRIATION ACT