1962-11-09

['Order. The question is quite out of order. It is purely argumentative.']
Hon. Leon Balcer (Minister of Transport) moved:: That the sessional committee on railways, air lines and shipping consist of Messrs. Addison, Badanai, Baldwin, Belzile, Bourbonnais, Caouette, Chevrier, Coates, Fairweather, Fisher, Foy, Granger, Gregoire, Lamoureux, Mitchell, Muir (Lisgar), Ouellet, Pas-coe, Prittie, Pugh, Rideout, Rinfret, Robinson, Rouleau, Rowe, and Smith (Simcoe North); and that the annual reports for 1961 of the Canadian National Railways, the Canadian National Railways securities trust and Trans-Canada Air Lines, the auditors' reports to parliament in respect of the Canadian National Railways and of Trans-Canada Air Lines, tabled on March 20, 1962; the budget for 1962 of Trans-Canada Air Lines tabled on February 9, 1962; and the budget for 1962 of the Canadian National Railways tabled on April 18, 1962, be referred to the said committee; and that items numbered 80 -Newfoundland ferry and terminals; 85-Prince Edward Island car ferry and terminals; 100-Maritime Freight Rates Act, as listed in the revised estimates of 1962-63, be withdrawn from the committee of supply and referred to the said committee, saving always the powers of the committee of supply in relation to the voting of public moneys.


[Stage Direction]
Motion agreed to.

[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier (Laurier):: I wish to direct a question to the Prime Minister. Would the Prime Minister indicate whether the suggestion that diplomatic and trading relations with Cuba should be broken off, as made by the national vice president of the Progressive Conservative Association of Canada, was a forecast of government policy?


Right Hon. J. G. Diefenbaker (Prime Minister):: All I know regarding this matter is what I read in the newspapers, and apparently the hon. gentleman is in the same position. Whatever statements were made were the personal views of the individual in question.


Hon. Paul Martin (Essex East):: Mr. Speaker, may I ask a supplementary question. Are we to conclude from what the Prime Minister has just said that in the formulation of foreign policy, this government does not take into account the views of the vice president of the Progressive Conservative association?


John George Diefenbaker: Mr. Speaker, the hon. gentleman, with that experience that goes back over the years, will recall observations made from time to time by those of his party in official positions that bore no relationship to the policies of that party.


[Stage Direction]
On the orders of the day:
Mr. T. C. Douglas (Burnaby-Coquitlam):: Mr. Speaker, may I direct a question to the right hon. Prime Minister. In view of radio reports indicating that India is so hard pressed for military aid to stem the Chinese aggression that Mr. Nehru has just stated India had asked for aid from the Soviet union and expects that the Soviet will stand by their previous commitments, will the Prime Minister assure the house that an offer of really substantial military aid will be made by Canada to our commonwealth partner?


John George Diefenbaker: Mr. Speaker, this is a matter which is receiving the joint consideration of the British, United States and Canadian governments, naturally in full co-operation with the government of India. The situation requires continued consideration, and everything that is being done is in accordance with arrangements as among these four countries. In so far as Canada's initial assistance is concerned, the Dakota aircraft which were of particular necessity for the Indian government are on their way and will arrive in India, I think, on the 14 th.


Thomas Clement (Tommy) Douglas: Mr. Speaker, may I ask the
Prime Minister a supplementary question. Did the Indian government ask for Caribou planes at the time we gave them the Dakota planes?


John George Diefenbaker: Mr. Speaker, this is a matter, of course, which I have not had the opportunity to check. However, I understand that a number of Caribou planes were ordered by the United States and that any assistance

Inquiries of the Ministry in this direction would come through the arrangements among the three countries, these Caribou planes having already been ordered some time ago by our neighbour to the south.


Paul Joseph James Martin: May I ask
a supplementary question, which perhaps I should address to the Secretary of State for External Affairs. Can the hon. gentleman say whether Canada has yet decided on its commitment to India with regard to our participation in the consortium arrangement with the world bank arising, likewise, out of what we propose to do to assist India at the present time?


Hon. Howard C. Green (Secretary of State for External Affairs):: There has been no change in recent months with regard to the consortium.
(Translation):


[Stage Direction]
On the orders of the day:
Mr. J. P. Cook (Monimagny-LTslet):: Mr. Speaker, may I ask the Prime Minister a question?
Last night, over the radio, we heard a report which pleased us, to the effect that the government had decided to have a translation made at its own expense of Beauchesne's work. Could the Prime Minister confirm that report?
(Text):


John George Diefenbaker: Mr. Speaker, this question has been asked on a number of occasions. I think it was the hon. member for Montmagny-L'Islet (Mr. Cook) who first raised this matter. I have been in communication with the law book publishers, the Carswell Company Limited, in regard to producing Beauchesne in the French language. I am informed that the cost would be approximately $20 per volume for 500 volumes, and if a lesser number than that was ordered the amount would be very little different. In addition, I think provision would have to be made for the payment of the royalty to which Dr. Beauchesne was entitled and which passes on to his estate. The amount of that royalty is from 15 per cent to 20 per cent. Furthermore, the law book publishers would expect the translation to be done by someone connected with the government administration; otherwise the cost would be considerably greater.
The attitude of the government is that this is something that deserves to be done.


[Stage Direction]
On the orders of the day:
Mr. Donald S. Macdonald (Rosedale):: should like to address a question to the Minister of Finance. Has Canada made application to the contracting parties under the general agreement on tariffs and trade pursuant to article 25, paragraph 5, of the agreement, for a waiver of Canada's obligations under that agreement to the extent necessary to authorize the collection of the tariff surcharges imposed on June 24, 1962?


Hon. George C. Nowlan (Minister of Finance):: All matters involved in connection with the surcharges and other trading relations between Canada and her associates are being discussed with the GATT signatories at the moment.


[Stage Direction]
On the orders of the day:
Mr. Reid Scott (Danforth):: I should like to direct a question to the Minister of Trade and Commerce. In view of the urgency of the matter, can the minister assure the house that the government is undertaking an industry by industry study of ways of replacing imported goods by Canadian manufactured goods, as recommended by the deputy minister yesterday in Montreal?


Hon. George H. Hees (Minister of Trade and Commerce):: Mr. Speaker, we have been doing this for quite some time. If the hon. gentleman would pay attention to what this government is doing on behalf of the Canadian people and the Canadian economy he would be better informed, and would not have to ask such silly questions.


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order. The answer was, of course, quite out of order but it may have been rather encouraged by the nature of the question. Hon. members should watch the nature of their questions, because they are quite wrong if they are designed to bring forward an argument, and in the same way that the answer is wrong so may the question be wrong. I would caution hon. members in that regard.


Reid Scott: A supplementary question, Mr. Speaker.


Mr. Speaker:: The hon. member for Belle-chasse.


Reid Scott: A supplementary question, Mr. Speaker.


Mr. Speaker:: Did the hon. member say he has a supplementary question?


Reid Scott: A supplementary question following the courteous answer I received from the minister. If the minister is telling me that I should be informed on government policy-


Some hon. Members:: Order.


Reid Scott: -would he also be good enough to inform the deputy minister, because he asked for this policy yesterday in Montreal.


Mr. Speaker:: Order. The question is quite out of order. It is purely argumentative.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. Allan J. MacEachen (Inverness-Richmond):: In view of the policy of the government, as declared by the Prime Minister, that fast, efficient and drastic action would be taken against those using devaluation to raise prices, is any action contemplated by the government to halt the proposed 10 per cent hike in auto insurance rates, part of which is attributed to devaluation?


John George Diefenbaker: Mr. Speaker, I have never yet seen any relation between greater casualties on the highways and devaluation.


Allan Joseph MacEachen: May I ask the Prime Minister if he is aware that the insurance companies in a statement attribute part of the decision to raise rates to higher prices ensuing from devaluation?



HOUSING


[Stage Direction]
On the orders of the day:
Mr. J. R. Garland (Nipissing):: May I direct a question to the Minister of Public Works and ask him if the parcel of $30 million worth of mortgages which is to be offered for sale, as announced in the press yesterday, by the Central Mortgage and Housing Corporation and for which tenders will close on November 20, is the same parcel as that which the minister described a week ago as mortgages which were going to be offered for sale early in 1963?


Hon. E. D. Fulton (Minister of Public Works):: I think there is a misunderstanding; I do not recall making any statement about mortgages to be offered for sale in 1963. However, I will not quarrel with the hon. member on that score because we have a continuing program for the sale of mortgages. The parcel
Inquiries of the Ministry in question which is being offered now is part of that program. This particular offering of some $30 million worth of mortgages, broken down into a number of subparcels does not, as far as I know, represent an acceleration of any proposed sales in 1963.


John Richard Garland: A supplementary question. I wonder if the attention of the minister has been drawn to a criticism offered by Mr. David Mansur to the royal commission-


Mr. Speaker:: Order. I do not think I am interrupting the hon. member as he puts his point, but it appears he is asking the minister to comment on a criticism or observation made by some individual outside this house, and I respectfully submit to the hon. member that this is not in keeping with our practice on the orders of the day. He may desire to rephrase his question and I will hear him later.


John Richard Garland: Mr. Speaker, I should like to direct a question to the Minister of Public Works in connection with the sale of mortgages. Has the minister seen the current reports of criticism by the former head of the corporation of the handling of the sale of mortgages, and will the minister give consideration to making more information available in the future to prospective purchasers and thereby further encourage the development of a secondary market for these mortgages?


Mr. Fulfon:: Mr. Speaker, yes. The procedure by which the mortgages are to be disposed of is under review now. I am aware that several suggestions have been made as to the method of marketing them, and those suggestions are being studied actively with a view to seeing whether we can arrive at a procedure which will further facilitate the disposal of these mortgages and thus promote the attraction of new capital into the housing market.



N.H.A.  REQUEST FOR LOWERING OF INTEREST RATE

[Stage Direction]
On the orders of the day:
John Richard Garland: I should like to direct a question to the Minister of Finance. It is based on the premise that the early availability of jobs is a matter not only of importance but of some urgency. Is the government considering taking any action this session, such as lowering the N.H.A. interest rate, that would have the effect of bringing the chartered banks back into mortgage lending for house construction?

Inquiries of the Ministry


George Clyde Nowlan: To that question you get, properly, the only conventional answer that this would be a matter of government policy. If the government were considering such matters, there would be an announcement in due course if a decision were reached.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Hon. J. W. Monteith (Minister of National Health and Welfare):: Mr. Speaker, yesterday the hon. member for Parkdale asked me a question relating to the increase in hepatitis cases over the past year.
The question of viral hepatitis has been of some concern to my department and provincial and local departments of health, and to the medical profession. Some time ago I established an expert committee on viral hepatitis as a subcommittee of the dominion council of health. This committee reported to the session of the dominion council of health sitting in Ottawa at the present time.
In its current report-and I would emphasize that the committee will be continuing to work on this problem-recommendations were made for the prevention of this disease. They included proposals with regard to sanitary control and the use of gamma globulin primarily as a preventive measure. The deputy ministers of health of the provinces are members of council, and in this way the information has been made available to the provincial departments of health. I recognize that viral hepatitis is an important public health problem, not only in Canada but in many other countries, and we will continue to take active steps to keep this disease under control.



INQUIRIES OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Mr. R. B. Cowan (York-Humber):: Mr. Speaker, I should like to ask the Minister of Veterans Affairs whether on Sunday next, November 11, when the nation is paying homage to its war dead, we are to honour the memory of Canadians killed in Korea fighting communist China, or should we hold our memorial service in abeyance until the present Chinese wheat deal has been concluded?


Some hon. Members:: Oh, oh.


Some hon. Members:: Cheap.


Mr. Charles M. Drury (St. Anloine-Wesl-mount):: May I address a question to the Prime Minister regarding the business of the house? Could the Prime Minister tell us when the government is going to bring forward the program of Social Credit legislation forecast to the press last night by the hon. member for Villeneuve?


John George Diefenbaker: Mr. Speaker, I can well understand the interest of the hon. gentleman. After the vote the other night it became particularly interesting.


Mr. Speaker:: Order. I think we will
recognize-


Mr. Fleming (Eglinton):: You are unhorsed on that one.


Mr. Speaker:: -that certain replies are begot by the questions asked.


Hon. J. W. Pickersgill (Bonavisla-Twillin-gate):: Mr. Speaker, I should like to put a question to the Prime Minister in view of the answer he gave to the question by the hon. member for St. Antoine-Westmount. Does the Prime Minister recall a vote he gave in this house on December 3, 1953 and the comment on it of the Ottawa Journal of December 5?


John George Diefenbaker: Mr. Speaker, I do not recall that, but that in no way answers the fact that the Liberal party sold out lock, stock and barrel the other day in this house.


Some hon. Members:: Oh, oh.


Some hon. Members:: Hear, hear.


Mr. Speaker:: Order. I hope we do not get
any more answers of this nature this morning but, on the other hand, perhaps we will also avoid any questions which seek answers of this type.


Lionel Chevrier: It certainly shook the foundation of the Tories.


John George Diefenbaker: Mr. Speaker, I simply want to say that when a question is asked I have a right to reply and give the facts.


Lionel Chevrier: Oh, lecturing the Speaker now.


Mr. Speaker:: Order. We will not go into any argument as to questions and answers. The hon. member for Winnipeg North Centre.


John Whitney Pickersgill: Mr. Speaker, since the Prime Minister has been permitted to comment I am rising on a question of privilege.


Some hon. Members:: No, no.


John Whitney Pickersgill: Since the Prime Minister was permitted to comment, I rise on a question of privilege.


Mr. Speaker:: Comment in which way?


John Whitney Pickersgill: I beg your pardon?


Mr. Speaker:: Comment in which way, other than in reply to the question?


John Whitney Pickersgill: No, afterwards. Perhaps Your Honour would listen to my question of privilege. My question of privilege is that I asked a perfectly straightforward, factual question. I asked the Prime Minister if he recalled a vote on a certain date and an editorial about it in the Ottawa Journal, and that was all I asked. The Prime Minister saw fit to get up and make a gratuitous observation which was out of order as Your Honour has pointed out. If the Prime Minister would like me to I could read the editorial in the Ottawa Journal for that date.


Mr. Speaker:: Order. So far I see absolutely no question of privilege.


Lionel Chevrier: Except the lecturing of the Speaker by the Prime Minister.


Mr. Speaker:: No one is lecturing the
Speaker.


Lionel Chevrier: There is no doubt the Prime Minister did.


Paul Joseph James Martin: Mr. Speaker, on a question of privilege, a few moments ago the Prime Minister cast a reflection on the way hon. members of the house voted with regard to a subamendment put forward by the Social Credit party.


Some hon. Members:: Order.


Donald Methuen Fleming: You have an uneasy conscience.


An hon. Member:: Keep quiet.


Paul Joseph James Martin: I simply want to say that the Prime Minister on December 3, 1953-


Some hon. Members:: Order.


Paul Joseph James Martin: -voted for a Social Credit-


Some hon. Members:: Order.


Mr. Speaker:: Order. Would the hon. gentleman state the point of privilege that he is raising? At this point I think we must recognize that in stating a point of privilege, it is not a time for making an argument or refuting something that has been said by another member in this house. It must be a question of privilege; it has very narrow limitations, if we look at our rules.


Mr.   Marlin@Essex East: My point of privilege was this. The Prime Minister made a comment upon the way hon. members had
Inquiries of the Ministry voted on a particular matter, and that is contrary to our rules. If the Prime Minister is going to be allowed to impute motives, surely another hon. member has the right to comment on a vote-


Some hon. Members:: Order.


Mr.   Marlin@Essex East: -with regard to the same matter by the Prime Minister in support of the Social Credit party in 1953.


Mr. Speaker:: Order. I do not think the hon. member was following the proceedings when I indicated that the Prime Minister's answer had gone too far and his reply was out of order. However, I think the score in that respect is about even.



AIR TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. D. M. Fisher (Port Arthur):: Mr. Speaker, I have a question for the Minister of Transport. It is rather long, but it is simple and I think in order. On Wednesday the Minister of Transport told the hon. member for Bonavista-Twillingate that there was no text of a speech made by Mr. Davoud to the air transport association of Canada. According to a Canadian Press story, such a text does exist, and it was issued in the form of a press release by the air transport association. I should like to ask the minister if he can inform us whether Mr. Davoud did give a text to the air transport association and, if not, what is the explanation for their press release quoting Mr. Davoud?


Léon Balcer: Yes, Mr. Speaker, I agree with my hon. friend that it is a simple question. My answer is that when I inquired from the chairman of the air transport board about a text, the answer I received was that there was no text.


Douglas Mason Fisher: A supplementary question.
Could the minister at least provide the house, as was asked by the hon. member for Bonavista-Twillingate, with this statement which suggests, or is alleged by the air transport association to suggest, that there is a text of Mr. Davoud's remarks?


Léon Balcer: Mr. Speaker, my understanding is that the chairman of the air transport board was appearing as a speaker on a panel and answered questions and so forth. I do not know whether he had documents before him when he made various statements; all I know is that there was no prepared text for this speech.

Inquiries of the Ministry


John Whitney Pickersgill: I should like to ask a supplementary question. Would the minister ask the chairman if he gave a press release and, if he did, would he furnish us with a copy of the press release?



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Mr. J. A. Byrne (Kootenay East):: I should like to direct a question to the Prime Minister. In view of the serious unemployment situation, more particularly in the electrical industry, will the Prime Minister tell the house if it is the intention of the government to introduce legislation this session which would have the effect of implementing their policy respecting a national power grid?


John George Diefenbaker: Mr. Speaker, the hon. gentleman, who has had previous experience in the house, should realize that government policy is announced in the usual course and not in answer to such questions.
(Translation):



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. Bernard Dumont (Bellechasse):: Mr. Speaker, my question is directed to the Minister of Agriculture or, in his absence, to his parliamentary secretary.
After the accident that occurred in Vancouver harbour, will it cost more to repair the grain elevator where the grain sold to Communist China and Poland is loaded, in the harbour of Vancouver, than to build a grain elevator in Berthier en Bas, in Mont-magny, for eastern farmers?


Mr. L. J. Pigeon (Parliamentary Secretary to the Minister of Agriculture):: There is no answer to be given on this matter. If the hon. member wants some figures, let him put his question on the order paper.


Bernard Dumont: You are not aware of the cost of repairs?
(Text):



NORTHERN AFFAIRS


[Stage Direction]
On the orders of the day:
Hon. W. G. Dinsdale (Minister of Northern Affairs and National Resources):: Yesterday, Mr. Speaker, the hon. member for the Northwest Territories inquired whether the absence

of Eskimo representatives from the Indian-Eskimo association meetings in Sudbury was due to the refusal of the government to assist in transportation.
In reply I should like to point out that the Indian-Eskimo Association of Canada is a private and voluntary organization incorporated on December 21, 1959, in response to the growing interest in northern Canada resulting from the government's program of northern development. My department has taken a close and continuing interest in the excellent work of the association. The federal government, through the Department of Citizenship and Immigration, provides financial assistance by way of grants to support the activities of the association. I am advised that, a portion of this year's grant helped to defray the cost of the meetings held in Sudbury.
I must, however, confess that I am somewhat puzzled by the question, since no request for assistance with respect to transportation was received by my department. Therefore there can, of course, be no question of refusal.



BROADCASTING


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I should like to direct a question to the Prime Minister. In view of the uncertain and difficult position in which the Canadian Broadcasting Corporation has been placed by a recent ruling of the board of broadcast governors, as well as by other rulings, will the government consider setting up a royal commission to inquire into the whole state of radio and television broadcasting in Canada?


John George Diefenbaker: Mr. Speaker, in so far as that question is concerned the answer will have no unnecessary verbiage in it. The answer is no.


Thomas Clement (Tommy) Douglas: May I ask a supplementary question related to the question asked by the hon. member for Winnipeg North Centre. In view of the decision of the board of broadcast governors which has recently been made compelling the C.B.C. to accept program advertising in connection with the Grey cup game contracted for by the private network, does the Prime Minister not consider the board of broadcast governors has now lost the confidence of the country and ought to be replaced?



INQUIRY FOR RETURN


[Stage Direction]
On the orders of the day:
Mr. Thomas R. Berger (Vancouver-Burrard):: May I respectfully direct a question to the Secretary of State for External Affairs and ask him to tell the house when a return will be made pursuant to the order for return to question No. 192, dated October 22, which requested the government to disclose whether an agreement had been reached with the province of British Columbia regarding the sale on a long term basis of downstream benefits to the United States under the Columbia river treaty.


Mr. Speaker:: If I may say so, that question should be directed to the Secretary of State. Under the procedure of the house all matters pertaining to orders for returns are channelled through the office of the Secretary of State. If he is prepared to answer, he may do so.


Hon. G. E. Halpenny (Secretary of State):: I shall make inquiries and see that it is put through.



WAYS AND MEANS

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

[Stage Direction]
Resolved,-that it is expedient to introduce a measure to amend the Income Tax Act to provide among other things:
1.	That for the 1962 and subsequent taxation years the amount deductible in computing taxable income in respect of a child qualified for family allowance be increased to $300 and the amount deductible in respect of other dependants be increased to $550 each.
2.	That with respect to income earned after March 31, 1962 a corporation whose principal business is manufacturing or processing (not including a corporation whose principal business is ship-building, mining, logging or the operation of oil or gas wells) be allowed to deduct from its tax otherwise payable an amount equal to 50 per cent of the tax cn the first $50,000, of its taxable income attributable to increased sales and an amount equal to 25 per cent of the tax on the remainder of its taxable income so attributable.
3.	That with respect to its first taxation year ending after April 10, 1962 and the next succeeding four taxation years a corporation be permitted to deduct in computing income 150 per cent of the amount by which expenditures of a current and capital nature on scientific research in Canada incurred by it in the year exceed expenditures of a current and capital nature on scientific research in Canada incurred by it in its last taxation year ending on or before April 10, 1962.
4.	That for the 1962 to 1966 taxation years both inclusive the deduction from tax allowed to corporations in respect of taxable income earned in a province be increased from 9 per cent to 10 per
27507-3-93^
Income Tax Act
cent in a prescribed province in which arrangements exist for the replacement of federal grants to universities by additional provincial grants in accordance with the proposed amendments to the Federal-Provincial Arrangements Act.
5.	That with respect to taxation years commencing in 1962 a taxpayer be allowed a deduction from tax on an amount equal to the lesser of two-thirds of the amount payable for the year to a province as a tax on income from logging operations or H of 10 per cent of the taxpayer's income from logging operations in the province, and the right to deduct in computing income amounts paid to a province as tax on income from logging operations be repealed.
6.	That with respect to expenses incurred after April 10, 1962 any corporation be allowed to deduct in computing income the drilling and exploration expenses, including all general geological and geophysical expenses, incurred by it on or in respect of exploring or drilling for petroleum or natural gas in Canada and the prospecting, exploration and development expenses incurred by it in searching for minerals in Canada not exceeding its income for the year from oil or gas wells in Canada.
7.	That with respect to expenses incurred after April 10, 1962 an individual be allowed to deduct in computing income the drilling and exploration expenses, including all general geological and geophysical expenses, incurred by him on or in respect of exploring or drilling for petroleum or natural gas in Canada not exceeding his income for the year from oil or gas wells in Canada.
8.	That with respect to acquisitions after April 10, 1962 amounts paid by
(a)	a corporation whose principal business is production, refining or marketing of petroleum, petroleum products or natural gas, or exploring or drilling for petroleum or natural gas, or mining or exploring for minerals,
(b)	an association, partnership or syndicate formed for the purpose of exploring or drilling for petroleum or natural gas,
(c)	a corporation (other than a corporation that qualifies under (a)), or
(d)	an individual for a right, licence or privilege to explore for, drill, or take petroleum or natural gas in Canada shall be classed as drilling or exploration expenses for purposes of computing deductions from income.
9.	That with respect of sales of property acquired after April 10, 1962 there shall be included in the income of a taxpayer any amount received as consideration for the disposition of a right, licence or privilege to explore for, drill for or take petroleum or natural gas except v/here the right, licence or privilege was acquired by inheritance or bequest.
10.	That the right of a successor corporation to deduct drilling, exploration, prospecting and development expenses incurred by a predecessor corporation from the income of the successor corporation attributable to the production of petroleum or natural gas from wells, or the production of minerals from mines, situated on property acquired from the predecessor corporation shall not be lost by reason of the fact that the successor corporation assumed liabilities of the predecessor corporation.
11.	That a joint exploration corporation may renounce an appropriate share of the drilling, exploration, prospecting and development expenses incurred by it after 1958 in searching for oil, gas or minerals in Canada in favour of a shareholder corporation whose principal business is
(a)	production, refining or marketing of petroleum, petroleum products or natural gas, or exploring or drilling for petroleum or natural gas,
(b)	mining or exploring for minerals,
[Stage Direction]
Income Tax Act
(c)	processing mineral ores for the purpose of recovering metals therefrom,
(d)	a combination of
(i)	processing mineral ores for the purpose of recovering metals therefrom, and
(ii)	processing metals recovered from the ores so processed, or
(e)	fabricating metals,
and in such case the expenses renounced shall be deductible by the shareholder corporation and not by the joint exploration corporation.
12.	That the right of a successor corporation to deduct drilling, exploration, prospecting and development expenses incurred by a predecessor corporation from the income of the successor corporation attributable to the production of petroleum or natural gas from wells, or the production of minerals from mines, situated on property acquired from the predecessor corporation be extended to a second successor corporation which has acquired the property from a predecessor corporation which was itself a successor corporation.
13.	That for the 1962 and subsequent taxation years income earned in Canada by a non-resident corporation whose principal business is mining iron ore in Canada, be exempt from the additional 15 per cent tax imposed by part IIIA on profits earned in Canada by non-resident corporations.
14.	That where an employee who is a member of one deferred profit sharing plan becomes a member of another deferred profit sharing plan the amount to his credit in the first mentioned plan may be transferred to his credit in the second mentioned plan without attracting tax on the amount so transferred.
15.	That the amount to the credit of an annuitant under a registered retirement savings plan may be transferred at any time before the maturity of the plan to another registered retirement savings plan or to a registered pension fund or plan without attracting tax on the amount so transferred.
The Chairman:: At the previous sitting of this committee we were considering paragraph 3 of the resolution. Shall the paragraph carry?


Mr. Laing:: Mr. Chairman, on November 2 when I was discussing paragraph 3 of the resolution I had pointed out the tremendous loss to Canada in the ten year period 1950-60 of educated persons by emigration to the United States. I was quoting from the Labour Gazette of January 31, 1962, and I should like to put some figures on the record to indicate what I believe members on all sides of the house will agree constitutes a most serious drain upon the resources of Canada. I quote:
Of the types of professionals who emigrated to the United States during the 1950-60 period nurses were the most conspicuous: they made up 30.5 per cent of the total of professional emigrants.
Some hon. members may say that the loss to Canada of nurses is not serious. I do know that the medical profession in my province is saying that, unfortunately, a high percentage of these nurses who are going to the United States are specialized nurses, specialists in such things as x-ray treatment and so on.
Engineers constituted 18.7 per cent. Other groups were accountants and auditors (5.4 per cent), draftsmen (5.2 per cent), . . . scientists (4.4 per cent), physicians and surgeons (4.8 per cent), and technicians (7.4 per cent).
I put those figures on the record, Mr. Chairman, because I believe that the effect of this five year undertaking to allow to these corporations 150 per cent of the cost of research done in Canada in relation to what they expended in the year previous is a good thing and will be supported by this side of the house. However, I do suggest to you, Mr. Chairman, that this is going to be of benefit to a relatively small number of companies in Canada. I turn to the proceedings of the special committee on research in 1960, and the evidence of the late Dr. Steacie of the national research council. At page 14 he is reported as saying:
The extreme case would probably be that of applied chemistry as compared to building research- the chemical industry in Canada consists essentially of a dozen quite large firms, whereas the building industry consists of thousands of contractors.
In the chemical industry you will always have plenty of people to contact, but in the construction business you have no one to contact concerning research problems, and you will have to find out what is bothering them, and then use your own initiative.
I suggest that the effect of this preference granted to firms will probably be to return to Canada some research that is done by gigantic United States firms for their Canadian subsidiaries, and that is a good thing. However, I ask myself what provision is being made for research in Canada, and I have to return to the national research council. I find that, according to the revised estimates, there is actually a reduction imposed upon the national research council. While there are increases granted in respect of salaries there is a reduction of $2,581,243 brought about by an obvious withdrawal in construction and acquisition of buildings, works, lands and equipment, and in its place there is an increase of $1 million providing assistance toward research in industry.
Here we have a situation in which the government is declaring itself in favour of research in Canada, but it provides an increase of only $1 million, and the small firms in Canada that are so preoccupied with their daily business that they cannot do their own research-they have neither the facilities, the ability nor the time-must look to the national research council to do the research for them.
The national research council is doing a splendid job. It is doing much of its work through our universities, either in pure research or business research, but we must compare this item of $1 million with the


Mr. Bell (Carlelon):: Will the hon. member permit a question? Are not the figures he is using in respect to the United States and the United Kingdom the amount which is spent for research in the totality? And if a comparison is to be made should it not take into account not only the $1 million but the total estimates for national research and the funds which the provinces provide in Canada, of which there are no counterparts in existence in the United Kingdom?


Arthur Laing: I have searched through all the material I could obtain, and I have some figures which indicate total research expenditures in Canada at $150 million for all sources and at all levels.


George Clyde Nowlan: Is that public moneys?


Arthur Laing: Public and private, but I rather think mostly private. I hope that this special item of $1 million is merely a token, and that the government and front benches regard it as a token.
We in Canada can do certain things extremely well, and we are doing some research extremely well. There is a private company in the city of Vancouver which I have no desire to advertise, Sandwell and Associates, which is now an international concern. It has on its staff men of international reputation from all parts of the world, and it is doing work in all parts of the world.
More and more of the machinery used in our pulp and paper industry and sawmills is being manufactured in Canada. It will be of interest to some hon. members who come from areas of lumber production to learn that one small sawmill in my riding employs 12 men on two shifts, in other words 24 men per day, and that mill is turning out 200,000 board feet of timber a day with machinery manufactured in the city of New Westminster and designed in the province of British Columbia. The Sandwell company is doing work all over the world and specializes in the production of machinery plants for pulp and paper mills. It has some excellent technicians, but that company will not benefit as a result of this action by the government.
We in Canada also have great experience in hard rock mining and could do more research in that field. There are many other areas where research is required, but I shall wind up by saying that of all the nations in the world, Canada today requires a greater national and unifying purpose. I think that
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has been demonstrated in this house in recent weeks. I shall not suggest that the expenditure of great sums of money on technology, science and research is the way to get that unifying influence, but I believe it could be one of the ways to help in getting it.
The age in which we live is a new age of discovery, and before the next generation matures I believe we shall have conquered many of the maladies of mankind. We shall have conquered heart disease, cancer and a great many other diseases. Also we in Canada can make a very great contribution toward the furthering of science in the emerging countries of the world, but we are losing a tremendous opportunity by not doing it now. With our great variety of industries we have an opportunity to bring young scientists from the emerging countries in greater numbers than we have hitherto, and teach them our skills and our technology.
I hope the minister will be able to tell us that supplementary estimates will be introduced for research. I suspect they will be, and I trust this very small amount will be increased to extend the advantages of research through the national research council to small companies in Canada. Those companies will not benefit much by the legislation the minister has introduced at the moment. (Translation):


Mr. Gregoire:: Mr. Chairman, I have just been handed a copy of the resolutions on ways and means now under consideration, and I am particularly interested in the one dealing with the Income Tax Act. Mention is made in paragraph 3 of tax deductions allowed to those who go in for scientific research.
Mr. Chairman, I feel that regardless of the particulars mentioned in that paragraph, one thing must be borne in mind. At the present time, the more you promote and assist industrial research and automation, the more you improve the products and develop new needs. Those new needs will result in an increased production and, consequently, we will have to build more factories.
I should like to point out that our group endorses any tax deduction which tends to promote research and development of production methods in our country.
But I should like to make a suggestion to the Minister of National Revenue. Apart from those deductions for research expenditures, the minister should advise his inspectors that, when they audit the books of companies, they

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must, not only allow them the deductions they are entitled to, but also leave our industrialists in peace and give them a change to breathe freely.
Nowadays, even if industrialists are given all sorts of privileges, the inspectors come around and cancel everything, which brings about increased expenditures, since accounting operations, red tape and what not are multiplied.
We approve this income tax deduction, but our suggestion to the minister would be to warn his inspectors to stop making trouble and causing increased costs for businessmen and manufacturers in our country.


An hon. Member:: Let us submit to robbery.


Gilles Grégoire: Mr. Chairman, we are in favour of the tax deductions which are being granted today, but, nevertheless, I would ask the Prime Minister to do away with all that useless red tape in the collection of that money. No other department, in my opinion, causes more trouble to Canadians.
The minister should be concerned not only with the granting of exemptions, but he should see to it that the inspectors of his department stop making trouble for businessmen. The minister should realize that after having added up all deductions, if an inspector feels that some industrialist, businessman or merchant has not paid the required tax, while the taxpayer is convinced he has submitted a proper return, then a wrong is being inflicted upon that taxpayer, because it is up to him to prove that his return is accurate and to initiate legal proceedings to do so, something which is often very costly.
(Text):


Gordon Campbell Chown: Order. I did not interrupt the hon. member because I thought somebody else might interrupt him on my behalf. What the hon. member has to say has more application, really, to the Department of National Revenue and could be discussed at another time. I do not know whether it could be done under any of the items that are ahead of us; I have not studied them that closely, but there will be the opportunity when the estimates of the Department of National Revenue are under consideration. At this time what the hon. member has been saying is out of order.
(Translation):


Gilles Grégoire: Very well, Mr. Chairman, in closing I shall say this. In short, as the discussion is on tax deductions in certain fields, we recommend that the Minister of National

Revenue, besides granting deductions, see to it that it does not cost too much to those who get these deductions.
I think the measures taken by the Minister of National Revenue regarding such deductions are very good and I do hope that he will take similar steps in the interests of all classes of society.
(Text):


Mr. Martineau:: Mr. Chairman, I wish to refer very briefly to the remarks made by the hon. member for Vancouver South a few minutes ago. While there is quite a lot in his remarks with which many of us in this committee would agree, it should nevertheless be pointed out that the research facilities of the government are far from being concentrated in just the national research council, as the hon. member seemed to indicate. I have been reading very recently some articles dealing with research, and I came across a series of articles written for industrial Canada which have been reprinted by the Canadian Manufacturers' Association. It is there set out that not less than 61 per cent of all research carried out in Canada is financed directly by the federal government, and that the role of government in research has been of immeasurable help in building and expanding Canada's wealth of raw material resources and thus providing a firm base for our manufacturing industry.
It mentions a few of the branches, and I think it is worth while stating those that are concerned with research. We have, for instance, the departments of Agriculture, Fisheries, Northern Affairs and National Resources, Forestry and Trade and Commerce, and more recent entrants have been national defence, national health and welfare, the national research council, of course, and Atomic Energy of Canada Ltd.
Another factor that must be remembered, as was stated by the Minister of Citizenship and Immigration, is that we are living under a federal system and the provincial governments also have extensive research facilities. I think my own Department of Mines and Technical Surveys is most closely associated with research. I might say that the principal role and purpose of the department is to promote research. I would like to point out that this research is associated very closely indeed with the mining industry, and many of the projects which are entered into by my department are carried out at the specific request of the industry. Moreover, in many cases mining companies may come and use the elaborate laboratory facilities existing in the mines branch on Booth street here in Ottawa, and may carry out experiments there.

All of this has helped to make our mining industry in particular one of the most competitive industries anywhere in the world.
While the government and hon. members here are indeed very much concerned with research, with the role of Canada in research, and the picture of the role of our country and its rank in the changing technological world in which we live, we must nevertheless not belittle the really substantial efforts that are being made by this government, which have been vastly enhanced and increased in the last few years.
Paragraphs 3 and 4 agreed to.
On paragraph 5-


Mr. Cameron (Nanaimo-Cowichan-The Islands):: Mr. Chairman, I am puzzled by paragraph 5. One thing I would like to know is just why the computations have to be complicated by speaking of two thirds of 10 per cent, instead of 7.5 per cent, which I would think is the logical way to express it. Another question that comes to my mind is raised by the final phrase in this paragraph, which proposes to repeal the right in computing income to deduct amounts paid to a province as tax on income from logging operations. Does that imply that the government has made some amendments to the federal-provincial agreements under which the provinces continue to levy a tax on logging operation? If so, what has been the nature of those amendments? That is one thing I would like to know.
It seems to me very strange that this government which, in spite of the optimism of the Minister of Finance, has been in grave financial difficulties-he admits that the government has been in very grave financial difficulties-would take steps that would appear to be reducing their income still further in favour of a section of our economy that has been doing very well lately, in fact extraordinarily well. One of the great advantages of the logging industry, at least on the Pacific coast, is that it is given to jurisdictions in revealing the amounts by which it is benefiting from its operations. Earlier this session I pointed out that at the end of the first six months of 1962 one large lumber corporation in British Columbia announced that its profits had increased by 43 per cent over the corresponding period in 1961, and another announced that its profits had increased by 50 per cent over the corresponding period in 1961.
It seems inappropriate to be choosing this section of the economy for generosity on the part of the government. I know, of course, the argument will be made that this is intended to encourage logging corporations to
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engage in modern silvicultural practices, conservation, reforestation and so on. It is the sort of argument I remember being produced at the time the first of the forest management licences were introduced by legislation in British Columbia. We were told then that we were going to place our forest industry on a rational basis, on a sustained yield basis, that the corporations would undertake to make sure that the forest wealth of British Columbia was maintained and that only the increment would be drawn from. Well, of course, there is no British Columbian who is not aware that the other side of the bargain was never kept.
I am always amused, when I drive through parts of my own constituency, to see large signs informing travellers that they are now entering such and such a tree farm, the implication being that this particular growth of young timber had been brought about by the activities of the lumber corporation concerned. This may fool some people, but it does not fool anyone like myself who has seen that particular piece of land in all its various stages, having passed through it 20 or 25 years before when it was a complete desert-and it was left as a desert until gradually, year by year, natural reforestation began to take effect, without any effort or expenditure being made by the corporation which benefited from the original cutting.
On Vancouver island particularly we also have a serious problem created by the fact that so large a part of our timber holdings is now owned by corporations whose head offices are in New York. It always exasperates me as a Canadian and as a British Columbian to read in the papers of the manner in which such organizations as rod and gun clubs have to go cap in hand, not to a local company but to New York, to find out whether the United States owners of our forests will permit members of their organization to enjoy the recreational possibilities of the Vancouver island forests. On the other hand these forests serve as a recreational centre for a great many of the officials and staffs of those companies who notoriously come up year after year from the United States to hunt and fish, not always within the limits imposed by our game laws, on these private reserves which have been established by the corporations.
I submit that the people of Canada should not be asked, at a time when they are being told by this government to tighten their belts, to further subsidize corporations whose activities are causing growing concern in the province of British Columbia, and whose financial position is revealed again and again

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in company reports and in statements by company executives. I see no reason whatever for considering that this is a justifiable alteration of our fiscal policy in this country, and I should like very much to know just what effect the Minister of Finance considers this particular paragraph of the income tax resolutions will have on the revenue of the national government, if it is enacted.


Mr. Nicholson:: I confess I was surprised and disappointed to hear one of my fellow members from British Columbia adopt an attitude of this kind, because I think if he understood the reason behind the introduction of this resolution he, as well as all hon. members of the committee, would support it. This is not an attempt, as I understand it, to give some special advantage to large corporations in the forest industry. Rather, and the minister can correct me if I am wrong, it is my understanding that the intention of this legislation is to correct an injustice, a discrimination, which has existed for a long time and which applies to all loggers not only in British Columbia but in the province of Ontario. Since 1949 in Ontario and since 1953 in British Columbia the forest industry in those two provinces has been burdened with income taxes which do not apply to the forest industries in any other part of Canada. Under the guise of resource taxes the two provinces in question have imposed what are in effect income taxes. If hon. members analyse the legislation in the two provinces they will see that the taxes are based on the profits which are made. The industry in both Ontario and British Columbia has been fighting these taxes on a united basis ever since they were imposed.
I would have thought that a member from a riding where the forest industry provides the principal means of livelihood would be fighting for the small man who is affected by these taxes-


Colin Cameron: On Vancouver island there are no small operators.


John Robert (Jack) Nicholson: Well, in other parts of British Columbia, and certainly in Ontario, there are a lot of small operators and they have to pay income taxes ranging from 2 to 5 per cent higher than industry in general in all parts of Canada.
As a member from British Columbia I was somewhat disappointed that the remedy which is attempted by this resolution has been to some extent nipped in the bud by the government of British Columbia, which earlier this year put through legislation which was supposed to complement the resolution we are

considering. In so doing they held back a little, and as a result of this action discrimination will still continue in the province of British Columbia. As far as this side of the house is concerned we approve of this resolution, which is supported by the forest industries and the service industries associated with them, certainly in both British Columbia and Ontario.


Mr. Herridge:: I have listened to the remarks by my hon. friend from Nanaimo-Cowichan-The Islands and by the hon. member for Vancouver Centre. I think the hon. member missed the point of the criticism which was made by my hon. friend. What he is seeking is equality of treatment as between the large operators and the small operators in British Columbia, a state of affairs which has not existed to date, whether we are considering provincial taxation or federal taxation. What he was complaining about is the fact that those who are reaping without having sown, as it were, will be able to take advantage of this legislation while those who throughout the years have provided for an increase in our natural resource wealth will not be able to do so.
This is a question which has been under serious consideration by those who are interested in conservation and the development and ownership of private tree farms in Canada. When I say private tree farms I mean ownership in part of a farm or on a small scale, where a man is interested in spending his lifetime developing this forest capital. In that connection I think there is no question but that the present Income Tax Act militates against sound tree farming on the part of the small operator, and the hon. member for Nanaimo-Cowichan-The Islands takes that stand with me.
I just want to quote, Mr. Chairman, a few paragraphs from "Forestry Tenures and Taxes in Canada", which is a report on a very extensive study made by the tax foundation of Canada. In this respect the report has this to say:
There are two income tax matters about which conservation groups, such as the conservation council of Ontario, are very concerned. One is that just discussed-the operation of the lure of making capital gain as an obstacle to the creation, preservation and good management of farm wood lots, plantations and tree farms. The other is the bar to deduction of losses incurred in the early years of a plantation from income from another source.
In brief, the interest of conservation groups and members of forestry societies is that land which is best employed as forest land should be kept continuously productive.
In this connection I might say that our income tax legislation and our property tax

legislation, as far as the provinces are concerned, make that almost impossible under certain circumstances.
There are social returns, in the form of protection of watersheds, wildlife and the recreational value of the woods above and beyond the monetary return to the owner.
That is a matter which is almost completely overlooked by specialists in taxation matters, who look purely at dollars and cents, papers and figures.
As well, farmers do not realize that a high rate of return can be secured from a properly managed wood lot, and the work of education is obstructed by tax considerations. Finally, since the social value of plantations and tree farms-
-and when we are talking of tree farms here we are talking of tree farms in the proper sense of the word, which have been planted by the owner, or cared for and brought into production by the owner over a long period of years.
-exceeds the private return to the owner, there is justification for tax provisions which make tree farming attractive, or at least do not act to thwart the intensive management of woodlands.
A specific complaint is that a farmer can charge off, as current costs of operating his farm, the expenses he incurs (other than his own labour) in starting a new wood lot or plantation.
Mr. Chairman, this is the complaint we are making, and we are making it because we want to contrast that with how the tree farmer is treated. We consider that the farmer should have this right. The report continues:
This is because it is not practicable to try to segregate the finances of the various parts of a farm's operations-all expenses and income are lumped together. On the other hand, if a hobby tree farmer buys a tract of timber land in poor condition and improves it greatly by afforestation of bare areas with a view to making it an intensively managed, continuously productive wood lot, his expenses in the early years when no income is produced may not be used to reduce his taxable income drawn from other sources.
That is the same as a farmer who would draw it from other sources in connection with agriculture.
The expenses of creating the plantation must be cumulated in a depletion account for claim when timber is cut decades later. Yet there is a net gain to the public above the return to the tree farmer himself.
Mr. Chairman, I do urge the minister to give consideration to this problem. I urge him, first of all, to consider treating all costs of establishing and maintaining a new plantation as current costs of operation. Second, I urge him to aggregate losses so calculated in the early years of establishing the plantation with income from other sources. And third, I urge him to include in the expenses so treated maintenance costs, annual property taxes, all planting costs, costs of protection from fire,
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disease and insects, and of installations for improvement of the limit such as tile drainage, roads, and so on.
The great complaint of the small operators in my own district is this, and, I am talking of tree farmers who own the land and have tree farmed it for many years. They are not able to charge provincial taxes as a cost of operation. They are not able to charge cost of road building. They are not even able to charge forest protection tax. The members of this group urge that the minister give consideration to this problem so that at least the small tree farmer will receive the same consideration that is presently enjoyed by the larger operators, and I think that is a very fair presentation. In the opinion of this group, up to this time they have not enjoyed the same treatment; as the larger the operation, the greater is the opportunity to take advantage of various sections of the Income Tax Act and provincial legislation to charge off a cost of operation when computing income tax or other taxation.


John Robert (Jack) Nicholson: Mr. Chairman, I have a question I should like to ask the hon. member for Kootenay West. I should like to ask him whether the lumber mill operators in his area have not communicated with him with regard to supporting this legislation, I mean two years ago.


Herbert Wilfred Herridge: I have not received any communications this year on this resolution. I have received communications throughout the years from the interior lumbermen's association with respect to this type of taxation, yes.


Gilles Grégoire: Mr. Chairman, I should like to ask a special favour of the members of the committee, owing to an opportunity of speaking which was unfortunately denied me. I went out of the committee for a few minutes just to inquire about certain points of procedure, and during the time I was out the committee agreed to paragraph 4. I should like to request hon. members of this committee, as a special favour, to give their unaminous consent so that we would be able to say a few words on paragraph 4 of this resolution.


Some hon. Members:: Agreed.


John Whitney Pickersgill: Mr. Chairman, I think everyone would feel that this is a very proper request, but I am sure the hon. member would equally feel that we ought to complete paragraph 5 first. Then if the minister agreed and the committee also agreed, I am sure everyone would feel that the hon. member should not be deprived of his opportunity on paragraph 4.

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George Clyde Nowlan: Mr. Chairman, I would be very happy to accede to the request of the hon. member. I suggest that we finish our discussion on paragraph 5 and then we can revert to paragraph 4 so that the hon. member, or anybody else who is associated with him, can make his comments thereon.


Gordon Campbell Chown: Shall paragraph 5 carry?
Paragraph 5 agreed to.


Gordon Campbell Chown: Does the committee give unaminous consent now to revert to paragraph 4?


Some hon. Members:: Agreed.
On paragraph 4-


Gilles Grégoire: I should like to thank hon. members who have unaminously consented to revert to paragraph 4.
(Translation):
Mr. Chairman, paragraph 4 of this resolution concerning the Income Tax Act is of particular interest to us in the province of Quebec. In my opinion, it concerns mainly the province of Quebec which has entered with the federal government into agreements enabling companies to benefit from a certain exemption from federal income tax. The province collects the tax, which is a substitute for direct government grants to the universities.
Mr. Chairman, everyone knows-and here I want to lay the foundation of an amendment I wish to propose to paragraph 4- that, at the present time, one of the main problems facing us in Canada is that of education at all levels. Whether at the primary, secondary or university level, in the province of Quebec as well as in the other provinces, very urgent problems, particularly financial ones, are facing us in the field of education.
Our universities are greatly in need of additional funds and the increase of those exemptions from 9 to 10 per cent will enable the provinces to give more to our universities.
But I believe that, in this day and age, that is not yet enough. I am of the opinion that our universities need even more than that.
That is why, without taking more time on that matter, I propose, seconded by the hon. member for Drummond-Arthabaska (Mr. Ouellet) that the resolution concerning the exemption on taxable income granted to corporations and which is automatically paid to the provinces be amended to read "from 9 to 25 per cent", instead of "from 9 to 10 per cent".

(Text):


George Clyde Nowlan: Mr. Chairman, without going into the merits of the question of aid to universities, on which I agree with the hon. member entirely, I suggest that the amendment involves a charge on the revenue and is out of order at this time.
(Translation):


The Deputy Chairman:: Order. I must advise the hon. member for Lapointe (Mr. Gregoire) that in my humble opinion his amendment is out of order, because its effect would be to change the basis of taxation, which, in turn, would involve a loss of revenue for the government. As found in Beauchesne, citation 246, paragraph (3), any measure involving an expenditure or reduction in revenue must necessarily be moved by a minister of the crown.
For those reasons and with all due respect for the opinion expressed by the hon. member for Lapointe, I must rule the proposed amendment out of order.
(Text):
Paragraph 4 agreed to.
On paragraph 6-


Mr. Benson:: Mr. Chairman, I should like to say a few words about resolutions 6 to 10 inclusive. I know we are all very anxious to get these resolutions through the ways and means committee and get on with some of the legislation we have been promised and have been looking forward to for so long, be it Social Credit legislation or otherwise.


George Clyde Nowlan: If the hon. member will permit me to intervene for one moment, we are now dealing with paragraph 6 but he has said he is going to deal with paragraphs 6 to 10. I want to tell him that I propose to move an amendment to paragraph 9 when we come to it, so he might bear that in mind.


Edgar John Benson: That is fine. Resolutions 6 to 10 primarily affect the oil and gas industry in Canada. It was estimated by the previous minister when they were introduced that they will cost the treasury some $15 million in a full year. The oil and gas industry as such will contribute very little to the income tax revenue of the federal government even though its gross revenue exceeds $500 million. I can think of no other industry in Canada in this favourable position.
It has been claimed that this industry needs further encouragement to find reserves. According to figures produced by the Canadian petroleum association, at the end of 1961 reserves on hand in Canada amounted to 18.9 years supply. If we compare our situation with the United States we will find that the United States had on hand at the same date

some 12 years supply, and over the past 100 years the United States working inventory has ranged between 10 and 15 years. By this standard, Mr. Chairman, we have too much oil on hand. Similarly, in Venezuela we find that at the end of 1961 they had about 18 years proven supply on hand and like Canada they are producing at only about 50 per cent of their maximum capacity.
What we need is more and faster growing markets for petroleum products. If we had these we would not need tax concessions to stimulate the search for oil. It is noteworthy in this regard that we import far more oil than we export, in spite of our unused capacity, and this is a factor contributing to our exchange problems. Incidentally, although we have had a national oil program, according to bureau of statistics figures capital investment in oil producing was $561 million in 1961 compared with $697 million in 1957.
I would think the next thing to consider is, who is going to benefit from these tax concessions contained in resolutions 6 to 10? Foreign control and ownership of this industry has been increasing and this legislation, I submit, will do nothing to discourage foreign ownership and encourage Canadian ownership. In this particular type of industry you have to go into the business wholeheartedly and operate in a big way to make a success of oil and gas exploration and development. Permitting other Canadian interests and industries to dabble in this type of activity is no way to ensure the expansion of Canadian investment in this field.
Under the present government, foreign ownership of our oil and gas industry has continued to grow. To give some examples, Superior of California has taken over Calgary and Edmonton, Phillips has taken over Pacific Petroleum and very recently the Shell Oil Company has taken over Canadian Oil. Close to 90 per cent of the acreage and 85 per cent of the proven oil and gas reserves in western Canada are now in foreign hands. Thus, Mr. Chairman, the benefits from this legislation will go largely to foreign investors in this field rather than to Canadian citizens.
These measures were drafted about a year ago, Mr. Chairman. Since the time they were drafted, and perhaps this has something to do with the minister's proposed amendment, this industry has received a windfall as a result of devaluation. Its export earnings, together with some increases in domestic prices, have added between $10 and $15 million to its gross revenues at the wellhead. Why, Mr. Chairman, if this is the case does the industry need a further shot in the arm amounting to some $15 million?
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Mr. Smith (Calgary South):: I am absolutely amazed, Mr. Chairman, at the statements I have just heard coming from the Liberal benches. We must assume this is an official spokesman for the Liberal party because the statements are, of course, completely contradictory to the views of the Liberal party as expressed by the leader of that party, to which I shall refer. He has on many occasions spoken on this subject, and I am going to refer-


Edgar John Benson: As a matter of personal privilege, Mr. Chairman, I should like to state that I am not the official spokesman of the Liberal party in this regard. Any statements which I made were my own.


John Whitney Pickersgill: Any more than the hon. member is the official spokesman for his party.


Arthur Smith: If they are not official statements of the Liberal party, I would expect one of the senior Liberal frontbenchers to get up and deny them.


John Whitney Pickersgill: May I ask the hon. gentleman a question?


Arthur Smith: The hon. mem-mer for Bonavista-Twillingate takes up altogether too much time in this committee, and he will have an opportunity to ask his question when I have concluded my remarks.


John Whitney Pickersgill: That suits me fine.


Arthur Smith: I am delighted that, for a change, he is happy. What interested me in the remarks of the hon. gentleman was his reference-I wrote it down as quickly as I could-to this measure providing a further windfall to the petroleum industry. Anyone with any knowledge of the industry would know that for the first time in its 20 year history, roughly, are any of these companies able to use black figures at all. They have been in the red for a considerable time for the very simple reason of the high cost of exploration and exploitation. This fact should be known to every Canadian. I attempted to show these figures when this subject was debated by the house earlier. Only now are certain companies, and I regret to say not all Canadian companies-


Edgar John Benson: May I ask the hon. gentleman a question?


Arthur Smith: Yes, on the conclusion of my remarks you can ask any question you like.


Mr. Gray:: Look after your temper.

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Arthur Smith: I can assure my hon. friend from the Toronto Star that my temper is under perfect control, and I suggest he should keep his the same way.
I want to make it clear this resolution is designed to help exactly the people over whom my hon. friend was expressing some concern. It is designed basically, first of all, to encourage participation in the industry by more Canadians by giving them certain tax concessions. This is very clear in the resolution. Second, this measure offers Canadians an opportunity to compete on a favourable basis with their United States counterparts in the development of our own resources.
As I have said before, it is significant that this is exactly the resolution which was introduced in the previous budget and which met with unanimous support from the independent companies who will be the chief beneficiaries. The hon. gentleman asks who is going to benefit from this? First of all, it is going to provide a considerable benefit to Canadian companies by reason of the fact that it will encourage Canadians to participate more broadly in the industry. It is going to permit write-offs against the high expenditures of a high risk industry. These are factors which apparently are not generally understood when the hon. member says these are privileges that are offered to no other industry. No other industry, Mr. Chairman, has to encounter the risks that are involved in exploring for oil.
It is hoped this measure will encourage more development, Mr. Chairman, at a time when it is so necessary. Another point, of which the hon. gentleman seems to lose track when he makes certain comparisons on the basis of oil reserves in the ground and the rate of discovery, is that there is a great deal of concern throughout the free world over these same figures, that is the relationship of the known reserves to the rate of use. The rate of consumption is reaching desperate proportions. There is great concern in the petroleum industry over the lack of discovery of new oil fields. I can understand that the hon. member would not perhaps appreciate that one of the desires of all people associated with the industry in any way, shape or form-I am including those people directly concerned with it-is to find new oil fields. If this is not done then Canada, and in fact the whole free world, could in a few years find itself in the position of having a shortage of oil which would, indeed, be a very dangerous situation.
When we reach paragraph 9 I am going to ask the minister certain questions relating to interpretation, and perhaps his amendment will cover them. However, may I assure him that at least the majority of those people

who are concerned with the development of this industry, and in particular the Canadians who are involved in this industry, feel this resolution goes a long way toward removing some of the handicaps they have been faced with in competing with the United States companies. It is designed basically to assist the Canadian independent producer, and I suggest that this it does.


John Whitney Pickersgill: I should like to ask the hon. member for Calgary South, who put a similar question to the hon. member for Kingston, to tell us whether he was speaking for the government or for himself.


Arthur Smith: Mr. Chairman, I think the hon. member fully appreciates that any time anyone on this side of the house speaks he speaks as an individual. He is encouraged to speak as an individual in this house, and that is not the case on the Liberal side.


John Whitney Pickersgill: Mr. Chairman, I should like to make a comment on that-


Rémi Paul: If the hon. member is going to comment or make a statement on the remarks of the hon. member for Calgary South, then I am obliged to say that I have already recognized the hon. member for Kootenay West.


John Whitney Pickersgill: I am rising on a question of privilege, Mr. Chairman, and my question of privilege is that the hon. member for Calgary South in reply to my question gratuitously insulted members on this side of the house-


Some hon. Members:: Oh, oh.


John Whitney Pickersgill: -by suggesting that they did not speak for themselves, in contradistinction to members on the other side of the house. Of course we do recall that during the election the Minister of Agriculture spoke for himself about the dollar and depreciated it further.


Herbert Wilfred Herridge: We were very interested in the remarks of the hon. member for Kingston with respect to this legislation. Throughout the years we have been told that the reason for this legislation is basically to increase production. We have been told that repeatedly on the estimates of the Minister of Finance or the Minister of National Revenue. I submit, Mr. Chairman, that this is not always the result. Companies take advantage of this legislation to drill oil or gas wells and then sometimes cap them. I know of companies taking advantage of similar legislation to develop mines and then close them up.

These developments, as a matter of fact, are public investments. These wells and these mines have been developed with public funds as a result of the deduction from income tax permitted. We in this group suggest that if you are going to permit this type of legislation, then there is a place where we can give some direction.
If you permit corporations to develop properties at public expense, then the government should have some say as to the order of development and some say in the direction of development, and make those corporations accept some responsibility for their policies being in the public interest in general. Numerous corporations are taking advantage of this legislation to develop properties that in some cases they will not utilize for generations to come, and they are doing this at public expense without accepting any responsibility as a result of that public investment.
As against that, Mr. Chairman, members of this group have repeatedly urged that the same consideration be given to farmers if the desire is to increase production. Any farmer who clears, irrigates or drains an acre of land, and thus increases agricultural production, is entitled to the same consideration that these corporations get. Moreover, in the case of the farmer, because of the nature of his operations and the nature of the farming industry in general, the country is assured to a much greater extent that this type of legislation will not be abused if the farmer wishes to take advantage of it to increase his capital investment in productive land and thereby increase his income.
I urge the minister to give consideration to enunciating a policy that will permit the government to give some direction and make these companies accept some responsibility after receiving these favours with respect to income tax, and I also urge him to give the farmers the same consideration.


Donald Stovel Macdonald: I should like to address two questions to the Minister of Finance. I understand the minister is prepared to accept comments in respect to two of the resolutions dealing with the oil industry.


George Clyde Nowlan: That is perfectly all right. Strictly speaking we are confined to one, but go ahead.


Donald Stovel Macdonald: With respect to resolution No. 6 I understand its purpose is to extend to corporations whose business is not principally that of oil or mining, a provision similar to section 83(A) of the Income Tax Act. I should like to ask the minister
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why there is no reference in the final line of the resolution to income from mines. As it now reads, expenses connected with mining may not be applied against income from mining as opposed to income from oil wells and gas wells, and I suggest that the minister adopt an amendment which would add the words "or mines" after the words "from oil or gas wells" in the last line.
In the same way with respect to resolution No. 7, I ask the minister why it is confined to expenses for oil and gas purposes and is not extended to cover expenses foi mining exploration and general mining purposes.


Colin Cameron: Mr. Chairman, I noted when the hon. member for Calgary South was speaking on this resolution and defending the policy suggested as being greatly in the public interest for the purpose of promoting oil exploration and discovery, he made no mention of a related fact which I believe should be taken into account when we are considering both mining companies and oil producing companies, namely the already extremely generous provisions which if I recall it correctly, were increased by the parliament of which I was a member some four or five years ago, respecting allowances for depreciation for oil wells and mining properties. At that time we pointed out that these allowances were so generous that in many instances they actually created a situation similar to the one my colleague from Kootenay West suggested, namely public financing of a private enterprise.
With regard to the resolution concerning the oil industry, it has always seemed to me that the oil companies are insured against a large part of possible loss in their gamble to find oil, but if they win that gamble then so restricted is the claim that the treasury makes on their profits that they virtually take all the gains. As the hon. member for Kingston pointed out, there is something completely fantastic when a major industry, producing one of our major resources, contributes so little to the public treasury of Canada for the promotion of the welfare of the community; and one does not have to look into balance sheets, one has only to read the newspapers to see how enormously wealthy and profitable is that industry.
Before the Minister of Finance asks the committee to accept this resolution he should present us with some figures regarding present income to the treasury from the oil and petroleum industry, figures which will tell us just how much is already granted to that industry in depreciation allowances, and

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show what proportion of national revenue is contributed by that extremely important and profitable sector of the economy.
I recall, and I am quite sure the minister recalls with equal clarity, the famous, very heated debates we had over one section of the oil and petroleum industry. I refer to the pipe line debate, and I can remember the Minister of Finance standing shoulder to shoulder with us in repelling attacks on the public treasury by the oil and gas tycoons of the United States.


Rémi Paul: Order. It being one o'clock I do now leave the chair.
At one o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 2.30 p.m.
Colin Cameron: Mr. Chairman, when we adjourned for lunch I was speaking of the position of the oil industry in Canada and suggesting that it was in a sufficiently healthy condition and was already in receipt of generous allowances by the government so as not to warrant this rather sweeping amendment to the Income Tax Act which is before us, which would provide still further increments for that industry. I have some figures in this regard which I think might well be put upon the record, sir.
We could, for instance, put on the record the depletion allowances that are now paid both to corporations engaged in the oil industry and to individuals who hold shares in oil companies. The corporation itself is permitted to deduct 33J per cent of its total income from its capital income. The shareholder is permitted a 25 per cent dividend deduction from his taxes. With regard to the contribution to the treasury, I think it is as well that we should have some idea of the magnitude of this particular operation and see what the figures are even in the distressed circumstances, shall I say, of the last three years.
The net value of the production in this industry-that is, less the cost of fuel, electricity and process supplies-will be of interest to the committee. The latest figures I can get are for 1960, but I have them also for 1959 and 1958. In 1958 they amounted to $407.1 million; in 1959 to $438.4 million; in 1960 to $453.4 million. From that enormous productive value they contribute a very meagre amount to the over-all operations of our country, in spite of the fact that they have been receiving very handsome profits during

those years, which have been going up steadily since 1958. The figures are $101 million in 1959, $104 million in 1960, and $109 million in 1961. This suggests to me, as I think it should suggest to most hon. members of the committee, that this is an industry which does not need any particular help. We are told, of course, that they must be given some allowance for the possibility of dry holes. I suppose that is so, if one does not think about it too clearly; but we must realize that if they hit a dry hole, if they make nothing, they pay no income tax anyway. What is proposed by that argument is that the taxpayers of Canada should recompense them for their bad luck in not having found a producing well. I suppose that is a principle that could be carried all through industry, but it would have rather a disastrous effect on our economy if the taxpayers were asked to subsidize every bad guess of private enterprise.
What it really amounts to is that we are being asked to help subsidize an industry that is well able to carry on its own functions without subsidies from the public purse. I would hope this committee would reject this proposal to further increase the emoluments of this part of our economy and have, rather, some consideration for the rest of the population who are not fortunate enough to be shareholders or directors of oil companies.


Mr. Southam:: Mr. Chairman, I would like to take two or three minutes to discuss paragraph No. 6 of the ways and means resolutions which are before us at the present time, and to mention specifically the oil industry. I was indeed rather surprised before the luncheon adjournment to hear the comments of the hon. member for Kingston with respect to this resolution. I know, coming from the area that I do in Saskatchewan, that he would not endear himself to the hearts of those in the oil industry in that particular part of Canada, because a great number of them, as has been pointed out by the hon. member for Calgary South, are private enterprisers, small companies establishing themselves in Canada in this great industry.
To give the committee some information on the extent of the oil industry in our particular area, the last figures I had early this spring show that in Saskatchewan we had, I believe, 4,865 producing wells. I am very happy to say that over 3,000 of those are in the great riding of Moose Mountain. I know that the people in my area interested in this industry would want me to support the resolutions that have been introduced by the Minister of Finance. Therefore, Mr. Chairman, I should like to support this resolution and I would

also reiterate the words of the hon. member for Calgary South, who has put this matter into proper perspective.
With reference to some of the suggestions made by the hon. member for Kootenay West, who was comparing the oil industry with the farming industry, I am sure afl hon. members of this committee are interested in the welfare of the farmer, and so am I, because that is also a great industry in our riding. But I do not think the comparison is as valid as was suggested, because the oil industry, as we know, is a great risk enterprise, whereas a man who is versed in the ways of farming can look at the topographical nature of the area in which he is going to set up business and see whether or not there is a risk involved. Due to the topographical nature of the area involved and through soil survey he is able to find out, through a soil survey, whether the land is suitable for profitable farming or not. However, this does not apply to the oil industry, as the hon. member knows and I do not think, therefore, that the illustration he gave was realistic. Speaking on behalf of my constituents, I wholly support the resolution being introduced by the Minister of Finance.


Gilles Grégoire: Mr. Chairman, maybe my name will become famous enough one day to have a constituency called after it, but not yet.
I would just like to address a couple of questions to the Minister of Finance. We are studying some changes in the law intended to help the gas companies in Canada, and I should like to know from the minister the amount of oil or gas we are importing into Canada. I should like also to know if the Canadian gas companies could obtain in Canada, particularly western Canada, the gas or oil which we are now importing from outside Canada. As my third and last question, I should like to ask the minister if he does not believe that by helping gas and oil companies to consume the raw materials which we can produce in this country, instead of importing them, it would assist them as much as the amendment we are studying today.


Arthur Smith: I wish to make a few brief observations because it has been suggested from two sides of this committee that the resolution provides more generous terms to the petroleum industry than to other segments within our economy. Earlier, I endeavoured to explain that what have been described as generous terms should be related to two factors-first, the risk of the operations involved and, second, the desirability of finding new reserves in Canada.
I have already indicated in this house that the search for oil is a highly speculative
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business. Here are the most recent figures I have, drawn from a reputable publication called "Oil and Canada" for the period ending October 26th. Of a total of 57 wells drilled, 24 found oil, nine found gas and 24 were dry. So the people who drilled those wells had very little to show for a great deal of capital expended. In some instances, as I have already indicated, deep drilling costs more than $1 million a well.
The second point I wish to make is that for the first time in western Canada's oil history gross production income is forecast at about $710 million as against a net cash expenditure of approximately $600 million. This surplus, or expected surplus, of about $100 million should be measured against a deficit last year of about $74 million or, against a deficit of $2 billion in the last 15 years. So we can see that these explorations cost a great deal of money and a great loss to the industry itself. The improvement in the position this year can be attributed directly, I believe, to the policy of this government in, first of all, processing a number of gas applications-I have already put on record the result of this-and, second, by the development of a national oil policy. Oil production in 1958 amounted to 465,000 barrels. By the end of this year it will be well over 700,000 barrels. Thus the improvement in industry revenue.
One hon. member from the New Democratic party suggested that the depletion allowance which is granted the industry is in itself a generous provision. Unfortunately, the conditions under which this allowance was made available were such as to prohibit any company other than a fully integrated company from taking any advantage of it. It is for this reason that the Canadian independents- I emphasize the word "independents"-came to the government and asked for the introduction of legislation based on these regulations which would permit them to enjoy benefits already enjoyed by their United States counterparts.
Every known authority has expressed concern over the lack of oil discoveries in western Canada. I have many references to which I could draw the committee's attention, including statements by the staff engineers of the Alberta oil and gas conservation board whose duty it is to examine these matters. Estimates of the remaining recoverable reserves of oil are likely, they say, to amount to 6.2 million barrels at the end of 1970 and they see little likelihood of an increase after that period at the present rate. The board itself foresees a sharp decline in the Alberta reserves from a 22-year supply to a 12-year supply by 1975. It further said in its most recent report that it was not in the public

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interest to have this index of probable future reserves fall below a 12-year period of supply. It was partly on this account that a permit was granted for the exploration of the Athabasca tar sands to supplement conventional production. Though this area has a fantastic estimated reserve of oil, no one knows how much is recoverable. An initial permit of 37,000 barrels has been authorized over a four-year period. It remains to be seen if it can be achieved.
My second authority for this revised view of Canadian reserves is an engineer well known throughout Canada, Mr. J. P. Lons-bury of the department of economic research of the Toronto-Dominion Bank. He said that Canadian reserves are at their lowest ratio since 1957 and though substantial additions were made last year they were all from fields presently known.
Next to reserves, capital is the commodity most urgently required in order to stimulate oil exploration. It is important that this capital should be developed in Canada and these regulations are designed basically to assist Canadians. Finally, the hon. member for Kootenay West expressed some concern that the petroleum industry in western Canada might be able to take advantage of these incentives and then cap their completed wells. This hardly seems logical. Such an action would not be within the control of a company. You only cap a well when it is an inefficient producer. This comes within the authority of the provincial regulatory bodies, not of the federal government or of individual companies.
Reference was also made to markets. One hon. member suggested that the proper solution is to foster additional markets and not to provide more incentives. Surely, that is in line with the development we have seen since the introduction of the national oil policy. It is true that at first the oil policy was largely dependant on exports to the United States, but we hope that with the development of new refinery capacity the time will come when these exports to the United States will decrease.
I suggest that these regulations are designed to achieve the ends the hon. member wants to see-new markets, and new opportunities for Canadian participation.


Ralph Bronson Cowan: Mr. Chairman, the last speaker was kind enough some time ago to refer to me as a member of the Toronto Star an organization with which I have no connection whatsoever. I should like to ask him through you, Mr. Chairman, whether he does not feel that under the Senate and House of

Commons Act he is disqualified from speaking and voting on the resolution on the oil and gas industry?


Arthur Smith: Perhaps the hon. gentleman would give me some indication why I should not be permitted to talk on these resolutions. On a point of privilege, I think the gentleman is under a misapprehension, and I think he should state wh; he has made such a remark.


John Whitney Pickersgill: He asked a question.


Arthur Smith: Put up or
shut up.


Some hon. Members:: Oh, oh.


Gordon Campbell Chown: The question of the hon. member for York-Humber was completely out of order. I should say at the outset that if such a question arises in the mind of any hon. member, it has to be brought to the floor by way of a substantive motion. That is the basis for my ruling the question out oi order. Shall paragraph 6 carry?


Arthur Smith: May I just say that if the hon. member considers that 1 should not have the right to speak because this question is so vital to the particular area of Canada which I represent, then I think he had better have another look at the importance of this industry to the whole of Canada as well.


Gordon Campbell Chown: Shall paragraph 6 carry?


Some hon. Members:: Carried.


John Whitney Pickersgill: Mr. Chairman, before paragraph 6 carries, I think there were one or two questions put to the minister by my hon. friend from Rosedale to which we should like to have a reply.


George Clyde Nowlan: Mr. Chairman, the questions were of a technical nature and I intended to reply to them at the end; they can be better dealt with when we have the bill in front of us. Actually, what we are doing here, as I understand it-I am not an authority on the oil industry in any shape or form-is that we are simply repeating the same words. Questions were asked as to why mines and minerals were or were not included, we are simply extending to individuals, the arrangement which heretofore applied to corporations. In reply to the hon. member for Lapointe, who asked about the value of the petroleum refinery and petroleum products industry, I am sure he has the tax returns at his desk, and he will know that in 1959 the petroleum refinery and products industry returned $35 million to the treasury so far as income tax revenue was concerned, and mining, quarrying and oil returned $62.4 million.

In other words, the petroleum industry returned a little more than half that of the mining, quarrying and oil industry.


Donald Stovel Macdonald: Mr. Chairman, my question to the minister in respect of the resolution was this. He is permitting the taxing authority to take into consideration expenses incurred in searching for oil, gas and minerals, but only permitting them to apply them against oil and gas revenue. Why not let them apply them to mineral revenue as well? I do appreciate the minister's answer to my question.


Gordon Campbell Chown: Shall paragraph 6 carry?


Some hon. Members:: Carried.


George Clyde Nowlan: The only answer I can give is that this is definitely a concession to the oil industry. That is what it is designed for, to help the industry. There may be some difference of opinion here as to whether that industry needs help, but this is a concession or assistance given to the development of the oil industry, and that is why the resolution is framed in the wording which is before us this afternoon.


Thomas Clement (Tommy) Douglas: Mr. Chairman, I should like to say-


Mr. McCleave:: Mr. Chairman, on a question of privilege-


Gordon Campbell Chown: Order. The hon. member for Halifax on a question of privilege.


Robert Jardine McCleave: Mr. Chairman, this is with reference to the remarks of the hon. member for York-Humber. While I was busy seeking citations to support-


John Whitney Pickersgill: Mr. Chairman, on a point of order-


Gordon Campbell Chown: Order. This matter has been already disposed of. There is no need to bring the point up again; I thought I had dealt with it adequately.


Thomas Clement (Tommy) Douglas: Mr. Chairman, I do not want to prolong discussion on paragraph 6, but I do want to say that in the opinion of our group this sets forth a very unsound basis for establishing taxation in this country. The two main arguments which have been advanced, particularly by the hon. member for Calgary South, are, first, that this is an industry which has a very high ratio of risk capital-


George Clyde Nowlan: Mr. Chairman, I thought paragraph 6 was already carried.


Gordon Campbell Chown: I will accept a certain amount of responsibility in that event. Perhaps I moved rather quickly after the point of privilege had been raised by the hon.
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member for Calgary South and called "carried", but I do not want to hurry the committee unnecessarily, and we can revert to paragraph 6 if that is the wish of the committee. Is that agreed?


Some hon. Members:: Agreed.


Thomas Clement (Tommy) Douglas: Mr. Chairman, I did want to speak to paragraph 6 at the time you called it, but I cannot blame you if you could not see me. I did want to say that the hon. member for Calgary South based his argument on two points. First of all, that this is an industry with a high ratio of risk capital, and some compensation should therefore be made in the form of writing off some of the losses in exploration and drilling against income tax. Second, he said that there is a great need in Canada for further exploration if we are going to meet the anticipated needs of the future.
With reference to the first point, I should like to say that it is undoubtedly true that this industry involves a high ratio of risk capital. I think it should also be recognized, however, that while the risk is great the returns are also very great, and that those who spend money looking for oil and gas, as for other minerals, receive a very generous return when they find them. They are allowed to develop and to use the resources which belong to all the people, and they are then going to dispose of the public domain for a royalty which is usually relatively small. The returns which have been made by the oil and gas industry over the years have been very substantial. It seems to me that to allow them to take what are legitimate expenses and legitimate risks, such as geological exploration and drilling, and to write them off against their taxes, is really to have the public treasury pay part of the cost of exploration and drilling.
Now, what will be the result of this? The hon. member for Calgary South and the hon. member for Moose Mountain say that this measure is to help the small companies. But if the small companies do not make a profit- and many of them do not-then, of course, this is of no benefit to them. This legislation will be of advantage only to those who have sufficient profits and are paying fairly high taxes; it will not help the small companies who are in the red. This legislation will help the large companies who have very considerable profits and who are able to charge part of their expenses off against the taxes which they would otherwise pay. As a matter of fact, the practice has grown up, particularly in the United States, that many of the large companies deliberately take part of their profits along with the write-offs which

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they are allowed in order to do exploration work on projects which they had no intention of developing for many years, so that they have actually done exploration and preliminary work on projects far in advance and have done so largely at the expense of the public treasury. I submit that this is an advantage which is given to scarcely any other group in the community. In essence the public are paying for any unprofitable venture while the industry in question receives a very high return on those ventures which turn out to be successful.
The second argument is that we face the possibility of an oil shortage over a long period of years and therefore there is a great need for exploration and development. I agree that there is a very genuine concern about this matter and that there is need for exploration and development and for geological surveys. But it seems to me that if these companies want to get the long term benefit from the development of our natural resources they should be prepared to make that kind of investment. If the public treasury is going to be asked to make this kind of investment, then surely it should be done directly by the public treasury and, as we do now in some parts of the mining industry, let the federal government with the provincial governments do the kind of exploration work and the kind of geological surveys which we are now leaving to private companies. Then let those companies pay for the work that has been done when they come to carry out the actual development or exploitation of the resources in question. If the public treasury is going to pay the shot then the public treasury ought to get the benefit; but if industry wants to get the benefit, as it is getting now, then certainly it ought to pay the shot.
In my opinion paragraph 6 is simply the continuation of a handout from the public treasury to an industry which at the present time is doing quite well. I want to emphasize the point made by the hon. member for Kingston, that in the main the benefits of this provision will not go, as has been said, to Canadian companies. Ninety per cent of the petroleum industry today is in the hands of large American concerns and the benefit will go primarily to them and not to Canadian taxpayers or Canadian producers. I certainly hoped that some of the members of the official opposition, who have been so vociferous in so many other debates, would have given some support to the member for Kingston in opposing what I think is a very unsound principle of taxation.


Gordon Campbell Chown: Shall paragraph 6 carry?


Mr. Lewis:: No, a standing vote, Mr. Chairman.


Gordon Campbell Chown: All those in favour of paragraph 6 please stand.


George Clyde Nowlan: Who is calling a standing vote? If there is going to be a vote I should like to say a word or two before the debate is finished. The question of whether or not the federal government is subsidizing the industry is a matter for the hon. member for Bumaby-Coquitlam and everyone else to decide for themselves, but the argument which has been advanced here is that this benefit is of no use to the small corporations because they cannot take advantage of it and is of advantage only to the large corporations. Having regard to the argument that has been raised, I would suggest that the large corporation is the one that is making a profit and the one which is paying income tax and so the large corporation is really in partnership with the Minister of National Revenue to the extent of 50 per cent or more of its earnings.
I am not trying to give a precis here or present a brief on behalf of the oil industry. Frankly I know very little about the oil industry except that I use gas in my car and oil in my furnace and I see pictures of oil wells all over western Canada. However, the argument that has been advanced that this provision is not going to help the little fellow who does not make any money but is going to help the big fellow who is paying a substantial amount of income tax is completely fallacious. I should point out that my predecessor and the government did not bring this legislation before the house last April at the request of any American corporation or at the request of any big corporation whatsoever. We brought it before the house and the committee, and I impress this on my friends who want a vote, at the request of the small independent oil operators. If my friends to my right, who are the friends of all the people, particularly the common people and the little people, want to vote against that, let them do so, but this legislation is for the benefit of the small operators and at their request. Otherwise it would not have been introduced.
It may be that there are areas in connection with its administration where there can be difficulties. I am not questioning the fact that some of the arguments raised may have a lot of merit, but I have given the background of this legislation and that is why we have this resolution before the committee at this time. I want members of the committee to understand that before they vote.


Edgar John Benson: Mr. Chairman, this morning I spoke against the general principle of giving specific advantages in taxation to specific

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industries, and I think there is much to be said for this as a principle of taxation. However, I do not think we can accomplish this by voting against a few resolutions which are only a part of sections 83 and 83A of the Income Tax Act. If we wipe out these resolutions we do not get away from the principle involved in those two broader sections of the Income Tax Act.


John Whitney Pickersgill: Mr. Chairman, before the vote is called I have a couple of questions I should like to pose to the minister.


Gordon Campbell Chown: Order. I am afraid I misled the committee to some extent in calling for a vote and in order to clear up that point right away I should like to give my authority. Normally resolutions on taxation are considered as a whole and not voted upon one way or another paragraph by paragraph. I apologize to the committee for rising so quickly in response to the request for a vote from the members of the New Democratic party. My authority for not so doing is set out at pages 275 and 276 of the Journals of 1948 when the house decided that a vote on a paragraph of a budget resolution was not in order and this was subsequently confirmed. I would refer hon. members to Hansard for May 2, 1951, page 2627. I will throw the paragraph open for continuing discussion.


John Whitney Pickersgill: I should like to put a question to the minister that might clarify this whole picture a good deal. The minister has said that this provision was incorporated in the budget resolutions by his predecessor largely at the request of certain small oil companies. I know the minister would not say that that would be a compelling reason for putting it in because any group of taxpayers is very apt to ask for relief from taxation for that particular group. I assume that the minister's predecessor would have made some pretence of establishing that there was some national interest in doing so. That is what we should be concerned about in the committee. It is not whether a group of oil companies or even the hon. and passionate member for Calgary South think this is a good thing-


Arthur Smith: Thank you very much.


John Whitney Pickersgill: -but whether or not it is in the interests of Canada to have a special tax concession for this particular industry is a different matter. I think that if the minister or the Minister of Citizenship and Immigration who was the parliamentary secretary to the minister of finance at the time the budget was introduced, could explain to us in very simple language just what national interest is
served in making this special tax concession, which is the only reason why we should support it, I am sure that might help a great deal to get a more harmonious feeling in the committee.


George Clyde Nowlan: Mr. Chairman, I certainly do not have to tell the hon. gentleman, who once sat on the treasury benches, that any minister of finance is under pressure to relax taxation and to give some concession to this group or that. I am sure this is something that my predecessors have gone through ever since confederation. I would not be betraying any secrets at the moment, Mr. Chairman, if I were to admit that the present minister may be going through somewhat the same pressures. The fact that one grants a concession, if it is a concession, must indicate something unusual, some argument, some motivation, rightly or wrongly, upon which the minister acted. The minister can make mistakes and governments can make mistakes. We all know that. However, no minister is going to succumb to pressure to relax taxation measures, because once he starts doing that he is in a hopeless situation and can no longer carry out his responsibilities as minister of finance.
Now, in the judgment of my predecessor in office and of the government of which I was a member and for which I take full responsibility, this measure was in the interests of Canada because it was necessary to assist the independents, it was necessary to encourage expansion and to develop greater reserves of oil over a period of years. As the hon. member for Calgary South said earlier today there is a time coming, fairly rapidly, when the world which moves on wheels will be short of oil. What was considered a surplus supply three or four years ago is now at a level where you can almost compute the end of it mathematically. You have to get cooperation to get more reserves than we have today.
I cannot document this, Mr. Chairman. I cannot give a mathematical calculation or anything of the kind, but I say to the hon. member for Bonavista-Twillingate that in the opinion of the government, of my predecessor and of the present Minister of Finance, this measure is desirable to further the development of the oil industry in Canada.


John Whitney Pickersgill: I think perhaps I might ask the minister one more question. It was suggested by several hon. members who spoke on this matter that this was really a tax concession almost exclusively to United States interests and not to Canadians. I think if the minister could give us a satisfactory and rather more concrete reply to that than his previous reply, it would help the committee a great deal.

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George Clyde Nowlan: I am sorry, Mr. Chairman, but I cannot give the hon. member for Bona-vista-Twillingate statistics as to the proportion of Canadians vis-a-vis people of the United States who would benefit from this concession. All I can say to the hon. member, and to the committee, is that this concession was requested by Canadians, Canadian producers and by Canadian association representations that were made to the government, to me as minister of national revenue at that time and to my predecessor, the then minister of finance. This concession was given, therefore, in the interests of the Canadian industry. Although I cannot give the figures to the hon. member this afternoon, I presume that they would be available to some extent, Mr. Chairman, at the dominion bureau of statistics. When we get to the bill and we are considering it in committee, I will try to give to the hon. member the detailed information he has requested.


John Whitney Pickersgill: I thank the minister very much for that undertaking. I understand the minister will, in the committee stage on the bill, so far as possible show what the real extent of this may be and show, so far as he can, the benefit to both small and independent operators and above all to Canadians, whether small or large. This would be of great assistance to us in trying to frame tax legislation. What he is saying seems to be a sound, conservative conception at any rate, in that the minister does seem to be trying to conserve an industry, but we would like him to give a conservative base to his argument by giving some concrete evidence in this committee. I do think if that could be done a lot of us would feel a great deal easier about this whole matter.


George Clyde Nowlan: I will give whatever evidence is available and I will produce it when we are in the committee stage on the bill.


Arthur Smith: I should like to make a comment, partially in reply to the excitable hon. member for Bonavista-Twillingate. First of all, for his satisfaction, I should like to point out that these representations were not made by a group of small oil companies. They were made by industry associations in general. It is perhaps interesting to note, Mr. Chairman, that the industry asked for considerably more than they received. I agree with the government that the requests of the industry, had they been granted, would not have been to the benefit of the Canadian industry primarily. The industry request was related to gross depletion on production revenue which would have benefited the United States companies to a greater extent than the Canadian companies.

The former minister of finance has included three basic principles in this resolution which the minister has undertaken to explain in detail, so that even the hon. member for Bonavista-Twillingate will see that they are going to benefit Canadians. This has been clearly established-


David Lewis: We are not at all satisfied with the sound conservative basis of the minister's explanation, even although the hon. member for Bonavista-Twillingate was satisfied.


John Whitney Pickersgill: I am not satisfied yet, but we have been promised a more detailed explanation.


David Lewis: The hon. member came so close to satisfaction that I took it he was satisfied. From our reading of statistics generally before us we understand that some 90 per cent or more of the acreage in which some of this drilling and exploration will take place is now in the hands of United States controlled corporations. It is strange that, under our taxing system, every time some small business asks for a benefit it is the big fellows who really get it. We are not at all satisfied, therefore, that this is a proper principle.
I want to turn to another point. As a new member of this house, I am completely flabbergasted at your suggestion, Mr. Chairman, if I may say so with respect, that you cannot have a standing vote on the portion of the resolution before the committee. It seems every time we pass a paragraph you ask: Is this paragraph carried? May I respectfully suggest to you that when you ask that you are, in effect, making us vote. Surely, a paragraph can neither be carried nor rejected unless there has been a vote, whether the vote is by voice or by silence, as it is in most cases, or by standing. It is still a vote. In my innocence, inexperience and probably ignorance, I would have thought the only purpose of a standing vote as distinct from silence was to see what members vote which way and to have a more accurate count than you get by silence or by voice. Therefore I would be most grateful, Mr. Chairman, if you would explain to me how you can call something carried if there has not been a vote; and if it were not carried does that not imply there was a vote, and therefore why cannot that vote be taken by a standing vote?


George Clyde Nowlan: The hon. member, as we all know, is a learned student who has read politics, history, philosophy and dogma, particularly dogma, for many years. He knows very well, Mr. Chairman, that when the resolution before the house is a budget resolution it is perfectly true what he says, that

as a matter of convenience the chairman deals with it paragraph after paragraph and he says "carried" because it is of convenience to hon. members to know whether we are on page four, page 41 or 44, or whether we are dealing with paragraph one or paragraph 91. Although I am not a constitutional authority, and I do not profess to be, I am convinced that the constitutional authority is that we have one budget resolution before the house.
That may be awkward. It may be inconvenient. You can move to strike it out but you cannot move to increase it because that would be contrary to our rules. You can move to delete something, but it is still one resolution, and although the chairman calls paragraph 1, paragraph 2, paragraph 3, paragraph 4, the tradition and background of this thing is that we have one resolution in front of us which we have to accept or reject.


John Whitney Pickersgill: I think, Mr. Chairman, I shall have to support the minister, hard as that is to do, upon this occasion because last Friday-I think it was last Friday-when we began to discuss this resolution and when the acting minister was piloting it he was very anxious to take each of the paragraphs separately, and I was very insistent that we should have a general debate on the whole resolution. I said there would have to be unanimous consent to take up the paragraphs separately because there was only one resolution before us and it had to be considered as a whole.
Having been sustained by the Chair over the mild objections of the treasury benches on one occasion, I feel I could not possibly argue in the opposite sense now, and the precedents that Your Honour cited are those that are in the recollection of some of the older hon. members of the house, and in my recollection too, although I was not a member of the house at that time. I do not think there is any doubt that what the minister said is the correct procedure.


David Lewis: Why do we vote on one paragraph and not on the others?


John Whitney Pickersgill: Mr. Chairman, I do not suppose you would allow me to give the hon. member for York South a lecture on procedure, particularly when the greatest professor on the subject is right behind him.


Stanley Howard Knowles: Mr. Chairman, I think it would be useful for the house to consider for a moment how we got to this position. I refer to the position which you have taken on the basis of the citation that you quoted a moment ago.
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Prior to 1948 these income tax resolutions were dealt with one by one. I was here at that time, as were other hon. members now present. Incidentally we were debating in 1948 certain tax changes that had been brought in by radio, but nevertheless the house was being given the opportunity to confirm them afterwards. We were dealing with them in committee of ways and means. The particular resolution before us had to do with increasing taxes on stoves, refrigerators, washing machines and things of that sort, and the point was reached when we who sat on the opposition side of the house-we were Conservatives, C.C.F.'ers and Social Crediters in opposition in those days-outnumbered the Liberals who were sitting on the government side of the house. We called a vote, a standing vote, as my colleague from York South sought to call one a moment ago.
Mr. William Golding was in the chair as deputy chairman of committees of the whole. The vote was taken by a standing vote and we on the opposition side of the house won the vote. The resolution to increase taxation was defeated.
Mr. Abbott was then minister of finance. He started to do what I thought was the correct thing, to ask that the committee rise so that the government could consider what to do, having lost its resolution in the committee; but he immediately got advice from a colleague, the late Ian Mackenzie who suggested he try some other course. That other course was to challenge the holding of the vote that had just been taken. A long procedural debate ensued, in which the Liberals argued that the chairman had no right to put the vote on one of the paragraphs of the income tax resolution.
That proposition was fought bitterly by the Conservatives. I was in the fight too, but that would not be any surprise, and so were the Social Crediters. Mr. Golding stood firm. He said it was in order to have taken the vote, the vote had been taken and the resolution had been defeated. In the face of Mr. Golding's firm stand, and I may mention Mr. Golding was a Liberal and the Liberals were in power, Mr. Abbott appealed that ruling to the house.
Mr. Speaker was called in to put the vote to the house. The bells were rung and the Liberals were brought in and the ruling of the deputy chairman, Mr. Golding, was upset. That is how we got into this situation, it was because the Liberals of that day did not like being beaten in committee of ways and means.
I contend, Mr. Chairman, that that was a wrong decision of the house, that the ruling of Mr. Golding in the chair was a correct one, and that we should get away from that ridiculous position that you have to vote on 10

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or 15 propositions that are different and that are in one resolution, instead of taking them one by one as we did prior to that occasion in 1948.
In that connection, Mr. Chairman, even if one persists in standing by the decision made by a Liberal house, opposed by the Conservatives of that day, I remind you of what it says at page 298 of Bourinot's fourth edition:
A motion which contains two or more distinct propositions may be divided so that the sense of the house may be taken on each separately.
I submit that the resolution before the committee has 15 distinct propositions, so distinct, Mr. Chairman that a moment ago you had to get unanimous consent to go back and discuss one that had been carried. There are 15 distinct propositions, and if you feel you are bound by that house vote in 1948, I submit you should have consideration for the sentence I have just read from Bourinot's fourth edition:
A motion which contains two or more distinct propositions may be divided so that the sense of the house may be taken on each separately.
I submit, Mr. Chairman, that is precisely what you have been doing, and that the member for York South is right. At the end of the consideration of each paragraph you have said "Is section so and so carried?" There has been some murmur of "carried," and you have moved on to the next section. You have in effect been taking the sense of the house on each proposition separately. It is easy to take the sense of the house when there is no division. You take silence to be consent, and go on; but if the house is divided on a proposition and the committee has different views, surely the only way to take the sense of the house is by the method of a vote.
As my leader points out, if that is not the case, if we are not taking them one by one, then how can you have order and what is to stop hon. members jumping from paragraph 2 to paragraph 13 and back again to paragraph 6? We are taking them in an orderly fashion, one by one, getting the sense of the committee in each case.
I said to my colleague from York South a moment ago when you, sir, began to put the question, "This is a very happy day for me. My good friend, who happens to be my member in this House of Commons, considering where I live in Winnipeg, is wiping out a 14-year injustice". But I find that I have a complaint to register against my member. You are retaining the injustice. Therefore, just as I did not vote for you, sir, last June 18, I will not vote for you next time either.

I might say, Mr. Chairman, that on the same page of Bourinot's Parliamentary Procedure, fourth edition, there is another paragraph which says, with regard to complicated questions, that it is always open to a member to move formally that a question be divided. Admittedly there are two types of these multiple things; one is called a complicated question and the other is a motion which contains two or more distinct propositions. I do not think this is merely a complicated question, in which case a member should move for it to be divided. I think this is clearly a motion that has 15 distinct propositions and that you, sir, should have regard to common sense; you should have regard to the practice up to 1948; you should have regard to the ruling of chairman William Golding; you should have regard to the position the Conservatives took on that occasion, and agree that this 15-point resolution that is before us contains 15 different propositions, and that the sense of the committee can and should be taken on them separately.


John Whitney Pickersgill: Mr. Chairman, I would like to say a word on that point. I am not going to argue the historical question that the hon. gentleman raised. I was not in the house at the time, but my friends in the house took exactly the position I am taking now, just as the hon. gentleman took the position he is taking now. They were sustained by the house, and the hon. gentleman was not. This committee made a decision on this particular point last Friday. Whatever may be the usual practice or whatever should be the proper practice, I was very insistent last Friday, over the objection of the acting minister, that we should take this resolution as one resolution. I actually said:
Of course, the Chair realizes that, on a strict point of order, it is one resolution that is before the committee and it can only be restricted by unanimous consent.
That consent was tacitly given; in fact, it was more than tacitly given, because we did have a short, general debate. Then there was agreement on this question. In fact, I was out of the chamber for a moment and when I came back I said, "Has there been unanimous consent now to take up the paragraphs one by one?" That was done as a matter of convenience; but it was clearly recognized-and the committee, of course, is master of its own procedure, as the hon. member for Winnipeg North Centre well knows-that the objection should have been taken at that time and the point of order raised at that time.


David Lewis: Mr. Chairman, could I ask the hon. member a question?


John Whitney Pickersgill: Certainly.


David Lewis: What page of Hansard was the hon. member reading from?


John Whitney Pickersgill: I was reading from page 1244 of Hansard for last Friday, when a precisely similar question came up and a decision was made by the committee and the Chair on this subject. The acting minister reluctantly proceeded to a general debate on the whole resolution, and then there was agreement, for convenience, to discuss it paragraph by paragraph. But there was no thought that each paragraph would be adopted separately, because we had insisted that under the rules the whole thing had to be adopted together.
Having taken that position, having insisted upon that rule being followed in committee, and there having been no objection taken, it seems to me that we cannot change that now, sir, so far as this resolution is concerned. If, when we come to the next resolution, the hon. gentleman wishes to raise the point of order and appeal to the house, or do anything of that sort to try to get the ruling reversed, that is another matter. But the committee made a decision last Friday on this precise point, and I maintain, sir, that we should proceed with the decision we then made.


David Lewis: Mr. Chairman, to assist the hon. members, I do not think it would be of value to this committee to take up more time and I withdraw my request for a standing vote.


Mr. Churchill:: Mr. Chairman, I would just like to add one point to the very learned discussion we have had, contributed to by the hon. member for Winnipeg North Centre. I wonder whether he has considered this fact. Although he was quoting from Bourinot with regard to a motion which might be divided into two or more distinct propositions, we are here dealing with a resolution, and a resolution is brought into the house and is followed by a bill. If the hon. member will look at the order paper he will find several resolutions there which contain several propositions; but the resolutions are written as a paragraph, divided by semicolons. It appears to me from a consideration of this matter that the budget resolutions are, for the convenience of the house, divided and numbered, rather than written all in one distinct paragraph with just the separation of a semicolon. Rather than being a whole series of distinct propositions, it is a resolution, just as other resolutions are, on which subsequently a bill will be founded and in which distinct measures are brought forward. That is perhaps a portion of the argument that was overlooked by the hon. member for Winnipeg North Centre when he was speaking on this matter.
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Stanley Howard Knowles: Mr. Chairman, may I just ask that you, sir, and the house leader consider this one further question. I refer you to page 1248 of Hansard for last Friday, after this discussion took place to which the hon. member for Bonavista-Twillingate referred. In the middle of column 1 there appears this line:


Gordon Campbell Chown: Shall paragraph 1 carry? Paragraphs 1 and 2 agreed to.
I ask you, sir, how did you find out?


Gordon Campbell Chown: I am very glad that the hon. member for Winnipeg North Centre disclosed his franchise, because it helps me to be all the more impartial. I am going to be brief in my reference to this point of order, simply to co-operate with the hon. member for York South who said that he will withdraw his request for a division. But from the standpoint of the future I think I should point to several authorities that will be helpful to hon. members in coming to the conclusion that the Chair, in seeking unanimous consent as a result of a request from an hon. member of the committee to consider these resolutions section by section, was co-operating with the committee, and the mechanics of disposing of each of these sections as they come up involves me simply in the use of the word "Carried". While I rose perhaps instinctively, on the suggestion that there be a division on a section, I realize that I moved in haste and overlooked the authorities in support of the point of view I am now making, namely that there should not be paragraph by paragraph division.
My authority for that, briefly, is May's sixteenth edition, pages 411 and 412. Perhaps I might read a very brief portion of this passage on page 412 which is helpful to us:
The house does not recognize the right of individual members to insist on the division of motions moved in committee of the whole house, or of motions giving special facilities for the transaction of public business-
This is what I think we have done here. I say that as an aside:
-although it has sometimes agreed to do so on the appeal of an individual member.
Then there is a reference to where that occurred before, and I will not look that up at the moment. My other authority is one in which the hon. member for Winnipeg North Centre has a particular interest. It was not in 1948, but in 1951 in Hansard, volume III, starting at column 1 of page 2627, where there is a very lengthy ruling by the then chairman which hon. members might look at in the interim period between the consideration of this resolution and the resolution which follows.
Shall paragraph 6 carry?

Income Tax Act


Some hon. Members:: Carried.


Some hon. Members:: No.


Gordon Campbell Chown: Then perhaps, to co-operate with hon. members in the far corner I will say, has the discussion of section 6 come to a conclusion?


Stanley Howard Knowles: That's better.


Gilles Grégoire: I put some questions to the Minister of Finance a few moments ago and I have not received an answer yet.


George Clyde Nowlan: I think I have answered all the questions I was asked. If there are any further answers required I suggest the hon. member should wait until we get to the committee stage of the bill itself when it is much easier to deal with these matters.
Paragraph 6 agreed to.
Paragraphs 7 and 8 agreed to.
On paragraph 9-


George Clyde Nowlan: In connection with this paragraph there is an amendment which will be moved by my colleague, the Minister of Citizenship and Immigration. After this paragraph was brought into the house last spring it was found there had been a slight error in drafting. It is, therefore, necessary that it be amended.


Thomas Miller Bell: That paragraph 9 of the Income Tax Act resolution be deleted and the following substituted therefor:
"9. That with respect to any disposition by a taxpayer after April 10, 1962 of property consisting of a right, licence or privilege to drill for, explore for or take petroleum or natural gas, there shall be included in the income of the taxpayer any amount received by him as consideration for the disposition, except where
(a)	the taxpayer was a person (other than one who would otherwise be required to include that amount in computing his income) who acquired the property on or before April 10, 1962, and who, for the taxation year that included that day, was not one of a class of persons who would be entitled to deduct expenses of drilling or exploring for petroleum or natural gas in computing income,
(b)	the property so disposed of was acquired by the taxpayer by inheritance or bequest, or
(c)	the property so disposed of was acquired by the taxpayer on or before April 10, 1962 and disposed of by him before November 9, 1962.


George Clyde Nowlan: The explanation of the need for this amendment is as follows: as originally drafted it covered property only as far back as April 10, 1962. It was then realized it would have been possible for owners to transfer property back and forth between various groups and had anyone tried to do this there might have been a serious raid on the treasury by reason of such a manipulation. To use a homely phrase, there was a loophole there through which one could
[The Chairman.]
have driven a coach and four horses. As a matter of fact, the oil companies were the ones who pointed this out to us. They said: Surely you did not mean this, because if you did, the deficit you have today is likely to become far greater. The provision was designed to protect the farmer who might have some property interest, but as drafted it could have gone much further.


John Whitney Pickersgill: I should like to ask the
minister to assure us that this amendment does not in any way affect the balance of ways and means, because I do not recall there was any message from the crown in connection with it and, as the hon. gentleman knows, he has no more right than any other member to bring down anything which would affect ways and means without such a message having been received.


George Clyde Nowlan: I can give that assurance, Mr. Chairman.


Stanley Howard Knowles: What are we amending?


Gordon Campbell Chown: The amendment is to paragraph 9 of the resolution.


George Clyde Nowlan: I may say, if the hon. member did not hear me, that the amendment is designed to correct an error which occurred in the drafting of the original section which, had it been allowed to stand, would have permitted substantial tax reductions to have been made by trading properties back and forth. This is a remedial section designed to protect farmers in the west who might have had some rights in the property.


Arthur Smith: Might I ask the minister if, either in the law or in regulation form, he would explain, purely as a matter of definition, the term "disposition" and also give a definition of "consideration". A number of people, myself included, have written to him in connection with this matter because it has involved a certain amount of misunderstanding.


George Clyde Nowlan: I told the hon. member before I came into the house that when we get to the committee stage I shall be prepared to deal at some length with these points.


Gordon Campbell Chown: Shall the amendment carry?


Some hon. Members:: Agreed.


[Stage Direction]
Amendment agreed to.
Paragraph 9 as amended agreed to.
Paragraph 10 agreed to.
On paragraph 11-
Edgar John Benson: Mr. Chairman, although I am speaking from this exalted position on the front bench, perhaps I should make it clear that the opinions I express are entirely my own.

These resolutions, like resolutions 6 and 10, are designed to aid the petroleum and mining industries. However, I would like to point out that, unlike the preceding resolutions, they allow a taxpayer, in this case a joint exploration corporation, to renounce expenses in favour of shareholder corporations, and in such circumstances, permit the shareholder corporations to deduct these expenses from their taxable income, providing the shareholder corporation carries on a business which could, in the circumstances, be deemed to be related to that of the joint exploration corporation. Indeed, resolution 12 when combined with resolution 10, goes so far as to permit a second successor corporation to deduct expenses incurred by the original corporation in drilling and exploration.
Mr. Chairman, when our taxation legislation is designed to favour certain specific industries or individuals, it necessarily leads to many complications. An examination of sections 83 and 83A of the Income Tax Act, with their numerous provisions, allowances and prohibitions, indicates the complexity of legislation which can develop from efforts such as these. As I have said before, I believe we should encourage Canadians to invest in the development of this heritage. I do feel that we must be careful in the extension of specific taxation advantages to non-resident ownership in this field. The government of Canada has to raise sufficient revenue through taxation to operate and carry out its social programs, and if specific taxation advantages beyond those enjoyed by Canadians generally are extended to citizens of other countries, it means that the Canadian taxpayer must make up for the lost revenue through higher taxes.
I should once again like to ask the minister whether he would indicate which corporations will benefit from these two resolutions. While I realize that it might not be wise to name specific companies, I do think he should indicate in a general way, based upon the analysis which must have been carried out prior to introducing these resolutions, whether or not the main benefit from these two particular resolutions will accrue to Canadians or to foreign-controlled corporations.
Another point which 1 should like to hear him discuss is whether or not he believes that it is furthering a dangerous precedent by allowing taxpayers to deduct from income expenses which were not directly incurred by them. Although there may be no particular danger in this regard in these two resolutions, if one accepted this as a general principle in our taxation system it could result in many abuses which would be unacceptable to the hon. members of this committee and to the Canadian public. For example, I can think of many corporate taxpayers operating in other 27507-3-94
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fields who would be willing to sell expenses and deductions at 25 per cent of cost if the Income Tax Act permitted the buyer to deduct them.
In closing, there is one other question which I should like to bring to the attention of the minister. Resolution 11 states that a joint exploration corporation may renounce an appropriate share of the drilling, exploration, and other expenses, and that these will be deductible by the shareholder corporation. I would request the minister to explain to the committee in some detail how the appropriate share is in fact to be determined.


George Clyde Nowlan: Mr. Chairman, as is obvious from the remarks of my hon. friend, this paragraph is a very technical one. He was very careful in using language which he had prepared in advance, and I think I should read also a memorandum which I have in front of me and confine myself to that. It does not answer all the questions which my friend asked. However, if he is satisfied with the statement which I will read in a moment, perhaps we could leave the further details until we have the bill before us and then I will be able to answer, I hope in complete detail, any question which he may raise. In general, I can say that this paragraph has been put forward at the request of Canadian companies operating in Canada; that is the general answer to his question. Somebody reminded me that probably the matter to which the hon. member referred specifically is in paragraph 10.


Edgar John Benson: Yes, it is.


George Clyde Nowlan: That being the case, if the discussion on paragraph 10 is concluded, we can move on to paragraph 11.


Rémi Paul: It has been concluded.


George Clyde Nowlan: Then I will read the statement I have in front of me with respect to paragraph 11. This paragraph proposes that a joint exploration corporation may renounce its rights to a deduction in respect of exploration and drilling expenses in favour of a shareholder corporation which would qualify for a deduction on this account, if it had incurred the pre-production expenses directly rather than indirectly through a joint exploration corporation. It sometimes happens that companies pool exploration and development resources under a separate corporate body in order to minimize risk and cost. Preproduction expenses of such a joint exploration company are now deductible from the income of that company but the object of a joint exploration company may not be to get into production. Its prospects of income

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against which pre-production expenses might be applied are thus very limited. Further, shareholders of a joint exploration company sometimes change. It is proposed that shareholders who finance the operation of a joint company should not be denied the right of deduction which could be theirs if they incurred the pre-production expenses directly themselves. That is the general explanation of this paragraph.


Rémi Paul: Is there any further discussion on paragraph 11? Then is the discussion concluded?


Some hon. Members:: Agreed.
Paragraph 11 agreed to.
On paragraph 12-


Rémi Paul: We will now proceed to paragraph 12. Is the discussion complete on this paragraph.


Some hon. Members:: Agreed.
Paragraph 12 agreed to.
On paragraph 13-


Edgar John Benson: Mr. Chairman, this resolution, which will result in an amendment or an addition to section HOB of the Income Tax Act, represents to my mind a reversal in thinking on the part of this government between 1961 and 1962. We all remember how the former minister of finance was, in 1960 and 1961, telling the Canadian people and foreign investors that the flow of capital into Canada must be stopped. The present government through its actions, including the introduction of section 11 OB into the Income Tax Act, was creating the impression abroad among foreign investors that the Canadian government was trying to find ways to discourage their participation in the development of the Canadian economy. This campaign proved very successful. In fact, it was so successful that the inflow of capital into Canada dried up entirely by June, 1962, and indeed there was a net capital outflow. This resulted in our government having to go hat in hand to the international monetary fund and to American and British central banks to borrow foreign exchange. It has been interesting to note, Mr. Chairman, that in this session there has been no expressed government antagonism toward foreign investors and indeed, as I have previously pointed out, the budget resolutions, including this present resolution, tend to favour foreign investors.
I have no doubt in my mind that this government is presently considering further legislation to encourage foreign investment in Canada. In fact, the increase in interest

rates which they have brought about certainly is not meant to benefit the internal growth of the Canadian economy, but rather to attract foreign investment into our country regardless of the effect upon Canadian expansion from within and the increase in job opportunities which would result therefrom. I believe, Mr. Chairman, that this resolution is intended to favour a relatively small number of foreign taxpayers and I question its advisability on these grounds. I would appreciate it if the minister would point out to this committee exactly whom it is going to benefit.
I sincerely hope, Mr. Chairman, that we will soon have reason to conclude that the government has become aware that there are other ways to control our destiny than by destroying the confidence of our friends in the government of this country. We must, Mr. Chairman, find ways-and the next Liberal government will find ways-of returning the control of our natural wealth to Canadians while, at the same time, assuring foreign investors that they will be fairly treated by our government.


George Clyde Nowlan: Mr. Chairman, in the calm and peaceful atmosphere which is predominating here right now, I am sure that I should not reply in any way, but I must reply to some of the more or less specious arguments which my hon. friend has brought forward. The amendments of 1960 were not designed to discourage foreign investment, but they were designed to remove certain special privileges to foreign investors. Without going into an argument about the merits of them for the moment-my hon. friend, I know, with his skill and professional experience realizes that as much as I do-and without repeating the timing and merits of them, I would say that the legislation was justified at the time, and I will not go into any further details with respect to the events which happened in June. I certainly do not admit for one moment that anyone went with hat in hand or anything of the kind but, as I said, I think we had better not spoil the peaceful atmosphere this afternoon by reviving the debate. The fact remains that companies carrying on mining require tremendous investment of capital. We have had examples, of course, in northern Quebec, in northern Ontario and in the west, and it is obviously desirable that they should be able to carry on their business in the way suggested here and should be freed from this charge which was placed upon them by the original legislation. This is to help only the mining companies referred to in the section and I think it will serve a useful purpose and will help to develop the Canadian economy.


Gilles Grégoire: I should like to say a few words on paragraph No. 13. We note that it is for the purpose of bringing foreign capital into Canada to develop our natural resources, including mines. I must say I disagree completely with the Minister of Finance so far as that point of view is concerned. If we need capital to develop our natural resources in Canada we do not need to get the money from strangers in Chicago, New York, Vienna or anywhere else in the world.
We have here in Canada our own central bank, the Bank of Canada, and we should give consideration to using the Bank of Canada to create the capital to develop our natural resources. Then we will not need money from outside of Canada.
Second, I also disagree because, as I understood, the purpose is to help the austerity program and to find money outside of Canada to equilibrate our foreign reserves. In the past we have seen such laws enacted and they have not been done away with when the austerity program has ended. They will continue and those who will continue to benefit from the tax deductions will not be Canadian citizens but foreign corporations or companies. If we want to exempt such capital from taxation we must begin first by giving tax deductions to our citizens here in Canada.


George Clyde Nowlan: May I say one word on that point. There are many tax deductions for Canadian citizens at the moment. There are many tax deductions in the mining industry. This government feels, and I think the country generally feels, that it is advisable and necessary to have an inflow of capital into this country, and I hope that will continue indefinitely. Certainly when you look at the tremendous expenditures that have been made in the province of Quebec, in Labrador, British Columbia and Ontario you realize that the capital was not available in this country at that time with which to make those expenditures. Whatever one's views may be as to how capital can be engendered and developed, we feel that in this particular industry, which means so much to the Canadian economy and which requires such terrific sums of money running into hundreds of millions of dollars in some cases, provision such as this should be made to encourage the industry, and that is why it is being made.


Gilles Grégoire: In answer to what the
Minister of Finance has just said regarding the need of foreign capital in Canada to develop our own country, I should like him to remember that not so many years ago, possibly not so many months ago, he and the government were complaining about the effect 27507-3-944
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on the stability of our foreign reserves of profits going out of Canada to other countries. They were complaining about profits from foreign capital invested here going out of Canada. If we continue such a system we will still be complaining about it in a couple of years and we will have the same kind of crisis as we had last June and will be obliged to keep Canada on an austerity program.


Thomas Clement (Tommy) Douglas: Am I correct in understanding that this exemption from paying the 15 per cent tax levied on non-resident corporations is now going to be granted to iron ore mining companies and only to iron ore mining companies?


George Clyde Nowlan: The ones which are now exempt are banks, insurance corporations, corporations whose principal business is the transportation of persons or goods, communication corporations, corporations incorporated before July 1, 1867 and corporations exempt from tax under section 62. This section proposes that in the future the 15 per cent tax will not apply to branches of non-resident companies whose principal business is mining iron ore in Canada.


Thomas Clement (Tommy) Douglas: Do I take it then that this exemption will not apply to all mining companies?


George Clyde Nowlan: That is right.


Thomas Clement (Tommy) Douglas: Why is iron ore selected particularly for this preferred treatment compared with other mining companies?


George Clyde Nowlan: I was not conversant with this section when it was being drafted last spring, but I am advised that iron ore mining is one branch of the mining industry which requires substantially larger sums of money than any other branch in developing the mine and the usual transportation facilities and everything else in connection with it. It is because of the unique situation of that industry that this section was brought into the budget by my predecessor last spring.


Charles Mills (Bud) Drury: I wonder if the minister knows or can say how many corporations there are operating in Canada at present which might be affected. Is it not a fact there is only one?


George Clyde Nowlan: This only applies, of course, to a branch of a non-resident corporation and if a non-resident corporation forms such a branch for the purpose of developing iron ore then this exemption would apply. I cannot give the hon. member the list of companies at the moment but I would be very glad to do so when we have the bill before us.


Mr. Barnett:: If I understood the minister correctly he said that the reason this proposal

Income Tax Act
was being advanced was that the development of iron ore mining requires substantially larger sums of capital than is the case in respect of certain other forms of mining.
I must say I find that statement rather puzzling in view of my own observations of certain mining operations that are being developed on the west coast of Canada at the present time where on the face of it it would appear to me that a relatively inexpensive development process is required. Could the minister give us more particulars with respect to the question as to the way in which the development of iron ore mining is generally more costly?


George Clyde Nowlan: What this refers to particularly, of course, is that type of corporation which has such large ore bodies that obviously the Canadian market would be of no use to it whatsoever or of infinitesimal use. You have corporations coming into Labrador and northern Quebec which are not looking forward to the development of the Canadian market hardly at all, but which are intending to export probably to the United States. Therefore they carry out this terrific development and ship to the United States. It is a foreign corporation and that is why we give this benefit.


Thomas Speakman Barnett: The minister has mentioned corporations shipping to the United States. I think probably he is aware of the fact that the iron ore shipments from the western part of Canada are not going to the United States. He has not mentioned the shipments of our iron ore industry at all. I wonder if he has any information that is relevant to the situation in the western part of Canada? I take it he has been referring to certain developments in the eastern part of Canada.


George Clyde Nowlan: As I understand it, this form of organization, this use of a branch for this purpose, is not one which has been used on the west coast at all. It has only been used by a few corporations which have spent hundreds of millions of dollars in the development of an export industry and therefore it does not apply particularly to the industries to which the hon. member refers. They are not of the same type as those in other parts of Canada.


John Whitney Pickersgill: May I ask the minister whether the effect of this section is not merely to put the subsidiary of the foreign corporation on the same tax basis as though it were a Canadian corporation?


George Clyde Nowlan: That is the branch of the foreign corporation?


John Whitney Pickersgill: Yes.


George Clyde Nowlan: The hon. member is perfectly right.
(Translation):


Bernard Dumont: Mr. Chairman, we notice by the measures introduced by the present administration, like the one now before us, that it tends to make the millionaires richer and the poor still poorer.
I should like to give you an example of what is going on in my own riding. An operator who would go to the United States for a logging operation would have to pay a fee of $6 per cord. In the case of mining companies, the United States would require from them, for their mining operation, enough money to ease the hardship of the people. As my hon. friend for Lapointe (Mr. Gre-goire) said a moment ago, the money thus going into the treasury would lower taxes for each individual. To come back to our friend from Bellechasse who goes logging in the United States, he will be required to pay a fee of $6 per cord, the equivalent of $6 per ton of paper. However, an American company coming to Canada is charged an operating fee of only $3.
And when the dollar was devaluated to 92 cents, not so long ago-just before the election, because it was impossible to wait till afterwards-all American companies saw their profits on export trade increased by $8 a ton. The government did not submit those companies to any penalty. Yet devaluation meant another increase in the cost of living, which is already so high, for the individuals.
It is most unfortunate indeed that the government legislate to protect companies like Iron Ore. It is simply enabling millionaires to get still richer. It is high time that we do something for the little people, instead of always protecting only the big companies. (Text):


John Robert (Jack) Nicholson: I should like to ask the minister if this resolution would not apply to the subsidiary of a Japanese firm that has an iron ore development in the gulf islands in British Columbia? I think that is what is bothering the hon. member for Comox-Alberni.


George Clyde Nowlan: It would apply to any nonresident company which is operating through a branch here.


Thomas Clement (Tommy) Douglas: Mr. Chairman, I do not want to hold up the committee because I think we will get a fuller discussion of this matter when the bill is before the house, but I should

like to say to the minister that on the basis of his explanation it looks to me like special and preferred treatment for what is probably only one, for two or three very large corporations. If this 15 per cent tax which is imposed on non-resident corporations doing business in Canada is a good thing, then surely it is a good thing for the huge corporations mining iron ore to pay, as well as the smaller corporations. If it is not a good thing, then we ought to wipe it out. My own feeling is that it is probably a good thing to have a tax on non-resident corporations.
I agree with what some of my friends across the way have said about the need for generating more capital in Canada. One of the problems we are having about our imbalance of payments at the present time is the growing amount of invisible payments which we have to make for dividends and interest which has grown over the years because of our dependence so much on foreign capital rather than generating Canadian capital for the development of our resources. If we are going to have a 15 per cent tax on non-resident corporations, I have not yet heard any good argument by the minister, or anyone on the government side, as to why these particular two or three large corporations should be exempted while it continues to be applied to other corporations.
I would hope, when the bill comes down the minister will be able to give us some better reason than the fact that this very small number of corporations have to make larger capital investments than do others. I have not the figures, but certainly investments for the development of potash, copper, zinc and other minerals, are very substantial before any returns are received. It seems to me a very dubious argument for the minister to put forward that the money expended for iron ore development in Canada is any more deserving of exemption than the money invested in other mining operations.


George Clyde Nowlan: Well, Mr. Chairman, I can quite appreciate the argument that the hon. member has put forward. I certainly would not want to justify legislation for a specific purpose for a specific corporation. I appreciate also the arguments which have been developed by gentlemen on the other side of the house, in fact by all hon. members, about developing our own industries with our own capital in so far as possible. However, you have the fact that the iron ore industry is an extremely expensive one to develop. I recall once sitting in a certain place in this building and listening to a rosy preview of the future of this industry in Canada. The gentleman said that the precious minerals were no longer gold, frankincense and myrrh,
Income Tax Act
but iron ore, of which Canada had a monopoly; so our future was assured. This was since the time I was in the house and after the time the hon. gentleman left, so he would know about what time that was.
In the meantime, iron has been discovered in various places of the world. Some of this iron ore is richer than that which we have in Canada. If some of these mines were not captive mines they would not be operated today. If we want to increase development in this country, as we do, then we are faced with a situation where legislation of this type has to be introduced. Without the expenditure of a tremendous amount of capital these developments would not take place for the benefit of the people who will be living there-there are not many people there now-so it was necessary to introduce the legislation that is before us today.


Thomas Clement (Tommy) Douglas: I do not want to prolong the discussion except to say I am even more concerned after the minister's statement. For instance at the present moment in Port Moody in British Columbia we are exporting coal to Japan with a $4 per ton government subsidy on it, and we are also exporting iron ore to Japan. Now, by virtue of an exemption of 15 per cent tax, we are subsidizing the iron ore as well as the coal. This points up the fact that we should be working toward the development of more of the processing of our primary resources in Canada, rather than subsidizing the export of products for steel industries outside our country.
(Translation):


Gilles Grégoire: Mr. Chairman, I should like to suggest an amendment to paragraph 14 of the resolution, in order to replace the year "1962" by the year "1982".


Rémi Paul: I wish to point out to the hon. member that we are now on section 13.


Gilles Grégoire: In paragraph 13 rather, that the figures "1962" be replaced by the figures "1982".


Rémi Paul: The hon. member must realize that if his amendment were accepted by the committee, it would result in making inoperative a clause of the resolution we are now considering. If the amendment were accepted, this resolution might only be considered in 20 years. I therefore consider the amendment out of order.


Gilles Grégoire: That is what we want. We have suggested five years, the Social Credit could have suggested five years, because I consider that in five years, the Social Credit party will be in power and will not have to search for capital elsewhere, since we shall

Income Tax Act
find it right here in Canada. Mr. Chairman, you did not give me any reasons why you do not accept my amendment. There is nothing in my amendment which is against the rules.


Rémi Paul: It is out of order.
I repeat what I said a moment ago: the proposed amendment is negative, and its effect is to destroy a section now before us.
The hon. member must abide by the Chair's ruling.


Mr, Gregoire:: Mr. Chairman, the amendment I have suggested is not negative, in my opinion; its purpose is not to destroy anything. On the contrary, we recommend that this principle be put into practice only in 1982. That is something positive. I do not see anything negative nor destructive in that. My amendment merely consists in putting off this measure, and I suggest that it cannot be declared out of order.


Rémi Paul: I have already declared the amendment out of order, and besides, the Chair has no text which would allow consideration of the amendment in question.


Gilles Grégoire: I have it here, Mr. Chairman.
(Text):


George Clyde Nowlan: Mr. Chairman, have you the amendment in front of you? The amendment, of course, affects the balance of ways and means. It adds an impost and therefore it cannot be moved by anyone except the minister himself, and is definitely and completely out of order.


John Whitney Pickersgill: In order to facilitate consideration of the amendment by the committee, could we have it read in the other official language, Mr. Chairman?


Rémi Paul: It is moved by the hon. member for Lapointe that the year "1962" be replaced by the year "1982".


John Whitney Pickersgill: Why not 1984?


Charles Mills (Bud) Drury: Mr. Chairman, I wonder if I could make a suggestion. This is not in the nature of a subamendment, but having in mind that the hon. member for Lapointe looked forward to a Social Credit government as the reason for moving this, would he not feel that perhaps 1984 was a more appropriate date than 1982?


Arthur Smith: Jokes destroyed the Social Credit government in Alberta, anyway, so it does not matter.
(Translation):


Rémi Paul: I do not want to be drawn into a debate by the mover of the amendment. But I feel that the amendment is negative in its scope. In addition, this

amendment is similar to another which has been moved in committee and declared out of order, because it dealt with a money bill or the right to collect taxes. Under the standing orders, such a measure can only be moved by a minister of the crown. Therefore, I declare the amendment out of order.


Gilles Grégoire: Mr. Chairman, I rise on a point of order. I am aware that a private member is not allowed, under the standing orders to move an amendment which would involve expenditures for the government. However, not only does my amendment not involve supplementary expenditures for the government, but it would result in an increase in revenue to the extent of 15 per cent. I do not think you will find anything in the standing to justify your ruling on that point.
Mr. Chairman, you have stated that my amendment was negative. Well, I consider all measures put forward by the government, in the resolutions now before us, to be negative, because they say that the government will exempt certain non-resident corporations from the additional 15 per cent tax. In my opinion, these provisions are all negative, for, since the beginning of the debate, we have been told that the government will not levy any tax on companies which carry out drilling operations or what have you.
Therefore, I feel I am not going beyond the subject matter of this debate.
The Depuly Chairman: I do not believe it is up to the chairman of the committee to discuss each hon. member's economic theories. I suggest once again that the amendment is a negative one, because, through it, a section of the resolution before us would become inoperative. Therefore, whatever the merits or the logic of the amendment, from an economic standpoint, I declare the amendment out of order.
(Text):
Is the discussion on paragraph 13 complete?
Paragraph 13 agreed to.
On paragraph 14-


Mr. McMillan:: Mr. Chairman, paragraph 14 will allow a participant to transfer his credit from one deferred profit sharing plan to another without having such credit subject to income tax. Eventually the participant will have a credit in a final plan. I surmise that he will receive payments on a monthly basis,

probably, after retirement and he will calculate his income tax for the years in which he receives this money. This is, in effect, allowing portability of funds for pension purposes.
The same thing applies to the next item, which allows for the transfer of funds from one retirement savings plan to another. Paragraphs 14 and 15 give certain privileges to certain funds that are being used as pension plans by their participants. They provide, for this rather restricted group of individuals, a portability of funds which will not be subject to income tax. We in the Liberal party are in favour of this portability aspect. We would call to the attention of the government, however, that this is rather discriminatory against the large class of Canadians who are contributing to pensions and who have not this right under the Income Tax Act. I do not want to go into that aspect of it, but we have maintained for some time that the federal government could provide for portability of pensions by providing for earlier vesting rights in pensions through the Income Tax Act.


George Clyde Nowlan: Mr. Chairman, this, as the hon. member knows, simply provides for the transfer of funds from one deferred system to another. Under the law as it is today, without this section those funds would be taxable as income. This permits the transfer to be made from one fund to another without incurring taxation. Of course, ultimately when this money comes out of the fund to which it has been transferred, it goes to the recipient and then it is taxable. That provision now applies to pension funds and funds can be transferred from one pension plan to another without attracting taxation, although of course when the pension is finally paid it is taxable. We are simply extending and broadening here the basis of what my hon. friend calls portability which applies to pensions and which is now going to apply to deferred profit sharing plans in this manner.


Mr. Thomas:: Mr. Chairman, might I ask why the word "employee" is used here? Why are employees specifically mentioned, rather than any other persons? Why does it refer to just employees?


George Clyde Nowlan: Mr. Chairman, my understanding is-I have not the act in front of me but I am quite sure I am right-that it is only an employee who can share in a deferred profit scheme. The word "employee" is used because that is the descriptive term used in the act and employees are the ones who can share in such schemes.
Estate Tax Act


Rémi Paul: Is the discussion on paragraph 14 complete?
Paragraphs 14 and 15 agreed to.


Rémi Paul: Shall the resolution carry?
Resolution as amended agreed to.
Resolution reported and concurred in.


ESTATE TAX ACT
[Stage Direction]
Resolved,-That it is expedient to introduce a measure to amend the Estate Tax Act and to provide among other things:
1.	That the lien in respect of tax payable by a successor to real property situated in Canada of a deceased person shall be applicable only where it appears from the records of the appropriate land titles or land registry office or where it can be established from any document or other writing of which notice is given in those records that the deceased person had an estate or interest in that real property, but no such lien shall be applicable where the real property is situated in a province whose government has entered into an agreement with the government of Canada whereby no transfer of an estate or interest in the real property may be registered until the consent of the Minister of National Revenue to the transfer has been obtained.
2.	That for purposes of the deduction from aggregate net value allowed for the value of a gift made to a charitable organization in Canada, such an organization shall include not only one that devotes its resources to the making of gifts to other such organizations in Canada, but also one that devotes part or all of its resources to the making of gifts to Her Majesty in right of Canada or a province, a Canadian municipality or a municipal or other public body in Canada performing a function of government.
3.	That the tax applicable in respect of the property of a person dying domiciled outside of Canada shall not apply to the property situated in Canada of an officer or servant of an organization as defined for the purpose of section 3 of the Privileges and Immunities (United Nations) Act, where the property was acquired during his lifetime for or incident to his residence in Canada as such an officer or servant whose duties required him to reside in Canada at the time of his death.
4.	That any enactment founded on paragraphs (1) and (3) shall apply in respect of deaths occurring after December 31, 1958.
On paragraph 1-
John Whitney Pickersgill: Mr. Chairman, I think before any of us on this side of the chamber ask our specific questions we should have from the minister the same kind of general statement that the acting minister made, or if he prefers to have the ex-parliamentary secretary, now the Minister of Citizenship and Immigration, make it, that is agreeable to us. But because this parliament has been denied a budget, for the benefit of those who have forgotten that sad budget of last April and for those who never heard it, we ought to be told what is the scheme of this thing before we embark on the individual paragraphs.

Estate Tax Act


George Clyde Nowlan: Mr. Chairman, I am very sorry that I was not here last Friday afternoon when the former parliamentary secretary to the former minister of finance, now my esteemed colleague the Minister of Citizenship and Immigration, obviously made a most masterful, general statement in dealing with the Income Tax Act.
There are three different sections in the Estate Tax Act, none of which is related to the other in any way whatsoever. Therefore I am absolutely incapable of making such a general statement. I do not know whether my colleague, the Minister of Citizenship and Immigration, who has nurtured this act from its birth, wishes to make a statement now that it is brought forward in the House of Commons.


Edgar John Benson: Mr. Chairman, I wonder
whether the minister would like to read the statement made by the minister last spring with regard to these resolutions.


John Whitney Pickersgill: Heaven forbid.


George Clyde Nowlan: I have it in the back of the book.


Rémi Paul: Shall the resolution carry?


Donald Stovel Macdonald: Mr. Chairman, I would like to ask the minister a question about the first paragraph of this resolution. How many of the agreements referred to in the resolution are now in effect; and, in particular, is there an agreement with the province of Ontario in this respect?


George Clyde Nowlan: There are no agreements in effect at the moment. This is to authorize the entering into of such agreements.


John Whitney Pickersgill: Have there been discussions with any of the provinces yet?


George Clyde Nowlan: There have been discussions, Mr. Chairman.


John Whitney Pickersgill: Which ones?


George Clyde Nowlan: Between officials of the-


John Whitney Pickersgill: I mean, with which provinces?


George Clyde Nowlan: I am not clear.


John Whitney Pickersgill: Perhaps the minister could find that out.
The Depuiy Chairman: Shall the resolution carry?


John Whitney Pickersgill: When I get an answer.


George Clyde Nowlan: Manitoba, specifically, and some of the other western provinces in general are meeting with our officials from time to time.


Mr. Teillei:: Mr. Chairman, I wonder
whether the minister could tell us when these negotiations were carried on with Manitoba. Was it just recently, or earlier this spring? I have a specific reason for asking that question at the moment. I think the minister is aware of the reason.


George Clyde Nowlan: I am not so aware. I have not been outside to hear the news. I take it you have.


John Whitney Pickersgill: Perhaps the minister could tell us when the election is going to be called in Nova Scotia.


George Clyde Nowlan: Two years from now.


Rémi Paul: Shall the resolution carry?


Some hon. Members:: Agreed.
(Translation):


Mr. Ouellel:: Mr. Chairman, we have discussed paragraph 15 dealing with the transfer of funds, but we were not given any opportunity to discuss the paragraph dealing with the estate tax.
The Depuiy Chairman: That resolution has already been agreed to by the committee.


André Ouellet: Mr. Chairman, I did not understand that it had been carried. Pension fund transfers were mentioned in the case of persons changing provinces and who have been contributing to a registered retirement savings plan, etc.
I believe that the paragraph dealing with the estate tax has not been considered. If it actually has, I am sorry that I did not realize that, and I would ask leave from the house to revert to this matter for a few moments.


Some hon. Members:: Agreed.
The Depuiy Chairman: I would point out to the hon. member that another opportunity to discuss this matter will be afforded to him when the bill comes up for consideration before the house and the committee.
However, I could ask the committee's consent to revert to this resolution so as to enable the hon. member for Drummond-Artha-baska to obtain certain information or make a few remarks.


André Ouellet: Mr. Chairman, I do not always happen to be in the house. Since I must leave in a short time for certain reasons, I shall be brief. Besides, my remarks will not take more than five minutes.
Mr. Chairman, would the house allow me-


Some hon. Members:: Agreed.


Rémi Paul: The house gave its consent.


André Ouellet: Thank you, Mr. Chairman. I wish to move an amendment to the resolution amending the estate tax act. It will no doubt be rejected like all the others, but nevertheless, I feel that a few changes should be made to that act.
I am a life insurance broker. Sometimes people want to buy life insurance in anticipation of the estates duties that their heirs will have to pay.
At present, when a person in business dies, his bank accounts, etc. are frozen immediately. Now, neither his associates nor his heirs can borrow from the banks as long as estate duties have not been paid. It often takes one or two years and even more, to settle an estate because some people forgot certain details and income tax inspectors have to come back and consider the whole thing. In the meantime, the small business of the deceased is completely paralysed, which brings trouble for the family.
In my opinion, a businessman should be entitled under the law to buy an insurance policy the benefits of which would be exempt from income tax and succession duties.
For these reasons, I move, seconded by the hon. member for Lapointe (Mr. Gregoire), that the Estate Tax Act be amended as follows:
An individual buys an amount of life insurance-


Rémi Paul: Order. I would remind the hon. member that the resolution has already been adopted and that the committee has only given him permission to make a few comments. I have to point out to him that he had not been authorized to propose an amendment. Therefore, to submit it, he must obtain the unanimous consent of the committee.


André Ouellet: Is it agreed by the house that I should read the amendment I am moving to the Income Tax Act? Do I have consent?


Some hon. Members:: No.


Rémi Paul: I have heard some negative answers to the hon. member's request. I regret, but I must point out to him that in order to move his amendment, he must absolutely have unanimous consent of the house.


André Ouellet: Do I have permission to carry on my remarks without moving my amendment?
Excise Tax Act


Rémi Paul: I should point out to the hon. member that when the bill is before us, he will have all the required latitude to introduce his amendment.


André Ouellet: Thank you, Mr. Chairman, but I might just give some explanations. Out of its good will and following the suggestion I will make, the government may decide to propose the amendment-which is what I hope for-for the greatest good of all Canadians.
It happens that-as I said a moment ago- when the time comes to settle an estate, the money is frozen.
The other day I met an income tax inspector-I will not give his name-who told me this: "I know a man who owes $40,000 in taxes. He is sick and if he were asked to pay that amount, he would surely die tomorrow morning." As a matter of fact, that man was not expected to live long.
Many other changes are desirable in that section of the Income Tax Act. It could even be entitled: The dead man is no longer here to defend himself, when he has forgotten some details.
In French-the expression is perhaps not parliamentary-we call that "to take the fat from the dead". I think the government should consider bringing some changes to that part of the legislation, in the interests of Canadians. Thus money would continue to circulate, even in case of death, and the government would be sure that the estate duties were paid.
(Text):
Paragraph 1 agreed to.
Paragraphs 2, 3 and 4 agreed to.


Rémi Paul: Shall the resolution to amend the Estate Tax Act carry?


Some hon. Members:: Agreed.


[Stage Direction]
Resolution agreed to.
Resolution reported and concurred in.

[Stage Direction]
Resolved,-That it is expedient to introduce a measure to amend the Excise Tax Act and to provide among other things:
1.	That the present exemption from sales tax for "Books, printed and bound, that contain no advertising and are solely for educational, technical, cultural or literary purposes," be changed to read "Printed books that contain no advertising and are solely for educational, technical, cultural or literary purposes,".
2.	That audio tapes and materials used in the manufacture thereof, authorized by the Department
[Stage Direction]
Excise Tax Act
of Education of any province in Canada for instruction in the English and the French language, he exempt from sales tax.
3.	That baler twine and materials used in the manufacture thereof be exempt from sales tax, regardless of use.
4.	That barrels and boxes for fish, lobster crates, lobster pots, lobster traps, scallop bags, and materials used in the manufacture thereof be exempt from sales tax.
5.	That drums or cans for honey and materials used m the manufacture thereof be exempt from sales tax.
6.	That goods for use in sewerage and drainage systems and materials used in the manufacture thereof be exempt from sales tax.
7.	That the present liability for sales tax on motor vehicles, tractors and machines and tools operated by such vehicles or tractors, that are diverted from an exempt use to a taxable use, be limited to five years from the time of the first sale by a person who would have been required to pay sales tax if the sale had not been for an exempt use, and where motor vehicles, tractors and machines and tools operated by such vehicles or tractors were imported or sold by a manufacturer or licensed wholesaler and sales tax was not payable or was refunded by reason of the intended use of the goods, any person who within five years of such importation or sale applies the goods to any other use (other than of a casual nature) for which the goods could not originally have been purchased exempt from sales tax, and the person from whom he purchased or rented the goods including the importer, manufacturer or licensed wholesaler, shall be jointly and severally liable for payment of sales tax on the fair market value of the goods at the time they are applied to that other use.
8.	That the present tax of 10 per cent on net premiums in respect of insurance against risks in Canada paid or payable by Canadian residents to an insurer not authorized under the laws of Canada or any province to transact the business of insurance, be extended to apply to net premiums in respect of any such insurance paid or payable by or on behalf of Canadian residents, where such insurance is entered into or renewed through a broker or agent outside Canada with an insurer that at the time the contract is entered into or renewed is authorized under the laws of Canada or any province to transact the business of insurance.
9.	That any enactment founded on paragraphs 1 to 6 of this resolution be deemed to have come into force on April 11, 1962, that any enactment founded on paragraph 7 of this resolution shall come into force on the date the said enactment is assented to, and that any enactment founded on paragraph 8 of this resolution be applicable in respect of contracts of insurance entered into or renewed after April 10, 1962.
John Whitney Pickersgill: I think that on this resolution, which is a tax which has been in effect since April 10, if I remember correctly, and has not yet been considered by parliament, the minister should be able to give us some general and comprehensive statement before we consider the individual paragraphs.


George Clyde Nowlan: There is no general statement which can be made with respect to this act which deals with a large variety of subjects. The first paragraph, as I recall it, deals with exemptions for sewage work and undertakings of that kind.
[The Deputy Chairman.]


John Whitney Pickersgill: It seemed to me to deal
with books.


George Clyde Nowlan: The first one concerns books, then.


John Whitney Pickersgill: The minister is not confusing books and sewage?


George Clyde Nowlan: There were times when as minister of national revenue I had to look at some of the books and it was not difficult at all to confuse the two. Fortunately, I have been relieved of that responsibility.
Then there is the question with respect to municipalities and construction work.
At one time municipalities were given relief, but if they had contractors doing the work who were required to pay excise tax, that requirement is now being amended by the bill. I will clarify that. That is paragraph 6.
Paragraph 2 concerns audio tapes and materials used in the manufacture thereof. That will help out in the broadcasting industry where today there are technological changes. These tapes are being re-recorded, re-used, and so on.
Paragraph 3 deals with baler twine, and materials used in the manufacture thereof, being exempted from sales tax, regardless of their use.
Barrels and boxes for fish, lobster crates, lobster pots, lobster traps, scallop bags-matters of great interest to the hon. members for Bonavista-Twillingate and Digby-Annapolis-Kings-are in paragraph 4, and there is an exemption from sales tax in those cases.
Paragraph 5 concerns drums or cans for honey. The former member for Middlesex West is no longer with us here, but he used to be very much interested in those because he was one of the largest producers of honey in Canada.


John Whitney Pickersgill: Was this honey put in by the previous minister?


George Clyde Nowlan: He did away with the excise tax on it, so that there would be more available than there was before.


Edgar John Benson: Mr. Chairman, I can understand why the minister is so obsessed with sewage while he was speaking, since this government is almost down the drain anyway.


Gordon Minto Churchill: The hon. member has not read the Winnipeg Free Press. It says that there was a sorry performance by the Liberals on Tuesday night.


Some hon. Members:: Oh, oh.


Edgar John Benson: Mr. Chairman, I should like to speak without these interruptions, and at

some speed, so that we can get these resolutions through and pass on to some of this constructive legislation about which we have been hearing for so long, but have not seen.


Robert Jardine McCleave: We would if you made a short speech.


Edgar John Benson: As I have previously pointed out, the Income Tax Act, the Estate Tax Act, and especially the Excise Tax Act, need immediate revision. I believe that the people of Canada cannot wait two, three or four years for a royal commission to report. In the case of the Excise Tax Act we already have the report of a parliamentary committee, which report was received back in 1956. The committee was known as the sales tax committee and it reported on January 12, 1956. The committee made a good many recommendations, but practically nothing has been done with regard to picking up the recommendations and many of us thought that perhaps the reason nothing was done was because the government looked on this committee, which was appointed by the previous Liberal government, with some disfavour. However, since the government has now selected the chairman of this committee, Mr. Carter, to be chairman of the commission on taxation, I think one cannot accept this as an excuse for not taking up some of the recommendations in the report of the committee in 1956 and carrying out a thorough revision of the Excise Tax Act.
I believe this is overdue. Under this act the minister has far too much discretion. On page 16 of the report, the committee states that the act contains over 25 references to the minister's discretion. In our view most of these discretions should be replaced by rules of law or by conferring authority on the governor in council to issue regulations. Mr. Chairman, I maintain that taxation should be carried out so far as possible by rules of law laid down by this house, and that ministerial discretion should be cut down to the minimum. I should like to suggest that we carry on with the changes which are suggested in the Excise Tax Act now, and get those through. What I should like to suggest to the minister is that when he has time in the very near future, although I realize he has not very much time when he is conferring with all the other ministers of finance who seem to have been crowded in, that he look back at the report of the committee on taxation in 1956 and consider making some of the serious and necessary changes required in this particular act.


Thomas Speakman Barnett: Mr. Chairman, I take it that we are considering the resolution as a whole, and not paragraph by paragraph. I have a question which I should like to ask the
27507-3-95$
Excise Tax Act
minister in regard to paragraph 4, the one in which he earlier remarked the hon. member for Bonavista-Twillingate would be interested, having to do with barrels and boxes for fish. I take it that these are barrels and boxes in which fish can be moved or transported, or otherwise taken, from where they emerge from the sea to the consumer. My question relates to the fact that in the coastal areas of British Columbia other methods are used for the transportation of fish, including increasingly some rather expensive installations which provide for refrigerated holds in vessels. I am wondering whether or not at the present time the materials and equipment required for this sort of transportation of fish are exempt from the sales tax-the present proposal is to add certain things-or whether in the drafting of this proposal the fact that in some parts of the country methods which are not included in the proposals here but which are used for the same purpose have been overlooked. I wonder whether the minister could explain to the committee just what is the situation in this regard.


George Clyde Nowlan: I am afraid I cannot, Mr. Chairman. When I first became minister of national revenue and started to inquire into the Excise Tax Act, I was told by a very distinguished and a very senior civil servant: Don t try to understand it; it does not make any sense at all", and I have never tried to understand it since. You have to look up each individual section as you come to it, and there have been exemptions, pressure groups, and various other things happen to it, as my hon. friend has pointed out. When the bill comes before the committee, and we also have the act before us at the same time, I will be very glad to answer the question of the hon. gentleman.


Rémi Paul: Shall the resolution carry?


Some hon. Members:: Carried.


John Whitney Pickersgill: No, Mr. Chairman, I have a few observations I want to make about lobsters.


George Clyde Nowlan: There is to be an amendment or two, so that unless the committee is prepared to give more time, and I doubt whether it is, we had better call it five o'clock.


Rémi Paul: Order. It being five o'clock, in order to proceed with the consideration of private members' business pursuant to section 3 of standing order 15, it is my duty to rise, report progress, and ask leave to sit again at the next sitting of the house.
Progress reported.

Canada Elections Act


Mr. Deputy Speaker:: It being five o'clock the house will now proceed to the consideration of private members' business as listed on today's order paper, namely, public bills and private bills.


CANADA ELECTIONS ACT
David Lewis: the second reading of Bill No. C-21, to amend the Canada Elections Act (age of voters).
He said: Mr. Speaker, as I have looked through Hansard for the past few years I have noticed that this matter has been before parliament on several previous occasions and I apologize to those in the house who were members of parliament at that time for making statements which they will have heard several times previously. The arguments in favour of the subject matter of the bill before the house continue, of course, to be the same.
It is obvious, Mr. Speaker, that there is nothing particularly sacred about the age of 21 any more than there is anything particularly sacred about the age of 18 and the age for voting should, I submit, be reconsidered and, if necessary, changed depending upon the developments in the society in which we live and where the voting is being applied. It is our view that the developments in recent years in Canada, as in many other democracies, have been such as to justify, indeed to require, that the voting age be reduced from 21 to 18.
I want to put forward first a proposition with which I am sure every member of the house agrees, that citizenship in a community does not really mean very much to the residents in the community until they have to do something about it. General propositions about freedom, democracy and liberty are not very useful or very meaningful to those who do not enjoy the fruits and the rights of citizenship, freedom and liberty. Our children in the schools are taught these things with an eye to the day when they will have an opportunity to enjoy the benefits of a free society such as we in Canada are proud to have.
Therefore I suggest, as a first proposition, that the vote ought to be given to our people at the first reasonable opportunity, at the first opportunity, that is to say, when looking at the situation as a whole one may reasonably conclude that the young people have had the kind of experience, the kind of training and the kind of environmental influences which will enable them to understand the meaning of the vote and to vote at least with the intelligence that we adults
[The Deputy Chairman.]
do. I would expect that they might even do a great deal better than we do, but at least with that intelligence.
The reason for suggesting 18, as I see it, is that it is by and large, with exceptions, of course, the age at which in most parts of Canada our young people finish their secondary schooling and are either absorbed in the work force, if there is work for them or, if they are fortunate enough, go on to university for higher learning. In other words, it is by and large across Canada a very logical dividing line between adolescence and maturity for those of us who are fortunate enough ever to gain maturity and therefore it is a logical dividing line between the "kids" who are not to vote and the men and women who are to have the vote.
If we look around us we find that in various important aspects a person 18 years old is asked to assume some very real responsibilities for the society in which he lives and which has given him his education and, I hope, adequate opportunity. You have first the fact that a good many of our teachers, for example, in the public schools in particular are under 21 years of age, being between 18 and 21 years old. The hon. member for Kootenay West (Mr. Herridge) tells me that some of the ladies of the press gallery-he would know more about this than I do; I am too old to find out-are under 21 years. At all events, we have in our public schools teachers who teach our children the meaning of democracy, the meaning of voting, and are themselves unable to cast a ballot on election day because they are 18 or over, but not 21.
As every member of the house knows, in two major world wars, including the last one against Hitler, we have asked young men of 18, 19, 20, before they reached 21, to take on the responsibility of defending our society, freedom and democracy, and to make the supreme sacrifice. If they are in the forces they are permitted to vote, but when they are not they cannot vote.
These are added to another reason that appeals to me, namely, that our educational system has improved a great deal in the last number of years. No matter what criticisms we may still have of our educational system in Canada and what improvements in that system all of us may still wish to see, I think that on the whole it is fair to say that it is a great deal better today than it was 20 years ago and it was probably a great deal better 20 years ago than it had been 20 years earlier. Therefore all of us in the New Democratic party urge that the 18 year old today, if he has not been driven out of school by economic circumstances and if he has had an opportunity to complete his secondary school education, has had sufficient education and

Canada Elections Act
sufficient training to be thoroughly compe- committee for careful consideration. I have tent to take a full part in the democratic not any objection to the bill going to a corn-process in our country and to cast his ballot mittee for as careful consideration as hon. on election day.	members wish to give the matter.
This matter was before the house in 1960 on an amendment to the third reading of an act to amend the Canada Elections Act, and it was before parliament on various other occasions as well. At that time the Leader of the Opposition, the same gentleman who is now leader of the official opposition, stated frankly that his party had opposed this suggestion in previous years but that he as Leader of the Opposition was supporting it. He had changed his mind. He said then, as found on page 6277 of Hansard for 1960, volume 6:
"The argument which I think must make the greatest appeal is that we do not hesitate as a state to call on young people to fight for our country and, if necessary, to die for our country, as thousands under the age of 21 have done. We ask them to accept the supreme obligation of citizenship in this regard, irrespective of whether they are 21 or 20 or 19 or 18, so it seems to me that if we ask Canadians to take on that obligation the time has come when they should have the privilege of voting-[DOT]"
And so on, along the same line. I hope that the Leader of the Opposition and the members of his party in this house, including the hon. member for Bonavista-Twillingate who then seemed to have some doubts in his mind, have resolved their doubts and are in favour of the bill which is now before the house.


John Whitney Pickersgill: Would the hon. member permit me to ask him a question?


David Lewis: Certainly.


John Whitney Pickersgill: Does the hon. gentleman know why I have some doubts, and if not would he like to hear me on the subject?


David Lewis: There is nothing I enjoy more than listening to the hon. member. When I have sat down, if the hon. member catches your eye, Mr. Speaker, he will no doubt have the floor. From the little experience I have had, if he has the floor and I am sitting here I shall hear him, Mr. Speaker.
I said that in 1960 the hon. member seemed to have some doubts in his mind. I hope that they have now been resolved and that he and his colleagues in the official opposition will support this measure. During that debate the Prime Minister-I hope I represent what he said accurately-said he had a great deal of sympathy for the proposal to lower the voting age to 18. I am referring again to the same debate in 1960. He said, however, that he did not think it was wise to have an amendment of that sort thrown at parliament on the third reading of the bill, but that it should go to a
I submit this is really a non-partisan matter. It seems to me it is more than time for us in the democracies in the west to emphasize in action, as we do in words, that our democracies have to be made as effective as possible. We must take every step available to us to improve their workings. We must make them alive in the minds and hearts of the people of our community. We must make them alive in the minds and hearts of more people in the community than is now the case, and that can be done in respect of young people if this bill is adopted and if the voting age is lowered from 21 to 18. Then, the young people, as they enter our labour force, as they start working after they have finished secondary school, or as they enter our universities to study the various ways in which mankind lives collectively-because that is all that education really means whether you study the humanities or the physical sciences-they will know that they now have the right to take a full part in the democracy in which they live. They can now translate the things they have learned on election day into actual expressions of opinion as to what policies, what principles and what programs they want to see in action in their country.
I submit, therefore Mr. Speaker, that the time has now come to do something about this bill. We have three provinces in Canada which have voting age limits lower than 21. The province of Saskatchewan was the first to reduce the voting age to 18, under the leadership of our leader in this house, the hon. member with whom I have the honour of sharing this desk. Then, the provinces of Alberta and British Columbia amended their respective provincial election acts to reduce the voting age to 19. We already have three jurisdictions in Canada with voting ages of 18 and 19. This parliament, therefore, it seems to me could give a lead to the other jurisdictions by doing something about it now.
I conclude my remarks by making these two points. My little bit of research on the subject has shown me that this matter has been before this parliament, if I am not mistaken, on at least a half dozen occasions. On every occasion it has been before parliament hon. members have generally agreed with the proposal, have said that they would like to see something done about it, and then have promptly talked the full hour to make sure that nothing was done about it. I submit that the time has come to stop talking

Canada Elections Act
and to do something about it. It is for that reason that I am going to sit down in one second.
The second point I want to make is that I am concerned only that this house accept this bill in principle. If it is desired that the bill go to the committee on privileges and elections, then of course I would be most happy to see it go there for all the study, all the inquiry that hon. members may think desirable or necessary. I urge, therefore, that this is the time, today is the day, on which this idea, which has been given such wide support on so many previous occasions, should be made a reality in the democracy of Canada.


Mr. Kindt:: May I ask the hon. member a question? Do I understand from his remarks that he favours 19 instead of 18?


David Lewis: No, I did not say that, Mr. Speaker. I said that my bill mentions 18 and I favour 18. I have said that one jurisdiction in Canada has a voting age of 18, namely Saskatchewan, and that Alberta and British Columbia have voting ages of 19. If the hon. member has the authority of the government to say that he will accept my bill if 19 is stipulated instead of 18, he might be able to get my concurrence.
(Translation):


Bernard Dumont: Mr. Speaker, may I put a question to the hon. member?
If the young people to whom he wants to give the right to vote at 18 were to vote for the Social Credit party rather than for the New Democratic party, would he withdraw his motion?
(Text):


David Lewis: I would agree that people of 18 should be given the vote, even if when they are given the right to vote they also exercise their right to be wrong.


Mr. O. J. Godin (Nickel Bell):: No doubt hon. members in this house, Mr. Speaker, are pleased at having the opportunity to hear comments on a problem which, as has been said, has been discussed on many occasions in the past. At the outset we can say that this is one problem upon which opinion in the various parts of Canada is not unanimous. If we look abroad to other countries we find that this same sentiment about lowering the age of voters has been accepted.
I recall having been a member of the committee on privileges and elections some few years ago when this matter was discussed. If I can be of any assistance to the house, possibly it would be by recalling the discussion which took place on this problem the hon. member for York South (Mr. Lewis) has brought before us. I must admit that no de-

cision was reached in the committee. A great deal of evidence was heard about what had been done elsewhere and what had been done in other parts of Canada with reference to this problem. I realize, being a member of the Liberal party, the party of reform, that many aspects of our way of life have changed. This is the result of many factors in Canada, one of which is our educational system and another the facility of communications in Canada. Recently, we were told that about 90 per cent of the Canadian people are reached by television.
Young Canadians know more about the election which took place a few days ago in the United States than older people knew of Canadian problems and affairs in days gone by. Greater facilities in education and better communications have given the younger people a large share of knowledge, and in Canadian universities the young people of today know more about Canadian political problems than their forefathers did at the same age.
The main problem is to find out what age group would be best suited. The evidence is voluminous that many people of 18 years and under are engaged in occupations, pay large amounts in taxes and do things to help the productivity of the country. Therefore they should be given the right to choose those whom they wish to be in charge of our political affairs.
Reference has been made to the age at which soldiers are taken into the army. We know soldiers are given a vote; but the younger soldiers, who may possibly be the first to be called upon to defend our nation, should also be given the right to decide the people they want in charge of the country's affairs.
I recall, when amendments to the election act were brought before the house a couple of years ago, the Prime Minister made a statement to the effect that the matter should be studied by a special committee at a later date and, speaking from memory, I believe he said hon. members of the house would be given the opportunity to make that study. The time has arrived for it to be undertaken, and it would be beneficial if the government did something to assist hon. members in undertaking the study that was contemplated.
During that debate references were also made to the effect that we should wait until the census returns were completed, but all the census returns will tell us would be the number of people in Canada between the ages of 18 and 21. A census could not in any way be a factor in determining at what age people should be given the vote, or in determining why the age of 18 would be better than any other age.

The Liberal party on many occasions has expressed its desire that a complete study be undertaken into the question of granting the franchise at 18 years of age instead of 21. Two years ago the then hon. member for Beauce, had a bill on the order paper similar to the one now under discussion. The hon. member for Skeena also had a similar bill which was discussed at that time, and I express the views of the Liberal party when I say we are prepared to make a complete study of this matter to see if the qualifying age could be lowered.
I have listened carefully to the hon. member for York South but I do not fully agree he has found all the reasons why 18 years would be the proper age. However I am prepared to state I have the same view, and I would be most happy if the Prime Minister would see fit to introduce a measure providing for the establishment of a special committee to study this problem, and to see that more complete information would be given that committee than was given the house in an indirect way a couple of years ago.
Certainly in the institutions of higher learning, as has been pointed out, some of the teachers are under 21 years of age, and doubtless they study political science. They have a great knowledge of the possibilities and needs of Canada and should have the right to go to the polls and choose their own representatives. If the committee decided that 18 years is the age at which the greatest number of Canadians become capable of exercising the franchise, then people of 18 years of age should be entitled to vote.


Mr. W. B. Nesbitt (Parliamentary Secretary to the Minister of Trade and Commerce):: Mr. Speaker, it is interesting that this debate on the bill moved by the hon. member for York South should come up in this particular week which has been dedicated by a number of people in Canada as youth appreciation week. Thus it is singularly appropriate that the subject should be discussed this week.
As two previous speakers have pointed out, this is an old subject in the house and I would agree that it is a non-partisan one. I also think it might be safe to say that most hon. members, like most Canadians, do not have any very strong feelings one way or the other on the subject. Speaking for myself I know that if anybody could present me with a really good reason why we should lower the voting age to 18 then I would be quite in favour of it. On the other hand, I do not feel we should make change just for change's sake because sometimes our institutions, and I think one might describe the voting age of 21 as being an institution in
Canada Elections Act
our society, albeit a small one, have developed over the years as a result of experience.
Having said that, I would like to add that there are certainly many arguments both ways. In years gone by I have had some rather active experience with young people in one political party; I have even had association from time to time with people who were formally enrolled in other political parties, and I can say I have never really found any very strong demand among young people to have the voting age lowered from 21 to 18 although, to be perfectly fair, I have heard the subject discussed favourably among such groups.
We must look at some of the arguments on the subject, both pro and con. In the first place, Mr. Speaker, let us look at the arguments which are in favour of lowering the voting age to 18. It has been pointed out by some that, since young people have a much greater stake, from the long range point of view, in the future of the country, it would be advantageous to lower the voting age from 21 to 18. It is said that those who are 18 are naturally going to live longer and have a greater interest in what is going to take place in the country in the future. I think that is a pretty good argument. Another argument-and I think this was at least alluded to by the hon. member for York South is that it would help young people, even those at school, to develop an interest in our democratic way of life; it would be a great help in developing an interest perhaps to a greater extent than people have today. Again, I think that is a good point and one which deserves consideration. Likewise, the arguments that were put forward by the hon. member for York South are, I think, very good arguments. I would not in any way disagree with them, except one, and I will come to that in a moment.
Let us for a moment look at some of the arguments on the other side of this question. It has been said by some that at the age of 21 people have reached a greater degree of maturity than they have at 18. This, of course, is a matter of opinion. I agree that 21 is a purely arbitrary age which has been arrived at, but again-as I mentioned earlier-it has been arrived at over the years as a result of experience and for no other reason. It is quite true that some people are quite mature enough to vote at, perhaps, the age of 15; and, indeed, as was pointed out by the hon. member for York South, some people perhaps never reach sufficient maturity to vote at any age. But we cannot take extreme examples one way or the other. When we are dealing with large numbers of people who make up

Canada Elections Act
a community, or indeed a country in this case, we have to look at the average, if there is such a thing. Experience appears to have shown that 21 is the age when a greater degree of maturity is reached, rather than 18. Again, Mr. Speaker, if some can show me differently I will be quite willing to change my mind.
The next argument put forward-and I am not too sure that this is as valid an argument as some others-against lowering the voting age is that a citizen must be fully qualified in order to vote, and must be under no disability of any kind. Of course, as we know in Canada, this being a federal state with divided powers, we do not have the entire say in this house as to what legal disabilities people may be under. Some of these things are provincial matters. As we all know, until a person is 21 years of age he cannot own property, except under certain special conditions; he cannot enter into contracts, except under very special conditions; and indeed he is not responsible for his torts or wrongdoings except, again, in very special instances.
Some point out that right from the days of Pericles' Athens one of the qualifications for a person being allowed to vote, as far as being an Athenian citizen was concerned, was that he had to be fully qualified and under no disability. Until a person is 21 years of age, in Canada he is under those legal disabilities or disqualifications, if you want to put it that way. This is unfortunate, perhaps, but it is something about which we in this house cannot do anything. However, I do point out that this is perhaps not as valid an argument as some others. It is perhaps a more theoretical than practical argument.
The last point I would like to make against lowering the voting age concerns the question of our present society. I agree with the hon. member for York South that, as society changes, so our institutions must change with it. I fully agree with this. The hon. member for York South pointed out, I believe, that nowadays younger people have a greater opportunity of finding out what are the political problems of the day. He also pointed out that the age of 18 is perhaps a good, arbitrary dividing point since that is the time when some people go to work and others go on to university or some other form of higher learning. I think on this point that he and I would disagree. I feel that because of conditions which have developed over recent years in our society and show every indication, I hope, of continuing, perhaps there would have been a greater argument for lowering the voting age 20 years ago than there is today. Hon. members may wonder why I say this. I say it for this reason. In our modem society there is a much greater tendency to keep people at

school longer. There are government scholarships of various kinds, scholarships put up by organizations and the like, and training programs both federal and provincial which encourage people to stay at school longer. We hope they will stay at school longer, because in our complex industrial society people without skills are pretty well lost. I think that would be accepted as a fact by everyone.
For this reason there is a greater tendency for people-and I hope this will continue to be the case-to stay at school longer and take further training. For this reason I say that the voting age should remain at 21, because I think most people will agree that in order to participate in government one should have reached maturity. Maturity does not just mean reaching a certain physical age; it also means acquiring of experience. I do not think a person is fully experienced until he has left his academic training, or technical training, as the case may be, and has gone out into the world and had some maturing, practical experiences in the outside world. When one is attending school one is usually supported, to a degree at least, by one's parents, by the state, by the community or by some organization. Until one actually gets out and works in the world and, if I may put it this way, has knocked about a bit-


James Allen (Jim) Byrne: And sowed his wild oats.


Wallace Bickford (Wally) Nesbitt: The hon. member for Kootenay East makes some observation about this. Perhaps he will deal with that later. Until one has this experience I do not think he can be considered mature. I think experience does a great deal in helping a young person acquire better judgment and discernment on various issues, rather than a purely academic background. I think there is something that should be considered in this respect. In this regard many people point out that when one is out in the world working, he has an actual stake in the community itself. You are helping to make your own living there; you are helping, by paying taxes, in the upkeep and maintenance of the community. When you have rather more practical experience in this regard, perhaps it helps one's discernment and judgment. I do not think one can go too far in this respect, but I believe it does help to some degree at least.
There are, of course, many arguments on both sides. I have tried to point out one or two in favour of lowering the voting age to which the hon. member for York South did not refer. However, there are those arguments against, which should be carefully considered. Like the two hon. members who have already spoken in this debate, I would

think that at some time a committee might well look into this matter, because it is a subject that has many facets. I do not think it is a matter of great urgency in making a change, whether it be to 18, 19, or whether the age should be raised, although I do not think I would really agree with that. But this question deserves very careful consideration. I know, Mr. Speaker, that there are other hon. members who wish to speak on this subject. I know one hon. member of the Social Credit party wishes to say something about this question, and there are others; therefore I will not take up any more time of the house.
(Translation):


Mr. L. P. Antoine Belanger (Charlevoix):: Mr. Speaker, it gives me pleasure to support the bill submitted by our hon. colleague from the N.D.P. I sincerely commend him for his initiative. I also assure him that I have no intention of killing his bill, I had prepared a somewhat longer contribution but I will make only a few remarks, to show him that I mean what I say. Our party is young and I believe I am the spokesman of my group when I declare that we support all sensible reforms.
The proposal of lowering the voting age to 18 is certainly most sensible and had already been submitted to our convention in 1921. Long before our party was organized, we were already in favour of such an idea.
A few moments ago, the hon. member stated we had accepted some of his ideas. On the other hand, he also said that there might be differences of opinion and they should be given serious consideration. One has to split hairs like he does to be able to say that, while he is not against, he is not in favour, and that, while he is not in favour, he is not against, without ever saying why he is against.
I feel that if young people from 18 to 21 are bright enough and old enough to go to war and fight for us, they are also old enough to be entitled to vote.
I would ask the hon. member who spoke before me what he thinks of the great principle "no taxation without representation". If young people of 18 and over pay taxes to municipal, provincial and federal governments, what becomes of that principle when they are denied the right to vote?
Such discrimination should be wiped out as soon as possible. It is not possible to deny them the right to have their say in the administration of the country; they must be permitted to exercise their right to vote as they wish exactly as they have the right to order their own future.
Canada Elections Act
We have the responsibility to prepare the future for our youth but I think it would be fair and logical that they could have something to say about it. One might think that I am preaching for my own party when I say that the young people generally accept new ideas. Although the hon. member who just sat down said a while ago that young people would rather deal with something else than politics, I should like him to attend a meeting of our young people in our ridings and he would see how eager they are to vote and to take part in the political life of their country. In closing I shall say that the best way to get our young people interested in Canadian politics and to make them better citizens is to give them the right to vote at 18.
With these words I end my remarks because I would like the bill to be put.
(Text):


Mr. J. C. Munro (Hamilton East):: I should like an opportunity on behalf of my party to make a few brief observations on this subject. I see the time is getting close to a quarter to six, so I shall be very brief.
It seems that the action which is anticipated in this legislation gives formal recognition to the added burden which we are placing on our young men and women in today's society and of the role we shall expect them to play in the future. It takes into account the economic areas and the professions in which they are now participating while under the age of 21. I am referring particularly to the areas of teaching, service in the armed forces, with the police and in executive positions. I think it is appropriate that we should pass legislation today of the type suggested.
Almost all of us would agree, I believe, that heavy burdens will be placed on the shoulders of our young men and women in the years ahead and that if the cold war continues we shall expect them to take a more active role in confronting these difficulties than many of us have taken. In the light of this expectation it does seem reasonable that legislation such as we have before us should be passed.
I should like to comment briefly on some of the arguments which have been introduced, or referred to, as being unfavourable to this measure. I think they can be completely answered by reference to our expanding educational facilities and the great degree to which our young people are now taking advantage of them. This is virtually a day of mass education and the old arguments against young men and women having the vote are outmoded in the light of this consideration. Their awareness of the world situation has been sharpened because of the degree to which mass communications media have developed in this country, as they have in
14S6

Canada Elections Act
most of the countries of the western world. They can hear world reports and listen constantly to some of the most learned men in all walks of life speaking on television and radio. This, I submit, makes young men and women far more competent to pass a judgment on the events of the day. Indeed, I believe they are just as competent to do so as our older men and women in Canada; they may be even more competent, because our young men and women today are very serious and concerned about the important questions which need to be resolved. They realize, perhaps, that they have many more years ahead of them than some of our older citizens and that it behoves them to have a considerable say in the policies which will determine their future.
I should like to make one or two comments on what was said by the hon. member for York South. I cannot help but wonder whether, as one of the leading spokesmen for the New Democratic party, he has tended to discount an increasing tendency on the part of young people to indicate their disenchantment with socialist dogmas and the old concepts of class society. Perhaps he has tended to discount the fact that young people today are prepared to accept the challenge of expressing their ideas within a party framework composed of people of different and varied interests; they express their views within that framework, but those views are tempered by the opinions of others. I wonder, also, if the hon. member has not ignored the tendency of our young people to be impatient when they see the frustration from which the country suffers by reason of the existence of minority groups. If he has given consideration to these matters, then I must say I admire the hon. member for his broadmindedness in being the author of the bill before us.
In conclusion, I think probably the greatest ancillary advantage which will arise if we enact this type of legislation in Canada is that increased impetus will be given to the necessity for the achievement of further advances in education by all levels of government. I think this will probably be the first demand of this new segment of our voters, if given the franchise. I think this would be a definite contribution to the good of Canada, and one which we all should welcome.


Mr. Terry Nugent (Edmonion-Siraihcona):: Mr. Speaker, I know time is getting on, but in order to relieve the anxiety of my colleagues in the house as to the necessity of having a vote on this bill tonight, I should start out by saying that I am not at all sure that I am ready for a vote on it. I am not sure that the house is ready to vote because

the question is one of those subjects on which it is very difficult to make up one's mind. I agree with many speakers who preceded me who said that the voting age, whether it is 21, 19 or 18, is to a good extent arbitrary, that the prime consideration seems to be the maturity or the responsibility of the person who is about to cast a vote. The question of the maturity, the ability or the understanding of a voter is of necessity a very subjective one, rather than objective. Most of us in this house at least like to think that we can remember the days of our youth and our own particular abilities. Some of us were very active in various organizations before our twenty first birthday, and I am sure that there is hardly anybody in this house who did not become most impatient with the slowness, if not the stupidity, of those who could not see things as clearly as we could. I am reminded of the story of the young fellow who, in speaking of his father said: "When I was 16, my dad didn't know a thing; by the time I was 21 I was amazed at how much the old boy had learned".
Mr. Speaker, I am not sure whether the magic age of 21 brings that realization. There are various ways in which maturity is demonstrated. There are various facets of character and intelligence which lead other people to judge one's age or maturity on different levels and for different reasons. For instance, on occasion, I have heard the hon. member for Kootenay West described by some people as the youngest member in the house. Some feel that the sense of humour he sometimes exhibits could belong to the very young because it is so bright and fresh. I have heard others say that they feel a little annoyed that this stigma can only belong to those who are too old to be here. However, I think that to consider what should be done, and at what age, would require computing machines of the type necessary to put a rocket into orbit. To try to arrive sensibly and logically at a subject which is going to be governed, as is this one, by the feeling of the majority of the people which you get on one side or the other seems to be a sort of hopeless task. The hon. member for Oxford described it in one sentence when he said that those who have finished their training are probably more apt to have the necessary maturity. I can see my brother in Edmonton, who is just starting law at the age of 40 squirm. I think he took that course because he felt no one had enough intelligence to keep up with his three sharp kids in grade ten, and wanted extra education.
I do not think that this question is just one of maturity or intelligence. I think I am

informed enough on the subject to know sufficient about young people, and I am sure that many children in their late teens are actually capable of sounder thought than some of us at a later age. I know that the question of maturity is not one that stops at 21; in most cases it goes on quite late into life. I know from my criminal law practice at home that many a man in his middle thirties, who was in trouble for the first time in his life, owed it to the fact that he suddenly started to mature and to realize, perhaps for the first time, how many years he had gone on facing life's difficulties without really realizing what they were. Then he got old, or wise enough to realize how little he had accomplished and how much more he might have done, and went to pieces.
Mr. Speaker, I feel that the question of reaching the age of maturity turns on looking frankly at one's responsibilities. I suggest that in this day and age life is much more complicated than it ever has been before. It requires more years of education merely to be able to hold one's own, to have any assurance of holding a job or progressing in one's daily work. The problems we face in our day to day life are necessarily more complex because the means of mass communication are more a part of every day life. We are not confined, as we were some years ago, to merely local problems; but every day, whether in school, radio, television, or in every walk of life, the troubles from every part of the world are brought home to us. I suggest that to lower the voting age when there are so many complicating factors which make it harder for a young person to get a proper perspective in life is not being completely realistic. When I suggest that we go slow in dropping the age of 18, there are some very good, valid and substantial reasons. Of course, they do not convince me that we cannot do this; they merely convince me that I would have some hesitation in voting on the question.
I feel that there are many members in this house, perhaps more experienced in psychology and experienced in other walks of life than I, who might be able to contribute something to this discussion, but I suggest that when the hon. member for York South (Mr. Lewis) talks of the responsibilities of democracy and of giving voting privileges to young people to add a sense of responsibility, he is only meeting half the problem. I think something is wrong in giving a person too easily the privilege of voting. There is something to be said for the right of earning the vote. Even if it is earning it merely by waiting two or three years, that in itself may be enough. May I call it six o'clock?
Business of the House BUSINESS OF THE HOUSE


John Whitney Pickersgill: Mr. Speaker, before you leave the chair, I wonder whether the house leader could give a little more complete indication than was given last night as to what the business will be for the whole of next week, if the government and the parliament last that long.


Gordon Minto Churchill: The opinion of the Winnipeg Free Press is that the Liberal party is not going to last very long. On Monday we will start off with the budget resolutions, followed by the bills based on those resolutions, granting to the Minister of Finance some leeway as to the order in which these come forward in case he wants to defer the bills until Tuesday. If the work proceeds quickly we would then take up two bills in the name of the Minister of National Health and Welfare, Bill No. C-3, to amend the Food and Drugs Act, and Bill No. C-4, to amend the Department of National Health and Welfare Act; then Bill No. C-71 in the name of the Minister of Agriculture, an act to amend the Farm Credit Act and, if the house runs short of work, the resolution in the name of the Minister of Justice, which is No. 22 on today's order paper, a measure to amend the Judges Act.
I think that would keep the house employed on Monday and Tuesday. We hope to complete the budget resolutions and the bills. They are the most important of the ones I have called.


John Whitney Pickersgill: Can the house leader give us any idea when the redistribution measure will be brought before the house?


Gordon Minto Churchill: Very soon, I hope; but the budget resolutions take priority.


Stanley Howard Knowles: Mr. ' Speaker, the minister said that the budget bills would not be proceeded with Monday if the minister did not wish to do so. Can it be understood they will not be proceeded with if we do not have them before Monday?


Gordon Minto Churchill: I have not had a chance to consult with the Minister of Finance and it may well be they will come up on Tuesday. I was rather leaving that open for him to give us a decision.


Stanley Howard Knowles: Let us leave it open for us too.


Gordon Minto Churchill: Well, I think you would be quite prepared for almost anything. You could raise a point of order if you were short.


Stanley Howard Knowles: Thank you.


[Stage Direction]
It being three minutes after six o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Monday, November 12, 1962