1962-11-15

Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, on October 19, as reported at page 699 of Hansard, I placed before the house the response of the President of the United States to the suggestion I had made in a letter to him representing, as it did, a matter that I brought before the commonwealth prime ministers' conference in London. I now wish to report what has taken place since.
Representatives of the nations who are parties to the general agreement on tariffs and trade now meeting in Geneva have agreed that a ministerial meeting should be held in the early part of 1963 to consider a program for effective liberalization and expansion of trade in both primary and secondary products. I think I can do no better in this connection than to read from a press communique which will be released today by the GATT secretariat. It says that the contracting parties have agreed that a ministerial meeting should be held in the early part of 1963 to consider such a program to which I have already referred.
-full weight should be attached to the importance and urgency of negotiating solutions to problems of trade in primary products and to the additional trade problems of less developed countries. The proposal that such a meeting should be held was made jointly by governments of the United States of America and Canada.
A precise date for the meeting should be determined by the council of representatives.
The council should be convened for this purpose by the executive secretary at the earliest possible date that he feels that necessary elements exist for arriving at a decision.
In this connection, due weight should be attached to the fact that in order to enable the United States of America to play a full part in a further substantial and early movement for reduction of tariffs and other barriers to trade, it is desirable that the necessary decision to initiate such a movement be taken early in 1963.
Council should at the same time propose an agenda for the meeting of ministers and make adequate preparation for the meeting.
I know the house will appreciate the fact, as it says in the communique, that Canada and the United States jointly proposed in Geneva that this meeting be held. This
decision is directly in line, as I said a moment ago, with the proposal I made for a meeting of like minded nations to consider these trade questions, which received the endorsement and support of President Kennedy last month. Representatives in Geneva have agreed that at this important meeting full weight should be attached to the urgency of negotiating solutions to the problems mentioned therein. That is in entire accordance with the Canadian views, and the government welcomes this decision.
The exact date of the conference will be settled at an early meeting of the GATT council. Arrangements will be made for Canada to be represented at this very important meeting by the Minister of Trade and Commerce and possibly by other ministers as well. I believe that a meeting at this time will have the most far reaching and beneficial results throughout the free world, and will open great possibilities for expanding trade and in consequence expansion in the Canadian economy.


Mr. R. N. Thompson (Red Deer):: Mr. Speaker, I should just like to express briefly my own satisfaction in hearing what the Prime Minister has had to say with regard to this world trade meeting as to which our good neighbour to the south and Canada have taken the initiative. Certainly this is a very desirable thing, owing to the simple fact that in the cold war of which we are a part it is impossible to separate the economic aspect, which here vitally concerns the freer exchange of goods amongst the nations and peoples of the earth in order better to meet the needs of people everywhere. In working on the agenda, as the Prime Minister has mentioned, I believe that one of the most important aspects, in addition to the lowering of tariff walls which tend to restrict trade, is the problem of international settlements. In the same way that we were in desperate trouble internally in the thirties with the problem of exchange, so are we now in trouble externally. Here is presented an excellent opportunity to be dealing with this problem in the wider aspect of world trade.
I would also just add this word to the Prime Minister and to his Minister of Trade and Commerce. It is excellent for us to be planning for the long term in relation to trade, but it is also important for us to be planning for the immediate objectives which

GATT Meeting at Ministerial Level we must reach as well. I am sure the government is doing all that it can. I would just add this word in order to impress again the importance of meeting some of these trade problems. We cannot separate our foreign policies from our trade policies, since the real offensive that is directed against us is an economic one.
I am pleased, as I am sure are all of us, that this action is being taken now. Again I would urge that we go forward and bring to the matter the leadership in this regard which I think the people of the world are waiting for, and give some further assurance that we can still live in a day of peace when the development of the world's resources can go forward as it should.


Mr. T. C. Douglas (Burnaby-Coquitlam):: Mr. Speaker, the members of the party with which I am associated welcome the news that a ministers' conference may be held to remove trade barriers between nations and encourage a freer exchange of goods and services among the GATT countries. Hon. members in all parts of the house have expressed their approval of a greater liberalization of trade. I would point out, however, that this objective is not accomplished by having surcharges such as we have had over the last while. I should like to express the hope that by the time Canada attends such a conference we shall go to it with clean hands and with our surcharges completely removed.



PUBLIC SERVICE


John George Diefenbaker: Mr. Speaker, it is traditional
at this time of year, and I have been requested by representatives of the civil service to make a statement in this regard, for the government to review the Christmas holiday situation to determine whether civil servants and other government employees should be given time off in addition to the statutory holidays of Christmas day and New Year's day. This year these two holidays fall on Tuesdays. The government has decided that the preceding Mondays, December 24 and December 31, shall be allowed as additional holidays for civil servants and other government employees. However, I should point out that the exigencies of the public service may require a number of civil servants and other government employees to work on these holidays, but any such persons will receive additional time off in lieu of these days or additional

pay in compensation for the extra work, depending on the laws applicable in each case.



INQUIRY AS TO ANNOUNCEMENT OF SALARY INCREASES

[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a question to the Minister of Finance. Further to the announcement made today by the Prime Minister regarding civil service holidays during the Christmas period, will there also be an announcement before Christmas regarding the unfreezing of civil service pay increases?


Hon. George C. Nowlan (Minister of Finance):: Mr. Speaker, if and when such an announcement is made it will be made in the House of Commons.


Stanley Howard Knowles: A supplementary question. Will the minister be meeting the representatives of civil service organizations on this question shortly?


George Clyde Nowlan: I hope to have further conferences with the representatives of the various organizations in the relatively near future.



UNITED NATIONS


Hon. Howard C. Green (Secretary of Slate for External Affairs):: Mr. Speaker, I should like to inform the house that the 18 nation committee on disarmament will resume negotiations in Geneva on November 26. General Burns will be returning to Geneva shortly, after consultations here, and will lead the Canadian delegation.
Two questions should receive priority when the 18 nation committee resumes. First and foremost is the urgent need to reach agreement on the cessation of nuclear weapons tests in accordance with the resolution which war recently adopted at the general assembly. That resolution calls for a report to the assembly by December 10. As a result, delegations will need to make an all-out effort.
Second, we believe that early consideration should be given to collateral measures which would reduce international tension and assist the realization of general disarmament. It is particularly important to take full advantage of the lessons of the Cuban experience to ensure that concrete measures are undertaken to reduce the risk of war and diminish the causes of existing tension. This question of collateral measures has been a Canadian initiative from the beginning.

It will also be necessary to proceed as quickly as possible toward agreement on far reaching measures of general disarmament to be embodied in a comprehensive program. As in the earlier rounds of negotiations in Geneva, the Canadian delegation will make every effort to emphasize areas in which positions of the two sides are close to one another and where a wider measure of agreement should be achieved.


Hon. Paul Martin (Essex East):: Mr. Speaker, I rise to note with satisfaction the announcement of the minister that the 18 member states on the disarmament committee will shortly convene in Geneva. In doing so, I express what I am sure is the general desire of the people of Canada, as well as the membership of this house, that the objectives the government has in mind in this regard will be fully realized. Perhaps, the minister will not mind my saying that it becomes increasingly apparent that the problem is much more difficult than he had first anticipated. Nevertheless, consistent with measures for our security, there will be the strongest desire that progress be made at Geneva this time.
There seems to be some ground for thinking that progress has been made in the matter of the cessation of tests. Certainly if agreement with regard to this matter cannot be reached, it is difficult to conceive how we may look forward realistically in the immediate future to some agreement in the matter of partial or total disarmament.
In any event, the minister may be assured that consistent with our security interests based on the desirability of pinpointing the objects of control and providing for adequate inspection, there will be the strongest desire on the part of the Canadian people that at long last some step may be taken toward progress at this disarmament meeting.


Robert Norman Thompson: I would also join in giving the Secretary of State for External Affairs assurance of support from our side of the house in his efforts toward this basic objective which must be realized if we are ever going to have peace. I would say this to the minister, that his consistent and persistent efforts in this regard are appreciated. We have awakened out of our lethargy perhaps as the result of the Cuban experience. The point with which I am concerned is that we won round one, but round two might be lost; that is a greater danger to us today than perhaps the crisis which was first precipitated.
Standing upon those principles which are right, upon the need of the basic measures of defence responsibility that we carry, and 27507-3-105
GATT Decision on Surcharges trusting that Canada will lead the way on this question, I may say that she has the respect of the nations of the world and a background that is free from those things which might hinder carrying through this objective. We admit it is an idealistic objective, but it is one which must be reached if reality is to be faced up to at this time.


Thomas Clement (Tommy) Douglas: rise merely for the purpose of assuring the Secretary of State for External Affairs that we in this group are appreciative of the efforts which he and his associates have put forth toward promoting the cessation of nuclear tests and bringing about nuclear disarmament. I assure him of our support for any program which he or the Canadian delegation to the disarmament committee care to put forward in this regard. In our opinion one of the strongest things Canada could do in this regard would be to make a clear and unequivocal statement to the effect that Canada will not accept nuclear weapons, nor put them in the hands of Canadian forces.



FINANCE


George Clyde Nowlan: Mr. Speaker, I have a brief statement to make concerning a decision reached in Geneva today by the contracting parties to GATT in respect of Canada's import surcharges. The surcharges were reviewed during the current session of the contracting parties. This provided an opportunity for the Canadian representatives to discuss with representatives of our trading partners the operation of the surcharge measures and the reasons which made them necessary. It also provided an opportunity for other delegations to set out their views about our surcharges fully and frankly. There has been a most useful exchange of views on these matters.
The contracting parties have now taken a decision, Mr. Speaker, and I should like to table that decision. The decision notes the undertaking which has been given by the government, both in this house and to our trading partners, that the surcharges will be removed as soon as circumstances permit. The Canadian delegation was instructed to support this decision, since it is fully in accord with the policy of the Canadian government.


Mr. Speaker:: Order. The minister has asked leave of the house to table a document. I take it there is agreement to that request?


Mr. Mcllrailh:: It should be in Hansard.


Mr. Speaker:: What is the length of it?

GATT Decision on Surcharges


George Clyde Nowlan: It is about a sheet and a quarter.


Mr. Speaker:: Would the minister agree, then, that instead of tabling the document it be printed in Hansard as part of today's proceedings?


George Clyde Nowlan: Yes.


Some hon. Members:: Agreed.
[Editor's note: Text of document referred to above is as follows:]
GATT Decision-Canadian Temporary Import Surcharges
Having received from government of Canada a notification dated June 25, 1962, concerning its imposition, on that date, of temporary import surcharges on numerous products including items bound in parts I and II of schedule V to the general agreement,
Having heard the explanation of government of Canada that the imposition of these surcharges is necessary in order to safeguard Canada's external financial position and balance of payments,
Having also heard Canadian government's explanation of the reason why it took action through the introduction of temporary import surcharges rather than through the introduction of alternative measures,
Taking note of the findings of the I.M.F. concerning the Canadian reserve and payments positions in relation to the incidence of the measures adopted,
Taking note that the government of Canada has begun to introduce longer term corrective measures of a positive and constructive character,
The contracting parties
Express their regret that the government of Canada should have found it necessary to introduce temporary measures inconsistent with article II of the general agreement,
Welcome the beginning made by Canada in the elimination of the temporary surcharges and the stated intention of the government of Canada to eliminate the remainder as quickly as circumstances permit,
Recommend that the remaining surcharges be eliminated expeditiously,
Request the government of Canada to report on action taken to this end to the contracting parties through the council in the early part of 1963,
This decision is without prejudice to the rights of any contracting party under the provisions of article XXIII.


Mr. Walter L. Gordon (Davenport):: Mr. Speaker, those of us who have had an opportunity to read this statement by the contracting parties will realize that while it is couched in diplomatic language, it seems to be highly critical of the government's action of last June. There are two references in particular which I think should be read into Hansard. One is the notice that the contracting parties have taken that Canada "has begun to introduce longer term corrective measures of a positive and constructive character." Those measures, if they have been taken, have not amounted to very much up to date, in the opinion of some hon. members of the house. It is for that reason

that I think this particular section of the preamble should be brought to the attention of the house and the public.
There is another section that I think should also be read into Hansard.


George Clyde Nowlan: It is all in Hansard.


Walter Lockhart Gordon: Well, it should be announced publicly; and that is that the contracting parties "recommend that the remaining surcharges be eliminated expeditiously." If I understand the meaning of that adverb it means very soon indeed. In fact, they go on to say they request the government of Canada "to report on action taken to this end to the contracting parties through the council in the early part of 1963." We on this side of the house very much hope the government will be able to do that.


Thomas Clement (Tommy) Douglas: All I wish to say, Mr. Speaker, is that we in our party are delighted that our fellow members in GATT have supported the position taken by this party that these surcharges should be ended at an early date. Although I do not suggest there is any necessary relationship between their decision and the position we have taken, I think the document is a very revealing one. It simply says to the Canadian government, like the small boy caught in the jar, "You have got the jam on your face; if you wash it off we will be prepared to drop the whole thing." I hope the government will act accordingly.


Robert Norman Thompson: Mr. Speaker, a copy of the document to which we have been referring has not reached my hands and I would like to reserve our remarks until a later date. However, we are pleased at least with the report that has been made.



COLUMBIA RIVER


[Stage Direction]
On the orders of the day:
Mr. Arthur Laing (Vancouver South):: have a question which I would like to address to the Minister of Justice, as I think he has inherited this responsibility. Is it true that federal negotiators have been participating in meetings held in the United States and dealing with the Columbia river proposals, and that the plans advanced by Premier Bennett of British Columbia have collapsed?


Hon. Donald M. Fleming (Minister of Justice):: Mr. Speaker there have been certain exchanges, but I have not got any information indicating a collapse of the proposals of the government of British Columbia.


Mr. H. W. Herridge (Kootenay West):: wish to address a supplementary question to the Prime Minister and, Mr. Speaker, I notice the expectant atmosphere. In view of a report from Washington that Premier Bennett asked the Bonneville power authority to build the dams mentioned in the Columbia river treaty at a cost of $390 million and was refused; and in view of the fact that he was also informed that there is no market in the United States for downstream benefits at five mills, has the Prime Minister any information he can give to the house with respect to this news?


John George Diefenbaker: Mr. Speaker, the Prime Minister cannot give that information, but I suggest to the hon. gentleman that he communicate with the premier of British Columbia, who made the transactions in question.


Mr. Robert W. Prittie (Burnaby-Richmond):: I wish to address a question to the Prime Minister. If it is revealed that Premier Bennett's plan regarding the export of power has failed, will the government give consideration to the development of the Columbia river on the basis of the McNaughton plan, which we know is the best plan?


John George Diefenbaker: The premise being hypothetical, no answer can be given.


Mr. T. S. Barnett (Comox-Alberni):: Mr. Speaker, I should like to address a question to the Prime Minister. In view of the recent developments in connection with the Columbia river proposals which were referred to in earlier questions today, can the Prime Minister indicate when we will have an opportunity of discussing these matters, either in the house or in the committee on external affairs.


John George Diefenbaker: Mr. Speaker, I do not want to get into a controversial field, but when the measures which are now before the house, including some very important ones, have been cleared away, then we will be in a position to deal with some of these other matters.



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. Hazen Argue (Assiniboia):: I wish to direct a question to the right hon. Prime Minister arising out of the continued drive by railway companies for large scale abandonment of railway lines. Has the governor in council received a petition under section 53 27507-3-105J
Inquiries of the Ministry of the Railway Act from the Canadian Federation of Agriculture asking for a stay of all proceedings in connection with applications respecting branch line abandonment until such time as the government has had an opportunity to develop a long range policy? If so, what action has the government taken on this request?


John George Diefenbaker: As to the first part of the question,
I cannot answer that because I did not have notice of it and, naturally, I am unaware of the various representations which are made until they are brought officially to my notice. However, the Department of Transport has met with the two railway presidents to devise a procedure by which the interested parties will have time to arrange for alternatives.



WELLAND CANAL


[Stage Direction]
On the orders of the day:
Mr. Joseph R. Sams (Wentworth):: I wish to direct a question to the Minister of Transport. Would the minister kindly inform the house what damage resulted to the Welland canal and/or bridges carrying highway traffic as a result of the accident involving the ocean vessel Captain Theo on November 13 last? Was any interruption of the operation of the canal involved?


Mr. Speaker:: With the greatest respect to the hon. member, I think that question should go on the order paper.



ST. LAWRENCE SEAWAY-INCREASE IN PILOTAGE FEES

[Stage Direction]
On the orders of the day:
Mr. Harry Bradley (Northumberland):: should like to direct a question to the Minister of Transport. Will Canadian pilots in the St. Lawrence seaway system receive increased pilotage fees comparable with those recently announced by the United States?


Mr. Speaker:: I think the hon. gentleman will realize that his question should go on the order paper.



SHIPBUILDING


[Stage Direction]
On the orders of the day:
Mr. Thomas R. Berger (Vancouver-Bur-rard):: May I direct a question to the Minister of Transport. On Thursday, November 8, I asked the minister why, in view of the fact that the house had already authorized the government to make progress payments to shipbuilders out of consolidated revenue, the payments were not being made on schedule.
1650	HOUSE OF
Inquiries of the Ministry The minister agreed to take the question as notice, and I should like him to tell the house when he can give us information about the situation and provide an explanation.


Hon. Leon Balcer (Minister of Transport):: Tomorrow, Mr. Speaker.



WELLAND CANAL


[Stage Direction]
On the orders of the day:
Mr. J. C. McNulty (Lincoln):: Mr. Speaker, I asked the Minister of Transport yesterday an urgent question with regard to the tie-up of vessels in the Welland canal. In the absence of the minister the parliamentary secretary took the question as notice. Would the minister be able to answer my question today?


Léon Balcer: Yes, Mr. Speaker. I have received a report from the marine service of my department which is as follows. While it is not practicable to ensure that pilots will always be available immediately on request during peak traffic periods, every effort is made to reduce delays to a minimum. Some delays occurred early in November due to a shortage of pilots, and three additional pilots have recently been appointed. There have been no such delays during the past seven days.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. Stanley Haidasz (Parkdale):: In view of the statement made yesterday by the Minister of National Health and Welfare I should like to ask the minister whether the federal government has taken the initiative and expressed to the provinces of Canada its willingness to resume as soon as possible the free mass immunization of the Canadian population with the appropriate anti-polio vaccine, according to the specifications of the provincial health departments and the recommendations of the dominion council of health.


Hon. J. W. Monteifh (Minister of National Health and Welfare):: As I understand the question, the answer would be that the deputy ministers of health of the various provinces forming part of the membership of the dominion council of health are fully aware of the steps taken yesterday. They were informed that I intended to make the statement I did-a statement which was presented to me by the dominion council of health-and the provinces are undoubtedly acting accordingly.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
John George Diefenbaker: Yesterday the Leader of the Opposition asked the following question:
May I ask the Prime Minister whether his attention has been called to reports that a Soviet fishing fleet is operating in the bay of Fundy; and, if these reports are accurate, what action does the government propose to take in this matter?
The bay of Fundy has always been considered, since the earliest days, first by Great Britain and thereafter by successive Canadian governments, as Canadian territorial waters. As far back as 1763 it was described in official documents as being comprised within the boundaries of what is now Canada. There are strong geographic and economic considerations for this.
Having regard to the fact that there have been two Soviet vessels in this area, instructions have been given that if these vessels, whose presence was reported yesterday, have not left already, they will be made aware of the position Canada takes and requested to leave.


[Stage Direction]
On the orders of the day:
Mr. Barry Mather (New Westminster):: Mr. Speaker, I should like to direct a question to the Minister of Fisheries. In view of the Prime Minister's statement today regarding foreign vessels in the bay of Fundy, and in view of the recent presence of foreign fishing vessels encroaching upon waters off Canada, will the government consider amending the coastal waters act to establish a 12 mile fishing limit?


Hon. J. A. MacLean (Minister of Fisheries):: Mr. Speaker, this is a matter of government policy which will be announced, if any change is made, in due course in the usual manner. It is a matter which comes under the responsibility of my colleague the Secretary of State for External Affairs.


Hon. J. W. Pickersgill (Bonavisia-Twil-lingate):: I wonder if I might ask the Secretary of State for External Affairs a supplementary question. Could the secretary of state at an early date give us a progress report on the negotiations on this very important subject.


Howard Charles Green: Mr. Speaker, I think I dealt with that during the last session, if the hon. member would check.


John Whitney Pickersgill: Then may I ask the minister whether any progress has been made since then?


Howard Charles Green: No.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
James Carroll Patrick McNulty: May I
address a question to the Minister of Veterans Affairs in his capacity as leader of the house. I should like to ask the hon. gentleman if he will take such steps as may be required to have a meeting of the standing committee on privileges and elections called at an early date in order that the committee might consider the petition of Mr. Raymond Spencer Rodgers, which was referred to that committee on Friday, October 19, 1962.


Hon. Gordon Churchill (Minister of Veterans Affairs):: Yes, Mr. Speaker.



INQUIRY AS TO LEGISLATION TO AMEND INDIAN ACT

[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: Mr. Speaker, in the absence of the Minister of Citizenship and Immigration I should like to ask a question of the parliamentary secretary, which perhaps could be taken as notice. In view of the fact that the minister is scheduled to attend the native brotherhood of B.C. convention later on this month, will the minister move to introduce a resolution to establish the Indian claims commission and the proposed amendment of the Indian Act in order that they may become public before the minister attends that all important convention?



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
On the orders of the day:
Frank Howard: I should like to direct a question to the Minister of Transport, which will be of interest, also to the Postmaster General. I wonder if the minister is aware that all along the northern British Columbia line of the C.N.R., mail and express is being delayed as a result of the inefficiency of the Canadian National Railways. Would the minister take steps to have this attended to so as to satisfy the needs of northern British Columbia or, at least, to have additional Budd cars provided?
Inquiries of the Ministry


Léon Balcer: I shall be in touch with the management of the C.N.R. on this matter.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. Hubert Badanai (Fort William):: I wish to direct a question to the Minister of Citizenship and Immigration. In the absence of the minister perhaps the parliamentary secretary could take it as notice.
My question is based on an article in today's Globe and Mail which reports the arrival of 135 Hong Kong refugees since the Prime Minister's promise to admit to Canada 100 families from the overcrowded British colony into which 60,000 Chinese have poured from the mainland. I wish to ask, is the government giving further consideration to the admittance of a greater number of these Chinese refugees.


Mr. Frank McGee (Parliamentary Secretary to the Minister of Citizenship and Immigration):: I will take the question as notice.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Paul Joseph James Martin: I wish to address a question to the Minister of Finance based on a statement made by him in this house on November 5, to be found at page 1301 of Hansard. The statement was "The unemployment situation is improving." May I ask the Minister of Finance if he has seen the release of the Department of Labour of this morning with regard to the latest unemployment figures showing a rise in unemployment in Canada for the last reported period from 260,000 to 283,000?


George Clyde Nowlan: No, I have not seen it. My colleague will answer.


Hon. Michael Starr (Minister of Labour):: In reply to that question, may I point out that the release also states that the increase-


John Whitney Pickersgill: I rise on a point of order.


Some hon. Members:: Sit down.


Mr. Speaker:: Order. May I remind hon. members that the Chair is in charge of proceedings. If an hon. member rises on a point of order, we shall hear the point of order.


John Whitney Pickersgill: My point of order is a very simple one. My hon. friend directed a question to the Minister of Finance and a reply was given.

Inquiries of the Ministry The Minister of Labour then rose and began to make a gratuitous speech to the house. In view of the rulings Your Honour has made with respect to questions, I suggest that the same strait limits be applied to answers.


George Clyde Nowlan: On the point of order, the question was (a) had the Minister of Finance seen something, and (b) would he comment. I said I had not seen it but I would ask my colleague the Minister of Labour to comment on it.


Some hon. Members:: Hear, hear.


Mr. Speaker:: Order. I think we are just getting into a little wrangle here. It was my impression that the Minister of Finance had passed the question over to the Minister of Labour for reply. I may have been wrong in that idea. I did not hear what was said by the Minister of Finance. He has furnished his explanation. If a minister passes a question on to a colleague, usually that satisfies the house. In most cases we get someone saying well, it should not be addressed to me; will you please direct the question again.


Michael Starr: The increase in unemployment has been due entirely to seasonal practice, and has been entirely in the agricultural areas.


Paul Joseph James Martin: A supplementary question to the Minister of Finance. In view of the statement made by the Minister of Labour, and in view of the statistics themselves, will the minister now agree that the statement he made on November 5 was not in accord with the facts?


George Clyde Nowlan: I would say it was a very accurate statement, Mr. Speaker.


Mr. R. J. Teillei (Si. Boniface):: Mr. Speaker, I should like to ask what I consider to be a supplementary question; I hope I am right. Perhaps you will permit me to pose the question. If I understood the minister correctly he said that the increase was in the agricultural areas. I believe the minister for Manitoba stated a month ago-


Some hon. Members:: Order.


Mr. Speaker:: Order. The hon. member for Royal.


Mr. Fairweafher:: My question was answered, Mr. Speaker.
(Translation) :



TELEVISION RECEPTION OF QUEBEC ELECTION RESULTS

Mr. Bernard Dumont (Bellechasse):: Mr. Speaker, I rise on a question of privilege. I should like, first, to correct a newspaperman's statement to the effect that the hon. member for Winnipeg North Centre (Mr. [Mr. Pickersgill.)
Knowles) had said, when I asked for a television set to watch programs from Quebec, "Out with those who cannot listen". What the hon. member, who is kind and courteous, actually said was that he had been to the ladies' sitting room and had been told to stay out.
I thank you most sincerely for giving us permission to hear the provincial election results in the ladies' sitting room. We spent a charming evening and had the pleasure of provoking quite a few smiles from ladies who came to visit us.


Mr. Speaker:: I know very well that several hon. members were interested in that question of a T.V. set in the House of Commons. However, I really think the question should not be discussed here.


Bernard Dumont: Even if we wish to ask for a set to listen to news from Quebec?


Mr. Speaker:: Even if hon. members from the west coast asked for a set to watch programs from their region.



INQUIRIES OF THE MINISTRY

Roger-Joseph Teillet: Mr. Speaker, I should like to ask a question of the Prime Minister. Could he tell the house whether he was in Prince Albert yesterday to cast his ballot?
(Text) :


John George Diefenbaker: Mr. Speaker, that question indicates that the hon. gentleman was not in the house himself.
(Translation):


Mr. Gilles Gregoire (Lapointe):: On the
question of both languages, members have been complaining that the election broadcast was televised only in French. When we ask for bilingualism, we not only ask for French but also for English, Mr. Speaker.
(Text):
On the orders of the day;


Mr. Ralph B. Cowan (York-Humber):: Mr. Speaker, I have a question that I should like to ask the Minister of Justice. In this Canadian House of Commons yesterday the Minister of Finance stated that the governor of the Bank of Canada is free, white and 21. A short time later the Secretary of State commented that the B.B.G. and the C.B.C. are also free, white and 21. Would the Minister of Justice tell this House of Commons, where the Canadian Bill of Rights originated some time ago, what virtue lies in being white?

Income Tax Act


Donald Methuen Fleming: Mr. Speaker, in reply, may I express the hope that some time soon the hon. member will start to act as though he were 21.



BROADCASTING


[Stage Direction]
On the orders of the day:
John Whitney Pickersgill: Mr. Speaker, I wonder if I could put a question to the Secretary of State in his capacity as the channel of communication to this house both by the B.B.G. and the C.B.C. My question is, was an offer made by station CFTO to the C.B.C. of the Grey cup telecast early in June, and was it accepted by the C.B.C.; and if so, why was the problem not settled then and there?


Hon. G. E. Halpenny (Secretary of Stale):: Mr. Speaker, I ask that this question be placed on the order paper.


John Whitney Pickersgill: Mr. Speaker, in view of the urgency of this matter, and in view of the fact that the minister is the channel of communication, I wonder whether this verbal notice would be sufficient so that the question can be answered tomorrow?


Some hon. Members:: Order paper.
(Translation):



CONTRACT FOR SALE TO COMMUNIST CHINA

[Stage Direction]
On the orders of the day:
Mr. Gerard Chapdelaine (Sherbrooke):: Mr. Speaker, I wish to put a question to the Minister of Agriculture.
Following an order for return in the name of the hon. member for Montmagny-L'Islet (Mr. Cook), the minister answered yesterday that there was no document confirming the sale of wheat by Canada to communist China. So I ask the minister whether there is any document or written paper establishing that in fact a wheat sale was made to communist China.


Mr. Speaker:: Order. No doubt the hon. member will admit that that question should be put on the order paper.
(Text):



INCOME TAX ACT

George Clyde Nowlan: the second reading of Bill No. C-78, to amend the Income Tax Act.
He said: Mr. Speaker, in moving second reading of this bill I would make a relatively brief statement since, of course, as hon. members who have read the bill know, it contains various sections many of which are technical and there is no general policy running throughout the whole bill, as is sometimes the case. It is therefore much easier to deal with this bill in committee when we can deal with it section by section on the individual matters, and with questions which hon. members will undoubtedly wish to raise, rather than on the general policy of what is an amendment to the Income Tax Act.
The purpose of the bill is to implement the tax proposals introduced in the budget speech on April 10, 1962, and to provide additional administrative and technical amendments that the government believes should be placed before parliament.


Mr. Speaker:: Order. The Chair hesitates to interrupt the proceedings, but I am afraid the several conferences which are going on are effectively doing so. We should like to hear the Minister of Finance.


George Clyde Nowlan: Thank you, Mr. Speaker. The bill contains a number of provisions which will be of substantial benefit to taxpayers. It is estimated that the total tax revenue given up by the tax concessions to be provided by this bill will be about $128 million on the basis of a full year.
The main income tax proposals which this bill is intended to implement have already been considered, since they were described in the income tax resolution which was before the committee of ways and means last Wednesday. Although all parts of the bill are important, I think general interest will centre upon those parts which implement four major proposals. These are the increased deduction for dependants; a tax reduction for corporations based on increased sales; the right to deduct 150 per cent of increased expenditure on scientific research; and the series of amendments to assist the oil and gas industry.
The additional $50 deduction for dependants will bring important tax savings to all taxpayers with dependant children and other dependants, and will completely relieve some
80,000	taxpayers from payment of income tax.
The production incentive related to increased sales is intended to induce increased production and employment and to stimulate the search for expanding markets. The benefit

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which will be available to companies engaged in manufacturing or processing will consist of cancellation of 50 per cent of the tax on the first $50,000 of taxable income arising from increased sales and cancellation of 25 per cent of the tax on any additional taxable income arising from increased sales. Both large and small companies will benefit from this measure. Smaller companies will be able to claim the 50 per cent reduction on all their taxable income attributable to increased sales. In fact the cancellation of half the tax on as much as $50,000 of taxable income arising from increased sales will allow the great majority of eligible companies to obtain cancellation of 50 per cent of the tax on all income arising from increased sales.
Implementation of this plan, which will apply to sales at home as well as to export sales, will mean that the large majority of processing and manufacturing companies which increase their sales will be allowed to retain half the taxes they would otherwise be required to pay on their additional income.
The implementation of the proposal to allow corporations to deduct 150 per cent of increased expenditures on scientific research in Canada will provide a powerful incentive for Canadian companies to expand their research. It will also, I am confident, result in a substantial amount of research that is now done outside Canada being done in this country in the future. The deduction for increased research expenditure will apply to current expenditures as well as those of a capital nature. Increased expenditures will be measured by reference to expenditures in a fixed base year. There will, I am sure, be general support of this portion of the bill, which is intended to provide a strong incentive for Canadian companies to maintain and extend their place in the world through advances in research.
The tax concessions for the oil and gas industry are proposed because the government shares the concern of the industry that the pace of exploration for oil and gas is not sufficient to maintain reserves adequate to meet anticipated demands. If Canada is to continue to supply existing markets, let alone expand its markets as we intend, additional reserves will be needed before many years have passed. The tax changes in the bill are intended to secure a more substantial and widespread participation in the oil industry by individuals and companies normally operating in other fields of industry and commerce. By this means we are doing what we can to secure the increased participation of Canadians, in various walks of life, in the ownership and development of this important industry.

In addition to the concessions for the oil and gas industry there are several amendments of benefit to those engaged in mining. The bill also contains a clause to carry out the proposal to change the present deduction for a provincial logging tax into a tax credit equal to two thirds of the provincial tax. Other provisions of the bill which will be of benefit to many taxpayers permit greater portability of amounts set aside to provide a retirement income.
In addition, the bill contains amendments dealing with administration of the act, and a number of amendments which are for clarification or for purposes of cross reference. I shall be glad to furnish whatever information I can concerning all parts of the bill when it is before the committee.


Walter Lockhart Gordon: Mr. Speaker, I should like to say a few words about this bill before it goes to committee, and before it is dealt with clause by clause. A complete revision of the Income Tax Act is overdue, as I think most hon. members of this house would agree. I hate to think that it is going to be postponed for several years pending the report of the proposed royal commission on taxation. In mentioning this royal commission I should like to say how sorry I am to have learned about the illness of Mr. Kenneth Carter, the chairman. I am sure all hon. members will hope that he will return to health very soon and be enabled to carry on with this important assignment. However, if the government knows what its objectives are, may I suggest that it should not be difficult for a small group of lawyers and chartered accountants who are familiar with taxation matters to draft a new act in a relatively short time without waiting for the report of the royal commission. I refer to the act as a whole because it leads me into what I wish to say about this bill.
My criticisms of the present Income Tax Act are threefold. First, it is much too complex and complicated for most people to understand. One of the reasons for this situation is the many amendments which have been made to the act over the years in an attempt to cooper up some flaw or other or to grant concessions to some interested party or class of taxpayers. As a result, parts of the act have become almost incomprehensible for the average man to understand.
I say this in all seriousness, and I would think that even the minister would agree with me; because, like him, I have been in professional practice for some years and at one time I had quite a lot to do with income tax practice. Now, however, I find that it

is necessary for me, despite the fact that I used to practise in this field, to retain a tax expert when I have to deal with certain sections of this act. Fortunately in my case I have partners who qualify in that respect, so it is perhaps easier and less expensive for me than for some others. I have in mind particularly such sections as those that deal with designated surpluses and related companies, which perhaps some people are able to understand.
My third criticism is that the law in its present form contains far too many loopholes and anomalies. Periodically government officials bring some of these loopholes and anomalies to the attention of the responsible minister, and sometimes amendments are proposed to this house to correct a particular abuse. But as long as we have an act that is overly complicated and so long as taxation is anywhere near the present levels it will not be possible for busy ministers and a relatively few officials to catch up with the ingenuity of thousands of taxpayers and their advisers in finding perfectly legal loopholes in the act.
I submit that Bill No. C-78 is subject to the three criticisms I have just made of the Income Tax Act itself. This bill is highly complex and complicated; it will be extremely difficult for the average man to understand, and it will provide loopholes for taxpayers to enjoy. Furthermore it will create great difficulties for those responsible for its administration. I have not had the time to make a complete study of the bill, but I did read it carefully last evening while enjoying the results on our bilingual system of television-


Paul Joseph James Martin: You mean the election results.


Walter Lockhart Gordon: -of the Quebec election. In order to illustrate the main points I have been trying to put forward I should like to make a few remarks about one section, section 10, which deals with the so-called production incentive. As I understand it, the idea seems to be to grant manufacturing and processing concerns that increase their operations an incentive in the form of lower taxes calculated on the basis of their increased sales. My first criticism is of the concept itself. Most businessmen increase their manufacturing and processing operations to meet increased demands for their products either in the domestic market or for exoprt. I suggest that no sensible businessman is likely to increase his productive facilities and productive capacity merely because he is offered a lower rate of tax on the profits resulting from increased sales. If the business climate is right and it looks as if there will be a
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continuing demand for their products, most businessmen will try to take advantage of the increased opportunities regardless of the tax rate.
This means that the government should concentrate on doing those things that will create the right kind of economic climate, rather than engaging in a tinkering operation on the Income Tax Act which in my humble opinion will not produce the kind of results that are being sought. But having created the kind of climate in which business can flourish and the economy can grow, and in which there will be more jobs available for those who need them, then if it is desirable to offer incentives to businessmen to increase their productive capacity I should like to put forward two suggestions as examples, and only as examples, which I think would have more real effect than the proposals suggested in this bill. I do this only by way of example.
The first example I should like to give is that manufacturing and processing establishments should be allowed to write off capital expenditures they make to increase their productive facilities against their profits for depreciation purposes at any rate they like to choose. In the long run there would be no loss of revenue to the treasury because people can only write off these assets once, and in the short run increased government revenues arising from increased economic activity in the country would far exceed the temporary reduction in corporation taxes from the firms in question. I believe, and I have said this on several occasions, that far too big a proportion of Canadian resources and Canadian companies is controlled by non-residents of our country, and for this reason I suggest that the kind of proposal I have recommended involving faster depreciation write-offs might be restricted to those companies that are owned by residents of Canada.
The second suggestion I should like to put forward by way of illustration is this. It is important that we should do a great deal more to encourage the establishment of manufacturing, processing and distributing facilities in surplus labour areas. Business concerns might be encouraged to do this if they were offered relief from all corporate income taxes for a three year period in the same way and according to the same principle as in the case of new mining ventures.
I suggest that incentives along these and similar lines would be much more effective than the proposed production incentive contemplated in this bill. This incentive or bonus is based on increased sales, and those responsible for drafting the legislation have gone to

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some noticeable pains to block certain obvious abuses such as transfers of business between associated and successor companies and the like. But, Mr. Speaker, I can assure the minister that there will be hundreds and probably thousands of businessmen in this country who will find ways of taking advantage of this provision as it is now drafted, ways that are probably not contemplated by the people who did the drafting. In doing so these businessmen will have a perfect right to take advantage of loosely drafted legislation.
The first thing that may happen is that some people may raise their prices, and I cannot believe that it is intended to grant tax incentives to people to raise prices. It is quite true that if businessmen raise prices in order to take advantage of the bonus offered in this section, they may have to spend more on advertising or they may have to employ more salesmen in order to maintain their sales in present volume terms. However, they could do this and at the same time increase their gross sales in dollar terms and therefore get a very nice, fat and unwarranted tax bonus.
Let me give another example. It is almost certain, I suggest, that there will be cases where some company gradually retires from one line of business and this business is picked up by another company. Even if the two companies are connected in some way, it will be very difficult under this legislation for the tax authorities to prevent the second company from claiming the tax bonus offered on these increased sales. I predict, Mr. Speaker, that the benefits of this section will accrue to a much greater extent to the larger corporations, a large proportion of which are controlled by non-residents, than to smaller Canadian owned companies. This is another reason why I have doubts about the wisdom of this particular proposal.
There is also the question of windfalls; and the greatest recent example, of course, is the companies whose export sales in Canadian dollar terms will increase quite considerably because of the devaluation of the Canadian dollar. These companies will not only enjoy increased profits for reasons that were quite beyond their own control, but they are now being offered lower taxes on these increased profits which to me makes no sense whatever.
For these reasons, Mr. Speaker, and for many other reasons to which I am sure the members of this house who are professional men or businessmen could add, I would urge the minister to withdraw this whole section dealing with the proposed tax bonus to manufacturing and processing concerns, 
at least until it has been gone over with a finer toothed comb than I suspect has been used on it up to date. As it stands, I submit it is a bad law and an amateurish way of trying to stimulate business activity in Canada.
Before I resume my seat I should like to urge the minister to do what has been customary on previous occasions before complicated amendments such as are contained in Bill No. C-78 are presented to this house; namely, that the minister or his officials should consult a small group of lawyers and chartered accountants familiar with taxation matters sponsored by the Canadian tax foundation. This is a non-profit organization. These experts, and they are experts, have been willing in the past upon request to provide this kind of service without charge. While they are not usually consulted about the policies involved, which naturally are the sole responsibility of the government, they have been helpful in preventing serious errors in the technical wording of bills or in their drafting. I understand that in this case the minister has not taken the initiative to obtain this kind of advice in connection with the bill, and I urge him to do so while there is still time.
(Translation):


Gilles Grégoire: Mr. Speaker, I thought I heard the hon. member for Davenport (Mr. Gordon) state at the end of his remarks that this is a bad law and that he therefore objected to it.
Even before sitting in the house, I knew that the opposition party always finds wrong what is done by the party in power, while the party in power always insists that what it advocates is for the best.
We, the Social Credit members, do not want to behave in that way.
In the bill now before us, some taxation is acceptable, because we think it is very sensible. On the other hand, there is some we cannot accept. We say, therefore, that this legislation is not wrong in itself, that it contains much that is good. Yet we shall ask the Minister of Finance (Mr. Nowlan) to reconsider some parts of it.
First of all, I shall make a few general remarks. The income tax and the corporation tax legislation is becoming more and more complicated. Today, a whole new booklet is added to the tax legislation.
Mr. Speaker, when such a competent and intelligent accountant as the hon. member for Davenport, who is also a great worker, thinks that our taxation laws are complicated,

I wonder what a simple industrialist, a businessman, an ordinary accountant would think. They must, in my opinion, and probably also in yours, Mr. Speaker, find all that legislation, all those amendments and subamendments extremely complicated.
It has often been said that the more laws there are, the more they are violated. A million laws are violated in the United States, whereas the Lord was satisfied with imposing only ten commandments.
Our laws should be simplified, more particularly those that have to do with income tax, because they are, at this time, the most complex. We should, right now, apply ourselves to streamlining our legislation. That is the first and the only remark of a general character I shall make today.
This is the first time I have the opportunity of commenting on a bill like this, since it is my first session here. If I am not mistaken, the bill is first considered as a whole, and then it is examined section by section.
Mr. Speaker, we cannot but support some sections of this bill, like the one which authorizes larger tax deductions on corporation benefits, that is of 10 instead of 9 per cent, for we know that the amounts collected in this way will be handed to the provinces, in the shape of university grants, at least in those provinces who have signed an agreement to that effect with the federal government.
However, we see that in those amendments to the Income Tax Act the legislator first of all looks after the producer. This applies to legislation from every department, including the Department of Finance.
Under this bill, the producer is to be helped by decreasing his taxes. But one point has been overlooked, and it is that the best way to help him is to supply the consumer with the means of buying his products. If the consumer is unable to do so, even if all taxes paid by the producer were abolished, warehouses, plants or factories will be crammed full as is now the case almost anywhere in Canada.
The best strategy is still to help the consumer absorb the manufacturers' products.
Some provisions of the act would seem to indicate an intention to help the large corporations, but when we consider the long term results, we can see that workers and small people may also benefit from them. For instance, when it is intended to grant tax concessions to those who wish to undertake research one can imagine that such tax reductions will in the long run be
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beneficial, because they will help improve the quality of products and create new demands on the market, which will develop other productive activities and, consequently, other industries offering jobs to workers.
Mr. Speaker, there is a point we would like to strongly recommend to the Minister of Finance (Mr. Nowlan), and when the amendments to the Income Tax Act in this regard are submitted to us for examination clause by clause, we will have to object to this particular clause and even vote against it. We wish to give an immediate notice to the Minister of Finance to that effect.
The point I am referring to is this. We approve assistance to Canadian investors for investment in Canadian industry, but we strongly object to tax deductions offered to foreign investors who would like to help us develop Canadian industry.
We object because it would result in a long term loss for us. Let us look at what happened in the past. For years, we were happy to see foreign capital entering Canada. At that time, we had a surplus of foreign currencies in this country. As long as foreign investments kept coming in, we had some advantage, for a time we believed that Canadians derived some advantages from the prevailing situation. But foreign investments lost momentum while the return to other countries of interest and profit payments on capital invested in this country exceeded the annual investments in Canada.
If instead of paying full interest on foreign capital invested in this country in the past, we had those amounts to invest in our industry, we would profit by it just like the foreign companies who invested in our country some 20 years ago. We are paying out more interest to other countries than we are getting foreign capital in the form of investments. Therefore over a long period, we are sure to come out the losers. It is high time that such trend be checked.
It is possible that this may prove difficult for some time. As a matter of fact, we have been finding it difficult for a few years since the very problem I am talking about is the cause of all the financial and monetary difficulties of this government. It is this very problem that forced the present administration to initiate an austerity program.

Income Tax Act
Our foreign exchange reserve has been getting smaller, as we all know. How? Precisely through the outflow from this country of interest and profits on these foreign investments made some 10, 12, 15 or 20 years ago. While we have to bear today the consequences of a mistake made 10, 15, or 30 years ago, we should not put up with that mistake any longer, we should put a stop to it.
Today we are under an austerity program imposed by the government precisely because of a too rapid outflow of foreign exchange in the form of profits paid on foreign capital invested in our country. Consequently, our reserves of foreign exchange have dwindled-
(Text):


Mr. Deputy Speaker:: Order. It would help the Chair if the hon. member would relate his remarks more specifically to a part of the bill. Normally on second reading we do not go into the broader aspects of fiscal and monetary policy, international exchange matters and subjects of that sort. I am sure the hon. member will also recognize that there has already been a considerable discussion of this whole general area of finance on a previous ways and means resolution. Therefore I would ask him to help me as much as he can in that regard, as it would assist us to move along expeditiously.


Gilles Grégoire: Mr. Speaker, if I understand the procedure in this house correctly-and you can tell me if I am wrong-at this stage of the bill each political party in the house puts forward its general ideas regarding the whole matter of the law, and later we enter into each specific point. My remarks on the bill presented to us are related to some specific points in it.
For example, when I mentioned the variation in corporation tax I said it was something we were ready to accept because it will help education in the province of Quebec. I am now talking about another clause in the bill relating to a deduction of 15 per cent tax in the case of foreign companies investing in Canada. If I am correct in speaking generally on points treated specifically in the bill, then I shall continue.
(Translation):
Mr. Speaker, I am dealing generally with points that we approve and with those we should not approve.
I am pointing out to the government that we are facing an austerity program because, in the past, we have encouraged the investment of foreign capital in our country, while Canadian investments should have been encouraged. Let us put an end at once to this

encouragement of foreign investments in our country.
Also, when the Minister of Finance is proposing to grant tax exemptions of 15 per cent to certain foreign companies which would like to invest in our country, it is my duty to tell him that in ten or 15 years from now, his successor will bitterly regret the mistakes being made this year.
Those are the main points I wished to raise. The points which we are prepared to accept are, for instance, exemptions for those who are doing research, exemptions on company benefits which, in turn, will be handed back to the provinces, to help improve education.
But we are opposed to any assistance to foreign investors.
However, we are not going to content ourselves with opposing that, because in a moment we are going to make a suggestion to the Minister of Finance, in order to compensate for what we want to refuse him. Let him find the Canadian capital needed for the development of our natural resources and our industries, in the Bank of Canada, which is a body coming precisely under the Minister of Finance.
Let him do that, and he will have our support.
(Text):


Mr. David Lewis (York South):: I regret I cannot say to you, Mr. Speaker, that I join with others in this house who have agreed with any major part of the bill which is now before us. It is my opinion that, except for one or two concessions to the average taxpayer, about which I shall have a word to say in a moment, this is yet another set of amendments to the Income Tax Act which seeks to give further concessions to those who have already had too many, and to help the large corporations of Canada to make even more out of the development of the people's resources in this country than they have been able to do to date.
There is a little sop to the taxpayer in the increase of the exemption for children by $50. If I heard the Minister of Finance (Mr. Nowlan) correctly he told us that several tens of thousands of present taxpayers would fall completely out of the group of those who pay taxes by reason of this small concession.
I am sure the minister would not have made that statement if it were not true. I say that such a statement is a condemnation of our society, a condemnation of the unequal and inequitable distribution of income within it. No government should derive satisfaction from the fact that if you raise an exemption by $50 it will free tens of thousands of people



IS, 1962

[Stage Direction]
from paying taxes. This means, in other words, that so many tens of thousands are now living on the very borderline of the minimum income at which taxes are payable.
Moreover, this clearly represents a much more important concession to people with higher incomes than it does to those in the lower income groups. The $50 additional exemption to the man who makes, say, $15,000 or $20,000 a year obviously means much greater reduction in his tax payment than it does to the man who makes only $3,000 or $3,500 a year, who would have hardly any reduction at all. Such exemptions are a proper objective in our society when accompanied by an increase in taxation at the top so that those who can afford to pay higher taxes are not assisted out of all proportion to the help given to those who really need this $50 exemption for a child.
But this, with all its defects, is the only item I see in the bill before the house which is intended to help the ordinary lower income Canadian, who still represents the overwhelming majority of the Canadian people. When we leave that, we come to concession after concession to the corporations of this country.
The minister said that one of the clauses in the bill gives concessions to the oil, petroleum and natural gas industries. May I remind you that the same kind of concession is made, also, in respect of the prospecting and development of mines. When I look at that, I cannot help remembering that in the last couple of days we have had reports in the newspapers of the profits made by some of our large mining corporations.
We learned in recent press reports that in 1953 one of the large nickel corporations of this country, Falconbridge Nickel Mines, made an agreement with the United States government. The United States government had used up its nickel during the Korean war, or had not sufficient reserves of nickel, and wanted to buy a large quantity from Falconbridge. The Falconbridge Nickel Company, according to the press, took the United States government to the cleaners. The nickel was sold at a price of $1 a pound-45 cents more than the market price-and, in addition, the company insisted on a $45 million bonus toward capital expansion to provide for increased production. All this has been brought out in evidence before a senatorial subcommittee in Washington. During that discussion, the chairman of the committee, Senator Symington, said this was outrageous-I am not quoting, now, I am paraphrasing; he said some discussion should have taken place with the Canadian government. One of the witnesses, a Mr. Jesse Larson, informed the committee
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that there had, indeed, been discussion with the Canadian government before the agreement was signed with Falconbridge in 1953, and that the discussion had taken place with the late Mr. C. D. Howe, then minister of defence production. The late Mr. Howe informed the United States negotiator-this is in the Ottawa Journal of yesterday-that he, the late Mr. Howe, did not want any interference with the private enterprise system. Therefore, he permitted Falconbridge to "take" this country-a large, powerful and wealthy country, it is true but, none the less, an ally of ours; to rob-
Some hon. Members:: Oh, oh.


David Lewis: Yes, rob, because any action of this kind is entirely unjustified. It is utterly wrong to charge the government of another and friendly country almost double the market price of a commodity. Forty five cents out of a dollar which was charged was the amount over the market price. That, I say, without reservation, is robbery by the corporation. The late Mr. C. D. Howe said that was O.K. He would do nothing about it, because to do so would represent interference with the private enterprise system. What a mockery of social morality that is. It is corporations of this kind that the proposed tax concessions will benefit.
Yesterday, in the Globe and Mail, Mr. Speaker, you will no doubt have seen a report that during the first nine months of this year the profits of the International Nickel Company were 23 per cent higher than they were in the first nine months of last year. International Nickel is another mining company to which this bill would give further tax concessions with respect to exploration.
There is nothing in Canada's economy today, from my study of it-of course, I may have overlooked some factors-which justifies added bonanzas to these large corporations, whether they are owned outside or inside Canada. Bonanzas are less justified when they go to corporations outside this country, because we have so much less control; but they are scarcely better when they go to corporations inside Canada making the kind of profits which these reports suggest. Senator Symington said about Falconbridge, for example, that the benefits arising from the deal with the United States in 1953 had enabled the company to increase its profits a thousandfold in 1961 as compared with 1949.
We submit from this corner of the house that the income tax exists partly for the raising of revenue and partly for the redistribution of income in this country, so that those who have not enough may have a little more, and those who have too much have a little less. It is not there for the

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purpose of giving a little more to those who have too much already, which is precisely, I submit, what this bill does in most of its clauses.
I agree with the hon. member for Davenport in his criticism of the concessions in respect of increased sales. Several weeks ago in the debate on the first resolution, during what I call the non-budget debate, I drew the attention of the committee to the fact that a mere increase in price could lead to the benefit of tax concessions. Similarly, a mere transfer of sales from one company to another, without there being any increase in total sales to the benefit of Canada, could give one of the participating firms the benefit of the proposed tax concession.
I was also interested to read in the business section of the Globe and Mail yesterday that the way in which the companies are defined in the bill before the house with respect to the concessions on increased sales means that a number of companies-not little fellows, Mr. Speaker, but companies like International Nickel, Noranda Mines, and Consolidated Mining and Smelting Company of Canada- will find themselves heirs to the tax concessions due to increased sales, because they are companies which manufacture and process as well as mine.
As I said the other day, and if I may repeat it, every time we are told that some concession is made for the purpose of helping the little fellow, my experience from whatever public duties I have had in this country and from studying the economic history of our country has been that although it is made ostensibly to help the little fellow, it is the big chap who really gets the assistance, while the little fellow remains at the wrong end of the stick despite all protestations to the contrary. As the hon. member for Davenport (Mr. Gordon) correctly stated, this is exactly what will happen with regard to the concessions on increased sales: the big corporations will be able to adjust their personnel, to adjust their finances, to adjust their sales techniques and to adjust their arrangements among themselves in order to take full advantage of the tax benefits.
But, Mr. Speaker, when we go to the hon. member for Davenport, as spokesman for the Liberal party, for suggestions as to what might be done, what suggestions does he propose? He suggests further tax concessions to the corporations. It is true-I must be fair to him-that I heard him say that he suggested these things merely as examples and he may also have said that he would implement them only after there was full employment and full use of present capacity.


Walter Lockhart Gordon: Mr. Speaker, may I say that the hon. member for York South did not hear me correctly.


David Lewis: I hoped I did not misrepresent him, but I am glad to be corrected. Am I therefore to understand now that, in place of the kind of tax concessions now in the bill before the house, the hon. member for Davenport is suggesting his tax concessions? One of these was that the corporations should be given a right to write-off capital used in expansion at any rate they pleased. He suggested, that is, that they be permitted depreciation write-offs at any rate they pleased. He pointed out that in the long run this will not really mean a loss to the treasury, because you can only write them off once and eventually taxes will have to be paid on the net income of the company concerned. That may or may not be so in the long run; but I submit that this is merely another kind of gift to the corporations, most of which, with incomes in the large brackets, do not require any more gifts from the public treasury.
Mr. Speaker, when these gifts are made it means that these private corporations, which go about the country boasting of the expansion they have undertaken, of the development for which they are responsible, and so on and so forth, are really expanding their enterprises and carrying on development not at their expense but at the people's expense. They are doing it at the expense of the public treasury. That is why the hon. member for Kootenay West (Mr. Herridge), when we were discussing the resolutions the other day, said to this house that these developments in exploration, in drilling and in development of petroleum, of minerals, and the like are taking place at public expense. He added that the public, through the government of Canada, ought to have some say as to the way in which this investment is made and as to the direction in which these enterprises are going.
We are paying-and when I say "we" I mean the people of Canada-for a large part of these exploration and other developments by the tax concessions which have been made. When one looks at the oil, gas and mining companies in this country he finds they already have a capital cost allowance, a depreciation allowance, provision for accelerated depreciation, a depletion allowance by the operator of roughly 33i per cent, and a depletion allowance for income tax on dividends to the shareholders up to 20 or 25 per cent. Now we are adding to the capital cost allowance and to the depletion allowance of these petroleum, natural gas and mining corporations an additional allowance for drilling, exploration, prospecting and

development in the search for oil and minerals. Mr. Speaker, I am not an accountant as are some other hon. members, and even as a lawyer I have not practised in taxation matters and therefore cannot claim to be an expert. However, as I consider the information which I found in a very recent volume on Canadian taxation, by Mr. Perry of the Canadian tax foundation, and as I add up the various allowances which are now given by the Income Tax Act to the corporations and their profits, I wonder what size tax remains to be paid by some of them.
Mr. Speaker, it is our submission to this house and to the minister that some of the provisions of the act which give these concessions to the corporations in Canada are not acceptable, and should not be acceptable, to the Canadian people. It is our belief that if the Canadian people understand, as I am sure they will, precisely what is proposed to this parliament at this time of economic stress, they will disapprove of the kind of gifts given to the corporations of Canada by this bill.
As I have said, we see in it only the increase of $50 in allowances to children which will be of benefit to the average Canadian. We see no decrease in personal income tax in the lower income brackets, and no increase in the tax rate in the higher income brackets, to make up for the added exemption at the bottom. It is our belief that both in justice, in terms of the moral and ethical compulsions of a democratic society, the income tax rate in the lower income brackets ought to be reduced and the income tax rate in the higher income brackets increased in order to promote a more just redistribution of income. Also in terms of the economic need of Canada and of stimulating Canada's economy, a great deal more can be done by releasing the purchasing power of the lower income people by reducing the rate of tax applied to them than can possibly be done by these added concessions involving millions of dollars to corporations which already exploit Canada's resources heartlessly enough.


Hon. George H. Hees (Minister of Trade and Commerce):: Mr. Speaker, I just want to take a short period of time to answer some remarks made by the hon. member for Davenport (Mr. Gordon). I was interested in listening to what he had to say. He said that he was opposed to the tax incentive based on increased sales because he believed that it will not encourage producers to enter into new lines of production.


Walter Lockhart Gordon: Mr. Speaker, I wonder if I might just interject?


George Harris Hees: Certainly.
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Walter Lockhart Gordon: I do not think I said I was opposed to it. I said that the objective could be achieved in a much more effective fashion.


George Harris Hees: Well, Mr. Speaker, if my
memory serves me aright, the hon. member said that his party were opposed to this type of production incentive.


George James McIlraith: No, that is not right.


George Harris Hees: Certainly, Mr. Speaker, if the hon. member and his party are in favour of this type of tax incentive, it is the most lukewarm kind of endorsement I have yet to hear in this house. Mr. Speaker, the facts are simply these. Producers in all parts of the country refrain from going into certain lines of production which are open to them because the profit picture in those lines is not sufficiently attractive to induce them to enter. If there is severe competition in certain lines from abroad that makes it unattractive for them to enter into those lines of endeavour, they do not do so because the energy, the expense and the chance they take by so doing are not made worth while by the opportunities for making a profit which are existent in that particular field. If the profit picture can be made more attractive, then those producers will in many cases enter a line of endeavour which they had not considered sufficiently attractive in the past. However, if the profit picture appears to remain unattractive, or not sufficiently attractive, they will simply leave that job of production to other producers who are more interested in producing that type of goods, and in most instances those producers are located in countries other than Canada.
By substantially reducing the taxes on increased sales, which is what this legislation proposes, this legislation will materially improve the profit picture in many lines of production which, up until now, have not provided a sufficiently attractive profit incentive to induce many Canadian producers to enter those fields. Many Canadian producers will, as a result of this production incentive, be persuaded to enter new lines of endeavour, with resultant increases in production and employment. Since these measures were mentioned by the then minister of finance in the budget of last spring I have talked to many hundreds of Canadian producers at various conferences we have held across this country and I may say that they have been universally enthusiastic about these tax incentives. They say that they will make it possible for them to enter into fields-


Mr. Malheson:: When did they see them?

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George Harris Hees: These tax incentives were mentioned in the budget of last spring. If the hon. member had been paying attention to what has been going on, he would have been aware of these facts. These tax incentives have been discussed in general by businessmen across Canada and, as I say, they are enthusiastic about them. They feel that many lines which are being produced abroad and which are selling in Canada will now be attractive for them to enter and they intend to do so; and they feel that they will have a very satisfactory production picture and will be able thereby materially to increase employment.
The hon. member for Davenport said he felt that producers might get this tax bonus by simply increasing prices. By saying that, Mr. Speaker, the hon. member shows that he simply is not conversant with the competitive system in this country or any other country. Anybody who is conversant with the competitive system knows perfectly well that producers are selling their products at a price which they consider gives them the best over-all return for their investment. In the competitive system, if a producer increases his price, he automatically loses sales to his competition; if he loses sales to his competition his over-all sales drop; and if his overall sales drop, he will not be eligible for any tax bonus. The matter is just as simple as that. Hence in saying what he has said in opposing this measure, in saying that this tax incentive would be available to producers who simply raise their prices, the hon. member for Davenport is not speaking in accordance with the facts of ordinary commercial competitive life.
During the past few years we have heard the Liberal opposition strongly urge on this government that we should introduce tax incentives. They have used the phrase over and over again. They want tax incentives to increase production and employment. Mr. Speaker, this is a tax incentive which has been worked out with great care, great pains and over a long period of time by the civil servants of the Department of Trade and Commerce, the Department of Finance and other associated departments, and the members of the government. We have worked hard in order to make this tax incentive a simple one, one which can be understood easily, operated easily, and applied easily and which, by its very simplicity and its very soundness, can attract Canadian producers to enter into new lines of production which they Lad not found profitably attractive previously. Under these circumstances when this new legislation is passed, as we hope it will be, many producers will find the profit incentive

attractive enough to induce them to get into these new lines, produce more goods and provide more jobs. But having worked this measure out and presented it to the House of Commons and having had an enthusiastic response for it from businessmen in every part of Canada, what do we find? As the hon. member for Davenport maybe does not know, in that matter we are unlike the government of the party to which he belongs. They never bothered holding conferences across Canada, in all parts of Canada with the businessmen and producers of Canada so that they could find out, so that those producers and businessmen could discuss business matters with members of the government.


Walter Lockhart Gordon: I rise on a point of order, Mr. Speaker. I should like to know which government I am supposed to be a member of.


George Harris Hees: I said "the government of the party to which the hon. member belongs". I hope he can understand those simple terms. As I say, Mr. Speaker, the government that ruled this country-and I say "ruled" advisedly-for 22 years.


George James McIlraith: Twenty two years of prosperity.


George Harris Hees: -never bothered to go across Canada and invite businessmen in, or go to them on their home ground and discuss business conditions with them in order to find out their problems, to outline what the government can do to help them. These businessmen in the conferences that we have had with them since these tax incentives were introduced in the budget of last spring, have expressed great enthusiasm in all parts of the country for these tax incentives. However, because we have brought in something that is going to increase production materially, and to increase employment materially, that is something that this Liberal opposition automatically opposes because, as I have said over and over again, they are not in favour of anything that increases production and employment. They want things that will not increase employment and production. As I have said before and say again, the only thing in which they are interested is increased unemployment, because they think it will enhance their chances of getting into office at some future time. Hence we can well understand the official spokesman of the Liberal opposition standing up in this House of Commons and vigorously opposing a tax incentive measure which will do exactly what he has advocated we do, namely increase production and greatly increase employment in this country of ours.



IS. 1962

George James McIlraith: Mr. Speaker, I am sure it must be a matter of great regret to the Minister of Finance (Mr. Nowlan) who has the responsibility for this bill in this house and indeed for the matters that are of the utmost importance to the welfare of this country, that his colleague, the Minister of Trade and Commerce (Mr. Hees) should have shown so little comprehension of the measure now before the house and which the house is being asked to approve, and that he should have had to listen to that colleague refresh the memory of the house on the fact that the unemployment rate since the Minister of Trade and Commerce became a minister of the crown has almost doubled throughout the whole of the period since that time.


Some hon. Members:: Oh, oh.


George Harris Hees: Oh, nonsense; absolute nonsense.


George James McIlraith: And the major part of that increase was due to the incompetence of the Minister of Trade and Commerce-


Mr. McGrath:: Of the previous administration.


George James McIlraith: -and the wrong policies followed by the Minister of Trade and Commerce in his unwillingness to deal with matters of policy as they related to the subject of trade-


George Harris Hees: I never knew you were a comedian before.


George James McIlraith: *-and was contributed to by the present Minister of Finance's predecessor in office because of his stubborn unwillingness to deal with the financial policies of this country in a responsible way and to adopt policies that would bring prosperity to Canadians. May I tell the Minister of Trade and Commerce in case he does not know it, that businessmen and others concerned with production in this country had a very good relationship with the former government and they had a good relationship, among other reasons, because-


George Harris Hees: A few tycoons did, but the ordinary little businessmen were brushed aside, and you know it. Only Texas oil men like Clint Murchison did. He had a very good association with your government, but not the little businessmen.


George James McIlraith: Now that the Minister of Trade and Commerce has made a second speech-


George Harris Hees: He will have lots more too.


George James McIlraith: may I say I am happy to have him interrupt me because-
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George Harris Hees: There is just so much nonsense one can listen to.


George James McIlraith: -if there is anything that demonstrates the weakness of the present government it is the calibre of the remarks made by the Minister of Trade and Commerce. I am quite content that his remarks should go on Hansard in the course of my speech so that they can be evaluated by persons who read Hansard.


George Harris Hees: Nobody reads your speechesr George.


George James McIlraith: That may well be.


George Harris Hees: They will go unknown.


George James McIlraith: That may well be; but there will be persons interested in reading the remarks of the Minister of Trade and Commerce who will read his remarks in Hansard, and if they do I am quite sure they will see what is wrong with the present government.
I want to continue the remarks I was about to make when the Minister of Trade-and Commerce interrupted me. I would point out to all hon. members that relations between industry, business and other people engaged in production in this country, and the former government, were very good and for an obvious reason. When those representatives of business or production did deal with the government of that day they found they were dealing with men-I am referring particularly to the holder of the office of minister of trade and commerce as it was then as compared with now-men who understood their problems and who were capable of listening and finding out exactly what the problems were.


An hon. Member:: And then doing nothing.


George James McIlraith: When representations were made to them they were capable of assessing and evaluating those representations and taking the kind of governmental decisions required to meet any difficulties that existed. So when the Minister of Trade and Commerce tries to misinterpret the speech


Frank Charles McGee: Don't be so modest, George.


George James McIlraith: I have no occasion to be modest about the member of the former government who held the office of minister of trade and commerce, and I think any businessmen or other thoughtful persons who study government in Canada will share that view and will not think me immodest in making claims of competence for him.
I regret very much that when we are dealing with a matter of significance to industry generally, to employment generally and to the welfare of this country the present Minister of Trade and Commerce should

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have sought to misinterpret the remarks ol the hon. member for Davenport (Mr. Gordon). That hon. member dealt with the taxation measure before the house and attempted to point out what he thought were its weaknesses and how best it could be improved. What better method is there of dealing with legislation that comes before the house? The attempt of the Minister of Trade and Commerce to indicate that businessmen of the country had seen the bill and and approved it is simply misleading to this house.


George Harris Hees: They were familiar with the principle of the bill.


George James McIlraith: The bill itself bears date of November 12. Actually it was made available on November 13 and has been in circulation for two days. That is quite within the rules and I have no complaint. For my own part I regret that I have not had a better opportunity of studying it more thoroughly because in my view it is a measure that deserves thorough study. Be that as it may, the Minister of Finance is quite within the rules in presenting it on short notice. I have no objection for another reason: The bill has been so long in coming before the house since the presentation of the first budget or the budget of 1962 that I am certainly not going to raise any objection now if notice is a bit short. As a matter of fact one of the criticisms I have of the government is that they did not proceed with this measure and permit debate on the budget when the resolutions on which this bill is based were first introduced. I have sharp criticism of them on that point, but I do not wish to digress in that regard at the present time.
In dealing with the principle of the bill today the Minister of Finance indicated in his remarks that, for purposes of discussion of its principles, the bill could be subdivided into four main parts or subject matters. I think that is a fair assessment. I wish merely to take a few moments to deal with one of the four parts, the oil and gas industry. At the resolution stage the remarks of the minister on this subject, as he admitted with some modesty, were not very full. I read Hansard again on this subject a few minutes ago and I found that he said he was not an expert on the oil and gas industry and therefore was not able to give the kind of explanation that was being sought at that time. However, he was kind enough to indicate that he would make further reference to the matter on second reading and presumably in the committee stage as well. I am no expert on the oil and gas industry either.
IMr. Mellraith.]


An hon. Member:: The Minister of Trade and Commerce is an expert in the gas industry.


George James McIlraith: Yes, I know he is; he is an expert in everything. I am one of those who are not overly enamoured of experts on all these subjects. I want to find out about these things myself and then do the best I can with them. I believe the Minister of Finance spoke from a carefully prepared statement today, and as I understood his remarks he sought to make it clear that the part of the bill having to do with the oil and gas industry was designed to meet the concern so widely evident in the country about the lack of adequate discovery of new reserves, and also to deal with the problem that arises due to the fact that the present taxation structure does not provide sufficient encouragement to Canadian companies to expend their available funds on oil and gas exploration.
I want to say at once that I am in complete accord with those purposes, if I have understood them correctly. If there is one thing that must be very clear to all concerned it is that, if we are to expand our markets in the years ahead we must do the exploration work long in advance of expanding those markets, and we must spend the time and the money-it is expensive-in exploration now. My criticism of the present government in this respect is that they did not take this action soon enough in respect of the oil and gas industries. If one looks at the statistics having to do with additions to reserves or the discoveries of new fields or new pools in old fields for the last 11 years, he will find there is a rather alarming decrease in those new discoveries. I suggest respectfully those are the figures that must be taken into account in assessing the need for this tax legislation as it affects the oil and gas industries, and not the total reserves. When you take the total reserves, you are dealing in many cases with revisions of previous estimates and extensions to known fields. In other words, they are somewhat misleading.
I do not intend to give the figures in detail, but they show continuously from the year 1954 onwards a considerable downward trend, with the exception of one year, 1959, and I believe that was the year of the Swan Hill discovery. There is an explanation for that one figure, in any event. However, leaving out that one figure there is a fairly sharp and consistent downward trend in the statistics relating to these discoveries of new fields, or new pools in old fields. This points up rather sharply the need for more exploration work now.
As recently as 1948, I think, although I have not had the opportunity of looking up

the figures, we were importing some 88 per cent of our oil requirements into this country. Today, we are producing something of the order of 80 per cent of our requirements. These figures, as I say, are given without having had the opportunity of checking them, but I believe them to be approximately accurate. I should like to make it very clear that the government is to be encouraged to proceed with measures that will help the industry spend more of its funds in the exploration of new fields.
There are one or two other peculiar anomalies in the existing legislation. There is the matter of the effect of the tax legislation, in the United States and Canada combined, which makes it more advantageous for United States companies to enter this field than for Canadian companies to spend their money in it. This is a condition that is quite undesirable. I believe that the members in all parties would wish that everything be done to enable Canadians to do their share of this development work. As I read the bill, quite frankly I find the sections complicated and I am not absolutely certain that they accomplish what is sought to be done by them. I have some reservations about that. However, be that as it may, we are dealing with the principle now and we hope the principle will achieve these two objectives of increasing exploration and increasing Canadian participation in this exploration. These two ends are desirable, and I wanted to record my views in connection with them.
In so far as the sections of the bill are concerned, I must say that to some extent I have to trust the minister as to what they actually mean, because to discern either the principle or the precise meaning of the sections from a reading of the bill is somewhat difficult. However, there can be more said about that at the committee stage. At this stage, I merely wanted to get on the record something that I thought would be definitive on this point, and to make clear what I believe to be the position of great numbers of Canadians on it.


Mr. Bert Leboe (Cariboo):: Mr. Speaker, not being an expert it will not be necessary for people to look through a 30-minute speech in order to ascertain what I have to say on this subject. First of all, I want to be on the record as being in favour of any incentive that is given to exploration and research in this country. I believe it is very important to our way of life that we have the utmost in research and exploration, whether it be in gas and oil, minerals or in the ways and means of increasing production on the farm
Income Tax Act
or in the forest. I feel it is commendable that legislation should be introduced to create an incentive in that regard.
I do think, however, in connection with secondary industries that we have the cart before the horse. I believe that secondary industries-I have been in business myself- are dependant on markets. I am wholly convinced that our markets are basically domestic markets when we have a balance of trade between this country and any other country in the world through unilateral or multilateral trading. If, in fact, our markets are domestic markets, I believe an incentive must be given to the individual to produce for these markets, and these markets must be increased through purchasing power in the hands of the individuals who compose the potential markets. Today, these people lack the purchasing power.
I believe that if we, as a group of individuals in this House of Commons, can devise ways and means of increasing our markets in Canada by fiscal and monetary policies, then we are going to create incentives, perhaps through these tax reductions on sales as outlined by the minister. It seems to me it must be apparent to each and every one of us that a person who is getting all the things he can relatively take out of life is not likely to be a market for any goods or services. The men and women in this country are limited in the amounts that they can take unto themselves in the way of goods and services. The millions of dollars that some individual may have do not mean he can eat any more than so many pounds of food, drink any more than so many bottles of wine, occupy more than one seat in an airplane or a train or drive more than one car at a time. These things are fundamental and I think we must keep them in mind when we are dealing with this situation of markets and incentives.
To my mind this is the incentive we should be looking for. With the increased purchasing power of our people they can buy the things they need and increase their standard of living. If we keep this in mind we shall be much further ahead than trying to start at the opposite end by encouraging people to produce just because they are going to make greater profits out of a small production. The production output of any producer should be for the use of the consumer, and if the Canadian consumer is not using everything he should be, then we must seek to improve his lot.
I would like to see the government go direct to the Bank of Canada in order to devise means by which the purchasing power of the Canadian people can be increased. When their purchasing power is increased, this

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would be a source of capital for hospitals, schools, roads, bridges, wharfs and all the things we need so badly. The people themselves will become the market and the incentive for the production of goods and services.
(Translation):


Mr. Deputy Speaker:: I point out to the
house that if the Minister of Finance (Mr. Nowlan) takes the floor he will conclude the debate.
(Text):


Thomas Speakman Barnett: Mr. Speaker, I may have been caught slightly off guard as I thought the hon. member for Cariboo would have spoken at greater length. A little earlier I listened to an exchange taking place between the Minister of Trade and Commerce and the hon. member for Davenport. I have no desire to become involved in their quarrel as to which of their parties has been the best friend to big business, but in the light of the remark made by the minister about the enthusiasm he found among businessmen with whom he had discussed his tax incentive proposals, I wish to ask him whether he has yet found anyone in the country who was not enthusiastic about a reduction in his taxes? That, in part, might explain the enthusiasm which the minister met.
When he was moving second reading of the bill, the Minister of Finance suggested that he found some difficulty in finding just what was the principle of it. I take it that the basic principle is to amend the Income Tax Act, and that principle was neatly outlined by my colleague from York South, earlier in the debate. In view of the fact that the Minister of Finance seems, on occasion, to have some fondness for biblical quotations I would suggest for his consideration what I think would be an appropriate text expressing the principle of the bill. It is "To him that hath shall be given and to him that hath not shall be taken away even that which he hath." For that reason my concern is not so much with what is in the bill but with what I do not find in it. If I might make another biblical reference I would suggest that this bill tends to continue the distinction between those who sit at the table above the salt and those who sit below it.
As the hon. member for York South has suggested, all it contains are one or two small crumbs for the people who sit below the salt and, generally speaking, I would say that most of the people who sit below the salt are people whose income comes directly from a salary or a wage.
It is fair to say that the greatest omission in this bill is the fact that there is little in it for those people who constitute the vast

majority of the taxpayers of Canada and, as has been previously suggested, its terms and provisions are almost entirely confined to providing things for those people whose income comes from business and investments in one form or another.
As has been the case on previous occasions when we were dealing with this question, my concern is with the specific limitations that are found in the Income Tax Act which prohibit those persons whose source of income is a wage or salary from making deductions from their taxable income, deductions which are allowed to many other categories of people within the country. This is a matter which has been discussed on many occasions previously when we were dealing with proposed amendments to the Income Tax Act. In fact this is at least the fifth session during which I have raised the question I have in my mind with respect to the kind of omissions found in bills presented by ministers of finance, and I regret that on coming back to the house after an absence of some four years I find myself once again in the position of having to bring forward an argument related to this basic discrimination that is being carried forward year by year in the Income Tax Act. The present bill does nothing to remove that discrimination.
I had intended to say something about this on the resolution stage, but at that time I yielded to the suggestion of the Minister of Finance who said he would like to get the matter beyond the resolution stage. Now I should like to go into the question in some detail but I notice that the hour has now reached five o'clock and I shall not be able to express at this time what I have in my mind. With your permission, Mr. Speaker, I would like to call it five o'clock.


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



PRIVATE BILLS


[Stage Direction]
The house in committee on Bill No. S-4, respecting Canadian Pacific Railway Company (without amendment)-Mr. Ormiston-Mr. Paul in the chair.
On clause 1-Line of railway authorized.
Hazen Robert Argue: Mr. Chairman, we had quite a lengthy discussion on this bill in the standing committee where some of us endeavoured to get certain information that we felt was necessary for a study of the desirability of this project. I was particularly interested in having a representative from the C.N.R. brought before the committee to give us

information as to whether or not, in a completely efficient way and without any prejudice to the efficient operation of the company, the C.N.R. could handle the output of this company. However, the majority of the members of that committee decided that this should not be done, and the motion was turned down. I think it is the duty of members of this house, particularly at a time when the C.N.R. is running a substantial deficit, to look very carefully at any proposal which is likely to reduce the potential revenues of the C.N.R. and thereby increase the burden on the public purse. For this reason many of us were anxious to have representatives of the C.N.R. come before the committee. However, that proposal was turned down and the bill has been reported back to the house. What faces us today, therefore, is the bill itself.
Some of us have a particular reason for questioning the desirability of building more branch lines at a time when the railway companies are determined to tear up in a rather wholesale fashion, from one end of this country to another, many of the branch lines which are already in existence. I received in my mail today a document which shows that the C.N.R. itself is now determined to take up 74 miles of railway line within my own constituency. It is just a further indication of the pattern which is developing and I, certainly, shall resist this kind of thing.
In such an atmosphere it was, I think, understandable that we should question very carefully whether or not a duplication of services was required in this instance when other users of freight facilities in this country are being deprived of the use of even a single railway.
Having said that, I wish to make it clear that this industry is of great importance to the province of Saskatchewan. The proposed railway line, when it is in operation along with the existing C.N.R. line, will take out the product of a very large potash development being operated in Saskatchewan by the International Minerals and Chemical Corporation. Potash, as hon. members well know, is a constituent of fertilizer which is required in large areas of the world. It is a commodity which is in great demand and in short supply. This would mean a large payroll for people working on the project in this area of Saskatchewan. It will mean some mineral development and, altogether, it is most welcome. I am sure the people of Saskatchewan will want to see everything done which will maximize the efficiency of operation of this mine.
I think the witness for the company gave us very valid reasons, from his standpoint,
Canadian Pacific Railway why this line should be built. He pointed out that there was a shortage, as far as any one company was concerned, of rail cars suitable for the transportation of potash and that it would increase the efficiency of the company as well as the availability of potash on short notice if there was an opportunity to take advantage of the facilities of both the C.N.R. and the C.P.R. I think the company itself made an excellent case for the building of this additional railway line. That does not detract at all from my desire at that time to hear a representative of the C.N.R. I do not think that any project, if it is a sound one, can be hurt by having the fullest amount of information placed before the committee. However, the majority of the members said no, and that being the case we are faced in this house with Bill No. S-4 to enable the C.P.R. to build 15 miles of railway line in Saskatchewan to Bredenbury for the purpose of taking out salt. We on this side of the house will support the bill and expedite its passage so that these facilities may be available to the company as quickly as possible.


David Lewis: I, too, am a member of the committee which went into the bill now before us. I should like, in the strongest possible language, to protest against the manner in which we have to pass an important piece of legislation on the basis of information which is totally inadequate to allow for an intelligent and reasoned decision.
Several simple facts are to be found in the evidence. In the first place, the Canadian National Railways is already serving this mine. Second, the spokesman for the company informed us, or told us in answer to questions, that this matter had been discussed with the C.N.R. and that that railway company felt they could handle the situation themselves-that another line was not required. Added to those simple facts, I wish to place on record two more considerations namely, the present dismantling of branch lines, particularly on the prairies, and the fact that we all have copies of the MacPherson report which urges upon this country and upon this parliament the rationalization of our transportation system and opposes the continuing proliferation of branch lines.
In spite of this, we are to give authority to build a duplicate line. We were not given any information as to whether such a line was needed. The majority of the committee decided the C.N.R. should not be invited to tell us if they believed they could handle the traffic. So we are being asked to permit the building of a duplicate line in an area where branch lines are continuing to be pulled up merely on the submission of a spokesman

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for the company which, as far as I am concerned, meant simply: the more carriers we have, the happier we shall be. Of course, from his point of view, if he could have every railway and trucking company in Canada coming to his mine so that he could pick and choose between them, he would be happiest of all. But that would not serve the interests of Canada. All we have before us is a statement by a spokesman of the company that they do not want to have to rely upon one carrier only. We have that, and we have another statement by a spokesman of the Canadian Pacific Railway that they think there will be enough business for both railways and that they, also, would like a chunk of it.
I can think of nothing less informative or less valuable than that kind of information, or evidence, upon which to make a decision. With the C.N.R. in deficit all the time, having a line already in existence to service this mine, and in the absence of any evidence why it cannot continue to serve the mine in the future, we are asked to take a step which would necessarily reduce the possible revenue of the C.N.R. and, thereby, increase its deficit. This is why I asked in committee that we should have an opportunity to learn more about the contract between the company and the C.P.R.-that we should know more about the proportion of production which would be shared by these lines.
That is why the hon. member for Assini-boia asked that a spokesman of the C.N.R. come and tell us what the C.N.R. think about the necessity of the situation. Both of those requests were refused, and in my opinion, and I say this with great conviction, this committee is really not able to make a reasoned judgment on this bill. This committee will simply have to act on it, if it votes in favour of it, by accepting the proposition put forward by hon. members in the committee, that we should assume that if the C.P.R. come and say that they want this duplicate line, then they should know what they are talking about. If this is the assumption, then I say to this committee of the whole what I said to the standing committee, why bother us? Why not just let them decide whether or not they want to build, if we are merely to accept their statement about the necessity? It is our business, as I see it, to go into that matter, and we have not done so. The standing committee did not do so, and in my submission this committee is not in a position to make a decision which has any intelligent relevance to the needs of the situation.
Mr. Chairman, I do not want to speak for long. This is my first experience of a bill before a standing committee, and I feel very

unhappy indeed. I gather that I can look forward to a great many similar experiences in the future. I say, this committee and this parliament are not in a position intelligently to decide on this bill, because we have not got the information which must form the basis of an intelligent decision. I have not any doubt in my mind that the way in which hon. members jumped to the defence of the bill in the standing committee was due entirely to the fact that the indestructible, infallible and omnipotent Canadian Pacific Railway company appeared as the benefactor of the bill before parliament.


Mr. Bell (Saint John-Albert):: Mr. Chairman, as a member of the standing committee I merely want to state for the record that I was fully satisfied with the democratic way in which the entire proceedings were carried out; and the record of those proceedings which has just been made available to hon. members today will bear that out. We have no business inquiring into the internal management of this private enterprise company; and I am surprised that the last two speakers are against an industry which I think is wonderful for the province of Saskatchewan.
I know the Conservative members of parliament also appreciate it.


Hazen Robert Argue: Mr. Chairman, I rise on a question of privilege. It has been said by the hon. member that I was against the development of this company in Saskatchewan. That statement is a lie. The hon. member who made that statement is telling a falsehood. I spoke in this committee a few moments ago and said I would support this bill, as will all hon. members on this side of the house, and I hope it will be given approval in an expeditious manner. I think the hon. member should accept my statement that I am in favour of this bill; and I am sure everybody is in favour of the industry-there is no question of that.


Thomas Miller Bell: Mr. Chairman, the impression was that he was against it.


Hazen Robert Argue: There is no impression at all.


The Deputy Chairman:: I would ask the hon. member for Assiniboia to withdraw the word "lie", which he used when speaking about some statement made by the hon. member for Saint John-Albert.


Hazen Robert Argue: Mr. Chairman, I am very happy to comply with your request; I withdraw that word. Now I ask the hon. member to withdraw any imputation that I am opposed either to this industry or to this bilL


Rémi Paul: That is a matter of argument. The hon. member for Burnaby-Coquitlam.


Hazen Robert Argue: Different rules for different parts of the house.


Thomas Clement (Tommy) Douglas: Mr. Chairman, I have always noticed that whenever an hon. member has a weak case he starts to impute motives to the other side. For the hon. member for Melville to suggest that anyone is opposing the development of an industry-


John Whitney Pickersgill: You mean Saint John-Albert.


Thomas Clement (Tommy) Douglas: Saint John-Albert. I am sorry; I got the wrong horse.


Paul Joseph James Martin: You rang the wrong bell.


Thomas Clement (Tommy) Douglas: Somebody suggests I rang the wrong bell. I think I got a cracked bell.


Thomas Miller Bell: This bell always rings true.


John Whitney Pickersgill: It always rings, too.


Thomas Clement (Tommy) Douglas: As one who had something to do with this company's coming into Saskatchewan, and as one who spent a great deal of time and effort in encouraging them to come into Saskatchewan, surely no one will accuse me or those associated with me of trying to hinder their development. However, that is a totally different thing from using that as an excuse for asking parliament to vote on a bill without the kind of information upon which parliament can make a rational and intelligent decision. I think it was Will Rogers who once said that you could walk across Saskatchewan with one foot on the C.P.R. line and the other one on the C.N.R. As we look back now, we think there was some pretty bad planning with reference to railway construction in days gone by. The people of Saskatchewan are now paying for this, because at the moment there are a large number of applications to haul up many of these lines as some of them are duplicate services and the railways now claim they are unnecessary. This means that communities which have been established, businesses which have been located and grain handling facilities which have been built along the lines, are going to become virtually worthless if they are pulled up. Surely, if we cannot correct the mistakes of the past, at least we can learn from them and not commit the same mistakes in the future. There is nothing quite so stupid as to keep on making the same mistake.
Here is an application to duplicate a line which is already in operation, a line which
Canadian Pacific Railway serves a potash mine. I submit that the representatives of Canadian National Railways should have been called. I should like to see this committee refer the bill back to the standing committee and insist that a representative of the Canadian National Railways be called to say whether or not, in the opinion of that company, it would experience any difficulty whatsoever in servicing the potash mine operated by the International Minerals and Chemical Corporation (Canada) Limited. If they express some doubt that they could handle the very heavy volume of traffic which will emanate from that mine, then this committee of the whole would be perfectly justified in giving its consent to the construction of an additional line by the Canadian Pacific Railway. But, Mr. Chairman, I submit that if the Canadian National Railways are convinced that they can handle this volume of traffic, then it should be given sufficient time to show whether or not its contention is borne out by the facts. If parliament in the future finds that it is not able to handle that traffic, surely that would be time enough to authorize the construction of a second line.
What we are being asked to do here is to authorize the construction of a line to duplicate a line already in existence, which would have the effect of dividing the traffic when that division of traffic may be totally unnecessary. The question is not whether we want to develop an industry in Saskatchewan: we are all interested in developing industries anywhere in Canada. What we are anxious to do is to avoid the mistakes of the past with regard to constant duplication of railway lines, which can only break up the traffic. If the traffic is divided so that the volume of traffic which each railway gets is not sufficient to cover the operating and capital costs, it means that the burden has to be borne by shippers on other lines, and this pushes up freight rate and other costs.
In Canada, as the MacPherson report has pointed out, one of the reasons for our high freight rates and for the deficits which particularly the Canadian National Railways have experienced, is the obligation to carry a great many unremunerative lines. We in this House of Commons ought to know whether we are simply constructing another unremunerative line or a line which, if it does become remunerative, may make unremunerative the C.N.R. line which is there. I submit that the issue at this time has nothing to do with the development of industry. The issue at that time is whether or not this house has been given the information to which it is entitled and upon which it can base a reasoned decision on an extremely important matter. For us merely to jump up and vote for the bill

Canadian Pacific Railway because an hon. member stands up and says, "If you vote against this bill this will be interpreted in the country as being opposed to the development of an industry in Saskatchewan" seems to me is a complete attempt to escape the responsibilities which lie upon members of the house.
As members of the House of Commons we have a responsibility to decide whether we are going to authorize a duplicate line. I for one have not been given sufficient information upon which to make that kind of decision, and I am convinced the committee was not given .sufficient information.


Robert Gordon Lee Fairweather: Mr. Chairman, the hon. member who has just resumed his seat and the hon. member for York South brought forward a seemingly frightening indictment about what seems to me to be an ordinary procedure of this house. Surely the simple fact is that the Canadian National Railways did not oppose the bill before the committee. The Canadian National Railways have a right to appear before the committee and to state their views. They had notice of the committee meeting. The notice is widely given in government documents or in public documents. Surely the silence of the Canadian National Railways is more eloquent than are any speeches against this development.


Mr. Smith (Simcoe North):: It has been intimated by some of the hon. members who have spoken that there was something improper or high handed on the part of the committee. The opposition are always very ready to remind us that this is a house of minorities. The composition of the committees reflects the composition of the house. The party of the government is a minority on the committee as well. We were there. We voted. I think that the votes were fair. We took all the time that was necessary to hear the hon. member for York South and the hon. member for Assini-boia. The violence of the protestations of the hon. member for Assiniboia today I think perhaps arise from the fact that he forgot himself for a while the other day in committee and reverted to his political antecedents.
The Conservative party is a party of free enterprise. This was an application by a free enterprise organization to build what amounts to little more than a spur line. If it had been six miles in length, they would not have had to be before the committee. Their spur amounts to 12 miles. They brought forward impressive reasons why-


Thomas Clement (Tommy) Douglas: Fifteen and a half miles.


Heber Edgar Smith: The hon. member says it is 15J miles. That is not much longer. I can still walk it. The company and

the railroad brought forward impressive arguments as to why it was needed and as to why the C.N.R. could not supply the service required. These arguments included, first, the rapidity of shipping. When the product of this mine, namely potash goes out, it must go out rapidly. The next argument was the available supply of box cars. They felt that even though the C.N.R. had all the products of the mine to ship, it could not supply the box cars which might be required. They also said that it was economical from the point of view of market destination to have available to them shipping by both lines. I should like to revert for just a minute to the problem of box cars. Some hon. members seem to take the attitude, "Oh well, if there are 100 more hopper cars, they could handle all this shipping".
The point of this is that the cost of the project is $668,000 and the cost of a hopper car is something like $21,000. Less than 33 hopper cars are the equivalent of the cost, and 33 hopper cars added to any railroad system could not provide the additional shipping facilities required by the company. The argument is logical. It was a free enterprise argument. There was nothing underhanded and nobody was bludgeoned or overwhelmed by the appearance of the C.P.R. This bill should be passed now.


David Lewis: I will not take more than a minute, Mr. Chairman, to say to you and to the members of the committee that the witnesses in reply to questions, admitted that the C.N.R. could rent hopper cars from the C.P.R. Spokesmen for the company informed the committee that they have some hopper cars which they could and would bring down to Esterhazy. In my experience I have seldom heard a lamer reason for building anything like what is now before us than to suggest that you must build it because one of the railways does not have all of the hopper cars necessary. It is well known that cars on freight trains-and I refer to every sort of car-interchange among railways all the time, or run from one line to another all the time. I wanted to put on record that this hopper car argument was made but that, in my submission, on the evidence it is not anything like a weighty argument.


Gordon Campbell Chown: Shall clause 1 carry?


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
Preamble agreed to.
Title agreed to.
Bill reported and read the third time and passed.

Mr. Speaker:: By unanimous consent Mr. Mandziuk, seconded by Mr. MacEwan moves that Bills Nos. SD-1 to SD-305 inclusive, being divorce bills items Nos. 2 to 306 inclusive on today's order paper, be now read a second time.


Frank Howard: Mr. Speaker, there is no unanimous consent.


Mr. Nicholas Mandziuk (Marquette) moved: the second reading of Bill No. SD-1, for the relief of Madeleine Francoise Hankowski.


Mr. Peters:: Before discussion takes place, Mr. Speaker, may we ask that the page boys be dismissed from attendance. This procedure has been customary in the past and I would hope that it would continue.


Thomas Miller Bell: How about the hon. member for York-Humber? He is not 21 yet.


Mr. Speaker:: I do not know if the hon. member is anticipating the debate when he makes this suggestion to the Chair but under the circumstances I think we will see how things go along. We will have the pages sent out if necessary but I feel that we may be unnecessarily labouring the point.


Gordon Minto Churchill: Mr. Speaker, I would say it is a rather odd thing that members should have to be deprived of the services of the page boys because somebody in the house is going to use material which is not suitable for them to hear.


John Whitney Pickersgill: I should like to say a word on the point of order. It seems to me that nothing that could be said on the principle of the bill, and that is all that is before us on second reading, would be offensive to the page boys or anyone else, and I hope that Your Honour, in keeping with the rulings you have made on other occasions, will see that the debate on second reading is confined exclusively to the principle and is not concerned with any of the matters that are only properly to be considered in committee.


Mr. Speaker:: On the point of order, I am in agreement with the member for Bonavista-Twillingate in this regard. I was wondering what the hon. member was proposing to do on second reading and whether we were going to get a penny thriller or have a discussion of the principle of the bill.


Frank Howard: Mr. Speaker, if that question has been disposed of, perhaps I can make a comment or two on the principle of the bill. Usually members rise to speak in a debate because they desire to do so but the situation is somewhat different for me 27507-3-106
Private Bills-Divorce
today because I do not have any desire to speak on the bill before us now. I regret that the occasion has arisen whereby we have this bill before us now and presumably will have others in the future upon which we will have to make comments. Our reasons for expressing that regret have been enumerated on a number of occasions.
There is the question of the custody, maintenance and welfare of the children. There is the question of whether or not there is a prohibition against engaging in a debate of that sort or whether we have any authority or jurisdiction with regard to such matters. There is the question of alimony payments and whether or not we have any right to deal with it. There is the question of the exorbitant charges petitioners must incur in presenting bills of this kind. There is the very important question of whether or not matters of private concern to individuals should be the subject of debate and consideration in parliament.
But the bill is before us and I presume other bills will come before us and therefore we have to express our thoughts with respect to each one, as has been the case in the past couple of years, in the hope that by expressing these thoughts and ideas we may be able to bring about some changes. The alternatives to the present procedure have also been enumerated on a number of occasions. We have even gone so far as to take cognizance of the penchant of the Prime Minister (Mr. Diefenbaker) for the appointment of royal commissions in the hope that he would appoint a royal commission to deal with this question. But such is not the case. No changes have been made and therefore we must proceed to deal with these bills on the same basis as in the past few years, particularly in the last parliament.
The bill seeks in principle to dissolve a marriage between two individuals, and I think that is the sole principle involved here. As always I will try to keep within the bounds of the rules in any comments I make. But in seeking to discover whether or not we want to dissolve the marriage I think we have got to determine whether there was one in the first place. This is only possible by looking at the evidence which was presented in order to determine whether or not there is a marriage to be dissolved. The facts are contained in the various pieces of evidence and material presented to the committee of the other place. Very briefly I should like to refer to the proof of marriage. The petitioner, who was under oath, was asked by the clerk of the committee of the other place about her name, age, occupation and the like. These are the specific questions and answers:
Q. Are you married, and if so to whom?
A. I am, to Jan Paul Hankowski.

Private Bills-Divorce
Q. When were you married?
A. October 15, 1955.
Q. Where were you married?
A. Montreal.
Q. By whom?
A. Father Paul Henri Lafontaine.
Q. What is your religion?
A. Roman Catholic.
Q. And your husband?
A. Roman Catholic.
Then she was shown a document and asked if she recognized it. She identified it as her marriage certificate. Presumably, therefore, there is a marriage in existence which we are now asked to dissolve though we are not allowed to concern ourselves with any of the other all-important factors connected with our decision to dissolve this marriage.
We have ahead of us some 700 similar bills seeking to do precisely the same thing, to dissolve a marriage or annul it, as the case may be. There is only one way whereby we can avoid having to consider these bills in the manner in which we now are. Even though our hopes were shattered many times in the past, we can hope again that the government will take action and some decision will be made thereby doing away with the necessity of having to rise and speak on a particular bill as I am now doing, even though I have no great desire to do so. Unfortunately, Mr. Speaker, if no decision is made, if no solution is presented, if there is no government action, I am afraid that for 700 more times we are going to have to engage in the consideration of individual bills of this type.


Mr. Andrew Brewin (Greenwood):: Mr. Speaker, I rise to oppose second reading of this bill and I desire to make clear to you and the house why I do so. I do not do so because I am opposed in principle to the dissolution of marriage, at least as a civil matter, nor do I do so because I have any knowledge of the facts of this particular case and the particular bill now before the house other than the facts recited in the bill itself. My objection goes to the root of the principle of this bill.


Mr. Speaker:: Order. I would suggest to hon. members in a modest way that they not interpose themselves between the member who has the floor and the chair. This is strictly against the rules and we are getting a little lax in that regard.


Francis Andrew Brewin: I hope I was able to make clear over the body of my neighbour that I was opposing this bill on principles which are not those of the hon. member for Skeena, although I agree with what he says. I oppose it because I think it is wrong for any legislature, tribunal or court to deal with the matter of divorce without at the same time taking

into consideration the question of maintenance of the spouse and the question of the custody of children, if any, of the marriage.
We are asked to approve of the principle of this bill on second reading and then refer it to the private bills committee to examine the evidence. But what are the terms of reference? Are the members of that committee to consider only the question of whether the marriage shall be dissolved on the alleged ground of adultery or are they to consider those matters which, in my submission, are essential to the proper consideration of any bill of divorcement granted by any responsible body?
Now, Mr. Speaker, I know that it has been said in this house that, in granting a bill of divorce, this house has no jurisdiction to deal with matters of the maintenance of the spouse and the custody of the children. I challenge that view. I say it is quite clear that this house has a legal responsibility and that the suggestion we cannot deal with the matter is neither in accordance with history nor with law nor with common sense.
First of all, let us examine the history of the matter. The question of divorce, Mr. Speaker, was essentially a matter, as you would know sir-


Gordon Minto Churchill: I rise on a point of order, Mr. Speaker. I regret the necessity for interrupting the hon. member, but I think he is wandering rather far afield. If this is permitted for one hon. member, then others of course will ask for the same opportunity to discuss the general subject rather than the particular bill.


Mr. Speaker:: Is there any hon. member who wants to speak on the point of order? If not, I am prepared to rule.


Francis Andrew Brewin: May I speak to the point of order before you rule, sir?


Mr. Speaker:: Yes.


Francis Andrew Brewin: We are dealing with a particular bill which contains a certain recital. We are dealing with the principle of it. The bill does not refer to the two matters which I have mentioned, in any shape or form. We are not told whether there are children of the marriage; we are not told in this bill whether any provision is made for the maintenance of the divorced spouse. In my respectful submission, Mr. Speaker, it is distinctly within the relevance of discussion and within the power of this house to determine whether or not these matters ought to be considered and should be considered.
I have heard it said that it is not within the legislative power or the constitutional power of this house to deal with these matters.



IS, 1962

[Stage Direction]
The submission I am about to make to you, sir, is that it is a matter of history, constitutional law and, as I said, common sense, that these matters can be dealt with together. I wish to present, as part of my argument on this particular bill at this moment, that these matters ought to be considered, and that this suggested ground of unconstitutionality is without substance. This is the point to which I was about to direct myself, Mr. Speaker.
Mr. Speaker:: This point is not without some difficulty. We have before us a very simple bill, and the principle of it is strictly whether or not relief to the parties in question should be granted. In so far as the points the hon. member is raising are concerned, I feel he may be engaging in a hypothetical argument. He, himself, has stated that there is no indication that there are any children involved, nor is there any question of maintenance. If that is so, then he is inviting the house to engage in general argument on the question of divorce, and what should be done in connection with divorce. These subjects are not within the bounds of relevance in respect of this particular bill.
I would submit that there may be other occasions when such matters can be discussed, such as other motions or bills that have been advanced in this house, at which time we may canvass the whole question of divorce by this legislative body. However, with the greatest of respect, I cannot see how we can get into the whole argument or discussion of divorce in parliament on the basis of the principle of one particular bill. I would ask the hon. member, in that regard, to limit his discussion to this particular bill.


Francis Andrew Brewin: Still on the point of order, Mr. Speaker-


Mr. Speaker:: No, I have indicated that there is a point of relevancy that has to be observed. We cannot discuss the whole question of divorce in this house on the basis of the second reading of one bill. We cannot re-argue the point of order.


Francis Andrew Brewin: Then, accepting your ruling, Mr. Speaker, I say that this particular bill should be rejected by this house because it contains in its recital no evidence that these crucial matters have been considered. There is not, before this house, the evidence taken in another place, although reference was made to it by the hon. member for Skeena (Mr. Howard). I have not seen the evidence taken in the other place, and I doubt if anyone else here has seen it.
What I am saying, Mr. Speaker, is that we are asked to refer to a particular piece of legislation providing for the dissolution of marriage between two individuals without 27507-3-1064
Private Bills-Divorce
having the opportunity of saying, as I should like to say to the private bills committee, you should include something about maintenance and custody. In my submission, unless we do that, we are being irresponsible. I should like to call to your attention authoritative pronouncements that you cannot separate the problems of maintenance and custody of the children from the sort of bill that is laid before us. We cannot separate from this Bill No. SD-1, the question of whether or not-


Mr. Speaker:: Order; I think if the hon. member wishes to make this the burden of his argument, he must then show his argument is relevant to this bill by determining whether or not there are children involved. If there are no children involved, then his argument is entirely irrelevant.


Francis Andrew Brewin: I accept your ruling with respect to the question of children. We may have to deal with that matter on another bill. However, in respect of the question of the maintenance of the spouse, that is clearly a matter that is incidental to any bill for the dissolution of marriage. Although the facts in respect of this particular case are not known to the house, it is my respectful submission that the question of the maintenance of the wife is indissolubly linked to any bill of this type. In this case, there may be some reason on inquiry for determining that the wife requires no maintenance or that the husband has no means to grant maintenance, but the subject is relevant when we are asked to pass this bill.
Before we accept second reading, we should be able to say to the committee; you find out the answers to these questions which are essential-


Mr. Speaker:: Order. Without appearing to engage in an argument with the hon. member, I wonder whether he has addressed himself to the question of whether or not all hon. members are in possession or may be in possession of the evidence that was heard in the other place in respect of this bill? If the hon. member is not in possession of the evidence, then he can readily obtain it. He could refer to the evidence, and one would assume that all hon. members, in preparation for a debate on the bill, would have considered the evidence and what was involved in the committee reports in respect of the evidence heard in the other place, without adverting directly to that evidence on second reading.


William Arnold Peters: If I may speak to this point, I believe there may be a misunderstanding in this particular case. To the best of my knowledge, the evidence is not available
1G74

Private Bills-Divorce
to most of the members of parliament. This evidence has been reprinted this year, so far as I know, and it has not been circulated. The new members, therefore, are not in possession of this evidence that was heard last year.


An hon. Member:: Yes, it has.


William Arnold Peters: I should like to draw your attention, Mr. Speaker, to the Senate minutes for October 17. You will note there is an appendix to the minutes of this one, which includes the reintroduction. It reads as follows:
The standing committee on divorce make their second report, as follows:-
1.	With respect to the petition of Madeleine Francoise Hankowski, of the city of Montreal, in the province of Quebec, for an Act to dissolve her marriage with Jan Hankowski.
2.	During the last session of parliament a bill of divorce in this matter was recommended by the committee and passed by the Senate, but owing to dissolution of parliament the proceedings on the bill were not completed.
3.	The committee again recommend the passage of an act to dissolve the said marriage based on the evidence adduced before the committee at the last session, which evidence is submitted herewith.
Incidentally, Mr. Speaker, I have that evidence, and I believe I am the only one who has it.


Mr. Speaker:: I am sure all hon. members who might want to could get it.


William Arnold Peters: Mr. Speaker, I submit that is not necessarily so. The amount of printing done last year was only sufficient for that session, and the printing in the other place is not large enough so that this could be duplicated again this year. I suggest the same will apply to the first 300 bills unless we advise the other place to reprint the evidence of last year so that it will be available to every hon. member in the house.


Mr. Speaker:: I shall take that point under advisement but I am of opinion that any hon. member who wishes to get a copy of the evidence can do so and that it can be obtained. Anyone who wishes to discuss any of these bills can get hold of the evidence, and we cannot take that excuse.


Francis Andrew Brewin: I of course accept your ruling, Mr. Speaker, and all I therefore propose to say in concluding my remarks is that, as you have in effect ruled that this is not the appropriate time to discuss the question of whether or not maintenance and the custody of children are adequately provided for, I shall be heard from later on on this subject at the appropriate time.


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


Some hon. Members:: Agreed.


William Arnold Peters: On division.


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

J. Nicholas (Nick) Mandziuk: the second reading of Bill SD-2, for the relief of Bruce Reid Campbell.


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

J. Nicholas (Nick) Mandziuk: the second reading of Bill SD-3, for the relief of William Metcalfe Watt.


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


Frank Howard: Mr. Speaker, I was a bit slow on the draw on the bill that preceded this one, but there is a particularly valid point which develops with specific reference to this bill. I do not know whether your comments on the first bill were an invitation to do this or not, but I so interpreted them and I would like to make one or two references to the evidence itself as it was taken before the other place, I being one of the fortunate or unfortunate ones who were able to obtain it.


Mr. Speaker:: I hope that if the hon. member makes reference to the evidence he will not give us long citations therefrom.


Frank Howard: That I do not know, Mr. Speaker.


Thomas Clement (Tommy) Douglas: On a point of order, Mr. Speaker, if lengthy citations from the evidence are necessary in order for the hon. member to underline his reasons for voting for or against the measure, surely that is perfectly in order.


Frank Howard: This bill seeks precisely to dissolve a marriage. I do not intend to read long citations at this stage from the evidence itself, except to point out two particular things. In the first place there was a petition praying for relief and upon that petition this bill was founded. Part No. 7 of the petition makes specific detailed reference to the question of the marriage, dealing with maintenance of the parties and the custody of the children and issue thereof.
Without quoting extensively from the evidence I would merely point out to you, sir, and to the house, that the hon. senators in

the other place, when children are involved, make extensive examination of the petitioner with respect to the question of custody and maintenance, and they did so in this case. Therefore the hon. senators in the other place considered it part of their responsibility to concern themselves with the welfare and custody of the children. This is the question that was dealt with before, and I only make slight reference to it in order to lay the groundwork for my hon. friend who spoke earlier and who will be speaking again.
I submit, Mr. Speaker, that this matter of maintenance is a valid ground for objecting to the passage of this bill on second reading. It is something which was dealt with by hon. senators in the other place and it should be considered and dealt with by us. If there is no other course open to us, then we shall have to continue our objection.


Robert Gordon Lee Fairweather: Mr. Speaker, if I was elected to be one of 264 judges, then I too share the view of the hon. member for Greenwood in wanting to be sure, before I pass judgment on this matter of principle, as to what provisions are made for custody and maintenance. I fail to see why such provision should not be part of the statute itself.


Some hon. Members:: Hear, hear.


Mr. Speaker:: Order. It now being six o'clock, the hour appointed for consideration of private members' business having expired, we will revert to the business that was interrupted at five o'clock. It being six o'clock, I will now leave the chair.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.

[Stage Direction]
The house resumed consideration of the motion of Mr. Nowlan for the second reading of Bill No. C-78, to amend the Income Tax Act.
Thomas Speakman Barnett: When the order of business changed at five o'clock I was about to suggest that there are three important respects in which the bill to amend the Income Tax Act which is now before us perpetuates a long standing discrimination against those whose income is gained from wages and salaries. This discrimination applies with respect to amounts which are considered deductible from a taxpayer's income and relate to incidental
Income Tax Act
expenses incurred during the course of earning a living, the cost of board and lodging should an individual be required because of his employment to be absent from the place where he maintains his normal establishment, deductions for travelling expenses and, in the case of many skilled workers in this country, deductions in respect of the purchase and replacement of tools which they must use in their occupation.
This is a subject which I have raised a number of times when bills to amend the Income Tax Act have been before the house, and the question has been discussed on various occasions in this house in the past. I want to say that in my view those Canadians whose incomes arise from wages and salaries and who constitute, I suggest, the vast majority of our Canadian citizens, are not averse to being placed in a position where they cannot claim deductions in respect of many of these things, provided the same treatment is given to all other Canadian citizens. However, as we all know, that is not the situation which exists, and in some cases these deductions are allowed. My view is that the rules should apply fairly and equitably to all.
There are times, of course, when those who feel they are being discriminated against become restive and, indeed, they have probably sought the advice of friendly lawyers to assist them in getting round the problem which faces them. An example of this was drawn to the attention of the house on at least one occasion by one of its members, and I should like to call attention to a statement reported in Hansard in 1957 to be found on page 3034. The hon. member who was speaking on that occasion had this to say:
It is somewhat ironical when one considers that a lawyer could perhaps devise a way by which this tax could be avoided-


Mr. Speaker:: Order. Perhaps the hon.
member could assist me. Has he been able to determine in this bill any provision whereby living allowances for any person or class of persons are affected? We must remember that we are now discussing the bill itself, and the principle of the bill is limited to the amendments which are contained therein. We are not at the resolution stage where the hon. member could advocate amendments or changes in the act. We are now confined to the principles of those amendments contained in the bill before us.
It may be that the hon. member has been able to find such a point, but after a careful perusal I have not, and I should like to have the assistance of the hon. member in this regard. Otherwise, he will appreciate that on second reading such a course as he now

Income Tax Act
appears to be following could not be continued, as it would mean the house could now go into every section of the Income Tax Act. That, of course, is not possible; the rules will not allow it to be done.


Thomas Speakman Barnett: In reply to the question Your Honour has raised with me, I understand that I cannot go into detail with reference to sections of the act on second reading. But I understand that the principle of the bill as it was outlined to us by the minister earlier was that it was an act to amend the Income Tax Act. In my view, in speaking on the principle of the bill before us I ought to be able to suggest that it is adequate or inadequate in relation to what it does or does not do. I might say, further, that at the resolution stage there was some request by the minister that we should not continue extended remarks on that occasion. I would also add for Your Honour's consideration that in previous similar debates on second reading of a bill to amend the Income Tax Act I have been allowed to pursue this particular line of discussion.


Mr. Speaker:: Unless anyone wishes to add anything on the point of order-


Mr. Benidickson:: Mr. Speaker, I would not without preparation be prepared to argue in detail on the point, but Your Honour is aware that I participated perhaps fairly closely in debates of this type both on the right of the Speaker and on his left. While I have not got the precedents before me, although they are somewhere in my office because last parliament I had occasion to use them-and I will send out for them now-the decisions which were made in the last parliament reversed the practice of what had previously been the general one. I would say that Your Honour is reverting to the practice prior to 1958. We were told throughout the last parliament that there was no leeway whatsoever with respect to debate on budget matters at the resolution stage, but a fair amount of leeway was provided when we were discussing the principle of the bill on second reading. I am speaking only, Mr. Speaker, of the practice; I am not going to quote the rules. But I can assure you that that was the practice.


Mr. Speaker:: If that is so, it would tend to offend what I conceive to be the rules of relevancy. The principle of this bill is contained within its two covers. It certainly does not open the whole of the Income Tax Act to discussion at this stage. Otherwise it would be all too simple to have an act which would amend one section of a very complex and lengthy statute like the Income Tax Act, and it would be open to complete discussion. That

is not, in my estimation, within the rules of relevancy, and at this stage when we have the bill before us it is only what is contained in the bill which can be discussed. At the resolution stage hon. members may have a little more freedom, but at this stage I do not think we can discuss a section not referred to in this act.


Thomas Speakman Barnett: Mr. Speaker, I think your ruling confines somewhat the tenor of the remarks I intended to make. I certainly felt that the matter to which I referred represented a very serious omission in the principle of the bill which the minister has brought forward. I find it difficult to determine clearly in my mind what exactly is the principle of the bill when on second reading we cannot discuss specifically its various clauses, each of which I think might contain a separate principle. I suppose that if I am not allowed to pursue this matter in particular, I shall have to conclude this section of my remarks by drawing to the attention of the Minister of Finance that the quotation I was about to read was one from a speech made by the then hon. member for Digby-Annapolis-Kings, now also the Minister of Finance. I would commend to him a re-reading of some of the remarks made by him during that debate, and also certain remarks made by the then hon. member for Perth, now also Minister of National Health and Welfare (Mr. Monteith), who I hope I can say I considered an ally participating with me in the debate on that occasion. I am sure that if the minister will re-read the debates of 1957 and the ones which followed during the next session he will understand fully the force of the argument I should like to make with respect to what I consider to be a continuing discrimination and, in my opinion, a very sad omission from the bill which the minister has brought forward.


Mr. Speaker:: I must advise hon. members that if the minister speaks now he will close the debate.


John Whitney Pickersgill: Mr. Speaker, I should just like to make a very few general observations before the Minister of Finance concludes the debate. The bill has the effect of alleviating, and in some cases reducing, taxation generally and of providing certain other alleged benefits to taxpayers. I say "alleged" because some of my colleagues have questioned how effective they will be. I must say that we feel rather sorry, although I am not going to labour this point, sir, that instead of this bill, which was conceived in sin last April and was never allowed to be born, instead of this-well, I do not think I will continue that figure of

speech, because the hon. member tor Timis-kaming (Mr. Peters) might want the page boys removed if I were to do so. But at any rate, this rather tired measure is all that is before us. We would have been much happier if those long range policies which the Prime Minister (Mr. Diefenbaker), on that day of repentance, June 24, envisaged, had actually seen the light of day five months later; but they have not.
All we have here is the residue of the late minister of finance. It is not very edifying. It is not very big. It is not very important. But it is, as I say, something like motherhood, which we are all in favour of, namely an alleviation of taxation as soon as possible. Therefore, it would seem to me, sir, that in accepting the principle of the bill, I should like to let the minister, who has got off pretty easily in these debates so far, know that we are not accepting all of its contents. He had a pretty easy time last Monday because it was a holiday; but when we get into committee on this bill we will expect the minister to tell us what all these clauses really mean and what their effect is going to be; and we will expect him to have all the answers.


Mr. R. M. T. McDonald (Hamilton South):: Mr. Speaker, I should like to make a couple of brief comments about the principle of this bill. One question which has been missed in all the discussion today is the influence that these amendments have on the portability of pensions of the average Canadian across the country. In clause 17 of the bill there is spelled out the conclusion of a long range government policy, I believe, with regard to the portability of pensions by people who are in a registered retirement savings plan and a deferred profit sharing plan. One of the difficulties of the worker today who is working under a company pension plan is his inability to move and to carry his pension rights with him. These amendments will now give him that right in every instance. I think this government should be commended on this principle of starting on the first road to portable pensions in this country.
We have heard a great deal from the opposition about this government's inability to cope with the contributory pension system in the country. Some people say that we do not need the advice of the provinces in amending the British North America Act for survivor and disability benefits. These amendments are clearly indicative of the fact that the federal government is taking the initiative in the federal field across the country by making final amendments to this Income Tax
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Act, under section 79B, to allow any person who is in a registered retirement savings plan, who has an individual savings plan or has a deferred profit sharing plan now to move his employment, and if he goes into another plan-I refer to a comparable type of pension plan-he can take this money and transfer it now without its being taxed in that given year as income. The fact that this is being done is very indicative of the position of this government in the field of portable pensions. I would hope that the minister, when he is spelling out clause 17 in the committee stage, would give a clear and full explanation of this portion of the pension situation so that every Canadian who is now in a private pension plan would know his rights and privileges in this instance.
(Translation):


Mr. Henri Latulippe (Compton-Fronlenac):: Mr. Speaker, in regard to income tax, we regret that the government of Canada has to tax the citizen so much that he has hardly anything left.
The cost of living in Canada has gone up every three months in the last decade, and it has become ever more difficult for Canadians to earn a living in a country blessed with bountiful resources.


Mr. Speaker:: Order.


An hon. Member:: Canadians are not to blame for that.


Mr. Speaker:: Order please. Would the hon. member show the connection between his remarks and the principle of the bill now before the house?
Actually, the bill comprises certain amendments. Therefore, the hon. member cannot discuss the general principles of the Income Tax Act any more than he can discuss the principle of the amendments.


Henry P. Latulippe: Mr. Speaker, those of us who sit in this corner of the house would like to move an amendment for the purpose of raising the basic exemption for Canadian taxpayers to $5,000 for the head of a family, and $3,000 for a single person. With such increased tax exemptions-


Mr. Speaker:: Order. I am very sorry but since the hon. member cannot connect his remarks to any section of the bill under consideration, his representations are out of order. He may have another opportunity to voice his opinions on the subject, and lie could have done so at the resolution stage but this is not the time for it.

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Gilles Grégoire: Mr. Speaker, I rise on a point of order. Certain sections of the bill are designed to promote the investment of Canadian capital in certain fields of industry. That is precisely the purpose of the amendment. If the hon. member for Comp-ton-Frontenac (Mr. Latulippe) proposes other incentives for companies to invest in Canadian ventures-


Mr. Speaker:: Order. The hon. member does not seem to understand that the remarks of the hon. member for Compton-Frontenac are out of order at this time. On second reading, the discussion is on the principle of the bill. This legislation contains certain amendments. Hon. members must then limit themselves to the amendments; they are not free to discuss anything else. There is no provision in the bill to amend personal exemptions and any discussion of this matter is therefore out of order. The debate here is limited to remarks on the oil industry and other subjects mentioned in the bill.


Henry P. Latulippe: Mr. Speaker, I will come back on that later on.
(Text):


Mr. D. M. Fisher (Port Arthur):: Mr. Speaker, I just wish to ask the minister, either in his forthcoming remarks or at the committee stage, although I would prefer it at this stage, to explain the arrangements that were made or discussed with the province of Ontario in relation to changes in the logging taxes, particularly the representations made by the province and those made by the industry. Would he also give some explanation as to the reason for the particular fraction that was arrived at so far as the tax is concerned. The pulp and paper industry in particular in Ontario for some years has been complaining about double taxation in the logging field. From the representations which they had made and which the provincial government had made I had understood that they wanted a full clearance rather than a third clearance. For that reason I should like to have an explanation of how that figure was arrived at. I should also like to know whether, in the discussions the Department of Finance had with the province of Ontario, this was somewhat of a compromise or whether the province or the provincial authorities are satisfied with this change revealed here in clause 12.


Mr. Steven Otto (York East):: Mr. Speaker, when the Minister of Finance introduced this
tMr. Speaker.]
bill, and in his comments about it when explaining how pleasant it would be for the general public to have the $50 extra deductible, I think he was more than modest when he forgot to mention the fact that the bill is also very good for the very rich. This is especially true of clause 8 of the bill. I refer to that matter because I doubt greatly whether too many people of the wage earner class would be in a position to incorporate companies to look after their estates.
I should like to support the statement made by the hon. member for Davenport that indeed this bill leaves much to be desired in the way it was set up. If the other clauses are as loosely put together as is clause 8, I dare say anyone can see at least seven different ways in which the purpose of this measure can be defeated.


Some hon. Members:: Question.


Mr. Speaker:: If the minister speaks now he will close the debate at this stage.


George Clyde Nowlan: I do not intend to speak at any length, Mr. Speaker, but I am very glad that we have attained this position anyway where the debate on the alleged general purpose of the bill is now concluded and that we shall be dealing with the sections. In response to the question from my friend the hon. member for Port Arthur (Mr. Fisher) dealing with a certain section and the one from my friend across the chamber dealing with another subject, may I say that these matters will be dealt with when we come to these clauses in the committee, and that I do not intend to refer to them specifically at this time.
Naturally I have listened to the debate with interest. I think it has been a relatively good debate. I greatly appreciate the comments of the hon. member for Davenport although, like the hon. member for York South (Mr. Lewis), I think it was, I found it to be a very difficult job to interpret the logic or the alleged logic which supposedly sewed together his remarks with very loose threads.
I assure my friend, the hon. member for Bonavista-Twillingate (Mr. Pickersgill), that I realize I have not been mistreated by the house and, in fact, I will let him in on a deep and dark secret. I do not know all the answers to the sections, just as the hon. member for Davenport said this afternoon that he did not; and if the member for Bonavista-Twillingate thinks we are going to continue this debate until I can give satisfactory answers to every question, then I think the house will still be

dealing with this bill when we adjourn lor Christmas. However, I hope that will not be the situation.
I agree completely with what the hon. member for Davenport said at the outset of his remarks about the Income Tax Act having become very complicated and very technical, and I must admit that as minister of national revenue for some four years and somewhat responsible for the administration of the act I sometimes found it very difficult to understand or interpret. He said that this situation has grown worse throughout the years and in that regard I could not agree more if I were to adopt the language with respect to the act which the hon. member used in the earlier part of his comments this afternoon. This is inevitable, of course, and I think the same thing has been said in every parliament in the world in which they have income tax legislation, because obviously, as the act continues to develop in impact, you also get pressures and the necessity for creating exemptions and, unfortunately, you get the obvious necessity of sometimes using very technical language.
I have used the same argument myself in days gone by when I was sitting somewhere else than where I am now. I used to say: "Why can you not use simple, plain language which any farmer would understand and there would be no difficulty whatsoever if you did"? If that happened I would point out to those hon. members who have been complaining today about the loopholes which might possibly develop through which one might drive a coach and four, the result unfortunately would be that you could drive a tank through the act and there would be no loopholes but rather a complete morass. Therefore it is necessary, and no one knows this better than the hon. member for Davenport, to have technical language, and sometimes language with regard to which, as he said, even he has had to consult experts in order to understand it. I must confess I have also had to do that more than once, and after having retained one expert and then another who could not agree I thought the situation was even worse than I had understood it was at the outset. Be that as it may, unfortunately that is the framework of a very technical act and I make no apologies for it. I am sure that anyone in this chamber who has had the experience of dealing with taxation matters, and I know there are many hon. gentlemen here who have, regrets the necessity of using such language but also appreciates the fact that if it were not used the difficulties would sometimes be worse than the ones of which they complain.
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I also appreciate the reference the hon. member made to the chairman of the royal commission, who has been ill for some time but who I am advised is making a very good recovery. I am sure the house will be very glad to know that he has been in touch with me by telephone and he hopes to take over the duties of the royal commission within a relatively short time. I can also assure the hon. gentleman that the government is not going to undertake a thorough revision and complete rewriting of the Income Tax Act in the interim. When that will be done, even under the aegis of a royal commission, is something for which I am not answerable. I will leave that to the royal commission to decide for themselves and the government, of course, to which the royal commission will report, possibly hon. gentlemen opposite, for no one ever knows; but in any event this government has no intention of rewriting the Income Tax Act at the moment.
The hon. member for Bonavista-Twillingate said that the present amendments were conceived in sin last April and referred to them as tired and laboured amendments. If my mathematics are correct and they were conceived in sin last April, then this is just about the proper time for them to be born.


John Whitney Pickersgill: It is not a baby to be proud of.


George Clyde Nowlan: I do not make any pretence to parentage of them whatsoever.


Walter Lockhart Gordon: It is a premature baby just the same.


George Clyde Nowlan: We are introducing amendments now to the act and I have no doubt that other amendments, some perhaps substantial, will be introduced from time to time, but certainly we are not intending to have a complete revision and rewriting of the act at any time in the immediate future.
My hon. friend spoke about anomalies, and who would not do so? Of course there are anomalies in this act. No one knows that better than the hon. member for Davenport or myself, as far as that is concerned. We both have had some experience in dealing with them. There undoubtedly are some loopholes in the act. There were many, and many of them have been cured, I think, by amendments, though sometimes the amendment which cured the loophole perhaps created another one. That has been the history of income tax legislation and it is inevitable.
My hon. friend suggested that the clause dealing with incentives was loose, that it was one which would be impossible to administer and one which would create many difficulties. I admit it will create difficulties. No one who has had any responsibility for

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the administration of the income tax law or any experience with it would deny that. But my hon. friend says that it is very easy and much simpler to do something else. He said, for instance, that we could allow a 100 per cent write-off in a year for plant and equipment and that would be a very simple incentive. But if all the firms investing in capital equipment were allowed to take a 100 per cent write-off in a year I wonder where the Minister of Finance would find the money with which to pay the hon. member for Davenport his indemnity. Whatever complaint there may have been about deficits during the last few years, I can understand that if that principle were followed the deficits that would ensue would be much greater than anything this country has ever known before, and I suggest that the difficulties of preventing that would be much greater than the difficulties of administering the section dealing with incentives.
The hon. member also referred to the fact that we should offer encouragement in surplus labour areas. That was provided for in the act two years ago, of course, and although it has not been as successful as one would like I think it has achieved some purpose in that field. The hon. member made other suggestions but I am not going to take up the time of the house tonight in dealing with them because I think they can be dealt with much better in the committee stage when I am sure the hon. member will raise them again. In one breath we are told that these incentives are no good at all and will result in nothing, and yet the suggestion is also made in the next breath that because of these incentives we are going to get corporate reorganizations and tens of thousands of dollars in legal fees are going to be spent to accomplish something which we are told is worth nothing at all. It just does not add up to logical common sense. As I said, I think it is much better to leave specific objections to the clauses to the committee stage, when we will be dealing with the clauses themselves.
The hon. member for Lapointe (Mr. Gregoire) dealt with some general criticisms of the Income Tax Act and of this bill with which I agree entirely. He also suggested that he thought that any incentives which we have outlined here should be confined to Canadian corporations and not be made available to corporations under American control. That is a very good theory but one on which I would not want to comment at length tonight except to say it is very difficult to administer these particular provisions of the Income Tax Act with that motivation in view. I think there is some merit in some of the arguments which he has advanced. However, I do suggest to him that that is not the purpose of this section.

The purpose is not to control the ownership of corporations. The purpose of clause 10, the incentive clause, is to have businessmen go ahead and develop their trade, either export or local. I agree with my colleague, the Minister of Trade and Commerce that it will have an impact. We have been assured by businessmen all over Canada that it will be helpful. However, it is not a solution to all the country's problems or anything of that kind. I think it will help to develop the Canadian economy.
I suggest to the hon. member for Lapointe if that is the purpose of the section, and it is not to control the ownership of corporations either United States or Canadian, but to develop the Canadian economy, to increase employment, then it does not make much difference to the people who are being employed at the moment whether the corporation is controlled in Canada or outside of Canada. What we were looking for in this incentive section is a way of increasing employment and increasing Canadian production. This other problem to which the hon. member referred is a very pertinent and very important problem, one with which we are all conversant and we are all concerned and no one more concerned than this government; but I suggest with respect to my hon. friend it cannot be dealt with through this section of the Income Tax Act which is before us.
Now, the hon. member for York South (Mr. Lewis) used the old, hackneyed expressions, the old catch phrases, to which we are so accustomed. He said that this was something to help the rich and not to help the poor. I did not apologize to the hon. member because I knew it was not necessary, but I had to leave for a few minutes while he was speaking. I think he made some reference to the fact that if 80,000 Canadians were being exempted from income tax because of that one amendment, that did not make this bill of any more assistance to the poor. It simply meant that there were too many poor people in this country. If that is logic, then I do not know what the term means. It may be that there are too many poor people in the country. I certainly sometimes feel that I have been included in that group throughout the whole of my lifetime and I would agree that there were too many of us and we were too poor. If we have an act that removes 80,000 taxpayers from the rolls at one stroke and then the hon. member says that this is no help, then I say that is not dealing with the situation frankly or honestly. I say this with all due respect to the hon. gentleman.
There are other clauses in this bill as well, as my hon. friend well knows. There is the clause to which the hon. member for

Hamilton South (Mr. McDonald) referred a few minutes ago, the one which permits the transfer of funds from pension funds to profit-sharing funds without having to pay income tax. There may be some wealthy people engaged in that area, and there probably are. I suggest to my hon. friend, who has very wide experience in the labour movement, who knows the law and particularly the economy of Ontario much better than I do, that the number of people who would be transferring from a pension fund to a profit-sharing fund would not include those about whom he was complaining, namely the very wealthy. I suggest it would be better in dealing with these matters to look at the situation frankly and deal with it on that basis rather than making appeals to prejudice and to class.
I rather regretted also the fact that this afternoon the hon. member saw fit to refer to some purported evidence that was brought in before a parliamentary group in another country the day before yesterday referring to two Canadian corporations. The hon. member for Lapointe may question whether they are Canadian corporations. The reference was to International Nickel and Falconbridge. These corporations were under attack the day before yesterday in a certain jurisdiction. After hearing the evidence that was brought in, so I am told, the chairman of one of these parliamentary committees today rather apologized for the attack which had been made basely and unfairly on these Canadian corporations. I regret the fact that these attacks were necessary in order to bolster a case about this act being for the benefit of the rich and to the detriment of the poor. I have no brief for either corporation, and I hold no shares in either one. All I know is that they are Canadian corporations and, according to reports today, the parliamentary group before which they were attacked reported they had been unfairly attacked. The statements made in another capital today would lead one to that conclusion. I regret, as I say, that my hon. friend saw fit to draw this matter into this debate.
After all, this is a rather humdrum debate dealing with certain technical sections, largely administrative, which, with the four exceptions I mentioned this afternoon, the ones dealing with incentives, and the oil and gas industry, are not likely to lead to an earth shaking debate in which philosophies are created or parties made or wrecked. I hope the house will now resolve itself into committee so that we can go ahead and deal with the bill before us section by section. I repeat what I said to the hon. member for Bonavista-Twillingate that I do not want 27507-3-107i
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to disappoint him but I can assure him that I will not be able to answer all the questions which are asked.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Chown in the chair.
On clause 1-Right to take petroleum or natural gas.
Mr. Benson:: Mr. Chairman, the purpose of clause 1 of Bill No. C-78 I believe, and I ask the minister for information in this connection, is to assure that the receipt by a taxpayer in consideration for the disposition of a right, licence or privilege to explore for, drill for or take petroleum or natural gas in Canada, as provided by subsection (5b) or (5c) of section 83A, is included in the income of a taxpayer. This difficulty, I think, arises because of the fact that under the Income Tax Act there is no definition under section 3 of income as such. We have to stretch the situation under the Canadian Income Tax Act.
Section 3 of the Income Tax Act simply says "income" is income and includes income from property, employment and business. When the Income Tax Act was first introduced it was very simple for a man to determine his income because income was determined according to ordinary business principles. However, with the development of our act and income tax acts in other countries the meaning of income as such has become quite different from business income.
I would suggest that although it is necessary to pass this clause in order to bring this particular item within the gamut of income as defined under the act, we should look very seriously at section 3 of the act and consider the possibility of moving back to business principles in the determination of income, rather than be always moving further and further away and having to bring in, under section 6 of the act, items which under ordinary business principles would not be included as income of the taxpayers.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
On clause 3-Application of section 12 (l)(c).
Edgar John Benson: Mr. Chairman, clause 3 is an amendment to subsection 6 of section 12 of the Income Tax Act. This is a clause which is introduced without any previous explanation in the house, or without being included in the budget resolutions as such, and I believe the house is entitled to an explanation from the minister as to exactly what is involved.

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George Clyde Nowlan: Mr. Chairman, I know that this was not included in the resolutions per se, but this is something which was asked for by the accountants association of Canada and another organization with which my hon. friend has at least a nodding acquaintance. The lawyers and accountants in a joint brief asked that this be done. It is, of course, a relieving amendment to broaden the conditions under which a holding company may deduct certain expenses, and it includes the words "property leased to a subsidiary controlled corporation subsidiary to it."
It is a relieving clause and, as my hon. friend knows, there are certain exemptions to which a holding company is entitled at the moment and this adds a lease holding provision at the request of the professional people concerned.


Herbert Wilfred Herridge: Mr. Chairman, I am not quite sure that many hon. members would consider the minister's explanation very clear or satisfactory. The explanatory note says:
This amendment, which adds the underlined words, will broaden the conditions under which a holding company may deduct certain expenses to cover the situation where part of the assets of the holding company consists of property that is leased to its subsidiary corporation.
This "deduct certain expenses" is a mighty ambiguous term, and in order that hon. members can understand what is meant, the minister should give a clear illustration of what type of situation this will cover. I would like a concrete example of where the resolution would be applied.


George Clyde Nowlan: Perhaps I can do no better at this time, Mr. Chairman, and I do not want to go too far afield. This is technical language which I am going to read for a moment from the technical explanation which I have in front of me. As I said earlier, this is a relieving amendment and I am sure my hon. friend knows that a taxpayer, under general law, cannot deduct expenses incurred in earning exempted income. If a taxpayer is earning income which is exempt from taxation then the taxpayer cannot deduct the expense of earning that income from his income.
Since a large part, or almost all of a holding company's income, consists of dividends from subsidiary companies, and since these dividends are exempt, the holding company, under general rule, would not be permitted to deduct the expenses involved. However, for many years-there is nothing new in this-the act has provided an exception to the general rule for those holding companies that could meet the test that more than 50 per cent of their income consisted of (a) shares

in capital stock and (b) bonds, debentures and mortgages of a subsidiary corporation controlled by them.
This amendment adds to these exceptions which I have read, and which have been in the law for years, a provision covering property leased to a subsidiary, and this will make it easier for holding companies to qualify for the exemptions which are permitted by deducting expenses in connection with their controlled subsidiaries.
As the hon. member for Davenport said this afternoon, it is very difficult to put this into simple language, but there is no departure from principle here. This deals with companies drawing income from subsidiaries and because of the fact that that income is exempt from taxation those companies could not deduct certain expenses.


David Lewis: What kind of property would be leased by a holding company?


George Clyde Nowlan: I do not know what property might be leased. I suppose anything could be leased from a warehouse to an automobile. Leasehold property would generally apply to leasehold real estate but, for instance, it would cover the expenses of the holding of a company meeting of the subsidiary, and company meetings, as my hon. friend knows, have to be held under statute at least once a year. That is one type of expense which is not permitted today and which would be permitted under this clause. Also if dividends are going to be paid, the expenses of issuing dividends and the printing of dividend cheques would be permitted, together with the corporate fees, the filing fees, of such a subsidiary. This is the type of expense involved and there would not be anything in it of major proportions. The clause covers the general operating expenses of subsidiaries in this case.
This is not embarking on any new principle. It is something which had been recommended on more than one occasion. I received these briefs from time to time when I was minister of national revenue and I am sure my hon. friend from Kenora-Rainy River heard them before. This is a matter which was sought in a brief by the chartered accountants and lawyers, and my predecessor decided to put this before parliament last spring.


Douglas Mason Fisher: I would have thought the minister would be able to give us a more concrete illustration considering that he has a friendly adviser on holding companies by his side but, apart from that facetious point, could the minister give us an estimate prepared by his officials as to the effect this particular change will have on revenues? We all hear so many stories about the large scale operations

of holding companies; I think that may be why we have a certain apprehension that this is opening the door. How much is it estimated this will cost the Department of National Revenue in the next fiscal year?


George Clyde Nowlan: There is no way of making an estimate of that, I am informed. I believe the impact on the revenue will be negligible. After all, if the company is a holding company, a subsidiary could incur the same expenditure and it could be accounted for there. This is a matter of convenience, and represents a reduction of bookkeeping rather than any large saving to the taxpayer or impact on the revenue. Of course, everything is bound to make some impact on revenue, but in this case there will be no important effects on the revenue whatsoever.


William Moore Benidickson: This is the first session of the new parliament and there are many new members in the house. I am glad that so many experts have, tonight, confessed that they experience difficulty with this act. I am not an expert, but I have had difficulties with it. I did not confess all of them, probably, but they may have been obvious.
We have had before us for some time resolutions which were presented as long ago as April 20 by the former minister of finance and which were repeated in Votes and Proceedings of September 27. Those resolutions gave notice only with respect to measures relating to money. It is customary, in the amendments which are made annually to the Income Tax Act, for the officials, after receiving representation from various public bodies such as those to which the minister has referred, to include in the revisions not only the legislation necessary to make effective the resolutions which we passed a few days ago but to add to the bill a number of extraneous items which relate to the administration. Since these do not involve the money items we do not get warning of them in the resolutions themselves.
I do not recall that we have ever been asked to pass an income tax bill within 24 hours of the time the bill itself was delivered to us in our mail boxes. Few of us, I am sure, have had an opportunity to give this bill adequate study in the circumstances. Some hon. members, I know, have done their best to examine the measure in the short interval which has elapsed since they received it. I do not think there are many features unrelated to the resolutions which are likely to prove particularly embarrassing or harmful. Perhaps there are none. However, I cannot guarantee this at all, and I think it is unfortunate that we should proceed with income tax legislation which affects so many millions
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of people across Canada without the usual interval between the presentation of the bill and the debate here in the house on second reading. I say this because in that interval it is customary for those who are interested, and particularly for the financial journals of the country to analyse its proposals-and they can do this better than most of us-and make public through their large circulations exactly what is contained in the legislation.
However, I do not intend to suggest that, in the circumstances, discussion of this bill should be held up. Goodness know, this is just warmed up legislation from last April, except for sections such as those-


George Clyde Nowlan: Then why all this talk about it?


William Moore Benidickson: I would suggest that the minister and his officials in committee tonight point out to us as we go along those clauses which are extraneous and which have no relation to the resolutions and the subjects of the resolutions we were debating. If this were done, I feel sure the committee would be in a better position to appreciate what it is being asked to approve.


George Clyde Nowlan: Mr. Chairman, I do not intend to rise every time a question is raised, because I know that is the best way to block progress. However, in connection with the comments made by the hon. member for Kenora-Rainy River I would point out that the main features of this bill, the substantive matters, have been before parliament for a long time. The hon. member said they were conceived in April. They have been before the public since that time. We had a nine-day debate on the resolutions some time ago. There has been every opportunity in the world for representations to have been made with respect to them. There has been no suggestion that there has been any lack of opportunity in this respect.
It is true there are some sections which are extraneous to the resolutions. These are matters which have been requested time and time again by organizations such as those representing accountants and lawyers. If there are any matters other than those which come within those two categories I shall certainly draw the attention of the committee to them as we go along, but at the moment I cannot think of any, except some administrative ones; it may be, for example, that for technical reasons we have to include certain sections in a different place.


Gilles Grégoire: If I understood correctly, the minister said the purpose of this article was merely to avoid double taxation and not to permit extra expenditure by exempting from taxation.

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George Clyde Nowlan: I think the hon. member did not understand me. I did not say it was to avoid double taxation. But, as the hon. member knows, a wholly owned subsidiary could avoid payment of taxation by passing dividends from one company to another. That is the usual form the practice takes. All this does is to permit the avoidance of duplication and expense in that a company owning real estate rented to a subsidiary could charge off expenses against income tax. In the absence of this amendment it would not be able to do so. It is not fair to say that this is a provision to avoid double taxation.


William Moore Benidickson: The minister is usually reasonable, and I do not think he understood my point. He indicated he would call to the attention of the committee clauses in this bill which do not relate to the completion of the enactment of the resolutions. He referred, also, to a class of amendments which have been asked for many, many times oyer the years. If they have been asked for many times over the years and there were reasons why the administration did not grant them, I would think they were of some consequence. Surely, the number of amendments of this kind is not great and I would suggest that the minister assume the obligation to draw the attention of the committee to any clause which does not relate to the resolutions we were debating last week.


George Clyde Nowlan: I will try to do that.


Edgar John Benson: I, as a new member of this committee, made a slight error. There was a question I wished to ask in regard to clause 2. I wonder if I might ask the unanimous consent of the committee to go back?


Gordon Campbell Chown: Does the committee give its unanimous consent to revert to clause 2?


Some hon. Members:: Agreed.


Edgar John Benson: I apologize for not having picked this up as we went along.
Clause 2 is an amendment to section ll(lKq) of the Income Tax Act. It contains a hidden benefit which I am sure the minister would not wish the public not to know about. There is a situation in Canada in which a widow may receive a lump sum from a pension fund in the event of the death of her husband, and I should like to ask the minister if I am correct in assuming that under the revised clause she would be permitted to put the lump sum into a registered retirement savings plan and, rather than pay tax on the lump sum, pay tax on the income derived from the retirement savings plan.


George Clyde Nowlan: I understand, from having had a quick look at this, that it is dealing with a profit-sharing plan.
IMr. Gregolre.]


Edgar John Benson: It also deals with pensions plans.


George Clyde Nowlan: It has been dealing with a pension plan heretofore and we are now enlarging it so that it will deal with a profitsharing plan; so that to this extent it is an enlargement of the scheme of the section but only to the extent that we are embracing a profit-sharing plan as well as a pension plan.


Edgar John Benson: Am I correct in assuming that, as it is presently worded this section would relieve widows who are often in receipt of their husbands' contributions to a pension plan, and have to take the money all at once. Previously they had to pay tax on it or take the option of averaging it. Now they can put the money into a retirement saving plan and only pay tax on the money as it is drawn out of the retirement savings plan.


George Clyde Nowlan: I do not think this section does that to which my hon. friend refers. There is a provision for that to be done and I think we will come across a reference to it later on in the bill; but as I said, in this particular section we are simply enlarging it to deal with profit-sharing plans nothing further than that.
Clause 3 agreed to.
On clause 4-


Stanley Howard Knowles: Mr. Chairman, clause 4 is one which, of course, the committee will endorse, but I think we should note in precise terms what we are doing. The Minister of Finance took some umbrage at the language used by my colleague, the hon. member for York South, about these tax concessions as a whole. In particular he did not like the suggestion that these concessions are much more magnanimous for the wealthy than they are for those in the lower income groups. In this clause we have a proposal that exemption allowance for children be increased by $50; from $250 to $300 in the case of a child of family allowance age, and from $500 to $550 in the case of a child beyond family allowance age still eligible for exemption.
I have taken the trouble to work out a table showing what this actually amounts to by way of a concession to, or a gain by, taxpayers in certain brackets. I am not going to ask unanimous consent for my table to be put on Hansard without reading it because I would rather read it, but I think it might be useful, when Hansard gets it, to put it in the tabular form which I have in front of me. I have entitled this table: "Married taxpayer with two children of family allowance

age". I have listed in the first column several income brackets; the second column shows the tax payable at present; the third column, the tax payable after the exemption has been raised to $300 per child; and the last column the saving or gain by the taxpayer. Here are the results. A married taxpayer with two children of family allowance age whose income is $2,500, now pays-


William Moore Benidickson: Is this the net income, the taxable income?


Stanley Howard Knowles: This is the income of the taxpayer. Perhaps at this point I should put
the table on	Hansard: Tax	Tax payable after exemption raised to	Saving or gainpayable	$300 per	by theIncome	at present	child	taxpayer$	$	$	$2,500	-	-	-2,600	11	-	113,000	55	44	115,000	335	318	1730,000	12,320	12,270	5050,000	20,195	20,140	55
Mr. Chairman, if I may recapitulate my figures in the right-hand column, the married taxpayer with two chilren earning $2,500 gets no gain. The $2,600 and $3,000 taxpayer gets $11 gain. The $5,000 taxpayer gets $17 gain. The $30,000 taxpayer gets $50 gain; and the $50,000 taxpayer gets $55 gain.
If these same people had four children, without giving all the details again the saving or gain at $2,500, $2,600 and $3,000 is zero. At the $5,000 level the saving is $34. At the $30,000 level the saving is $100. At the $50,000 level the saving is $110. My good friend, the Minister of Finance is very familiar with the scriptures, I know, but it seems to me that he is altogether too familiar with the verse which says: "To him that hath shall be given and from him that hath not shall be taken away even that which he hath".
There was a way open to the government to make this kind of change which would give all the saving to those in the lower income groups. There is an act on the statute books which can be very easily amended, so that instead of giving nothing to those in the lower groups and several times the saving they already get to those in the higher groups, the gain could have gone to all alike. The Minister of Finance boasted most loudly about the
80,000	taxpayers who will be removed from the tax roll by this generous gift. I have been poring over these figures and the best I can do with my arithmetic-and I think my arithmetic is a little better than the arithmetic the Minister of Finance used about the gestation period-indicates that these 80,000 people
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who will be removed from the tax roll are those who are paying taxes of from $1 to $11 per year, or an average of between $5 and $6 per year. It really is not much of a gift which he is making to those people. I suggest that the point made by my colleague from York South on second reading still stands. It is a pretty sad situation when there are
80,000	taxpayers, either single or married with families, whose incomes are so low that this $50 change removes them from the obligation of paying taxes, but all they save by this is from $1 to $11 per year.
Now, Mr. Chairman, I hope the day will come when we will have in power the kind of government which, when it makes tax changes, will not just make these changes at exemption levels or changes in rates, which give a little to those at the bottom and a whole lot to those at the top. Under our income tax legislation, even without doing something more appropriate, such as raising the amount of family allowances, it is possible to adjust the rates so that the benefit of a change like this accrues entirely to those in the lower brackets only, so that it accrues entirely to those who need it. I suggest to my good friend the Minister of Finance that before he engages in the histrionics in which he indulged about the speech made by my friend the hon. member for York South, he face up to the facts that I have tried to put before him in figures. The facts are that this move which is a sop that he counts on most in making this income tax amending bill acceptable to the Canadian people is in fact only a sop. It gives such a little bit to the little people. In fact, there are many to whom it gives nothing at all. However, it gives considerably more to those in the higher brackets. I urge that some day we take a much more human attitude towards changes in the Income Tax Act than is suggested by the change proposed in this clause.


Gordon Campbell Chown: Shall clause 4 carry.


Some hon. Members:: No.
(Translation):


Mr. Rondeau:: Mr. Chairman, I shall limit myself to a few remarks on clause 4 of Bill C-78.
First of all, I have to congratulate the Minister of Finance (Mr. Nowlan) for having granted to every head of a family an additional exemption of $50 for each child. However $50 is only a drop in the bucket, a fiscal drop, which the head of the family will not have to pay. If a tax exemption of $300 per child represents a weekly exemption of $5.75 this amount is insufficient to allow the father

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of a family to support his child before he contributes to the support of the government. Now, to my mind, it is, first of all, essential to allow a Canadian family to live before enabling the government to live. It is impossible for the head of a family to support a child on $5.75 a week.
Therefore, we ask the Minister of Finance kindly to reconsider the exemption of $300 granted in his bill, in the light of what a child costs: food, living quarters, clothes, insurance, education, drugs and doctors' bills. Now those are essential things which everyone must pay before paying one's income tax.
I think that the $300 exemption should at least be doubled, so as to help the head of a family to pay essential expenses for each member of his family.
This is the reason why I ask the Minister of Finance to reconsider the amount of that exemption. However, I commend him for the driblet he did grant to Canadian heads of families.


Gérard Chapdelaine: Mr. Chairman, I wish to join also with my colleague for Shefford (Mr. Rondeau) to congratulate the Minister of Finance (Mr. Nowlan) on the good will he showed by increasing the exemption with regard to children.
I also wish to endorse the remarks made by the hon. member for Winnipeg North Centre (Mr. Knowles) who has fully grasped the problem of concern to us at this time, namely the necessity of helping those who are in need of assistance.
The small wage earner has always been the one who paid more taxes and who could least avoid doing so. Professionals and industrialists can always juggle with their income and evade taxes until they feel it is time they started paying them. Now, since deductions are made at the source in the case of small wage earners, they are unable to resort to the same tricks as those whose income is not state controlled.
It is better to grant larger exemptions for children and to control more closely those with a larger income than the small wage-earners.
The supplementary exemption of $50 per child is definitely inadequate and ridiculous, Mr. Chairman. It should have been established at $500 per child ten years ago, and now after this delay it is deemed advisable to increase it from $250 to only $300. Such a small increase will help neither the poor nor those who can afford to pay income tax.
For an average family of five children, that means an additional exemption of $250. It is a trifling economy for middle income citizens

and it is not even noticed by the person who can afford to pay.
I respectfully submit that this measure is inadequate and that the government should revise its position and grant a minimum abatement of $500 for each child.
(Text):


Edgar John Benson: I should simply like to agree also that an increase in exemption of $50 applied to a person in the lowest tax bracket, for instance, a man with four children, involves a saving to him of $28 in taxes, whereas if it is applied to a person in the highest tax bracket it would involve a saving of $160. Hence this adjustment in taxation benefits, by raising the dependants exemption, is of much more benefit to those with a high income than it is to the taxpayer in the lowest income tax bracket.


George Clyde Nowlan: This matter can be argued in many different ways, Mr. Chairman, and I do not intend to embark on them tonight. This argument should be very helpful-and I am thinking not so much of this country as perhaps in another country where you hear talks about a tax recess or tax reduction sometimes of some kind, that it is going to give such a terrific shot in the arm to the economy and establish such tremendous purchasing power. Here is a little shot at least in the arm. They complain that it does not benefit anyone at all. They save two or three dollars. It certainly is not going to make a great shot in the economy, I would not think, although the effect on the national revenue, of course, as I think I pointed out this afternoon is fairly substantial. This amounts to about $35 million, all told. Although my friend the hon. member for Comox-Alberni was quoting from the scriptures, may I point out that there is also a quotation to which I might direct his attention, although it has no application at all. The quotation to which I refer is the one to the effect that figures do not lie but certainly liars can figure.
It is true that the exemption may be only a negligible amount in certain cases. However, if you consider the case of a father with four children and with $4,000 income, this will give him a 50 per cent reduction- just imagine that-in his tax or a 22 per cent reduction in his tax. So one can go on and on with regard to figures, as I have said. I admit that after all it is only a $50 increase in the exemption for a dependant. I admit that this is not the solution of the problems of a family. That is not the answer to all the economic problems with which individuals are confronted. However, it is

something in that direction. After all, I should remind my hon. friend of the fact that, when we were sitting somewhere else than where we are sitting today, the exemption went up and up, and then up again this time. It has been more than doubled in the years that he was out in the wilderness and that is more than the children of Israel obtained when they were in the wilderness, if he wishes to go back to the scriptures.
Hence as I say, whatever way you look at it, an argument can be made. I agree also that other steps should be taken. However, of course, these were exemptions which were brought into effect last spring. They have been applied to the armed forces. They have been applied throughout the year where the deductions are made monthly. If one wanted to do so, one could not make the change at this time. Whatever my friend said also a while ago about the rush of this thing, may I say this. There are companies whose fiscal year ends this month and they will be claiming exemptions because of some of these matters which are contained in this bill. That is another reason why it was desirable to go ahead with the bill and get it translated into legislation, assuming parliament so desired, at the earliest possible moment.


Edgar John Benson: Summarizing the minister's words with regard to exemptions, can we say that we all agree that this is a little shot to the little shot and a slightly bigger shot to the big shot?


David Lewis: Mr. Chairman, it may be more than the children of Israel got in the wilderness, this $50 exemption, until the time when manna fell from heaven, and what I was anxious to make clear earlier was that the minister should not get away with the idea that this was manna. I am sure he did not want to convey the impression to the house or to the country that the 80,000 taxpayers who were taken off the tax rolls were going to cost the revenue of this country $35 million, because I am certain that is incorrect. The $35 million the minister mentioned must refer to the total loss as the result of this exemption. If it does, Mr. Chairman, it merely underlines the truth and the importance of what we said.
I would point out to the committee that if the calculations of the hon. member for Winnipeg North Centre are correct, the 80,000 taxpayers would be saved an average-a mathematical average, not a weighted one, which may not be exactly accurate but it is adequate for this purpose-of $5.50 per year per taxpayer-


Stanley Howard Knowles: Ten cents a week.
Income Tax Act


David Lewis: If I can do mental multiplication at all I would say that 80,000 taxpayers at $5 each a year makes altogether $400,000. That means that over $34 million of the $35 million the minister is talking about must come out of the higher income people in this country who are the real beneficiaries of this small concession. What I was trying to say earlier, and what we say again, is that if this kind of concession is made at the bottom and if it is really intended to benefit the people at the bottom of the income ladder, then something ought to be done with the income tax rates to make sure that it does not provide $34 million or $30 million or $25 million, whatever the exact figure may be, of benefit to those in the higher brackets of income who do not deserve more benefits than they now have.


Gilles Grégoire: Mr. Chairman, I have a question I should like to ask the Minister of Finance. If 80,000 taxpayers will avoid taxation under this article next year, how many employees of the Department of National Revenue will become unemployed as a result of such a measure?


[Stage Direction]
Clause agreed to.
On clause 5->
George Clyde Nowlan: Mr. Chairman, in keeping with my undertaking to the hon. member for Kenora-Rainy River may I say that clause 5 was not included in the prognosis with respect to this bill. I am advised it is one which has been included every year since some time in the late fifties and it is obviously a technical amendment.


[Stage Direction]
Clause agreed to.
On clause 6-
George Clyde Nowlan: Clause 6 also was not mentioned in the resolutions. I am told that, as the explanatory note says, this is a technical amendment to correct an oversight when section 31A was placed in the law in 1961. This simply goes to prove what the hon. member for Davenport and others, including myself, have said today, that it is possible even for the best to make mistakes. There was a slight error made when this provision was introduced last year.


[Stage Direction]
Clause agreed to.
Clause 7 agreed to.
On clause 8-
Walter Lockhart Gordon: Mr. Chairman, the minister has explained that many of these are merely humdrum amendments and I do not want to

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take up the time of the committee on them, but I wonder whether he will explain the explanation of clause 8 (2).


George Clyde Nowlan: All I can do is probably make confusion worse confounded by reading the typewritten explanation which is placed in front of the minister for his elucidation. The amendment provided by subclause 2 deals with an associated company and is relieving. That at least we are thankful to know. In 1960 and 1961 the Income Tax Act was amended to provide new rules under which the splitting up of companies into several small companies in order to obtain the benefit of the lower rate of tax on the first $35,000 of taxable income might be prevented. We are all familiar, of course, with that mechanism and that proviso.
It has since been found that some companies may be precluded from qualifying for the lower tax rate simply because they happen to be controlled by a trust or an estate after the death of an individual. The amendment last year provided that in such event corporations are deemed to be not associated. This amendment recognizes further that control by trust may arise for good and sufficient reasons apart from the death of an individual and provides that in such cases the corporation be not associated unless the settlor of the trust has or did have during the year control of the trustee corporation directly or through a related group.


Walter Lockhart Gordon: I should like to thank the minister for a very complete and understandable explanation.


Steven Otto: Mr. Chairman, in connection with clause 8 surely the minister cannot be so naive as not to see that the benefits of this clause, if any, would certainly be overridden by the misuse of this clause in that a holding company or the owners of a holding company would now be allowed to break up their income into several trusts and so reduce their taxable income to the $35,000 limit. I daresay that this clause follows the army-navy case which was decided many years ago and, with all due respect, I cannot see what the purpose of the clause is since the courts have already made a very careful study of this question of associated companies and trusts under the act as it now stands. By making two companies or any number of companies under trust prima facie non-related companies I can see no benefit whatsoever and certainly all sorts of opportunities for misuse of the section.


George Clyde Nowlan: As far as misuse is concerned, I think we can leave it to the national revenue officers to look after that. With respect to the minister being naive and innocent,
[Mr. Gordon.!
he pleads guilty and admits it freely. The only thing about this particular section is that it was requested by the chartered accountants of Canada and by the lawyers, who undoubtedly are more naive than the hon. member who has just spoken.


Edgar John Benson: If the minister is going to refer to the chartered accountants so frequently in this committee, I think he should bring forward proof that this is so.


George Clyde Nowlan: I can bring you the brief.


[Stage Direction]
Clause agreed to.
On clause 9-Deduction from corporation tax.
(Translation):
Gilles Grégoire: Mr. Chairman, quite often during the debate on the bill to amend the Income Tax Act, there were violent discussions in which the Minister of Finance (Mr. Nowlan) himself took part.
With regard to clause 9 of the bill, we congratulate the Minister of Finance for having increased from 9 to 10 per cent the amount deductible from the taxable income of a corporation. It is a step forward.
That amendment will enable the provinces to recover that 1 per cent and thus to increase their revenue to help our universities.
We hope that the Minister of Finance will continue in that right direction, so that, before too long, the federal government can withdraw from the field of education.
Thus, the provinces will have sufficient revenue to enable our universities and our institutions of higher learning to look after themselves, and to organize an education system that will be adequate and better adapted to our times, particularly in the province of Quebec.
(Text) :


Mr. Maclnnis:: May I ask the minister if when this particular clause was being drafted any consideration was given by the department to a return to the rationalization and equalization principle under which the formula for federal-provincial tax-sharing arrangements was based on the average per capita yield of the two richest provinces instead of the national average as is the case today?


George Clyde Nowlan: Undoubtedly consideration was given to this question in the many discussions, in the many dominion-provincial conferences and in conferences in respect of the amendments which are now before us.


Donald MacInnis: The minister has indicated consideration was given, and can he amplify that by indicating why we are not returning to what is generally recognized in many parts of Canada as a better formula?


George Clyde Nowlan: Certainly, it is not recognized as better in the province from which the hon. gentleman comes. I can assure him of that. In addition, this question has no bearing whatever on the clause with which we are dealing.


[Stage Direction]
Clause agreed to.
On clause 10-Production incentive deduction.
Walter Lockhart Gordon: I take it, Mr. Chairman, that this is not one of the clauses the minister described as humdrum in view of the remarks made by his predecessor when these budget resolutions were introduced in April last, and in view of the rather anguished remarks of his colleagues, the Minister of Trade and Commerce this afternoon, who thought that nobody should even question the soundness of these particular proposals. I should like to ask the minister a number of questions and perhaps I might be permitted to put them one at a time.
As I suggested this afternoon, this particular clause may result in a number of windfall profits to certain people or certain corporations. When this resolution was first put forward, I wonder whether there was any thought at that time-this was on April 10 I believe-that shortly afterwards the Canadian dollar might be devalued and hence might result in some very substantial windfall profits to a great many companies who probably never expected them? I wonder if the minister would answer that?


George Clyde Nowlan: The answer is no.


Walter Lockhart Gordon: If the answer is no, Mr. Chairman, then I wonder if the minister is still as convinced that this proposal is in the form in which it should become the law of this country?
(Translation):


Gilles Grégoire: Mr. Chairman, I admit it is quite possible that the results of clause 10 in the amendments to the income tax bill will surprise the Minister of Finance (Mr. Nowlan).
As an incentive to production at this time, the minister would like to offer 50 per cent tax exemptions on production increases. I think the minister will experience an unpleasant surprise at the results, for if we
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look at the facts at the present time, in Canada we realize that the production is not even sold because the Canadian people do not have the required purchasing power.
So, what is the good of promising tax reductions as a production incentive when producers, manufacturers and industrialists have already on hand a pile-up of stocks in warehouses and manufactures.
How can we promise tax reductions to producers as a production incentive when last year's production is not even disposed of? You only have to visit our stores and our manufactures of shoes, suits, shirts or even our house builders to see that they have the capacity to increase their production by 200 per cent.
As a matter of fact, our manufactures of white furniture, stoves, refrigerators, washing machines, operate at only 40 per cent of their capacity. These manufactures would produce more even if their taxes were not reduced, but if the citizens of Canada were able, through an increased purchasing power, to buy that furniture.
The Canadian manufacturers are able to produce more even if section 10 is not added to the bill.
I fail to see whom these exemptions would benefit. Especially at the present time, excluding a few exceptions, how could our Canadian industries and manufactures benefit from them, since they voluntarily reduce their production because it does not sell?
If the Minister of Finance wants to increase production, he should, in my opinion, start by increasing the purchasing power of the citizens of Canada.
(Text):


Neil Alexander Matheson: I should like to refer to the matter raised by the hon. member for Davenport, and may I amplify it slightly to the minister. This section was designed to be an incentive to production, but consideration is not given to the fact that even with no production at all those sectors of our economy, manufacturing and processing, which are making exactly the same output as they did prior to devaluation have been given this great benefit resulting from devaluation of the dollar recommended by this government and have been given a production incentive bonus as well. They do not need to increase their production because they have already had a benefit, which in some industries has amounted to many millions of dollars, but on top of that they are to receive the additional benefit of a reduction in tax.
I wonder if the minister is in a position to give us any idea what this proposal is going

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to cost the public treasury? It seems to me that this is another illustration of what has been referred to as taking from those in the lower income bracket and giving to those in the higher income bracket, in this case corporations which in many instances are owned by non-residents. I think if we could introduce one other scriptural quotation it would be, "By their fruits shall ye know them."


David Lewis: If I understood the Minister of Finance correctly when he replied in the debate on second reading, he said that there were safeguards in this amendment against abuse of it by those who would seek to get this benefit by merely raising prices. Also, if I understood him correctly, he seemed to suggest that the wording of the amendment would prevent the benefit of a tax concession accruing to a corporation or a firm which was merely taking sales from another firm instead of benefiting the total economy through increased production.
I have not been able to find any such language. I may have missed it, and I should be grateful if the minister could now, if he would, with the help of the experts in front of him, tell the committee and in that way tell me, what language there is in this clause which would prevent its abuse in the two ways mentioned, namely merely increases in prices and by switching sales from A to B or from B to A in the economy. Would the minister like to answer that query, as perhaps I missed the language.


George Clyde Nowlan: I shall reply later.


Mr. Turner:: Referring to clause 10, which I would take as the kernel or core of the tax incentive legislation before the house, I would suggest to the minister that a lot of the sting of the incentive is lost in what I might term a mass of paper. For example, Mr. Chairman, if you look at the illustration given on page 7 you see that in producing a sales increase from $900,000 to $1 million a company achieves a tax saving of about $1,230. I would suggest that it would scarcely be worth while for an average corporation or average taxpayer to negotiate their way through this legislation to achieve a tax saving of $1,230.
The second point I wish to make is that a great deal of the incentive of this legislation will be lost by reason of the fact that you have a flexible advantage to the taxpayer. In other words, the better you do this year the less chance you will have of getting an incentive next year, and that is a serious handicap to the legislation.
The third point I would like to bring to the minister's attention is that the provision applies only to corporations. It does not apply to sole proprietorships and unincorporated

partnerships, and perhaps when the minister concludes his remarks on this clause he would tell us why it is that only corporations are to have the benefit of the tax credit.
The fourth point I offer for the minister's consideration is that the eligible taxpayers under this measure are confined to manufacturing and processing corporations. Therefore this will in effect exclude all retail and servicing establishments, and here again I think the incentives are unnecessarily confined.


Bert Raymond Leboe: Could the minister tell the committee what we have in Canada that is in short supply and that these incentives will help us to produce? I would also like him to tell us whether he does not think that these incentives will produce a situation where high pressure salesmanship is going to be applied thus causing people to put themselves in debt to finance companies. Under pressure of salesmanship people will put themselves in the position of buying things on time and mortgaging their future, and I do not know that there are so many things in short supply at the moment.


Edgar John Benson: Mr. Chairman, I rise to speak for the remaining couple of minutes in order that the minister may have time to think over the questions asked. First of all I would like to say that all of us on this side of the house are in favour of incentives as such, whether they be incentives to manufacturing industries, corporations or individuals. I would not like to make the distinction which was made by the hon. member for York South this afternoon because I believe that many Canadian corporations, at least those which are Canadian owned, are made up of Canadian individuals, and if these corporations can be given incentives to produce more jobs at a reasonable cost to the taxpayers, and without causing a great change in the distribution of income tax in favour of those in the higher income levels, then those incentives should be encouraged.
However, there are many criticisms which can be made with regard to this particular clause which is to introduce a new section 40A into the Income Tax Act, as it is written at the moment. First of all this type of incentive encourages firms to increase prices, regardless of what the Minister of Trade and Commerce said this afternoon. We are not operating in an economy which is absolutely free and in which prices are determined on an interplay of market forces. In some instances people do have something to say with regard to determination of the prices of their products, and they will have something to say in particular cases regarding determination of their prices under this legislation in order to obtain tax benefits. There is no doubt

about that. Another thing which is bad about this particular clause is that it does not present any incentive for efficiency within an industry.
Suppose we have an industrial producer who is selling all he can sell in existing markets in Canada, but who can come along and operate more efficiently and at a lower price which might help him in the export market. He is given no incentive on additional profits which are made through lowering costs in his manufacturing concern.
Clause 10 stands.
Progress reported.



BUSINESS OF THE HOUSE

Mr. Chevrier:: May I inquire what the house will do tomorrow; and perhaps the house leader would be good enough to indicate what we will be doing next week?


Gordon Minto Churchill: Mr. Speaker, I intend to outline the work for tomorrow and all of next week, subject to any unforeseen circumstances. The intention is to proceed steadily with legislation and we will continue with the four bills under the Minister of Finance until they are concluded, starting tomorrow with the one we are on now, which would be the first item. The second would be Bill C-79 concerning the Estate Tax Act, the third would be the Excise Tax Act and the fourth the Customs Tariff Act.
I will list the other items to which the house might direct its attention, reserving the right to change the order after we conclude the four bills I have mentioned. These are Bill C-4, an act to amend the Department of National Health and Welfare Act, which we were debating the other day, and
Business of the House
Bill C-71, an act to amend the Farm Credit Act, which is close to being finished.


Lionel Chevrier: What number is that?


Gordon Minto Churchill: That is No. 2. Then there will appear in Votes and Proceedings tomorrow, and on Monday's order paper three resolutions, two of which refer to items mentioned in the speech from the throne-a national economic development board and the Atlantic development board, together, perhaps, with a short resolution dealing with an amendment to the act which set up the productivity council.
In addition to those items, we shall consider the resolution standing in the name of the Minister of Transport dealing with the Freight Rates Reduction Act and then the resolution in the name of the Minister of Finance dealing with C.N.R. capital expenditures; the resolution in the name of the Minister of Labour dealing with a manpower consultative service; then Bill No. C-64 dealing with an amendment to the Coal Production Assistance Act-


George Clyde Nowlan: You have gone far enough.


Gordon Minto Churchill: Some of these are small, of course, though most of them are of major importance. Afterwards we shall take the resolution dealing with the Aeronautics Act and the resolution in the name of the Minister of Justice dealing with an amendment to the Judges Act, followed by Bill No. C-70 in the name of the Minister of Labour dealing with the safety of persons in federal works.
I missed one out of our list-Bill No. C-49 dealing with an amendment to the Combines Investigation Act.


[Stage Direction]
It being five minutes after ten o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Friday, November 16, 1962