1962-04-10

[Stage Direction]
Miss Margaret Aitken (York-Humber) presented the first report of the standing committee on standing orders, and moved that the report be concurred in.
Motion agreed to.


Mr. Speaker:: May I inform the house that the committee on procedure has its first report in the course of preparation, in English and in French. I had hoped to be able to present it to the house now. If it should be ready in the course of the afternoon, would the house permit me to present it when it is ready?


Some hon. Members:: Agreed.


Mr. Speaker:: I have the honour to present in English and French the unanimous first report of the special committee appointed to consider with Mr. Speaker the procedure of the house. This is done pursuant to leave given earlier today. The report will be printed in Votes and Proceedings.



TABLING OF TEXT OF INTERNATIONAL


Hon. Alvin Hamilton (Minister of Agriculture):: I wish to table the text of the 1962 international wheat agreement in its original version, which is in English. I am also tabling a French translation. For the convenience of hon. members I ask leave to have the text of the agreemeent published as an appendix to today's Hansard. Following the usual practice, both houses of parliament will be asked to approve by resolution Canada's ratification of the agreement.


Mr. Speaker:: Has the minister leave to table the document tendered just now?


Some hon. Members:: Agreed.


Mr. Speaker:: And has the minister leave to have it printed as an appendix to Hansard?


Some hon. Members:: Agreed.
[Editor's note: For text of document referred to above, see appendix to Hansard for Wednesday, April 11, 1962.]


Mr. Speaker:: May I have leave to present a further problem. The Minister of Agriculture presented today, and got leave of the house to have printed as a schedule to Hansard, a very lengthy document. Hansard today will be lengthy enough without the addition of a further 50 pages and, subject to the approval of the house, I have taken the liberty of having this document printed as an appendix to tomorrow's Hansard rather than today's. Is it agreed?


Some hon. Members:: Agreed.



PUBLIC SERVICE


Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, as the house is aware there is a vacancy on the international joint commission. I wish to announce that the governor in council has today appointed Mr. Arnold D. P. Heeney, presently our ambassador to the United States, to that position. His appointment becomes effective on the 15th of this month.
Mr. Heeney will remain for a few days as ambassador in Washington before returning to Ottawa. Naturally I am very pleased that Mr. Heeney has accepted this position. The house is fully aware of his distinguished record and qualifications. As a student and teacher of international legal matters, as one time secretary to the cabinet, as former under secretary of state for external affairs and as ambassador to the United States, he has for many years been concerned with those matters which will come under his interest and consideration in this new position.


Hon. L. B. Pearson (Leader of the Opposition):: I am sure the house will have heard with some interest the announcement which the Prime Minister has made. This announcement gives us on this side of the house an opportunity to pay tribute to the work that
2658	HOUSE OF
St. Lawrence Pilots Work Stoppage General McNaughton has done on the international joint commission and to his distinguished service to Canada in war

from the first world war-and in peace. General McNaughton is a man whose integrity, honesty and honour are above reproach and are recognized on all sides.
As he is leaving the international joint commission I cannot think of anybody better equipped for that position than the man who has been mentioned by the Prime Minister as the new chairman of the Canadian section. Mr. Heeney, as the Prime Minister has said, is also a very distinguished public servant. He has filled many important posts, and he has filled them all with great distinction. I am sure he will fill this one with great distinction too.


Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I and the members of this group wholeheartedly join with the leader of the official opposition in paying tribute to General McNaughton and the great service he has rendered to Canada, in world war I and world war II, as president of the national research council, as a member of the joint Canadian-American committee on defence, and in other organizations, and particularly during the last 10 years as chairman of the international joint commission. In that regard, Mr. Speaker, he was fully qualified to occupy the position because of his capabilities as a scientist, an engineer and an administrator.
With respect to the announcement made by the Prime Minister, I must frankly say that while we in this group recognize the record of the gentleman who has been appointed, in the Department of External Affairs, as an ambassador and in other posts, we say most emphatically that this position requires a man of at least equal ability with respect to scientific and engineering knowledge, and as an administrator, to General McNaughton, and we are of the opinion that Mr. Heeney does not fulfil those requirements.
(Translation):



SHIPPING


Hon. Leon Balcer (Minister of Transport):: Mr. Speaker, certain questions were asked yesterday about the work stoppage of the St. Lawrence pilots and as to the legality of that stoppage. When those questions were being asked, I was having separate talks with the shipowners and the representatives of the pilots.
From a legal point of view, pilots are not party to individual or collective contracts, but hold positions which under the government certificate constitute a monopoly. The gov-
[Mr. Pearson.)

eminent collects fees from the shipowners, which are afterwards handed over to the pilots to be divided among themselves. Section 329 of the Canada Shipping Act and pilotage regulations enacted by order in council under that section specifically provide that pilots must carry out their pilotage duties; their present refusal to do so is therefore illegal.
Yesterday I met with representatives of the Shipping Federation of Canada and of the Canadian Shipowners Association; meanwhile, officials of my department were in touch with the Dominion Marine Association. Those associations represent all the shipowners involved. They claim that since the work stoppage is illegal, they would greatly jeopardize their future situation if they were to enter into direct negotiations with the pilots before there is any indication that the stoppage is nearly over. They stated that they have had a lot of trouble with the pilots in that connection these past few years; in their opinion, the consequences of such steps taken by the pilots in recent years are so serious that the situation calls for a public investigation.
They informed me that, under the circumstances, they will do everything they can to continue the operation of their ships without the help of pilots, even though that may cause some delay; in their opinion, such action will not interfere with shipping. They stated that, in their opinion, the situation has reached the point where they have to accept a continuous suspension of work, if need be, in their own long-term interest. As for me, I asked them not to take an unyielding attitude in this matter and I expressed the hope that they would agree to another meeting with the pilots.
I then met the pilots' federation representatives from the main pilotage districts of Quebec, Montreal, Montreal harbour, Cornwall and Kingston. I explained the shipowners' stand to them and I gave them to understand that they were violating the clauses of the Canada Shipping Act and the pilotage regulations established thereunder in refusing to perform their duties, adding that I greatly regretted that they had seen fit to take that step on a short twenty-four hours' notice. I also conveyed to them my feeling that the shipowners no doubt firmly intended to see that the ships' movement was not interrupted.
In view of the fact that the pilots had mentioned certain delays and difficulties in connection with their working conditions, we looked into the background in that regard and I pointed out to them that out of the five

main points concerning working conditions which, in their opinion, were pending, we had already accepted two and agreed in principle to two more by undertaking to work out the details of their application, and that we also had decided to pursue with them the consideration of the fifth point. I also pointed out to them that there had been no undue delay in the consideration of those matters, that, in fact, the pilots had submitted their brief less than two months ago and that several meetings and interviews had taken place since then.
We found that the main issue the pilots wished to settle concerned their income and the increase asked for by three pilotage districts. I informed them that in view of the present level of income and working conditions, their requests in that respect had seemed exaggerated, not only to the shipowners but to myself, and I asked them to meet my officials in order to study these requests in greater detail and to see if they could be modified. The requested increase in fees to be paid by the vessels came to approximately 18 per cent in the Cornwall and Montreal districts, and it remained practically the same during the following discussions, although it seemed that an adjustment could be made with regard to Montreal harbour. No important issue concerning income was involved in the Quebec and Kingston districts.
I asked the pilots to put an end to their work stoppage, in view of the fact that the pilots' federation had assured me that in such a case the shipping federation would be willing to meet immediately the pilots' representatives to study new propositions with regard to the whole question and the income the shipping federation is willing to give the pilots. Up to now the pilots' representatives have not indicated they were willing to change the requests I have mentioned or to put an end to the work stoppage.
I regret that situation because I firmly believe that the shipowners intention not to stop the ships movement can only be damaging to the pilots. I should like to add also that I believe the time has come to undertake a general investigation on all questions relating to pilotage, and I expect to submit later some proposals to be examined by the government. However, I will continue to seek a solution to this problem, and after studying further the results of yesterday's meetings I will continue to keep in touch with the various agencies involved.


Hon. Lionel Chevrier (Laurier):: Mr. Speaker, it is obvious, considering what the
10, 1962
St. Lawrence Pilots Work Stoppage minister just said, that he was not successful in his effort to get the pilots and ship owners together with a view to settling the dispute. It is also apparent that, notwithstanding what the minister said, namely that the pilots have held meetings with only 24 hours notice is not true, because, according to the pilots themselves they have been discussing the matter with the department since February last. Any way, Mr. Speaker, it is quite clear that this dispute is very prejudicial to the Canadian economy, as well as to the passengers who are now on the Empress of Britain quite apart from being a menace to navigation, of which the department is certainly aware.
There were already two ships, the Consuelo and another one, the name of which I forget-
(Text):


Mr. Tremblay:: The "Pearson Boat"! (Translation):


Lionel Chevrier: -which ran aground, causing considerable damage, because of the absence of a St. Lawrence pilot.
Moreover, Mr. Speaker, there is at this time a ship carrying flammable goods sailing up the St. Lawrence. I wonder whether the Department of Transport gave some consideration to the menace this represents for the communities and towns past which this vessel will sail.
Another most important point is that the minister, after having, through his officials, invited both parties to meet, did not ask the pilots to go to Montreal to discuss the situation with the shipowners.
I know that yesterday he asked them to come here, because both parties had apparently not succeeded in arranging a meeting. Now, when they arrived here, the minister told them that the strike was illegal, that they should go back to work and free the Empress of Britain, adding that their claims were excessive and suggesting that they review their requests.
Everybody knows that the main points under dispute are rather serious and significant, and that the main point concerns a rate increase. But what the minister seems to forget is that the tonnage of St. Lawrence vessels has developed considerably, whereas the pilots' rates have scarcely been raised. Now, it is true that on the St. Lawrence seaway ships of 2,500 to 3,000 tons have largely disappeared, so that today pilots have to steer vessels of 20,000, 25,000 and under certain circumstances, even 28,000 tons.
That is one of the main reasons why they complain of not having benefited from a rate increase proportionate to the expansion of tonnage. I am more particularly thinking of

St. Lawrence Pilots Work Stoppage the Montreal and Cornwall pilots. I notice that my hon. friend from Stormont (Mr. Campbell) is not in his seat-


Mr. Johnson:: Neither are you in your seat, I mean in Laurier.


Lionel Chevrier: -because, when the question of pilots was raised last year, the hon. member for Stormont stated that there were none in his constituency. Yet, Mr. Speaker -
(Text):


Mr. Speaker:: Order. I seem to hear more voices than one. Perhaps I am mistaken, but I think not.
(Translation):


Lionel Chevrier: However, Mr. Speaker, the cost of pilotage in that district decreased by 300 per cent, if we take into account the increase in tonnage, and those figures bear no resemblance whatsoever to those given by the minister.
Now, according to the minister, an increase of 16 per cent is sought by the pilots travelling between Montreal and Quebec. And- I am not sure whether the minister mentioned it in the statement he just made-I understand the pilots pledged the minister their word that they would sign an agreement for a period of three years, under the provision that the tariffs be increased, and they have agreed to give full consideration to the whole issue of pilotage during that period of three years.
I need not tell the house, Mr. Speaker, that the course followed for the settlement of this dispute is completely outmoded.
I appreciate that the minister is subject to the clauses of the Canada Shipping Act and that, as the authority over pilotage, he must comply with the law. But this dispute should be settled in the same way as all others.
(Text):


Mr. Speaker:: Order. The discussion is rather unusual. The subject is complicated, it is true, and the hon. member for Laurier is discussing it in considerable detail and going somewhat beyond the statement made by the minister. I have not interfered, but I feel that the hon. member should keep his comments within as narrow a compass as he reasonably can, and that he should also be prepared to agree, with respect to the new matter he has raised, that the minister, if he wishes to do so, is free to comment on that matter.
(Translation):


Lionel Chevrier: I shall try to abide by your ruling, Mr. Speaker, but it should not be forgotten that the minister made a long statement, obviously prepared by his officials and dealing with the circumstances of the interview he had with the pilots.

Under the circumstances it should not be forgotten that the opposition has the right to reply to certain allegations made by the minister. He said, for instance, that the pilots had only given 24-hour notice before holding their meetings, which is incorrect, for the pilots have been requesting since last February to meet with the officials of the transport department and to have an interview with the minister himself, because they were unable to come to an agreement with the shipowners.
Now, in short, Mr. Speaker, the minister was arrogant with the pilots yesterday. He-
(Text):


Mr. Speaker:: Order. The hon. member's comment goes beyond the ordinary comment that is permissible on ministerial statements, and I would ask him not to make a debate of this matter. It is true that the circumstances recounted by the minister in his statement constituted a narrative of some length and complication, and that if one commented on everything he said it might take considerable time, but that does not make this an opportunity for a debate. I would ask the hon. member for Laurier, who has had very full time, in fact more time than the minister himself took, to bring his remarks to a close.
(Translation):


Léon Balcer: Mr. Speaker, I rise on a point of order.
(Text):


Mr. Speaker:: Order. Perhaps the minister would indicate why he is rising.
(Translation):


Léon Balcer: I rise on a point of order. I do not object to my hon. friend commenting on my statement and explaining in this house the opposition's stand concerning pilotage. But when he states that this or that statement is false and that I showed arrogance etc., I submit that it has nothing to do with the statement I just made, and I feel that the hon. member for Laurier is out of order.
He can comment upon my statement; but he has raised three or four points which are absolutely false, or at least do not give a true picture of what has happened.
However, I should like to have the privilege of answering him so that the house may not be left under a false impression and faced with certain allegations which are not borne out by the facts.
(Text):


Mr. Speaker:: I accept the minister's view. As a matter of fact I had risen to indicate to the hon. member for Laurier that I too

felt he had gone too far and I have also indicated to the hon. member for Laurier that I feel it would be proper to permit the Minister of Transport to comment when the hon. member finishes.
(Translation):


Lionel Chevrier: Mr. Speaker, there is no point of order at all. The minister evidently is not aware of the rules-
(Text):


Mr. Speaker:: Order. Perhaps the hon. member would complete his statement. The point of order has been disposed of.
(Translation):


Lionel Chevrier: Well, Mr. Speaker, there are three important points which are apparent from the minister's statement. First, pilots and shipowners-
Mr. Speaker, may I ask you to call the hon. members to order? It seems to me-
(Text):


Mr. Speaker:: Order. No contribution is being made to the conduct of the affairs of the house if hon. members make it difficult for the member who has the floor to carry on his remarks.
(Translation):


Lionel Chevrier: Mr. Speaker, we on this side of the house have listened closely to the minister's statement and I think-


An hon. Member:: Because it made sense.


Lionel Chevrier: I think it is only proper that a member speaking on behalf of the opposition should be listened to in the same way.
In conclusion, I should like to say that three points of capital importance are involved in this dispute. First of all, this strike is greatly prejudicial to the Canadian economy; second, it is a cause of serious inconvenience to travellers; and last, but most important, this dispute endangers the safety of navigation on the St. Lawrence.
I say, with all due respect to the minister, and I think he will agree, that he failed to take those three points into account when he met with the parties.
In view of what has been said, I urge him to bring once again the pilots and shipowners together so that they may reach an agreement.
(Text):


Mr. Speaker:: Would the minister wish to comment now or to wait until I have heard the member for Port Arthur?


Léon Balcer: I can comment now, Mr. Speaker.
26207-1-170
St. Lawrence Pilots Work Stoppage (Translation) :


Léon Balcer: Mr. Speaker, the hon. member for Laurier raised three points about which I am in full agreement with him. That is why I met the shipowners and the pilots yesterday. I asked the pilots to return to work and I asked the owners to be more flexible and try to understand the situation.
I should now like to reply to the statement made by the hon. member for Laurier, to the effect that I treated the pilots with arrogance. I do not think there has ever been a minister of transport as patient with the pilots as I have been and I should add that the pilots have never been so well treated as they have been these last three years.
Yesterday I had the opportunity of listing about 60 items of things we have done for the pilots. I think my predecessor and myself have always treated the pilots with fairness.
The only point I represented to the pilots yesterday is that they will be the first to suffer from the strike, which is illegal; they are doing damage to themselves. I think they exaggerate.
I asked them to reconsider the situation, to modify their claims to make them reasonable, and to try to reduce them to a minimum, taking into account not only their personal interest but that of the public at large. On that we parted. My officials met the pilots and discussed with them. As far as I am concerned I am prepared to meet them anytime. I asked them to consider that point.
As far as the 24-hour notice is concerned, I received word from the pilots that the strike was scheduled to begin Thursday night. Now, I received their telegram Wednesday night, and the shipowners received a similar telegram at 5.15 p.m.
This is too short a notice and I submit that in view of that short notice, several people have suffered a great deal of inconvenience, which they would not have had to suffer if notice had been given earlier.
I sincerely believe that the owners and the pilots should consider the problem calmly and try to reach an agreement in order to contribute their share to maintaining that feeling of optimism which now prevails in the economy of the country, and thus work together for the prosperity of Canada.
(Text):


Mr. D. M. Fisher (Port Arthur):: Mr. Speaker, it is very apparent that the co-operation the minister seeks has been made somewhat more difficult by the fact that he has
2662	HOUSE OF
Inquiries of the Ministry given an indication that the strike is illegal. It seems to me it would follow that if it is an illegal strike he should be suggesting not so much that there is going to be a general investigation into pilotage but what particular steps he intends to take to make sure that the river is opened again to traffic.
I never anticipated that I would be sympathetic to the shipping federation of Canada in a situation, but it does seem to me that in this particular case the pilots gave inadequate indication both as to their grievances and as to the time involved. I certainly have a great deal of sympathy with the Department of Transport in its general pilotage problem as reflected by the situation in this part of the river.
The minister probably knows that there are at least four different systems of pilotage on the great lakes and the St. Lawrence seaway, and one of the idiosyncrasies is that the particular group on strike at the present time seems to be a traditional or almost a family group. I can only say that their approach, in either union terms or terms of their work, is unique and unlike the pattern of the rest of the system. If the minister is indicating he is going to hold an inquiry that is to be allembracing, to investigate pilotage on the whole system, I think we on the upper lakes would be interested, as would everyone else. I believe there is a certain anachronism in the step-up that exists on the river system. I hope this could be cleared up before we are left with a very bad situation to start the shipping season.
It seems to me that responsibility for that solution finally must devolve upon the minister. I suggest to him that in this particular area he get the people from the Canada labour relations board to work immediately, even in an unofficial way, in order to get some kind of settlement going rather than continue with this indefinite basis under which we have an illegal strike indicated, and at the same time a rather pious hope by the minister that the strikers and the companies will get together.
(Translation):


Lionel Chevrier: Mr. Speaker, may I put a question to the Minister of Transport. In view of the dispute mentioned a moment ago, does the minister intend to afford any protection to the riparian localities from the hazard of ships carrying flammable and explosive material?


Léon Balcer: Mr. Speaker, the Department of Transport continues to assume responsibility for shipping in the St. Lawrence river. We intend to maintain all navigational aids and to enforce all regulations presently in force in that section of Canada's navigable waters.



DAMAGE TO TELEPHONE CABLE

Mr. Gabriel Roberge (Megantic):: Mr. Speaker, I should like to ask the Minister of Transport a supplementary question. Have the officials of the Department of Transport carried out an investigation in the breakage of a telephone cable by the steamship Consuelo, near Quebec city, and can the minister report to the house on that matter?


Léon Balcer: No, Mr. Speaker, I have nothing to report. I could not say at this time whether it will be officials of my department who will investigate the breakage of that cable.
(Text):



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: Mr. Speaker, I should like to ask the Prime Minister whether he would follow the course normally followed at this time of the session by him and his predecessors, and inform the house as to the date of the beginning of the Easter recess and the measures which the government hopes to have passed before that recess, as well as the order of priority attached to those measures.
Right Hon. J. G. Diefenbaker (Prime
Minister): I will give consideration to that question, Mr. Speaker. I will look over the order paper and endeavour to give a general outline of some of the matters that would be brought before the house.


Herbert Wilfred Herridge: May
I ask the Prime Minister a supplementary question. It is a great convenience to western members to know the date of the Easter recess. When the Prime Minister is giving the other information, will he tell us when the Easter recess will commence?


John George Diefenbaker: I think the Easter recess generally commences some days in advance of Good Friday.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. H. J. Robichaud (Gloucester):: I wish to
direct a question to the Minister of Fisheries. Since the lobster fishermen of district 7B in Nova Scotia, New Brunswick and Prince Edward Island lost the first three weeks of the 1961 fishing season because of abnormal ice conditions, would the minister consider advancing the opening date for the district concerned for this year from May 1 to April 24 or April 25, in order to provide these fishermen with an opportunity to resume their fishing operations at an earlier date?


Hon. J. A. MacLean (Minister of Fisheries):: Mr. Speaker, my department has considered this possibility. As the hon. member will recall, although lobster fishing in district 7B opened late last year it also continued a few days later than normal, with the result that the average fisherman had a normal year. There were a few areas which were exceptions to this rule. We have considered the possibility the hon. member has suggested, but have found that it would not be practical because full advantage could not be taken of such an early opening in all districts and this would unfairly spread the advantage, if any, which might accrue from an early opening.
It is expected, therefore, that the season in district 7B will open on May 1, which is the normal time.



SEALING


[Stage Direction]
On the orders of the day:
Mr. J. R. Tucker (Trinity-Concepiion):: wish to direct a question to the Minister of Justice or, in his absence, to his parliamentary secretary. Would the minister please advise if he is in a position to report on the complaints received by the Royal Canadian Mounted Police from Captain Moss, of the sealing ship North Star, that his men had been attacked by pirates who took rifles from his men and stole their seal pelts? Will he comment also on an article in this morning's Globe and Mail to the effect that Captain James Gillette of the Arctic Sealer reported that five helicopters spent three days last week taking pelts belonging to his ship?


Mr. Thomas M. Bell (Parliameniary Secretary to the Minister of Justice):: I am not
sure of these allegations, but this matter is
26207-1-1704
Inquiries of the Ministry under active consideration by the Royal Canadian Mounted Police. When the investigation has made sufficient progress I shall be pleased to see that a report is given to the house.


Mr. J. A. McGrath (St. John's East):: Mr. Speaker, would the Minister of Fisheries be prepared to comment on the hon. member's question?


John Angus MacLean: I could add, in reply, that the officers of my department have also gone by helicopter to the area from which these allegations arose to investigate the possibility of cancelling licences for sealing operations, if- such a course should be advisable.



INQUIRY FOR RETURN


[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: wish to direct a question to the Minister of National Revenue. On February 7, as recorded at page 631 of Hansard, my question No. 124 concerning books banned or prohibited entry into Canada by the Department of National Revenue was passed as an order for return. I know the minister has been checking over this list for me, but time is growing short. Is the minister now in a position to comply with the order of the house?


Hon. George C. Nowlan (Minister of National Revenue):: I will check on this order and advise the house in a short time.
(Translation):



BRIDGES


[Stage Direction]
On the orders of the day:
Mr. Gerard Loiselle (Si. Ann):: Mr. Speaker, I should like to put a question to the Minister of Transport. Can he tell the house if the meeting between the representatives of his department and those of the provincial government of Quebec and the city of Montreal in regard to the abolition of tolls on bridges was held yesterday, and if so what were the results of these talks?


Léon Balcer: Mr. Speaker, the hon. member for Chambly-Rouville (Mr. Johnson) advised me of his intention to ask such a question. I want to tell him and also the hon. member for St. Ann that following a conversation between the premier of the province of Quebec, Mr. Lesage, and myself, it was agreed that the meeting which was to be held yesterday be postponed to Wednesday afternoon in Ottawa.

Inquiries of the Ministry


Mr. L. J. Pigeon (Jolieiie-L'Assomplion-Monicalm):: Mr. Speaker, I wish to ask a supplementary question. Could the Minister of Transport tell the house if the delay by the provincial government of Quebec in accepting the conditions is due to the very important problems facing the government of Quebec and the failure of its policy?
(Text):



HOUSING


[Stage Direction]
On the orders of the day:
Mr. J. R. Garland (Nipissing):: I have a question for the Minister of Public Works. I should like to ask him what precautions, if any, Central Mortgage and Housing Corporation takes to ensure that building contractors getting the benefits of N.H.A. lending are financially responsible, thereby giving some assurance that innocent home builders will not lose their deposit money.


Hon. D. J. Walker (Minister of Public Works):: It would seem to be quite a detailed question, and I would be very happy to accept it as notice.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Mr. J. P. Deschatelets (Maisonneuve-Rose-mont):: I should like to direct a question to the Minister of National Revenue. Since for the first time in 20 years the Allan cup final will be contested between a western team and a team from the province of Quebec, the powerful Montreal Olympics, and that the final series will be played entirely in the west, will the minister ask the C.B.C. to give T.V. coverage for these games of national interest?


George Clyde Nowlan: I shall take that matter up with the C.B.C. but in view of the fact that another important series is starting tonight and may run on for two weeks, I am not sure whether the C.B.C. will be able to make commitments with respect to alternative programs, but I shall advise the house in due course.


Douglas Mason Fisher: On a
point of order, Mr. Speaker, the Montreal Olympics are not the eastern champions. A team from northern Ontario is still fighting in the series.


Mr. Speaker:: I am afraid hon. members will be asking us to place bets if this goes on.



PUBLIC BUILDINGS


[Stage Direction]
On the orders of the day:
Mr. John R. Maiheson (Leeds):: I wish to direct a question to the Minister of Public Works. Can the minister indicate the proposed date of the tender call for construction of the new federal building in Brockville?


David James Walker: The answer is today.
(Translation):



QUALIFICATIONS OF MINISTER OF MINES AND TECHNICAL SURVEYS

[Stage Direction]
On the orders of the day:
Mr. Azellus Denis (Si. Denis):: Mr. Speaker, I should like to put a question to the Prime Minister. According to the Conservateur Canadien -


An hon. Member:: Order.


Azellus Denis: Do you hear, Mr. Speaker? You know that voice.
According to the Conservateur Canadien, the Minister of Mines and Technical Surveys (Mr. Flynn) was a lawyer and a local attorney for the wartime prices and trade board. If such was the case, does the Prime Minister think of his Minister of Mines and Technical Surveys as one of those wartime bureaucrats that he criticized lately, and for similar reasons? May I expect an answer?


An hon. Member:: He does not understand French very well.


Paul Léo Maurice Johnson: You do not understand
French very well yourself.
(Text):


Mr. Marlin (Essex Easl):: Surely the Prime Minister will answer that.


David James Walker: Not even the translators can. Mr. Speaker: The hon. member has asked his question. I am not responsible for seeing that he gets a reply.


Louis-Joseph Pigeon: It is not an intelligent question. Mr. Speaker:	If the hon. member for
Chambly-Rouville wishes to speak, he will take the floor.


Some hon. Members:: Hear, hear.


Paul Léo Maurice Johnson: It is a question of privilege, Mr. Speaker. I was just taking up a remark by an hon. member of the opposition which was a rather unethical reflection on the Prime Minister.


Mr. Speaker:: Well, the hon. member has now taken the proper course, and if he wishes to pursue the matter I shall be glad to hear him.


Lester Bowles Pearson: Go ahead.
(Translation):


Paul Léo Maurice Johnson: Mr. Speaker, there had to be among the Liberal members a wise guy to mention the Prime Minister's ability to speak French. I should like to make sure, first, whether the hon. member speaks French correctly himself.


Mr. Fortin:: That is easy-he knows neither French nor English.



USE OF TRANSPORT DEPARTMENT PLANES FOR ELECTION PURPOSES

[Stage Direction]
On the orders of the day:
Mr. Alexis Caron (Hull):: May I ask the
Minister of Transport a question? Could he tell us whether, since he took over the department, any person or organization has undertaken to pay or indeed has paid for the use of government planes for any purpose? If so, which persons or organizations?
(Text):


Mr. Speaker:: I think another question for the order paper is indicated.



PENITENTIARIES


[Stage Direction]
On the orders of the day:
Mr. Harold E. Winch (Vancouver East):: should like to direct a question to the Minister of Public Works, and ask whether plans have been completed, tenders called and contracts let for the construction of a building to confine Doukhobors in the Agassiz area, convicted under the Criminal Code?


David James Walker: I would be very happy to accept this question as notice.


Harold Edward Winch: Mr. Speaker, I should like to address a question to the Minister of Justice-may I say that I am glad the Minister of Public Works is here-or in the minister's absence could I direct my question to the Acting Minister of Justice or the parliamentary secretary. Could I ask on what basis, in view of the emergency, an award has been made for the construction of the Doukhobor restraining building in the area of Agassiz,
Inquiries of the Ministry not through the Department of Public Works on contract but by a t.m. plus profit contract through the department.


Mr. Speaker:: Order. I think questions about contracts, and so on, might very well go on the order paper rather than taking up the time of the house.



BELLECHASSE CONSTITUENCY


[Stage Direction]
On the orders of the day:
Mr. Guy Rouleau (Dollard):: I should like to direct a question to the Acting Minister of Justice. Can the acting minister give us a report about the inquiry of the R.C.M.P. in the constituency of Bellechasse, which was announced by the Secretary of State on March 26 as having top priority?
Hon. W. J. Browne (Acting Minister of
Justice): I shall take that question as notice.



AIR TRANSPORT


[Stage Direction]
On the orders of the day:
Lionel Chevrier: I should like to direct a question to the Prime Minister and ask him whether the government intends to grant an additional transcontinental air service to C.P.A., as reported in Saturday's edition of the Financial Post"!


John George Diefenbaker: Whenever any decision is made with regard to such a matter it will be brought to the attention of the house. It will not be announced through the medium of speculative stories in any newspaper.


Lionel Chevrier: As a supplementary question to the Prime Minister, has an application been made to the cabinet under the Aeronautics Act for the purpose I have mentioned, namely to give additional transcontinental air services to C.P.A.?


John George Diefenbaker: The answer is no.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. Erhart Regier (Burnaby-Coquitlam):: should like to direct a question to the Acting Minister of Labour, or to the parliamentary secretary to the Minister of Labour. In view of the fact that many people working on a commission basis now receive annual holidays with pay, is the minister in a position to

Inquiries of the Ministry explain why Canadian government annuities representatives are not in receipt of annual holidays with pay?


Mr. R. D. Thrasher (Parliamentary Secretary to the Minister of Labour):: I shall take that question as notice.



MARITIME PROVINCES


[Stage Direction]
On the orders of the day:
Hédard-J. Robichaud: I wish to direct a question to the Prime Minister. Will the Prime Minister inform the house whether he has received representations from Premier Stanfield of Nova Scotia and Premier Robichaud of New Brunswick with regard to further utilization of maritime coal by local industries? If so, will the Prime Minister advise the house what action, if any, has been taken to implement the suggestions or recommendations submitted in the premiers' brief?


John George Diefenbaker: I shall take that question as notice.
(Translation):



POST OFFICE DEPARTMENT


[Stage Direction]
On the orders of the day:
Azellus Denis: Mr. Speaker, I should like to direct a question to the Postmaster General. Since he is in the Prime Minister's confidence-


Jean-Noël Tremblay: Order.


Azellus Denis: -does the minister feel he will be able to explain to the house the deficit of over $4 million shown by his department?


Jean-Noël Tremblay: Order.
(Text):


Mr. Speaker:: Order. I am sorry, but for some time I have heard Interruptions from the far end of the chamber which I think are not in the best interests of the dignity and conduct of business of this house and I would ask hon. members, without mentioning any names, who feel that the cap fits, to better observe the proprieties. I make no apology for rising because, if hon. members will reflect on the course of our proceedings during the past few days, I think they will agree that we have a dignity to maintain in the eyes of the country, and also we have work to do.

(Translation):


Jean-Noël Tremblay: Mr. Speaker, I rise on a question of privilege concerning the comments you have just made.
I should like to inform you, with all due respect, that I was the one who objected to the question that the hon. member for St. Denis was about to ask, because, knowing the kind of questions he has been asking for four years, I was sure that, as usual, it would be an insignificant one designed simply to waste the time of the house and its members.
(Text):


Mr. Speaker:: I shall always be glad to hear a point of order from the hon. member, but I can scarcely make the assumption in advance that a point of order will arise.
(Translation):


Azellus Denis: Mr. Speaker, now that we have silence in the house, may I repeat my question to the Postmaster General? Since he is in the Prime Minister's confidence, does he feel he will be able to explain to the house-


Jean-Noël Tremblay: Order.


Azellus Denis: -before the end of the session the deficit of more than $4 million shown by his department?


Jean-Noël Tremblay: Order.


An hon. Member:: The hon. member for Roberval was right.
(Text):


Mr. Speaker:: Perhaps the minister would permit me to say that questions of that kind relating to financial affairs are normally dealt with on the estimates and in the budget. The invitation to deal with the finances of a department in general on the orders of the day is quite improper and out of order.


Some hon. Members:: Hear, hear.


Azellus Denis: I think it should be done before dissolution of parliament.


Mr. Speaker:: I appreciate the hon. member's anxiety to get on with it, but he is out of order.



AIRPORTS


[Stage Direction]
On the orders of the day:
Lionel Chevrier: Mr. Speaker, in the light of a telegram I have received from the president of the professional SkyCaps I should like to direct a question to the Minister of Transport. My question is this.

Is it a fact that the president of the professional Sky-Caps, who has been a porter at Dorval airport for some eight or nine years, and 14 of his fellow porters have been arrested by the R.C.M.P. for carrying passengers' bags at the terminal? If so, can the minister give the reason for this arrest, and did the minister notify the president that he could no longer work at Dorval without his written permission?


Léon Balcer: 


Mr.   Speaker-Mr. Speaker@: Order. Did the hon. member give notice of the question?


Léon Balcer: I think, Mr. Speaker, I can answer the question simply. I would like to state that following the great deal of trouble we had at Dorval airport the department decided to bring porters under the civil service commission. In so doing the department invited all the porters engaged in the carrying of bags at Dorval airport to submit applications. Over 40 of the Sky-Caps have submitted those applications and they have been hired; another three refused to take up this offer of the department, and another four or five insisted on certain other conditions and refused to accept the positions offered to them.
This group of professional Sky-Caps kept on working at the airport while a decision was being obtained from the court on a writ of injunction. Pending the decision the department did not do anything as far as these porters were concerned. However, now that a decision on the writ has been rendered, these porters have been notified that they should not carry on their activities at the airport as they have refused the positions offered to them by the department.
I do not know about the arrest of these porters. I just wanted to give the situation to the house and make it very clear that we have offered jobs to all the porters who were working at the airport during the last year.


Lionel Chevrier: May I ask a supplementary question arising out of the statement the minister has made. It is said that a writ of prohibition has been issued by the superior court against the Department of Transport, I understand. Does the minister not think that pending the decision of the court those 14 men who have not accepted the proposal of the minister should be allowed to carry bags at the airport?


Léon Balcer: As I said, Mr. Speaker, a decision has been rendered, and following that decision these people were told they had no business working there.
Inquiries of the Ministry TRADE



STUDY OF SUBMISSIONS OF EUROPEAN TRADE UNION ECONOMISTS

[Stage Direction]
On the orders of the day:
John Ross Matheson: Mr. Speaker, may I address a question to the parliamentary secretary to the Minister of Labour, in the absence of the minister. Is the Department of Labour studying the submissions of the trade union economists from The Netherlands, Sweden, France and the United Kingdom who met recently at Niagara Falls and discussed the methods whereby labour, management and government in Europe have contrived to co-operate more effectively in the public interest?


Mr. Speaker:: Order. The hon. member poses a very interesting question in general terms, but perhaps it would be more appropriately raised in debate.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. John Charlton (Parliamentary Secretary to the Minister of Agriculture):: Mr. Speaker, yesterday on the orders of the day the hon. member for Leeds asked the following question:
-I should like to address a question to the parliamentary secretary. It arises out of the answer given on March 8, 1962 to this question:
What is the age of the oldest butter now in storage?
The answer given was "August, 1960". Would the parliamentary secretary to the Minister of Agriculture advise the house whether the government intends to place this butter, produced in August, 1960, on the market?
The answer, Mr. Speaker, is no, not as butter. At the present time the butter being offered for sale was manufactured in 1961 or later. All butter manufactured prior to 1961 has been or is in the process of being converted to butter oil.



PIPE LINES


[Stage Direction]
On the orders of the day:
Douglas Mason Fisher: Mr. Speaker, I would like to ask the minister responsible for Northern Ontario Pipe Line Crown Corporation a question which stems from the recent legislation passed by the Ontario legislature giving municipalities the right to tax pipe lines. I wish to ask the minister what effect this legislation has upon the revenues of Northern Ontario Pipe Line Crown Corporation.

Inquiries of the Ministry


Mr. Speaker:: Order. I suggest the question might go on the order paper. I do not expect that the hon. member really looked for an answer off the cuff.



INDIAN AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: Mr. Speaker, before the orders of the day are called I wonder if I could direct a question to the Minister of National Health and Welfare and ask the minister whether his attention has been drawn to a news item in yesterday's Ottawa Citizen emanating from Fort Nelson, British Columbia, which indicates that a Dr. Raymond March said yesterday that several children died on remote northern Indian reserves this winter because a doctor could not reach them in time. Has the minister any comment to make thereon?


Hon. J. W. Monleith (Minister of National Health and Welfare):: Mr. Speaker, I have not seen this article and as a consequence have no comment to make. However, the house will recall that the hon. member for Skeena and the hon. member for Bonavista-Twillingate have taken up with me on previous occasions the alleged problems of the Indians of the Prophet river reserve in British Columbia. This morning I received the following further report in my capacity as Acting Minister of Citizenship and Immigration.
The report from the British Columbia Indian commissioner was received by the department this morning. The commissioner reports that as of March 30, the day he visited the Prophet river community, there was no sickness in the community itself and only two of the 59 Indians living there were still in the Fort Nelson hospital.
The commissioner questioned each of the families living at Prophet river as to conditions prevailing on the week end of March 17, when the epidemic of sickness occurred. Two families are on permanent assistance, three heads of families have trap lines, and five others have been employed at a saw mill a short distance from where they live. All heads of families confirmed that they had not been suffering from any shortage of food prior to the time when they were taken ill.
The agency superintendent or his representative has visited the community each month, except for December, since last October. The provincial public health nurse visited early in March and reported nothing usual. In addition, a school teacher has 

lived with the Indians in the community at Prophet river throughout the winter, and has been in a position to report any health or welfare conditions requiring attention. Unfortunately she was absent from Prophet river on week-end leave Saturday, March 17, when the epidemic developed. The Indians therefore telephoned the doctor in Fort Nelson, Dr. March, who visited Prophet river, taking along with him the editor of the Fort Nelson newspaper.
Dr. March deserves a great deal of credit for the prompt action he took in coping with the situation which he found on arrival at Prophet river on March 18. His prompt and effective action undoubtedly was responsible for the rapid recovery of the Indians who were overtaken by illness.
At the same time it seems clear from reports received from the commissioner, from the provincial health authorities and from other independent sources that charges of malnutrition among this group of Indians, and accusations of neglect on the part of responsible officials, were not justified.



ESTABLISHMENT OF ELECTORAL BOUNDARIES COMMISSION

[Stage Direction]
The house resumed, from Monday, April 9, consideration in committee of the following resolution-Mr. Diefenbaker-Mr. Martineau in the chair:
That it is expedient to introduce a measure respecting the establishment of an electoral boundaries commission for the readjustment of representation in the House of Commons; to provide that certain members of the commission may be paid such per diem allowance as may be fixed by the governor in council; to provide for the payment of reasonable travelling and living expenses for the members of the commission; and to provide also that the commission may engage the services of such technical advisers and other staff, including a person to act as secretary to the commission, as it deems necessary.
Mr. Pickersgill:: I do not intend to traverse today any of the ground I covered last evening except to repeat the final point I made, because unless I do so I think what I have to say would lack continuity.
I had pointed out that in almost every case since confederation, except in 1945 when a constitutional amendment had been made so that the constitution could be set aside until after the war, after the completion of the census there has been no election without first of all a redistribution. The only years in which an election came soon after the year for the taking of the census were 1872, 1882 and, of course, 1911, if one regards the taking of the census as being merely the day on which the information is collected from the population. If the date was June 1, as it is

nowadays, that would presumably have been done before the election was held; I have not checked to see. However, I think it is clear that in the 1911 case the census had not been completed.
I pointed out last night that if the government had been seriously concerned about carrying out the pledge made by the Prime Minister in 1957, this legislation would have been introduced for the first time at least two years ago. I say this because when one is altering the pattern of 90 years and dealing with one of the most fundamental features of our constitution, the composition of this house, it is evident that no hasty action ought to be taken at a time which a lot of people may regard-though I have never said so- as being somewhere near the end of this parliament. These steps should have been taken in such time as to allow plenty of opportunity for appropriate consideration not only by the house but also by the public, whose servants we are, of this bill by virtue of which a fundamental and important departure is to be made.
The right course would have been to have introduced this legislation in 1960 at the latest, though not to have attempted to pass it in that year. As has been done with regard to many other important bills, it should have been left on the table for a year so the public might have given proper consideration to it. Then the government could have introduced the bill again in the following year, almost certainly in an amended form, and the matter could have been disposed of by this house and the other place.
I also pointed out that though of course the government has to take the initiative in this matter, first because the Prime Minister is the leader of the house and, second, because the expenditure of money is involved in connection with payment to a commission, the bill nevertheless should in no other respects be regarded as a government measure. We are dealing with a measure which is of no more concern, or should be of no more concern, to the government than it is to anyone else in the house. I am sure the Prime Minister will agree with that proposition, though he may not agree with many other of the things I say.
I maintain, therefore, that this resolution on which the proposed bill is to be founded should either have been introduced two years ago or, if it is to be introduced at this late date, that we should have an assurance from the Prime Minister that it is going to be effective and that unless some unforeseen crisis occurs it will be put into operation and the constitution complied with before a general election takes place. Otherwise the time of parliament is being taken wantonly and
Electoral Boundaries Commission unnecessarily in an attempt hastily to put legislation on the statute books which cannot come into operation until after there has been a general election, and which properly should be considered by a new parliament with a fresh mandate, not by a parliament in the kind of atmosphere which unfortunately has characterized far too much of this session.


An hon. Member:: You want to go to the people now.


John Whitney Pickersgill: The hon. gentleman seems to be very concerned about going to the people. I suggest we were sent here to do the business of the country in this house, and if we would spend our time doing the business of the country in this house in the way we have been sent to do it, instead of having all this agitation outside the house about an election, it would be very much more profitable. It would also be much more in accord with the correct way to conduct parliament.


Mr. Jones:: Two flags and two election dates.


John Whitney Pickersgill: The hon. member says "Two flags and two election dates". What we have had for the last three months is the spectacle of the Prime Minister of this country like a little girl among the flowers in a meadow in the summer picking the petals from a flower and saying "He loves me, he loves me not-shall we have an election, or shall we not?" For three months that performance has been going on all over Canada while the business of the country has been neglected.
I would draw the attention of the hon. member for Saskatoon to the fact that he provoked that irrelevant observation by his intervention.


Henry Frank Jones: I might tell the hon. member that he seems to have plenty of irrelevancies without my provoking them.


John Whitney Pickersgill: I suggest, then, that if the hon. gentleman is worried about the number of my irrelevancies he should not provoke more. However, that is an aside. I want to go on and deal with this measure. Either this legislation is going to take effect and become operative, in which case I have no criticism to put forward, though I maintain it is being brought forward too late to be done properly, or the time of this parliament is being taken up unnecessarily with something that should be left over to the next parliament because it is not in fact going to come into operation during the life of this parliament and we have been told that urgent matters are being held up by the opposition. This is not the first measure of a hypothetical
2670	HOUSE OF
Electoral Boundaries Commission nature that has been brought in; we had one last week which was hypothetical when it was introduced.
I say if there is urgent business-and I think there is; I think there is very urgent business that should be before us-it is not expedient, to employ the language of the motion, to be debating something that can have no effect upon the course of events for several years to come, because it is now too late in the life of this parliament for it to have any effect.
It may be that the reason this is being done is in an attempt to create an impression upon the public for another general election, I do not know; but before we decide the basic question as to whether it is expedient to have a bill we are entitled to be told what the government envisages will happen in connection with it. We are also entitled to be told why it is being brought in now at this particular time in this particular session.
I said last night I am sure that unless an attempt is made to put undue pressure on the commission to make it work in a hasty and slipshod fashion it will be impossible for the work of any commission of this kind to be brought to completion within two years from the date of the passing of the legislation. If in fact the legislation had been enacted even as late as last year, and if the organizational work had all been completed so that on the day the census returns became available the job of redrawing the boundaries could have begun the next day-


John George Diefenbaker: The returns are not yet completed.


John Whitney Pickersgill: Yes, I know that. If I have time to do so I will shortly say something about that or perhaps later in the afternoon when I speak again.
In 1882 they were completed in time for the redistribution to be completed by parliament on May 17. In 1872. notwithstanding the nature of communications in this country at that time, they were able to complete the redistribution and have royal assent to the act on June 14.


Mr. Hamilton (Notre Dame de Grace):: What about the population?


John Whitney Pickersgill: The population has grown, but so have the electronic devices for dealing with these matters promptly.


William McLean Hamilton: The
population has also grown.


John Whitney Pickersgill: There is absolutely no doubt in my mind that if the bureau of statistics had been told that the work of gathering the basic data required for the redistribution, which does not involve counting all the cattle 

in the country or processing all the data about other things but only involves getting the population statistics and nothing else for each constituency, should be expedited; if it had been given priority, there is no reason on earth why this information should not have been ready on April 10. I am not charging that they were told to have a deliberate slowdown, but it would require quite a lot to convince me that they had been asked to expedite it. I do not believe they have.
I suppose because I have been around a long time and have taken a certain amount of interest in these things I was asked more than a year ago what I envisaged about this matter, whether I thought there would be a redistribution or not before the next election, whenever it was, and I said, "Well, you know, I am not one to predict or to try to read the right hon. gentleman's mind-"


John George Diefenbaker: Has the hon. gentleman a crystal ball, too?


John Whitney Pickersgill: No, I have not. I think the right hon. gentleman's mind is something I ought not to try to read, and I do not try to read it; unlike many other people in the press gallery and elsewhere, whose reading of the right hon. gentleman's mind seems to be still pretty uninstructed, I simply do not try. I think it is too difficult. What I do say is that I did what I am sure every hon. member did. I made my own prediction. I am sure all hon. members did this, because we were all interested in whether our constituencies were going to be changed, and we were all interested in whether there would be a redistribution.
I said, "I know what will happen. It will be like everything else. It will be left to the last minute. At the last minute we will be told we must not have a conventional redistribution but that we must have a new kind, and then it will be too late; it will be mentioned in the speech from the throne in 1962."
I made this prediction over a year ago.


John George Diefenbaker: Where did the hon.
gentleman make this revelation?


John Whitney Pickersgill: I could produce the witnesses. When the bill goes to the committee on privileges and elections, as all these bills always do, I shall be glad, if the Prime Minister is interested, to bring two or three witnesses to whom I made this statement. I do not think it would be very profitable to do so, and I am sure the right hon. gentleman does not doubt my word in this matter.
I made the prediction that it would be mentioned in the speech from the throne, that it would be at least three months or nearly three months after the speech from the throne was read before this urgent legislation was

ever introduced into parliament, that it would take some considerable time for it to pass, and that even if the election were not held until 1963 it would be easy to have sufficient delay so the redistribution could not be completed during the life of this parliament. I do not think that prediction will prove to have been wrong.
Of course there are circumstances in which an election would be justified after a census without a redistribution, if there were some critical situation, if the government lost the confidence of the house and wished to test the confidence of the country, if there were some great emergency of some kind and there was some doubt in the government's mind about whether or not it had the support of the country; but in times which we are told are tranquil, when we are told everything is going so well in the country, and when the government still has what appears to be a rather large majority, there seems to be no valid reason for the government not having taken every precaution in good time to ensure that this constitutional obligation would be carried out as the fathers of confederation intended it to be carried out. And that, sir, has not been done.


The Chairman:: Order. I regret to interrupt the hon. member, but his time has now expired.


Lionel Chevrier: Carry on.


John Whitney Pickersgill: I shall have an opportunity to speak later.


Douglas Mason Fisher: Mr. Chairman, I would agree to the hon. member for Bonavista-Twillingate carrying on, but I think he intends to do so later in any event.
Any pleasure we may have experienced at the introduction of this resolution is tempered by disappointment arising from its lateness and the realization that an injustice, although it may be an abstract one, is going to be done to a great many voters in Canada because the commission has not been made effective at an earlier date, and because we will not have a redistribution, apparently, before the election.
The remarks of the Prime Minister last evening were quite disappointing to me as one who for several sessions has introduced a measure that had the same intent as this, although as a private member I was limited in the extent to which I could spell out the intention. My disappointment stems from the very apparent fact that the Prime Minister has not fully thought out the kind of instruction that ought to be given to the electoral commission that draws up the boundaries and this, it seems to me, is one of the key
10. 1962
Electoral Boundaries Commission points. What is the use of making the general statement that representation by population is not to be the over-all principle, that some account must be taken of traditional boundaries and so on, without some indication as to the-


John George Diefenbaker: I do not want to interrupt the hon. gentleman but that is the reason I suggested last night that it would be helpful to pass the resolution so that we could have the bill before us. I cannot go into detail, as the hon. member knows, but the bill has in it directions and guides for the commission. If we could hasten the passing of the resolution to the bill would be before the house, the fullest consideration could then be given to the bill. I do not wish to interrupt the hon. member except for the purpose of making that very clear.


Douglas Mason Fisher: Mr. Chairman, I suppose I should have got in touch with Jackson of the Journal; maybe I could have found out something about the situation and what is planned. It does seem to me there is no point in going ahead with a commission unless full guiding lines are to be laid down as to how it is to operate in this regard. I will apologize to the Prime Minister if it is later revealed that I have done him an injustice, but I thought he was very indefinite on that particular score.
There is another point he did not touch on at all that I thought he would almost be forced to deal with. The fact is that at least in the province of Quebec there is a very strong body of opinion that has had its voice in this house during this parliament and also found a voice in the Tremblay report several years ago. That body of opinion has indicated that the whole question of representation in the federal parliament by its very nature, as intended by the fathers of confederation, was meant to be on the basis of provincial representatives within the federal chamber rather than national representatives from particular areas of Canada.
I disagree with this point of view, but it has immense consequences if it is going to be accepted. Though it is a delicate matter, it seems to me it is one that needs to be faced because in my view the Canadian parliament at any time has to be completely in charge of the whole conception. I would point out to the Prime Minister and to other hon. members that because of the Senate floor that now keeps Prince Edward Island at four seats, New Brunswick at ten, Newfoundland at seven and will probably keep Nova Scotia at ten for the next one or two redistributions, these provinces are now guaranteed a representation which it seems to me lends some support or even some sovereignty to the idea
2672	HOUSE OF
Electoral Boundaries Commission that the provinces in themselves, that is as organizations of their own, have a right to a certain measure of representation at all times.
This point is an important one to me in view of the information that the Prime Minister brought out. He dealt with the projection as to what would be the effect on the house of an increase in the membership to 293, and he showed very effectively, as I had demonstrated to me a couple of years ago by the chief electoral officer, that this really would not do much good for Saskatchewan, which in the short run tends to be the province that is going to lose the most so far as the number of seats is concerned. But I wonder how much longer we can go on carving down provinces such as Saskatchewan and Manitoba while leaving the maritime provinces protected by the Senate floor, when in the name of equity and having regard to population figures it is quite apparent that Saskatchewan and Manitoba in relation to the maritime provinces are being cut down below their respective weights in the chamber.
This is an extremely touchy and delicate point, and in considering the question of adding more seats I wonder whether a more pragmatic approach has not been considered by the Prime Minister or by his adviser, who I assume was the chief electoral officer in this case. That approach would be to freeze at this stage, in 1962, the present representation in the House of Commons. Why should Saskatchewan and Manitoba suffer because of the fact that constitutionally they have not been protected in the same way the maritime provinces have? If you were to work from the basis of freezing the membership at a minimum as at the present time and then making adjustments upward in those parts of the country where the population is moving up, it would at least remove the factor of the Senate floor, and limit the disadvantage to those provinces that are going to suffer at the present time. Since the Prime Minister comes from Saskatchewan I would have thought that he would be interested in that kind of approach.
With regard to his comments about the chamber, the number of members in it and the need for more intimacy, if he really feels as strongly about this matter as he has indicated on several occasions I think he should plan to proceed with it in the next parliament. I have said in the past that I am no great respecter of the British House of Commons in terms of what it accomplishes. I suppose I have watched it in session as much as most Canadian members of parliament, and I think the reasons for the different calibre of the debates there stem from factors other than the make-up of the actual chamber or the lack of desks. I should like to make one


point here. I do not think the attendance of the members of the British House of Commons, compared with the attendance of members in the Canadian House of Commons, is quite as good when it is considered that they are so much handier to Westminster than we are to Ottawa. There are hardly any British members of parliament who have to come from a great distance away, as many of our members do, and who are in London for such long periods of time as many of our members are stuck in Ottawa, if one may put it that way. So far as this house is concerned, I am thinking particularly of the western and eastern members who in my view have always tended to carry the burden of attendance in this chamber so much of the time.
I should like to move on to another point in relation to redistribution. I do not know what is in store with regard to who will be on the commission, but as the Prime Minister is a lawyer I have anticipated that it may be heavily weighted with judges, and if more than one judge pops up on this commission I will be quite disappointed. The hon. member for Bonavista-Twillingate made the point that the members of the commission should be named in the bill. I agree with him, and I think one of the people named should be a demographer. I think all members know that a demographer is a special kind of geographer who is trained in population studies and who has rather expert knowledge, as most of them I have encountered have, of trends, shifts and changes in population. Canada happens to be fairly well supplied with such people, and I think it would not be very difficult to find one distinguished professionally to take part in the work of this commission.
An indication was given that the chief electoral officer would probably be a member of the commission. I have tried to look at this both from the point of view of the office and the present incumbent, and I cannot particularly quarrel with the idea. From my experience with the present chief electoral officer it always seems to me that he is the most articulate man in Canada. I can only think of one person who approaches him, and that is Professor Cohen of McGill University.
The difficulty that I and other people, I suppose, have always found with regard to the chief electoral officer is that most of the arguments that we may put before him tend to founder on the very knowledge and brilliance that he brings to his job. One point about the chief electoral officer which the Prime Minister did not touch on and which is germane to the position I want to advance is that in his expressed opinions about redistribution I have found in him a tendency to fairness and a knowledge that

I think are unique. But I have never been able to make any headway, I will acknowledge frankly, in the recognition of the problems of rural ridings and the old distinction between urban and rural constituencies. In this sense the chief electoral officer tends to be what I might call a traditionalist. If there is any formula developed, I am sure he would be interested in an urban-rural formula or ratio.
I insist that this is not sophisticated enough, not practical enough, in the Canadian situation. I think I can show it to a degree, not *only by reference to my own constituency but to several others. I have insisted for several years that we have four kinds of constituencies in Canada. I think I might label them as urban, suburban, rural and frontier or hinterland. Naturally, since Port Arthur is a hinterland constituency, it interests me the most. There are a number of others like this, and I should like to put on the record the ten largest constituencies in Canada with their present populations. They are Mackenzie River with 527,490 square miles and a population of 14,895; Saguenay with an area of 374,950 square miles and a population of 81,097; Yukon with 207,076 square miles and a population of only 14,628; Churchill with 170,827 square miles of area and a population of 54,952; Port Arthur, with an area of 148,482 square miles and a population of 87,977. This is the largest in terms of population for these very large constituencies. Then constituency No. 6 is Grand Falls-White Bay-Labrador, with an area of 125,710 square miles and a population of 82,433. In my view this is probably the most difficult constituency in Canada. Then there is Skeena with an area of 125,641 square miles and a population of 58,740; Cariboo with an area of 120,544 square miles and a population of 82,173; Meadow Lake, with an area of 96,327 square miles and a population of 37,937; Chapleau, with an area of 83,640 square miles and a population of 71,394.
Now I should like to draw to the attention of hon. members that of those ten largest constituencies in area, perhaps those which have shown rather exceptional growth are Saguenay, because of mineral developments there, Port Arthur, Grand Falls-White Bay-Labrador, again because of mineral developments. Then Cariboo has grown amazingly in the last ten years, and the Peace River constituency has shown considerable growth. I add that one, and it is No. 11 in size.
The traditionalists argue that rural areas- it seems to me the Prime Minister was being a traditionalist last night-deserve what is in effect better representation. Well, we have so many anomalies. What is the difference
Electoral Boundaries Commission between Port Arthur and Fort William in terms of background? Yet a voter in Fort William has just about twice as much effect as a voter in Port Arthur in terms of the relationship to population. We have a situation where my hon. friend from Timmins is right in the centre of a group of huge constituencies. I kid him about it and say he has a little pocket borough that he can drive around in an hour. It is very small and has a population of about 25,000. Then we have an example of a big suburban constituency such as the one the hon. member for York-Scar-borough represents. I think we all know something about the problems he has, and these problems are shared by the hon. member for York Centre and the hon. member for York West. There is the problem of tremendous boom development and an inordinate number of people to look after.
Then we look at the other constituencies in Ontario such as Dufferin-Simcoe and Grey-Bruce, which have a population much below the median. Then we run into this argument that they are rural constituencies. I wanted to put on the record the most compact review of this particular point that I have encountered. It is an article written by J. B. McGeachy on redistribution which appeared in the Financial Post of August 20, 1960. The article outlines the arguments advanced in favour of these rural constituencies. The arguments advanced are as follows:
1.	The farming or food producing interest has a special value to the community and deserves special protection in parliament.
2.	The farmers are lusty yeomen, the salt of the earth, splendid fellows, etc., and heaven forbid this superior racial breed should be permitted to die out.
This is the argument I believe Mr. Frost has used in the past.
3.	The farmer is less alert and vigorous mentally, less well educated than the city man, more likely to be taken in, hornswoggled and otherwise put upon. He needs some protection against his natural dumbness.
4.	The city man has the press, boards of trade, chambers of commerce and other agencies to speak for him directly to government. The farmer has none of these.
Then Mr. McGeachy has put in brackets:
(Though the farm associations seem to do very well when it comes to extracting subsidies).
5.	Many rural ridings are represented by city men whereas the reverse almost never happens. Thus the Toronto area, e.g., really has more m.p.'s than the 17 elected in the greater Toronto seats.
6.	There must be a limit to the size of rural constituencies. A city man who represents only ten square miles can walk around it in a day but a rural m.p. may speak for the inhabitants of thousands of square miles.
But this surely means nothing at all in the motor car age-except, of course, in a few vast
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north country areas like Saguenay, Port Arthur, etc., which can't be helped by redistribution anyway.
I assure the reader that I have not invented any of these arguments for making urban ridings more populous than rural ones. I have found them all in the writings of distinguished students of the subject; and, on balance, I think very little of them indeed.
I tend to find very little in them, indeed, myself. I believe that the overriding principle in representation should be representation by population. I should like to point to the example of Saskatchewan. I say this despite the criticism suggested by the Prime Minister last night. I think the province of Saskatchewan is the most fairly proportioned of all the provinces at the present time in terms of the median of population and some kind of median in terms of the size of the constituency. I know that both Saskatoon and Regina are out of line, and I feel they should be reduced in population terms by adding either to the adjoining constituencies or by creating other constituencies. It seems to me that in Saskatchewan, and to a lesser degree in Manitoba, we come closer to representation by population than in any of the other provinces. It seems to me that this is the goal we should really put forward as the first, overriding principle, to our electoral boundary commission.
The last thing I really wanted to touch upon stemming from the Prime Minister's remarks was his suggestion that county lines, and I would assume municipal lines, are to be considered to a certain extent by the electoral commission. This is a traditional argument, for example, that has held sway for a very long time in the province of Quebec and to a degree in rural Ontario. The argument is that it would be wrong to break up these traditional ridings and constituencies. People worry a great deal about traditional boundaries of municipalities and townships and, as the Prime Minister indicated, they even worry about the courses taken by rivers.
However, as I look at the situation faced by the hon. member for Mackenzie, the hon. member for Yukon, the hon. member for Grand Falls-White Bay-Labrador and myself,
I cannot help laughing at this. The hon. member for Grand Falls-White Bay-Labrador has a part of Newfoundland and a chunk of Labrador in his electoral area. I received word in a sessional paper yesterday that I have some 1,400 Indians in my constituency at a place called Trout lake, which I have never seen. To get there I would have to go 200 miles to Sioux Lookout, and there charter an airplane to make another flight of 280 miles in order to locate them. Is it any wonder that when I look at problems like 

those which hon. members for these big Ontario ridings face, I cannot help but chuckle ironically at the fuss made over old lines in the redistribution of urban constituencies, particularly in Ontario and Quebec.
I see that the hon. member for York-Scar-borough is giving me an unsolicited accompaniment-


Mr. McGee:: A crying towel.


Douglas Mason Fisher: I hope he will take the opportunity to participate in this debate. The hon. member has said something about a crying towel. In that connection I would point out that in my area the Progressive Conservative candidate and the president of the Liberal association have met with me and we have looked at this particular problem as it affects the constituency. We have come to a firm agreement that when the commission is set up we will make a joint submission to it and point out the difficulties that face a constituency such as ours. It is quite apparent that we cannot get the best kind of thorough representation when we are faced with a problem of so much population scattered over so very wide an area.
The story contained in the population figures given by the census of Canada is a fairly easy one to write. Indeed, it seems to me that most of the gentlemen in the press gallery have had no trouble in pointing out the inequality between Iles-de-la-Madeleine and Mercier, where in one case the population is above 200,000 while in the case of Iles-de-la-Madeleine it only takes 12,000 voters to elect a member of parliament. However it is foolish under the present situation to compare Iles-de-la-Madeleine with York-Scar-borough. What we have to do is compare, within the provincial framework, York-Scar-borough with Grey-Bruce and Dufferin-Sim-coe and ask ourselves why during the last five or six years the hon. member for Grey-Bruce has been worth approximately six times in basic voting terms what the hon. member for York-Scarborough is worth.
It is quite apparent that you cannot work out the division even to 1,000 or 2,000, but it does seem to me that we need a formula or approach that will allow for a leeway of a ratio of seven to five between constituencies. I notice some people are enthusiastic about the ratio arrived at in Manitoba, but I cannot see why the Manitoba ratio should be applicable to the rest of Canada, because Manitoba has a rather unique urban-rural situation. Winnipeg has relatively so much larger a population, taken in comparison with other parts of the province which have mostly a farming population.
The principle that I believe should be put to the electoral commission is that they seek not

to have equal representation, but that they allow for a ratio of between seven and five to make adjustments that take care of the area factor, and second to take care of the location of cities and towns that may throw the matter awry.
The Prime Minister seems to have given an indication that the reason he personally was prepared to take the lead with regard to redistribution was related to his own experience. I have gone through the old debates, and I expect he remembers very clearly the debate which took place in July, 1947 when he, Mr. Tucker, and Mr. Wright from Saskatchewan got so deeply involved in what was in effect a public quarrel about the way Saskatchewan was being divided up. For the sake of those people who read Hansard I want to put on the record a comment made by Mr. Wright, who was a third member of the Saskatchewan committee on redistribution. As recorded at page 5668 of Hansard for July 15, 1947 he stated:
As the member for Rosthern has said, the member for Lake Centre-
He is now the Prime Minister.
-did not appear to be very much interested in any other part of Saskatchewan than his own constituency. In the proceedings in the committee he raised only one point that I can remember with regard to any other constituency and that was with reference to Melville, adding an area south of Qu'Appelle valley to that constituency.
If that is the basis on which we are to deal with redistribution, the personal interest and personal preserves of individual members, I do not think we can ever reach fair decisions, and that apparently was the basis on which this matter was considered.
I place that on the record, Mr. Chairman, because although I do not want to reduce the nobility of the Prime Minister's motives I think it might be somewhat of an antidote to the general conception a stranger might get on looking at Hansard, that the Prime Minister is a complete St. George destroying the dragon.


Mr. Lambert:: He was just defending himself.


Douglas Mason Fisher: Did the hon. member make a comment?


Norman Platt Lambert: He was just defending himself. He was "the target for tonight".


Douglas Mason Fisher: That may be, but it seemed to me that last night he was crediting himself with more noble motives than that. Surely, it is not unkind to reduce a man to a politician.


Henry Frank Jones: They were trying to carve up his constituency. That was the whole object of that redistribution.
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Douglas Mason Fisher: I would advise the hon. member to read the debates. If he did it would put a new perspective on matters.


John Whitney Pickersgill: It certainly would.


Henry Frank Jones: I read the debate.


Douglas Mason Fisher: When the Prime Minister
introduced this measure last night he made reference to the situation in the United States, where a new decision of the supreme court has given great hope to people affected there. The situation in the United States, so far as the intervention of the jurists was concerned, was dealt with in a judgment made some years ago by Justice Frankfurter, who said:
Courts ought not to enter this political thicket. The remedy for unfairness in districting is to secure state legislatures that will apportion properly, or to invoke the ample powers of congress.
This is an example of juristic attitude which I take to say that under its present constitution congress should take the leadership in invoking powers and straightening out malapportionment. I would say that the reasons with which the Prime Minister introduced this argument, pointing out how serious is the problem, are applicable in Canada, and I have to agree that we have not handled this whole question with any fairness and we very much need the kind of solution he is advancing at this time.


Paul Raymond Martineau: I am sorry to interrupt the hon. member but his time has expired. Does the committee wish the hon. member to carry on?


Some hon. Members:: Agreed.


Douglas Mason Fisher: I shall only be a few more minutes, Mr. Chairman. I was talking about the relationship of malapportionment to the Canadian situation. I was approached the other day by a lawyer who wanted to know about this, and I thought it was worth while going ahead and trying to watch what action in Canada might lead to the same result that was obtained in the United States. I do not know enough about the jurisdiction of the courts in this country, but it does seem to me that this would be a very nice issue for some public-minded person in the country to take up at the present time, perhaps under the bill of rights. I refer to taking up this question that was brought before the supreme court in the United States; that is, whether there is a legal right to have your vote count with some means of equality with other citizens in the country.
It seems to me it would still be important and relevant in this country to have such a decision, because all the pieties that we may utter here about the need for fairness in this

Electoral Boundaries Commission regard will tend to fall away if the instruction is not very, very clear as to what are the principles under which this new commission is to operate.
The hon. member for Bonavista-Twillingate put forward the point that the commission should bring its report into the house in the form of a bill, with the boundaries already drawn up. It seems to me this is the only sensible way it can be done. I would only hope that some kind of tradition develops in so far as this particular measure may be concerned and that the party line, as the hon. member suggested, will not be in effect when this particular bill is before the committee that considers it, other than the fact that the members of the committee will, I assume, be apportioned on some kind of basis relative to the party standing in the house.
The other point in relation to the bill as it may be laid before the house, it would seem to me, is the amount of preliminary opportunity that will be given to local groups to make their presentations before the bill is made up. That is, I hope it would be considered practical for the commission to have one or two members move across the country at regular intervals, getting the feel in the various areas about what their needs and wishes are with regard to representation, and that at no time would a substantial change be made in any district without representatives having the opportunity, if possible, on the local scene to make their representations about the way the constituency should be divided.
The measure is one that we would be very happy to support, despite our doubts as to its really being effective in the short run, particularly for the voters in the approaching election.


John Ross Matheson: Mr. Chairman, all of us of course are sympathetic to the principle enunciated in this bill. We regret that a reading of the remarks of the Prime Minister do not appear to indicate any clear answer to complicated problems involved. We find it difficult to understand why, in what appears to be the last hours of this parliament, we are addressing ourselves to one of the most complex matters ever laid before the House of Commons of Canada. Perhaps in the next parliament, with people of the competence of Dr. Pauline Jewett, we might be able to do rather better.
May I refer to some comments of Sir Richard J. Cartwright in his book entitled "Reminiscences". Answering certain questions put to him by a reporter at that time and referring to the classic case of gerrymandering in the election of 1882, he said:
Under pretence of adding four seats to the representation of Ontario they-

That is, Sir John A. Macdonald:
-changed the boundaries of 54 constituencies so that while the Liberal party in Ontario almost exactly divided the popular vote in 1882 and 1887, and had a decisive majority in 1891, they were placed in a large minority in 1882 and 1887 and even in 1891 were kept still in a minority, though, of course, not so large a one. That there may be no possibility of dispute, I give the figures for 1891 from the published statement of Mr. George Johnson, the dominion statistician and a strong Conservative. Mr. Johnson stated the total Liberal vote in Ontario in 1891 to have been 178,871 and the total Conservative vote 171,595, giving a majority of the whole vote of 7,276 in favour of the Liberal party. The result in number of seats was that the Liberals, with a popular majority of 7,276, got 44 seats and the Conservatives, who were in a minority of 7,276, obtained 48. How grave a thing this was can be best understood from the fact that the total Conservative majority in Ontario in 1878 was 7,000, when they carried 59 seats to the Liberals' 29 out of the 88 seats Ontario then possessed.


Mr. Graffiey:: Tell us about St. Antoine-Westmount.


John Ross Matheson: Sir Richard indicated that this gerrymander-and I shall not be distracted by the intervention of my hon. friend from Brome-Missisquoi-began in 1882 and it was not done away with until the election of 1904, owing to the refusal of the Senate to alter the constituencies until after the census had been taken.


William Heward Grafftey: Tell us about St. Antoine-Westmount, Moose Jaw-Lake Centre and all those places.


John Whitney Pickersgill: Does the hon. member really want to know about Moose Jaw-Lake Centre? I would not advise him to ask about that.


John Ross Matheson: Sir Richard continues:
As the Conservatives had a decided majority in the Senate at that time, we had no alternative but to submit. This meant that for five successive elections, in 1882, 1887, 1891, 1896 and 1900, the Liberal party in Ontario were deprived of their fair share in the representation.
A few hours ago I took the occasion-


William Heward Grafftey: Tell us about St. Antoine-Westmount.


John Ross Matheson: It is difficult to continue with these interventions from my giggling friend from Brome-Missisquoi who is in his seat. May I simply say that as we look back over the records no party can feel more indignant about the whole question of gerrymandering than the Liberal party, and they themselves at different times have learned from these things-


William Heward Grafftey: You are reading history with your blinkers on.


John Ross Matheson: -which were introduced into the history of Canada so effectively by the master gerrymanderer of them all, that

wily, very clever and attractive personality, Sir John A. Macdonald. Certainly the 1882 gerrymander becomes the classic case in Canada and one that presents a great deal of amusement and interest to people who can now look back at history and perhaps not be as concerned about its evil consequences.
This bill poses a real problem. It is a matter which calls for earnest consideration with respect to principle. Now it would seem to have no chance of adequate consideration and debate. We do not want to be in the position, at this stage of the session, of impeding the government in any of their proper undertakings.
I have read with some care the Diefenbaker promises of 1957 and on this matter of redistribution it would seem that as early as the fall of 1956, the man who now presides over the government of Canada had very clear ideas about redistribution; at least, one would have thought he had.
In the addresses given yesterday one can find words and a good deal of talk on generalities almost as vague as some of the other recommendations which have been brought to this house. We have heard two addresses, one from the hon. member for Bonavista-Twillingate and one from the hon. member for Port Arthur which will indicate to the people of Canada something of the complexity of this problem.
I represent a riding which in population,
I have no doubt, is below national average. When there was discussion of redistribution in recent months there was immediate consideration of what this would do to certain seats. The effects will be felt by a number of Liberals in this house. We should like to know what the governing principle here shall be.
It was my pleasure in recent days to spend some time in the Cariboo and to see something of the complications of this vast riding, and of the adjacent Skeena riding which has been referred to by the hon. member for Port Arthur. Does it make sense that we should depart from the area concept? I cannot find myself subscribing to the principle which I think is inherent in the speech of the hon. member for Port Arthur with respect to the special sovereign interests of provinces. I doubt whether it represents a true interpretation of the constitutional situation but it is certainly one which has been advanced by some able constitutional lawyers and particularly by some scholars in the province of Quebec. All this illustrates how unwise would be too speedy a disposition of a matter so fundamental to democratic rights.
Electoral Boundaries Commission
I subscribe to the idea of an independent council and we know of the high qualifications and character of the chief electoral officer. Here is a person something like the chairman of the Bank of Canada whose office renders him somewhat independent of the government; a person who has a high judicial function, and we are fortunate at this time that we have this kind of person to preside when this matter is to be raised.
I read some days ago a number of clippings with respect to the suggestion of reform. When we read those clippings we realize how very complex this matter is, almost too complex to involve us at this stage when we shall not have time to debate the basic considerations. We have been waiting week after week to go into specific matters such as the exchange fund which we thought would have been discussed three or four weeks ago.


William Heward Grafftey: Whose fault is that?


John Ross Matheson: The hon. member for Brome-Missisquoi is again intervening. I may tell him that some of us have gone away from this place in order to meet people who are qualified to give helpful advice on this subject which we thought was of urgent importance. We thought this exchange legislation was the kind of thing which could not be left over. We did not think it was possible for this mint and exchange bill proposed by the Minister of Finance to be delayed. We thought this was something to which we would have to address ourselves. I remember flying here so as to be able to make some modest contribution to a subject which was highly complex and upon which we had to seek the best possible advice in a hurry. Over a week ago I spoke to a person on the west coast who is regarded as one of the highest authorities on this subject. But we did not have time for that legislation.
Now we have before us one of the most complicated and sophisticated problems in the Canadian economy. I would just ask that the committee should consider a statement which appeared in the London Free Press of December 5, 1961. The editorial states:
When confederation was established a clause of the British North America Act provided that after every decennial census there should be a redistribution of House of Commons seats. As a protection for Quebec that province was given 65 seats and 65 divided into the Quebec population was the quota for the rest of Canada.
Have we time, now, seriously and earnestly to consider any really meritorious contribution to redistribution? I submit that at this stage that is asking this committee to do the impossible.


Paul Raymond Martineau: Is the committee ready for the question?

Electoral Boundaries Commission Mr. Pickersgill: I was hoping that the Prime Minister would deal with some of the points which have been raised, particularly with the question of the fundamental conditions which it seems to me ought to be observed with regard to this bill, above all, whether this parliament is going to decide on the commissioners or whether the government has any thought that the commissioners are to be appointed by an order in council which, I think, would be completely unacceptable.
There is really no reason why this scheme of the bill should not be exposed at this stage. There is no sanctity about this. I can remember that being done on many occasions when the right hon. gentleman was on this side of the house. Sometimes it was resisted by the government, and they gave way afterwards. I thought it was a foolish point to make in the past, though sometimes it was done because the bill was not quite ready, even under the previous government. If this bill is ready, I hope the Prime Minister can indicate, as I say, whether parliament will decide who the commissioners are going to be or whether the government has in mind to do this by order in council.


John George Diefenbaker: Mr. Chairman, I would simply say this: the rules are that I cannot deal with the bill in the committee stage of the resolution. We have heard the views of hon. gentlemen on the subject and if they would allow the resolution to pass now we would make great progress, because the bill would be before the house and the country immediately and be available for consideration in detail. Each hon. member would then have the fullest opportunity to make his suggestions.
I have listened with much interest to the various statements which have been made, and the views expressed, but the principle before us now is the setting up of an independent commission, and from what I gather from the opinions expressed by representatives of all the parties, that principle is accepted. This being so, in order to expedite consideration of the various questions which have arisen I hope there may be acceptance of the resolution. When that is done we shall immediately table the bill. First reading will be given at once and in that way an answer to a number of doubts expressed will, I think, be forthcoming.


John Whitney Pickersgill: I am not going to enter into a sterile argument about whether or not the right hon. gentleman can tell us what the scheme of the bill is. We have had that point over and over again in the house. Even if there were some technical objection, if everyone wanted it there would be no harm in doing it. I am not insisting on that point nor will I waste any time on it.
[The Chairman.]

The Prime Minister said the principle we were to settle was whether there would be an independent commission. That, of course, is not correct. What we are determining here in accordance with the government's request is whether it is expedient to introduce a measure. The principle of a bill is determined on the second reading of the bill, not on the resolution. The question we are asked to settle here is whether it is expedient to introduce this bill. I think it would have been expedient to introduce a bill of this kind in 1960, as I indicated when I spoke earlier. I think it would have been excusable and perhaps expedient to do it in 1961. I do not think it is expedient to do it in 1962 unless we have an assurance from the government that it intends to proceed with the implementing of the redistribution itself; unless, in other words, we are assured that this legislation is going to come into immediate operation and that the constitutional obligation to redistribute is going to be carried out during the lifetime of this parliament. Otherwise it seems to me it would be more expedient to be dealing with urgent legislation that obviously has to be passed before there can be an election.
If we are not going to implement this in any way, if it is not going to have any effect upon the next election, then there does not seem to me, using the word "expedient" in its ordinary sense, to be any kind of urgency; and since urgency has been stressed so much by the government in recent weeks I do not feel we should proceed with this measure now. If the session goes on longer and the supply which is urgent business is voted, supply to pay bills that were contracted in the last fiscal year the passing of which is our fundamental job in parliament-


John George Diefenbaker: Perhaps the hon. gentleman would allow me to give an answer to these various matters immediately.


John Whitney Pickersgill: Certainly.


John George Diefenbaker: To begin with I would say we could not set up a commission in advance in order to assure that redistribution would be proceeded with any faster than will now be the case.


John Whitney Pickersgill: Well, that is a matter of opinion.


John George Diefenbaker: Redistribution cannot be proceeded with until the census is completed, and the census is not completed yet. To have set up a commission for the purpose of giving consideration to what it would do after the census was completed would have been idle and futile, so that the question as to whether it should have been introduced in 1960 or 1961 is, I think, an academic argument.

The hon. gentleman says there are matters of urgency. I should point out that this is the 59th sitting day. During that period we have spent 22 days on supplementary estimates, two days on main estimates, eight days on the speech from the throne, two days on a supply motion and only 23 days on legislation.


John Whitney Pickersgill: Which is a lot of time.


John George Diefenbaker: A most unusual situation has developed. We have had arguments over and over again on the question of supply, not original supply but supplementary.


John Whitney Pickersgill: Would the Prime Minister permit me to put a question about this?


John George Diefenbaker: Yes.


John Whitney Pickersgill: Surely the Prime Minister would not say that the $40 million acreage payment was not an original piece of supply or that the emergency assistance for the fishermen of Newfoundland was not an original piece of supply? A lot of the supply was not supplementary in the ordinary sense, but was new business.


Paul Joseph James Martin: It is still business of the house.


John George Diefenbaker: Mr. Chairman, very little time was taken on the question of the $40 million grant. We have spent 22 days on supplementary estimates. As I have said on a number of occasions we used to be criticized when we sat in opposition for holding up progress, but in a period of five years we spent only nine days on supplementary estimates.


John Whitney Pickersgill: But the supplementaries of this government are as much this year as in that full five year period.


John George Diefenbaker: The hon. gentleman again interrupts.


John Whitney Pickersgill: Well, I gave the figures the other day.


John George Diefenbaker: The hon. gentleman is merely engaging in an exercise in futility. I am pointing out this fact. I was trying to be helpful. I thought if this resolution passed we could then have the legislation before us. However, I am in the hands of the house. If we are not going to be able to pass the resolution and get the legislation before us then, of course, the responsibility is not that of the government.


Paul Joseph James Martin: That is exactly where the responsibility lies. The responsibility rests with the government, not with the opposition.


John George Diefenbaker: Well, Mr. Chairman, if one looks at the record-
Electoral Boundaries Commission


Paul Joseph James Martin: Do not lose your temper.


John George Diefenbaker: I would say to the hon. gentleman that he is frustrated.


Paul Joseph James Martin: Do not make these charges.


John George Diefenbaker: Let me say to the hon. member for Essex East that his entire attitude in recent weeks has been one of deep frustration over the fact that he does not occupy the position he would like to.


Some hon. Members:: Shame.


Paul Joseph James Martin: Mr. Chairman, I rise on a point of order.


John George Diefenbaker: There is no point of order.


John Whitney Pickersgill: There is a question of privilege; a personal attack.


Paul Joseph James Martin: Mr. Chairman, I rise on a question of privilege.


Paul Raymond Martineau: Order. I notice at the present time that the clock says five o'clock. According to the rules of the house, so that the house may proceed to the consideration of private members' business, pursuant to section 3 of standing order 15, it is my duty to rise, report progress and request leave to sit again later this day or at the next sitting of the house as the case may be.


Paul Joseph James Martin: Mr. Chairman, I rose on a question of privilege and a question of privilege is always heard forthwith.


Paul Raymond Martineau: Order. I am afraid the hon. member will either have to raise his question of privilege when the Speaker is in the chair or else raise it when the committee sits again; but at the moment I must report progress.


Paul Joseph James Martin: Mr. Chairman, on a question of privilege which also involves a point of order-


John George Diefenbaker: Mr. Chairman, I am not seeking to interrupt the hon. member.


Paul Joseph James Martin: Mr. Chairman, I rose on a question of privilege. If I cannot speak, the Prime Minister cannot. Surely he must not be given a preference. The Prime Minister has made a statement-


Henry Frank Jones: The Prime Minister is endeavouring to help the hon. member.


John George Diefenbaker: I am rising to give assistance to the hon. gentleman.


Paul Joseph James Martin: Mr. Chairman-


Paul Raymond Martineau: Order.


John George Diefenbaker: Mr. Chairman, I am attempting to allow the hon. member to raise this imaginary question of privilege of his.
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Paul Joseph James Martin: Mr. Chairman-


Harold Edward Winch: Mr. Chairman, if I may, I am rising to request that you insist on enforcing the rules governing our procedure. It is now five o'clock and we should now proceed to the next order of business.


Paul Joseph James Martin: Mr. Chairman, on the point of order raised by the hon. member for Vancouver East, may I say I appreciate the hon. gentleman's attempt-


Paul Raymond Martineau: Order.


Paul Joseph James Martin: Mr. Chairman, on the point of order raised by the hon. member for Vancouver East-


Paul Raymond Martineau: Order. The hon. gentleman has just mentioned that he is now speaking to a point of order.


Paul Joseph James Martin: No, no.


Paul Raymond Martineau: As this is a different matter I regret that I must inform the hon. gentleman that I am required to report progress.


Paul Joseph James Martin: Mr. Chairman, I was rising on the point of order raised by the hon. member for Vancouver East. Under the rules of the house a question of privilege must be heard forthwith. If I wanted any better authority, it is the statement of the Prime Minister.


William Heward Grafftey: Under what rule must a question of privilege be heard forthwith?


Paul Raymond Martineau: Order. The hon. gentleman stated that he had a question of privilege. He was given an opportunity to state it and now he rises on a point of order.


Paul Joseph James Martin: With deference, Mr. Chairman, that is not correct.


George Clyde Nowlan: Order.


Paul Raymond Martineau: If the hon. gentleman has a question of privilege Which he can state succinctly I am willing to hear him, and then I shall report to the Speaker.


Harold Edward Winch: Mr. Chairman, may I point out that at two minutes after five no one can raise a question of privilege or a point of order under our rules.


Paul Joseph James Martin: Mr. Chairman-


Harold Edward Winch: It is not allowed under the rules.


Paul Raymond Martineau: Order. I will hear the hon. member for Essex East.


Paul Joseph James Martin: Thank you, Mr. Chairman. I simply wish to say to the Prime Minister with regard to the matter he has raised and which has provoked this question of privilege, this is the second time-


Paul Raymond Martineau: Order. I asked the hon. gentleman to state his question of privilege but I do not feel that at this time, it being past five o'clock, he may engage in a debate, and obviously he was beginning to engage in a debate in addressing his remarks to the Prime Minister.


Paul Joseph James Martin: Mr. Chairman, I
would ask you to consider carefully what you have just said. My question of privilege arises out of what the right hon. gentleman has said and I cannot begin to state my question of privilege unless I address myself to what the Prime Minister said. The Prime Minister for the second time showed that remarkable sense of the dignity of his high office by once again making a personal aspersion. I simply-


Paul Raymond Martineau: Order.


Paul Joseph James Martin: May I finish?


Paul Raymond Martineau: Order. Will the hon. gentleman please resume his seat while the chairman is on his feet. I am satisfied that the matter that the hon. gentleman has just raised, interesting as it may be, is not a matter of privilege that must be taken up at. this instant and I feel-


Paul Joseph James Martin: You just said a moment ago that I could.


Paul Raymond Martineau: -that according to the rules I must interrupt this sitting at this time so that the house may proceed to the consideration of private members' business, and I accordingly do so.


Paul Joseph James Martin: You just said a moment ago that I could.
Progress reported.



PRIVILEGE


Paul Joseph James Martin: Mr. Speaker, on a question of privilege, just before five o'clock and before Your Honour took the chair the Prime Minister made what can only be regarded as a reflection involving my person and my attitude toward public questions in this house. At that time Mr. Deputy Speaker thought that I would have to raise the question of privilege after five o'clock and that I am now doing. To deal with the question of privilege-


Mr. Speaker:: Order. I am sorry but I am not empowered to deal with a matter which arises in committee and on which the committee has not reported to me.


Paul Joseph James Martin: Mr. Speaker, we are in this amazing situation. Under our rules a question of privilege must be raised forthwith at the earliest opportunity and if I had

not raised it at the time I would have been precluded under our rules and practices from dealing with it later. The Deputy Speaker said that I could not raise it because we had reached the hour of five o'clock and that I would have to wait until Your Honour was in the chair. Therefore I am now raising it. We are put in the position where an hon. member has been attacked by no less a person than the Prime Minister, and I would simply say to the Prime Minister if Your Honour will permit, and this will bring the matter-


Mr. Speaker:: Order. The hon. member is proceeding to deal with the matter. It may be that there is an hiatus in the rules. The hon. member would be able to raise his question of privilege, I think, when the committee sat again. I am sorry, but I am not empowered to take under consideration or to bring before the consideration of the house matters which arise in committee unless the committee has reported them to me.


Paul Joseph James Martin: The Prime Minister has been saved by a technicality.



PRIVATE BILLS

[Stage Direction]
On the order:
House in committee on Bill S-9, an act to incorporate Brock Acceptance Company. (Without amendment).-Mr. Smith (Winnipeg North).
Mr. Speaker:: As there are a number of private bills standing for consideration in committee of the whole, is it agreed that in accordance with section 1 of standing order 54 they be referred to committee of the whole on one motion?


Harold Edward Winch: Are you referring now to Bill No. S-9, Bill No. S-10 down to Bill No. S-12? If so, I should like them taken individually.


Mr. Speaker:: The first five items. Does the hon. member wish them to be referred to the committee separately?


Harold Edward Winch: Bill No. S-9, Bill No. S-10, Bill No. S-14, Bill No. S-15 and Bill No. S-12.


Mr. Speaker:: They would be considered separately in committee. What I suggested was that they be referred to the committee at one time so that the committee could deal with them one after another rather than reporting back after each bill. Is it agreed?


Some hon. Members:: Agreed.



BROCK ACCEPTANCE COMPANY

[Stage Direction]
The house in committee on Bill No. S-9, to incorporate Brock Acceptance Company- Mr. Smith (Winnipeg North)-Mr. Martineau in the chair.
Private Bills
On clause 1-Incorporation.
Harold Edward Winch: Could we have an explanation from the sponsor of the bill?


Mr. Smith (Winnipeg North):: Mr. Chairman, I have nothing further to add to the statement I made on second reading of the bill. It is a bill to incorporate a small loans company under part II of the Small Loans Act to be known as Brock Acceptance Company. The bill was referred to the standing committee and, as hon. members will note, was reported back to the house without amendment.


[Stage Direction]
Clause agreed to.
On clause 2-Provisional directors.
Frank Howard: Mr. Chairman, on clause 2 I should like to propose an idea which I have mentioned previously to the hon. member for Winnipeg North, the sponsor of the bill. I have no knowledge yet of his reaction to the proposal I want to make. Clause 2 provides that the persons named in section 1 shall be the provisional directors of the company. When we were considering a bill respecting Aurora Pipe Line Company last year the committee started upon a course of action to provide that the directors should be Canadian citizens. Another bill passed earlier this session involving another pipe line company contains a similar principle. We agree with this principle and we think that parliament should give expression to it in the incorporation of companies through private bills. Perhaps the government will subsequently see its way clear to follow this practice with respect to companies incorporated under the Companies Act. Therefore I should like to move an amendment to clause 2.
That clause 2 be renumbered as subclause (1) and the following be added as a new subclause (2):
(2) All the directors of the company shall at all times be Canadian citizens ordinarily resident in Canada.
This is the wording, Mr. Chairman, that is contained in the act incorporating Aurora Pipe Line Company which was passed at the last session.


William Murray Smith: It was brought out in the banking and commerce committee and in the Senate committee that this is a family company being set up by the mother, father and their eldest son. There is in existence an acceptance company known as Brock Acceptance Company, and this bill would merely empower that company to make small loans under part II of the Small Loans Act. The history of small loan companies in Manitoba, as I am sure all hon. members are aware, is that they can be incorporated by special act of the provincial legislature or by

Private Bills
obtaining letters patent from the provincial legislature. However, the history in Manitoba is somewhat different. The policing of these companies in this field, as a result of an unfortunate incident many years ago, has been by the director of insurance under the federal authorities. The Manitoba government, therefore, discourages the incorporation of these companies on a provincial basis. They take the view that if these companies are going to be policed by the federal authorities, then they should be incorporated by the federal authorities. This is the main reason incorporation is sought by an act of parliament at this time.
There are a great many companies operating in this field, but only five are incorporated by an act of parliament. If this bill is passed, and the next one on the order paper, there would be seven such companies. In view of the fact that Winnipeg is one of the more progressive areas in Canada, and in view of the fact I have not had an opportunity of determining exactly the effect of this amendment on the operations of this company, as well as the fact that this is a family corporation and in all likelihood will remain so for years to come, I do not feel this amendment is necessary. However, since this is a private bill and I do not wish to waste the time of the house as did the incomparable member for Essex East, if the majority of the members of the committee feel this amendment is necessary then I am sure that those who seek incorporation would be willing to accept it. However, I would point out to the committee that if the situation of this company changes in subsequent years it will be necessary to amend the act to allow for directors other than those covered by this amendment.


Harold Edward Winch: I find myself in a very peculiar position because I was a member of the banking and commerce committee which studied these bills. The circumstances surrounding these bills are so strange that I have never come up against them before. I would ask the sponsor of this bill, and the following bill, to make a very emphatic declaration in this House of Commons. Strangely enough, Mr. Chairman, it is not possible to refer to the one bill without making some reference to the other because we have an extraordinary situation which came to light as a result of the reference of these bills to the banking and commerce committee.
Upon investigation in the committee we found that the incorporators of this small loan company were named Schwartz, Schwartz and Schwartz, that is, a husband, wife and son, and the incorporators of the other company which will be before us will be engaged in exactly the same business and are

related by marriage. I did my best in the committee to find out what the interrelationship was. I am sorry, sir, but I find I am in a position where I cannot understand why two private bills come before this house, both from the same city, both for the same purpose and the incorporators of these companies are interrelated by marriage. Certain affirmations were made in the committee but, in my opinion, it is just too coincidental that this should occur.
There is no transcript of the proceedings of the banking and commerce committee. I do not know the reason for this, but there is no transcript available. Because there is this interrelationship between the two bills in so far as the type of business is concerned and the relationship by marriage of the incorporators, I feel there should be a statement made in this house to assure hon. members that there is no collusion and no business relationship and to explain why we should have these two bills from Winnipeg at the same time. I agreed in committee that the bills should be sent forward to this house, and I think the hon. member will understand why. I ask that the explanation be given here, because there was no transcript of the committee proceedings.


Mr. Aiken:: I was a member of the committee which examined this bill and the other bill. I agree with the hon. member for Vancouver East that we examined these bills very closely, and the hon. member asked a good many questions about the relationship of these parties and their intentions. The principle of this amendment is not one to which I could object, because it is desirable that so far as possible directors of companies should be Canadian residents. However our present difficulty is that we have already passed the bill in committee and the problem was not raised there.
Now at the last moment we are asked to consider an amendment which we have not had time to study fully. There was a question of law raised in connection with the other bill, but I understand we now have an answer to it and can proceed with that bill. However in regard to this bill there is the difficulty that if we incorporate the amendment that is proposed, even if we incorporate it in both bills, it would be a matter of discrimination against the people to whom these two bills apply, discrimination which does not apply in the case of many other private bills now on our statute books.
I believe the proper approach would be a general amendment to bring all private companies under an identical type of restrictive

legislation. I believe it would be unfair to introduce it into these two bills now, and I shall vote against the amendment.


Mr. Macdonnell:: I should like to associate myself with the remarks made by the hon. member for Parry Sound-Muskoka. I also was on the committee which had the advantage of hearing a report from the very able superintendent of insurance who had looked into the whole situation. I think everything said by the hon. member for Parry Sound-Muskoka is true.
Why should we now, without any valid reason that I have heard, introduce this restriction which surely in effect will be discriminatory, as described by the last speaker? For that reason I should like to echo what the last speaker has said, and unless there is a sound answer to that it seems to me it would be utterly impossible for us to accept this amendment.


Harold Edward Winch: Here is another fact for consideration. It is most unfortunate that we have no record of the proceedings in the committee on banking and commerce. There is no transcript. I do not know why, but there is none. Therefore I think I should put certain matters on record.
I should like to ask a question which I asked in the committee, a question which the hon. member for Greenwood knows I asked. Since this company intends to operate only in Winnipeg, in the province of Manitoba, why has it felt it necessary to ask for a bill of this kind through the House of Commons and not get a bill through the provincial legislature of Manitoba? In asking that, I realize Manitoba is one of the provinces which will not issue any licence of this kind by letters patent, but from my reading of the bill the people concerned do not intend to operate outside Manitoba whatsoever. But if Manitoba does not issue letters patent, it can issue a bill through the provincial legislature; and I ask why these people ask for a private bill from the House of Commons when they could get the same thing in Manitoba? I repeat that I only ask this question now because there is no transcript of the proceedings in the committee on banking and commerce.


William Murray Smith: The hon. member has raised two points, first with regard to the family connection and second, with regard to the procedure involved in incorporating this company. I am sure the hon. member will recall that the procedure for incorporation of companies of this nature in the province of Manitoba was explained quite fully in the committee by Mr. MacGregor, the superintendent of insurance.
Private Bills
Some years ago the province of Manitoba had an unfortunate experience with regard to companies of this nature and companies of other natures in this field, acceptance companies and so on, which had to be wound up and which resulted in a substantial loss to a great many citizens in the province. I do not know if it was due to inadequate policing or inadequate regulations, but I do know that since that time the province of Manitoba has asked, as I said earlier, to have federal inspection of companies operating in this field within the province even though they are not subject to federal inspection. Also since that time the government of Manitoba has been very reluctant to incorporate companies in this field, either by letters patent or by private act of the provincial legislature, because they have taken the view that if these companies are subjected to federal inspection then they should be incorporated by federal act of parliament.
There is also the point that even though at present a company intends to operate only in Winnipeg it may find in the not too distant future that it wishes to operate in other provinces such as Ontario and Saskatchewan. Because of the difficulty of incorporating in Manitoba they must incorporate in the Dominion of Canada, and this not only gives them a wider field of operations but it also gives them the prestige of being dominion companies.
With regard to the family tie up, I do not think I need to go into that in any detail. I do not think my brother and I are in the same business, and even if we were I do not think anyone could tell me I was running his affairs or he was running mine. The sponsor and petitioners in each bill are interrelated by marriage, but it is also true that they are outstanding families. The Schwartzs and the Arkins are outstanding families in the city of Winnipeg, and from their common start they have branched out into their own businesses. They have each set up acceptance companies in order to facilitate their transacting business in various fields; and now each of them, at the same time, is applying for a licence under part 2 of the Small Loans Act to incorporate a small loans company.
I discussed this with the department of insurance as I was quite sure that hon. members who knew of the family relationship would wonder why they were doing this simultaneously. The department of insurance informed me they had the same thought in mind, and made a very thorough investigation in order to determine whether or not there was anything being done that should not be done. Having concluded their investigations, and I am sure all hon. members

Private Bills
will agree on the efficiency of the department, they saw nothing wrong. They saw no objections which they could raise in the committee of the other place or in the banking and commerce committee of the House of Commons. No objection was raised there. In the banking and commerce committee of the House of Commons this question was raised repeatedly. We were told about the investigations that had been conducted and we were given the assurance of the superintendent of insurance that there was nothing that had not been disclosed or uncovered to prevent the two from applying for a licence at the same time.


Frank Howard: Mr. Chairman, I am not too much concerned about the interrelationship of the two families here. In fact I did not know it existed until that fact was mentioned just now. Not being a member of the banking and commerce committee, wherein this matter was gone into thoroughly, I would not have the opportunity of knowing it unless I inquired of our members on that committee what had been discussed.
However, the point of the amendment is that all the directors of the company shall at all times be Canadian citizens, following the practice we started last year with respect to Aurora pipe lines. The hon. member for Greenwood said this amendment has come in at this stage with no valid reason. That is what I understood from his words. Therefore, he said, we should not accept it.
There is a very valid reason for the amendment. It is a simple, uncomplicated reason. It is that we desire corporations which exist and operate within Canada to have boards of directors consisting of Canadian citizens. That is a valid enough reason. The reasoning behind the amendment, if one wants to go further into it, can be found in various speeches made by the Prime Minister before he reached the exalted position that he now holds. This was one of his key arguments and expressions throughout the country, that there should be Canadian ownership of industry and the like. We have just spent two or three days dealing with the same subject matter in part with respect to a bill introduced by the Minister of Justice regarding statistical information from corporations and trade unions.
The reasons are simple, and I think they are also valid. The hon. member for Winnipeg North who sponsored the bill has indicated that this is a family corporation. But it may not always be that way. I have not the faintest idea what is the situation here. I know of other family corporations which have got into difficulty and in order to obtain financial support to expand the business have had to sell out the corporation to United States

interests. This is one of the reasons why there is increasing United States control and ownership of Canadian industry. The reason is that private companies find it necessary to go to that market in order to get money, thereby selling the corporation in the process.
The hon. member who sponsored the bill, as I understood him, said that if there is a subsequent change in this regard the bill would have to come back to parliament for alteration. I think this is not the case, because clause 1, which we have already passed, reads as follows:
Beatrice Harriet Cohen, spinster, Arthur John Arkin, manager, and Jack Isaac Arkin, manager, all of the city of Winnipeg, in the province of Manitoba, together with such other persons as become shareholders in the company, are incorporated-
Therefore the way is open now for other people, once this bill becomes law, to become shareholders, and for those shareholders at some subsequent time, without coming back to parliament and without asking for an alteration to the bill, to participate in electing members to the board of directors. It could then very easily be that those members might not be Canadian citizens, depending upon what activity takes place within the company after its incorporation.
For this reason I think the sponsor of the bill is in error when he says that a change in the directorship of the company must be effected by way of amending legislation in a future session. That is not so. What may take place is contained in the bill at the moment, the same as with all companies. I agree with the contention of the hon. member for Parry Sound-Muskoka that a better course to follow would be to do this by way of general legislation which would apply equally to all companies incorporated in this fashion. I think, as I said earlier, that there should be an extension of this principle to companies which are incorporated not only by way of private act but under the Companies Act.
However, we do not have that sort of general legislation. If the Prime Minister really believed what he stated on a number of occasions before the last general election, then perhaps general legislation would have been introduced in this parliament to put into practice and effect the principles which he espoused and which he said were part of the Conservative program. But we have not any general legislation; we have not any indication from the government that it really believes in this sort of approach.
At the last session of parliament after long, long debate and disagreement, and some hard feelings perhaps-which I hope have now gone-we established this principle with respect to the Aurora Pipe Line Company.

That amendment, which is exactly the same as this, was accepted by the committee. This year a similar bill has been passed with respect to Polaris pipe lines, I believe sponsored by the hon. member for Peace River. The bill with respect to that company contains a provision akin to that which is before the committee at the moment.
I think the amendment would not cause hardship to anyone. I am sure the people named in clause 1 of the bill, who will be the corporation itself, would not object one bit to this amendment. The hon. member for Winnipeg North has said that they are outstanding, fine citizens in the community of Winnipeg. There is no question in my mind that they would say, "Yes, we welcome such an amendment to this bill, because that is what we believe in as Canadian citizens; we believe that the corporate structure in Canada should be that way".
I have heard no real, valid reason why we should not proceed with this particular amendment. If there were valid reasons, surely they would have been put forward and propounded when we moved a similar amendment with respect to the incorporation of Aurora pipe lines, which of course was not a family company in any sense of the word. But there was no objection last year; the committee unanimously said, "Yes, this is a fine principle to have established with respect to Aurora pipe lines". If it is a fine principle, why do we not now adopt with respect to Brock Acceptance Limited and other companies which are incorporated in the future in similar fashion? Why do we not now accept this principle, in the hope that the government itself will come along with legislation of a general nature so that we will have the principle established and will not have to go through this process bill after bill after bill and remind the government that we are attempting to put its promises into effect; promises, incidentally, which coincide with our concepts and ideas.


William Murray Smith: Mr. Speaker, I should like to say just one or two words about the remarks of the hon. member for Skeena for whom I have a very high regard. As I pointed out at the beginning of my remarks, I wanted to hear comments from other hon. members of the house, and I thank the hon. member for Parry Sound-Muskoka and the hon. member for Greenwood (Mr. Mac-donnell) for giving very valid reasons as to why this amendment should not be accepted.
I would also like to point out that were we to amend this bill by putting this restriction in it, we could expect that governments in other countries would include the same type of restriction in bills with regard to Canadian companies doing business in those countries.
26207-1-171
Private Bills
I would point out to the house that in respect of item No. 4 on today's order paper-which is a bill I am also sponsoring-with regard to another company, that company does the majority of its business in the United States of America. It would be rather difficult for us to pass this bill with the amendment and say all these directors must be Canadians, and then come down to item No. 4 and say, "Well, here we have the reverse; therefore we should put in a provision that all directors should be Americans". I think we would find ourselves in a position that could not at anytime be maintained.
I should also like to say in closing that I should like to see the hon. member bring forward some form of bill with regard to directorships of unions operating in Canada affecting directors who are not Canadian citizens and who do not reside in this country.


Harold Edward Winch: I find it difficult to understand why there should be this opposition to the amendment moved by my hon. friend from Skeena. He is saying that all directors of companies shall at all times be Canadian citizens ordinarily resident in Canada. I cannot understand why there should be any objection to that. I sat through every meeting of the committee on banking and commerce in connection with this matter and as I pointed out at that time, and point out again, I found it most extraordinary that we had before us at one time four private bills, all from Winnipeg. Two of them were completely tied together, the bill which is now before us, Bill No. S-9, and Bill No. S-10. I hope you will allow me to refer to them both for a few moments, Mr. Chairman.
If we take Bill No. S-9 and Bill No. S-10 we shall find that they have identical wording except where they deal with incorporation, and that differs only in the names of the incorporators. In Bill No. S-10 it is Schwartz, Schwartz and Schwartz. In Bill No. S-9 which we are now discussing it is Cohen, Arkin and Arkin. According to the information given to us in the committee this is a combination of family and business completely. Why there should not have been just one bill brought in on a combination of family businesses I do not know. However, this I do know: that on my questioning in the committee on banking and commerce- and the hon. member for Greenwood was there-there was no intention of any outside Canadian control of Canadian investment and there was no collusion on the basis of operation between the two families, one, Schwartz, Schwartz and Schwartz and the other of Arkin. Surely, therefore, I suggest to the hon. member for Greenwood through you, Mr. Chairman, in view of what he

Private Bills
heard in the committee and in view of this most strange coincidence of these two bills coming in from the same city, dealing with the same business and the same family, there ought not to be any objection to a clause which says that all directors of the companies shall be Canadian citizens.


Mr. Brunsden:: On a point of order, Mr. Chairman, the hon. member for Vancouver East insists on discussing in connection with this bill another bill which has not yet been introduced in the house and I respectfully suggest that in so doing he is completely out of order.


Harold Edward Winch: I respectfully suggest to you, Mr. Chairman, that when we have a bill before us, and one which is to follow identical in terms and having to do with the same business and the same family, changing only the names, I am completely in order in saying that in discussing the one bill we are at liberty to consider how it is related to the other.


Paul Raymond Martineau: On that point of order, I believe the hon. member for Vancouver East is using Bill No. S-10 only as a basis for comparison for discussing matters which come under the amendment being considered. As long as he does not get into the principle or the details of the other bill I think he would be in order.


Mr. Pitman:: I should like to say a few words on this amendment. It seems to me that we have spent a great deal of time in the last few days talking about ownership. The whole tenor of the argument used by the Minister of Justice was that we were seeking to secure information and that as a result of obtaining this information we would be able to ascertain the extent of foreign control over the various business enterprises which we have in Canada. Although this is not the kind of company which would come under the disclosure bill which we have passed, and which this group vigorously opposed at some points, the Minister of Justice indicated nevertheless that this kind of information would be sought from companies which came under other types of legislation, banks, transportation companies and so on. The whole intent was to convince this house that this was an important first step toward understanding the nature of our economy in order that no more foreign control would take place.
I was interested in the argument of the hon. member for Winnipeg North when he said that if we voted for this kind of amendment whereby we tried to determine that Canadian directors would be in control of this particular company this would be a very dangerous thing, because possibly the United

States would demand that the same thing be done. If we follow this argument logically it completely destroys the proposition which the Minister of Justice was putting before us last week during the discussion of the disclosure bill. He gave us to believe that legislation would follow this bill and that once we had determined the extent of this control we would take measures to try to handle it. If we follow the reasoning put forward in the discussion of this bill it negates every concept which the Minister of Justice was putting before us last week.
We are not trying to be perverse in the discussion of this seemingly small and unimportant piece of legislation, in the eyes of many members of the house. We are trying to adopt the principle which this government has placed before us and which we agree with. Our whole attitude toward the disclosure bill was not that this was undesirable in itself but that the bill would not do what it purported to do-that it was not going far enough. Most of the speeches we made during the discussion of that bill in committee were to the effect that we already had a tremendous amount of information from the dominion bureau of statistics as to the extent of foreign control over our enterprises-92 per cent over the rubber industry, 65 per cent in certain areas of secondary manufacturing, and so on. The whole suggestion was that once we had more information under this bill we would do something about it. We said we already had information over some 30 years and unless the government was going to prove by some piece of action that it was going to do something we were unconvinced.
Last year there was a long and rigorous discussion having to do with Aurora pipe lines before it was finally incorporated, and we tried to encourage Canadian ownership and Canadian directors there. I wonder if the hon. member for Winnipeg North would be willing to accept another kind of amendment, an amendment which stated that the majority of the directors of the Brock Acceptance Company should be Canadian. This, surely, is not one which could possibly be looked upon with disfavour by anyone. We in this comer believe implicitly in what the hon. member said, that this is a respectable and forwardlooking group in Winnipeg which is going to do something for the financial stature of that community. We accept this. But surely he would not be unwilling to agree that the majority of the directors of the firm should be Canadians.


Mr. Morton:: Mr. Chairman, I am surprised that this amendment is brought forward at this date. No matter how valid the general premise may be or how worthy the general

principle may be, this amendment in application to this company is discriminatory. If the group who have brought in the amendment were sincere in this request they would have raised the matter in committee. Certain questions were raised but not with respect to all the directors. At that time the sponsor would have been able to provide an answer concerning whether or not there would be objection. He is now unable to obtain that information and is not in a position to give an answer.


Harold Edward Winch: Will they object to this?


Murray Douglas Morton: I assure the hon. gentleman I have no objection to the general principle but I object to this attempt to discriminate against one company that happens to come before the house at a particular time. I believe it is wrong to apply against one company a general principle not applicable to all similar companies. I do not think the committee should be put in the unreasonable position of acting in the arbitrary fashion suggested.


Harold Edward Winch: Will the hon. gentleman permit a question?


Mr.   Morion@: Certainly.


Harold Edward Winch: This company has to come before the House of Commons to get this authority. Am I not correct in saying they could have gone before the legislature of Manitoba and obtained the same authority?


Mr.   Morion@: If the hon. gentleman will recall the answer that was given, it was a matter of policy that they should be required to come before parliament in order that there should be more control over companies of this type. I think the company has every right to come to the house and be given the same treatment as any other company that comes before us.


Harold Edward Winch: Could they not have obtained the same authority under an act of the Manitoba legislature?


Mr.   Morion@: Technically, no. They could have obtained authority to act within the province of Manitoba but if they wish to go outside the province, as they may wish to do, they would require a federal charter.


Harold Edward Winch: Where is authority for that statement to be found?


Mr.   Morion@: It is a matter of jurisdiction.


William Murray Smith: I believe the hon. member for Peterborough, who can correct me if I am wrong, mentioned something to the effect that this amendment would ensure Canadian control of this company and that these people would desire this amendment. May I say to the hon. gentleman that 26207-1-171J
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these people are, have been and always will be Canadians. Anything they can do in this business will be, and anything they have done in any other business has been for the benefit not only of the city of Winnipeg and province of Manitoba but every Canadian in this country; and this will continue to be so. The hon. member need have no worry about that.


Frank Howard: The emotionalism exhibited by the hon. member for Davenport and the sponsor of the bill indicates they are on the wrong track. This amendment has nothing to do with the individuals concerned.


Mr. McCleave:: It is anti-Semitism.


Frank Howard: The sponsor said they are Canadians, which is fine and dandy. We are concerned with the principle that the directors at all times should be Canadian citizens.


James MacKerras Macdonnell: Would the hon. member not agree that the principle of the amendment has everything to do with them?


Frank Howard: It would if they were not Canadian citizens. It would mean they could not be on the board of directors. These are the directors of the company. They are fine, outstanding Canadian citizens and there is no argument about that at all. We say that the directors at all times should be Canadian citizens ordinarily resident in Canada. It will apply to these directors as long as they are directors, and it will also apply to the company and future directors. The emotionalism displayed by the two hon. gentlemen about the individuals concerned reveals they are on the wrong track. This is not a discriminatory approach as the hon. member for Davenport indicated.
We have only one bill before us, which is all we can deal with. We draw a distinction between this bill and the next with respect to which we propose to move exactly the same amendment. We can deal only with the bill before us. If that is discrimination, every hon. member discriminates when he participates in any debate on the measure then before the house.
The hon. member for Winnipeg North did not answer the question of the hon. member for Peterborough. Would he be prepared to accept an amendment which would say the majority of directors shall be Canadian citizens if the present amendment is so objectionable?
Amendment (Mr. Howard) negatived: Yeas, 4; nays, 30.


Mr. Peters:: Mr. Chairman, we believe this is an important principle.


Paul Raymond Martineau: Order. I am sorry to interrupt the hon. member but it is now six o'clock.
2688	HOUSE OF
The Budget-Hon. D. M. Fleming It being six o'clock it is my duty to rise, report progress and request leave to sit again at the next sitting of the house.


Robert Jardine McCleave: You fellows hate Quebec, don't you?
Clause 2 stands.
Progress reported.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.


Hon. Donald M. Fleming (Minister of Finance) moved:: That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
He said: Mr. Speaker, this evening I present my sixth budget. There were as well the financial proposals introduced on December 6, 1957. Each has been designed to serve a long range goal; each has been fashioned also to meet the needs and conditions of its own time. The goal I defined in these words:
The abiding goal of our fiscal policy is the maintenance of a sustainable rate of growth in terms of employment, development of resources, and a sound dollar.
Budgets are normally annual. The fiscal program for the year must be adapted to existing economic conditions. These in an open dynamic and sensitive economy like Canada's are always changing. Flexibility must therefore characterize our financial programs. Adaptation has marked our annual budget programs in these past five years, adaptation to conditions, adaptation to change.
Je suis heureux de signaler que les cir-constances dans lesquelles se presente ce budget du Canada sont une prosperity gran-dissante, un nombre accru d'emplois, de plus grandes possibilites et une rapide croissance economique. La politique enoncee dans ce budget demeurera expansionniste, adaptee a la conjoncture economique nationale. Telle est la note dominante de mon discours.
I am happy to report that the circumstances attending this Canadian budget are rising prosperity, more jobs, greater opportunities, and rapid economic growth. The policy expressed in this budget will continue to be expansionist, suited to our national economic circumstances. This is my keynote.
[The Chairman.]



GOVERNMENT ACCOUNTS 1961-62

[Stage Direction]
The financial transactions of the government for the fiscal year which ended on March 31 are set forth and analysed in detail in the white paper which was tabled and published yesterday. I need therefore refer to them only briefly this evening. The figures presently available are, of course, subject to some changes, since many payments must still be made and the final figures will not be available until the accounts for the year have been closed and audited.
In my last previous budget ten months ago I forecast revenues for the fiscal year ended March 31 at $5,765 million. Our current estimate is $5,772 million, an increase of $7 million, within one eighth of one per cent of the forecast. Expenditures which were forecast at $6,415 million have turned out to be $6,563 million, an increase of $148 million, or 2J per cent. More than four fifths of this excess is due, however, to events and policy decisions which could not have been foreseen when the earlier budget was presented. There has been an increase of $40 million in defence expenditures resulting from policy decisions made and announced at the time of the Berlin crisis last August, and the abnormally low crop yields on the prairies required an increase of $40 million in statutory disbursements under the Prairie Farm Assistance Act and resulted in the decision in this present session to provide further payments of $42 million to western grain producers. Apart from these three items expenditures for the past year were about $25 million, or two fifths of one per cent higher than originally forecast.
The budgetary deficit for the year just ended is thus $791 million, or $141 million greater than last June's estimate, due to the cost of the unforeseen events to which I have just referred. These additional costs received the unanimous approval of the house, except perhaps for certain hon. members who argued that they should have been considerably greater.
Our non-budgetary receipts and disbursements have differed considerably from the figures I put forward in June, but it will be recalled that my June budget statement explicitly excluded any forecast of unpredictable changes in the exchange fund. Last June I expected an over-all cash requirement of $980 million. It now appears that our over-all cash deficit has been only $479 million. This reduction of $500 million in our cash requirements is largely the result of repayments of more than $240 million from earlier advances to the exchange fund, a reduction of about $40 million in the advances anticipated under the National Housing Act due to market sales by Central Mortgage and Housing Corporation
[Stage Direction]
of over $40 million of existing mortgages, a decrease in loans to Canadian National Railways of some $40 million, and the repayment of $67 million of advances to the unemployment insurance commission. As a result of the reorganization of the unemployment insurance fund to which I referred last June we have replaced cash advances to the unemployment insurance commission by the purchase of its former portfolio and by redemptions from its holdings of non-marketable bonds.
In conformity with the Old Age Security Act I should also report to the house the current position of the old age security fund. Details of this are set forth on pages 2805 and 2806 of the white paper. In brief, the revenues of the fund under the statute for the past year have been $649 million, the pension payments including the increase to $65 a month effective February 1, 1962, have totalled $625 million resulting in a surplus for the year of $24 million. There was. however, an outstanding loan to the fund by the Minister of Finance of $17 million a year ago. This was repaid, leaving a surplus of $7 million.
For the new fiscal year, 1962-63, total benefit payments under the Old Age Security Act will be about $736 million, revenues under the act will be about $672 million which will result in a deficit for the year of $64 million and an accumulated deficit of $57 million. We shall be giving this subject further consideration in the light of future policy decisions regarding social welfare pension plans following the present consultation with the provinces as to a constitutional amendment to permit parliament to legislate a contributory plan with survivors' benefits. Studies in relation to portability of pensions also are being actively pursued.

[Stage Direction]
It is a source of satisfaction to be able to report to the house, first, that the Canadian economy is experiencing healthy expansion; second, that this expansion is considerably more rapid than in the last similar period and that our international trade and payments are in better balance than they have been for many years; third, that measures taken by this government are contributing constructively and decisively to these developments; and fourth, that given continuation and adaptation of these measures this new fiscal year, we have good reason to expect substantial further economic growth and prosperity.
The increase in levels of economic activity during the course of 1961 has indeed been impressive. The gross national product, expressed at annual rates, increased from the first quarter of the year to the fourth quarter
10, 1962	2689
The Budget-Hon. D. M. Fleming by $2.4 billion, a gain of 7 per cent. From March to December 1961, the index of industrial output rose by more than 9 per cent. By the year end it was nearly 5 per cent higher than it had ever been before. Particularly sharp advances were achieved in the output of certain types of heavy industry. For example, production of steel ingots in 1961 was 12 per cent greater than in 1960, and reached a record high of almost 6£ million tons. Over the past five years output of this basic product has increased by 23 per cent, and the capacity of the entire industry has been expanded, broadened and diversified. Today this industry is meeting more of our domestic needs. In 1956 Canadian producers supplied 70 per cent of our steel requirements; since then this proportion has risen to approximately 80 per cent. A wide range of primary and secondary steel products previously supplied from abroad, such as heavy steel shapes and large diameter pipe, is now being produced in Canadian mills. Our exports of steel products have also been higher. This is but one example of the many industries in Canada which have been progressing and developing notwithstanding the changing world economic environment.
Mining output, too, has reached new peaks, rising sharply in the course of the past year. The largest increases have been in the production of nickel, asbestos, natural gas and petroleum.
Exports of Canadian goods rose sharply in 1961, and in the fourth quarter of 1961 reached a level of $6,256 million, seasonally adjusted at annual rates, 19 per cent above the level achieved in the fourth quarter of 1960. The house is well aware of the success which has crowned our efforts to expand sales of agricultural products, especially wheat. But the house may not be fully aware of the substantial increases which have taken place in sales abroad of other Canadian products such as livestock, cotton textiles, industrial machinery, electrical apparatus, petroleum, nickel, basic plastics, asbestos and chemicals. The increases in the exports of these products in 1961 over 1960 have exceeded $150 million.
In response to the quickened tempo of economic activity in 1961, employment increased substantially. In 1960, when all of the gain in employment took place in the service industries, women accounted for most of the increase, but in 1961 increased employment in manufacturing was particularly significant and it involved a substantial growth in male employment. In February 1962 there were 196,000 more people employed in Canada than a year earlier, and of these 164,000 were
[Stage Direction]
The Budget-Hon. D. M. Fleming men. Accordingly there was a significant drop in the rate of unemployment, particularly among men.
Largely as a result of this increase in employment labour income increased markedly during 1961. Over the eight months from April to December 1961, the increase in labour income equalled that of the 15 preceding months. Business profits increased sharply as well, and by the fourth quarter of 1961 had reached a new peak of $3.8 billion, 4 per cent higher than ever before.
Increased incomes encouraged increased consumer spending which rose by over $800 million during 1961. By the end of 1961, the level of consumer spending was nearly 8 per cent higher than it had been at the previous peak of business activity.
This acceleration in the tempo of our economy is highly gratifying. The rate of expansion during the last nine months of 1961 was more rapid than in comparable stages of the preceding cyclical advance in 1958. During the first nine months of the previous expansion the volume of non-farm output increased by only about 3 per cent. During the first nine months of the present expansion, the increase has been almost 5 per cent. The expansion which we have enjoyed in 1961 has already taken the volume of non-farm output to a level 4 per cent higher than the previous peak. By a similar point in the previous expansion the volume of non-farm output was about 1$ per cent above its previous peak.
All too often in the past a resurgence in economic activity has been accompanied by substantial increase in prices. Happily, this has not been our experience in 1961. During the last nine months of 1961 the consumer price index increased by only half of 1 per cent, while in the comparable period of the previous advance it went up by 1£ per cent. Having in mind our very proper concern over the dangers of inflation I am sure the house and the people of Canada will welcome such striking evidence of price stability.
A little earlier, Mr. Speaker, I outlined the substantial growth in exports which was achieved in 1961. Imports of goods increased in 1961 by 3 per cent amounting to $5,717 million with most of the increase occurring in the later months of the year. A substantial increase in imports is quite normal during a business upturn. But contrary to previous experience, exports have increased much more rapidly than imports. As a result we were able to achieve a sizeable trading surplus on merchandise account totalling $179 million. This is the first favourable balance of trade of any consequence that this country has achieved in the last ten years and is in contrast to a record deficit on

merchandise account of $728 million in 1956. This improvement in our trade position was more than sufficient to offset an increase in our deficit on non-merchandise account. Consequently the total current account deficit in the balance of payments was reduced to $989 million in 1961. This represents a 19 per cent reduction from the deficit in 1960 and a 28 per cent reduction from the deficit in 1956. In fact the deficit in 1961 was the lowest since 1955.
The growth of our economy in recent years has revealed itself in a number of other ways besides the improvement in our balance of payments. In fact, Mr. Speaker, key economic statistics adjusted for normal seasonal trends show that our record is better than that of either of our major trading partners, Great Britain and the United States. From 1957 to the end of 1961 industrial production in the United States increased by 15 per cent, while in Great Britain it increased by 12 per cent; in Canada it grew by more than 16 per cent. During this same period total British exports rose less than 8 per cent and total United States exports less than 6 per cent; Canadian exports in the same period surged forward by more than 30 per cent. Employment in both Great Britain and the United States increased by about 3 per cent; employment in Canada grew by almost 8 per cent. At the same time prices increased less in Canada than in either Great Britain or the United States.
This marked improvement in our economic situation has not happened by chance. In my budget speech last June I said that the cyclical recovery which was beginning to appear at that time was likely to be weak and unsatisfactory unless there was some positive government stimulus. I affirmed that an appropriate blending of fiscal, financial and commercial policies was required to impart an impetus to the economy, to employ unused productive capacity, to stimulate growth, to increase trade and thus to expand employment opportunities for our people. Since then we have witnessed a major expansion. The vigour of the expansion that has occurred is due in no small measure to the blend of sound, strong policies we have introduced. While many of these policies have been directed towards particular situations of a specific nature, they have been part of a coherent and co-ordinated approach to the broad objective of improving the performance of the Canadian economy in both the short run and the long run.
In the short run we had as our objective the expansion of domestic demand to take up the slack in the productive resources of the country. To this end we planned and incurred a substantial fiscal deficit. As I explained
[Stage Direction]
to the house in my last budget speech, by means of such a deficit the government places in the hands of the public more purchasing power than it draws from it. The increased demand thus generated encourages higher levels of production and employment.
A deficit appropriate in size to economic circumstances such as we have confronted may result from a variety of fiscal measures. Tax cuts, increases in direct expenditures by the government on goods and services, and increases in transfer payments to persons or to other levels of government, may be used singly or in combination. This government has, as you know, made significant tax cuts in order to stimulate consumer demand. Generally speaking there have been only moderate increases in total direct government expenditures on goods and services. Total expenditures on goods and services by the federal government have been a smaller proportion of gross national expenditure in 1961 than they were in 1956. Our most important contribution to the expansion of purchasing power, demand and economic growth, throughout the length and breadth of the country has been through increases in welfare payments and in transfer payments to provinces and municipalities. We have greatly increased payments to meet the needs of old persons, of veterans, of the unemployed. We have consistently chosen to augment the incomes of these people. We have also provided large sums of money for the income maintenance of both farmers and fishermen. Similarly, this government has greatly aided provincial and municipal governments in finding the funds to provide adequate services in their areas of responsibility. Consequently we have given priority to their needs over increases in our own direct federal expenditures. Payments out of the federal treasury to individuals increased by 65 per cent from 1,224 million in 1956 to 2,014 million in 1961. Payments out of the federal treasury to provincial and municipal governments rose over 130 per cent from 485 million in 1956 to 1,123 million in 1961. These increased payments provided a significant stimulus to the whole economy as well as enormous assistance to the other two levels of government in this country.
The stimulation of demand is a desirable objective when there are pools of unused productive resources in the country. But in the long run more is required than mere expansion of demand. People must steadily become more skilled and versatile in order to compete in this increasingly complex world of technological revolution. And they must have at their disposal modern plants and equipment, efficient transportation, abundant fuel and power, all provided at reasonable
10, 1962
The Budget-Hon. D. M. Fleming cost. Our policies have been designed to meet these requirements. In co-operation with the provinces we have encouraged and heavily financed basic and advanced training in technical and vocational schools. We have greatly increased our financial assistance to universities in support of higher education for a greater proportion of our young people. During the fiscal year ended March 31 we have spent on these programs alone about $80 million, four times more than was spent five years ago. As already announced, we shall be adding substantially to these contributions in the new fiscal year.
Parallel to this policy of improving the technical skills of our people, we have encouraged the modernization and diversification of our industry. Special capital cost allowances for re-equipment and modernization and double depreciation allowances for products new to Canada or new to designated areas of surplus manpower were introduced in the last two budgets to stimulate expenditures on plant and equipment. The establishment of a productivity council and the introduction last year of special incentives to private research are improving the output of Canadian industry. Later this evening I shall be making further proposals to stimulate technological research and development.
The government has pursued a vigorous policy of developing Canadian resources in all parts of the country. The national oil policy has, by providing markets for oil at home and abroad, brought about a substantial increase in production of this important source of energy. In recent weeks we have taken the initiative in exploring in co-operation with the provinces the technical problems of long distance, high voltage transmission systems for electric power.
The establishment of a new federal Department of Forestry reflects the interest of the government in this valuable Canadian resource and its determination to help in ensuring that Canadians will benefit to the maximum extent possible from the future growth of world markets in wood and wood products. Action has been taken to push the frontiers northward and to improve the opportunities for exploiting the riches, particularly the mineral resources, in our more remote areas. The roads to resources program and the recent legislation for the construction of the Pine Point, Gaspe and northern Manitoba-Optic lake railways are striking examples of the government's vigorous effort in this field.
In addition to these and many other projects which are already under way, the government has taken action which holds the promise that an extensive but well-balanced program for the development of Canadian resources will
2692	HOUSE OF
The Budget-Hon. D. M. Fleming continue apace in the future. In October of last year, the resources for tomorrow conference held in Montreal provided a unique opportunity for an intensive survey and study of the potential for Canadian development of renewable resources. The benefits from this broad assessment of opportunities and challenges will be felt increasingly in years to come as Canadians bend to the task of managing our land, water and forest resources. As a first step in the government's comprehensive approach, the Agricultural Rehabilitation and Development Act was designed to make the most effective use of our land, to raise the productivity of our agricultural resources, and to provide for rural adjustment and better income opportunities in rural areas.
Measures related to the functioning of our capital markets have assisted Canadian business to find from domestic sources the capital necessary to expand both production and exports. The wide expansion of activities by the Industrial Development Bank is now providing capital to small and medium sized business at the rate of $100 million a year. In the 1957 fiscal year the bank approved 401 loans totalling $30 million; in the 1961 fiscal year the bank approved 1,364 loans amounting to $71 million. In the past three years ten new branches have been opened and the bank now has 16 regional offices doing business across the country. The new policy of guaranteeing term loans to small businesses by the chartered banks is rapidly achieving results. Export Credits Insurance Corporation has experienced a fourfold expansion of business over the past few years. These are some of the results that testify to the vigour of the government's measures.
In addition, improvements in the field of debt management, combined with a policy of monetary expansion pursued by the Bank of Canada, have improved our capital markets. In spite of a large increase in the total demands on our capital markets last year, and in spite of a reduction in the inflow of foreign capital to supplement our own financial resources, interest rates in this country are now lower than they were a year ago. The spread between interest rates in Canada and those in the United States has narrowed. Consequently the incentive to capital inflows has been considerably reduced. Later this evening I shall discuss in some detail our exchange rate policy and the beneficial results it is achieving. At this point I shall say only that, largely as a result of the reduction in the external value of the Canadian dollar, prices of Canadian goods are more competitive at home and abroad, and Canadian production is being effectively stimulated.
In connection with these financial developments I should like to express my warm
IMr. Fleming (Eglinton).]
[Stage Direction]
appreciation of the assistance I have received from the Bank of Canada. At the time of Mr. Rasminsky's appointment as governor last July he and I, in separate statements, agreed that a judicious and co-ordinated combination of monetary, fiscal and debt management policies was needed for the promotion of national economic growth and prosperity. We both emphasized the importance of regular and close consultation in order to achieve that co-ordination of policies. Since his appointment the governor and I have held regular meetings at least once a week, and I have profited greatly from our exchange of views and information.
Let me turn to the future, Mr. Speaker. Recent economic developments have been encouraging, but we must not be complacent. We still have unused capacity in our industry; seasonally adjusted unemployment fell from 7.8 per cent in February 1961 to 6.0 per cent in February 1962, but this gratifying reduction must be carried much further; and our balance of payments position needs to be still further improved. The economic upswing which we are enjoying is strong, but we must not be content to assume that it will automatically carry forward to the point where our productive capacity is fully utilized. The co-ordinated policies announced last summer were good and our resulting progress has been vigorous. However, that progress has not yet reached a point where a fundamental change in approach is required, we must be careful to avoid a premature dampening down of the upswing which is under way. Fiscal policy must continue to provide stimulus to the economy and further specific measures must be introduced to improve the quality and quantity of our industrial output, thereby stimulating employment and income. These are matters to which I shall return a little later.
The momentum of the upswing now under way, reinforced by the measures already introduced and by others to be announced tonight, will carry the level of economic activity in Canada to record heights. Assuming normal crops and no unforeseen adverse events, I expect that the growth in gross national product from 1961 to 1962 will be about 7 per cent. An increase of this magnitude has been exceeded only twice in the last ten years.
Mr. Speaker, I had expected at this point to say something at length on the subject of international economic developments, but unless the house is prepared to extend the time of this evening's sitting there will not be time for that chapter.

[Stage Direction]
During the past fiscal year we have introduced a number of significant changes in the management of the public debt which

have lent strength and stability to the bond market. The fluctuations in market yields of government securities have been quite moderate, the trend of interest rates has been downward and the differential between yields on United States and Canadian government securities has been substantially narrowed. The results have been very beneficial to the Canadian economy.
In the past 12 months total sales of new issues of government bonds have amounted to $3,451 million, of which $2,233 million were market issues and $1,218 million were non-market issues, mostly Canada savings bonds. On the other hand $549 million of market bonds matured and were paid ofT, $883 million were retired by advance refunding, $486 million were acquired and cancelled prior to maturity, and $676 million of non-market bonds were encashed. The net result is that the outstanding amount of market bonds increased by $315 million and of non-market bonds by $542 million. Mr. Speaker, the table which I should ask leave to have printed in Hansard at this point contains the more detailed statistics of these issues and retirements.
Mr. Speaker:: Has the minister leave
to incorporate the table just referred to at this point in his speech?


Some hon. Members:: Agreed.
[Editor's note: The table referred to above is as follows:]
Table 1
Bond Issues-Fiscal Year 1961-62 (in millions of dollars)
Market Bonds
New issues	 2,233
less: Matured	 549
Advance Refundings ..	883
Purchased and Cancelled prior to maturity 486	1,918
Net increase	
Non-Market Bonds Sold to Unemployment Insurance Commission 	162	Canada Savings Bonds	1,056	1,218less: Redemptions	Unemployment Insurance Commission 	109	Canada Savings Bonds	567	676Net Increase	
542Total Increase	
857


Mr. Speaker:: Having regard to past experience there may be other tables, and there might be an economy of time if the house 26207-1-172
The Budget-Hon. D. M. Fleming would concur now in the incorporation of such other tables as the minister may introduce. Agreed?


Lionel Chevrier: No, Mr. Speaker, I think we should see these tables.


Some hon. Members:: Oh, oh.


Some hon. Members:: Shame.


Donald Methuen Fleming: Let me say very simply, Mr. Speaker, that in the matter of economy of time the speech I have prepared, as I have indicated, could not be completed unless the house were prepared to extend the time of sitting, as I wish to make it a firm rule that there should be a reasonable time left for reply by the opposition tonight.


Lester Bowles Pearson: On that point, Mr. Speaker, the minister will know that we have already agreed to the extension of his time on this subject. When we talk about tables not being printed automatically in Hansard, of course if they are long tables they should go in, but if they are short ones naturally the minister would like to read them.


Herbert Wilfred Herridge: Mr. Speaker, I would just like to say on behalf of this group that we will agree to the minister's time being extended provided he agrees on behalf of the government to permit this budget debate to be continued tomorrow, and continued without interruption for six days as provided by the rules.


Some hon. Members:: Oh, oh.


Donald Methuen Fleming: In my budget speech last June I said that in order to avoid congestion in the long term bond market we would for at least several months confine new federal issues to short term bonds. During the past nine months we have issued no long term bonds; $375 million ranging in term from 5i to 6 years were placed directly with the Bank of Canada, and the terms of all 315 other market issues in no case exceeded 3J years. This policy of not issuing long term bonds has rendered important assistance to the provinces and municipalities and to corporations in meeting their long term capital requirements. We intend to continue a debt management program that will promote a sound and orderly investment market and investor confidence.
As announced in the June budget, we purchased last September at their book value all bonds held in the unemployment insurance fund and out of these proceeds, plus its net revenues in October and November, the unemployment insurance commission repaid to the treasury the $67 million of cash advances previously made to the fund and purchased $162 million of non-marketable
2694	HOUSE OF
The Budget-Hon. D. M. Fleming bonds redeemable at par at any time on 30 days' notice. Of these non-marketable bonds $109 million have since been encashed.
The June budget also announced that we would establish a purchase fund to provide for the orderly retirement of government debt and at the same time contribute to the stability of the longer term bond market. The initial amount made available to the purchase fund was $100 million, and in September the house was informed that we would not limit our purchase fund operations to this amount. To date the purchase fund has acquired $166 million par value of long term bonds in the market at a cost of $157 million, and all these bonds have been cancelled. I propose to continue to operate the purchase fund during the coming year.
I should like to refer to the increasing popularity and effectiveness of our Canada savings bond issues. In recent years individuals of moderate incomes have shown increasing interest in investing a substantial amount of their savings in Canada savings bonds. At the end of 1957 the outstanding amount of Canada savings bonds was $2,649 million, which was about $100 million greater than a year earlier. During 1958 the holdings of Canada savings bonds increased by $250 million, in 1959 by $300 million, in 1960 by almost $400 million and in 1961 by nearly $500 million. The total holdings of Canada savings bonds on December 31, 1961 was $4,080 million, a net increase of $1,539 million in five years.
Interest rates on government securities have declined during the past year. The average interest rate on three month treasury bills during March, 1962 was 3.09 per cent, or one eighth per cent below the rate in March, 1961. Between the same periods the yields on two

to ten year bonds have dropped by about three quarter per cent, and on over ten year bonds by one quarter to one half per cent. Of even greater significance has been the narrowing of the spread between interest yields on United States and Canadian government issues. The spread between average Canadian and American treasury bill yields during March, 1961 was 0.83 per cent, during the past month it has been 0.36 per cent. In the long term bond area the spread dinring the first half of 1961 was between 1.25 and 1.40 per cent; from July to September the spread was around 1.00 per cent and during the past month it has averaged 0.89 per cent.
The total net government debt is now $13.2 billion. This amounts to $712 per capita as compared with $685 a year ago, $701 in 1956 and $774 in 1952. As a percentage of gross national product our net debt now stands at 35.9 per cent as compared with 34.6 per cent a year ago, 41.6 per cent in 1956 and 52.8 per cent in 1952.
The net interest cost of our net debt in the current year has been 3.77 per cent, a decline from 3.80 per cent a year ago and 4.10 per cent two years ago. The average term of our outstanding debt, excluding Canada savings bonds and perpetuals, was 8.3 years on December 31, 1961. In 1960 it was 9.4 years, in 1956 6.6 years and in 1952 6.8 years.
Mr. Speaker, may I insert here in Hansard three tables showing details of the figures in regard to debt.


Mr. Speaker:: Does the house agree to the insertion of these tables?


Some hon. Members:: Agreed.
[Editor's note: The tables referred to above are as follows:]
Table 2
GOVERNMENT OF CANADA Gross and net direct debt
Funded Debt	Total Debt	Net Debt	Net Debt Per As per cent Capita of G.N.P.	March 31-	(billion $)	(billion $)	(billion $)	t	1952	17.3	11.2	774	52.81953	17.9	11.2	752	46.51954	17.9	11.1	727	44.41955	18.0	11.3	717	45.31956	19.1	11.3	701	41.61957	18.3	11.0	664	36.01958	18.4	11.0	648	34.61959	20.2	11.7	669	35.5I960	
15.9	21.0	12.1	679	34.71961	21.6	12.4	685	34.61962	
16.9	22.9	13.2	712	35.9

	APRIL 10. 1962 The Budget- Table 3 GOVERNMENT OF CANADA Interest Cost of Gross and Net Direct Debt		2695 -Hon. D. M. Fleming	
	Interest			Net Interest
paid on	Return on	Net	as p.c. ofYear ending March 31 Total Debt	Investments	Interest	Net Debt(millions $)	(millions S)	(millions $)	1952	
432	123	309	2.771953	
451	126	325	2.921954	
476	152	324	2.911955	
478	134	344	3.051956	
493	149	344	3.041957	
520	207	313	2.851958	
539	169	370	3.351959	
606	221	385	3.301960	
735	239	496	4.101961	
757	284	473	3.801962	
804	305	499	3.77Table 4 GOVERNMENT OF CANADA Maturity and Distribution of Direct and Guaranteed Debt	Average December 31 term of debt*	Amount of Debt held by	P.C. held by Gen. PublicBanks	Government accounts	General Public	Years	($ millions)	1952....	
6.8	5,176	1,102	8,909	58.71953....	
6.2	5,184	1,314	9,139	58.41954....	
7.2	5,633	1,204	8,629	55.81955....	
6.3	5,540	1,491	8,969	56.11956....	
6.6	4,950	1,518	8,766	57.51957....	
6.0	5,105	1,367	8,693	57.31958....	
10.3	6,190	1,258	8,968	54.61959....	
9.5	5,487	923	10,725	62.6I960....	
9.4	5,801	866	11,080	62.41961....	
8.3	6,669	644	11,323	60.8
* Excluding Canada Savings Bonds and PerpetuaU


Donald Methuen Fleming: I continue:



EXCHANGE RATE AND EXCHANGE FUND

[Stage Direction]
At this point it is appropriate to review government policy towards the exchange rate against the background of our balance of international payments and our relations with the International Monetary Fund.
Canada's international economic relations are, I believe, more complex and, in relation to our size, more extensive and pervasive than those of any other country. I have in mind such facts as these. On a per capita basis Canada's trade is the highest among the major trading nations of the world; we have been heavy importers of capital from abroad, which has involved us in a network 26207-1-1724
of international associations and transactions that is unique; and finally, we are geographically very close to, and financially closely linked with, the world's largest and most active capital market-New York.
Because of such factors as these our international financial relations have, throughout our history, presented special problems and special challenges. Canada might be regarded as a classic example of a country for which, because of the diversity of our international interests and obligations, it is extremely difficult to devise and pursue an exchange rate policy that may be regarded as completely satisfactory from every point of view.
In this connection it is relevant to recall actual Canadian experience over the past
2696	HOUSE OF
The Budget-Hon. D. M. Fleming 40 years. During that time, and apart from the period of wartime controls from 1939 to 1950 there were only about half a dozen years during which the Canadian dollar was securely and effectively fixed in value despite international efforts to introduce general exchange rate stability. Going back to the inter-war period, it will be recalled that Britain led the world back to a gold standard regime of fixed exchange rates in 1925. It was less than four years after that when, as a result of an outflow of capital to the great stock market boom in New York, the Canadian dollar was driven below the maximum discount under the gold standard rules. After Britain and other countries were driven off the gold standard in 1931, the Canadian dollar floated rather unsteadily and unevenly between sterling and the U.S. dollar. Many hon. members will recall that, in December 1931, Canadians had to pay a premium exceeding 20 per cent on the United States dollar, while we could buy sterling at a discount of about the same amount. With the outbreak of war, in September 1939, major currencies including the Canadian dollar were brought under control and stabilized.
During the war period from 1939 to 1945 the Canadian exchange rate was fixed at a level 10 per cent below the U.S. dollar. This period was, however, exceptional not only for Canada, but for other countries. In Canada, as elsewhere, the stability of our currency in relation to other currencies required the support of a complex system of foreign exchange controls and import controls as well.
During the next five years, from 1945 to 1950, Canada continued to pursue a policy of fixing its exchange rate but it could hardly be claimed that this policy was an unqualified success. In the first place, the system of foreign exchange controls was continued and for part of the period a system of import controls was also needed. In the second place, while the official rate was at no time during those years allowed to fluctuate on the basis of market forces, there was, during much of the period, an "outside" or "unofficial" market, available to investors and tourists abroad, where a fluctuating rate acted as a sort of safety valve in relation to controlled dealings at the official rate. In the third place, it was found necessary during that period to alter the official exchange rate on no fewer than three occasions. In 1946 the government of the day removed the 10 per cent premium that had been established on the United States dollar at the outbreak of war; in 1949 it restored the premium of 10 per cent on the U.S. dollar at the same time that Britain and certain other countries depreciated 
[Stage Direction]
the value of their currencies by 30 per cent; in 1950 the government of the day found itself unable to counteract the inflationary impact of a rapid inflow of capital, based in part on the conviction in many quarters that the rate chosen by the government in 1949 was proving too low, and the Canadian exchange rate was allowed to float free, to find its own level. Within two years, the last vestige of foreign exchange control was abolished.
Continuously since 1950 the Canadian exchange rate has been basically determined by the market forces of supply and demand, as represented in our international transactions on current and capital account. It should be noted that throughout this period the Canadian exchange rate has in fact been much more stable than it was during the preceding five years. Since 1950 the government, using the exchange fund which was set up in 1935, has operated to restrain and smooth out the more rapid movements of the rate in one direction or the other. At no time, throughout the whole period, have the resources of the exchange fund been used aggressively, to push the exchange rate in one direction or the other against market forces.
In my last budget speech, on June 20, 1961, I expressed the desire of the government to see the Canadian dollar move to a lower level as a means of stimulating Canadian production and employment and of lessening our very heavy international deficit. In some quarters my statement was misinterpreted to mean that we were embarking on an aggressive policy in the market designed to drive our exchange rate down. This, as events made clear, was not the case. Actually, as I explained last June and previously, the essential means by which the exchange rate was to be moved to a lower level was to lessen upward pressures that had been exerted by the inflow of certain types of capital.
In this regard our efforts have been successful; I refer in particular to the various actions announced in the budget last June in the field of interest rates, international interest spreads, and debt management, to the measures taken in the interim budget of December 1960 to eliminate special incentives to capital imports, and to the warning which I issued in my budget of March 31, 1960 regarding the risks associated with capital imports. As a result of the removal of excessive pressures, the exchange value of our dollar fell to a lower level after my last budget, and since that time its fluctuations have been relatively narrow. This movement, combined with the other movements which followed my two earlier budgets,
[Stage Direction]
has relieved Canadian producers of a competitive handicap in markets both at home and abroad.
At the same time-and despite certain pessimistic predictions uttered both inside and outside this house-the Canadian cost of living has remained remarkably stable. The confidence of the government that, in the prevailing economic circumstances, a significant movement of the exchange rate could take place without inflation has been fully justified by events.
The government has not hesitated, and will not hesitate in the future, to deploy a substantial volume of funds, on one side of the market or the other, in order to prevent sudden or erratic movements in our exchange rate. In pursuit of this goal we made substantial purchases of United States dollars in the autumn, and we made substantial sales in the early part of this year. The total of our official reserves of gold and United States dollars has risen and fallen by several hundred million dollars. There may well be similar movements in the future; from time to time our cumulative purchases will no doubt substantially exceed our cumulative sales, and vice versa. It may be of interest to the house to know that since my supplementary budget of December 1960, the published figures show that our market sales and purchases have come within $70 million of balancing each other.
The changed level of the exchange rate has unquestionably been an important factor contributing to the improvement of our international current account during 1961, including the emergence of a favourable trade balance after nearly a decade of deficits. In this situation we can take satisfaction; but it would be a mistake to allow satisfaction to develop into over-confidence. Unquestionably, with the changed exchange rate, our imports have risen less in physical volume, and our exports have risen more, than they would otherwise have done. Unquestionably, the lower exchange rate has yet to exert its full effect on our trade balance, our balance of tourist expenditures, and other items in our current balance of payments. Nevertheless our over-all current deficit is larger than it ought to be, even during the upswing of the business cycle. This must remain a matter of concern. And in this context I would renew my appeal to all Canadians, to management and to labour, to keep Canada competitive; to work together in a spirit of partnership; to hold costs down; to develop our skills and improve our technology; to meet foreign competition at home and abroad with efficient and well designed products of our own manufacture; and to persevere in the drive to expand exports.
10, 1962
The Budget-Hon. D. M. Fleming It is in these fields that the continued reduction of our balance of payment deficits must be sought.
In order to complete this review of the exchange rate and the balance of payments, Mr. Speaker, I should add a few words in regard to the International Monetary Fund and our relations with it. Canada was a founding member of the fund. The Canadian delegation to the Bretton Woods conference in 1944 played an effective and influential part and, ever since the fund opened for business in 1946, Canada has been an active participant and vigorous supporter. Any country with such widespread and diverse international interests as Canada must, in pursuit of its national objectives, support an organization dedicated to expansion of trade and payments on a multilateral basis, and elimination of restrictions.
It was in 1950, as I have already explained that the Canadian government found itself unable to comply with article IV of the fund agreement under which members are required to maintain fixed exchange rates, subject only to alteration in consultation with the fund if a fundamental disequilibrium develops. At that time when Canada moved from a fixed to a floating exchange rate, and from time to time thereafter, the hope has been expressed by the fund authorities that Canada might find it practicable to rejoin the ranks of those that are in full conformity with this particular article. As was to be expected, this view has been reiterated in our most recent consultations with the fund.
At the same time, it has always been recognized, in recent fund discussions as in earlier ones, that Canada's international economic relations are very complex. The fund is fully aware of the nature of our official operations in the exchange market: that we have responded to and moderated market pressures and that no actions prejudicial to the interest of other countries have been taken.
Moreover, we have played a very active part in making resources available to the fund. When there was a general increase in contributions in 1959 we accepted a higher proportion than most countries; when there was a special call for credits to support sterling last summer we promptly contributed our share; when a new stand-by arrangement for supplementary resources was announced last January, again Canada was found amongst the ten leading industrial countries which participated.
Against such a background of general cooperation, Mr. Speaker, the house will understand why the fund, while naturally and properly retaining the ultimate objective of having Canada declare a fixed exchange rate,
[Stage Direction]
The Budget-Hon. D. M. Fleming has not been disposed to press us into any hasty action which might prove to be premature or impossible to sustain. We on our part would wish the prospects of success to be more assured than they were when the Canadian government made its ill-starred attempts to maintain fixed rates during the years from 1946 to 1950.

[Stage Direction]
Mr. Speaker, I had hoped to make a statement to the house concerning dominion-provincial relations, but in view of the statement which has been made with regard to unwillingness to extend the hours of sitting I shall have to forgo that and content myself simply by saying that whereas when the government took office-
Paul Joseph James Martin: May I ask the
Minister of Finance if this document has been given to the press?


Donald Methuen Fleming: The usual arrangements with respect to the press have been observed-those which have been prevailing for many years, long years before I came to office as a minister of the crown, the same arrangements as prevailed when the hon. member was a minister.


Some hon. Members:: Oh.


Donald Methuen Fleming: Whereas when this government took office the provinces received a tax rental equal to 10 per cent of the federal income tax, this rental was raised to 13 per cent commencing in the fiscal year 1958-59.
The new arrangements provide for a reduction in federal personal income tax of 16 per cent in the first year of the arrangements, rising by 1 per cent each year to 20 per cent in 1966-67. Thus the provinces without imposing any additional burden of taxation will by the last year of the new arrangements be receiving double the share they received when this government took office in 1957.
At the same time the new system of fiscal arrangements provides for a broader and more realistic system of equalization. The result of the new fiscal arrangements will be to increase very substantially the contributions to the provinces by way of unconditional grants or tax abatements. The estimated value of these unconditional grants and abatements to the provinces for 1962-63 is $980 million, an increase of $122 million over last year and of $428 million over 195657.
Although the increase in unconditional grants to the provinces since 1956-57 has been large, the increase in conditional grants has been even more rapid. I should like at this point to insert in Hansard a table showing the amount of the federal contributions to the provinces and certain payments to institutions in the provinces for the fiscal years 1956-57 to 1961-62 together with the estimated amount for the years 1962-63. Table 5, Mr. Speaker.


Mr. Speaker:: Has the minister leave?


Some hon. Members:: Agreed.
[Editor's note; The table above referred to is as follows:]

The Budget-Hon. D. M. Fleming
Tabli 5
Federal Contributions To or For the Benefit of the Provinces (in millions of dollars)
	1956-57 1957-58		1958-59	1959-60	1960-61	1961-62 pre- liminary	1962-63 esti- mated
Unconditional Payments.							
1. Statutory subsidies	22.8	22.0	21.6	21.4	21.0	23.5	23.52. Tax Abatements (estimated)	157.3	275.6	275.1	313.8	307.7	313.0	715.93. Tax rentals	]	213.9	249.0	279.7	288.7	312.6	-4. Equalization (including stabilizal tion)	J	365.9	139.4	149.1	180.7	192.0	170.0	178.25. 50% share of federal Estate Tax....	-	-	-	-	-	13.36. 50% share of Income Tax on Power Utilities	6.6	7.3	8.7	4.8	4.2	6.4	6.57. Atlantic Provinces Adjustment grants	_	25.0	25.0	25.0	2 .	35.08. Newfoundland Additional Grant. ..	-	13.6	7.3	7.7	8.0	8.0Sub-total	552.6	658.2	742.1	832.7	846.3	858.5	980.4Conditional Payments	9. Agriculture	0.9	1.0	1.9	6.7	3.8	5.1	4.210. Health	36.4	34.6	45.9	46.0	47.9	48.9	49.211. Hospital Insurance	-	54.7	150.6	188.9	283.3	324.212. Welfare	38.4	48.2	74.1	90.8	102.8	139.2	150.813. Vocational Training, etc	4.7	4.8	8.1	8.4	8.7	61.0	104.814. Highways and Transportation	26.9	50.9	53.7	56.8	54.2	42.2	50.215. Resource Development	2.7	4.3	8.7	15.3	17.9	24.0	23.116. Municipal Winter Works	-	.2	6.6	8.9	24.7	37.917. Other	1.0	1.0	1.1	1.6	2.4	3.7	4.8Sub-total	111.0	144.8	248.4	382.8	435.5	632.1	749.2
C. Payments for the benefit of Provincial Institutions-
18. University grants (including net
value of abatement to Quebec)... 19. Grants to Municipalities in lieu of taxes on federal government prop-	16.0	16.6	25.5	26.1	26.7	27.2	37.0erty	9.7	17.5	21.9	22.6	24.6	24.9	27.3Sub-total	25.7	34.1	47.4	48.7	51.3	52.1	64.3Total	689.3	837.1	1,037.9	1,264.2	1,333.1	1,542.7	1,793.9


Donald Methuen Fleming: It will be seen that the total of all these payments and abatements, conditional and unconditional, is estimated at $1,794 million for 1962-63, more than two and one half times as great as the total of $689 million in 1956-57. Conditional grants as estimated for 1962-63 at $749 million are not far short of seven times the total of $111 million for the fiscal year 1956-57.
This enormous increase in the contributions to the provinces has assisted them directly and indirectly in the provision of essential services and has placed them in a better position to assist their municipalities. It has greatly added to federal financial burdens and has given rise to federal budgetary deficits.
In fact, the cumulative increase in these contributions to the provinces over the past five years has been greater than the cumulative budgetary deficits for that period by no less than $376 million. I should like at this point to place in Hansard a table which compares the budgetary deficits of the dominion government for the period 1957-58 to 1961-62 with the increase in contributions to or for the benefit of the provinces. Table 6, Mr. Speaker.


Mr. Speaker:: Has the minister leave?


Some hon. Members:: Agreed.
[Editor's note: The table above referred to is as follows:]
2700	HOUSE OF COMMONS
The Budget-Hon. D. M. Fleming
Table 6
Comparison of Federal Budget Deficits with Increases in Contributions to the Provinces and Certain Payments to Institutions in the Provinces from April 1, 1957
Budget Deficits
Contributions to Provinces
Cumulative Cumulative Increase
Year	Annual	Cumulative	Annual	Increase over base year 1956-57	Increase over base year 1956-57	in Contributions to Provinces minus Cumulative Budget Deficits
1956-57				689.3			
1957-58	.... 38.6	38.6	837.1	147.8	147.8	109.21958-59	.... 609.3	647.9	1,037.9	348.6	496.4	-151.51959-60	.... 413.1	1,061.0	1,264.2	574.9	1,071.3	10.31960-61	.... 340.4	1,401.4	1,333.1	643.8	1,715.1	313.71961-62	.... 791	2,192.4	1,542.7	853.4	2,568.5	376.1GOVERNMENT	ACCOUNTS	1962-63	direct	assistance	in industrial research and


Donald Methuen Fleming: I turn now to our
budget prospects for this new fiscal year. The main estimates for 1962-63 which were tabled on February 12 provide for authorized expenditures of $6,276 million. Since the main estimates were printed the government has announced a number of important additional spending programs. The largest single item is the $110 million increase in old age security benefits which, however, are non-budgetary expenditures. Of the enlarged budgetary expenditures the most important are increases of $12 million in welfare payments to the elderly, the blind and the disabled, of about $38 million in benefits and support to farmers, and $70 million related to the extension of the Freight Rates Reduction Act and the recommendation of the royal commission on transportation. Further supplementaries will have to include in due course the Canadian National and the Trans-Canada Air Lines deficits which are expected to exceed $50 million, and also provision for a renewed winter works program which is likely to cost not less than $35 million. Other costs which are likely to emerge, less probable lapsings, will bring our total budgetary expenditures for 1962-63 to about $6,525 million. This, I am glad to report, is $38 million less than in the year just ended.
The shifts in the pattern of expenditures over the past several years have been significant and highly constructive. The increase in controllable expenditures over the past four years has been firmly restricted. But at the same time many important development programs of expenditure have shown very large increases. For example, in the coming year we are providing $15.5 million for research work in universities, compared with $3.9 million five years ago; a fourfold increase. In addition there will be grants in various areas totalling $8 million specifically provided for

development, whereas five years ago such provisions did not exist. We are providing $105 million of assistance to technical and vocational training as compared with only $5 million in 1957-58. Appropriations for the development of the north will amount to $41 million, more than double the expenditure of five years ago. The essential development and expansion of air flight safety systems and of efficient airports will cost $126 million in 1962-63 as compared with $68 million in 195758. Again, the construction element of our new penal reform program requires over $10 million in 1962-63 compared with less than $1 million in 1957-58. We are providing $54 million, compared with $28 million in 1957-58, for the care of Indians; $37 million, compared with $16 million, for university grants; $51 million, compared with $38 million, for general health and hospital construction grants; $50 million, compared with $35 million, for the Colombo plan; $10 million for assistance to ship construction, whereas no such provision existed in 1957-58; and $17 million for the development and care of our forest resources compared with $10 million in 1957-58. Finally, about $206 million will be provided in 1962-63 for the promotion of agriculture, including the net budgetary cost of the recently announced changes relating to dairy products, compared with $129 million in 1957-58. Last, but by no means least, in the five years ending next March 31 the federal government will have paid to the provinces and relieved all the families and individuals in Canada of their onerous hospital and medical expenses to the extent of over $1,000 million.
I am sure, Mr. Speaker, that hon. members will agree that in the face of such necessary and highly constructive increases the fact that we have held our total controllable expenditures to an average annual increase of


Mr. Speaker:: Has the minister leave?


Some hon. Members:: Agreed.
[Editor's note: The table above referred to is as follows:]

The Budget-Hon. D. M. Fleming
Table 7
BUDGETARY REVENUES (in millions of dollars)
1960-61	1961-62 forecast before
Actual	Estimated tax changes
Personal Income Tax	
Corporation Income Tax	
Non-Resident Tax	
Estate Tax	
Customs Duties	
Sales Tax	
Other Duties and Taxes	
Total Taxes	
Non-Tax Revenues	
Total Revenues...
1,711	1,800	1,8101,277	1,205	1,19088	115	12085	85	90499	539	550721	774	815635	639	6305,016	5,157	5,205602	615	6255,618	5,772	5,830


Donald Methuen Fleming: With revenues forecast at $5,830 million and expenditures expected to be $6,525 million there would be a budgetary deficit of $695 million if there were no amendments to our present tax structure. I shall, however, be introducing certain tax changes of economic importance which will modify this figure.



TAX POLICY

[Stage Direction]
We are in a period of substantial and healthy expansion, and our fiscal policy must neither put the brakes on the momentum of our expansion nor invite the danger of inflation.
Much of our progress is due to the vigour and skill of our people-farmers, workers and management. Credit is also due to the government's policies of the past 4$ years as reflected both in constructive spending and improvements in our tax laws.
Six out of seven individual income-tax payers in Canada are better oft under the present tax rates than they were five years ago. On the basis of the latest statistics I would estimate that out of a total of 5,100,000 taxpayers no fewer than 4,400,000, or 85 per cent, pay less income tax under the present rates than they would have paid under the rates in force before this government came into office. This is quite apart from the 16 per cent abatement in personal income taxes which is provided from the beginning of this year under the federal-provincial fiscal arrangements. Single taxpayers with incomes up to $4,000 now pay less federal income tax, including old age security tax, than they did on the same amount of income in 1957. Married taxpayers without dependants with incomes up to $5,000 now pay less federal income tax, including

old age security tax, than they did on the same amount of income in 1957. Married taxpayers supporting two children eligible for family allowances with annual incomes up to $7,500 now pay less federal income tax, including old age security tax, than they paid on the same income in 1957. Thus our policies have brought tax relief to persons of lower and medium incomes.
Since 1957 numerous changes have been made to provide more generous deductions from income on account of medical expenses. The definition of medical expenses has been greatly enlarged by the addition of amounts paid for prescribed drugs and medicines, and numerous medical services and appliances. Formerly there were restrictive upper limits on the amounts deductible as medical expenses, $1,500 for a single person, $2,000 for a married couple and $500 for each dependant. Since 1957 these limitations were abolished.
Since 1957 university students and their parents have been assisted by provisions for the deduction of tuition fees. Amendments have been enacted to allow a student in full time attendance at a university, if he is proceeding towards a degree, to deduct his tuition fees when computing his taxable income. In addition the parent has been allowed to deduct the amount of the university tuition fee from the student's income in determining whether the student qualifies as a dependant. If the student's income after deduction of his fees falls below $950 the parent is now entitled to the $500 exemption.
Since 1957 an amendment has been enacted to encourage corporations to make larger donations to educational institutions and other charitable organizations, by allowing them
[Stage Direction]
to deduct up to 10 per cent of their income for such donations in place of the previous 5 per cent.
Since 1957 the new Estate Tax Act has been introduced. This provides for a simplified form of tax and a reduced burden of death duties, particularly on smaller estates, a result which followed mainly from the generous exemptions. When a husband dies leaving a widow, there is a deductible exemption of $60,000 and there is an additional exemption of $10,000 for each dependant child.
Since 1957 important measures of relief have been introduced to minimize or avoid any combined impact of income tax and estate tax. An individual receiving income in the form of a pension or a pension benefit under a registered retirement savings plan or a payment of a death benefit by an employer upon the death of an employee is now allowed to make a deduction from such payments for income tax purposes if the asset represented by the payments has been subject to estate tax or provincial succession duties.
Since 1957 estate tax relief has been granted where the value of a pension or annuity that was part of an estate is reduced because of marriage or death of the recipient within the four year period normally allowed for reassessment.
Since 1957 an important new departure has been made in connection with gift taxes. In addition to the existing exemptions, an individual is now permitted to make a tax free gift once during his lifetime of up to $10,000 to his wife in the form of ownership of their home or of a farm to his child.
Since 1957, as hon. members are well aware, the special excise tax on automobiles, which was formerly 10 per cent has been repealed. In effect this has relieved taxpayers of a burden of about $90 million per year.
Since 1957 assistance has been given to municipalities by providing them with exemptions from sales taxes on many of their important purchases. These include the materials used in sewage and drainage systems, culverts, chassis for fire trucks, fire hose, structural aluminum and laminated timber for bridges and diesel fuel for use in generating electricity.
Since 1957, in addition, exemptions from sales taxes have been granted in respect of certain materials used in the construction industry, certain equipment purchased by educational institutions, certain machinery used on farms and certain articles needed by disabled persons.
Since 1957 the first bracket of corporation taxable income which is subject to a low rate of tax has been enlarged on two occasions to benefit a large number of small and medium sized companies. This bracket of income was
10, 1962	2703
The Budget-Hon. D. M. Fleming increased from $20,000 to $25,000 in 1958 and to $35,000 in 1961. It is estimated that, on account of these successive enlargements of the lower bracket, some 12,000 companies now pay less tax than they would have paid on the same income in 1957.
Since 1957 the surtax of 4 per cent on investment income has been repealed as applied to income from Canadian sources, in order to encourage investment and to ensure more efficient application of the savings of the Canadian people.
Provision was made last year for a reequipment and modernization allowance which was designed to assist industry and to stimulate expansion. This is in the form of a 50 per cent increase in the first year in the rate of capital cost allowance in respect of new assets acquired for use in Canada in the period from June 21, 1961 to March 31, 1963.
Employment has been rising rapidly and unemployment falling, but we still have more unemployment than is consistent with our national objectives. Capital investment is picking up sharply, but we need still more. It is important, therefore, not to apply any fiscal brakes at this time by abruptly closing the gap between revenues and expenditures.
On the other hand, prices have been very stable during the past year, and indeed during the past several years. One of my duties as Minister of Finance is the avoidance of inflation with its attendant damage and injustice, and I can assure you, Mr. Speaker, that I shall not neglect that duty. But at the present time, with a good deal of surplus capacity still in our economy and increasingly keen competition in both domestic and external markets, there appears to be little current risk of inflation. It seems to me, therefore, that the deficit I am presently forecasting will provide a sound degree of economic stimulus and at the same time will not endanger the price level during the coming year.
The encouragement of economic growth has been one of the main objectives of the government and it is the central purpose of this budget. One of the new measures is expressly designed as an incentive for further industrial expansion and increased employment. Another is intended to give a significant stimulus to scientific research in industry. Because of their economic nature these measures will offer benefits to industry. They will constitute an important addition to the structure of tax changes which I have brought to this house in recent years. Encouragement and incentive are thus being given to private industry under several related headings, to increase its efficiency, to expand employment, to improve Canada's
2704	HOUSE OF
The Budget-Hon. D. M. Fleming competitive position and to keep current with the most advanced technical and scientific methods.
I shall also put before you, Mr. Speaker, a fairly large number of particular tax proposals. To some extent these are of a technical nature. A number of them result from probing into the deficiencies of the tax system in a continuing effort to overcome obstacles to progress and to achieve greater equity among taxpayers.

[Stage Direction]
I have not received many representations asking for changes in the estate tax. This indicates that the Estate Tax Act, sponsored by this government in 1958, is continuing to work well. As is usual, however, experience has revealed the need for a few changes to give relief, to block loopholes or to provide clarification. I am glad to say that of the few amendments I am proposing most are designed to afford relief. I should like to comment on one that is of general interest.
The Estate Tax Act contains provisions for assuring collection of the tax. Where real property situated in Canada is concerned this security is obtained by a provision imposing a lien in respect of tax payable by the successor to the property. This has caused difficulties in certifying that the title to a particular property is clear, especially in those provinces where the Torrens system of land titles is in effect. If the provincial authorities would not permit the registration of the transfer of real property until they were satisfied that the Minister of National Revenue had given his consent to the transfer, for purposes of the estate tax, the provision for imposing the lien would no longer be necessary. I am accordingly proposing that where a federal-provincial agreement to this effect has been entered into, the lien provision shall not apply. The authorities of some provinces have already been acting in the manner intended by an agreement of the kind proposed and I am hopeful that eventually all provinces may wish to co-operate in solving the problem in this way. In the meantime, however, I have come to the conclusion that the existing provision for the lien can be restricted so as to cause much less difficulty in practice.
I am proposing therefore that the cases to which the lien is to apply shall be only those where the records of the land titles or the land registry office concerned show that the deceased person had an interest in the property.

[Stage Direction]
The changes I am proposing in the sales tax are intended to extend and clarify some
[Stage Direction]

existing exemptions and take account of technological changes. In the 1958 budget the list of exemptions for municipalities was extended to include materials used in sewage and drainage systems. Since then the trend has been for municipalities to require subdividers and contractors to install these services. Accordingly, I am proposing that this exemption be extended to include all sewage and drainage materials. The proposed specific exemption for several items used in the fishing industry will clarify the tax exempt status of these articles and extend the exemption to goods used in their manufacture.
It is estimated that these amendments in sales taxes will reduce revenues by $2 million per year.
I referred in my budget speech last year to the increasing tendency on the part of non-resident corporations carrying on business in Canada, and also Canadian corporations which are controlled outside of Canada, to arrange their fire and casualty insurance in respect of risks in Canada through agents or brokers located outside Canada. Certain amendments to the Excise Tax Act were proposed at that time respecting insurance placed with insurers which are not authorized to transact the business of insurance in Canada and such amendments were subsequently made. I also stated at that time that the practice of arranging insurance of risks in Canada through non-resident agents and brokers was being studied and that further steps might be taken, if necessary, to curb this undesirable practice.
Surveys that have recently been made indicate that the practice referred to continues in substantial volume. Since this practice results in loss of taxes otherwise payable in Canada, as well as loss of business, employment and income for persons in Canada, and since the laws and regulations of some other jurisdictions require that insurance covering risks in those jurisdictions be placed only through agents or brokers who are licensed therein, it is proposed to amend the Excise Tax Act further so as to extend the application of the present tax of 10 per cent levied on premiums paid to unauthorized insurers by Canadian residents. The proposed amendment would extend the tax to premiums paid to insurers authorized to transact business in Canada where insurance covering risks in Canada is effected or renewed through an agent or broker or other representative of the insurer outside Canada, subject to certain exceptions. As in the case of the present tax on insurance placed with unauthorized insurers, the new tax will not apply to certain classes of insurance, namely life
[Stage Direction]
insurance, personal accident and sickness insurance, marine insurance, and, to the extent that such insurance is not available in Canada, insurance against nuclear risks.

[Stage Direction]
On budget night last June I tabled, on behalf of the Prime Minister, a report prepared by Professor V. W. Bladen on the problems of the Canadian automotive industry. At that time I announced that, in accordance with Professor Bladen's recommendations, the special excise tax of per cent on passenger cars would be removed, effective immediately.
Professor Bladen's other recommendations included a far reaching proposal under which exports of particular parts or vehicles from Canada to other countries would earn, for a manufacturer, free entry for other parts or vehicles. Thus, it was argued, the Canadian industry could be more effectively integrated with industry abroad, and the economies of longer runs and greater output made available here.
I should like to repeat now part of what I said last June about this proposal:
The government warmly approves these objectives, and it is grateful to Professor Bladen for the constructive and imaginative suggestions that are embodied in his report. Nevertheless, his recommendations relating to tariffs are complex and sweeping, and would require extensive readjustments in the industry. It is essential that those concerned, both management and unions, should have an opportunity to assess not merely the objectives but the desirability and practicability of the means by which these objectives are to be obtained.
The response to our invitation for those concerned to submit detailed comments on Professor Bladen's tariff proposals has been quite extensive, and it is still continuing. Many constructive and helpful comments have been received. They have brought to light a number of practical problems which require further examination. For this reason, and also because the implementation of the remaining recommendations would require extensive modifications of Canada's existing international commitments respecting automobiles and parts, no further action on the Bladen report is being proposed in this budget. Indeed, I am not proposing any changes whatsoever in the automotive schedule at this time, pending completion of our review of the whole problem.
The resolutions which I shall table at the conclusion of my remarks will, however, include proposals for a number of tariff changes. All of them are in a downward direction. In some cases the effect of the proposed amendment is to remove an existing duty; in others, it is to extend the duration of an
10. 1962
The Budget-Hon. D. M. Fleming existing free entry provision which otherwise would expire during the current year.
I am proposing that existing duties be removed from certain preparations used for medical purposes, and from certain materials imported by religious or educational institutions or societies. I am proposing also that several existing free entry provisions having statutory expiry dates of July 1, 1962, be extended. The most important of these items relate to aircraft and aircraft engines of types or sizes not made in Canada. Others relate to uranium and heavy water; conductive shoes for use in hospitals; and sodium borate for use as a fire retardant in combating forest fires.
Before leaving the subject of tariffs, I should like to refer briefly to tariff board reports which were received during the past year, and to two new tariff board references which are contemplated. During 1961 the tariff board completed its work on reference 125 relating to textiles, and submitted the final three reports thereon. These related to coated or impregnated fabrics, miscellaneous textiles, and hats and caps, respectively. The tariff amendments recommended by the board in these reports would affect items which are bound under the general agreement on tariffs and trade. Negotiations now are in progress looking toward securing adjustments in our present international commitments so as to permit the implementation of these recommendations, subject to some minor modifications which are deemed advisable in the light of representations which have been received, subsequent to the hearings. If the negotiations in question should be completed before tonight's resolutions are disposed of by parliament, consideration will be given to the possibility of introducing supplementary resolutions to implement the results.
Of the two new tariff board references which are contemplated, one relates to wire and wire fencing. The other relates to machinery and apparatus used by the Canadian printing industry, including printing presses, engraving machines, bookbinding machines, and printing plates of all kinds. If any interested parties should wish to submit views regarding the scope of either of these proposed references, they are invited to do so.

[Stage Direction]
I now come to changes in the Income Tax Act.
Personal Income Tax
The first of my proposals pertains to personal income tax. Hon. members will recall that the first fiscal measures I was privileged to place before this house, in December, 1957, included an increase in the amount deductible
[Stage Direction]
The Budget-Hon. D. M. Fleming for dependants. At that time I announced that the deduction for children eligible for family allowances and for other dependants would be increased by $100. I am now proposing a further increase to $300 on account of a child qualified for family allowance. This is twice the amount of the deduction of $150 in force before 1957. For other dependants the new deduction will be $550. This compares with $400 allowed before 1957.
This further increase in deductions will free completely from income tax about 80,000 taxpayers and will bring a modest tax reduction to all remaining taxpayers who support dependants. Taxpayers who support children over age 16 who are attending school or university will be able to deduct $550 in respect of each dependant child and, as I have previously explained, the amendment introduced last year permits tuition fees to be deducted in determining if a child qualifies as a dependant. This tax relief will reduce budgetary revenue by $26 million in this fiscal year and by $35 million next year. There will also be a reduction in old age security tax revenue of $4 million in this fiscal year and $5 million next year.
Production Incentive
As I have already said, one of the continuing objectives of government policy is economic growth. I am bringing forward in this budget a plan to use tax incentives to induce increased production and employment. This will provide encouragement for private industry in its search for new and expanding markets. A benefit will be allowed to a company in the form of a reduction in tax on profits derived from increased sales. Since larger sales will involve more production and more employment for our citizens, this new incentive will bring benefits to the community at large in substantial addition to those which will accrue directly to the successful enterprises.
The benefit, 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 income arising from increased sales. In the first year the plan is in operation the amount of taxable income to be attributed to the increased sales will be calculated by reference to the amount, if any, by which gross sales in the current tax year exceed the gross sales of the immediately preceding year. The ratio of this excess to sales in the current year will be applied to taxable income to determine the amount of taxable income to be attributed to increased sales.
[Mr. Fleming (Eglinton).l
In the second year of the plan the amount by which sales have increased in the current year will be determined on the basis of average sales in the two preceding years.
In the third year of the plan, and thereafter, the amount by which sales have increased will be determined on the basis of average sales in the three preceding years.
In this way the gradual extension of the base to the average gross sales of the preceding three years will provide as time goes on for the continuing effectiveness of this new measure and for the increasing stability of its operation.
The proceeds of disposal of a company's capital assets will not, of course, be included in gross sales for the purposes of the tax concession.
The cancellation of half the tax on as much as $50,000 of taxable income arising from increased sales is sufficiently generous to allow the great majority of eligible companies to obtain the full 50 per cent cancellation of tax on all income arising from increased sales. For example, a company which increases its sales by 10 per cent, thus bringing its total taxable income to over half a million dollars, will pay tax on only half its taxable income arising from the increase in its sales.
Small companies whose taxable income is wholly or largely within the first bracket of $35,000, and therefore subject to the lower rate of corporation income tax, will be able to claim the reduction of 50 per cent on all of their taxable income attributed to increased sales, both the amounts normally taxed at 12 per cent and any amounts normally taxed at 41 per cent.
It is the policy of the government to promote by every practical means the further development of processing and manufacturing in Canada. In existing economic circumstances, furthermore, the greatest opportunities for increased employment are to be found in the industries which manufacture and process. The benefits of the new plan are to be made available, therefore, in these large areas of industry where they can do the most good by having the greatest effect.
More concretely, the benefit is to be made available to companies whose principal business is manufacturing or processing of goods for sale. Companies will be excluded whose principle business is shipbuilding, oil or gas wells or mines benefiting from percentage depletion. A company whose principal business is processing will be able to qualify whether it be crushing and concentrating ore, refining petroleum or freezing and canning foodstuffs.
The new plan will not be extended to unincorporated businesses in which the earnings are subject to taxation at the graduated rates
[Stage Direction]
of individual income tax. The large majority of unincorporated businesses are in any event in the fields other than the manufacturing and processing of goods for sale. As for the others, it has been found after careful technical study that a benefit comparable to the one being extended to corporations would be both inequitable and far too complicated.
New companies will be allowed to claim the tax credit provided they have at least one full year of sales experience, prior to the current tax year, on which to base their claims.
The bill to be put before the house will contain some special rules to deal with cases in which an extensive corporate reorganization of some sort has taken place including amalgamations, mergers, purchase of assets, transfers of sales contracts and so forth. In each case the purpose will be to establish, if possible, a total of gross sales during the preceding year which can be compared with gross sales in the current year.
The plan to induce increased production and employment is to take effect as from the beginning of this month. Taxpayers will be allowed to claim the benefit in respect of their current taxation year, a portion of which will already have expired in most cases. In this first taxation year the taxpayer will calculate the full amount of tax credit according to the formula and will then reduce this amount by the proportion of his taxation year which had expired by April 1.
In summary, by means of this plan to induce increased production and employment 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 effect on revenue of this plan is very difficult to estimate because the extent of sales increases cannot be precisely estimated in advance. It is believed that the amount of tax cancelled under the plan in a full year will be at least $50 million and it may be considerably more. The tax that is given up will be offset in some measure by compensating benefits including increased revenue on other income. Although the plan is expected to exert an immediate stimulus the reduction in corporation income tax revenue in this fiscal year will not be great because in a period of rising profits most companies base their interim monthly payments of estimated tax on their previous year's actual income.
Double Depreciation
In the supplementary budget of December 20, 1960 I introduced the program of double depreciation for investment in assets acquired to manufacture products new in Canada or
10, 1962	2707
The Budget-Hon. D. M. Fleming new in designated surplus manpower areas. This program was designed to encourage the production in Canada of goods not hitherto produced here and to stimulate industrial development in surplus manpower areas. In the June budget speech I informed the house that an increasing amount of interest was being shown in this program on the part of Canadian industries. Up to the present, assets certified under the plan have reached a total of $112,000,000 and a steady stream of applications is still being received and processed. This program was introduced initially for a period of two years extending to January 1, 1963. However, manufacturers whose plans for additional investment may require a longer time for completion are already beginning to make inquiries concerning continuation for a further period. I am pleased to announce, therefore, that this program of double depreciation is to be extended for another calendar year, that is until January I, 1964.
The extension of this program will not substantially affect revenues in 1962-63 but, it will, of course, extend the revenue effects of the program, originally estimated to be about $25 million a year, for an additional 12 months.
Scientific Research in Industry
The government gives a high priority to encouraging and assisting scientific research in Canada of all kinds. There has been steady and substantial expansion in the areas where the federal government directly supports research through Atomic Energy of Canada, the Defence Research Board, the National Research Council and various other agencies. If Canada is to maintain and extend its place in the world continuous advances must be made in industrial research and in the development of new methods and new products.
In the 1961 budget I expressed the view that Canadian industries, particularly the subsidiaries of foreign companies, have developed an excessive dependence on research done abroad. To stimulate increased industrial research in this country I announced important tax changes at that time, providing for acceleration of the rate at which capital expenditures on research could be written off as expenses. These amendments have apparently given rise to very constructive results in the limited time they have been in operation.
As announced in the speech from the throne, the government has this year introduced a program of direct financial aid to research in industry. Under this plan, administered through the National Research Council, financial assistance for applied research and
[Stage Direction]
The Budget-Hon. D. M. Fleming development will be given on a matching basis, with the government contributing up to as much as 50 per cent of the cost of some projects. It is believed that this program will be of far reaching assistance in building up new research and development in industry, and in expanding existing efforts.
Unprecedented opportunities exist today for the enhanced co-operation of science and industry. The great need is for industry itself to grasp the vital importance of more research if it is to forge ahead. I now propose a new and powerful incentive to corporate taxpayers who undertake increased industrial research in Canada.
Commencing in 1962 such taxpayers will be permitted to deduct 150 per cent of their increased expenditures on scientific research for industrial purposes when computing income for tax purposes. This deduction will apply in each year to current as well as capital expenditures on research to the extent that these exceed similar expenditures by the taxpayer in his latest tax year which ended before tonight. The use in this way of a fixed base period will provide taxpayers with scope to earn substantial tax benefits through increased research. Because there will be need to reconsider the formula after a few years the plan will be introduced initially for a five year period. This will provide time for taxpayers to put comprehensive programs into operation.
This amendment to allow taxpayers to deduct 50 per cent more than the amount actually spent will make it necessary to review carefully what should qualify under the heading of scientific research.
A definition of eligible research must, of course, rule out programs for which taxpayers receive payments from governments as well as expenditures related to sales promotion, such as market research and surveys of customer acceptance. It is intended that payments should qualify which are made to universities and approved institutions and associations in Canada to have research carried out. In administering this tax concession my colleague, the Minister of National Revenue, will have the assistance of the National Research Council.
I should add that this new measure is not intended to serve as a precedent to encourage taxpayers to seek the right to deduct more than they spend in other fields.
Here also the effect of the proposed incentive upon revenue is very difficult to forecast because it will depend upon the extent to which taxpayers avail themselves of the potential benefits. Moreover, it is expected that the revenue cost will increase over the next several years as new research programs proceed. The revenue given up may easily
[Mr. Fleming (Eglinton).l
be $20 million in a full year after the plan has been in operation for one or two years. The loss of revenue in fiscal year 1962-63 is expected to be about $8 million.
Oil and Gas Industry
The government has given much study to the position of the oil industry. Numerous proposals by representatives of the industry and others have been received and considered. The measures I am including in this budget have been selected on the basis that they are responsive to requests received from the oil industry and particularly from those known as independents, that their cost to the treasury in terms of tax revenues can be justified and that they will contribute constructively to the attainment of national objectives.
The petroleum and natural gas industries have developed at an increasing pace during the past year. These industries are in a much healthier condition than before this government took office. The improvement which has taken place is due in no small measure to the policies the government has pursued and, in particular, to the national oil policy. The natural gas industry is consolidating its position in the Canadian markets to which it has access and it has penetrated very large United States markets under the export policies implemented by this government. The response of the oil industry to the new policies has been commendable, particularly since some of the readjustments involved are, at least in the short term, expensive for the companies concerned.
Representatives of the petroleum industry have expressed a strong desire, which is shared by the government, to secure a more substantial and widespread participation in the oil industry by persons normally operating in other fields of industry and by Canadian investors. They have sought tax concessions to this end.
Although surplus productive capacity for oil still exists the prospects for the petroleum and natural gas industries are very good in the long run. There is growing concern, which the government shares, that the pace of exploration for hydrocarbons is not sufficient to maintain reserves of oil adequate to meet anticipated demands.
After careful consideration of all the circumstances I am putting before the house three new proposals:
1.	That individuals be granted the right to charge petroleum preproduction expenses against income earned from oil and gas production;
2.	That all companies including those not normally engaged in petroleum or in mining
[Stage Direction]
be granted the right to charge petroleum preproduction expenses against income earned from oil and gas production; and
3.	That expenditures involved in the acquisition after April 10 of rights to explore or drill for oil or gas or to extract oil or gas be deductible under section 83A of the Income Tax Act along with other drilling and exploration expenses and proceeds from sales of such rights be taken into income by all taxpayers including individuals.
When these amendments have been implemented oil companies will be in a position to deduct without limit of time, in computing income, all of their preproduction expenses including the costs of acquiring rights, the costs of exploration and the costs of drilling. In addition, they will continue to enjoy the benefits of depletion calculated at 33J per cent of income. To the extent of the income earned in the oil and gas industry, individuals and companies outside the industry will henceforth be allowed full access to the special tax benefits associated with oil and gas.
As with the other proposed incentive measures the effect of these amendments upon revenue will be dependant upon the extent to which they are used by taxpayers. In a full year the revenue loss may be $15 million. The loss of revenues in 1962-63 will be about $7 million.
Iron Ore
In 1960 when the additional 15 per cent tax was imposed on income earned in Canada by branches of non-resident corporations it was decided to exempt certain classes of companies from the tax. These exemptions granted recognition to the fact that companies sometimes have no real alternative to the branch office form of organization when operating abroad. I am now proposing that nonresident companies whose principal business is mining iron ore be added to the group of companies which are excluded from this special tax. It has been found that such enterprises which require tremendous amounts of capital normally involve joint participation by Canadian interests and foreign users of iron ore. This kind of venture does not readily lend itself to the formation of a subsidiary company in Canada and logically it should be included in the group of companies which are relieved of this tax.
Logging Tax
At the dominion-provincial conference of February 23-24, 1961, the Prime Minister referred to heavier taxation borne by corporations engaged in the forest industries as a result of the fact that successive fiscal
10, 1962	2709
The Budget-Hon. D. M. Fleming arrangements entered into by Canada and the provinces since 1947 have permitted the provinces to impose a tax on logging profits which is deductible as an expense in computing federal income tax. The Prime Minister stated:
During the period covered by the current agreements, companies engaged in the forest industries in British Columbia and Ontario have borne a considerably higher burden of tax rates than other industries. This is because of the combined effect of federal income taxes and provincial logging taxes ... It is proposed that... the federal government and the provinces in question should seek agreement by which each will make a concession in the interest of resolving this problem.
The Prime Minister made a more specific statement on this matter in his letter of June 16, 1961, to the provincial premiers in which he made the following generous proposal:
Subject to reaching agreement on this matter of the definition of logging income, the federal government is prepared as a means of relieving the tax burden on the forest industry to offer a tax credit equal to two thirds of the logging tax up to a maximum rate of 10 per cent, provided the province gives a tax credit equal to the remaining one third of such logging tax.
With a view to reaching agreement on this matter in order that any new arrangement might apply to the 1962 taxation year, I wrote on January 4 to the treasurer of Ontario, the minister of finance of British Columbia, who is also the premier of the province, and to the presidents of the Ontario Forest Industries Association, the Council of Forest Industries of British Columbia, and the Canadian Lumbermen's Association proposing that technical discussions be held in Ottawa at an early date. However, owing to the position taken by British Columbia it was not possible to choose a date for the proposed meeting which was satisfactory to all the parties concerned.
Notwithstanding the fact that it has been impossible to hold the proposed discussions and to reach complete agreement on the concessions to be made by the two levels of government, I propose to remove discrimination in the taxation of logging income so far as the federal government is concerned. In order to accomplish this objective I am recommending to parliament that the Income Tax Act be amended so that a federal tax credit will be allowed equal to two thirds of a provincial logging tax up to a maximum rate of tax of 10 per cent on the basis of the existing definition of logging income, that is, the definition contained in the 1957 tax rental agreements. This action will go a long way toward removing the existing tax discrimination of forest industry corporations irrespective of any action which the provinces may take. Moreover, if the provinces imposing a logging tax supplement our tax credit with a
[Stage Direction]
The Budget-Hon. D. M. Fleming credit of their own equal to one third of the logging tax, as it is to be hoped they will, the discrimination will be removed completely. The reason for proposing that the federal government should bear two thirds of the full tax credit is that the federal income tax is approximately twice as large as the provincial income tax and logging tax combined in provinces which now impose a tax on income from logging. This proposal constitutes a unique concession inasmuch as no other provincial tax is allowed as a tax credit under the Income Tax Act.
It is estimated that this concession may reduce revenues by $3 million net in a full year and $1J million in 1962-63.
University Grants
Commencing in the year 1962-63 federal grants to universities will be increased by one third, that is from $1.50 per capita for the population of each province to $2.00 per capita. Before 1960 these grants were paid to the National Conference of Canadian Universities (later succeeded by the Canadian Universities Foundation) for distribution to the universities of each province in proportion to student enrolment. However, in 1960 this government introduced legislation to provide an alternative arrangement for a province wishing to administer its own grants. This was done to meet the long standing difficulty with respect to university grants in the province of Quebec. Under section 9A of the Federal-Provincial Tax-Sharing Arrangements Act it is provided that a province may be prescribed if it has not entered into a tax rental agreement with Canada under which it agrees to refrain from levying corporation income taxes and if satisfactory arrangements exist in that province for the payment of university grants of at least $1.50 per capita in addition to grants to universities made as part of the ordinary expenditure of the province. In a province thus prescribed an additional abatement of 1 per cent in the rate of corporation income tax was provided under Section 40 of the Income Tax Act for taxation years 1960 and 1961.
In order that there should be equity in treatment as between provinces section 9A also provided that where the value of the additional abatement of 1 per cent in the rate of corporation income tax in a prescribed province was less than $1.50 per capita an additional payment would be made to the province to bring it to that level and where it exceeded $1.50 per capita the excess would be recovered from the province. The Prime Minister has received assurance that the government of the province of Quebec desires a continuation of the alternative arrangements for the payment of university grants. Accordingly provision will be made to continue this 
[Stage Direction]
additional abatement of 1 per cent in the rate of corporation tax in a prescribed province.
In addition, it is necessary to provide for the increase in the level of university grants from $1.50 to $2.00 per capita. This will be done by amendment to the Federal-Provincial Fiscal Arrangements Act which it is proposed to introduce subsequently.

[Stage Direction]
I can now summarize the net budgetary cost of all the proposed tax changes. The major reductions in revenues will occur in personal and corporation income taxes. The benefits to individuals will amount to about $30 million in this fiscal year and about $40 million in a full year. Of these amounts $4 million in this fiscal year and $5 million in a full year will be reductions in contributions to the old age security fund, and the remainders will be reductions in budgetary revenues. The business incentives will cost about $22 million in 1962-63 and $88 million in a full year. The sales tax reductions will amount to about $2 million. Total benefits resulting from these tax changes will be about $54 million in this fiscal year and $130 million on a full year basis.
I should like to place in Hansard at this point the revised table of revenues for the fiscal year ending March 31, 1963.
Mr. Speaker:: Has the hon. minister leave?


Some hon. Members:: Agreed.
[Editor's note: The table above referred to is as follows:]
Table 8
Estimated budgetary revenues, 1962-63 (millions of dollars)
Personal Income Tax	$1,784
Corporation Income Tax______	1,168
Non-Resident Tax	 120
Estate Tax	 90
Customs Duties	 550
Sales Tax	 813
Other Duties and Taxes		630
Total Taxes	 5,155
Non-tax revenues	 625
Total revenues	 5,780


Donald Methuen Fleming: Total budgetary revenues in 1962-63 will thus be reduced to an estimated $5,780 million, and since expenditures are expected to be $6,525 million our estimated budgetary deficit will be about $745 million. Any forecast covering a full year ahead is, of course, subject to some degree of uncertainty and a deviation

of as little as 1 per cent in either revenues or expenditures can mean a difference of $60 million.
Our non-budgetary cash requirements during this year, excluding as has always been done in the past any increases or decreases in the exchange fund account, appear likely to be about $295 million. Our nonbudgetary cash receipts will be about $280 million, and our net loans, investments and advances will be about $575 million. The main components of our non-budgetary cash outlays are $230 million for Central Mortgage and Housing Corporation, $80 million for financing export credits, $68 million of advances to the old age security fund and $60 million to the Farm Credit Corporation. Loans to the Canadian National Railways, which include the capital requirements of Trans-Canada Air Lines, will amount to only $20 million.
Statistically, our net cash requirements for 1962-63, including both budgetary and nonbudgetary accounts, will be about $1,040 million; but as I said in the early part of my speech this evening, while our net cash requirements in 1961-62 turned out to be $479 million, the net increase in outstanding bond issues during the past year was $857 million. Consequently our cash balances at the end of the fiscal year were about $400 million greater than on March 31, 1961 and stood at $762 million. Subject to unpredictable changes in our exchange fund, the use of surplus cash balances now held will reduce our borrowing requirements in 1962-63 to a level below those of 1961-62.



CONCLUSION

[Stage Direction]
Mr. Speaker, it is with grateful satisfaction that we survey in Canada today the unchallengeable evidences of rising prosperity, increased employment, greater opportunities and rapid economic expansion.
Mr. Speaker, it is with grateful satisfaction that we survey in Canada today the unchallengeable evidences of rising prosperity, increased employment, greater opportunities and rapid economic expansion. Many new records have attested to the strength and extent of our economic growth. Policies and programs set out in previous budgets have contributed effectively to these tsriking achievements.
Many new records have attested to the strength and extent of our economic growth. Policies and programs set out in previous budgets have contributed effectively to these striking achievements.
The Budget-Resolutions But we must not be complacent. We must not rest. This budget is designed to continue and to extend those policies which have contributed so much to dynamic growth in Canadian economy and to the creation of 200,000 new jobs in Canada in the last year. It is also designed to stimulate Canadian enterprise to new effort and new peaks of achievement. It offers tangible incentives to Canadian producers to seek out more markets, to take more risks, to breast the keen competition of the trading world with new confidence and resolve, and with the highest standard of efficiency. It summons all members of the great Canadian family to work together in the spirit of partnership for the attainment of national goals beneficial to all. It asks all to face realistically the challenges of our national and international responsibilities. It calls for effort, confidence and achievement in keeping with our resources, our high position in the free world, and the incomparable destiny of the Canadian nation.


[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Income Tax Act and to provide among other things:
(1)	That for the 1962 and subsequent taxation years the amount deductible in computing taxable income in respect of a child qualified for family allowance be increased to $300 and the amount deductible in respect of other dependants be increased to $550 each.
(2)	That with respect to income earned after March 31, 1962 a corporation whose principal business is manufacturing or processing (not including a corporation whose principal business is shipbuilding, mining, logging or the operation of oil or gas wells) be allowed to deduct from its tax otherwise payable an amount equal to 50 per cent of the tax on the first $50,000 of its taxable income attributable to increased sales and an amount equal to 25 per cent of the tax on the remainder of its taxable income so attributable.
(3)	That with respect to its first taxation year ending after April 10, 1962 and the next succeeding four taxation years a corporation be permitted to deduct in computing income 150 per cent of the amount by which expenditures of a current and capital nature on scientific research in Canada incurred by it in the year exceed expenditures of a current and capital nature on scientific research in Canada incurred by it in its last taxation year ending on or before April 10, 1962.
(4)	That for the 1962 to 1966 taxation years both inclusive the deduction from tax allowed to corporations in respect of taxable income earned in a province be increased from 9
2712	HOUSE OF
The Budget-Resolutions per cent to 10 per cent in a prescribed province in which arrangements exist for the replacement of federal grants to universities by additional provincial grants in accordance with the proposed amendments to the Federal-Provincial Fiscal Arrangements Act.
(5)	That with respect to taxation years commencing in 1962 a taxpayer be allowed a deduction from tax of an amount equal to the lesser of two thirds of the amount payable for the year to a province as a tax on income from logging operations or two thirds of ten per cent of the taxpayer's income from logging operations in the province, and the right to deduct in computing income amounts paid to a province as a tax on income from logging operations be repealed.
(6)	With respect to expenses incurred after April 10, 1962 any corporation be allowed to deduct in computing income the drilling and exploration expenses, including all general geological and geophysical expenses, incurred by it on or in respect of exploring or drilling for petroleum or natural gas in Canada and the prospecting, exploration and development expenses incurred by it in searching for minerals in Canada not exceeding its income for the year from oil or gas wells in Canada.
(7)	That with respect to expenses incurred after April 10, 1962 an individual be allowed to deduct in computing income the drilling and exploration expenses, including all general geological and geophysical expenses, incurred by him on or in respect of exploring or drilling for petroleum or natural gas in Canada not exceeding his income for the year from oil or gas wells in Canada.
(8)	That with respect to acquisitions after April 10, 1962 amounts paid by
(a)	a corporation whose principal business is production, refining or marketing of petroleum, petroleum products or natural gas, or exploring or drilling for petroleum or natural gas, or mining or exploring for minerals,
(b)	an association, partnership or syndicate formed for the purpose of exploring or drilling for petroleum or natural gas,
(c)	a corporation (other than a corporation that qualifies under (a), or
(d)	an individual
for a right, licence or privilege to explore for, drill for or take petroleum or natural gas in Canada shall be classed as drilling or exploration expenses for purposes of computing deductions from income.
(9)	That with respect to sales of property acquired after April 10, 1962 there shall be included in the income of a taxpayer any amount received as consideration for the disposition of a right, licence or privilege to
[Stage Direction]

explore for, drill for or take petroleum or natural gas except where the right, licence or privilege was acquired by inheritance or bequest.
(10)	That the right of a successor corporation to deduct drilling, exploration, prospecting and development expenses incurred by a predecessor corporation from the income of the successor corporation attributable to the production of petroleum or natural gas from wells, or the production of minerals from mines, situated on property acquired from the predecessor corporation shall not be lost by reason of the fact that the successor corporation assumed liabilities of the predecessor corporation.
(11)	That a joint exploration corporation may renounce an appropriate share of the drilling, exploration, prospecting and development expenses incurred by it after 1956 in searching for oil, gas or minerals in Canada in favour of a shareholder corporation whose principal business is
(a)	production, refining or marketing of petroleum, petroleum products or natural gas, or exploring or drilling for petroleum or natural gas,
(b)	mining or exploring for minerals,
(c)	processing mineral ores for the purpose of recovering metals therefrom,
(d)	a combination of
(i)	processing mineral ores for the purpose of recovering metals therefrom, and
(ii)	processing metals recovered from the ores so processed, or
(e)	fabricating metals,
and in such case the expenses renounced shall be deductible by the shareholder corporation and not by the joint exploration corporation.
(12)	That the right of a successor corporation to deduct drilling, exploration, prospecting and development expenses incurred by a predecessor corporation from the income of the successor corporation attributable to the production of petroleum or natural gas from wells, or the production of minerals from mines, situated on property acquired from the predecessor corporation be extended to a second successor corporation which has acquired the property from a predecessor corporation which was itself a successor corporation.
(13)	That for the 1962 and subsequent taxation years income earned in Canada by a non-resident corporation whose principal business is mining iron ore in Canada, be exempt from the additional 15 per cent tax imposed by part IIIA on profits earned in Canada by non-resident corporations.
(14)	That where an employee who is a member of one deferred profit sharing plan
[Stage Direction]
becomes a member of another deferred profit sharing plan the amount to his credit in the first mentioned plan may be transferred to his credit in the second mentioned plan without attracting tax on the amount so transferred.
(15)	That the amount to the credit of an annuitant under a registered retirement savings plan may be transferred at any time before the maturity of the plan to another registered retirement savings plan or to a registered pension fund or plan without attracting tax on the amount so transferred.

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Estate Tax Act and to provide among other things:
(1)	That the lien in respect of tax payable by a successor to real property situated in Canada of a deceased person shall be applicable only where it appears from the records of the appropriate land titles or land registry office or where it can be established from any document or other writing of which notice is given in those records that the deceased person had an estate or interest in that real property, but no such lien shall be applicable where the real property is situated in a province whose government has entered into an agreement with the government of Canada whereby no transfer of an estate or interest in the real property may be registered until the consent of the Minister of National Revenue to the transfer has been obtained.
(2)	That for purposes of the deduction from aggregate net value allowed for the value of a gift made to a charitable organization in Canada, such an organization shall include not only one that devotes its resources to the making of gifts to other such organizations in Canada, but also one that devotes part of all of its resources to the making of gifts to Her Majesty in right of Canada or a province, a Canadian municipality or a municipal or other public body in Canada performing a function of government.
(3)	That the tax applicable in respect of the property of a person dying domiciled outside of Canada shall not apply to the property situated in Canada of an officer or servant of an organization as defined for the purpose of section 3 of the Privileges and Immunities (United Nations) Act, where the property was acquired during his lifetime for or incident to his residence in Canada as such an officer or servant whose duties required him to reside in Canada at the time of his death.
(4)	That any enactment founded on paragraphs (1) and (3) shall apply in respect of deaths occurring after December 31, 1958.
10, 1962	2713
The Budget-Resolutions

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Excise Tax Act and to provide among other things:
(1)	That the present exemption from sales tax for "Books, printed and bound, that contain no advertising and are solely for educational, technical, cultural or literary purposes," be changed to read "Printed books that contain no advertising and are solely for educational, technical, cultural or literary purposes,".
(2)	That audio tapes and materials used in the manufacture thereof, authorized by the department of education of any province in Canada for instruction in the English and the French language, be exempt from sales tax.
(3)	That baler twine and materials used in the manufacture thereof be exempt from sales tax, regardless of use.
(4)	That barrels and boxes for fish, lobster crates, lobster pots, lobster traps, scallop bags, and materials used in the manuafacture thereof be exempt from sales tax.
(5)	That drums or cans for honey and materials used in the manufacture thereof be exempt from sales tax.
(6)	That goods for use in sewerage and drainage systems and materials used in the manufacture thereof be exempt from sales tax.
(7)	That the present liability for sales tax on motor vehicles, tractors and machines and tools operated by such vehicles or tractors, that are diverted from an exempt use to a taxable use, be limited to five years from the time of the first sale by a person who would have been required to pay sales tax if the sale had not been for an exempt use, and where motor vehicles, tractors and machines and tools operated by such vehicles or tractors were imported or sold by a manufacturer or licensed wholesaler and sales tax was not payable or was refunded by reason of the intended use of the goods, any person who within five years of such importation or sale applies the goods to any other use (other than of a casual nature) for which the goods could not originally have been purchased exempt from sales tax, and the person from whom he purchased or rented the goods including the importer, manufacturer or licensed wholesaler, shall be jointly and severally liable for payment of sales tax on the fair market value of the goods at the time they are applied to that other use.
(8)	That the present tax of 10 per cent on net premiums in respect of insurance against risks in Canada paid or payable by
2714	HOUSE OF
The Budget-Resolutions Canadian residents to an insurer not authorized under the laws of Canada or any province to transact the business of insurance, be extended to apply to net premiums in respect of any such insurance paid or payable by or on behalf of Canadian residents, where such insurance is entered into or renewed through a broker or agent outside Canada with an insurer that at the time the contract is entered into or renewed is authorized under the laws of Canada or any province to transact the business of insurance.
(9)	That any enactment founded on paragraphs 1 to 7 of this resolution be deemed to have come into force on April 11, 1962 and
[Stage Direction]
that any enactment founded on paragraph 8 of this resolution be applicable in respect of contracts of insurance entered into or renewed after April 10, 1962.

[Stage Direction]
1. Resolved, that Schedule A to the Customs Tariff be amended by striking out tariff items 206b, 237a, 296g, 409f, 431h, 440m, 440n, 611a(4) and 696(1), and the enumerations of goods and the rates of duty set opposite each of these items, and by inserting therein the following items, enumerations of goods and rates of duty:

§.
			Most-
		British	Favoured-
Tariff	-	Preferential	NationItem	Tariff	Tariff
2066 Dextrose (glucose) solutions and levulote {fructose) solutions, prepared for parenteral administration in therapeutic treatments; component materials and
articles to be used in making such preparations	
Free	Free2206 Phenylalanine deficient dietary preparations specially compounded for use in the treatment of phenylketonuria	
Free	Free
237a Deuterium oxide or heavy water; uranium in the form
of pigs, ingots, billets or bars	
Free	FreeOn and after July 1, 1964	Free	15 p.c.2960 Sodium calcium borate ore for use as a fire retardant....	Free	FreeOn and after July 1, 1964	15 p.c.	20 p.c.
409/ Animal clippers;
Automatic stock watering devices;
Bam hay forks, carriage, pulleys and track;
Bam litter carriers and track;
Combination excavating and transporting scraper units; Egg cooling cabinets;
Elevators (other than storage elevators);
Grain crushers;
Grain or hay dryers;
Grain or hay grinders;
Grain loaders;
Gravity discharge farm wagon boxes;
Hay stack forms;
Hitches and couplings;
Hydraulic hoists for unloading vehicles;
Land levellers;
Machines and tools for use on tractors, including blades, loaders, rippers, rakes and related operating and controlling gear;
Milk coolers;
Sodium metabisulphite;
Sprinkler irrigation systems;
Rates in Effect Prior to Rates Proposed in this Budget
British	Most>-
General	Preferential	Favoured-Nation	GeneralTariff	Tariff	Tariff	TariffFree	Free	Free	Free17} p.c.	20 p.c.	40 p.c.25 p.c.	15 p.c.	20 p.c.	25 p.c.25 p.c.	Free	Free	25 p.c.25 p.c.	Free	15 p.c.	25 p.c.(On and after July 1, 1962)	25 p.c.	Free	Free	25 p.c.25 p.c.	15 p.c.	20 p.c.	25 p.c.(On and after July 1, 1962)	
>
[DOT]tJ
td
to
o
+-
tn
The Budget-Customs Tariff
Fleming (Egllnton).]
Tariff
Item
Stack heaters for orchards;
Steel stanchions for confining livestock either in pens or individually, and complete equipment for milking parlors;
All the foregoing for use on the farm for farm purposes only;
Brooders;
Ensilage cutters;
Fodder or feed cutters;
Hay loaders;
Hay tedders;
Post hole diggers;
Potato diggers;
Potato planters;
Snaths;
Stumping machines;
All other agricultural implements or agricultural machinery, n.o.p.;
Parts of all the foregoing	
431A Geophysical surveying precision instruments and equipment for use exclusively in prospecting for, or in the exploration and development of, petroleum, natural gas, water wells and minerals, or for geophysical studies for engineering projects, including the following; Magnetometers; gravity meters and other instruments designed to measure the elements, variations and distortions of the natural gravitational force; field potentiometers, meggers, non-polarizing electrodes, and electrical equipment for making measurements in drill holes; instruments and equipment for seismic prospecting; geiger muller counters and other instruments for radioactive methods of geophysical prospecting; electrical and electronic amplifying devices and electrical thermostats designed to be used with any of the foregoing; sodium iodide crystals, thallium activated, in rough cut blanks, when imported to be manufactured into parts for use in instruments for prospecting; all the foregoing of a class or kind not made in Canada, and parts, tripods and fitted carrying cases for any of the foregoing	
British
Preferential
Tariff
Free
Free
to
[Stage Direction]
 **	*		 -J
Rates in Effect Prior to Rates Proposed in this Budget
Most-	
[Stage Direction]
Favoured-	British	Most-Nation	General	Preferential	Favoured-Nation	GeneralTariff	Tariff	Tariff	Tariff	TariffFree	Free	Free
10 p.c.
Free 22J p.c.
Free 35 p.c.
[Stage Direction]

►1
o
o
s
0 2
Free
30 p.c.
Free 10 p.c. 20 p.c.
Free 221 P-e-20 p.c.
30 p.c. 35 p.c. 30 p.c.
The Budget-Customs Tariff
26207-1-173
440m
440n
611a
Aircraft, not including engines, under such regulations as the Minister may prescribe:
1. When of types or sizes not made in Canada	
On and after July 1, 1963
Aircraft engines, when imported for use in the equipment of aircraft:
1. When of types or sizes not made in Canada	
On and after July 1, 1963
(4) Conductive shoes for use in hospitals	
On and after July 1, 1963
(1) Philosophical and scientific apparatus (and ancillary equipment thereto), utensils, instruments, and preparations, including boxes and bottles containing the same; maps, charts, photographic reproductions and other pictorial illustrations; video tape recordings; stencils and cards, specially designed for the preparation of library index cards; casts as models; animals as research or experimental subjects; living plants, seeds, cuttings, buds, scions, tubers, bulbs and root-stock; mechanical equipment of a class or kind not made in Canada; parts of the foregoing. All articles in this item, when for the use and by order of any society or institution incorporated or established solely for religious, philosophical, educational, scientific or literary purposes, or for the encouragement of the fine arts, or for the use and by order of any public hospital, college, academy, school, or seminary of learning in Canada, and not for sale or for rental, under such regulations as the Minister may prescribe	
Free
Free
Free
Free
Free 20 p.c.
Free
Free	27J p.e.	Free	Free	271 P-c.15 p.c.	271P-C-	Free	15 P-c.	271 P-c.
(On and after July 1, 1962)
Free 15 p.c.	271 p.c. 271 P-c.	Free Free	Free 15 p.c. (On and after July 1,	1962)	271 P-c. 271 P-c.Free 271 P-c.	40 p.c. 40 p.c.	Free 20 p.c.	Free 27J p.c. (On and after July 1,	1962)	40 p.c. 40 p.c.
>
*0
tfl
1-I
r1
Free	Free
Free	Free
15 p.c.	20 p.c.
15 p.c.	221 P-c.
10 p.c.	221 p.c.
Free 30 p.c. 25 p.c. 35 p.c.
to -o ►-*
The Budget-Customs Tariff
[Stage Direction]
The Budget-Customs Tariff 2. Resolved, that any enactment founded upon the foregoing resolution shall be deemed to have come into force on the eleventh day of April, 1962, and to have applied to all goods mentioned in the said resolution imported or taken out of warehouse for consumption on or after that day, and to have applied to goods previously imported for which no entry for consumption was made before that day.
[See also budget papers pages 2721 to 2834]
Lester Bowles Pearson: Mr. Speaker, I should like to begin by congratulating the minister on the speed of his delivery and the eloquence of his peroration. I doubt very much whether I shall be able to congratulate him on anything else which occurred in his budget speech this evening.
There was, of course, one feature of this speech which is altogether unprecedented. The minister circulated a copy of his speech to me as I came into the house and no doubt he has done this earlier in the case of members of the press gallery. He omitted a great deal of his speech which, presumably, will now appear in public but which has not been given to the House of Commons.
At a Young Conservative convention last Saturday night a song was dedicated to the minister with the title "Brother, Can You Spare a Dime". The minister has indicated tonight, by the figures that he has put on record, that dimes are going to be scarce to be spared in Canada, because he has told us-he told us yesterday

that the deficit for the previous year is $790 millions, which is $150 millions more than he estimated nine months ago. He told us this evening that the deficit for the current year, on the basis of a 7 per cent increase in the gross national product, on that exaggerated basis, will be $745 millions.
This is the sixth of the hon. gentleman's budgets. It is the sixth deficit. With the one he has given us tonight-and it will probably be higher than is estimated-the total budgetary deficits during the minister's regime now amount to about three billion dollars.


Some hon. Members:: Shame.


Lester Bowles Pearson: Perhaps, as it is on the eve of an election, this particular budget might be described as "Vote now, pay later".
The minister began his statement tonight by reading the objective of his financial policy and that of his government over these five years of unrelieved deficits. He quoted that objective as follows:
The abiding goal of our fiscal policy is the maintenance of a sustainable rate of growth in terms of employment, development of resources, and a sound dollar.


The minister's own statement and the record of the policies of this government show that that goal has not been achieved as we come to the end of this parliament. The record shows that the volume of production per person in this country is now lower than it was in 1956, that unemployment since that year has increased, averaging 7.2 per cent in 1961 higher than any year between 1945 and 1957. The record shows that the volume of investment declined by 13 per cent since 1957. So far as the dollar is concerned, the minister has spent from the exchange fund in the first three months of this year about $350 million, not for the purpose for which he said it would be used some months ago, that of getting the dollar down, but for the purpose of keeping the dollar from going down too far. So if this is the goal the minister set out at the beginning of his speech, it has not been achieved in any single respect he mentioned this evening.
Of course, with all these deficits, the minister has included in his budget speech some proposals which presumably are designed to stimulate the economy. They involve the expenditure of money. It was interesting to note, as the minister put these on the record, that some of these proposals we urged on the government three and four years ago. If some of these things had been done, and done more effectively at that time, we would not be confronted today with a deficit of $745 million and at the same time massive and chronic unemployment.
The individual benefits about which the minister speaks amount to $40 million, according to his figures. There are 18 million people in this country and if you divide 18 million into $40 million-and I hope my arithmetic is correct-you get $2.22 per person. "222" is the name of a well known headache tablet. The taxpayer of this country is going to need a headache tablet when he is confronted this year with another deficit of $745 million. Because deficits are debts and debts are charges on the future, and the men, women and children of the future will have to pay this $3 billion of budgetary deficits.
The minister made great play with his accurate estimates of this and that tonight in his budget speech; but the minister must know, I am sure he does know, that in every year since he has been Minister of Finance he has forecast a gross national product increase for that year which has been wrong. And he has always been wrong in the one direction. He has always estimated a growth that did not occur. He now estimates a 7 per cent growth for next year. It is not likely

to occur on the basis of his own record as a prophet and if it does not occur there will be a much higher deficit than $745 million. And remember, Mr. Speaker, we are facing these deficits and difficulties at a time when the minister says we are in the midst of a period of prosperity and expansion. The Prime Minister keeps talking about being in a period of prosperity and expansion.
Last year in his budget speech when the minister was dealing with this prosperity and expansion he gave us a very optimistic report on the economic prospects for 1962. The minister as reported at page 6642 of Hansard of June 20, 1961 had this to say:
When employment and incomes have reached satisfactorily high levels and the rate of economic growth is strong, a sound budget and tax structure should generate sufficient revenues not only to cover current expenditures but also to provide funds for the orderly retirement of debt-
The minister has now denied his own words of nine months ago. He said at that time that in the situation he claims we face in this country today we should have not only a balanced budget but should be putting aside money to pay off the national debt. That is the kind of thing we used to do in our day, when we were in periods of expansion. Not only did we balance the budget but we paid off $2 billion of the national debt.
As reported at page 6665 of Hansard of June 20, 1961 the minister also said:
On the basis of the present situation-
That is the situation we are now in.
-and anticipated trends-
Those are the trends the minister anticipated:
-it is not unreasonable to expect that the current flows of revenue and expenditures will be approaching a balance by the end of 1962.
10, 1962	2719
Business of the House
Now he tells us that by March 31, 1963 on the basis of the highest increase in gross national production since they took office, of 7 per cent, we will have not a balanced budget but another deficit of $745 million.
This is the minister's budget. This is the way the minister manages the financial affairs of this country. The minister condemns himself by his own words and the country will soon condemn his government by their votes.
On motion of Mr. Pearson the debate was adjourned.



BUSINESS OF THE HOUSE

Lionel Chevrier: Mr. Speaker, may I inquire of the house leader what the business of the house will be tomorrow? I hope the house leader will be able to indicate the business for Thursday and Friday as well.


Mr. Churchill:: Mr. Speaker, tomorrow the first item will be Bill No. C-80, an act to amend the Veterans' Land Act; the second item will be Bill No. S-19, an act to amend the Canada Grain Act; the third item will be Bill No. C-79, an act to amend the Customs Act.


Mr. Hellyer:: What about the supplementary
estimates?


Mr. Tardif:: What about the budget?


Lionel Chevrier: Can the house leader give any indication of the business for the following day?


Gordon Minto Churchill: If the opposition will tell me that they will pass these three bills tomorrow I shall then be very glad to announce further business for the week.


[Stage Direction]
At ten o'clock the house adjourned without question put, pursuant to standing order.
26207-1-173i
[Stage Direction]


mm
[Stage Direction]

The Budget-Appendix
BUDGET PAPERS [I
presented
the Honourable Donald M. Fleming, M.P., for the information of Parliament in connection with the Budget of 1962-1963
/t'
[Stage Direction]
The Budget-Appendix

[Stage Direction]
The purpose of these Papers is twofold:
1.	to present a general economic review of 1961, bringing together in one place and in convenient form some of the more comprehensive indicators of economic conditions prepared by the Dominion Bureau of Statistics, the Bank of Canada and other Government Agencies, together with brief comments;
2.	to present a preliminary review of the Government Accounts for the fiscal year ending March 31, 1962.

The Budget-Appendix

[Stage Direction]
Page
1.	General	 2724
2.	National Accounts-
National Income and Product	 2726
National Expenditure	 2730
Personal Income and Its Disposition	 2734
Source and Disposition of Saving	 2736
Investment and Capital Expenditure	 2738
Revenue and Expenditure of all Governments	 2741
3.	Employment and Earnings	
27454.	Price Trends	
27485.	Balance of International Payments	
27516.	Financial Developments-Credit Conditions	
2758Federal Debt Management	
2761Federal Government Financing	
2762Provincial and Municipal Financing	
2763Non-Farm Business Financing	
2763Housing Finance	
2763Consumer Credit	
2764
The tables in this Budget Paper are based upon estimates provided by the Dominion Bureau of Statistics, the Bank of Canada and other Government Agencies. Some of the figures appear for the first time; others have been published elsewhere. All 1961 estimates are preliminary and subject to revision.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
1961 was a year of expansion in the Canadian economy. In the midst of a wide variety of economic forces which influenced Canadian developments, some of which will continue to be of importance in the years ahead, the economy responded to policies undertaken during 1961. Then too, the external environment, one of the more basic elements determining Canada's economic well-being, was, on the whole, favourable to the course of expansion.
In the 1960 Budget Papers reference was made to the unusual conjuncture of economic forces, special, cyclical and longer term that were having adverse effects on the Canadian economy. This condition lasted into the early months of 1961, and by March 1961 the index of industrial production was 4 per cent below the peak level reached at the beginning of 1960. Unemployment was high, being close to 8 per cent of the labour force, after allowing for normal seasonal movements. The deficit on international current account was running at an annual rate of $1.2 billion, or the equivalent of about 3| per cent of the Gross National Product. This represented, in effect, the net importation of resources from abroad which, given the extent of unused capacity in Canada at that time, was at a level clearly inappropriate to Canada's economic circumstances. These relatively unfavourable conditions do not, of course, tell the entire story: employment and incomes had continued to rise throughout 1960 and prices had risen scarcely at all.
It was against this very briefly sketched background that Canada entered the spring months of 1961. At that time economic conditions in the United States began to improve and, as the earlier American deterioration there had imparted a downward influence on Canada's economic activity, so did the subsequent business upswing impart a more favourable influence. At the same time the expansion of exports to other countries was reinforced by some additional large grain sales, helping to improve Canada's external position.
The wide range of economic and financial policies followed by the federal government in 1960 and 1961 was designed to facilitate the flow of Canadian savings to Canadian borrowers and reduce excessive capital inflows from abroad. In the event, these policies resulted in a reduction of upward pressures on Canada's exchange rate and reduced the deficit on international current account. At the same time, the size of the budget deficit was increased to enlarge the flow of purchasing power to the general public, in a period when there was a considerable amount of unused economic capacity.
From March to December 1961, (the month of the latest available data) the index of industrial production rose by 9.1 per cent, bringing it to a level 4.7 per cent above the previous cyclical peak of January 1960. The most comprehensive measurement of economic activity, the Gross National Product, increased from its first quarter low to the fourth quarter by $2.4 billion, or by 7 per cent, and at year end was about 3 per cent above the average of 1961 as a whole. Employment responded to the improved pace of economic activity and rose at a more rapid rate than in 1960 and the rate of unemployment began to fall. By August 1961, the numbers of unemployed were below those experienced one year earlier and, by year end, the rate of unemployment (after allowance for normal seasonal movements) had fallen from the cyclical peak of 7.8 per cent at the beginning of the year to 6.1 per cent of the labour force.
26207-1-174

[Stage Direction]
NATIONAL INCOME AND GROSS NATIONAL PRODUCT (Seasonally Adjusted at Annual Rates)
1.	Wages, salaries, and supplementary labour income	
2.	Military pay and allowances	i	
3.	Corporation profits before taxes and before dividends paid to non-residents
4.	Deduct: Dividends paid to non-residents*11	
5.	Rent, interest, and miscellaneous investment income	
6.	Accrued net income of farm operators from farm production O'	
7.	Net income of non-farm unincorporated business	
8.	Inventory valuation adjustment*11	
9. National Income (1+2+3+4+5+6+7+8).
10.	Indirect taxes less subsidies	
11.	Capital consumption allowances and miscellaneous valuation adjustments.
12.	Residual error of estimate	
13.	Gross National Product at Market Prices (9+10+11-1-12)	
14.	(Gross National Product at Market Prices excluding Accrued Net Income of
Farm Operators)	
1960				Preliminary 1961			
IQ	2Q	3Q	4Q	IQ	2Q	3Q	4Q
			(Millions of dollars)				
17,992	18,044	18,172	18,268	18,412	18,736	19,060	19,328500	500	504	532	540	544	544	5723,516	3,244	3,176	3,172	2,956	3,364	3,588	3,844-484	-488	-488	-420	-748	-544	-548	-5122,356	2,396	2,372	2,436	2,480	2,468	2,616	2,552+ 248	1,136	1,140	1,252	864	932	1,016	9362,176	2,196	2,136	2,252	2,092	2,224	2,372	2,308-136	-104	- 64	84	48	- 64	-124	-20427,168	26,924	26,948	27,576	26,644	27,660	28,524	28,8244,45G	4,480	4,392	4,456	4,556	4,584	4,540	4,8924,320	4,320	4,284	4,248	4,312	4,284	4,388	4,41244	-104	96	104	48	- 40	-56	-19635,988	35,620	35,720	36,384	35,560	36,488	37,396	37,932(34,740)	(34,484)	(34,580)	(35,132)	(34,696)	(35,556)	(36,380)	(36,996)
>
a
<0 Includes withholding tax applicable to this item. Since the withholding tax is also part of National Product it is included again in Rent, interest and miscel-laneous income. Also includes some net profits of non-Canadian non-financial corporations.
<*) Includes accrued earnings arising out of the operations of the Canadian Wheat Board.
<[DOT]>
See footnote 2, Table 3.
to
to
Cn
The Budget-Appendix
[Stage Direction]
The Budget-Appendix
On the financial side, interest rates declined generally after mid-year, and the spread between Canadian and United States interest rates narrowed appreciably. Liquidity increased in the economy and a larger share of total borrowing was financed in Canada. This was reflected in the decline in the capital inflow from abroad and the reduction of the external price of the Canadian dollar. The international current account deficit was accordingly reduced in 1961.
The economic expansion of 1961 was achieved without disturbance to the relative stability of prices. A variety of price indexes, including the consumer price index and the price index applicable to Gross National Product, averaged less than 1 per cent higher in 1961 than in 1960. These and other developments are discussed more fully below.
THE NATIONAL ACCOUNTS National Income and Product
As indicated above, the Gross National Product rose substantially throughout the last nine months of 1961. By contrast, the movement within 1960 had been irregular, falling from the first to the second quarter, then increasing to the fourth quarter before declining again at the beginning of 1961. The irregularity of the movement of G.N.P. throughout 1960 and into the first quarter of 1961 makes less meaningful a comparison of the annual averages of these two years; indeed such a comparison masks the significant strengthening in economic activity which took place throughout 1961. Further, the measurement of Gross hvational Product includes the value of farm production and the annual figures for 1961 reflect the sharp decline in farm inventories which resulted from the drought in western Canada as well as enlarged grain exports. The 1961 grain crop turned out to be only about three-fifths of its average value in recent years, and the increase in G.N.P. was correspondingly reduced by about $400 million, or about 1 per cent. (It should be noted, however, that farm cash income was maintained at peak levels, with sales made possible out of previously accumulated stocks.) The net result of all these factors was that

[Stage Direction]
The Budget-Appendix
G.N.P. in 1961 rose to about $36.8 billion, 2.5 per cent above the average of
1960.	With prices relatively stable, about four-fifths of this increase in yearly averages represented a gain in real volume.
As was previously pointed out, the G.N.P. seasonally adjusted in the fourth quarter of 1961 was already about 3 per cent above the average of the year as a whole and 7 per cent above the first quarter of 1961. This compares favourably with the increases during the early phases of previous upswings.
The following table and accompanying chart illustrate this point. They show changes in the value and volume of non-farm output during the downswing and early phases of the upswing in 1953-54, 1957-58 and 1960-61. The purpose of making comparisons with the low point of activity is, of course, to show the relative strength of the upturn. However, this type of comparison has only a limited meaning by itself, since an upturn is more likely to be strong after a steep than after a mild decline. For this reason, it is useful also to compare the current level of activity with that prevailing before the declines took place, i.e. at the previous peak, in terms of both the value and the physical volume of output at these points. This shows that the recent gain (late 1961) in real terms was larger than the expansion in the immediately preceding upturn (1958) in which the value increase contained substantial elements of price.
Output of the services-producing industries of the economy rose during
1961,	reflecting a continuation of the almost uninterrupted longer run movement, and reached new peaks, both in total and for each major service industry. For the year as a whole, output in services averaged about 3 per cent above the level of 1960.
The goods-producing sector of the economy produced a less even picture, as might be expected. This is typical of the goods sector, which is more subject to varying demands, including shifts in inventories and in fixed investment within the country, and changes in foreign demand for goods including, again, shifts in inventories and fixed investment in foreign markets. The greater volatility of output in this sector, relative to services, is associated with wider swings in employment, particularly of males, who predominate in goods-producing industries.

[Stage Direction]
1960-1961 WITH PRECEDING PEAK OF ACTIVITY = IOO)
120
110
100

[Stage Direction]
26207-1-1741
[Stage Direction]
The Budget-Appendix

[Stage Direction]
Date	Value of Non-farm Output(1) (Preceding Peak = 100)	% Change 3 quarters after trough	% Change Preceding Peak to 3 quarters after trough	Volume of Non-farm Output(1) (Preceding Peak = 100)	% Change 3 quarters after trough	% Change Preceding Peak to 3 quarters after troughIQ 1960	100.0	100.0	IQ 1961	100.5	99.4	4Q 1961	106.6	+6.0	+6.6	104.0	+4.6	+4.0IQ 1957	100.0	100.0	IQ 1958	100.2	98.4	4Q 1958	104.9	+4.7	+4.9	101.7	+3.4	+1.72Q 1953	100.0	100.0	2Q 1954	101.3	99.0	IQ 1955	107.0	+5.6	+7.0	105.1	+6.2	+5.1
W The data in this table and in the accompanying chart exclude farm output and interest and dividend payments to and from abroad, and thus differ somewhat from the measurement of gross national product. The value of farm production has been deducted since, for statistical reasons, the seasonally adjusted value of the grain crop for the calendar year is allocated evenly throughout the four calendar quarters, complicating comparisons between quarters of different years. The interest and dividend adjustment has been made to the value figures in order to make them comparable to the volume figures, which measure output on a gross domestic basis, i.e. of goods and services physically produced in Canada. It should also be noted that price comparisons cannot be derived with precision from the value and volume indexes in this table. For purposes of price comparison, the deflators of Gross National Expenditure are more accurate.
Data prepared in Department of Finance.
In 1961 the volume of total agricultural output declined because of drought conditions in western Canada, the drop in grain output more than offsetting increases in the remainder of the agricultural sector. Apart from agriculture, output in the rest of the goods sector showed a yearly average gain. Manufacturing output, which had declined during 1960, rose throughout 1961 and at December was somewhat above the previous peak level of January 1960. This reflected, in the main, movements in durable goods production, since output of non-durable goods had been relatively flat in 1960 and rose significantly in 1961. Developments in durable manufacturing were more volatile. From January 1960 to January 1961, output in durable manufacturing declined by 11 per cent, then increased and by December 1961, was almost back to the level of January 1960.
Mining output reached new peaks in 1961, rising sharply in the course of the year. There were gains in some metals including nickel and copper, but the larger increases came from the output of non-metals and fuels, especially asbestos, natural gas and petroleum, the latter groups enjoying larger markets both at home and abroad.
The output and distribution of electric power and gas utilities continued its steady rise and increased by 7 per cent over 1960.
In the construction industry, there was an increase of about 3 per cent in the yearly average due to the increase in the non-residential component. During the year as a whole forestry output declined but fishing and trapping showed increases.
Considering developments in the labour force in 1961, which will be discussed more fully in a later section, four main points stand out: the recent sharp increases in the labour force slackened; there were significant increases in employment; employment of males rose substantially for the first time in about two years; and the level of unemployment declined in the course of the year. By December 1961, the labour force was 1 per cent, or 65,000 higher than a year

[Stage Direction]
GROSS NATIONAL EXPENDITURE (Seasonally Adjusted at Annual Rates)
	1960				Preliminary 1961			
	IQ	2Q	3Q	4Q	IQ	2Q	3Q	4Q
				(Millions of dollars)				
1. Personal expenditure on consumer goods and services	22,856	23,332	23,376	23,904	23,784	24,124	24,504	24,6002. Government expenditure on goods and services	6,492	6,544	6,804	6,892	6,924	7,140	7,284	7,3843. Business gross fixed capital formation*1)	7,008	6,548	6,564	6,648	6,392	6,260	6,620	6,700new residential construction	1,624	1,372	1,396	1,380	1,344	1,436	1,576	1,476new non-residential construction	2,624	2,524	2,580	2,580	2,616	2,560	2,652	2,760new machinery and equipment	2,760	2,652	2,588	2,688	2,432	2,264	2,392	2,4644. Value of physical change in inventories-total<'>	780	484	-92	264	-332	-212	-316	-92non-farm business inventories	692	380	-132	156	60	168	104	504farm inventories and grain in commercial channels	88	104	40	108	-392	-380	-420	-5965. Exports of goods and services**)	7,244	6,748	7,204	6,892	7,184	7,316	7,856	7,9566. Imports of goods and services**)	-8,348	-8,144	-8,036	-8,112	-8,344	-8,184	-8,608	-8,8127. Residual error of estimate	-44	108	-100	-104	-48	44	56	1968. Gross National Expenditure at Market Prices (1+2+3+4+5+64-7)	35,988	35,620	35,720	36,384	35,560	36,488	37,396	37,932
<*)Includes private businesses and institutions, and publicly owned Business Enterprises.
<*>The book value of inventories is deflated to remove the effect of price changes and the derived "physical" change is then valued at average prices of the current period to obtain the value of physical change. The difference between this value of physical change and the change in book value is called the inventory valuation adjustment (see line 7, Table 1).
<*>Minor adjustments have been made to the figures of current receipts and payments shown in Table 31 to achieve consistency with the other component series.
co
The Budget-Appendix
[Stage Direction]
The Budget-Appendix earlier, and total employment was up 3 per cent, or 180,000, of which 125,000 were males and 55,000 females. Unemployment declined by 115,000 persons from December 1960 to December 1961.
Turning to the flow of incomes in 1961, the major components showed increases from the first quarter of the year. By the fourth quarter, national income was running at an annual rate of $28.8 billion, compared with $26.6 billion in the first quarter of the year and $27.2 billion in the first quarter of 1960.
The sharpest gain within 1961 took place in corporation profits, which had, however, shown the sharpest decline during 1960 and early 1961. During 1961 corporation profits increased from the first to the fourth quarter by 30 per cent. This brought profits to a new peak rate of about $3.8 billion in the fourth quarter, surpassing the previous peak of the fourth quarter of 1959 by about 4 per cent. The increase in profits during 1961 reflected the sharp pickup in production and the relative steadiness of Costs.
Labour income rose by 5 per cent from the first to the fourth quarter of the year. During the same period the number of paid workers and average hourly earnings rose significantly while there was also a modest rise in the length of the average work week. The rise in personal disposable income paralleled that of labour income. Taking into account the stability in consumer prices and the estimated rise in population, there was a significant gain in per capita real disposable income from the beginning to the end of 1961.
Rent, interest and miscellaneous investment income increased about 6 per cent from 1960 to 1961. The level of farm income in 1961 was reduced from 1960 due to the drought and subsequent decline in grain production in western Canada. Cash income was maintained at record levels, however, due to increasing export and domestic sales of grains and other farm commodities, requirements of grain being met out of previously held stocks.
Net income of "other unincorporated business" rose somewhat in 1961.
National Expenditure
Between the beginning and end of 1961 all of the components of demand on a seasonally adjusted basis increased thus providing the support for the upward movement in the economy. Over the period as a whole, gains in consumer spending and exports were the largest elements in the rise, with increases in government

[Stage Direction]
CHANGES IN COMPONENTS OF GROSS NATIONAL EXPENDITURE (Millions of dollars)
First Quarter 1961 to Fourth Quarter 1961
Consumers	
Government	
Business Investment
Housing	
Plant and Equipment Exports	
+816
+460
+132
+176
+772
Sub-total	
Non-farm business inventories	
Farm inventories and grain in commercial channels
Total Purchases	
+t,sse
+444
+2,596
Imports	
Residual Error,
-(+468)
+244
Gross National Expenditure	
[Stage Direction]
+2,372

[Stage Direction]
GROSS NATIONAL EXPENDITURE IN CONSTANT (1957) DOLLARS (Seasonally Adjusted at Annual Rates)
	1960				Preliminary 1961			
	IQ	2Q	3Q	4Q	IQ	2Q	3Q	1 4Q
				(Millions of dollars)				
1. Personal expenditure on consumer goods and services	21,856	22,200	22,220	22,572	22,476	22,776	23,068	23,1162. Government expenditure on goods and services	6,148	6,128	6,336	6,416	6,392	6,608	6,720	6,7123. Business gross fixed capital formation	6,564	6,096	6,088	6,176	5,904	5,780	6,108	6,168new residential construction	1,500	1,260	1,276	1,256	1,220	1,312	1,440	1,344new non-residential construction	2,448	2,360	2,396	2,412	2,424	2,376	2,476	2.564new machinery and equipment	2,616	2,476	2,416	2,508	2,260	2,092	2,192	2,2604. Value of physical change in inventories-total	744	464	-116	240	-364	-248	-340	-96non-farm business inventories	668	372	-132	152	64	176	112	484farm inventories and grain in commercial channels	76	92	16	88	-428	-424	-452	-5805. Exports of goods and services	7,140	6,592	7,056	6,748	7,036	7,148	7,564	7,6246. Imports of goods and services	-8,276	-7,944	-7,796	-7,892	-8,068	-7,884	-8,080	-8,236-40	100	-96	-96	-44	40	52	184
8. Gross National Expenditure in Constant (1957) Dollars (1+2+3+4+								
5+6+7)		34,136	33,636	33,692	34,164	33,332	34,229	35,092	35,472
The Budget-Appendix
[Stage Direction]
The Budget-Appendix spending on goods and services being next in magnitude. Business investment in fixed plant and equipment and in non-farm inventories also increased significantly from the first to the fourth quarter. In total, demand, both domestic and foreign, rose by about $2.6 billion over the period, and was met by increases in domestic production of $2.1 billion and additional imports totalling $0.5 billion.
As between the first quarter of 1960 (the preceding peak) and the fourth quarter of 1961, the change in the composition in total demand was substantially different from that which took place from the beginning to the end of 1961. Between the first quarter of 1960 and the fourth quarter of 1961, farm inventories and grain in commercial channels declined by about $700 million, reflecting both the lower grain crop in 1961 and higher export sales. At the same time the accumulation of non-farm business inventories was smaller by $188 million, reflecting the reaction to the post-U.S. steel strike inventory accumulation in early 1960. Total business fixed investment was also at a lower level in the fourth quarter of 1961. Offsetting these influences were larger increases in consumer and government spending, the two sectors rising in total by $2.6 billion over the seven quarters.
During 1961 consumer spending increased steadily from the first to the fourth quarter. Increases in government spending on goods and services were fairly steady throughout the year. Housing outlays were higher in the second half of the year as were outlays on business plant and equipment. Exports rose very sharply in the third quarter and more than maintained the rate in the last quarter of the year. Liquidation of farm inventories was very heavy throughout the year, reflecting large grain sales and a much reduced crop. The accumulation of non-farm business inventories was small during the first three quarters of the year, but moved up significantly in the last quarter. In contrast with previous upswings, inventories have so far played a more modest role in the expansion of demand reflecting different fundamental conditions including ample supply and steady prices.
Turning to expenditure items in more detail, consumer spending rose throughout 1961 after having shown a fractional decline in the first quarter of the year. In the last three quarters of 1961 consumer spending increased by about 3? per cent and by the end of 1961 was 8 per cent above the rate in the previous peak in general business activity in the first quarter of 1960. Prices of consumer goods and services changed very little in the course of 1961, so that the value increases in spending represented gains in real terms.
Purchases of durable goods seasonally adjusted rose by more than 14 per cent within 1961. The gains were concentrated in purchases of new cars which after declining in the first quarter of the year reached a level in the fourth quarter about 10 per cent above the level of a year earlier. Prices of durable goods, particularly automobiles, declined in 1961, compared with 1960, so that the increases in real terms were even greater than the gains in value terms.
Consumer spending on non-durable goods rose steadily until the fourth quarter of the year when it declined slightly but was still more than one per cent above the level of the first quarter. Consumer spending on services continued its long term rise throughout 1961, increasing from the first to the fourth quarter by about 3 per cent, of which nearly 2 per cent represented increases in real terms. The main part of the value increase was accounted for by spending on medical services and on rents (paid or imputed on owner-occupied dwellings).
Government spending on goods and services rose from the first to the fourth quarter by 7 per cent. More than one-half of the increase in this period took place at the provincial and municipal levels. For the year as a whole, government spending on goods and services rose by $500 million, of which about $45 million reflected increased capital outlays.

The Budget-Appendix
Business fixed capital formation rose in the second half of 1961, after declining in the earlier part of the year and by the fourth quarter of 1961 had surpassed the level achieved one year earlier. Movements were diverse throughout the year. During the first quarter of the year housing starts were at a very high rate carrying forward the upward movement begun in the last quarter of 1960. This increase in starts was not reflected in housing completions until the third quarter of the year. Starts declined from the very high rate in the first quarter, and then increased irregularly until the closing months of the year. For 1961 as a whole starts totalled about 125,000 units, some 15 per cent above the previous year, while completions were 116,000 units, 7 per cent below 1960. In November 1961 the N.H.A. maximum interest rate was lowered from 6f per cent to 6J per cent.
Business investment in new plant and equipment is described more fully in the section on Investment and Capital Expenditure. In broad terms, outlays for both plant and equipment were somewhat below the levels of 1960, although within 1961 itself there was a firm upward trend during the second half of the year. For the first time in seven years there was a relative stability in costs of non-residential construction.
During 1961 there was a net liquidation of inventories in Canada. This liquidation was more than accounted for by a reduction in grain inventories which arose from a combination of increased marketings (notably exports) of grains and a much reduced grain crop in western Canada. On the other hand, there were some increased livestock inventories on farms. As against the net depletion of farm stocks there was an increase in holdings of non-farm business inventories of $209 million, with the largest increase taking place in the fourth quarter of 1961.

[Stage Direction]
1961 quarterly at annual rates				1961 Annual
	IQ	2Q	3Q	4Q	
		(Millions of dollars)			
Manufacturing	- 24	- 60	- 84	252	21Wholesale Trade	68	16	- 4	176	64Retail Trade	- 64	20	204	224	96Other	80	192	- 12	-148	28Non-farm Business Inventories	60	168	104	504	209Farm Inventories and Grain in Commercial	Channels	-392	-380	-420	-596	-447Total Inventory Change	-332	-212	-316	- 92	-238
During 1961, manufacturers, especially of durable goods, continued to draw down stocks well after the pickup in general business activity, and it was not until the fourth quarter that significant accumulation of inventories took place in that sector. Other non-farm business sectors tended to accumulate inventories hesitantly and erratically in the course of the year. Over the year as a whole the buildup was small in relation to previous upswings and in the manufacturing sector the rate of increase in stocks was less than in shipments, so that at year end the ratio of stocks to sales was somewhat below that of the previous year.
[Stage Direction]
The Budget-Appendix
Some indication of the modest increase in inventories may be given by measuring the "swing" in non-farm business inventories for the three quarters from the low point in general business activity for 1961 and 1958.
(1) Trough in Business activity	(2) Change in Non-Farm Business Inventories during quarter	(3) Change in Non-Farm Business Inventories three quarters after trough	(4) "Swing" Col. (3) Minus Col. (2)IQ 1961	(Millions 60 -688	of dollars) 504 72	+444 +760IQ 1958	
The moderate nature so far of the inventory upswing reflects, as has been previously noted, conditions of more ample supply and rapid delivery as well as more cost consciousness and a decline in the fear of the possibility of inflation. The lower rate of inventory accumulation in this upswing compared with the last may have had some bearing on the demand for financial resources and the lesser increase in interest rates as compared with the preceding upswing in 1958.
Exports of goods and services rose in 1961 more rapidly than imports, so that the deficit on current account narrowed, compared with 1960. The increase in exports was generally maintained throughout the year and was concentrated in commodity exports which rose to a new peak. There were, in addition, other significant developments which are discussed more fully in a subsequent section. For the first time since 1954, there was a surplus on merchandise trade account (adjusted to conform with balance of payments definitions).
Personal Income and Its Disposition
Personal income fell slightly from the fourth quarter of 1960 to the first quarter of 1961, but subsequently rose to $28.8 billion in the fourth quarter of 1961, a 5.6 per cent increase over the first quarter.

[Stage Direction]
1.	Wages, salaries and supplementary labour income Deduct: Employer and employee contributions t(
social insurance and government pension funds
2.	Military pay and allowances	
production^1)	
4.	Net income of non-farm unincorporated business..
5.	Interest, dividends and net rental income of per
sons<2>
6.	Transfer payments to persons-
(a) from government (excluding interest)...
rations	
7. Personal Income (l+2+3+4-f5+6).
1958	1959	1960	Prelim. 1961
	(Millions of dollars)		
. 16,521 D	17,463	18,119	18,884-615	-651	-735	-781491	496	509	5501,201	1,123	1,188	9092,125	2,192	2,190	2,2492,277	2,551	2,742	2,8502,637	2,756	3,121	3,34338	42	44	4524,675	25,972	27,178	28,049
(J) Excludes undistributed profits of the Wheat Board and an inventory valuation adjustment on a calendar year basis for grain held by the Wheat Board.
(2) Includes all government debt interest paid to persons.

The Budget-Appendix
Among the components of personal income, wages, salaries, and supplementary labour income rose throughout the year; farm income itself, while lower for the year as a whole due to the smaller grain crop, was higher in the latter half of 1961. Income of unincorporated businesses rose during the second half of the year due to improvements in trade and construction. Interest and dividend payments to persons, along with net rental incomes, rose 5 per cent during the year. The increase throughout 1961 in transfer payments from Government (excluding interest) was the reflection of a regular growth in family allowances and old age security payments, as well as payments to farmers under the Prairie Farm Assistance Act. These increases were offset to some extent by lower unemployment insurance benefit payments as the numbers of unemployeddeclined during the year.

[Stage Direction]
-	1958	1959	1960	Prelim. 1961
		(Millions of dollars)		
1. Personal direct taxes-				
(a) income taxes	1,554	1,744	1,978	2,126(b) succession duties	126	130	158	146(c) miscellaneous taxes	115	213	221	232Total direct taxes	1,795	2,087	2,357	2,5042. Personal expenditure on consumer goods and services- Goods-	(a) non-durable	10,878	11,303	11,699	12,139(b) durable	2,499	2,678	2,667	2,694Services	7,868	8,514	9,001	9,420Total consumer expenditure	21,245	22,495	23,367	24,2533. Personal saving-	(a) personal saving excluding farm inventories...	1,727	1,466	1,439	1,606(b) change in farm inventories	-92	-76	15	-314Total personal saving	1,635	1,390	1,454	1,2924. Personal Income (1+2+3)	24,675	25,972	27,178	28,049
Personal disposable income followed somewhat the same pattern as personal income and increased by about 3 per cent over 1960. Personal direct taxes (including, in addition to personal income taxes, succession duties, motor vehicle licence fees, hospital insurance premiums, etc.) rose from the first to the third quarter but moderated during the rest of the year. Total payments increased by 6.2 per cent over 1960 to a total of $2,504 million. Personal income tax payments rose by 8.7 per cent from the first to the fourth quarter of 1961.
[Stage Direction]
The Budget-Appendix
The trend of personal saving, i.e., personal disposable income less personal spending, was generally upward during the year.

[Stage Direction]
1956	1957	1958	1959	1960	1961Personal saving as per cent of personal disposable income	6.5	5.7	7.1	5.8	5.9	5.1Personal saving, excluding change in farm inventories as per cent of personal disposable income	5.4	6.2	7.5	6.1	5.8	6.3(1) Personal disposable income	20,153	21,274	(Millions 22,880	of dollars) 23,885	24,821	25,545(2) Personal saving	1,320	1,202	1,635	1,390	1,454	1,292(3) Change in farm inventories	+241	-125	- 92	- 76	+ J5	-314(4) Personal saving excluding change in farm inventories	1,079	1,327	1,727	1,466	1,439	1,606

[Stage Direction]
1949	1950	1951	1952	1953	1954	1955	1956	1957	1958	1959	I960	1961

[Stage Direction]
For 1961 as a whole, personal saving amounted to 5.1 per cent of personal disposable income. Excluding change in farm inventories the percentage was 6.3 per cent, slightly higher than in four of the preceding five years.
Source and Disposition of Saving
Total saving declined in the first quarter of 1961 but rose steadily during the remainder of the year. As noted in last year's Budget White Paper and as illustrated in the accompanying chart, total national saving tends to follow closely the movements of general business activity.

The Budget-Appendix

[Stage Direction]
1958	1959	1960	Prelim. 1961
		(Millions of dollars)		
Personal net saving*1*	1,635	1,390	1,454	1,292Business gross saving-total	4,774	5,143	5,092	5,156(a) Undistributed corporation profits<2>	876	989	793	779(b) Capital consumption allowances and mis-	cellaneous valuation adjustments	3,899	4,159	4,293	4,349(c) Adjustment on grain transactions*3*	- 1	- 5	6	28Inventory valuation adjustment	- 35	-130	-55	- 86Government surplus (+) or deficit (-)<*>	-1,007	-520	-648	-893Residual error of estimate*5*	102	- 43	35	-61Total	5,469	5,840	5,878	5,408
«>
See Table 7.
See Table 12.
**>
Accrued earnings arising out of operations of the Canadian Wheat Board.
<*>
See Table 16.
<*>
See Tables 1 and 3.
Despite the increase during the year, total saving for 1961 as a whole was below the average for 1960 as a whole. Most of this decline was due to the smaller grain crop which had the effect of reducing both personal saving (by lowering farm net income) and inventories. Apart from this, business saving rebounded from the first quarter decline as profits rose sharply in the remainder of the year. After payment of dividends, undistributed corporation profits by the fourth quarter of 1961 reached the highest level in three years. The total of capital consumption allowances rose slightly in 1961. The combination of rising capital consumption allowances and the increase in undistributed profits raised the rate of gross business saving in the fourth quarter of 1961 to a new dollar peak. The significance of this along with the rates of business investment in fixed capital and inventories is analyzed in the section on financial developments.

[Stage Direction]
1958	1959	1960	Prelim. 1961
		(Millions of dollars)		
Business gross fixed capital formation	6,975	6,894	6,692	6,493Value of physical change in inventories	-322	350	359	-238Surplus (+) or deficit (-) on current account with	non-residents*1*	-1,083	-1,448	-1,138	-909Residual error*2*	-101	44	- 35	62Total	5,469	5,840	5,878	5,408
<* Minor adjustments have been made to the figures appearing in Table 31. <*>
See Tables 1 and 3.
The deficit on combined government account (national accounts basis) for 1961 as a whole was $245 million higher than in 1960, but the quarterly series suggest that the level of the deficit remained relatively unchanged from the
[Stage Direction]
The Budget-Appendix third quarter of 1960 through to the second quarter of 1961, and then declined. The government deficit at the federal level rose for the year as a whole from $251 million to $446 million, while the provincial and municipal deficits combined rose from $397 million to $447 million. The deficit, on a national accounts basis, at the federal and provincial and municipal levels was somewhat reduced in the second half of 1961.

[Stage Direction]
1958	1959	1960	Prelim. 1961
		(Millions of dollars)		
Corporation profits before taxes including dividends				
paid to non-residents(1>	3,075	3,498	3,277	3,438Deduct: Corporation income tax liabilities	1,315	1,5S0	1,562	1,610Excess of tax liabilities over collections	- 24	143	-125	36Tax collections	1,339	1,437	1,687	1,574Corporation profits after taxes	1,760	1,918	1,715	1,828Deduct: Dividends paid out<*>	884	929	922	1,049Undistributed corporation profits^	876	989	793	779
(1>
Includes depletion charges and is adjusted for losses, and for conversion to a calendar year basis. (!) Includes charitable contributions made by corporations (See Table 7).
<*) See Table 10.

[Stage Direction]
BILLIONS OF DOLLARS	BILLIONS OF DOLLARS
Investment and Capital Expenditure
Private and public capital expenditure totalled $8,109 million in 1961, about 2% below the level of 1960. The entire decline was accounted for by private investment, which for the full year was below 1960, but which rose in the last half of 1961 and contributed to the upswing in the economy. By the fourth quarter seasonally adjusted business investment was 4% above the level of the first quarter of 1961, which marked the end of the previous downswing in general economic activity.

The Budget-Appendix
In Canada capital expenditures in 1961 constituted 22.0% of Gross National Expenditure, a figure which is high by international comparison but below the levels and proportions of the period of the mid-1950's.
In the first decade after World War II there was an unusual conjuncture of factors which led to very large "bunching" of investments. This phenomenon of "bunching" has been typical of Canadian development, but each period has been marked by different circumstances. At the end of the War there existed a vast accumulation of unsatisfied demand for consumer, social and industrial capital which had been running down ever since the end of the 1920's through the depression and war years. On top of these needs were the obvious requirements of European reconstruction and the related absence of foreign competition, which provided an additional stimulus to investment in Canadian facilities. While these factors were at work a number of other developments were taking place which gave additional emphasis to investments in Canada. For example, world political developments at that time made Canada a safe source of essential raw materials for U.S. defence needs. At the same time the associated boom in world commodity prices, along with large scale stockpiling programmes, led to sharp increases in capital outlays, especially in resource industries. At this time too, there was a general view that demands in the United States for certain industrial materials would soon exceed their domestic supplies. This added an air of urgency to the normal pace of exploration and development of sources of raw materials.

[Stage Direction]
1958	1959	1960	Prelim. 1961Agriculture and fishing	465 33 342 1,095 845 1,308 157 705 514 1,782 1,118	(Millions 539 48 342 1,144 766 1,076 145 833 536 1,752 1,236	ot dollars) 550 54 400 1,178 686 1,086 130 875 573 1,456 1,274	521 49 451 1,024 677 987 132 857 615 1,467 1,329Mining, quarrying and oil wells	Electric power, gas and water works	
Transportation, storage and communications	
Construction industry	
Trade, finance and commercial services	Government departments	
Total Capital Expenditure!1)	
Total Capital Expenditure as a percentage of Gross National Expenditure	
Index of total Capital Expenditure in Constant Dollars	8,364	8,417	8,262	8,16925.4	24.2	23.0	22.0100.0	97.8	94.6	93.0
<0 For reconciliation with Business Gross Fixed Capital Formation in housing, plant and equipment in Table 3, see below.
Prelim.
1958	1959	1960	1961Private and Public Capital Expenditure-Table 13	
Deduct:	8,364	8,417	8,262	8,109Provincial hospitals and schools, and municipal schools	-247	-264	-278	-270Government housing excl. C.M.H.C. rental housing	-19	-18	-13	-9Direct government department outlays	-1,118	-1,236	-1,274	-1,329Other	-5	-5	-5	-8Business Gross Fixed Capital Formation in Housing, Plant and Equipment-Table 3	6,975	6,894	6,692	6,493
The Budget-Appendix
Since investments by modern large-scale enterprise are often made with a very long time horizon, because of the "lumpy" nature of many investments and the financial capabilities of large corporations, it is not surprising that, over short periods of time, some major classes of investment should tend to outstrip demand. In part, this was due to the over-optimism of some investors, at least in the short run. Historically, too, Canada has tended to "grow up" to its facilities so that from time to time some excess capacity exists temporarily. This has been the case over the past few years. Expectations have not been completely fulfilled as prices of primary products have receded and alternative sources of supply have been developed by other countries. At the same time, during recent years, a shift occurred in the strategic concepts underlying western defence, which brought about a virtual end to military stockpiling and a reduction in the materials content of military hardware. In these altered circumstances, the stimulus to develop Canadian sources of supply in the resource industries decreased. At the same time, in manufacturing, the rate of expansion in facilities was adversely affected by strong international competition and by slower growth in total domestic demand.
The result of all of these trends was a falling off in certain types of investment and, thus, a decline in the proportion of G.N.P. devoted to investment. This is a situation, of course, which calls for a shifting of resources, both human and material, either into other areas of investment, where demands are more immediately pressing, or into other sectors of the economy. These transfers of resources require high degrees of flexibility and mobility in the economy generally, especially of the labour force, if the slack in the economy is to be taken up.
Turning to 1961, total private and public investment was down about 2% from 1960 although there was increased investment in such sectors as mining, chemicals, oil and gas pipelines, universities, hospitals, and government departments. Increases in the above sectors were slightly more than offset by decreased fixed investment in agriculture, primary metals, petroleum refining, telephone utilities, and other industries. Capital expenditures by private business enterprises, apart from institutional investment, declined by 4 per cent in 1961 compared with 1960.

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BimOUS OF DOLLARS	BILLIONS OF DOLLARS

The Budget-Appendix
Of the sectors where investment rose significantly, one of the larger gains was the 13% or $51 million increase for mining, quarrying and oil wells. This reflected additional iron ore development in the Quebec-Labrador boundary area. A sharp gain was registered in oil and gas pipeline construction in western Canada. The higher level of capital spending in institutional services includes a $25 million rise in hospital construction and equipment and a $15 million rise in construction in universities,which have started to accommodate the larger number of teenagers born in the mid-forties and seeking higher education. The increase in investment by government departments largely reflects a $42 million increase in federal capital expenditures.
In the manufacturing sector, investment in the chemical and chemical products industry rose $17 million. There were no marked changes in capital spending in such industries as food and beverages, leather, clothing and primary textiles, wood and paper, printing, machinery, and electrical equipment. The only noticeable declines occurred in transportation equipment, non-metallic minerals (asbestos, abrasives, cement, etc.), oil refining, and primary metals. The latter reflected the completion in the preceding year of the large nickel refinery in Thompson, Manitoba.
Capital expenditures in the transportation, storage and communications sector fell sharply. Increases in pipeline construction were more than offset by a $29 million decline in telephone utilities and a $115 million drop in railroad construction. The latter reflected the completion of railroads serving new iron ore mines in the Quebec-Labrador region.
Revenue and Expenditure of All Governments
Computed on the basis of the National Accounts definitions, expenditures in 1961 by all levels of government increased by approximately 8% over comparable expenditures in 1960. Since revenues for the year as a whole did not rise by the same proportion, the deficit for all levels of government increased by rather more than a third to an amount of $893 million.(1>

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REVENUE AND EXPENDITURE OF ALL GOVERNMENTS (National Accounts Basis)
	1960			1961		
	Revenue | Expenditure		Deficit	Revenue | Expenditure! Deficit		
			(Millions of dollars)			
Federal	6,416	6,667	251	6,664	7,110	446Provincial-Municipal	5,048	5,445	397	5,408	5,915	447Total	11,464	12,112	648	12,132	13,025	893
In 1961, government expenditures on goods and services (excluding transfer expenditures) represented 19.5% of Gross National Expenditure. By way of comparison, expenditures of this type by all levels of government in 1952 after the rearmament programme stemming from the Korean conflict amounted to 17.8% of G.N.E Over the past nine years, therefore, goods and services outlays by government have grown at a rate which is only slightly above that of the increase in Gross National Expenditure.
(D The following section discusses only those government transactions relevantto the National Accounts. As a result the statistics differ from those shown in Public Accounts. Table 1G indicates the reconciliation between federal deficit or surplus for purposes of the National Accounts and the comparable figures appearing in the Public Accounts. In particular, federal corporate income taxes have been adjusted to an accrual basis. On a National Accounts basis, this adjustment decreased revenues in 1960 by $100 million and increased revenues in 1961 by $31 million.
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The Budget-Appendix

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-	1952	1961Expenditures by: Federal-Defence	7.5 2.9 (10.4) 7.4	4.4 3.7 (8.1) 11.4Non-defence	Total Federal	Provincial and Municipal	All levels of Government	17.8	19.5
Within the overall total, there have been divergent movements at the various levels of government. Expenditures on goods and services by the federal government in 1961 represented a smaller share of Gross National Expenditure than in 1952, while the proportion at the combined provincial and municipal levels was appreciably higher.
While the term "goods and services" bears the connotation of expenditures for consumable goods and for current administrative services, it should be noted that the definition of goods and services in the government sector of Gross

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1960	Prelim. 1961	Change
GOVERNMENT REVENUE-	(Millions of dollars)		
			
Direct Taxes-Persons	2,357	2,504	+147Federal	2,016	2,132	+ 116Provincial and Municipal	341	372	+ 31Direct Taxes-Corporations	1,562	1,610	+ 48Income-	Federal	1,284	1,320	+ 36Provincial	278	290	+ 12Other Direct Taxes-	Withholding taxes-Federal	77	199	+ 32Indirect Taxes	4,681	4,893	+212Federal	2,181	2,190	+ 9Provincial and Municipal	2,500	2,703	+203Investment Income	1,058	1,112	+ 54Federal	384	406	+ 22Provincial and Municipal	674	706	+ 32Employer and Employee Contributions to Social Insurance and	Government Pension Funds	735	781	+ 46Federal	474	507	+ 33Provincial and Municipal	261	274	+ 13Transfers from Other Governments-	Provincial and Municipal	994	1,123	+129Total Revenue	11,464	12,132	+668Federal	6,416	6,664	+248Provincial and Municipal	5,048	5,468	+420
The Budget-Appendix
TABLE 16-Concluded

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I960	Prelim. 1961	Change
	(Millions of dollars)		
GOVERNMENT EXPENDITURE-			+500
Goods and Services		6,883	7,183	
Federal-			
Defence	1,548	1,617	+ 69Non-defence	1,180	1,353	+173Provincial and Municipal	3,955	4,213	+258Transfer Payments to Persons	3,131	3,343	+222Federal	1,980	2,014	+ 34Provincial and Municipal	1,141	1,329	+188Interest on Public Debt	1,079	1,126	+ 47Federal	756	783	+ 27Provincial and Municipal	323	343	+ 20Subsidies	235	250	+ 15Federal	209	220	+ UProvincial and Municipal	26	30	+ 4Transfers to Other Governments-	Federal	894	1,123	+129Total Expenditure	12,112	13,025	+913Federal	6,667	7,110	+443Provincial and Municipal	5,445	5,915	+470Deficit (-) or Surplus (+)	-648	-893	+245Federal(1)	-251	-446	+195Provincial and Municipal	-397	-447	+ 50Total Expenditure minus deficit (or plus surplus)	11,464	12,132	+668Federal	6,416	6,664	+248Provincial and Municipal	5,048	5,468	+420
Reconciliation with Public Accounts Surplus or Deficit shown below.
Prelim.
1960	1961
Federal Government calendar year surplus for national accounts purposes	
Adjustments:
Difference between calendar and fiscal year	
Difference between corporation tax accruals and government receipts.
Revenue items omitted	
Reserves, write-offs and similar items omitted from expenditure.
Shipment of military equipment to NATO countries less replacement.
Extra-budgetary funds for pensions and social insurance (net)...
Adjustment to place debt interest on a "due date" basis	
Other adjustments	
Federal surplus for fiscal year as per public accounts	
(Millions of dollars)	
-251	-446
-75	+247
+100	-31
+ 17	+22
-62	-49
-41	-48
+3	-3
-104	-32
-413	-340
National Expenditure includes outlays by all levels of government on construction and capital equipment. Items of this type, which are of the nature of capital investment, include a wide variety of projects: housing, hospitals, schools, marine engineering projects, highways, transportation facilities and others. Over the past several years expenditures by government on construction, machinery and equipment have represented a relatively constant share, approaching one-quarter, of all government outlays on goods and services.
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The Budget-Appendix
Turning to the revenue side, it has already been indicated that the year-to-year increase in government revenues in 1961 was less than the corresponding increase in expenditures. In 1961 revenues of all levels of government (excluding inter-governmental transfers) amounted to $11,009 million, an increase of 5% over revenues in 1960. However, the year-to-year comparison masks the significant change in government revenues, calculated on the National Accounts basis, which occurred between the first and last quarters of 1961. The table below indicates the nature of such changes and compares them with the record of earlier recovery periods.

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(Seasonally Adjusted at Annual Rates)
-	1960 to 1961	IQ 1961 to 4Q 1961	IQ 1958 to 4Q 1958	2Q 1954 to IQ 1955Direct Taxes-Persons	6.2	7.5	2.1	6 1Direct Taxes-Corporations	3.1	19.0	10.9	8.5Indirect Taxes	4.5	7.3	2.1	4 5Investment Income	5.1	5.7	11.9	4.1Other	9.6	3.7	10.2	8.3Total Revenue (Excluding inter-governmental	transfers)	5.1	8.5	5.0	5.7
Revenues of all levels of government reached an annual rate by the fourth quarter of 1961, 9% above that of the first quarter, the low point in business activity. The gain in revenues was largely due to the increases in indirect tax receipts and accruals of corporation income taxes as the pace of economic activity quickened. By comparison, there were smaller proportionate increases in accrued government revenues in the first nine months of the upswings in economic activity in 1954 and in 1958.

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-	Construction	Machinery and Equipment	Totals	% of Capital Outlays to Total Government Expenditures on Goods and Services1959	(M 1,386 1,433 1,469	illions of dollar 137 137 147	s) 1,523 1,570 1,616	24 24 231960	1961<!)	
0>
These figures exclude investment expenditure by government business enterprises which is included in the national accounts item for business capital formation.
M Preliminary.
Total expenditure at all levels of government includes not only expenditures on goods and services, but also outlays for transfer payments to persons, interest on the public debt and subsidies. Calculated in this manner, total expenditures by all levels of government (excluding inter-governmental transfers) in 1961 were $11,902 million, an increase of 7% over expenditures in 1960. This figure indicates the gross effect of government operations on the economy, since it

The Budget-Appendix
includes transfer payments to individuals which in turn may be used for expenditures on goods and services. The proportion of total government outlays represented by the categories of expenditure cited above is indicated in the table below.

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(Excluding inter-governmental transfers)
-	1952	1957	1960	1961Goods and services	67.7	66.1	60.1	60.3Transfers to persons	21.5	24.0	28.1	28.1Interest on public debt	9.2	8.5	9.7	9.5Subsidies	1.6	1.4	2.1	2.1100.0	100.0	100.0	100.0
Outlays on goods and services have declined from 68% of total government expenditures in 1952 to 60% in 1961, while payments to persons increased during the same period from 22% to 28%. This change has been particularly marked since 1957.
Expenditures by government on goods and services and on transfers to individuals increased in 1961 by almost identical proportions. Expenditures on goods and services by the federal government and by the combined provincial and municipal levels contributed about equally to the increase in this item. For transfer payments to persons, however, higher provincial and municipal outlays on grants to hospitals under federal-provincial hospitalization insurance arrangements contributed the bulk of the increase in 1961. Federal transfer payments to persons for the year as a whole increased by only a small proportion due to the effect in the last half of the year of lower outlays on unemployment insurance benefits. Interest on the public debt was somewhat higher in 1961 than in 1960 at the federal and provincial and municipal government levels. Government expenditure on subsidies increased by $15 million as interim subsidies by the federal government under the Freight Rates Reduction Act more than offset a reduction in payments under the Agricultural Stabilization Act while provincial government outlays of this type in 1961 were almost unchanged from the amounts recorded in 1960.
Federal transfers to other levels of government amounted to $1,123 million in 1961, an increase of 13% over 1960. By far the largest factor contributing to this increase was the rise in the federal government share of hospital insurance expenditures. The entry of Quebec into the federal-provincial hospital insurance arrangements on January 1, 1961, accounted for about two-thirds of this increase, but total grants to other provinces increased substantially as well. Increased payments to the provinces for unemployment assistance and higher federal expenditures under the Winter Works Program also contributed to the increase in federal transfers in 1961.

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During the course of 1961 there was a significant increase in employment in Canada in both goods and service producing industries, which was spread throughout the main regions of the country. Concurrently, the very rapid increases in the labour force which had occurred in recent years slowed down. As a result of these two main developments, unemployment fell throughout 1961, so that by the year end the rate of unemployment was appreciably below that
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The Budget-Appendix at the beginning of 1961, seasonal factors apart. The greater share of the increase in employment during 1961 occurred among male wage earners, in marked contrast with the experience of the recent past, and reflected the upswing in production in the commodity-producing industries which took place during this period.
The increase in employment began about April, after allowing for normal seasonal movements, and from then until year end there was an increase in total employment of more than 3 per cent. By December 1961 there were 180,000 more people employed in Canada than a year earlier of which 125,000 were men and 55,000 women. The gain in female employment marked a continuation of the upward trend observed over the past decade when increasing numbers of women were finding employment in a wide variety of industries, notably the service industries. The gains in male employment, however, marked a change from the relative stability prevailing since 1956.

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MILLIONS OF PERSONS	MILLIONS OF PERSONS
(1)	SEASONALLY ADJUSTED AT ANNUAL RATES
(2)	SEASONALLY ADJUSTED ESTIMATES BY THE DEPARTMENT OF FINANCE.

The Budget-Appendix
The increases in employment were all accounted for in the non-agricultural sectors. More than half of the gains were in Quebec and Ontario, but employment in the Prairies, Atlantic provinces and British Columbia also rose significantly and the percentage increases in all regions were of the order of 2 to 4 per cent from the end of 1960 to the end of 1961. Employment in the goods-producing industries rose somewhat more than in the service-producing industries. The gain in the latter sector constituted a continuation of the post-war increases, whereas the rise in employment in the former sector was the first in about two years. The manufacturing and construction industries accounted for almost all of the gain in the goods-producing industries.
The rate of increase in the labour force slowed down in 1961, compared with very rapid rates of growth in recent years. As noted in last year's Budget White Paper, rates of increase in Canada's labour force over the past decade or so had been two or three times those of other industrialized countries. The phenomenon of deceleration in the rate of growth of the labour force occurs from time to time and is the result of a variety of factors. There was a particularly sharp drop in the labour force participation rates (which measure the percentage of any group working or seeking work) in the male age groups 14-19 and 20-24, reflecting the larger number of males in these age groups remaining in school and receiving fuller training. It will be recalled that the unemployment rate of young males is very much higher than that of the rest of the labour force and the average level of skills and education among these unemployed is quite low. There was very little change in the participation rate of the group of prime working age, 25-64.
The participation rate of females continued its long-term rise, although the increase moderated. This was the net result of two conflicting movements: the youngest female age group, 14-19, showed a decline, though not as large as in the corresponding male age group. On the other hand, participation rates of women in the 20-64 age bracket continued to increase. Much of this rise was accounted for by employment of married women. In December 1961, almost one-half of employed females were married, compared with one-third only eight years ago.
During 1961 the rate of unemployment declined from 7.8 per cent of the labour force in January to 6.1 per cent in December, after allowing for seasonal elements. Almost all of the decline was in the male unemployed and took place mainly in Quebec, Ontario and British Columbia.
The improvement in the unemployment rate during 1961 contrasts with the experience of the past two upswings in business activity. The following table shows the unemployment rates (seasonally adjusted) at the low point in activity and the rates after three quarters of upswing.
Trough	Unemployment Rate	Three Quarters after trough	Unemployment Rate	ChangeIQ 1961	7.8	4Q 1901	6.3	-1.5IQ 1958	0.7	4Q 1958	7.2	+0.52Q 1954	4.6	IQ 1955	4.8	+0.2
Labour income responded to the increased pace of employment during 1961. The increase in labour income began to accelerate after April, and between the eight months of April and December 1961 the increase in labour income was as large as in the preceding 15 months. In the last three quarters of 1961 there were substantial gains in labour income in the goods-producing industries, in contrast to declines in the immediately preceding period, and continued increases in labour income in the service-producing industries.
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The Budget-Appendix
Total labour income rose by more than 5 per cent from the first to the fourth quarter of 1961. During this period average hours worked per week in manufacturing increased about 1 per cent and average hourly earnings between 2 per cent and 3 per cent. The rise in employment was about 2^ per cent. With consumer prices rising by less than 1 per cent during 1961 there was an increase in per capita real earnings in the order of 2 to 3 per cent.

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Prices of goods and services produced in Canada rose only fractionally in the aggregate in 1961 compared with 1960. This is in contrast to the experience of many industrialized countries in Europe where prices rose more rapidly than in North America. While world prices of commodities generally have not increased in the recent past, pressures of other costs in Europe have been upward. Price increases in Canada in almost every major sector were smaller in 1961 than in the previous year, which in itself was a period of relative price stability. The one exception was in international trade, where prices of both imports and, to a lesser extent, exports rose in response to the lower level of the Canadian exchange rate.
The smaller rise in 1961 in the price of capital goods relative to 1960 was the result of very little increase in residential and non-residential building costs offset to some extent by a larger increase for new machinery and equipment which has a substantial import content. Residential construction costs in the fourth quarter of 1961 were at about the same level as in the final quarter of 1960.

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PERCENTAGE PRICE CHANGES (Implicit Price Indexes of GNE and Components)
-	1959/1958	1960/1959	1961/1960+ 1.4	+ 1.2	+0.9+0.6	+0.5	+0.2+2.6	+2.2	+ 1.8+3.4	+2.2	+ 1.8+2.8	+2.2	+0.9+3.7	+2.7	+0.5+3.1	+2.4	+0.4+ 1.8	+ 1.9	+ 1.7+ 1.5	+0.9	+ 1.2-0.6	+ 1.4	+2.8
+2.6	+1.4	+0.7
			
W Price indexes of these sectors are measured mainly by elements entering into costs (materials and labour purchased) rather than final selling prices, and generally it has not been possible to allow for changes in productivity. Over short periods of time, these cost indexes are not likely to vary to any extent from indexes of actual selling prices. Over longer periods, it may be that these cost deflators overstate price increases.
The consumer price index for 1961 averaged 129.2 compared with 128.0 for 1960, an increase of just under one per cent. This fractional increase in 1961 marks the second successive year in which over-all consumer prices demonstrated comparative stability in contrast to average annual increases of more than 2 per cent in the previous five years.

The Budget-Appendix

[Stage Direction]
Period	Total Percentage Change over the Period
1955-1957		+4.7
1957-1959		+3.8
1959-1961		+2.1
	
The consumer price index declined from 129.2 in January, 1961 to 129.0 in March where it remained until August. In August and September, the index was 129.1. Successive monthly increases in the linal quarter of the year, associated mainly with seasonal movements in food prices and to some extent reflecting the introduction of the Ontario Sales Tax, raised the index to 129.8 in December, 1961, fractionally above the level of 129.6 in December, 1960.
The following table shows that the increase in consumer prices in the last quarter of 1961 over the last quarter of the preceding year was due to higher costs in the services component. The index for total services rose 1.2 per cent while the index for total goods was virtually unchanged. The stability in the total goods component was the result of an increase of about one-half of one per cent in non-durable prices and a decline of nearly two per cent in durable prices, the latter reflecting lower prices for electrical household appliances and new automobiles. The federal excise tax of 7§ per cent on new automobiles was removed on June 21, 1961.

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4Q 1959	4Q 1960	4Q 19614Q 1958	4Q 1959	4Q 1960Total Goods and Services	+1.5	+1.1	+0.4WCommodities	+1.0	+0.8	+0.1Commodities excluding Food	+1.6	-	+0.1+0.5 +0.8	+1.6	+0.1O)Durable Goods	-1.3	-1.6Household Equipment	+0.2	-0.9	-1.5Transportation Equipment	+2.7	-2.3	-1.8Non-Durable Goods	+ 1.2	+1.1	+0.5Non-Durable Goods excluding Food	+ 1.9	+0.3	+0.7Textiles	-0.3	+0.5	+ 1.4Other Non-Durable Goods	+2.7	-	+0.3+2.2	+1.8 +2.6	+1.2Services excluding Shelter	+3.0	+1.9
(>) Changes based on 1957 weighted index.
The much smaller increase in the price of services is of some significance. In part, this is due to lesser increases in shelter costs. In the last five years or so, as housing construction has filled the pressing backlogs of housing needs, the pressure on shelter costs, particularly rent, has been eased. General increases throughout all other components have been more responsible for recent increases in the services index. The largest increases have occurred in health care, public transportation and vehicle operating costs.
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The Budget-Appendix
The wholesale price index, which is heavily weighted with export and import goods, prices of which are generally affected by changes in the value of foreign currency, rose on average in 1961 by 1 per cent, with somewhat larger increases taking place in the second half of the year as the exchange rate declined. The largest increases appeared in prices of raw and partly manufactured goods, industrial materials and iron and non-ferrous metals and products. The building materials price index, both residential and non-residential, declined during the course of the year and were lower on average in 1961 than in 1960.

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INDEXES OF SELECTED WHOLESALE PRICES (1935-1939 = 100)
-	1959	1960	1961210.9	209.6	212.6241.6	242.2	244.4 243.2240.2	240.4	248.3	250.6	253.3
General Index of Wholesale prices		230.6	230.9	233.3
			
It is of interest to compare the behaviour of prices over the course of the business upswing in 1961 with that of 1958. The following table shows changes in price levels from the low point in activity in the first quarter of 1961 and from the previous peak in the first quarter of 1960 to the fourth quarter of 1961. It makes similar comparisons with the preceding upswing in 1958.

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3 quarters after trough	3 quarters after trough from previous peak	3 quarters after trough	3 quarters after trough from previous peak4Q 1958	4Q 1958	4Q 1961	4Q 1961IQ 1958	IQ 1957	IQ 1961	IQ 1960Consumer Price Index	+1.9	+4.8	+0.4	+1.2Commodities	+0.8	+3.1	+0.2	+0.7Services	+2.8	+7.0	+1.2	+2.7General Index of Wholesale Prices	+0.3	-0.1	+1.9	+2.4Gross National Expenditure Implicit Price	Index	+1.9	+3.5	+0.2	+ 1.4
The table shows clearly that price movements in the current upswing have been much less than in the one preceding. This is particularly apparent in the case of the consumer price index and the overall price deflator of Gross National Expenditure. In the 1958 upswing, while commodity prices in general did not increase, as seen by the movement of the Wholesale Price Index, the other indexes which measure a wider range of final goods and services continued to move up. In part, this was due to significant increases in service and other

The Budget-Appendix
costs which are added to the cost of materials. These cost increases had their roots in the inflationary conditions of the mid-1950's and reflected a delayed reaction to events at that time.

[Stage Direction]
During the current upswing, while wholesale prices have risen somewhat, as explained previously, because of exchange rate movements, their effect on final prices of goods and services has been very slight. The smaller increases in service prices reflect a much different environment, including less intense pressure on and greater availability of resources.

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There was a significant improvement in Canada's balance of payments in 1961 as the deficit on current account was reduced to $989 million from $1,217 million in 1960 and $1,504 million in 1959. This improvement was made possible by a surplus on merchandise trade account which (aside from a minor amount in 1954) was the first such surplus since 1952. The improvement arising from merchandise trade more than offset a further increase in the deficit on nonmerchandise account, which did not, however, rise as rapidly as in most years of the past decade. At the same time, there was a substantial reduction in the inflow of long-term capital to the lowest level since 1955, and an increase in the inflow of other forms of capital.
Important changes occurred in the capital account over the past few years. In 1961, the inward net capital movement was reduced substantially and was at the lowest level since 1955.
A summary of capital movements for the past four years is given in table 25.
The amount of inflow for direct investment was lower in 1961 than in 1960 or 1959 and was at the same level as 1958. In part, the decline reflected a reduction in transactions related to take-overs of existing enterprises, which had
26207-1-175J
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The Budget-Appendix been more important in 1960. In part, the decline was related to the phasing-out of some major projects. As in 1960, a substantial proportion of direct investment was related to the petroleum, natural gas and mining industries. In 1961, direct investment abroad totalled $110 million, an increase of $25 million above 1960.
Net inflows from security transactions were somewhat higher in 1961 than in 1960, but well below the levels of the preceding four years.
In 1961 the composition of inflows from security transactions changed substantially from earlier years. Provincial government net new issues acquired by non-residents declined sharply from 1959 to 1960 and declined further in 1961. Municipal government net new issues acquired by non-residents declined moderately from 1959 to 1960. In 1961 there was a small net retirement of municipal bonds held by non-residents. Thus, net new issues of provincial and municipal governments held by non-residents fell very sharply over the period 1959 to 1961. On the other hand, net new issues of corporate securities rose sharply in 1961, following two years of relatively small amounts of financing from abroad. Important among the corporate securities purchased by non-residents in 1961 were securities of petroleum and natural gas corporations, real estate investment corporations, some financial institutions and the pulp and paper industry. In some cases it would appear that sales of corporate securities to nonresidents are arranged for apart from considerations of interest rates or exchange rates and may take into account other factors including, for example, special relationships between borrower and lender and relative ease of placement of large issues.
While the data show a considerable decline in total capital inflow in 1961, a more detailed analysis by quarters is of considerable interest.

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INTERNATIONAL PAYMENTS Capital Account
-	1960	1961	IQ	2Q	3Q	4Q	IQ	2Q	3Q	4Q(Millions of dollars)	Direct investment: in Canada	+196	+144	+168	+137	+120	+140	+ 75	+ 85abroad	- 15	- 25	29	- 16	- 40	- 35	- 15	- 20Canadian securities	Trade in outstanding bonds and deben-	tures	+ 19	+ 15	- 19	- 12	+ 31	+ 34	- 12	+ 10Trade in outstanding common and pref-	+ 13	+ 24	+ 10	+ 2	4- 13	+ 32	- 5New issues	+209	+146	+ 52	+ 40	+ 90	+171	+127	+104Retirements	- 50	- 78	32	93	- 69	- 93	- 29	-101Foreign securities	+ 7	- 5	+ 2	- 24	-f 3	+ 2	- 10New issues	- 2	- 3	- 2	- ii	- 5	- 18	- 6	- 5Retirements	+ 6	+ 3	+ 7	+ 2	+ 2	+ 2	+ 3	+ 2Loans by Government of Canada	
+ 7		+ 25	+ 3	+ 8		+ 27
Subscriptions in Gold and U.S. dollars to								
			- 1	- 2				
Change in Canadian dollar holdings of								
foreigners		- 2	- 2	+ 45	+ 79	- 5	- 72	- 1	+ 44
Change in official holdings of gold and								
foreign exchange (increase, -)	+ 11	+ 82	- 40	- 14	-105	51	+ 62	-135Other capital movements	- 71	+162	- 39	+ 191	+305	+196	-140	+270Net Capital Movement	+321	+478	+122	+304	+343	+314	+ 66	+266
The Budget-Appendix
During the course of 1961 while actual deliveries of Canadian securities to non-residents (which measure the capital inflow) did not decline, there was a significant decline in contracts in the latter half of the year.

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Quarter	Contracts	DeliveriesI960 1 	(Millions 182 100 53 103 122 87 52 64	Df dollars) 185 125 33 26 80 141 103 842 	3 	4 	1961 1 	2 	3 	4 	
The decline in net capital inflow from security transactions of provincial and municipal governments in 1961, as a whole, and the decline throughout 1961 in new issues contracted for sale to non-residents were undoubtedly related in part to the narrowing of the differential between Canadian and U.S. interest rates, to the reduction in the level of Canadian interest rates and the greater availability of long-term funds in the Canadian capital market, and to amendments in the withholding tax in December, 1960.

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NET NEW ISSUES OF BONDS AND STOCKS-FOREIGN CURRENCY (Including Net Disinvestment of Government accounts)
	I960	1961				
	Annual	Annual	IQ	2Q	3Q	4Q
			(Millions of Canadian dollars)			
-1	-55	-51	-3	-56	-51	-5-1	2	-3	518	7	15	-18	10Municipal	85	-12	-7	15	-4	-16Corporate (including corporate stocks)..	4	114	-7	61	59	1Total	106	55	-49	55	55	-5
Note: Figures may not add due to rounding.
Turning to short-term capital flows, these reflect a variety of elements moving in both directions and responding to diverse factors including seasonal elements associated with the financing of trade, short-term interest rate differentials, both hedged and unhedged, the views of Canadian residents regarding holdings of foreign assets and non-residents regarding holdings of Canadian assets.
During 1961, non-resident holdings of Canadian treasury bills, which had been increasing for three consecutive quarters until the middle of 1961, were reduced in June and in the third quarter by more than $100 million, following a significant narrowing of the hedged differential between Canadian and United States treasury bill rates. This outflow was offset to some extent in
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The Budget-Appendix the third quarter by an increase in non-resident holdings of Canadian dollar deposits, some of which were interest-bearing, in chartered banks amounting to $33 million. In the fourth quarter of 1961 there was some increase in non-resident holdings of treasury bills as well as some further accumulation of Canadian dollar deposits.
Another component of short-term capital which showed sharp movements in 1961 was private and banking holdings of foreign exchange. In the first half of 1961 these holdings, some of which originate from commercial transactions, were reduced by $182 million, but in the third quarter there was an increase of $140 million. In the final quarter of 1961, most of this increase was repatriated. All other components of short-term capital in total showed an inward movement throughout the four quarters of 1961.

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INTERNATIONAL PAYMENTS: CAPITAL MOVEMENTS
-	1958	1959	1960	Prelim. 1961
		(Millions of dollars)		
Direct investment in Canada	+420	+550	+645	+420Direct investment abroad	- 48	- 80	- 85	-110Canadian securities-	Trade in outstanding bonds and debentures	+ 91	+ 3	+ 63Trade in outstanding common and preference	stocks	+ 88	+110	+ 40	4- 40New issues	+677	+707	+447	+492Retirements	-158	-258	-253	-292Foreign securities	+ 3	- 33	- 20	- 30Loans by Gov't of Canada-Drawings	- 34	- 1	Repayments	+ 64	+ 34	+ 32	+ 38Subscriptions to IMF, IFC and IBRD in gold and	US dollars	- 59	_ 3	Change in Canadian dollar holdings of foreigners	+106	+ 13	+120	- 34Change in official holdings of gold and foreign exchange	(increase, -)	-109	+ 70	+ 39	-229Other capital movements	+122	+360	+243	+631Net capital movement	+1,131	+1,504	+1,217	+989
Another factor which is assuming a more important role in the capital account is the extension of export credit facilities. The provision of export credits does not, of course, in itself always imply a net extension of credit from Canadian sources. Many of the claims are receivable in United States funds and may, in effect, be discounted outside Canada. However, aside from this, there have been net extensions of export credit of various kinds. Canada's Export Credits Insurance Corporation has long made available insurance to Canadian exporters of goods and services to protect them against non-payment by foreign buyers due to the various risks involved in foreign trade. In the spring ol 1960 the Chartered Banks of Canada joined in setting up the Export Finance Corporation of Canada Ltd. to finance insured exports of capital goods through the provision of medium-term credit ranging up to five years.
Complementing these medium-term arrangements, the guarantee facilities of the Export Credits Insurance Act were extended to longer-term credit and the Government Agency, the Export Credits Insurance Corporation, was authorized

The Budget-Appendix
to buy guaranteed instruments for direct financing of export sales. Commitments to extend credit to foreign purchasers of capital equipment in Canada have already begun to be made, but the resultant capital outflows will only arise as and when disbursements take place. For the year 1961, such outflows were negligible.
Apart from these facilities the Government has guaranteed substantial credits for the Canadian Wheat Board to conclude sales of wheat and barley to Communist China on a short-term credit basis.
In August, 1961, arrangements were made for the drawing by the United Kingdom of U.S. $1,500 million from the International Monetary Fund. Canadian participation in this drawing had the net effect of reducing both Canadian liabilities to the International Monetary Fund by $52 million and gold and foreign exchange holdings by about the same amount during the third quarter of 1961.
During 1961, total Canadian merchandise exports rose by 9.2 per cent compared with a 5 per cent increase in 1960. Imports rose by 3.1 per cent during this same period. As a result, trade data for 1961, adjusted for balance of pavments, showed a surplus of $179 million in contrast to a deficit of $145 million for 1960.

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INTERNATIONAL PAYMENTS: BALANCE ON MERCHANDISE TRADE
-	1960	1961	Percentage Change 1960/1961(Million 5,400 5,545	s of dollars) 5,896 5,717	+9.2 +3.1
-145	+179	
			
Within 1961 itself, exports of goods moved generally upwards while imports, which had moved downward irregularly from the beginning of 1960, increased in the latter half of the year. In the fourth quarter of 1961, the volume of imports, seasonally adjusted, was at about the same level as in the first quarter of 1960, although the value was higher. Movements of both exports and imports in 1961 were strongly affected by the business upturn in North America.
The value of merchandise exports amounted to $5,896 million for 1961, a new record, compared with $5,400 million during the previous year; increases in exports of agricultural products represented the largest share of the increase from the 1960 level. Exports of grain, forest products, nickel and petroleum increased substantially and there was some decline in exports of iron ore, copper and uranium. Larger export credit facilities and a more favourable exchange rate explain some of these increases. At the same time, the increase in economic activity in the United States and the maintenance of high levels of activity abroad helped provide a more expansionary environment for exports.
The value of merchandise imports for 1961 was $5,717 million; this was somewhat higher than in 1960. The growth in imports in 1961 was widely distributed among various items although there were somewhat larger than average increases in imports of machinery and equipment from the United States.
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The improvement in the trade balance was widespread on a geographical basis. The trading deficit with the United States was reduced, while the surplus with the United Kingdom rose slightly. The sharpest improvement took place with all other countries.

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Exports	Imports	Trade Balance	Percentage change	I960	1961	I960	1961	I960	1961	1960/1961	(Millions of dollars)	Exports	ImportsUnited States	3,039	3,215	3,715	3,831	-676	-616	+ 5.8	+3.1United Kingdom	924	923	611	588	+313	+335	- 0.1	-3.8Other Countries	1,437	1,758	1,219	1,298	+218	+460	+22.3	+6.5Total	5,400	5,896	5,545	5,717	-145	+179	+ 9.2	+3.1
The deficit in non-merchandise transactions increased by $96 million in 1961 over 1960, compared with relative stability for 1960 over 1959, but the rate of increase was well below the average annual increase of the last decade.
There were a number of interesting developments on the non-merchandise account. The travel account showed a significant improvement, with receipts in 1961 rising by $53 million while payments rose by only $6 million. At the same time there was a gain of $18 million from receipts of dividends, in contrast to a $4 million decline in the preceding year. Payments of interest and dividends rose by $102 million in comparison with the $2 million decrease in 1960, but this rise masks a very unusual shift between the fourth quarter of 1960 and the first quarter of 1961, as some payments of dividends were made in the first quarter of 1961, rather than in the last quarter of 1960, in contrast to past experience. The result of this shift was that the figures for 1960 were somewhat lower than usual and those for 1961 were correspondingly higher.

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1400 * 1200 1000 800 600 400 200 0
200 *

The Budget-Appendix BALANCE ON NON-MERCHANDISE TRANSACTIONS

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1952	1953	1954	1955	1956	1957	1958	1959	I960	1961

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INTERNATIONAL PAYMENTS: CURRENT ACCOUNT
-	1958	1959	1960	Prelim. 1961
		(Millions of dollars)		
Current Receipts-	5,400	5,896Merchandise exports (adjusted)O)	4,887	5,150	Gold available for export	100	148	162	158Travel expenditures	349	391	420	473Interest and dividends	168	182	178	196Freight and shipping	401	420	442	467Inheritances and immigrants' funds	97	109	102	103Other current receipts	375	392	420	388Total Current Receipts	6,437	6,792	7,124	7,681Current Payments-	5,545	5,717Merchandise imports (adjusted)	5,066	5,572	Travel expenditures	542	598	627	633Interest and dividends	612	671	669	771Freight and shipping	460	525	533	554Inheritances and emigrants' funds	145	165	181	183Other current payments	743	765	786	812Total Current Payments	7,568	8,296	8,341	8,670Balance on Merchandise Trade	-179	-422	-145	+179Balance on other Transactions	-952	-1,082	-1,072	-1,168Current Account Balance	-1,131	-1,504	-1,217	-989
O) Aid to NATO countries under Defence Appropriation Act has been excluded.
Official Canadian holdings of gold and foreign exchange varied somewhat in the course of 1961. Holdings at December 31, 1960 were $1,829 million and at the end of May, 1961, the last month end prior to the June budget, were $1,949 million. After moving both up and down throughout the remaining months of 1961, official holdings at February 28, 1962 (the latest available month) were $1,747 million. Apart from an advance of U.S. $50 million in connection
26207-1-176
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The Budget-Appendix with the United Kingdom drawing from the International Monetary Fund, there was thus a reduction of $32 million between the beginning of 1961 and the end of February, 1962.

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-	1958	1959	1960	1961Exchange Fund Account and Bank of Canada- Gold	1,078.1 800.0 61.0	(Millions of 959.6 879.4 30.2	U.S. dollars) 885.3 914.9 29.0	946.2 1,087.5 22.1U.S. Dollars	Other Government of Canada Accounts	
Total Gold and U.S. Dollars	1,939.1	1,869.2	1,829.2	2,055.8
The exchange value of the Canadian dollar declined during 1961. The average noon rate for the United States dollar, in terms of the Canadian dollar, was 99.29 in January; it moved from a low of 98.66 for June to 103.50 at June 30, to 104.31 at the end of December, 1961 and was 104.97 at the end of February,
1962.

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Credit Conditions
Monetary conditions in 1961 were relatively easy. Interest rates were appreciably below the peaks reached in the last upswing in the economy and the spread between interest rates in Canada and the United States narrowed. The spread between average long-term yields on United States and Canadian Government bonds was 1.40 per cent at the end of May 1961, 0.87 per cent at the end of October, and 0.84 per cent at the end of February, 1962. After following a fairly flat trend from January to May, security yields in Canada fell sharply in June and resumed a relatively stable trend from that point. The decline in interest rates in 1961 during the first year of the recovery is in contrast to an increase in interest rates in the corresponding phase of the 1958-59 upswing.

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End of **>	Medium Bonds*2*	Long Bonds*	91-day Treas. Bills	Canada	U.S.	Spread	Canada	U.S.	Spread	Canada	U.S.	SpreadI960	March	5.17	4.22	.95	5.32	4.13	1.19	3.01	2.79	.22June	4.50	4.03	.47	5.08	3.83	1.25	3.07	2.40	.67September	4.09	3.55	.54	4.84	3.76	1.08	1.70	2.29	-.59December	4.74	3.72	1.02	5.41	3.80	1.61	3.25	2.15	1.101961	March	4.68	3.72	.96	5.18	3.80	1.38	3.21	2.39	.82June	4.49	3.94	.55	4.99	3.97	1.02	2.57	2.22	.35September	4.41	3.91	.50	5.02	4.03	.99	2.59	2.23	.36December	4.17	4.10	.07	4.96	4.11	.85	2.99	2.59	.401962	January	4.17	4.14	.03	4.98	4.14	.84	3.07	2.71	.36
(1) Last Wednesday of the month.
(* Government of Canada 2J% bonds due June 15,1967-68 and United States Government 21% bonds due December 15, 1963-68.
<*>
Government of Canada 3>% bonds due January 15, 1975-78 and United States Government 31% bonds due June 15, 1978-83.

The Budget-Appendix
The demand for new funds rose in 1961. New money raised by Canadian borrowers in 1961 from the securities markets and chartered bank loans increased by some 25% above the level of 1960. The increase stemmed entirely from federal and provincial government financing since, for the year as a whole, municipal and non-governmental borrowing was slightly below the levels of 1960. However, after the first quarter of 1961, corporate and other private financing rose in response to the upswing in the economy.

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I960		1961				
	4Q	Annual	Annual	1 IQ	2Q 1	3Q	4Q
			(Millions of dollars)				
Raised by:							
Government of Canada		678	669	1,110	145	2	238	725
Net New Issues of Securities							
Canada Savings Bonds	592	382	486	-32	-89	-75	682Treasury Bills	20	-92	-100	-50	-50	0	0Other Bonds	25	322	504	90	147	310	-44Sub-total	637	612	890	8	8	S35	638Net Disinvestments (+) in Govern-	ment Accounts	41	57	221	139	-6	3	86Provincial Governments	114	566	849	177	114	333	225Municipal Governments	74	305	283	147	14	8	114Private Borrowers*1*	300	899	816	-125	492	203	247Total	1,166	2,439	3,058	344	622	782	1,310Raised from:	Securities Markets	871	2,047	2,636	578	434	607	1,017Bank Loans	295	392	422	-234	188	175	293
Note: Figures may not add due to rounding. <x>
Excludes chartered bank stock issues.
Despite the increasing demand for funds, and the resumption of economic expansion during the last three quarters of 1961, the trend of interest rates was downward for the better part of the year. As the following table indicates, this decline is in contrast to the increases in interest rates which occurred in 1958 during the first three quarters of the economic upswing which was also taking place at that time.

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At end of(1)	91-day Treas. Bills Avge. tender rate	Canada 2f % due June 15, 1967-68	Canada 3J% due Jan. 15, 1975-78	1958	1961	1958	1961	1958	1961IQ	2.27	3.21	3.59	4.68	4.01	5.184Q	3.49	2.99	4.48	4.17	4.76	4.96Change	+1.22	-.22	+ .89	-.51	+ .75	-.22
<>>
Nearest Thursday to the end of the quarter for treasury bills, nearest Wednesday for Canada bonds.
26207-1-1761
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Bank loans seasonally adjusted resumed their upward trend in the second half of 1960 and continued to increase during 1961. Most of the increase occurred in personal and business loans of less than $1 million. The rate of growth in these two categories accelerated after May. Farm loans continued to rise steadily in 1961.

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Total assets of the banking system expanded by 9.8% during 1961, compared with 5.9% during the previous year, a slight decline in 1959, and a 10.8% climb during 1958. At the same time, the liquidity of the banking system also increased. The proportion of total bank assets held in the form of government securities, day-to-day loans, cash, and other liquid assets rose fairly steadily from 32% in September 1959 to 37% in early 1962. This is below the peak ratios in recent years of 43% in 1958 and 49% in 1955.
Although complete data are not yet available, total assets of some major non-banking financial institutions (instalment finance companies, credit unions, trust companies, mortgage loan companies) probably rose by a substantial percentage during 1961. Assets in these institutions have been growing at an annual rate of 10% and more in recent years.
The public's holdings of financial assets rose in 1961 and a greater share of the increased holdings was in liquid forms. During 1961 currency and deposits in the hands of the public rose 8.7%.

The Budget-Appendix

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1960		1961				
	4Q	Annual	Annual	IQ	2Q	3Q	4Q
			(Millions of dollars)				
Money and Other Liquid Assets							
Currency and Bank Deposits							
Corporate Notice Deposits	10	18	353	168	112	93	-20Currency and Other Deposits	72	597	818	-22	199	345	296Sub-total	82	615	1,171	H6	SU	438	276Treasury Bills	61	-206	-144	-45	-46	-126	72Other Gov't of Can. Issues 2 yrs. and	under	100	-463	356	108	282	-1	-33Canada Savings Bonds	592	382	486	-32	-89	-75	682Finance Companies Short Paper	1	10	-67	53	-9	-84	-27Total	836	338	1,892	230	419	152	970Less Liquid Assets	Government of Canada Bonds over 2 yrs	-139	642	-455	-56	-268	-5	-125Provincial Bonds	17	499	903	241	138	349	170Municipal Bonds	68	315	229	50	65	9	106Corporate and Other Bonds	-19	343	285	13	166	86	20Corporate Stocks	34	235	181	65	156	16	-56Total	-39	2,034	1,143	313	257	455	121Grand Total	797	2,372	2,945	543	796	607	1,091
Note: Figures may not add due to rounding.

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1960			1961		
		Annual	IQ	2Q	3Q	1 4Q
Market Issues- Government of Canada (Direct and Guaranteed): Net Disinvestment (+)in Govern-			(Millions of dollars)			
						
ment Accounts	57	165	88	-6	3	81Treasury Bills	-92	-100	-50	-50	Other Market Issues	323	558	141	151	310	-44Sub-total	288	623	179	95	SIS	37Provincial Governments	459	924	233	156	355	180Municipal Governments	234	265	62	44	15	143Corporations and "Other'*	311	205	17	113	38	38Sub-total	1,005	1,394	312	SIS	408	361Finance Co. Short Paper	10	-67	53	-9	-84	-27Corporate Stocks	230	178	62	156	16	-56Total Market Issues	1,533	2,127	605	553	653	316Non-Market Issues-	Canada Savings Bonds	382	486	-32	-89	-75	682Grand Total	1,915	2,613	573	464	578	998
Note: Figures may not add due to rounding.
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The Budget-Appendix
Among the more liquid assets, there was a sharp gain in corporate notice deposits at the banks. This appears to have been associated with the practice adopted by the banks at the beginning of 1961 of paying interest rates on these deposits higher than the comparable treasury bill yields. The public's holdings of Canada Savings Bonds were $4,075 million on February 28, 1962, $491 million higher than a year ago; by a wide margin the largest annual increase in the past decade. The general increase in the supply of liquid assets responded to an increase in the liquidity preference of the public.
Federal Debt Management
Policies concerning the management of the public debt by the federal government are influenced by a number of objectives and considerations including: the interest of the government in minimizing its costs of borrowing; the preferences of potential investors for particular types of securities; the desirability of maintaining levels of interest rates and liquidity appropriate to the general state of business activity. Another objective in debt management has been to narrow the spread in interest rates between Canadian and U.S. securities and lessen the incentive to obtain certain types of capital from abroad so as to lessen upward pressure on the exchange rate.
Following an announcement in the June Budget, the government has been reducing the so-called "overhang" of long-term Canada bonds in order to foster confidence in the capital market and to allow more room in the capital market for other long-term borrowers. The government has reduced this "overhang" in three ways. It has confined new bond issues to the "short end" of the market leaving the long-term financing market available to the provinces, municipalities and private business. It has converted the bond holdings of the Unemployment Insurance Fund totalling $237 million into non-marketable bonds redeemable on 30 days' notice. The federal government also established a Purchase Fund to assist in the orderly management of the public debt.
During 1961 the federal government continued the practice of advance refunding with the Bank of Canada. This means of reducing the weight of nearby maturities contributed to orderly debt management.
From late 1959 through 1960 the average term to maturity of Government of Canada and C.N.R. market securities remained almost unchanged at about 9| years. It was shortened to 9 years by the end of June, 1961 and just under 8§ years by the end of the year.
Federal Government Financing
In calendar year 1961 the Government of Canada raised $1.1 billion from net new security issues in the capital market and from net sales of securities held by the Unemployment Insurance Commission and other Government accounts. This total exceeded the $0.7 billion raised from direct and guaranteed securities in 1960, approximated that raised in 1959 and was less than the $1.4 billion obtained in 1958.
Of the $1.1 billion in new funds in 1961, $674 million came from issues of marketable bonds. Retirement of treasury bills held outside government accounts exceeded new issues by about $50 million. Net new issues of Canada Savings Bonds in the fourth quarter and for the year as a whole (at $486 million), were about $100 million higher than in the previous year.

The Budget-Appendix Provincial and Municipal Financing
Net new funds raised by provincial governments from security issues and chartered bank loans, which had been between $500 million and $600 million annually since 1956, exceeded $800 million last year. However $205 million represented issues of guaranteed bonds by one of the provinces to finance the expropriation of a privately-owned utility company.
Since 1956 net new municipal financing has ranged between $270 million and $350 million annually. In 1961 it fell to $283 million as compared with $305 million in 1960.
In the fourth quarter of 1961 net new provincial and municipal financing was at its heaviest for that quarter since 1957.
Non-Farm Business Financing
The rapid upswing since early 1961 in industrial production, employment and corporate profits was accompanied in the third quarter by higher outlays on plant and equipment and in the fourth quarter by a significant rise in non-farm business inventories. As economic activity expanded, the funds obtained by non-farm business from the security markets, banks, retained corporate earnings, and other sources began to exceed those raised in the corresponding quarters of 1960, despite the drop in net direct foreign investment in Canada.
Corporate earnings retained after payment of taxes and dividends, which had declined in the preceding year and a half, turned above the levels of the previous year in the second quarter of 1961. Depreciation allowances moved slightly above year-earlier levels in the third quarter.
Corporate bond and stock issues, net of retirements, totalled $460 million in 1961 compared to $523 million in 1960. Bank loans to non-farm business moved above the levels of a year earlier in the second and third quarters of 1961 and for the year as a whole to $303 million compared to $137 million in 1960.
Net new corporate financing from securities issues and bank loans moved above the level of a year earlier in the second and third quarters. During 1961, as has been the case for several years now, the high level of common stock prices, in relation to earnings and dividends, continued to make financing through the sale of stock attractive to corporations. The net retirement of corporate stocks in the last half of 1961 reflects the distribution of $86 million to the shareholders of a utility taken over by a provincial government and the exchange of $104 million of preferred stock for bonds guaranteed by that province.
Housing Finance
Total expenditures on new housing declined from $1,825 million in 1958 to $1,472 million in 1960 and were $1,485 million in 1961.
In late 1960 the government amended the terms under which it would guarantee N.H.A. housing loans by financial institutions. Amongst other things the amendments provided for higher mortgage loans and lower down payments. The supply of mortgage funds in the hands of lending institutions appeared to be quite substantial at that time.
In 1961 the mortgage loans made under N.H.A.-guarantee by financial institutions rose to $388 million as compared with $177 million in 1960, the highest amount since 1958. This type of housing finance came almost completely from life insurance companies and trust and loan companies. The proportion of all housing funds supplied by N.H.A.-approved lending institutions rose from 12% in 1960 to 26% in 1961.
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The Budget-Appendix

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-	1958	1959	1960	1961Public funds	(Millions	Df dollars)	CMHC limited-dividend loan	30	45	27	27Other CMHC loans	304	264	245	248Other Public funds	50	40	36	25Sub-total	384	349	308	300Institutional funds-NHA	Chartered banks	259	235	42	1Life Insurance Companies	129	137	112	227Loan and Trust Companies, etc	35	28	23	160Sub-total	423	400	177	388Institutional funds-Conventional	Life Insurance Companies	159	228	201	171Loan and Trust Companies, etc	102	97	93	79Sub-total	261	325	294	250Equities of owners in addition to the above Mortgages and	other funds*1*	758	720	692	547Total w	1,825	1,794	1,472	1,485
Note: Figures may not add due to rounding.
M These include equities of owners or builders on dwellings being financed with mortgages from public funds or from institutional lenders. Also includes equities on dwellings financed with mortgage loans from non-institutional lenders or by loans other than mortgages, or equities on dwellings fully financed by their owners.
Differs slightly from public and private expenditures on housing in Table 13, which includes major alterations to buildings but not the cost of land. Table 38 includes the cost of land but not major alterations to buildings.
Conventional mortgage loans by lending institutions declined from $294 million in 1960 to $250 million in 1961. Financing in the form of equity and other non-mortgage payments by home owners fell from $692 million in 1960 to $547 million in 1961. This decline reflected the 8% decline in housing completions and the lower down payments permitted under the National Housing Act.
New housing financed directly by C.M.H.C. and other public funds fell from $384 million in 1958 to $308 million in 1960 and to $300 million in 1961, and from a 21% share of all new housing finance in 1958 to one of 20% in 1961. In June, 1961 Central Mortgage and Housing Corporation inaugurated a series of auctions of insured mortgages from its portfolio to promote a secondary market in mortgages. Sale from three auctions in 1961 totalled $41 million.
In line with the lower level of long-term interest rates the government reduced the interest rate on N.H.A. mortgages from 6f% to 6^% in November, 1961.
Consumer Credit
The rate of growth in short-term consumer debt slowed somewhat further last year. Credit extended to consumers from finance companies, retail stores, and unsecured personal loans from banks, increased by about 6% or $185 million compared to $270 million or 9% in 1960 and $341 million or 14% in 1959.

The Budget-Appendix

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-	1958	1959	I960	1961Consumer Credit	(Millions of dollars	)Chartered bank unsecured personal loans(1>	133	166	138	173Instalment finance companies	-12	38	22	-68Small loan companies	39	83	65	34Department stores	20	32	50	33Other retail dealers	15	22	-5	13Total	195	311	270	185Other Loans	Chartered bank secured personal loans	30	-5	4	50Chartered bank government-guaranteed home improvement	loans	10	2	-4	10Life insurance Co. policy loans	10	18	21	16Quebec savings banks	-1	1	1	3Credit unions	G2	77	28	n.a.
o>
Excludes personal loans fully secured by marketable bonds and stocks and home improvement
loans, n.a., not available.
The bulk of the increase in consumer credit continued to be in unsecured personal loans from banks which rose $173 million in 1961 compared to $138 million in 1960. Consumer credit extended by retail stores rose $46 million in 1961 compared to $45 million in 1960 and that provided by instalment finance and small loan companies fell $34 million in 1961 compared to a rise of $87 million in 1960.

The Budget-Appendix
Part II

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Table of Contents
Page
1.	Introduction	 2768
2.	Highlights of governmental financial operations during 1961-62. 2768
3.	Budgetary accounts	
2771A.	Revenues	
2772B.	Expenditures	
27784.	Summary of assets and liabilities as at March 31, 1962	
2801A.	Changes in principal liability classifications during 1961-62 2801B.	Changes in principal asset classifications during 1961-62..	2808C.	Increase in net debt	
28165.	The cash position	
28176.	The public debt	
28207.	Supplementary detailed tables	
2826
The Budget-Appendix


[Stage Direction]
1. INTRODUCTION
The figures presented in this Part for the fiscal year ended March 31, 1962 are preliminary and subject to revision. The fiscal year of the government ended on March 31 but the books must remain open for several weeks after that date to record various adjusting entries and to take into account all payments up to and including April 30 made on account of expenditures originating in and properly chargeable to the fiscal year 1961-62. The figures used in this White Paper are based on eleven months actual and one month estimated. The final figures when they become available next July or August will vary to some extent from those given in the following pages.
2. HIGHLIGHTS OF GOVERNMENTAL FINANCIAL OPERATIONS

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The following table summarizes the budgetary and non-budgetary transactions for the fiscal year and indicates how the budgetary and non-budgetary transactions, including changes in unmatured debt, affected the government's cash balances. More detailed explanations of these transactions are given in subsequent sections of this Part.

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(in millions of dollars)
Summary of Budgetary and Non-Budgetary Transactions and Changes in Cash Position
Budgetary transactions-
Revenues-
Tax	
Non-tax	
Expenditures-
Defence....
Non-defence
Deficit (-)	
Non-budgetary transactions-
Receipts and credits (excluding unmatured debt transactions)-
Repayment of temporary loans to old age security fund...
Repayments of other loans, investments and working capital
advances	
Net government annuities account receipts	
Net insurance and pension accounts receipts	
Other non-budgetary receipts	
Disbursements and charges (excluding unmatured debt transactions)-
Other loans, investments and working capital advances...
Other non-budgetary disbursements	
Net amount received from non-budgetary transactions	
Overall cash requirements (-) to be financed by increase in debt or
decrease in cash balances	
Net increase in unmatured debt outstanding in the hands of the public	
Net increase or decrease (-) in Receiver General bank balances....
Fiscal year ended March 31	
1962 (estimated)	1961
5,157	5,016
615	602
5,772	5,618
-1,647	-1,538
-4,916	-4,420
-6,563	-5,958
-791	-340
17	11
367	201
37	42
267	353
116	92
804	699
-478	-484
-14	-169
-492	-653
312	46
-479	-294
880	223
491	-71

The Budget-Appendix
Budgetary transactions
The revenues and expenditures as forecast in the budget speech of June 20, 1961 and the actual figures as now estimated are shown in the following table:

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(in millions of dollars)
Budgetary Transactions for Fiscal Year 1961-62	Budget forecast June 20, 1961	Actual (estimated)	Increase or decrease (-) compared with forecast of June 20, 1961	
			Amount	Per cent
	5,765.0 -6,415.0	5,772.0 -6,563.4	7.0 148.4	0.12 2.31
				
				
	-650.0	-791.4	141.4	
				
Revenues
The revenues of the government for the fiscal year ended March 31, 1962 amounted to $5,772 million. This is $7 million or approximately one-tenth of one per cent more than the total of $5,765 million forecast in the budget speech of June 20, 1961, and approximately $154 million or about 3 per cent more than the total of $5,618 million collected in the fiscal year 1960-61.
Of the increase of $154 million over 1960-61 revenues, $141 million was due to tax revenues and $13 million to non-tax revenues. Personal income tax receipts accounted for most of the increase in tax revenues and were $89 million more than in the preceding year, reflecting the higher level of incomes during the year. Corporation income tax collections were $72 million less than the preceding year due to lower corporate profits in 1960.
The increase of $13 million in non-tax revenues was due to increases of $21 million in return on investments, $6 million in net post office revenue and a reduction of $14 million in other non-tax revenues.
Expenditures
Government expenditures at $6,563 million were $148 million or approximately 2.3 per cent more than forecast on June 20, 1961, and $605 million or 10 per cent more than total expenditures in 1960-61. Almost all of the increase of $148 million has been due to events that were not foreseen last June. An increase of approximately $40 million in defence expenditures has resulted from certain changes in policy made last August, and the abnormally low crop yields in the prairie provinces have produced an unexpected increase of about $40 million in statutory payments under the Prairie Farm Assistance Act and also resulted in the recent decision to make further payments of $42 million to western grain producers.
Expenditures for defence again constituted the largest item and amounted to $1,647 million or 25 per cent of total expenditures, compared with $1,538 million or 26 per cent in 1960-61.
Civil or non-defence expenditures were $4,916 million, an increase of $496 million over the corresponding total for the previous fiscal year. The main items were increases of $150 million in expenditures of the Department of National Health and Welfare (including increases of $95 million in the government's contribution under the Hospital Insurance and Diagnostic Services Act, $37 million in unemployment assistance and $15 million in family allowances), $80
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The Budget-Appendix million in expenditures of the Department of Transport (including $50 million in interim payments related to the recommendations of the Royal Commission on Railway Problems), $67 million in the expenditures of the Department of Labour (including increases of $46 million in payments to provinces authorized by the Technical and Vocational Training Assistance Act and $15 million under the municipal winter works incentive program), $52 million in expenditures of the Department of Finance (including $42 million for higher public debt charges) and $42 million in expenditures of the Department of Veterans Affairs (including increases of $27 million for pensions for disability or death and $16 million in war veterans allowances and other benefits).
More detailed explanations of budgetary revenues by source and expenditures by classification and department are given in Section 3 of this Part.
Deficit
On the basis of these figures the deficit for the fiscal year 1961-62 was $791 million compared with the deficit of $650 million as forecast on June 20, 1961, and the deficit of $340 million in 1960-61.
Non-budgetary transactions
A net amount of $312 million was available during the fiscal year from nonbudgetary transactions (excluding unmatured debt transactions). Non-budgetary disbursements and charges totalled $492 million and receipts and credits, $804 million. Sums totalling $478 million were required for loans, investments and working capital advances, and $14 million for other non-budgetary purposes. On the other hand, of the total of $804 million available from various non-budgetary receipts and credits, $384 million was available from the repayment of loans, investments and working capital advances, $304 million from the net receipts from various government annuity, insurance and pension accounts, and $116 million from other non-budgetary sources.
Old age security fund
During 1961-62 pension payments from the old age security fund were $625 million compared with $592 million in the previous fiscal year. Accounting for approximately $20 million of the increase was the increased rate of payment (from $55 to $65 per month) effective February 1, 1962. Tax receipts credited to the fund were $649 million for the year. The excess of $24 million in receipts over payments was applied to repay the temporary loans made by the Minister of Finance to the fund. These loans amounted to $17 million at March 31, 1961. The fund reflected a credit balance of $7 million as at March 31, 1962.
The transactions in the account during 1961-62 compared with those for the previous fiscal year are as follows:
Fiscal year ended March 31
(estimated)
(in millions of dollars)
Pension payments	
625	592Tax receipts	
649	603Excess of receipts over payments applied in part to the repayment of temporary loans from the Minister of Finance	24	11Temporary loans outstanding at fiscal year-end	
17Balance in fund at fiscal year-end	
7
The Budget-Appendix
Debt transactions
During 1961-62 the government issued securities amounting to $3,451 million (excluding the refunding of treasury bills which mature weekly) and redeemed or converted issues in the amount of $2,594 million, resulting in an increase of $857 million in unmatured debt. However, as other liabilities increased by $407 million the government's gross public debt increased by $1,264 million to $22,867 million at March 31, 1962. During the same period the government's net assets increased by $473 million to $9,638 million. As a result, the government's net debt was $13,229 million at March 31, 1962, the increase of $791 million being equivalent to the budgetary deficit for the fiscal year.
Cash position
Receiver General balances were $401 million more at March 31, 1962, than they were at March 31, 1961. This is the amount by which the increase of $880 million in unmatured debt outstanding in the hands of the public, plus the net amount of $312 million available from non-budgetary transactions, exceeded the budgetary deficit of $791 million.
3.	THE BUDGETARY ACCOUNTS
Total revenues were $5,772 million for 1961-62, $154 million more than the total for the previous year. Total expenditures were $6,563 million, an increase of $605 million over the total for 1960-61. The deficit for the fiscal year 1961-62 was $791 million compared with $340 million for the previous year.
iooo r

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Millions of Dollars
qiooo ^ -500
1958	1959	I960	1961	1962*

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Fiscal Years Ended March 31 Billions of Dollars
* Eiliaaled
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The Budget-Appendix

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Budgetary Revenues, Expenditures and Deficit (in millions of dollars)
Fiscal year ended March 31	Budgetary revenues	Budgetary expenditures	Deficit (-)1958	5,048.8	5,087.4	-38.61959	4,754.7	5,364.0	-609.3I960	5,289.8	5,702.9	-413.11961	5,617.7	5,958.1	-340.41962 (estimated)	5,772.0	6,563.4	-791.4
A. Revenues
Budgetary revenues totalled $5,772 million in 1961-62 compared with $5,618 million in 1960-61, an increase of $154 million or 3 per cent. Tax revenues of $5,157 million accounted for 89 per cent of the total for the current fiscal year and non-tax revenues of $615 million accounted for 11 per cent.

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Fiscal Years Ended March 31 Billions of Dollars

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«

TOTAL REVENUES FROM TAXES 89%


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Eilimatod
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The Budget-Appendix

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Budgetary Revenues by Major Sources (in millions of dollars)
	Fiscal year ended March 31				Increase	
Source	1962 (estimated)	1961	or decrease (-)	Amount	Per cent	Amount	Per cent	Amount	Per centTax revenues- Income tax- Personal^*	1,800.0	31.2	1,711.2	30.5	88.8	5.2Corporation^1*	1,205.0	20.8	1,276.6	22.7	-71.6	-5.6On dividends, interest, etc., going abroad	115.0	2.0	88.2	1.6	26.8	30.4Excise taxes- Sales*1*	774.0	13.4	720.6	12.8	53.4	7.4Other	276.0	4.8	290.7	5.2	-14.7	-5.1Customs import duties	539.0	9.3	498.7	8.9	40.3	8.1Excise duties	303.0	6.3	344.9	6.1	18.1	5.2Estate tax*2*	85.0	1.5	84.9	1.5	0.1	0.1Other taxes	(3) 6,157.0	89.S	(3) 6,016.8	89. S	(3) nuz	8.8Non-tax revenues- Return on investments	305.0	5.3	283.8	5.0	21.2	7.5Post office revenue	180.0	3.1	173.6	3.1	6.4	3.7Other non-tax revenues	130.0	2.3	144.5	2.6	-14.5	-10.7615.0	10.7	601.9	10.7	18.1	8.8Total budgetary revenues...	5,772.0	100.0	5,617.7	100.0	154.3	2.71961-62	1960-61
(estimated)
(1>
Excluding tax credited to the old age security fund-
Personal income tax	
Corporation income tax	
Sales tax	
259.0	229.4
100.0	103.5
290.0	270.2
649.0	603.1
(,) Includes duties levied under the Dominion Succession Duty Act.
<8) Less than $50,000.
(1) TAX REVENUES
Tax on personal incomes
In 1961-62 the largest source of government revenue was again the personal income tax. The yield (excluding the old age security tax) was $1,800 million or 31 per cent of all budgetary revenue. The increase of $89 million or 5 per cent over 1960-61 collections was due principally to the higher level of personal incomes during the fiscal year.
The tax on personal incomes levied under the Old Age Security Act in the amount of $259 million was credited to the old age security fund.
Corporation income tax
The corporation income tax (excluding the old age security tax) was $1,205 million or 21 per cent of government revenue for 1961-62 and was the second largest source of revenue. Collections under this category were approximately $72 million or 6 per cent less than the comparable total of $1,277 million for
1960-61. This decrease was due mainly to lower corporate profits for the calendar year 1960 which in turn were reflected by lower corporation income tax collections during 1961-62.
In addition the tax on incomes of corporations levied under the Old Age Security Act in the amount of $100 million was credited to the old age security fund.
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The Budget-Appendix Taxes on dividends, interest, etc., going abroad
Revenue included in this category is derived from taxes withheld on payments of dividends, interest, rents, royalties, alimony and income from estates and trusts made to non-residents. Collections in 1961-62 were $115 million, an increase of $27 million over the comparable total for 1960-61. This reflects the removal of exemptions and the increased rate on certain interest and dividend payments, to non-residents, introduced in December 1960.
Excise taxes
Included under this heading are the revenues from the general sales tax and other special excise taxes.
From a revenue standpoint the most important tax levied under the Excise Tax Act is the sales tax. Receipts from this tax (excluding the old age security tax) were $774 million, $53 million or 7 per cent higher than in the previous fiscal year.
The tax on sales, levied under the Old Age Security Act, in the amount of $290 million was credited to the old age security fund.
Excise taxes levied under the Excise Tax Act, other than the general sales tax, were $276 million, a decrease of $15 million from the 1960-61 total of $291 million. Receipts from the excise tax levied on the sale of automobiles were $34 million less than corresponding receipts for 1960-61 due to the repeal of such tax effective June 21, 1961.
Customs import duties
Customs import duties totalled $539 million for 1961-62, an increase of $40 million over the comparable figure for 1960-61.
Excise duties
Excise duties are levied on alcoholic beverages and tobacco products. (Additional taxes on tobacco products are levied under the Excise Tax Act referred to above.) Gross receipts in 1961-62 from taxes on alcoholic beverages were $209 million and from taxes on tobacco products were $158 million, compared with $200 million and $150 million respectively in 1960-61.

The Budget-Appendix
Estate tax
Revenue from this source amounted to $85 million in 1961-62, approximately the same as the total for the previous fiscal year.
Other taxes
Revenue under this heading was less than $50 thousand in 1961-62, approximately the same as for 1960-61.
(2) NON-TAX REVENUES
Non-tax revenues totalled $615 million in 1961-62, an increase of $13 million or 2 per cent over the 1960-61 total of $602 million.

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(in millions of dollars)
Non-Tax Revenues	Fiscal year ended March 31	Increase or decrease (-)	1962 (estimated)	1961	Amount	Per centReturn on investments	305.0	283.8	21.2	7.5Post office revenue	180.0	173.6	6.4	3.7Refunds of previous years' expenditure	26.8	40.5	-13.7	-33.8Services and service fees	42.4	40.4	2.0	5.0Proceeds from sales	23.4	24.0	-0.6	-2.5Privileges, licences and permits	23.4	22.4	1.0	4.5Bullion and coinage	7.0	8.5	-1.5	-17.6Premium, discount and exchange	0.5	0.9	-0.4	-44.4Other	6.5	7.8	-1.3	-16.7615.0	601.9	13.1	2.2
Return on investments
Receipts in this category amounted to $305 million for the fiscal year 1961-62 compared with the 1960-61 total of $284 million.
Payments from Crown corporations amounted to $206 million in 1961-62, an increase of $12 million over the previous year's total. The main increases of $18 million in Bank of Canada profits and $12 million in receipts from Central Mortgage and Housing Corporation were offset partly by a decrease of $4 million in returns from the Canadian National Railways and by the fact that there was no comparable receipt in the current fiscal year to the $13 million received from The St. Lawrence Seaway Authority in 1960-61.
It should also be noted that in accordance with Order-in-Council P.C.
1961-1863 dated December 29, 1961, interest of $14 million payable on December 31, 1961 by The St. Lawrence Seaway Authority, as well as interest payable on December 31, 1962 has been deferred until December 31, 1963. On December 31, 1963 the total amount of interest so deferred together with the interest payable on December 31, 1963, will be computed as a single sum and is to be repaid in equal annual instalments calculated by amortizing the said sum, including interest at rates determined by the Minister of Finance, over a period of forty-six years.
Other loans and investments yielded $99 million compared with $89 million in 1960-61. Receipts of $8 million from the purchase fund which was established during 1961-62 to assist in the management of the public debt in accordance with the announcement by the Minister of Finance in the budget speech of
[Stage Direction]
The Budget-Appendix June 20, 1961, together with increases of $3 million in receipts from the securities investment account, $3 million in interest received from the Unemployment Insurance Commission and $1 million in interest on loans to national governments were offset partly by decreases of $3 million in interest on Receiver General deposits with the chartered banks and $2 million in the yield from the sinking fund held for retirement of unmatured debt.

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(in millions of dollars)
Return on Investments	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Loans to, and investments in, Crown corporations-			
Bank of Canada-profits	107.7	90.2	17.5Canadian National Railways	1.4	5.0	-3.6Canadian National (West Indies) Steamships Limited..	1.2	2.9	-1.7Canadian Overseas Telecommunication Corporation.. ..	1.3	1.2	0.1Central Mortgage and Housing Corporation	71.2	59.6	11.6Eldorado Mining and Refining Limited	5.0	4.9	0.1Farm Credit Corporation	6.0	4.1	1.9National Capital Commission	0.7	1.1	-0.4National Harbours Board	3.9	3.9	Northern Canada Power Commission	0.5	1.1	-0.6Northern Ontario Pipe Line Crown Corporation	4.3	4.3	Polymer Corporation Limited	3.0	3.0	The St. Lawrence Seaway Authority	13.1	-13.1Miscellaneous	0.2	0.2	£06.4	194.6	11.8Other loans and investments-	United Kingdom	21.8	22.2	-0.4Other national governments	9.0	8.1	0.9Provincial governments	1.6	1.9	-0.3Soldier and general land settlement loans and veterans	land act advances	4.9	5.3	-0.4Exchange fund account	32.6	32.5	0.1Purchase fund account	7.6	7.6Securities investment account	8.2	5.1	3.1Sinking fund held for retirement of unmatured debt....	1.0	2.7	-1.7Interest-bearing deposits with chartered banks	3.6	6.6	-3.0Unemployment Insurance Commission	2.9	0.4	2.5Miscellaneous	5.4	4.4	1.098.6	89. £	9.4305.0	283.8	21.2
Post office revenue
In 1961-62 gross post office receipts totalled $210 million but authorized disbursements from revenue for salaries and rent allowances at semi-staff and revenue offices, commissions at sub-offices, transit charges on Canadian mail forwarded through or delivered in foreign countries, etc., in the amount of $30 million, brought net revenue to $180 million. In 1960-61 gross receipts were $202 million, authorized disbursements were $28 million and net revenue was $174 million.
As costs of operating the Post Office Department during 1961-62 (excluding the $30 million charged to revenue) were $189 million, net expenditure exceeded net revenue by $9 million. However, in making this comparison, it is to be noted that the total shown for post office revenue does not reflect any payment for the franking privilege covering parliamentary and departmental mail or for certain miscellaneous services provided for other government departments and agencies, nor does the total shown for operating expenses reflect any charges for premises occupied by the Post Office Department or for certain accounting and miscellaneous services provided by other departments.

The Budget-Appendix

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(in millions of dollars)
Post Office Revenue	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1981	
Postage	106.9	189.0	7.3Commission on money orders	7.8	7.7	0.1Rental of post office boxes	2.0	1.9	0.1Transit credits on foreign correspondence	1.4	1.3	0.11.8	1.4	0.4Less-	£09.9	£01.9	8.0Salaries and allowances at semi-staff and revenue offices.	-25.6	-24.0	-1.6Transit charges on foreign correspondence	-1.7	-1.2	-0.5Other	-2.6	-3.1	0.5-29.9	-£8.S	-1.8180.0	173.6	6.4
Refunds of previous years' expenditures
Refunds in 1961-62 of expenditures made in prior years totalled $27 million, a decrease of $14 million from the comparable total for 1960-61. Included in this category is an amount of $12 million received by the Department of National Defence, consisting of refunds of $3 million from the United States Government, $1 million in respect of advances to Canadian Vickers Limited, $1 million from the defence production revolving fund and $7 million from miscellaneous sources. In addition, the unexpended balance of parliamentary grants as at March 31, 1961, amounting to $3 million was refunded by the Canadian Broadcasting Corporation.
Services and service fees
Collections in 1961-62 for services and service fees amounted to $42 million, an increase of $2 million over the total for 1960-61.
Revenue in this category includes: $12 million received by the Royal Canadian Mounted Police, mainly for police services to certain provinces and municipalities; $14 million received by the Department of Transport of which $7 million was in respect of aircraft landing fees and $3 million from marine steamers' earnings; $7 million by the Department of Agriculture including $5 million for services in connection with the inspection, weighing, storage and elevation of grain, and $1 million in respect of race track supervision; and $4 million by the Department of National Health and Welfare due mainly to reimbursement by the provinces for treatment of Indians in federal government hospitals.
Proceeds from sales
Receipts from this source totalled $23 million compared with $24 million in 1960-61.
Included in this category are: $9 million by the Department of Defence Production of which $8 million represents amounts from the sale of surplus Crown assets (after deducting certain agency fees and transfers) and $1 million under agreements of sale of Crown assets; $5 million by the Department of Public Works representing the proceeds of the sales of properties by Central Mortgage and Housing Corporation; and $4 million by the Department of National Defence of which $2 million is in respect of the sales of stores to the United Nations.
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The Budget-Appendix Privileges, licences and permits
Revenue of $23 million for the fiscal year 1961-62 on account of privileges, licences and permits was $1 million more than was received in 1960-61.
Included in this revenue are amounts of $9 million received from the Department of Transport representing rentals, concessions and radio licence fees and $4 million from the Department of Northern Affairs and National Resources including $1 million in respect of bonuses, exploratory permits, fees, leases and royalties from oil and gas.
Bullion and coinage
Revenues in this category were derived from the operations of the Royal Canadian Mint and consist mainly of $7 million from a net gain on coinage. Small amounts were also obtained from gold refining charges, handling charges and gain on gold refining.
Premium, discount and exchange
In the current fiscal year premium, discount and exchange transactions resulted in a net credit of $1 million, approximately the same as for 1960-61.
Other non-tax revenues
Revenues, other than tax revenues, not dealt with in preceding sections totalled $7 million for 1961-62, a decrease of $1 million from the 1960-61 total.
B. Expenditures
Budgetary expenditures for 1961-62 amounted to $6,563 million, an increase of $605 million over the 1960-61 total of $5,958 million.

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Fiscal Years Ended March 31 Billions of Dollars
1959
1961
1962*
1962*
1.	Does	not	include	those payments made	to provincial and municipal government* for specified purposes.2.	Does	not	include	pension payments out	of the eld age security fund not charged te budgetary expenditures	in the year In erhich
they were paid.
* Estimated

The Budget-Appendix

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Statement of Budgetary Expenditures by Departments and Major Classifications
(in millions of dollars)
-	Fiscal year e 1962 (estimated)	nded March 31 1961	Increase or decrease (-)	Amount	Per cent	Amount	Per cent	Amount	Per centDefence expenditures-	National Defence	1,622.0	24.7	1,517.5	25.5	104.5	6.9Defence Production	24.7	0.4	20.4	0.3	4.3	21.11,61,6.7	25.1	1,637.9	25.8	108.8	7.1Non-defence expenditures-	Agriculture	289.3	4.4	264.9	4.4	24.4	9.2Atomic Energy	35.3	0.5	38.9	0.7	-3.6	-9.3Canadian Broadcasting Corporation...	77.0	1.2	66.8	1.1	10.2	15.3Citizenship and Immigration	66.1	1.0	61.1	1.0	5.0	8.2External Affairs	95.0	1.5	103.0	1.7	-8.0	-7.8Finance-	Public debt charges	839.7	12.8	797.6	13.4	42.1	5.3Tax-sharing, subsidy and other	540.6	8.2	537.8	9.0	2.8	0.5Government's contribution to the	public service superannuation	account	46.9	0.7	41.4	0.7	5.5	13.3Other	85.2	1.3	83.2	1.4	2.0	2.41,512.4	2S.0	1,460.0	24.5	62.4	3.6Fisheries	24.3	0.4	19.2	0.3	5.1	26.6Forestry	15.1	0.2	10.1	0.2	5.0	49.5Justice	9.7	0.1	8.6	0.2	1.1	12.8Office of the Commissioner of	Penitentiaries	25.0	0.4	19.1	0.3	5.9	30.934.7	0.5	27.7	0.6	7.0	25.885.4	1.3	24.1	0.4	61.3	254.4Unemployment Insurance Act ad-	ministration and government's	contribution	102.7	1.6	97.2	1.6	5.5	5.7188.1	2.9	121.3	2.0	66.8	55.1Mines and Technical Surveys	69.3	i.i	59.1	1.0	10.2	17.3National Health and Welfare-	Family allowances	520.9	7.9	506.2	8.5	14.7	2.9Government's contributions under	the Hospital Insurance and	Diagnostic Services Act	284.0	4.3	189.4	3.2	94.6	49.9Other	232.5	3.6	191.6	3.2	40.9	21.31,037.4	15.8	887.2	14.9	150.2	16.9National Research Council, including	the Medical Research Council	38.7	0.6	34.4	0.6	4.3	12.5National Revenue	75.9	1.2	73.3	1.2	2.6	3.5Northern Affairs and National	Resources	86.5	1.3	74.3	1.2	12.2	16.4Post Office	188.6	2.9	178.4	3.0	10.2	5.7Public Works	193.4	2.9	200.9	3.4	-7.5	-3.7Royal Canadian Mounted Police	61.1	0.9	56.0	0.9	5.1	9.1Trade and Commerce	40.0	0.6	21.8	0.4	18.2	83.5Transport	416.4	6.3	336.4	5.7	80.0	23.8Veterans Affairs	334.1	5.1	292.3	4.9	41.8	14.3Other Departments	38.0	0.6	33.1	0.6	4.9	14.84,916.7	74-9	4,420.2	74.2	496.6	11.2Total budgetary expenditures	6,563.4	100.0	5,958.1	100.0	605.3	10.2
The Budget-Appendix

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Fiscal Years Ended March 31
Estimated
(1) DEFENCE EXPENDITURES
Defence expenditures which consist of expenditures of the Departments of National Defence and Defence Production were again the largest category of government budgetary expenditures. The total of $1,647 million for 1961-62 was approximately 25 per cent of the aggregate budgetary expenditures of the government for the year and was $109 million more than the total of $1,538 million for 1960-61.

[Stage Direction]
(in millions of dollars)
Defence Expenditures	Fiscal year ended March 31	Increase1962 (estimated)	1961	decrease (-)Department of National Defence- Naval services	262.9	245.5	17.4Army services	447.8	402.2	45.6Air services	778.6	751.6	27.01,489.3	1,399.S	90.0Administration and general	23.6	21.2	2.4Defence research and development	42.9	41.9	1.0Government's contribution to the Canadian forces superannuation account	56.0	40.5	15.5Mutual aid to NATO countries including contributions towards military costs of NATO	10.2	14.6	-4.41,622.0	1,517.5	104.5Department of Defence Production- Administration and general	17.9	15.7	2.2Production capacity and capital assistance	2.3	1.8	0.5Technological capability	4.5	2.9	1.6S4.7	to. 4	4.s1,646.	1,537.9	108.8
The Budget-Appendix
National Defence
Expenditures of the Department of National Defence were $1,622 million in 1961-62. In 1960-61 expenditures were $1,518 million.
Expenditures for naval, army and air services amounted to $1,489 million, $90 million more than the 1960-61 total. Of this increase, $17 million was attributable to naval services, $46 million to army services and $27 million to air services.
Direct charges to mutual aid amounted to $10 million during 1961-62 compared with $15 million in 1960-61 and consisted of procurement of equipment for mutual aid and Canada's share of NATO military budgets and infra-structure costs.
Expenditures for defence research and development were $43 million compared with $42 million in 1960-61.
The government's contribution to the Canadian forces superannuation account of an amount equal to If times the contributions by permanent services personnel was $56 million, an increase of $16 million over the total for the previous year. The increase resulted from a provision of the new act which became effective March 1, 1960 and which authorized the crediting to the superannuation account quarterly, in each fiscal year, such amount, in relation to the total amount paid into the said account during the preceding quarter by way of contributions in respect of current services and past services by contributors, as is specified by the Minister of Finance. The contribution for 1960-61 therefore, was based on a nine-month period from April 1, 1960 to December 31, 1960, inclusive, compared with the contribution for 1961-62 which was based on a twelve-month period from January 1, 1961 to December 31, 1961, inclusive.
Administration and general costs were $24 million in 1961-62, an increase of $2 million over the 1960-61 total.
Defence Production
The total expenditure of $25 million in 1961-62 for the Department of Defence Production was $4 million more than in 1960-61.
Outlays of $5 million in connection with the government program instituted in 1959-60 of supporting selected defence development programs in order to sustain technological capability in Canadian industry were $2 million more than in 1960-61. Expenditures of $2 million in respect of the procurement of capital assistance by Canadian Arsenals Limited and the programs under which assistance for the establishment of production capacity and capital assistance is given to private contractors, Crown plants operated on a management-fee basis and Crown corporations undertaking contracts essential to the defence program were approximately $1 million more than corresponding expenditures in the previous fiscal year.
Administration and general costs amounted to $18 million in 1961-62 compared with $16 million in 1960-61.
Cash outlays for defence
In addition to these budgetary expenditures for defence, there are certain other cash outlays which must be considered in assessing the full effect of the defence program on the economy of Canada.
Section 11 of the National Defence Act provides that materiel, not immediately required for the use of the Canadian defence forces or the Defence Research Board, may be sold to such countries and upon such terms as the Governor in
26207-1-177
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The Budget-Appendix Council may determine. The proceeds of such sales in 1961-62 amounting to $3 million were credited to a special account to be used for the procurement of materiel. Cash outlays of $6 million from this account during 1961-62 resulted in a balance of $2 million at March 31, 1962.
The Department of Defence Production also makes cash disbursements for the procurement of materials for use in the manufacture of defence equipment which are not recorded as budgetary expenditures. For purposes of accounting and control, these amounts are charged to the defence production revolving fund and are treated as assets on the books of the government until they are billed to the Department of National Defence or sold to defence contractors for use in the manufacture of defence equipment. As a result of the transactions during 1961-62 purchases exceeded proceeds from sales by $18 million and the assets of the fund increased by an equivalent amount, leaving a balance of $33 million in the account at March 31, 1962.
The following table summarizes the cash outlays for defence for the past two fiscal years:
TABLE 10 (in millions of dollars)
Cash Outlays for Defence	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Budgetary expenditures-			
Department of Defence Production	24.7	20.4	4.3Department of National Defence	1,622.0	1,517.5	104.51,646.7	1,537.9	108.8Disbursements for, or receipts from (-)-	Defence production revolving fund (net)	17.5	-5.0	22.5Replacement of materiel account-sec. 11, National	Defence Act (net)	3.0	-1.0	4.020.6	-6.0	26.5Net cash outlay for defence	1,667.2	1,531.9	135.3
(2) NON-DEFENCE EXPENDITURES
Agriculture
Expenditures of the Department of Agriculture were $289 million for 1961-62 compared with $265 million for 1960-61.
Increases of $40 million in expenditures to cover the deficit in the prairie farm emergency fund and $6 million in outlays for rehabilitation and reclamation projects were offset partly by the decrease of $30 million in the net operating loss of the agricultural stabilization board.
The 1961-62 net operating loss of the agricultural stabilization board was $23 million compared with $53 million in 1960-61.
Advances of $49 million made by the Minister of Finance to the prairie farm emergency fund to cover the year's deficit have been charged to budgetary expenditures. The comparable amount in 1960-61 was $9 million.

The Budget-Appendix
TABLE 11 (in millions of dollars)
Agriculture	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961 '	
	5.2	4.4	0.8
	4.9		4.9
23.0	53.4	-30.449.0	48.2	0.86.5	6.3	0.249.5	9.2	40.3Production and marketing branch-	16.7	19.2	-2.514.4	13.4	1.040.5	40.5	7.2	6.6	0.619.6	17.3	2.398. b 26.6	97.0 20.2	i.i 6.426.2	26.2	
289.3	264.9	24.4
Atomic Energy
Expenditures of the Atomic Energy Control Board and payments to Atomic Energy of Canada Limited were $35 million compared with $39 million in 196061, a decrease of $4 million.
Administration expenses of the Atomic Energy Control Board and grants for research and investigations with respect to atomic energy totalled $1 million, approximately the same as for the previous fiscal year.
During the year under review approximately $34 million was paid to Atomic Energy of Canada Limited for its research program, $4 million less than in the previous fiscal year. Of the total, $26 million was for current operations and maintenance and $8 million for the construction or acquisition of buildings, works, land and equipment.
TABLE 12 (in millions of dollars)
Atomic Energy	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Atomic Energy Control Board-			
Administration	0.1	0.1	Grants for research	0.7	0.6	0.10.8	0.7	0.1Atomic Energy of Canada Limited-	Research program-	Construction or acquisition of buildings, works, land	and equipment	8.2	15.1	-6.9Current operations and maintenance	26.3	23.1	3.2H.5	88. S	-8.735.3	38.9	-3.6
Canadian Broadcasting Corporation
Payments of $77 million have been made by the government to the Canadian Broadcasting Corporation during 1961-62, an increase of $10 million over the total for 1960-61.
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The Budget-Appendix
Grants for capital requirements including the replacement of existing capital assets of the radio and television services increased by $1 million during 1961-62, while grants in respect of the net operating requirements of the radio and television services were $9 million higher than in the previous fiscal year.
Outlays for the international shortwave broadcasting service were approximately the same as for 1960-61.
TABLE 13 (in millions of dollars)
Canadian Broadcasting Corporation	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Grants in respect of radio and television services-	6.4	5.6	0.868.9	59.3	9.675.S 1.7	64.9 1.9	w.4 -0.2
77.0	66.8	10.2
Citizenship and Immigration
Expenditures of the Department of Citizenship and Immigration were $66 million in 1961-62, an increase of $5 million over the total for 1960-61.
Outlays for the Indian affairs branch increased by $5 million during 1961-62 due principally to increases of $2 million in expenditures for Indian education, $1 million in outlays for Indian welfare, $1 million in costs of Indian agencies and $1 million in expenditures for economic development of Indians.
Expenditures of the immigration branch and the citizenship and citizenship registration branches were approximately the same as for the previous fiscal year.
TABLE 14 (in millions of dollars)
Citizenship and Immigration	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
1.0	0.9	0.11.6	1.5	0.112.5	12.3	0.251.0	46.4	4.6
66.1	61.1	5.0
External Affairs
Expenditures of the Department of External Affairs totalled $95 million in 1961-62, a decrease of $8 million from the previous year's total.
The principal changes in expenditure as compared with 1960-61 were decreases of $7 million in contributions to international organizations and $4 million in assistance to other countries and increases of $2 million in costs of representation abroad and $1 million in expenditures for administration and general.

The Budget-Appendix
Contributions to international organizations decreased by $7 million during the year due mainly to the fact that 1960-61 expenditures included the following items for which there was no comparable expenditure in 1961-62: (a) $6 million for the purchase and transfer of wheat flour to assist in the establishment of strategic stock piles of food supplies in member states of NATO; (b) $2 million for the reimbursement of the agricultural commodities stabilization account for canned pork donated to international relief agencies; and (c) $2 million to reimburse the agricultural products board account for whole milk powder donated for international relief purposes.

[Stage Direction]
(in millions of dollars)
External Affairs	Fiscal year ended March 31	Increase1962 (estimated)	1961	decrease (-)8.9	8.1	0.82.5	6.4	-3.9Canada's assessment for membership in international (includ-	5.4	4.7	0.715.1	22.2	-7.150.0	50.0	13.1	11.6	1.5
95.0	103.0	-8.0
Finance
Expenditures of the Department of Finance amounted to $1,512 million in 1961-62, an increase of $52 million over the corresponding total of $1,460 million in 1960-61.
The main changes were increases of $42 million in public debt charges, $5 million in the government's contribution to the public service superannuation account, $3 million in tax-sharing, subsidy and other payments to provinces, $2 million in administration expenses of the Comptroller of the Treasury, and $2 million in the government's share of medical-surgical insurance premiums and a decrease of $2 million in administration and general costs.
TABLE 16 (in millions of dollars)
Finance	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Administration and general	
Government's contribution as an employer to the unemploy-	11.0	12.9	-1.9ment insurance fund	
Government's contribution to the public service superannua-	1.0	1.0	tion account	46.9	41.4	5.5Government's share of medical-surgical insurance premiums.	7.6	6.0	1.6Grants to municipalities in lieu of taxes on federal property... Grants to universities-	24.7	24.5	0.2Payments to the Canadian Universities Foundation	
Office of the Comptroller of the Treasury-administration	19.4	19.0	0.4expenses	21.5	19.8	1.7Public debt charges	839.7	797.6	42.1Tax-sharing, subsidy and other payments to provinces	540.6	537.8	2.81,512.4	1,460.0	52.4
The Budget-Appendix Government's contribution to the public service superannuation account
In 1961-62 the government's contribution to the public service superannuation account amounted to $47 million, an increase of $5 million over the comparable figure for 1960-61.
Public debt charges
In 1961-62 public debt charges were again the second largest item of budgetary expenditure. These charges, which consist of interest on public debt, the annual amortization of bond discounts and commissions, the cost of issuing new loans and other costs incurred in servicing the public debt, totalled $840 million in 1961-62 or 13 per cent of all budgetary expenditure, compared with $798 million or 13 per cent in 1960-61.

[Stage Direction]
(in millions of dollars)
Interest and Other Public Debt Charges	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Interest on public debt- Unmatured debt including treasury bills- Payable in Canada	639.2	607.2	32.0Payable in London	1.0	1.4	-0.4Payable in New York	2.7	4.0	-1.3Other liabilities- Annuity, insurance and pension accounts	642.9	612.6	so.s157.7	141.0	16.7Deposit and trust accounts	3.4	3.1	0.3161.1	144-1	17.0Total interest on public debt	804.0	756.7	47.3Other public debt charges-	Annual amortization of bond discounts and commissions.	33.6	38.9	-5.3Cost of issuing new loans	1.3	1.3	Servicing of public debt	0.8	0.7	0.1SB.7	40.9	-6.2839.7	797.6	42.1
Interest on public debt in 1961-62 amounted to $804 million, an increase of $47 million over the 1960-61 total of $757 million. Interest of $643 million on unmatured debt was $30 million higher than in 1960-61 reflecting the increase in unmatured debt; interest of $161 million on other liabilities was $17 million higher due to the increase of $17 million in interest on annuity, insurance and pension accounts, including increases of $10 million in respect of the public service superannuation account and $5 million in respect of the Canadian forces superannuation account.
Other public debt charges amounted to $36 million compared with $41 million in 1960-61. The decrease of $5 million was due to a reduction in the cost of annual amortization of bond discounts and commissions.
When considering the magnitude of these public debt charges and the burden they place upon the public treasury, it must be borne in mind that a substantial portion of the debt is attributable to, or is invested in, productive or earning assets. Therefore, in calculating the net burden of the government's annual interest charges, the income derived from loans, investments and other productive assets must be taken into account. For 1961-62 this income totalled $305 million as shown in the non-tax revenue section under the heading "Return

The Budget-Appendix
on investments". This amount deducted from the gross total of $804 million for interest as shown in the above table leaves a net amount of $499 million compared with a net of $473 million in 1960-61. Measured as a percentage of the net debt the burden of the net annual interest charges was 3.77 per cent in 1961-62 compared with 3.80 per cent in 1960-61.

[Stage Direction]
(in millions of dollars)
Net Burden of Annual Interest Charges	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
	804.0 -305.0	756.7 -283.8	47.3 -21.2
			
Net interest costs				
	499.0	472.9	26.1
	3.77	3.80	
			
Tax-sharing, subsidy and other payments to provinces
Payments to the provinces during 1961-62 for statutory subsidies, payments under the Federal-Provincial Tax-Sharing Arrangements Act, additional grants to Newfoundland and the transfer of a portion of income tax receipts from certain public utility companies were $541 million compared with $538 million in 1960-61.
Charges to budgetary expenditures in 1961-62 under the federal-provincial tax-sharing arrangements, including adjustments made on account of previous years, were $2 million less than in 1960-61. The decrease was due to an increase in the relative proportion of personal and corporation income tax attributable to provinces other than Ontario and British Columbia which had the effect of reducing the equalization payments payable with respect to 1961-62 as well as substantially lowering the adjusting payments necessitated by the final calculation of the tax-sharing arrangements payments for 1960-61 which were required to be made by December 31, 1961.
Payments of $503 million to the provinces under the federal-provincial tax-sharing arrangements in 1961-62 were adjusted by deducting a total of $1 million from the tax-sharing entitlements of Newfoundland, Prince Edward Island, New Brunswick, Manitoba and Saskatchewan, making a net disbursement to the provinces of $502 million. These deductions represented recovery of one-fifth of the overpayments made to those provinces under the 1952 tax rental agreements on account of an over-estimation of their population as revealed by the 1956 census. By Memoranda of Agreement with the provinces concerned, the 1952 tax rental agreements were amended to authorize the recovery of the overpayments in equal monthly deductions from the tax-sharing payments to those provinces over the five-year life of the new arrangements.
Statutory subsidies at $24 million for 1961-62 were $3 million more than in the previous year, on account of adjustments arising out of the results of the decennial census.
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The Budget-Appendix
Information in regard to the tax collection agreements with the provinces is given under the liability category "Deposit and trust accounts".

[Stage Direction]
(in millions of dollars)
Tax-Sharing, Subsidy and Other Payments to Provinces	Fiscal year ended March 31	Increase1962 (estimated)	1961	decrease (-)Payments under Federal-Provincial Tax-Sharing Arrangements Act, c. 29, Statutes of 1956, as amended	502.7	504.9	-2.2Statutory subsidies	23.5	20.7	2.8Transfer of certain public utility tax receipts	6.4	4.2	2.2Transitional grant to Newfoundland	0.3	-0.3Additional grant to Newfoundland	8.0	7.7	0.3540.6	537.8	2.8
A summary of payments, by provinces, during 1961-62 is given in the following table:
TABLE 20 (in millions of dollars)
Fiscal year ended March 31, 1962 (estimated)
Tax-Sharing, Subsidy and Other Payments to Provinces	Payments under tax-sharing arrangements	Statutory subsidies	Transfer of certain public utility tax receipts	Additional grant	TotalNewfoundland	27.6	1.7	0.1	8.0	37.4Nova Scotia	39.8	2.1	0.4	42.3Prince Edward Island	7.2	0.7	0.1	8 0New Brunswick	33.7	1.7	0.1	35.5Quebec	60.4	4.0	2.1	66.5Ontario	120.7	4.6	0.6	125.9Manitoba	40.4	2.1	0.1	42 6Saskatchewan	40.6	2.1	0.1	42.8Alberta	58.4	2.8	1.9	63 1British Columbia	73.9	1.7	0.9	76.5502.7	23.5	6.4	8.0	540.6
The amount of public utility tax receipts for transfer to the provinces in 1961-62 was $6 million, an increase of $2 million over the 1960-61 total. The 1961-62 payments represent the transferable portion of the income tax received from corporations whose main business was the distribution to, or the generation for distribution to, the public of electrical energy, gas or steam for the taxation year 1959.
Fisheries
Expenditures of the Department of Fisheries amounted to $24 million in 1961-62, $5 million more than in 1960-61.

The Budget-Appendix
Increases of $2 million in outlays for field services, $2 million in expenditures of the Fisheries Research Board of Canada and $1 million in administration and general costs were the main factors contributing to the increase.
TABLE 21 (in millions of dollars)
Fisheries	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Administration and general	4.8	3.7	i.iCanadian share of the expenses of international commissions.	1.1	0.8	0.3Field services	12.0	9.9	2.1Fisheries Research Board of Canada	6.4	4.8	1.624.3	19.2	5.1
Forestry
Expenditures of the Department of Forestry totalled $15 million for 1961-62, an increase of $5 million over the 1960-61 total of $10 million.
Contributions to the provinces for assistance in establishing forest access roads and trails during 1961-62 were $3 million over the comparable expenditure for 1960-61, while outlays for forest research, and administration and general costs were each $1 million more.
TABLE 22 (in millions of dollars)
Forestry	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Administration and general	1.9	1.2	0.7Contributions to the provinces- Assistance in forest inventory, reforestation and forest fire protection	2.4	2.3	0.1Forest access roads and trails	4.0	0.6	3.4Forest research	6.8	6.0	0.815.1	10.1	5.0
Justice
Expenditures of the Department of Justice amounted to $35 million for 1961-62, an increase of $7 million over the total for the previous fiscal year.
Administration and general costs accounted for $1 million and expenditures of the Office of the Commissioner of Penitentiaries for $6 million of the overall
increase.
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TABLE 23 (in millions of dollars)
Justice	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Administration and general	4.6	3.6	1.0Judges' salaries and travelling allowances	5.1	5.0	0.19.7	8.6	1.1Office of the Commissioner of Penitentiaries-	Administration	0.7	0.7	Construction, improvements and equipment	6.6	3.2	3.4Operation and maintenance of penitentiaries	17.7	15.2	2.599.0	19.1	5.934.7	27.7	7.0
Labour
Expenditures of the Department of Labour totalled $188 million in 1961-62, an increase of $67 million over the total for 1960-61.
Payments to provinces under the Technical and Vocational Training Assistance Act of $54 million for the year were $46 million more than comparable expenditures in 1960-61. This act, which received Royal Assent on December 20, 1960, superseded the Vocational Training Co-ordination Act. The purpose of the act is to provide financial assistance to vocational and technical schools, and training under youth training projects.
Payments to provinces and in respect of Indian bands by the Government of Canada, of amounts not exceeding one-half of the cost of labour engaged on winter work projects in the amount of $24 million were $15 million more than in 1960-61.

[Stage Direction]
(in millions of dollars)
Labour	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Administration and general	7.4	6.7	0.7Municipal winter works incentive program	
Payments to provinces authorized by the Technical and	24.0	8.9	15.1Vocational Training Assistance Act	54.0	8.5	45.586.4	94.1	61. SUnemployment Insurance Commission-	Administration and general	46.1	42.1	4.0Government's contribution to the fund	56.6	55.1	1.5102.7	97.2	6.6188.1	121.3	66.8
The Budget-Appendix
Unemployment Insurance Act administration and government's contribution
Expenditures in 1961-62 relating to the act (excluding the government's payment as an employer which is included in the expenditures of the Department of Finance) totalled $103 million compared with $97 million in 1960-61.
Unemployment insurance benefit payments are not charged to budgetary expenditures but are paid from the unemployment insurance fund which is financed by equal contributions from employees and employers, by interest earned on investments, and by the government's contribution of an amount equal to one-fifth of the combined employee-employer contributions. Further information in regard to the unemployment insurance fund is given under the liability category "Annuity, insurance and pension accounts''.
The government's contribution to the fund for 1961-62 was $57 million and administrative costs were $46 million; the corresponding amounts for 1960-61 were $55 million and $42 million respectively.
Mines and Technical Surveys
Expenditures of the Department of Mines and Technical Surveys amounted to $69 million in 1961-62, an increase of $10 million over the total for 1960-61.
Increases in expenditures include $6 million in higher outlays for surveys and mapping, $1 million in the expenditures of the geological survey of Canada, $1 million in costs of the Dominion Coal Board and $1 million for administration and general expenses.
TABLE 25 (in millions of dollars)
Mines and Technical Surveys	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
	5.1	3.9	1.2 0.7
	20.0	19.3	
12.5	12.1	0.45.5	4.3	1.24.8	4.5	0.321.4	15.0	6.4
69.3	59.1	10.2
National Health and Welfare
Expenditures of the Department of National Health and Welfare during 1961-62 were $1,037 million, an increase of $150 million over the total for 1960-6L
Outlays for the national health branch were $368 million in 1961-62, an increase of $98 million over the previous year's total. The increase was due primarily to the increase of $95 million in the government's contributions under the Hospital Insurance and Diagnostic Services Act.
During 1961-62 expenditures of the welfare branch increased by $51 million to $663 million mainly as the result of increases of $36 million for unemployment assistance and $15 million for family allowances.
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TABLE 26 (in millions of dollars)
National Health and Welfare	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Administration and general	
National health branch- Government's contributions under the Hospital Insur-	6.3	5.1	1.2ance and Diagnostic Services Act	284.0	189.4	94.6General health grants to provinces	49.0	48.0	1.0Indian and northern health services	24.5	23.0	1.5Other	10.3	9.4	0.9Welfare branch-	S67.S	S69.8	98.0Family allowances	520.9	506.2	14.7Old age assistance	30.7	30.7	Disabled persons allowances	16.2	16.4	-0.2Blind persons allowances	4.1	4.2	-0.1Unemployment assistance	88.0	51.5	36.5Other	3.4	3.3	0.166S.S	6US.S	S1.01,037.4	887.2	150.2
Government's contributions under the Hospital Insurance and Diagnostic Services Act
The Hospital Insurance and Diagnostic Services Act, Statutes of 1957, authorized contributions by Canada in respect of programs administered by the provinces, providing hospital insurance and laboratory and other services in aid of diagnosis. In 1961-62 payments were $284 million compared with $189 million in 1960-61. The increase of $95 million was due partly to the fact that during 1961-62 all provinces and territories were participating under the agreements for the full fiscal year, whereas during 1960-61 the Province of Quebec and the Yukon Territory participated under the agreements for only three months and nine months respectively.
The effective date of each agreement is as followsJuly 1, 1958 for Newfoundland, Manitoba, Saskatchewan, Alberta and British Columbia; January 1, 1959 for Nova Scotia and Ontario; July 1, 1959 for New Brunswick; October 1, 1959 for Prince Edward Island; April 1, 1960 for the Northwest Territories; July 1, 1960 for the Yukon Territory; and January 1, 1961 for Quebec.
TABLE 27 (in millions of dollars)
Government's Contributions under the	Fiscal year ended March 31	IncreaseHospital Insurance and Diagnostic Services Act	1962 (estimated)	1961	decrease (-)Newfoundland	6.3	5.1	1.2Nova Scotia	11.5	9.6	1.9Prince Edward Island	1.4	1.0	0.4New Brunswick	9.7	7.9	1.8Quebec	72.0	13.9	58.1104.7	84.5	20.2Manitoba	15.3	13.1	2.215.9	14.5	1.421.0	16.9	4.1British Columbia	25.5	22.5	3.00.7	0.4	0.3
284.0	189.4	94.6

The Budget-Appendix
General health grants to provinces
General health grants to provinces for assistance in hospital construction, general health services and the control of diseases amounted to $49 million for 1961-62, an increase of $1 million over the 1960-61 total of $48 million.

[Stage Direction]
(in millions of dollars)
General Health Grants	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Newfoundland	1.1	0.8	0.3Nova Scotia	2.6	2.9	-0.3Prince Edward Island	0.3	0.4	-0.1New Brunswick	1.8	1.6	0.2Quebec	13.9	14.0	-0.1Ontario	16.2	15.8	0.4Manitoba	2.7	3.0	-0.3Saskatchewan	2.6	2.5	0.1Alberta	3.7	2.8	0.9British Columbia	4.0	4.1	-0.1Northwest and Yukon Territories	0.1	0.1	49.0	48.0	1.0
Family allowances
Family allowances are payable in respect of all children under sixteen years of age, resident in Canada, with minor exceptions such as in the case of children of immigrants who must reside in Canada one year before an allowance is payable. The monthly allowance is $6 if the child is under 10 years and $8 in the age group 10 to 15. Children of immigrants receive family assistance of $5 per month during their first year of residence in Canada from the Department of Citizenship and Immigration if during that period they are under sixteen years of age.
Family allowance payments in 1961-62 totalled $521 million and represented 8 per cent of total expenditures. The increase of $15 million over the previous year reflects the increase in the number of children in the eligible age groups.

[Stage Direction]
(in millions of dollars)
Family Allowance Payments	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Newfoundland	16.3	16.0	0.3Nova Scotia	21.6	21.2	0.4Prince Edward Island	3.2	3.1	0.1New Brunswick	19.2	18.9	0.3Quebec	158.2	154.2	4.0Ontario	168.1	162.6	5.5Manitoba	25.1	24.4	0.7Saskatchewan	26.3	25.8	0.5Alberta	38.9	37.4	1.5British Columbia	42.7	41.4	1.3Northwest and Yukon Territories	1.3	1.2	0.1520.9	506.2	14.7
The Budget-Appendix Old age assistance, disabled persons allowances, blind persons allowances and unemployment assistance
Under the Old Age Assistance Act, the federal government reimburses the provinces by paying 50 per cent of the lesser of $65 monthly or the amount of assistance given by the provinces in the form of monthly pensions to eligible persons in need who are in the age group 65 to 69. (Under the Old Age Security Act, all persons 70 years and over who satisfy the residence requirements of the act may receive a pension of $65 per month from the federal government out of the old age security fund.) Similarly, the federal government reimburses the provinces under the Blind Persons Act for allowances of not more than $65 per month to blind persons in need 18 years of age or over by paying 75 per cent of the total payments, and under the Disabled Persons Act by paying 50 per cent of not more than $65 per month for allowances to disabled persons in need 18 years of age or over. In 1961-62 payments of $31 million for old age assistance, $16 million in respect of disabled persons allowances and $4 million for blind persons allowances were approximately the same as for 1960-61.
Amendments to the Old Age Assistance Act, the Blind Persons Act and the Disabled Persons Act raised the maximum pension towards which the federal government would contribute from $55 to $65 per month, effective February 1, 1962. As increased payments are dependent on individual action by each province they will not affect expenditures in the 1961-62 fiscal year. A similar increase was authorized in old age security payments, effective on the same date, through an amendment to the Old Age Security Act.
Under the Unemployment Assistance Act the federal government contributes up to 50 per cent of the cost of unemployment assistance paid by the provinces, subject to certain deductions as set out in the act. All provinces have signed agreements with the federal government. There was an increase of $37 million in contributions for 1961-62 over those for the previous year.
The following table presents a distribution of these payments to provinces for 1961-62:
TABLE 30 (in millions of dollars)
Federal Share or Old Age Assistance, Disabled Persons Allowances, Blind Pehsons Allowances and Unemployment Assistance	Fiscal year	ended March 31, 1962	(estimated)Old age assistance	Disabled persons allowances	Blind persons allowances	Unem- ployment assistance1.7	0.4	0.2	3.51.6	0.9	0.4	1.50.2	0.2	(1)	0.21.7	0.6	0.3	1.611.0	7.5	1.4	35.86.7	4.4	0.8	17.01.6	0.4	0.2	3.81.8	0.5	0.2	4.02.0	0.6	0.2	4.52.3	0.7	0.3	16.00.1	Cl)	0.1	0.1
30.7	16.2	4.1	88.0
<*>Less than 150,000.

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National Research Council, including the Medical Research Council
Expenditures of the National Research Council, including the Medical Research Council amounted to $39 million for 1961-62, $4 million higher than for 1960-61. Increases of $2 million in expenditures for administration and general and $2 million in outlays for scholarships and grants in aid of research were the main factors contributing to this increase.
TABLE 31 (in millions of dollars)
National Research Council, including	Fiscal year ended March 31	Increasethe Medical Research Council	1962 (estimated)	1961	decrease (-)21.7	19.7	2.0Construction or acquisition of buildings, works, land and	5.5	5.3	0.211.5	9.4	2.1
38.7	34.4		4.3
National Revenue
Expenditures of the Department of National Revenue totalled $76 million for 1961-62, $3 million more than in 1960-61, due mainly to increases of $2 million in expenditures of the taxation division and $1 million in outlays of the customs and excise divisions.
TABLE 32 (in millions of dollars)
National Revenue	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Customs and excise divisions	40.1	39.0	1.1Taxation division	35.6	34.1	1.5Income tax appeal board	0.2	0.2	75.9	73.3	2.6
Northern Affairs and National Resources
Expenditures of the Department of Northern Affairs and National Resources in the fiscal year 1961-62 amounted to $87 million, an increase of $12 million over the comparable total for 1960-61.
The main changes were increases of $5 million in expenditures of the national parks branch, $5 million in outlays of the northern administration branch and $2 million in the expenses of the water resources branch and a decrease of $1 million in administration and general costs.
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(in millions of dollars)
Northern Affairs and National Resources	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Administration and general	3.9	4.5	-0.6Canadian government travel bureau	3.0	2.7	0.3Contributions to the provinces to assist in the development of roads leading to resources	12.0	12.0	National parks branch	29.2	23.9	5.3Northern administration branch	34.4	29.2	5.2Water resources branch	4.0	2.0	2.086.5	74.3	12.2
Post Office
Gross expenditures of the Post Office Department for 1961-62 totalled $219 million, an increase of $12 million over the 1960-61 outlay of $207 million.
Remuneration of postmasters and staffs at revenue and semi-staff offices and certain other authorized disbursements are paid from revenue. These payments, included in the total of $219 million, were $30 million for 1961-62, an increase of $2 million over the comparable total for 1960-61.
TABLE 34 (in millions of dollars)
Post Office	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Charged to budgetary expenditure- Administration and general	2.1	2.1	Financial services	3.3	3.1	0.2Operations-salaries and other expenses of staff post offices, district offices and railway mail services; and supplies and equipment and other items for revenue post offices	120.3	111.0	9.3Transportation-movement of mail by land, air and water	62.9	62.2	0.7188.6	178. i	10. tCharged to revenue- Operations-salaries of postmasters and staffs at revenue and semi-staff offices, commissions paid at sub-offices and other disbursements	29.9	28.3	1.6218.5	206.7	11.8
Public Works
Expenditures of the Department of Public Works for 1961-62 amounted to $193 million, a decrease of $8 million from the 1960-61 total of $201 million.
Increases in expenditures of $3 million for housing, $3 million in payments to the National Capital Commission, $2 million for harbours and rivers engineering services and $1 million in administration and general costs were more than offset by decreases in expenditures of $9 million in development engineering services and $6 million in outlays for "Public buildings-construction and services".

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The decrease of $9 million in expenditures of the development engineering services was due mainly to the reduction of $7 million in contributions to the provinces under the terms of the Trans-Canada Highway Act and the decrease of S3 million in costs of construction of the Trans-Canada highway through national parks, offset in part by the increase of SI million in outlays for the installation of a water supply system at Churchill, Manitoba.
Expenditures for "Public buildings-construction and services" were approximately S6 million less than the comparable figure for the previous fiscal year, due to the decrease in costs of acquisition, construction and improvements of public buildings.

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(in millions of dollars)
Public Works	Fiscal year ended March 31	Increase1962 (estimated)	1961	decrease (-)Administration and general	15.3	14.4	0.9Development engineering services- Trans-Canada highway division-	-2.9Construction through national parks	6.3	9.2	Contributions to the provinces under the terms of	-6.7the Trans-Canada Highway Act	42.0	48.7	General	5.3	4.5	0.86S.6	6S.4	-8.8Harbours and rivers engineering services- Acquisition, construction and improvements of harbours	29.9	1.6and river works	31.5	Dredging	6.1	6.1	-0.1General	0.8	0.9	S8.4	S6.9	1.5Housing	6.2	3.7	2.5National Capital Commission	8.8	6.3	2.5Public buildings-construction and services- Acquisition, construction and improvements of public buildings-	8.3	8.5	-0.2Ottawa	Other centres in Canada	15.8	18.2	-2.4Outside Canada	0.3	4.3	-4.0Fire prevention	0.2	0.2	0.2Furniture and furnishings	2.8	2.6	Maintenance and operation	43.7	43.4	0.371.1	77.t	-6.1163.4	200.9	-7.5
Royal Canadian Mounted Police
Expenditures for the Royal Canadian Mounted Police amounted to S61 million for 1961-62, an increase of $5 million over the 1960-61 total of $56 million.
Payments as shown in the table represent gross expenditures; payments received from the provinces and municipalities for police services at $11 million have been credited to revenue.
Increases in expenditures of $5 million for the land, air and training divisions and $1 million in higher outlays for headquarters administration and national police services were offset partly by the decrease of $1 million in the government's contribution to the Royal Canadian Mounted Police superannuation account.
The decrease of SI million in the government's contribution to the Royal Canadian Mounted Police superannuation account was due to the fact that the government's contribution during 1961-62 was based on the amount paid into the
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The Budget-Appendix account by contributors for the twelve-month period ending March 31, 1961, whereas in the previous fiscal year it was based on the twelve-month period ending March 31, 1960 as well as a nine-month period April 1 to December 31, 1960, inclusive, in accordance with the provisions of the new Royal Canadian Mounted Police Superannuation Act, 1960.

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(in millions of dollars)
Royal Canadian Mounted Police	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Government's contribution to Royal Canadian Mounted			
Police superannuation account	2.3	2.9	-0.6Headquarters administration and national police services..	7.7	6.8	0.9Land, air and training divisions	45.9	41.4	4.5Marine services	1.8	1.7	0 1Pensions and other benefits	3.4	3.2	0.261.1	56.0	5.1
Trade and Commerce
Expenditures of the Department of Trade and Commerce were $40 million for 1961-62, compared with the 1960-61 total of $22 million.
The increase of $18 million in expenditure for 1961-62 was due mainly to increases of $3 million in administration and general costs and $15 million in outlays of the Dominion Bureau of Statistics mainly on account of the 1961 Decennial Census of Canada.
TABLE 37 (in millions of dollars)
Trade and Commerce	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Administration and general	6.7	4.0	2.7Dominion Bureau of Statistics	25.1	10.4	14.7National Energy Board	0.5	0.4	0.1Standards branch	2.7	2.5	0.2Trade commissioner service	5.0	4.5	0.540.0	21.8	18.2
Transport
Expenditures of the Department of Transport totalled $416 million for 1961-62, compared with the 1960-61 total of $336 million.
Outlays for air services reflected an increase of $18 million over the previous year due mainly to increased expenditures of $8 million by the civil aviation branch, $6 million by the telecommunications and electronics branch and $3 million by the meteorological branch.
Expenditures of the Board of Transport Commissioners for Canada increased by $45 million due in large part to interim payments of $50 million related to

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recommendations of the Royal Commission on Railway Problems, pending its complete report, to companies as defined in the F reight Rates Reduction Act. A decrease of $5 million in the government's contribution to the railway grade crossing fund occurred during 1961-62.
Increases in expenditures amounting to $4 million by the Canadian Maritime Commission in 1961-62 were attributable to the increase of $1 million in steamship subventions for coastal services and to the outlay of $3 million for capital subsidies for the construction of commercial and fishing vessels for which there was no comparable expenditure in the previous fiscal year.
Marine services expenditures amounting to $50 million were $3 million greater than in 1960-61; outlays for railway and steamship services, including charges to expenditures in respect of deficits of government-owned enterprises, were approximately the same as for the previous fiscal year; the deficit of Trans-Canada Air Lines charged to budgetary expenditure in 1961-62 was $7 million compared with $3 million in 1960-61; and non-active advances to the National Harbours Board were $4 million greater than in the previous year.

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(in millions of dollars)
Transport	Fiscal year ended March 31	Increase1962 (estimated)	1961	decrease (-)7.2	6.1	1.1Air services-	5.5	4.8	0.791.3	82.9	8.418.9	16.2	2.736.3	30.0	6.3Board of Transport Commissioners for Canada-	15!. 0 1.3	18S.9 1.2	18.1 0.120.0	20.4	-0.4Interim payments related to the recommendations of the	50.0	50.07.0	7.0	10.0	15.0	-5.088.3 11.2	48.6 6.9	44.7 4.3Marine services-	1.1	1.0	0.110.7	10.1	0.64.0	4.1	-0.123.0	23.3	-0.34.5	3.5	1.0Ship channel service-St. Lawrence and Saguenay rivers. Railway and steamship services-	6.5 49.8 5.1	4.7 46.7 5.8	1.8 S.l -0.7Maritime Freight Rates Act-difference between tariffs	12.3	14.1	-1.8Deficits-	67.3	67.5	-0.27.1	5.4	1.73.1	2.6	0.5Yarmouth, N.S.-Bar Harbour, Maine, U.S.A.	0.1	0.1	1.4	0.5	0.998.4 6.5	96.0 2.6	0.4 3.95.0	0.6	4.4
416.4	336.4	80.0
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Veterans Affairs
Expenditures of the Department of Veterans Affairs amounted to $334 milhon for 1961-62, an increase of $42 million over the 1960-61 total of $292 million.
Pensions for disability or death totalled $178 million during the current year as compared with $151 million in 1960-61, and outlays for war veterans allowances and other benefits increased by $16 million to $81 million for 1961-62. These increases were mainly the result of increased rates of pensions during the year over those in effect during 1960-61.

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(in millions of dollars)
Veterans Affairs	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Administration and general		6.9 177.6 4.7 3.2 58.5 2.2 81.0	6.7 150.7 5.2 3.4 58.7 2.9 64.7	0.2 26.9 -0.5 -0.2 -0.2 -0.7 16.3
Pensions for disability or death				
Soldier Settlement and Veterans Land Acts- Administration and general				
Provision for reserve for conditional benefits, Veterans Land Act				
Treatment and welfare services				
War service gratuities and re-establishment credits				
War veterans allowances and other benefits				
			
	334.1	292.3	41.8
All Other Departments
Expenditures of the departments not dealt with in preceding sections amounted to $38 million, an increase of $5 million over the total for 1960-61.
The most significant changes in expenditures for 1961-62 were increases of $3 million in outlays of the Privy Council Office (of which $2 million pertained to the expenses of the Royal Commission on Government Organization), $1 million m the expenditures of the Department of Public Printing and Stationery and $1 million in higher costs of the Civil Service Commission.

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(in millions of dollars)
All Other Departments	Fiscal year ended March 31	Increase1962 (estimated)	1961	decrease (-)-Auditor General	1.1 0.3 0.3 4.7 0.5	Board of Broadcast Governors	0.3	Chief Electoral Officer	Civil Service Commission	Governor General and Lieutenant-Governors	0.4	0.1Insurance	Legislation	National Film Board	5.2 1.0 4.9 1.0 4.1 5.1	National Gallery of Canada	0.9	Privy Council	Public Archives and National Library...	0.8	Public Printing and Stationery	Secretary of State	
38.0	33.1	4.9

The Budget-Appendix
4.	SUMMARY OF ASSETS AND LIABILITIES OF CANADA AS AT MARCH 31, 1962
The assets and liabilities of the Government of Canada at March 31, 1962, the comparable balances at March 31, 1961, and the changes in each category during 1961-62, are shown in condensed form in the following table.

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Summary of Assets and Liabilities of Canada (in millions of dollars)
	Balance at March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Liabilities			
Current and demand liabilities	1,220.9	1,147.6	73.3Deposit and trust accounts	267.5	239.7	27.8Annuity, insurance and pension accounts	4,260.5	3,955.5	305.0Undisbursed balances of appropriations to special accounts. .	108.5	104.5	4.0Deferred credits	78.3	79.0	-0.7Suspense accounts	6.1	8.6	-2.5Unmatured debt	16,925.0	16,067.9	857.1Total liabilities	22,866.8	21,602.8	1,264.0Assets	Current assets	1,220.5	784.4	436.1Advances to the exchange fund account	1,783.0	2,024.0	-241.0Sinking fund held for retirement of unmatured debt	17.8	17.0	0.8Loans to, and investments in, Crown corporations	3,995.3	3,627.7	367.6Loans to national governments	1,339.8	1,378.2	-38.4974.5	1,022.1	-47.6Securities held in trust	31.4	30.1	1.3Deferred charges-	Unamortized portions of actuarial deficiencies-	Canadian forces superannuation account	326.3	326.3	Public service superannuation account	276.7	276.7	Royal Canadian Mounted Police superannuation	account	3.5	3.5Unamortized loan flotation costs	120.9	130.7	-9.8727.4	7SS.7	-6.SSuspense accounts	0.2	0.1	0.1Capital assets	(1)	(1)	Inactive loans and investments	94.8	94.8	Total assets	10,184.7	9,712.1	472.6Leas reserve for losses on realization of assets	-546.4	-546.4	Net assets	9,638.3	9,165.7	472.6Net debt, represented by excess of liabilities over net assets.	13,228.5	12,437.1	791.4
O) Shown at nominal value of $1
A.	Changes in Principal Liability Classifications During 1961-62
The gross liabilities of the government increased by $1,264 million during the fiscal year due mainly to increases of $857 million in unmatured debt, $305 million in annuity, insurance and pension accounts, $73 million in current and demand liabilities, and $28 million in deposit and trust accounts.
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Fiscal Years Ended March 31 Billions of Dollars
I%OTHER LIABILITIES
1% DEPOSIT AND TRUST ACCOUNTS


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Current and demand liabilities
This category consists of obligations of the government payable currently or on demand.

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(in millions of dollars)
Current and Demand Liabilities	Balance at March 31		Increase or decrease (-)
	1962 (estimated)	1961	
266.0	251.7	14.3240.3	221.4	18.9Non-interest bearing notes payable to-	6.7	6.7	356.0	377.0	-21.0362.7 46.9	383.7 31.9	-21.0 15.095.0	66.8	28.2182.0	154.0	28.0International monetary fund-revaluation adjustment of	10.1	-10.123.1	23.1	4.5	4.5	0.4	0.4	
1,220.9	1,147.6	73.3
The net increase of $73 million was due mainly to increases of $28 million in interest due and outstanding, $28 million in accrued interest, $19 million in accounts payable, $15 million in matured debt outstanding, and $14 million in outstanding treasury cheques offset partly by decreases of $21 million in non-interest bearing notes and $10 million in the revaluation adjustment of the Canadian dollar balance in the international monetary fund.

The Budget-Appendix
Deposit and trust accounts
Sundry funds deposited with, or held in trust by, the Receiver General of Canada for various purposes are recorded in these accounts.

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(in millions of dollars)
Deposit and Trust Accounts	Balance at March 31	Increase1962 (estimated)	1961	decrease (-)6.1	6.5	-0.412.1	12.1Canadian Pension Commission-administration trust fund..	12.0 15.3	11.0 15.6	1.0 -0.3Contractors securities-sundry departments-	13.2	11.0	2.210.4	9.4	1.01.4	1.4	25.0 23.5	21.8 19.4	S.2 4.11.5	1.4	0.1
Guarantee deposits

4.7	4.6	0.18.0	9.1	-1.130.0	28.5	1.5Instalment purchase of bonds, public service	11.5 16.1	11.7 16.1	-0.24.0	5.7	-1.728.6	28.5	0.138.0	38.0Soldier settlement and veterans land acts trust account-	2.5	2.5	7.7	36.7	-29.01.0	1.1	-0.119.9	19.5	0.4
267.5	239.7	27.8
The change during the year was an increase of $28 million. The main items constituting this increase were $38 million in the provincial tax collection agreements account and a decrease of $29 million in the United States of America deposit account.
Under the 1957 tax rental agreements, the obligation on the renting provinces to abstain from the imposition of personal and corporation income taxes was to lapse on December 31, 1961. As the Government of Canada did not offer to renew tax rental agreements, the former renting provinces have all imposed personal and corporation income taxes effective January 1, 1962. The Government of Canada, in place of the tax rental agreements, offered to enter into tax collection agreements with the provinces whereby Canada would undertake to collect without charge the provincial personal and corporation income taxes at rates determined by the provinces provided that the provincial personal income tax was expressed as a percentage of the federal personal income tax payable and the provincial corporation income tax employed a definition of corporate taxable income identical with the federal definition. To make room for the imposition of provincial income taxes, the Income Tax Act was amended in the 1961 session of Parliament to (1) reduce the federal income tax payable by individuals resident
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The Budget-Appendix in the provinces by 16 per cent in 1962 and by a further one per cent in each subsequent year until the deduction amounts to 20 per cent in 1966, and (2) reduce the federal tax rate on the taxable income of corporations earned in the provinces by 9 percentage points. Canada will be collecting the personal income tax for nine provinces (Quebec excepted) and the corporation income tax for eight provinces (Quebec and Ontario excepted). With the exception of Saskatchewan and Manitoba, the provinces which have entered into tax collection agreements have imposed personal and corporation income taxes equivalent to the federal withdrawal. The aforementioned provinces have imposed personal income taxes at 22 per cent rather than 16 per cent of the federal tax payable and 10 per cent rather than 9 per cent of the taxable income of corporations.
Annuity, insurance and pension accounts
In this category are recorded the amounts to the credit of the various annuity, insurance and pension accounts.

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(in millions of dollars)
Annuity, Insurance and Pension Accounts	Balance at March 31	Increase1962 (estimated)	1961	or decrease (-)Unemployment insurance fund	71.5	0264.6 -247.0	-193.1 193.5Less investment in bonds and accrued interest	-53.5	
Uninvested funds on deposit with the government		18.0	17.6 1,199.1 1,468.8 1,155.3	0.4 37.0 120.0 124.1 6.7 16.8
Government annuities		1,236.1 1,588.8 1,279.4 6.7 131.5		
Public service superannuation account					
Canadian forces superannuation account				
Old age security fund				
Other			114.7	
			
	4,260.5	3,955.5	305.0
(1) Includes loan of $67 million from the Minister of Finance.
Unemployment insurance fund
The total benefits paid out of the Unemployment Insurance Fund in the 1961-62 fiscal year were $466 million, its total revenues $340 million, and its deficit $126 million. This compares with 1960-61 figures of benefit payments of $514 million, revenues of $333 million and a deficit of $181 million. In addition the fund has repaid in full its advances from the Minister of Finance in the net amount of $67 million, resulting in a total reduction in the fund's assets of $193 million.
Government annuities account
The government annuities account increased by $37 million during the year reflecting the amount by which premium receipts of $45 million and interest of $46 million credited to the account by the government exceeded payments of $54 million to annuitants and beneficiaries.

The Budget-Appendix
Public service superannuation account
The increase of $120 million in the public service superannuation account was due mainly to the government's contribution of $47 million (equal to the estimated current and prior service payments of individuals in 1960-61), and interest of $61 million credited to the account. The remainder of the increase was due to the excess of employees' current and prior service contributions and miscellaneous receipts over benefit payments.
Canadian forces superannuation account
The Canadian forces superannuation account increased by $124 million. The increase reflected the government's contribution of $56 million which was made at the rate of one and two-thirds times the current and prior service contributions, interest of $48 million credited to the account, and the amount of $20 million by which contributions by permanent services personnel for current and prior years' service exceeded benefit payments from the account.
Old age security fund
Under the Old Age Security Act pensions at $55 per month (increased to $65 per month effective February 1, 1962) are paid, without a means test, from the old age security fund to all eligible persons seventy years of age or over. Credits of $649 million consisting of $290 million from the 3 per cent sales tax, $259 million from the 3 per cent tax on personal incomes (maximum tax $90) and $100 million from the 3 per cent tax on corporation profits exceeded payments of $625 million by $24 million. Temporary loans of $17 million as at March 31, 1961 have been repaid resulting in a credit balance in the fund of $7 million. In 1960-61 receipts of $603 million exceeded payments of $592 million by $11 million and a $28 million deficit (covered by temporary loans from the Minister of Finance) was brought forward from 1959-60.
TABLE 45 (in millions of dollars)
	Fiscal year ended March 31				
Old Aob Security Fund	1958	1959	1960	1961	1962 (estimated)Tax receipts-	175.8	173.6	270.0	270.2 229.4	290.0 259.0 100.0135.0	146.4	185.6	60.7	55.3	91.3	103.5	371.5	375.3	546.9	603.1	649.0 -625.0-473.9	-559.3	-574.9	-592.4	
-102.4	-184.0	-28.0	10.7	24.0 -17.3
	-1.5			-28.0	
Appropriation by Parliament-	103.9	184.0	Temporary loans from the Minister of Finance to	28.0	17.3	
6.7
					
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A distribution by provinces of pension payments from the old age security fund for the last two years is shown in the following table:
TABLE 46 (in millions of dollars)
	Fiscal year ended March 31		Increase
Old Age Security Payments	1962 (estimated)	1961	or decrease (-)12.0	11.4	0.628.9	27.6	1.35.2	4.9	0.321.3	20.4	0.9131.4	124.3	7.1226.0	214.6	11.438.1	36.1	2.039.6	37.6	2.042.3	39.7	2.679.7	75.4	4.30.5	0.4	0.1
625.0	592.4	32.6
Undisbursed balances of appropriations to special accounts
This category records the undisbursed balances of appropriations to special accounts for which moneys have been appropriated by Parliament and from which disbursements may be made for authorized purposes in periods subsequent to that in which the appropriation was made. There was an increase of $4 million during the fiscal year bringing the balance as at March 31, 1962 to $109 million.

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(in millions of dollars)
Undisbursed Balances or Appropriations	Balance at March 31	Increase or decrease (-)to Special Accounts	1962 (estimated)	1961	75.4	67.5	7.92.9	2.8	0.130.1	34.1	-4.00.1	0.1	
108.5	104.5	4.0
The increase of $8 million in the Colombo plan fund resulted from a credit thereto of $50 million, the offsetting debit being to budgetary expenditures, and charges of $42 million to cover disbursements.
The railway grade crossing fund showed a decrease of approximately $4 million during the year representing disbursements of $14 million from the fund less an amount of $10 million credited thereto and charged to expenditures.

The Budget-Appendix
Deferred credits
This category records amounts due the government in respect of which payment has been deferred. These are contra accounts to corresponding items under the following asset categories: "Cash in blocked currencies", "Loans to, and investments in, Crown corporations", "Loans to national governments" and "Other loans and investments".
TABLE 48 (in millions of dollars)
Deferred Credits	Balance at March 31	Increase1962 (estimated)	1961	decrease (-)8.7	9.9	-1.26.0	4.9	i.iDeferred interest-	19.4	19.4	44.2	44.2	(i)	0.6	-0.6
78.3	79.0	-0.7
Less than $50,000.
Balances receivable under agreements of sale of Crown assets are set up as contra accounts to corresponding items under "Other loans and investments". During the year receipts amounted to $1 million on outstanding agreements.
The government's equity in the agency account of Crown Assets Disposal Corporation is a contra account to a corresponding item under "Other loans and investments". This equity increased by $1 million during the year.
There was no change during the year in deferred interest of $44 million on loans made under the United Kingdom Financial Agreement Act, 1946, and of $19 million on loans made to The St. Lawrence Seaway Authority. These are contra accounts to corresponding items under "Loans to national governments" and "Loans to, and investments in, Crown corporations" respectively.
Suspense accounts
These consist of balances where some uncertainty as to disposition exists.

[Stage Direction]
(in millions of dollars)
Suspense Accounts	Balance at March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Replacement of materiel, sec. 11, National Defence Act	1.6 1.5	4.6 1.4	-3.0 0.13.0	2.6	0.4
6.1	8.6	-2.5
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The Budget-Appendix
The replacement of materiel account, established by section 11 of the National Defence Act, is credited with amounts realized from the sale of materiel that has not been declared surplus to requirements but has been authorized by the Governor in Council to be sold to other countries. The account is debited with disbursements representing amounts paid for the procurement of replacement materiel. During 1961-62 disbursements exceeded credits by $3 million.
The unclaimed cheques account is credited with the amount of treasury cheques (except those drawn on asset and liability accounts) which remain undelivered for certain specified periods subsequent to date of issue, pending claims therefor.
Unmatured debt
The unmatured debt of Canada as at March 31, 1962 amounted to $16,925 million as compared with $16,068 million at March 31, 1961. The increase of $857 million applied to debt payable in Canada.
TABLE 50 (in millions of dollars)
Unmatched Debt	Balance at March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Payable in Canada-	4,044.0 10,812.8 53.0	3,555.5 10,447.2	488.5
			365.6
Non-marketable bonds (Unemployment Insurance Com-			53.0
	14,909.8 1,885.0	14,002.7 1,935.0	907.1 -50.0
			
Payable in London		16,794.8 32.0	15,937.7 32.0	857.1
	98.2	98.2	
			
	16,925.0	16,067.9	857.1
The details of the various loan issues, redemptions and conversions resulting in the net increase are described more fully in section 6, "The Public Debt".
In the year under review, unmatured debt obligations payable in London are stated in Canadian dollars converted at the rate of $2.80 for the pound sterling and that payable in New York at par for the U.S. dollar.
B.	Changes in Principal Asset Classifications During 1961-62
The total assets increased by $473 million during 1961-62. The principal changes were increases of $436 million in current assets and $368 million in loans to, and investments in, Crown corporations and decreases of $241 million in advances to the exchange fund account, $48 million in other loans and investments, $38 million in loans to national governments and $6 million in deferrred charges.

The Budget-Appendix


[Stage Direction]
Fiscal Years Ended March Billions of Dollars
Current assets
Total current assets at the close of the 1961-62 fiscal year amounted to $1,220 million, an increase of $436 million from the balance of $784 million at the close of 1960-61. This increase was due mainly to increases of $401 million in cash in current and special deposits and $54 million in departmental working capital advances and revolving funds (including increases of $39 million in the agricultural commodities stabilization account and $18 million in the defence production revolving fund) offset in part by a decrease of $24 million in the securities investment account.
TABLE 51 (in millions of dollars)
Current Assets	Balance at March 31	Increase1962 (estimated)	1961	or decrease (-)Cash in current and special deposits	762.0	360.7	401.3130.6	126.1	4.5Departmental working capital advances and revolving funds-	128.7	90.2	38.533.2	15.7	17.5Miscellaneous departmental imprest and advance ac-	28.0	25.4	2.634.7	39.8	-5.1284.6 77.5	171.1 101.5	55.5 -24.0Moneys received after March 31 but applicable to the current	15.0	14.0	1.0Post Office-cash on hand and in transit	10.8	11.0	-0.2
1,220.5	784.4	436.1
The decrease in the securities investment account was due to the cancellation of $320 million of the holdings therein of the government's own issues, offset in part by the net result of other transactions in the account in the amount of $296 million.
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The Budget-Appendix
It should also be noted that in accordance with the announcement by the Minister of Finance in the Budget Speech of June 20, 1961 a Purchase Fund was established to assist in the management of the public debt. During the fiscal year issues totalling $166 million were purchased and the securities cancelled prior to the fiscal year-end.
Advances to the exchange fund account
The balance of $1,783 million in the exchange fund account was $241 million less than the 1960-61 total of $2,024 million.
Sinking fund held for retirement of unmatured debt
The balance of $18 million in this category at March 31, 1961 was approximately $1 million higher than the balance at the previous fiscal year-end.
TABLE 52 (in millions of dollars)
Sinking Fund Held for Retirement of Unmatured Debt	Balance at March 31	Increase1962 (estimated)	1961	or decrease (-)Sinking fund invested in- Newfoundland guaranteed stock, 1933/34-43/63, 3 per cent United Kingdom conversion stock, 1963, 4f per cent	12.8 5.0	12.8 4.2	0.817.8	17.0	0.8
Loans to, and investments in, Crown corporations
An increase of $368 million in these loans and investments during 1961-62 brought the balance at March 31, 1962 to $3,995 million.
TABLE 53 (in millions of dollars)
Loans to, and Investments in, Crown Corporations	Balance at March 31		Increase or decrease (-)
	1962 (estimated)	1961	
	63.5	60.9	2.6
	5.9	5.9	
	7.5	7.5	
	3.0	3.0	
	7.0	7.0	
	1,164.2 1.6 34.4	1,087.8 1.6 31.7	76.4
Canadian National (West Indies) Steamships Limited				2.7
	1,708.7 8.2	1,510.7 8.2	198.0
			
18.0	10.0	8.0209.8	155.8	54.034.5	25.2	9.3179.4	172.8	6.645.2	40.0	5.2120.8	123.7	-2.930.0	30.0	The St. Lawrence Seaway Authority-	330.5	320.5	10.019.4	19.4	2.6	4.8	-2.2i.i	1.2	-0.1
3,995.3	3,627.7	367.6

The Budget-Appendix
Advances to Atomic Energy of Canada Limited, to be covered by obligations or shares of the company, were $64 million at March 31, 1962, an increase of $3 million during the year.
During the fiscal year ended March 31, 1962, the government advanced to the Canadian National Railway Company $68 million for capital purposes and retirement of debt in the hands of the public. Of this amount $37 million was advanced under the Refunding Act, 1955, for the refunding of various trust certificates, $28 million for capital purposes and $3 million for the company's purchase fund which is operated under the terms of Canadian National Railway Company bonds, guaranteed by the Government of Canada, issued on May 15, 1959, December 15, 1959, January 1, 1960 and October 1, 1960. During the fiscal year $11 million was repaid by the company on current and prior years' advances.
In addition, to assist the company to finance further capital expenditure during the fiscal year, the government purchased $21 million of four per cent preferred stock of the company. This stock is issued under the authority of the Canadian National Railways Capital Revision Act, 1952, in an amount equal to three per cent of the gross revenue of the company.
Also in the year ended March 31, 1962, the government provided the company with temporary loans of $64 million in respect of its 1961 income deficit. This amount plus temporary loans of $2 million made on the same account in the previous fiscal year brought the total loans on account of the 1961 deficit to $66 million. It should be noted that the total 1961 deficit of $67 million, of which $66 million was covered by temporary loans by the government and the remainder paid from company funds, was charged to budgetary expenditure.
TABLE 54 (in millions of dollars)
Advances to, and Repayments by, the Canadian National Railways	Fiscal year ended March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Advances-	37.2	1.0	36.228.4	102.6	-74.22.8	4.0	-1.263.8	55.5	8.3132.2	163.1	-30.9Repayments-	-11.4	-225.1	213.7-65.8	-75.0	9.2-77. S	-S00.1	222.9Excess of advances over repayments or repayments over	55.0	-137.0	192.0Purchase of 4 per cent preferred stock (C.N.R. Capital	21.4	20.5	0.9
Net increase or decrease (-) during the fiscal year in the government's advances to, and investments in, the	76.4	-116.5	192.9
			
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The Budget-Appendix
In summary, the total amount made available to the company during the fiscal year was $153 million and repayments including the charge to budgetary expenditure were $77 million. The amount of advances to the company outstanding at March 31, 1962 increased by $76 million.
At March 31, 1961, temporary loans of $5 million were outstanding to the Trans-Canada Air Lines in respect of its 1961 income deficit. During 1961-62 further advances of 12 million were made for this purpose. The amount of $7 million was repaid or credited during the year. However, the government made advances of $3 million on account of the air lines 1962 income deficit which is still outstanding.
Loans during the year to Central Mortgage and Housing Corporation amounted to $246 million, of which $237 million was for direct loans by the corporation and $9 million in respect of loans for federal-provincial housing projects. Repayments were $48 million, of which $43 million was in respect of direct loans, $2 million in respect of loans for federal-provincial housing projects and $3 million in respect of loans for housing projects. The net increase of $198 million for the year brought the total loans to $1,709 million at March 31, 1962.
Loans to the Farm Credit Corporation amounted to $56 million and investment in the capital of the corporation to $1 million during the year. Repayments by the corporation of $3 million brought the outstanding advances to $210 million at March 31, 1962.
Advances to The St. Lawrence Seaway Authority during the year amounted to $10 million bringing the total loans to $331 million. In addition, deferred interest on these loans was $19 million at the year-end, unchanged from the total at March 31, 1961. A contra item for this deferred interest is included in the liability catagory "Deferred credits".
It should also be noted that in accordance with Order-in-Council P.C. 1961-1863 dated December 29,1961, interest of $14 million payable on December 31, 1961 by The St. Lawrence Seaway Authority, as well as interest payable on December 31, 1962, has been deferred until December 31, 1963. On December 31, 1963 the total amount of interest so deferred together with the interest payable December 31, 1963, will be computed as a single sum and is to be repaid in equal annual instalments calculated by amortizing the said sum, including interest at rates determined by the Minister of Finance, over a period of forty-six years.
Other changes in this category include increases of $9 million in loans to the National Capital Commission, $8 million in loans to the Export Credits Insurance Corporation, $7 million in loans to the National Harbours Board, $5 million in loans to the Northern Canada Power Commission, $3 million in loans to the Canadian Overseas Telecommunication Corporation and a decrease of $3 million in loans to the Northern Ontario Pipe Line Crown Corporation.
Loans to national governments
These loans decreased by $38 million during the year leaving a balance of $1,340 million at March 31, 1962.
The United Kingdom government repaid $17 million of the $1,185 million loan made under the $1,250 million credit authorized by the United Kingdom Financial Agreement Act, 1946, reducing the principal to $1,030 million at March 31, 1962.

The Budget-Appendix

[Stage Direction]
(in millions of dollars)
Loans to National Governments	Balance at March 31		Increase or decrease (-)
	1962 (estimated)	1961	
Loans to United Kingdom-			
The United Kingdom Financial Agreement Act, 1946...	1,030.3	1,047.4	-17.1Deferred interest	44.2	44.2	1,074.5	1,091.6	-17.1Loans under the Export Credits Insurance Act, Part II-	Belgium	34.6	36.9	-2.3France	133.9	142.3	-8.4The Netherlands	68.9	73.4	-4.5IS7.4	H62.6	-15. SSpecial loans to Colombo plan countries to finance the purchase of wheat and flour from Canada-	Ceylon	1.7	2.0	-0.3India	24.8	29.5	-4.7S6.5	SI.6	-5.0Miscellaneous loans and advances-	France-interim credit-consolidated interest	1.3	1.4	-0.1The Netherlands-military relief and currency credits	settlement	0.6	-0.6Other	0.1	0.5	-0.41.4	S.5	-1.11,339.8	1,378.2	-38.4
Advances under Part II of the Export Credits Insurance Act to Belgium, France and The Netherlands to assist them in purchasing goods in Canada have been reduced by repayments of $15 million during the year leaving a balance of $237 million outstanding.
Special loans to Colombo plan countries to finance the purchase of wheat and flour from Canada amounted to $27 million at March 31, 1962, $5 million less than at March 31, 1961.
Other loans and investments
The balance in this category was $975 million at March 31, 1962, a decrease of $48 million during the fiscal year 1961-62.
Canada's subscriptions to the capital of international organizations increased by $29 million during the year due mainly to a further subscription of $8 million to the international development association and revaluation adjustments of $19 million in the Canadian dollar balance in the international monetary fund.
Loans to provincial governments decreased by $8 million. The balance at March 31, 1961 of $1 million for overpayments to provinces arising out of the 1952 tax rental agreements was settled during the year.
The Veterans Land Act advances account less the reserve for conditional benefits increased by $12 million.
Miscellaneous loans and investments were $81 million lower than the total for the previous year, more than accounted for by the repayment of $67 million by the Unemployment Insurance Commission and the repayment of $17 million of temporary loans in respect of the old age security fund.
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TABLE 56 (in millions ol dollars)
Other Loans and Investments	Balance at March 31	Increase1962 (estimated)	1961	decrease (-)Subscriptions to capital of, working capital advances and loans to, international organizations- Canada's subscription to capital of- International bank for reconstruction and development	76.5	73.7	2.8International development association	16.4	8.5	7.9International finance corporation	3.5	3.5	International monetary fund	562.7	543.7	19.0Working capital advances and loans to international organizations	1.4	1.8	-0.4660.5	6S1.2	SB. SLoans to provincial governments- Alberta	7.6	8.0	-0.4British Columbia	14.7	15.5	-0.8Manitoba	12.8	13.2	-0.4New Brunswick	19.5	22.9	-3.4Saskatchewan	21.7	24.2	-2.576. S	83.8	-7.5Overpayments to provinces arising out of 1952 tax rental agreements	1.0	-1.0Veterans Land Act advances	209.0	199.6	9.4Less reserve for conditional benefits- Veterans Land Act, 1942	-30.6	-33.5	2.9178.4	166.1	12.3Miscellaneous- Assisted passage scheme (section 69, Immigration Act, R.S. 1952)	2.6	3.4	-0.8Balances receivable under agreements of sale of Crown assets	10.6	12.1	-1.5City of Montreal- Atwater tunnel	2.0	2.0	St. Remi tunnel	1.1	1.2	-0.1Construction of dock and rail facilities for Steep Rock Iron Mines Limited	1.6	1.8	-0.2Crown Assets Disposal Corporation-Government equity in agency account	6.0	4.9	1.1Dominion Coal Company Limited	5.7	5.7	Hamilton Harbour Commissioners	1.3	0.9	0.4Housing projects for Canadian forces	6.8	4.6	2.2Land development of the Cornwall Navigation System.	1.7	1.7	Municipal Improvements Assistance Act, 1938	1.5	1.6	-0.1New Westminster Harbour Commission	2.3	2.3	Northwest Territories	2.1	0.7	1.4Old age security fund-temporary loans	17.3	-17.3Town of Oromocto, New Brunswick	4.0	4.2	-0.2Town of Oromocto Development Corporation	1.0	1.0	Unemployment Insurance Commission	67.0	-G7.0Yukon Territory	3.6	2.2	1.4Other	5.4	5.4	59. S	140.0	-80.7974.5	1,022.1	-47.6
Securities held in trust
This category records the security holdings of various deposit and trust, and annuity, insurance and pension accounts. Bonds and certified cheques held in connection with contractors' securities included in the deposit and trust category are also recorded under this heading. The balance at March 31, 1962 amounted to $31 million, $1 million higher than the previous year-end balance.

The Budget-Appendix
Deferred charges
This category consists of tne unamortized portions of actuarial deficiencies in the Canadian forces superannuation account, the public service superannuation account, the Royal Canadian Mounted Police superannuation account, and the outstanding balance of unamortized loan flotation costs. There was a decrease of $6 million in this category during the year, bringing the balance at March 31, 1962 to $727 million.
Unamortized 'portions of actuarial deficiencies
This category records the unamortized portions of the actuarial deficiencies in the public service, the Canadian forces, and the Royal Canadian Mounted Police superannuation accounts which have been set up as deferred charges to be written off to budgetary expenditure upon parliamentary approval.
The deficiencies in the public service superannuation account, the Canadian forces superannuation account and the Royal Canadian Mounted Police superannuation account are based on actuarial valuations made as at December 31, 1957, March 31, 1958 and December 31, 1961, respectively.
Unamortized loan flotation costs
This account records the residual balances of discounts, commissions, redemption bonuses and conversion premiums on loan flotations that havejnot
TABLE 57 (in millions of dollars)
Unamortized Loan Flotation Costs
Balance of account at beginning of fiscal year	
New flotation costs to be amortized-
51% loan issued Oct. 1, 1959, maturing Oct. 1, 1975	
4% loan issued Feb. 1, 1961, maturing May 1, 1964	
31% loan issued March 15, 1961. maturing Dec. 15, 1962	
3% loan issued May 1, 1961, maturing May 1, 1962	
3% loan issued Aug. 1, 1961, maturing Aug. 1, 1962	
4% loan issued Aug. 1, 1961, maturing Dec. 1, 1964	
41% loan issued Sept. 15, 1961, maturing Dec. 15, 1966	
2}% loan issued Dec. 1, 1961, maturing June 1, 1963	
3j% loan issued Dec. 1, 1961, maturing Oct. 1, 1964	
4}% loan issued Dec. 1, 1961, maturing June 1, 1967	
2J% loan issued Jan. 15, 1962, maturing April 1, 1963	
4J% loan issued Jan. 15, 1962, maturing Jan. 15, 1963	
Treasury bills discount	
Canada savings bonds-adjustment of previous issues	
Canada savings bonds-new issue	
51% loan issued April 1, 1900, maturing April 1, 1963	
51% loan issued April 1, I960, maturing April 1, 1969	
41% loan issued June 1, 1960, maturing Dec. 1, 1902	
3% loan issued Dec. 15, 1960, maturing June 15, 1962	
4% loan issued Dec. 15, 1960, maturing Dec. 15, 1963	
4% loan issued Feb. 1, 1961, maturing May 1, 1964	
31% loan issued Mar. 15, 1961, maturing Dec. 15, 1962	
Less-
Amortization applicable to fiscal year-
Canada savings bonds and general loans	
Discount on treasury bills charged to interest on public debt...
Fiscal year ended March 31
(estimated)
130.7
1.4 2.1 2.6 1.6 1.2 2.8
1.4
2.0
3.4 0.5
2.5 0.5
9.5 0.6 9.0
41.1
-33.6
-11.3
151.0
11.3
0.7
7.2 0.7
2.3
0.1
3.4
3.4 3.7 1.2

[Stage Direction]
Adjustments re cancellations of securities.
Decrease (-) during the year	
Balance of account at end of fiscal year...
-6.0
-BO. 9
-54.3
-9.8
120.9
-20.
130.
7
26207-1-1791
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The Budget-Appendix been charged to budgetary expenditure. The balance at March 31, 1962 totalled $121 million, a decrease of $10 million from the previous year-end balance.
Cost of new loans issued during 1961-62 and charged to the account amounted to $41 million, of which $10 was in respect of treasury bill discounts which will be charged to interest on public debt in 1962-63. Credits to the account were $51 million of which $34 million was a charge to the budgetary expenditure item "Annual amortization costs", $11 million, representing discount on treasury bills sold in 1960-61, was a charge to the budgetary item "Interest on public debt" and $6 million was an adjustment due to cancellation of unmatured loans prior to their maturity date.
Suspense accounts
The only item in this category is the cheque adjustment suspense account which reflects unadjusted balances resulting from the reconciliation of payments for redemption of paid cheques with the amount of those cheques as subsequently determined in adjustment of the outstanding cheque account.
Capital assets
Assets of the government such as land, buildings, works and equipment, etc., that are charged to budgetary expenditure at the time of acquisition or construction, are included in this category and are shown on the statement of assets and liabilities at a nominal value of $1.
Inactive loans and investments
Loans and investments which are not currently revenue-producing or realizable are recorded in this category. Included are the loan of $49 million to China under the Export Credits Insurance Act, loans of $24 million and $7 million made to Roumania and Greece in 1919-20 and 1920-21 and advances of $15 million in respect of the implementation of guarantees (Ming Sung Industrial Company Limited).
Reserve for losses on realization of assets
There is no change in this reserve during the year, the balance at March 31, 1962 being $546 million, unchanged from the end of the previous year.
C.	Increase in Net Debt
The deficit for the fiscal year of $791 million resulted in a corresponding increase in the net debt of Canada which at March 31, 1962, was $13,229 million.

The Budget-Appendix
5.	THE CASH POSITION
The government's cash position is affected not only by the budgetary transactions but also by changes in the government's outstanding unmatured debt and by other non-budgetary transactions. In 1961-62 there was an increase of $401 million in the government's bank balances. This increase is the result of the budgetary deficit of $791 million, being more than offset by an increase of $880 million in outstanding unmatured debt (after taking into account transactions in the purchase fund, securities investment and sinking fund accounts) and the net receipts of $312 million from other non-budgetary transactions. It should be noted that in accordance with the announcement by the Minister of Finance in the Budget Speech of June 20, 1961 a Purchase Fund was established to assist in the management of the public debt. During the fiscal year issues totalling $166 million were purchased and the securities subsequently cancelled.
Non-budgetary receipts and disbursements relate to transactions which result in increases or decreases in the government's assets and liabilities and do not appear in what might be called the government's income account for the fiscal year nor do they enter into the calculation of the annual budgetary surplus or deficit. However, in considering the full scope of the government's financial operations and in measuring their effect on the government's cash position and their impact on the economy, non-budgetary as well as budgetary transactions must be taken into account.
TABLE 58 (in millions of dollars)
Changes in Cash Position
Fiscal year ended March 31
(estimated)
Budgetary transactions-
Revenues	
Expenditures	
Budgetary deficit (-)__
5,772.0
-6,563.4
1961
5,617.7
-5,958.1
.4	-340.
Non-budgetary transactions (excluding unmatured debt transactions) (net)-
Receipts and credits	
Disbursements and charges	
804.5
-492.1
398.5
-351.9
Net amount received from non-budgetary transactions (excluding
unmatured debt transactions)	 312.4
Overall cash requirement (-) to be financed by increase in debt or
decrease in cash balances	 -479.0
46.6
-293.8
Net increase in unmatured debt outstanding in the hands of the public-
Unmatured debt-
Bonds	
Treasury bills	
Securities investment account	
Sinking fund	
907.1
-50.0
24.0
-0.8
367.8
-190.0
-23.6
68.3
Net increase or decrease (-) in Receiver General bank balances...
880.3
401.3
222.5
-71.3
The increases or decreases in the government's assets and liabilities have been described in detail in the section entitled "Statement of Assets and Liabilities of Canada". On the assets side the non-budgetary transactions consist, for the most part, of loans and advances to, and repayments by, Crown corporations and other government agencies and funds (including the old age
[Stage Direction]
The Budget-Appendix security fund), national, provincial and municipal governments, international organizations, veterans and other borrowers. On the liabilities side they relate mainly to receipts and payments in connection with the many deposit and trust accounts, and annuity, insurance and pension funds held or administered by the government.
The preceding table summarizes both the budgetary and non-budgetary transactions for 1961-62 and indicates how they affected the government's cash position. For purposes of comparison the corresponding figures for 1960-61 are also shown.
As the table shows, non-budgetary receipts and credits for 1961-62 (excluding unmatured debt transactions) totalled $804 million while non-budgetary disbursements and charges (also excluding unmatured debt transactions) were $492 million, resulting in a net receipt of $312 million. As the budgetary deficit was $791 million, $479 million required financing by an increase in unmatured debt or a decrease in cash balances. In 1960-61 there was a net receipt of $46 million from non-budgetary transactions and a budgetary deficit of $340 million resulting in $294 million having to be financed by an increase in unmatured debt or a decrease in cash balances.
Non-budgetary receipts and credits
Non-budgetary receipts and credits, as already indicated, amounted to $804 million in 1961-62 as shown in the following table:
TABLE 59 (in millions of dollars)
Fiscal year ended March 31
Non-Budgetary Receipts and Credits
(estimated)
Repayments of loans, investments and working capital advances (net)-
Exchange fund account	
Northern Ontario Pipe Line Crown Corporation	
United Kingdom (1946 loan)	
Special loans to India and Ceylon (re purchase of wheat from
Canada)	
Other national governments (Export Credits Insurance Act).
Old age security fund	
Provincial governments	
Unemployment insurance fund	
Other	
241.0
2.9
17.1
5.0
15.2
17.3 8.5
67.0
9.9
-64.0
-2.2
16.7
3.5 15.2
10.7
5.6 -67.0
7.8
383.9
-73.7
Net government annuities account receipts-
Premium receipts less payments to beneficiaries Interest paid by government	
-9.0
46.0
37.0
-2.4
44.6
42.2
Net insurance and pension accounts receipts-
Employee contributions less payments to beneficiaries	
Government contributions	
Actuarial deficiency in the public service superannuation account... Actuarial deficiency in the Royal Canadian Mounted Police superannuation account	
Interest paid by government	
Old age security fund	
37.8
107.6
3.5
112.0
6.7
267.6
30.3
88.7
137.7
96.4
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 353.1
Net decrease in unamortized loan flotation costs	
Net increase in current and demand liabilities	
Net increase in uninvested portion of unemployment insurance fund ....
Net increase in deposit and trust accounts	
Net receipts from sundry other accounts	
9.8
73.3
0.4
27.8
4.7
20.3 48.5
-5.2
-3.0
16.3
804.5
398.5

The Budget-Appendix
Non-budgetary disbursements and charges
Non-budgetary disbursements and charges totalled $492 million in 1961-62 as shown in the following table:

[Stage Direction]
(in millions ol dollars)
Non-Budgetary Disbursements and Charges
Loans, investments and working capital advances (net)-
Agricultural commodities stabilization account..
Atomic Energy of Canada Limited	
Canadian Broadcasting Corporation	
Canadian National Railways	
Canadian Overseas Telecommunication Corporation..
Central Mortgage and Housing Corporation	
Defence production revolving fund	
Export Credits Insurance Act (sec. 21A)	
Farm Credit Corporation	
International organizations (subscriptions to capital).,
National Capital Commission	
National Harbours Board	
Northern Canada Power Commission	
The St. Lawrence Seaway Authority	
Veterans Land Act advances	
Other	
Fiscal year ended March 31
(estimated)
38.5	-30.5
2.6	1.5
	3.0
76.4	-116.5
2.7	9.1
198.0	192.0
17.5	-5.0
8.0	
54.0	40.1
29.7	26.3
9.3	7.4
6.6	11.4
5.2	5.4
10.0	24.0
12.3	14.5
7.2	16.2
478.0
198.9
Net disbursements from special defence account	
Net increase of cash in hands of collectors and in transit	
Unamortized portion of actuarial deficiency in the public service superannuation account	
Unamortized portion of actuarial deficiency in the Royal Canadian
Mounted Police superannuation account	
Adjustment to net debt in respect of C.N.R. 1958 deficit	
Other	
3.0	-1.0
4.5	-7.3
137.7
3.5
3.1
7.5
16.1
492.1
351.9
Summary
In summary, as budgetary and non-budgetary transactions required financing in the amount of $479 million, and unmatured debt outstanding in the hands of the public (after taking into account transactions in the purchase fund, securities investment and sinking fund accounts) increased by $880 million, cash balances on deposit with the banks increased by $401 million.
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The Budget-Appendix
6.	THE PUBLIC DEBT
Gross and net debt
The gross debt of Canada amounted to $22,867 million as at March 31, 1962. Unmatured debt, including treasury bills, in the amount of $16,925 million accounted for approximately 74 per cent of the total. The remaining liabilities, consisting of current and demand liabilities, deposit and trust accounts, annuity, insurance and pension accounts, undisbursed balances of appropriations to special accounts, deferred credits and sundry suspense accounts, aggregated $5,942 million or approximately 26 per cent of the total debt.
_The net debt of Canada was $13,229 million as at March 31, 1962, an increase of $791 million over the net debt at March 31, 1961. Total liabilities increased by $1,264 million to $22,867 million and net assets by $473 million to $9,638 million at March 31, 1962.

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Billions of Dollars

[Stage Direction]
Billions of Dollars
1958	59	60	61	62 *

[Stage Direction]
Statement or Public Debt, Unmatored Debt, Recorded Net Assets and Net Debt or Canada
(in millions of dollars)
As at March 31	Gross Public Debt	Less recorded net assets	Net debt	Increase in net debt during fiscal yearUnmatured debt	Other liabilities	Total	1958	14.245.1 15.574.1 15.890.1 16,067.9 16,925.0	4,173.4 4.675.8 5,096.3 5.534.9 5,941.8	18,418.5 20,249.9 20,986.4 21,602.8 22,866.8	7 372 2	1959	8^ 57l!5 8.897.2 9,165.7 9.638.3	1960	1961	1962 (estimated)	13,228.5	791.4
Unmatured debt
The total unmatured debt of Canada at March 31, 1962 totalled $16,925 million, $857 million more than at the end of the previous fiscal year. The government's holdings of its own securities were $95 million, comprised of $77 million in the securities investment account and $18 million in the sinking fund account. This was a decrease of $23 million over the comparable figure

The Budget-Appendix
at March 31, 1961 when holdings were $101 million in the securities investment account and $17 million in the sinking fund account.
The decrease in the securities investment account was due to the cancellation of $320 million of the holdings therein of the government's own issues, offset in part by the net result of other transactions in the account in the amount of $296 million.
In accordance with the announcement by the Minister of Finance in the budget speech of June 20, 1961, a purchase fund was established during the fiscal year to assist in the management of the public debt. Purchases of securities were:
$11 million 4J per cent bonds due September 1, 1972;
$53 million 5§ per cent bonds due October 1, 1975;
$7 million 3£ per cent bonds due June 1, 1976;
$8 million 3| per cent bonds due January 15, 1978;
$15 million 3£ per cent bonds due October 1, 1979;
$70 million 4§ per cent bonds due September 1, 1983 and
$2 million 3f per cent bonds due March 15, 1998.
Of these securities, $61 million were cancelled in November, 1961 and the balance of $105 million cancelled prior to the fiscal year-end and unmatured debt reduced by similar amounts.
Of the total unmatured debt, $16,795 million or more than 99 per cent was payable in Canada, $98 million in New York and $32 million in London.
Summary of security issues and maturities, redemptions, conversions or cancellations
During the year ended March 31, 1962 the government issued securities payable in Canada in the principal amount of $3,451 million (excluding the refunding of treasury bills which mature weekly) and redeemed, converted or cancelled issues payable in Canada in the amount of $2,594 million.
TABLE 62 (in millions of dollars)
Unmatured Debt Transactions	Fiscal year ended March 31	
	1962 (estimated)	1961
Balance at beginning of year		16,068	15,890
New issues-		
For cash-		
Canada savings bonds series 14			64
Canada savings bonds series 15		67	851
Canada savings bonds series 16		989	
Marketable bonds		1,350	200
Non-marketable bonds (Unemployment Insurance Commission)	162	
	£,568	1,115
By renewals and conversions-		
Marketable bonds		883	1,416
	3,451	2,531
Less-		
Matured marketable bonds		-498	-998
Redeemed non-marketable bonds (Unemployment Insurance Com-		
	-109	
	-883	-497
Canada savings bonds redeemed or matured	-568	-496Treasury bills (net)	-50	-190-£, 108	-£,181Unmatured marketable bonds (purchased and cancelled)	-486	-172-2,594	-2,353Increase in un matured debt	857	178Balance at end of year	16,925	16,068
26207-1-180
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The Budget-Appendix
Net sales of Canada savings bonds 1961, series 16, as at March 31, 1962, totalled $989 million and additional sales of Canada savings bonds 1960, series 15, during the year were $67 million. Redemptions of Canada savings bonds series 6 to 15 totalled $568 million. The net increase during the year for all series was $488 million and the amount outstanding and unmatured for all series at March 31, 1962, $4,044 million.
The amount of treasury bills outstanding at March 31, 1962 was $1,885 million, consisting of $1,235 million in three-month bills and $650 million in six-month bills. The March 31, 1961 balance was $1,935 million, consisting of $1,235 million in three-month bills, $650 million in six-month bills and $50 million in special 366-day bills.

[Stage Direction]
Debt Matured, Redeemed, Converted or Cancelled During the Fiscal Year Ended
March 31, 1962 (estimated)
-	Matured	Redeemed	Converted	Cancelled prior to maturity	Total50,000,000 200,000,000 245,059,000 53,473,150	50.000.	000 300.000.	000 770,514,000 53,473,150 90.000.	000 110.000.	000 41,419,000 49.165.500 33.641.5003% 1958/59-61	(>>100,000,000 (*>525,000,000	3% 1958-61	455,000	3% 1944-62	3% 1961-62	(*>
90,000,000 <<>110,000,000	3% 1960-62	21% 1950-68	41.419.000 49.165.500 33.641.500 48.728.500 51.870.000 832,500 79.505.000 56.580.000 123,619,500	3}% 1954-76	31% 1953/58-78	31% 1954-79	31% 1956-98	51.870.000 832,500 79.505.000 56.580.000 123,619,500 57.920.000 226,000 567.500.000 108.500.00031% 1958-65	41% 1958-72	51% 1959-75	41% 1958-83	51% 1959-62	<*>
57,920,000 ([DOT]>
226,000	51% 1960-63	Canada savings bonds S.6-15.. 3j% non-marketable bonds (Unemployment Insurance	567.500.000 108.500.000	
548,532,150	676,000,000	883,146,000	485,816,500	2,593,494,650
.*** $50,000,000 exchanged for 3% loan due May 1, 1962; $50,000,000 exchanged for 4% loan due May 1 1964.
(8) $50,000,000 exchanged for 3J% loan due December 15, 1962; $100,000,000 exchanged for 3% loan due August 1, 1962; $100,000,000 exchanged for 4% loan due December 1, 1964; $75,000,000 exchanged for 4}% loan due December 15, 1966; $100,000,000 exchanged for 3\% loan due October 1, 1964; $100,000,000 exchanged for 4J% loan due June 1, 1967.
<« $25,000,000 exchanged for 3% loan due August 1, 1962; $15,000,000 exchanged for 41% loan due December 15, 1966; and $50,000,000 exchanged for 4\% loan due January 15, 1968.
«>
*60,000,000 exchanged for 4J% loan due December 15, 1966; and $50,000,000 exchanged for 41% loan due January 15, 1968.
Exchanged for 51% loan due October 1, 1975.
(,) Exchanged for 5J% loan due April 1, 1976.

The Budget-Appendix

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New Securities Issued During Year Ended March 31, 1962 (estimated)
Description	Price to govern- ment	Yield at price to government	Total amount issued	Renewals or conversions included in amount issued	Amount issued for cash*	5	$Issued to general public-	Marketable bonds-	<1>Loan due Oct. 1, 1975, 5£%	57,920,000	57,920,000	<*>Loan due April 1, 1976, 5?%	226,000	226,000	<*>Loan due May 1, 1964, 4%	98 25	4.63	110,000,000	50,000,000	60,000,000«>Loan due Dec. 15, 1962, 3	98.75	4.35	200,000,000	50,000,000	150,000,000<*>Loan due May 1, 1962, 3%	99.25	3.77	190,000,000	50,000,000	140,000,000<®>Loan due Aug. 1, 1962, 3%	99.75	3.29	225,000,000	25,000,000	200,000,000<*>Loan due Aug. 1, 1962, 3%	99.70	3.31	110,000,000	75,000,000	35,000,000<7>Loan due Dec. 1, 1964, 4%	99.00	4.32	240,000,000	100,000,000	140,000,000<8>Loan due Dec. 15, 1966, 4£%	99.25	4.66	175,000,000	175,000,000	Loan due June X, 1963, 2|%	99.00	3.44	175,000,000	175,000,000t«Loan due Oct. 1, 1964, 3\%	98.80	3.70	250,000,000	100,000,000	150,000,000WLoan due June 1, 1967, 4}%	99.50	4.35	100,000,000	100,000,000	Loan due April 1, 1963, 2f%	99.15	3.47	150,000,000	150,000,000Loan due April 1, 1963, 21%	99.15	3.56	150,000,000	150,000,000<n>Loan due Jan. 15, 1968, 4j%	99.50	4.35	100,000,000	100,000,000	Non-marketable bonds-	Unemployment Insurance Com-	mission, 31%	100.00	3.75	161,500,000	161,500,000Canada savings bonds-	Nov. 1, 1960- Nov. 1, 1970, 4-5%,	series 15	99.00	67,000,000	67,000,000Nov. 1, 1961-Nov. 1, 1971, 41-5%	series 16 (net)	98.75	988,958,000	9&S,958,0003,450,604,000	883,140,000	2,567,458,000
Win exchange for 5$% loan due Oct. 1, 1962.
Win exchange for 5$% loan due April 1, 1963.
<3>$50,000,000 in exchange for 3% loan due May 1, 1961.
<<>$50,000,000 in exchange for 3% loan due Dec. 1, 1961.
<6>$50,000,000 in exchange for 3% loan due May 1, 1961.
<[DOT]>$100,000,000 in exchange for 3% loan due Dec. 1, 1961.
<7>$100,000,000 in exchange for 3% loan due Dec. 1, 1961.
<*>$75,000,000 in exchange for 3% loan due Dec. 1, 1961; $60,000,000 in exchange for 3% loan due June 15, 1962 and $40,000,000 in exchange for 3% loan due May 1, 1962.
<[DOT]>$100,000,000 in exchange for 3% loan due Dec. 1, 1961.
<10>In exchange for 3% loan due Dec. 1, 1961.	,	.	,	.
<n>$50,000,000 in exchange for 3% loan due June 15, 1962 and $50,000,000 in exchange for 3% loan due May 1, 1962.
Interest rates
The average interest rate on the government's unmatured debt at March 31, 1962 was 3.91 per cent the same as at the end of the previous fiscal year.
The yield on three-month treasury bills at tender on March 29, 1961 was 3.21 per cent. It rose to 3.34 per cent on April 13, 1961, was 2.26 per cent on August 31, 1961 and rose to 3.12 per cent on March 29, 1962.
The yield on six-month treasury bills at tender on March 29, 1961 was 3.37 per cent. It rose to 3.49 per cent on April 13, 1961, was 2.53 per cent on November 10, 1961 and rose to 3.29 per cent on March 29, 1962.
The following table shows the high and low yields together with the yield on the latest issue of three-month bills for the fiscal years 1957-58 to 1961-62 inclusive, and for six-month bills for the fiscal years 1959-60 to 1961-62 inclusive.
26207-1-180J
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The Budget-Appendix

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Tbeasduy Bill Yields at Tended
Fiscal year ended March 31
Three-month bills-
1958		
1959		
1960		
1961		
1962		
Sir-month bills-
1960		
1961		
1962		
High	Low	Last issueper cent	per cent	per cent4.08	2.27	2.274.30	0.87	4.306.16	3.01	3.013.95	1.68	3.213.34	2.26	<'>3.126.87	3.23	3.234.07	1.99	3.373.49	2.53	<*3.29
<'>At tender on March 29,1962.

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As At March 31
Indirect debt or contingent liabilities
In addition to the direct debt set out in the statement of assets and liabilities, the government has assumed certain indirect or contingent obligations. These consist of securities of the Canadian National Railways, guaranteed as to principal and interest or as to interest only, and a number of miscellaneous guarantees, the chief of which are the guarantee of insured loans made by chartered banks and other approved lending institutions under the National Housing Act, 1954, deposits maintained by the chartered banks in the Bank of Canada, bank advances to the Canadian Wheat Board, advances under the Export Credits Insurance Act and bank loans under the Farm Improvement Loans Act.
The government's liability under its guarantee of loans under the National Housing Act, 1954 was $3,562 million at December 31, 1961 compared with $3,025 million at December 31, 1960.

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The Budget-Appendix
Summary op Indirect Debt or Contingent Liabilities as at March 31, 1962
Bonds and debenture stock guaranteed by the government- Railway securities guaranteed as to principal and interest-
Canadian National 2|% due February 1, 1963	
Canadian National 5j% due December 15, 1964<l>.
Canadian National 3% due January 3, 1966	
Canadian National 21% due January 2, 1967	
Canadian National 4J% due April 1, 1967!')	
Canadian National 5% due May 15, 1968<*	
Canadian National 2J% due September 15, 1969...
Canadian National 2J% due January 16, 1971	
Canadian National 5$% due December 15, 1971<I>.
Canadian National 3j% due February 1, 1974	
Canadian National 2}% due June 15, 1975	
Canadian National 5% due May 15, 1977<'>
Canadian National 4% due February 1, 1981	
Canadian National 5}% due January 1, 1P85<*....
Canadian National 5% due October 1, 1987<*>....
Railway securities guaranteed as to interest only- Grand Trunk 5% debenture stock, perpetual...
Amount outstanding March 31, 1962 (estimated)
[Stage Direction]
250.000.	000
198.981.000
35.000.	000
50.000.	000
72.750.000
56.400.000
70.000.	000
40.000.	000 19,000
200.000.	000 6,000,000
85.950.000 300,000,000
99.500.000
171.500.000 1,636,100,000
51,442
1,636,151,442
Other outstanding guarantees and contingent liabilities-
Deposits maintained by the chartered banks in the Bank of Canada	
Loans maintained by approved lending institutions under National Housing Acts
prior to 1954 Act	
Loans made by lenders under Part IV of the National Housing Act, 1954, for home
extensions and improvements	
Insured loans made by approved lenders under the National Housing Act, 1954...
Guarantees to owners of returns from moderate rental housing projects	
Insurance and guarantees issued or approved under Sections 21 and 21a of the Export
Credits Insurance Act	
Loans made by chartered banks under the Farm Improvement Loans Act	
Loans made by chartered banks under the Veterans' Business and Professional Loans
Act	
Loans made by chartered banks and credit unions under the Fisheries Improvement
Loans Act	
Loans made by chartered banks under the Prairie Grain Producers' Interim Financing
Act, 1956	
Loans made by chartered banks under the Prairie Grain Loans Act	
Loans made by chartered banks under the Small Businesses Loans Act	
Loans made by chartered banks to the Canadian Wheat Board	
Loans made by chartered banks to the Canadian Wheat Board pursuant to the
Prairie Grain Provisional Payments Act	
Loans made by chartered banks under the Prairie Grain Advance Payments Act...
696,007,777
Indeterminate
9,131,768
3,553,231,426
Indeterminate
352,614,290
44,968,111
129,045
127,790
32,789
3,127
2,558,227
113,555,146
10,572
8,672,245
<*The original amounts issued were as follows: 1964 maturity $200,000,000; 1967 maturity $75,000,000; 1968 maturity $60,000,000; 1977 maturity $90,000,000; 1985 maturity $100,000,000; 1987 maturity $175 000 000-these amounts were reduced by $1,000,000, $2,250,000, $3,600,000, $4,050,000, $500,000 and $3,500,000 respectively through the operation of the company's purchase fund and $19,000 of the 1964 maturity was exchanged for a like amount of 5J% bonds due December 15, 1971.
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The Budget-Appendix
7.	SUPPLEMENTARY DETAILED TABLES Revenues Expenditures
Annual Changes in Loans and Investments Unmatured Debt

The Budget-Appendix

[Stage Direction]
(in millions of dollars)
-	1957-58	1958-59	1959-60	1960-61	1961-62 (estimated)S	$	$	t	tTax Revenues Income tax-	Personal W	1,499.8	1,353.5	1,566.6	1,711.2	1,800.0Corporation <*>	1,234.8	1,020.6	1,142.9	1,276.6	1,205.0On dividends, interest, etc., going	abroad	64.3	61.2	73.4	88.2	115.02,798.9	t, 435.3	2,782.9	S,076.0	S,120.0Excise tales-	Sales tax<* <[DOT]>	703.2	694.5	732.7	720.6	774.0Other excise taxes-	Automobiles	72.3	59.3	64.3	59.6	25.4Beverages (soft drinks)	
Candy and chewing gum	
Cigarettes, tobacco and cigars	0.6 0.7 142.4	148.0	185.5	193.7	221.7Electric power export	1.4	1.2	1.3	1.6	1.4Jewellery, watches, ornaments, etc.	5.3	5.6	5.6	5.9	5.7Matches and lighters	0.9	0.9	0.8	0.8	1.1Television sets, radios, tubes and	phonographs	16.9	17.8	17.8	15.9	17.6Toilet preparations	6.3	6.8	7.7	8.4	8.9Wines	2.7	3.1	3.0	3.2	3.5Sundry commodities	1.4	1.2	1.2	1.1	1.2Interest and penalties	0.6	0.5	0.6	0.8	0.5Less refunds	-0.7	-2.6	-0.4	-0.3	-11.0250.8	241.8	287.4	290.7	276.0Customs import duties	498.1	486.5	525.7	498.7	539.0Excise duties-	Spirits	83.7	96.5	102.4	108.5	113.7Beer	88.2	83.1	90.7	91.0	95.6Cigarettes, tobacco and cigars	131.7	141.2	146.2	149.6	158.3Licences	(«)	(«)	(*>	(*)	(«)Less refunds	-3.5	-4.1	-4.1	-4.2	-4.6S00.1	S16.7	SS5.2	J44.9	S6S.0Estate tax <*>	71.6	72.6	88.4	84.9	85.0Miscellaneous tax revenue	0.1	(S)	(«)	(*)	(1)Total tax revenues	4,622.8	4,247.4	4,752.3	5,015.8	5,157.0Non-Tax Revenues-	Post office-net postal revenue	152.9	157.5	167.6	173.6	180.0Return on investments	169.4	221.2	239.7	283.8	305.0Other	103.7	128.6	130.2	144.5	130.0Total non-tax revenues	426.0	507.3	537.5	601.9	615.0Total Revenues	5,048.8	4,754.7	5,289.8	5,617.7	5,772.0
(*>Excluding tax credited to the old age security fund-
1961-62
1958-59 1959-60 1960-61 (estimated)
Personal income tax	
135.0	146.4	185.6	229.4	259.0Corporation income tax	
60.7	55.3	91.3	103.5	100.0Sales tax	
175.8	173.6	270.0	270.2	290.0
(2)Net after deduction of refunds and drawbacks as well as transfers to the old age security fund. <*>Less than $50,000.
<4>Ineludes duties levied under the Dominion Succession Duty Act.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
(in millions ot dollars)
-	1957-58	1958-59	1959-60	1960-61	1961-62 (estimated)t	t	$	S	tAgriculture-	Administration and general	2.6	3.6	3.6	4.4	5.2Agricultural products board-net oper-	ating loss	4.9Agricultural stabilization board-net	operating loss	6.0	15.0	57.7	53.4	23.0Assistance re storage costs of grain....	33 3	38.4	42.3	48.2	49.0Board of Grain Commissioners	6.3	6.1	6.1	6.3	6.5Prairie farm emergency fund-deficit.	5.9	17.0	12.5	9.2	49.5Production and marketing branch	20.3	23.2	25.4	29.3	34.0Contributions to Alberta, Saskat-	chewan and Manitoba-unhar-	vested crops	4.7	1.4	Payments to western grain producers.	41.3	40.5	40.5Freight assistance on western feed	grains	17.5	20.0	23.8	19.2	16.7Premium on hog and lamb carcasses	suitable for export to United King-	dom	5.5	6.9	8.2	6.6	7.2Rehabilitation and reclamation	projects 	12.5	13.5	17.6	20.2	26.6Research branch	22.0	23.6	25.6	26.2	26.21S1.9	SO 8.6	*.*7.5	S64.9	S89.SAtomic Energy	21.6	26.1	30.1	38.9	35.3Auditor General's Office	0.8	0.8	0.9	0.9	1.1Board of Broadcast Governors	0.1	0.2	0.3	0.3Canadian Broadcasting Corporation-	Grants toward the anticipated operat-	ing deficit and capital expenditures	of the radio broadcasting and tele-	vision services	24.4	50.3	61.9	64.9	75.3International service	1.8	1.9	2.0	1.9	1.7Payment from the consolidated rev-	enue fund of amounts equal to taxes	collected under the Excise Tax Act	in respect of radio and television sets	and equipment	16.8	9.8	1,5.0	6S.0	6S.9	66.8	77.0Office of the Chief Electoral Officer.	13.6	3.2	0.3	0.6	0.3Citizenship and Immigration-	Administration and general	1.9	2.1	2.1	2.4	2.6Immigration branch	22.1	14.4	11.7	12.3	12.5Indian affairs branch	27.8	36.4	411	40.4	51.061.8	5S.9	51,-9	61.1	66.1Crra Service Commission	3.2	3.5	3.7	4.2	4.7Defence Production-	Administration and general	10.2	12.1	15.0	18.6	22.4Production capacity and capital assist-	ance to defence industry	4.8	1.8	2.6	1.8	2.315.0	IS.9	17.6	so. 4	*47External Affairs	15.7	17.0	16.9	19.4	22.0Contributions to international economic	and special aid programs	38.0	40.0	57.2	66.8	61.0Other payments to international or-	ganizations and programs	6.7	18.8	23.1	16.8	12.060.1,	7 5.8	97. t	10S.0	95.0Finance-	Administration and general	7.6	10.2	10.8	19.9	19.6Office of the Comptroller of the Treas-	ury	17.5	17.9	18.2	19.8	21.5Grants to Canada Council	100.0	
The Budget-Appendix

[Stage Direction]
FOR THE LAST FIVE FISCAL YEARS-Continued
(in millionB of dollars)
[Stage Direction]
Finance-concluded-
Grants to municipalities in lieu of taxes
on federal property	
Grants to universities	
Government's contributions, with respect to the superannuation account-
General	
Special	
Payments to provinces-
Statutory subsidies	
Tax-sharing arrangements, 1956 act.. Transfer of certain public utility tax
receipts	
Transitional grant to Newfoundland Additional grants to Newfoundland
Premium, discount and exchange	
Public debt charges-
Interest on public debt	
Cost of issuing new loans and annual amortization of bond discounts
and commissions	
Servicing of public debt	
17.5
10.6
33.8
44.3
20.6
353.3
7 4 1.4
539.2
27.7
0.5
1,187.4
Fisheries	
Forestry	
Governor General and Lieutenant-Governors	
Insurance	
16.4
9.6
0.4
1.2
Justice	
Office of the Commissioner of Penitentiaries	
7.2
12 7
lb 9
Labour	
Government annuities-amount required to maintain reserve....
Unemployment Insurance Commission-	
Administration and general....
Government's contribution	
10.2
1.2
32.5
37.8
81.7
Legislation-
House of Commons... Library of Parliament Senate	
5.0
0.3
1.5
6.8
Mines and Technical Surveys	
Dominion Coal Board	
Emergency gold mining assistance....
18.7 8.8 8.6 86.1
National Detence-
Defence forces, army, naval and air
services	
Defence research and development. . Government's contributions with respect to Canadian forces superannuation account	
Mutual aid to NATO countries	
Pensions-payments under Defence
Services Pension Act	
Other	
1,415.0
78.7
49.7
118.5
5.8
1.8
1,669.6
1959-60
1961-62 (estimated)
t
24.5
21.9
25.5
37 7
20.6
423.1
8.7
1.0
13.6
606.6
40.8
0.6
1,888.2
17.5
9.8
0.4
1.2
7.6
16.7
84.8
14.2
0.2
35.3 37 1 86 8
5.6 0.3 1 7
7.6
22 7 11.3 9.8 43.8
1,222.7
74.4
49.5
70.7
6.0
2.4
1,486-7
22.5
26.1
40.0
20.8
485.4
4.8
0.7
7.3
0.2
735.6
47.3
0.5
1,480.8
19.9
9.9
0.4
1.2
8.1
19.7
87.8
21.1
0.2
35.9
45.7
108.9
5.6 0.3 1.8
7.7
23.7
17.6
13.1
1,397.1
39.2
51.8
18.4
6.3
3.8
1,516.6
19.0
41.4
20.7
504.9
4.2
0.3
7.7
756.7
40.2 0.7
1,460.0
19.2
10.1
0.4
1.3
8.6
19.1 87.7
24.1
42.1
55.1 181.8
6.3 0.3 1.9 8.5
27.7
19.3 12.1 59.1
1,406.0
41.9
40.5
14.6
6.7
7.8 1,617.6
24.7
19.4
46.9
23.5
502.7
6.4
8.0
804.0
34 9 0.8 1,518.4
24.3
15.1
0.5
1.4
9.7
25.0
84.7
85.4
46.1 56.6
188.1
6.3 0.3 1.8
8.4
36.8 20.0 12.5 69 3
1,496 5 42.9
56.0
10.2
7.3 9 1
1,628.0
[Stage Direction]
The Budget-Appendix
STATEMENT OF EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS-Continued
(in millions of dollars)
-	1957-58	1958-59	1959-60	1960-61	1961-62 (estimated)t	$	S	*	tNational Film Boabd	4.0	4.3	4.6	4.9	5.2
National Gallery or Canada		0.6	0.6	0.7		1.0
National Health and Welfare-					
Administration and general		4.5	4.6	4.5	5.1	6.3
National health branch-					
General health grants		34.6	45.9			49.0
Government's contributions undei					
the Hospital Insurance and Diag noetic Services Act			54.7	150.6	189.4	284.0
Other		29.8				
		31.2			34.8
Welfare branch-					
Family allowances		437.9	474.8	491.2		520.9
Old age assistance, blind persons and					
disabled persons allowances		39 7	49 7 184.0 23.9 3.1	50.6	51.3	51.0
Old age security fund-deficit		103.9				
Unemployment assistance		8 2		40.2	51.5	88.0 3.4
Other		3.1				
					
	661.7	871.9	816.7	887. t	1,037.4
National Research Council, including					
the Medical Research Council		21.6 67.7	25.4 68.8	31.5 68.7		38.7 75.9
National Revenue						
					
Northern Affairs and National Re-					
SOURCES		41.9	58.0			86.6
					
Post Office		153.3	157.8			188.6
					
Privy Council, including Prime Min-					
ister's Office		0.6	1.1		1.9	4.9
					
Public Archives and National Library	0.7	0.7	0.7	0.8	1.0Public Printing and Stationery	3.3	3.5 170.1 4.9 51.1	3.5	3.5	4.1 142.6 8.8 42.0Public Works	156.6 3.3	National Capital Commission	6.2 53.2	6.3 48.7	Trans-Canada highway contributions..	49.4	SOS. 3	ete. 1	117.9	tOO. 9	193.4Royal Canadian Mounted Police. .. .	47.4	51.7	52.4	56.0	61.1Secretary of State	4.0	4.4	4.9	5.1
Trade and Commerce		17.1	19.9	17.7 0.2 17.9	21.4	39.5 0.5 40.0
National Energy Board						
	17.1	19.9		tl.8	
Transport-					
Administration and general		3.7	4.0 115.4 5.9	4.6	5.0	5.8 152.0 11 ?
Air services		90.3 5.2				
Canadian Maritime Commission	
Canal services	6.7	6.9	8.6 32.8	9.7 51.8	5.3 47.2Marine services	Non-active assets-	National Harbours Board	4 8	4.3 1.8	2.0 3.7	5.0 6.5Railway and steamship services	5.7	Deficits-	Canadian National Railways	
Canadian National (West Indies)	22.1	51.6	43.6	67.5	67.3Steamships Ltd	0.6	1.2	North Sydney-Port aui Basques	ferry and terminals	6.0	5.8	5.8	5.4	7.1Prince Edward Island car ferry	and terminals	2.0	2.0	2.6	3.1Yarmouth-Bar Harbour ferry	service	0.3	0.2	0.2	0.1 |	0.1
The Budget-Appendix
STATEMENT OF EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS-Concluded
(in millions of dollars)
-	1957-58	1958-59	1959-60	1960-61	1961-62 (estimated)S	S	S	$	$Transport-concluded-	7.8	20.4	20.0Freight Rates Reduction Act	Interim payments related to the recommendations of the Royal Com-	50.0mission on Railway Problems	7.0	7.0	7.0	7.0	Maintenance of trackage	7.0Maritime Freight Rates Act	12.6	13.1	14.3	14.1	12.3Contribution to the railway grade	15.0	15.0	15.0 2.6	10.0 6.5crossing fund	
Trans-Canada Air Lines-deficit	5.0	toe. 7	t88.8	196. B	886.4	416.4Veterans Affairs-	6.3	6.4	6.7	6.9Administration and general	6.2	Hospital accommodation, additions,	3.3	4.5	6.1	5.3alterations and improvements	3.3	Pensions	145.6	150.7	149.7	150.7	177.6Provision for reserve for conditional	3.8	3.4	3.2benefits	5.2	4.4	Soldier settlement and veterans land	5.2	4.75.6	5.4	5.2	Treatment and welfare services	56.4	56.1	52.6	52.8	53.2Veterans allowances, treatment allow-	63.2	64.7	81.0ances and other benefits	53.1	60.4	War service gratuities and re-estab-	2.2	2.9	2.9	2.2lishment credits	1.8	*77.*	188.8	188.8	19i.S	884.1Total Expenditures	5,087.4	5,364.0	5,702.9	5,958.1	6,563.4
The Budget-Appendix

[Stage Direction]
(in millions of dollars)
Loans to, and investments in, Crown corporations-
Atomic Energy of Canada Limited.. Canadian Broadcasting Corporation. Canadian Commercial Corporation..
Canadian National Railways	
Canadian National (West Indies)
Steamships Limited	
Canadian Overseas Telecommunication Corporation	
Central Mortgage and Housing Corporation	
Export Credits Insurance Corporation
Farm Credit Corporation	
National Capital Commission	
National Harbours Board	
Northern Canada Power Commission	
Northern Ontario Pipe Line Crown
Corporation	
The St. Lawrence Seaway Authority
Trans-Canada Air Lines	
Other	
Loans to national governments-
United Kingdom-
The War Appropriation (U.K. Financing) Act, 1942	
The United Kingdom Financial
Agreement Act, 1946	
Export Credits Insurance Act....
Special loans to Colombo plan countries to finance the purchase of wheat and flour from Canada.... Other	
Other loans and investments-
Subscriptions to capital of, working capital advances and loans to, international organizations- Canada's subscription to capital of-
International monetary fund....
International bank for reconstruction and development.. International development association	
Working capital advances and loans
to international organizations_
Loans to provincial governments.... Balances receivable under agreements of sale of Crown assets______
Old age security fund	
Unemployment Insurance Commission	
Veterans land act advances	
Other	
Net total of changes in loans and investments	
1957-58	1958-59	1959-60	1960-61	1961-62 (estimated)$	t	$	t	t3.2	2.7	0.6	1.5	2.6-0.3	-27.0	3.0	2.0	1.0	-10.7	199.5	-261.4	-116.5	76.4-0.2	-0.3	-0.2	-1.0	0.3	0.3	9.6	9.1	2.7107.5	335.6	315.1	192.0	198.014.3	22.0	28.5	40.1	8.0 54.02.1	5.0	10.7	7.4	9.311.1	20.2	15.8	11.4	6.66.7	7.3	12.9	5.4	5.270.5	42.8	8.0	2.2	-2.9<*99.2	<*106.1	<*>33.1	24.0	10.02.5	1.0	1.3	-2.20.1	-0.1	0.1	-0.1SOS. 8	716.7	176.6	181.0	S67.6-30.0	-22.5	<*>44.2	-16.1	-16.4	-16.7	-17.1-19.9	-17.9	-17.9	-15.2	-15.216.2	18.3	0.5	-3.5	-5.0-1.1	-0.8	-0.6	-0.9	-1.19.4	-S9.0	-S4.4	-S6.S	-38.45.0	-2.6	235.4	15.0	19.02.8	2.88.5	7.9-0.2	-0.1	-0.3	-0.4<*>1.0	<4>25.5	-6.0	-5.6	-8.5-4.4	-2.9	-3.1	-3.9	-1.5-1.5	28.0	-10.7	-17.367.0	-67.0-3.2	-3.0	0.6	14.5	12.39.4	3.4	-3.4	0.4	5.16.1	so. 4	ssi. 4	87.7	-47.6319.3	698.1	392.6	232.4	281.6
(,) Includes deferred interest.
(8) Deferred interest.
(,) *4 million in overpayments to provinces arising out of 1952 tax rental agreements offset in part by repayments of $3 million.	3
H>
Loan °{*29-5 million to New Brunswick in respect of the Beechwood Power Project offset in part by repayments of $4 million on other loans.

The Budget-Appendix

[Stage Direction]
-
[Stage Direction]
Date of maturity
[Stage Direction]
Rate per cent
[Stage Direction]
Amount of loan
[Stage Direction]
Annual interest
[Stage Direction]
Payable in Canada-
[Stage Direction]
%
[Stage Direction]
$
[Stage Direction]
Loan of 1961
[Stage Direction]
AT. 3
[Stage Direction]
1962 May
[Stage Direction]
1
[Stage Direction]
3
[Stage Direction]
100,000,000
[Stage Direction]
3,000,000
[Stage Direction]
Loan of 1960
[Stage Direction]
T.41
[Stage Direction]
June
[Stage Direction]
15
[Stage Direction]
3
[Stage Direction]
190,000,000
[Stage Direction]
5,700,000
[Stage Direction]
Loan of 1961
[Stage Direction]
AT. 4
[Stage Direction]
Aug.
[Stage Direction]
1
[Stage Direction]
3
[Stage Direction]
335,000,000
[Stage Direction]
10,050,000
[Stage Direction]
Canada savings bonds 1951
[Stage Direction]
S. 6
[Stage Direction]
Aug.
[Stage Direction]
1
[Stage Direction]
3i
[Stage Direction]
<D 24,398,250
[Stage Direction]
853,939
[Stage Direction]
Loan of 1959
[Stage Direction]
T.35
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
5*
[Stage Direction]
291,821,000
[Stage Direction]
16,050,155
[Stage Direction]
Loan of 1960
[Stage Direction]
T.40
[Stage Direction]
Dec.
[Stage Direction]
1
[Stage Direction]
4}
[Stage Direction]
140,000,000
[Stage Direction]
5,950,000
[Stage Direction]
Loan of 1961
[Stage Direction]
AT. 2
[Stage Direction]
Dec.
[Stage Direction]
15
[Stage Direction]
3J
[Stage Direction]
375,000,000
[Stage Direction]
13,125,000
[Stage Direction]
Loan of 1959
[Stage Direction]
T.33
[Stage Direction]
1963 Jan.
[Stage Direction]
1
[Stage Direction]
4
[Stage Direction]
100,000,000
[Stage Direction]
4,000,000
[Stage Direction]
Loan of 1960
[Stage Direction]
T.37
[Stage Direction]
Apr.
[Stage Direction]
1
[Stage Direction]
5}
[Stage Direction]
448,072,000
[Stage Direction]
24,643,960
[Stage Direction]
Loan of 1961 and 1962
[Stage Direction]
AT.10
[Stage Direction]
Apr.
[Stage Direction]
1
[Stage Direction]
21
[Stage Direction]
300,000,000
[Stage Direction]
8,250,000
[Stage Direction]
Loan of 1961
[Stage Direction]
AT. 7
[Stage Direction]
June
[Stage Direction]
1
[Stage Direction]
2f
[Stage Direction]
175,000,000
[Stage Direction]
4,812,500
[Stage Direction]
Canada savings bonds 1952
[Stage Direction]
S. 7
[Stage Direction]
Aug.
[Stage Direction]
1
[Stage Direction]
3!
[Stage Direction]
0) 26,539,950
[Stage Direction]
995,248
[Stage Direction]
Eighth victory loan
[Stage Direction]
P. 5
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
3
[Stage Direction]
223,020,200
[Stage Direction]
6,690,606
[Stage Direction]
Loan of 1960
[Stage Direction]
T.42
[Stage Direction]
Dec.
[Stage Direction]
15
[Stage Direction]
4
[Stage Direction]
300,000,000
[Stage Direction]
12,000,000
[Stage Direction]
Loan of 1961
[Stage Direction]
AT. 1
[Stage Direction]
1964 May
[Stage Direction]
1
[Stage Direction]
4
[Stage Direction]
360,000,000
[Stage Direction]
14,400,000
[Stage Direction]
Loan of 1961
[Stage Direction]
AT. 8
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
250,000,000
[Stage Direction]
8,125,000
[Stage Direction]
Loan of 1961
[Stage Direction]
AT. 5
[Stage Direction]
Dec.
[Stage Direction]
1
[Stage Direction]
4
[Stage Direction]
240,000,000
[Stage Direction]
9,600,000
[Stage Direction]
Conversion loan of 1958
[Stage Direction]
T.27
[Stage Direction]
1965 Sept.
[Stage Direction]
1
[Stage Direction]
3!
[Stage Direction]
1,265.890,600
[Stage Direction]
47,470,898
[Stage Direction]
Canada savings bonds 1953
[Stage Direction]
S. 8
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
3!
[Stage Direction]
<* 90,721,250
[Stage Direction]
3,402,045
[Stage Direction]
Ninth victory loan
[Stage Direction]
P. 7
[Stage Direction]
1966 Sept.
[Stage Direction]
1
[Stage Direction]
3
[Stage Direction]
245.202,200
[Stage Direction]
7,356,066
[Stage Direction]
Canada savings bonds 1954
[Stage Direction]
S. 9
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
<>>
53,397,400
[Stage Direction]
1,735,415
[Stage Direction]
Loan of 1961
[Stage Direction]
AT. 6
[Stage Direction]
Dec.
[Stage Direction]
15
[Stage Direction]
41
[Stage Direction]
175,000,000
[Stage Direction]
7,875,000
[Stage Direction]
Loan of 1961
[Stage Direction]
AT. 9
[Stage Direction]
1967 June
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
100,000,000
[Stage Direction]
4,250,000
[Stage Direction]
Canada savings bonds 1955
[Stage Direction]
S.10
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
<* 51,732.400
[Stage Direction]
1,681,303
[Stage Direction]
Loan of 1961
[Stage Direction]
AT.11
[Stage Direction]
1968 Jan.
[Stage Direction]
15
[Stage Direction]
41
[Stage Direction]
100,000,000
[Stage Direction]
4,250,000
[Stage Direction]
Refunding loan of 1950
[Stage Direction]
P. 9
[Stage Direction]
June
[Stage Direction]
15
[Stage Direction]
21
[Stage Direction]
308,581,000
[Stage Direction]
8,485,978
[Stage Direction]
Canada savings bonds 1959
[Stage Direction]
S.14
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
<'>1,117,117,950
[Stage Direction]
47,477,513
[Stage Direction]
Loan of 1960
[Stage Direction]
T.39
[Stage Direction]
1969 Apr.
[Stage Direction]
1
[Stage Direction]
5}
[Stage Direction]
80,000,000
[Stage Direction]
4,400,000
[Stage Direction]
Canada savings bonds 1956
[Stage Direction]
S.ll
[Stage Direction]
May
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
<* 89,819,650
[Stage Direction]
3,143,688
[Stage Direction]
Loan of 1958
[Stage Direction]
T.24
[Stage Direction]
1970 May
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
200,000,000
[Stage Direction]
7,000,000
[Stage Direction]
Canada savings bonds 1957
[Stage Direction]
S.12
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
<>>663,857,100
[Stage Direction]
31,.533,212
[Stage Direction]
Canada savings bonds 1960
[Stage Direction]
S.15
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
4
[Stage Direction]
<>>685,889,700
[Stage Direction]
27,435,588
[Stage Direction]
Canada savings bonds 1961
[Stage Direction]
S.10
[Stage Direction]
1971 Nov.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
<>>988,958,000
[Stage Direction]
42,030,715
[Stage Direction]
Conversion loan of 1958
[Stage Direction]
T.28
[Stage Direction]
1972 Sept.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
1,287,228,800
[Stage Direction]
54,707,224
[Stage Direction]
Canada savings bonds 1958
[Stage Direction]
S.13
[Stage Direction]
1973 Nov.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
<>>251,529,800
[Stage Direction]
10,690,016
[Stage Direction]
Loan of 1959
[Stage Direction]
T.30
[Stage Direction]
1975 Oct.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
122,631,000
[Stage Direction]
6,744,705
[Stage Direction]
Loan of 1960
[Stage Direction]
T.38
[Stage Direction]
1976 Apr.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
928,000
[Stage Direction]
51,040
[Stage Direction]
Loan of 1954
[Stage Direction]
T.l 1
[Stage Direction]
June
[Stage Direction]
1
[Stage Direction]
3}
[Stage Direction]
250,834,500
[Stage Direction]
8,152,121
[Stage Direction]
Loan of 1953 and 1958
[Stage Direction]
T. 5
[Stage Direction]
1978 Jan.
[Stage Direction]
15
[Stage Direction]
31
[Stage Direction]
216,358,500
[Stage Direction]
8,113,444
[Stage Direction]
Loan of 1954
[Stage Direction]
T.13
[Stage Direction]
1979 Oct.
[Stage Direction]
1
[Stage Direction]
3}
[Stage Direction]
351,271,500
[Stage Direction]
11,416,324
[Stage Direction]
Conversion loan of 1958
[Stage Direction]
T.29
[Stage Direction]
1983 Sept.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
2,027,929,450
[Stage Direction]
91,256.825
[Stage Direction]
Conversion loan of 1956
[Stage Direction]
T.15
[Stage Direction]
1998 Mar.
[Stage Direction]
15
[Stage Direction]
31
[Stage Direction]
198.130,000
[Stage Direction]
7,429,875
[Stage Direction]
Loan of 1936
[Stage Direction]
P. 1
[Stage Direction]
Perpetual
[Stage Direction]
3
[Stage Direction]
55,000,000
[Stage Direction]
1,650,000
[Stage Direction]
Three-month treasury bills
[Stage Direction]
<>>3.12
[Stage Direction]
1,235,000,000
[Stage Direction]
37,791,000
[Stage Direction]
Six-month treasury bills
[Stage Direction]
<*3.29
[Stage Direction]
650,000,000
[Stage Direction]
21,125,000
[Stage Direction]
Special non-marketable bonds (U.I.C.)
[Stage Direction]
31
[Stage Direction]
53,000,000
[Stage Direction]
1,987,500
[Stage Direction]
16,794.800,200
[Stage Direction]
658,888,903
[Stage Direction]
Payable in London- Loan of 1933/34
[Stage Direction]
Loan of 1938
[Stage Direction]
Payable in New York- Loan of 1949
[Stage Direction]
Loan of 1950
[Stage Direction]
1963 July July 1974
[Stage Direction]
Sept. 1975
[Stage Direction]
Sept.
[Stage Direction]
1 1 1 15
[Stage Direction]
3 31 21 21
[Stage Direction]
<[DOT]>30,010,702 <[DOT]>
1,978,362
[Stage Direction]
900,321 64,297
[Stage Direction]
31,989,064
[Stage Direction]
964,618
[Stage Direction]
<"60,206,000 <"37,969,000
[Stage Direction]
1,655,665 1,044,148
[Stage Direction]
98,175,000
[Stage Direction]
2,699,813
[Stage Direction]
16,925,024,264
[Stage Direction]
662,553,334
[Stage Direction]
Note-Where various rates of interest are applicable during the term of a loan the interest rate in effect
at March 31, 1962 has been used.
<>>
Estimated.
<* Rate of discount at tender on March 29, 1962. <[DOT]>
Conversion rate $2.80= £1.
<* Conversion rate $1 Can. = $l U.S
[Stage Direction]
Wednesday, April 11, 19B2