1962-03-09

Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, there are two announcements I should like to make in connection with preparations for the observance of the one hundredth anniversary of confederation. The first has to do with the Canadian centenary council, which is holding its annual meeting today and tomorrow. It has associated with it some 160 national associations, either directly or by way of affiliation. The council was established to stimulate interest and participation on the part of the general public in the preparations for the observance of the centennial of confederation.
I wish now to inform the house that, subject to the approval by parliament of the moneys involved, the government will make a grant under the National Centennial Act in the amount of $25,000 early in the fiscal year 1962-63 to assist the Canadian centenary council in its activities. Active participation by citizens everywhere in the country is essential if Canadians are to make the centennial one of the truly significant events in their history.
Second, subject also to the approval by parliament of the funds involved, an order in council will be passed early in the next fiscal year to provide an interim grant of $250,000 to the organization known as the fathers of confederation memorial citizens foundation to enable architectural work to be done in connection with the memorial buildings to be erected in Charlottetown by the foundation to commemorate the conference there in 1864. In addition there will be a grant, inclusive of the above interim grant, in the amount of one half the construction costs of the buildings in question, but not exceeding a total grant of $2.8 million.
It will be a condition of the main grant that the foundation shall not award a contract for the construction of the buildings until it has satisfied the appropriate officers of the federal
government that the foundation possesses sufficient funds, including the grant, to cover the full cost of construction of the buildings in question.


Hon. L. B. Pearson (Leader of the Opposition):: Mr. Speaker, we on this side will support any government move, any request for funds, for the preparatory work which will be required to make this celebration, as the Prime Minister calls it, one of the significant events in our history. He can count on the full co-operation of this side in the work to be done.


Mr. H. W. Herridge (Kootenay West):: The
members of this group support wholeheartedly the government's proposals for the celebration of our centennial. However, for certain reasons, Mr. Speaker, we would like to know if the Prime Minister expects to be in office when the centennial is celebrated.


Some hon. Members:: Hear, hear.


John George Diefenbaker: Mr. Speaker, the answer is in the affirmative.

On the orders of the day:


Mr. D. M. Fisher (Port Arthur):: I should like to ask the Prime Minister a very simple question arising out of his comment about the centennial committee. I wonder whether he can tell us who is the chairman of the centennial committee.


Lester Bowles Pearson: Don't be ashamed.


John George Diefenbaker: Mr. Speaker, I will secure a record of not only the chairman but of the other members for the hon. gentleman. I note that his curiosity has been aroused.



THE CANADIAN ECONOMY


Hon. George H. Hees (Minister of Trade and Commerce):: Mr. Speaker, I am tabling today the report entitled "Private and Public Investment in Canada-Outlook 1962" which summarizes the results of a recent survey of capital spending intentions. The survey, which is conducted annually, is designed to cover anticipated outlays for new plant and equipment, institutional and government facilities and housing.

Canadian Economy
Capital expenditure plans for all sectors of the economy, as outlined in this report, involve total outlays in 1962 of $8.6 billion. This is 6 per cent above the $8.1 billion actually spent last year. Higher capital spending is indicated for each of the major sectors of the economy, with business investment up 2 per cent, residential construction up 4 per cent and institutional and public building up 16 per cent.
Within the business area most of the added strength will be in key commodity producing industries. Capital outlays in manufacturing are expected to increase by 16 per cent, mainly as a result of expanded programs in primary iron and steel, non-ferrous metal processing and petroleum refining. Other areas of business where plans call for significantly larger capital outlays in 1962 include iron ore and non-ferrous metal mining, electric power and communications, and retail trade. Less will be spent in 1962 in pipe line and gas processing plant construction, new office building and in acquiring equipment for the commercial airlines, unusually large programs having been implemented in these fields last year.
The major factor contributing to larger outlays in the area of institutional and public investment is the greatly expanded program of technical school construction which has been made possible through extensive financial assistance by the federal government. Significant increases are also indicated in anticipated outlays for the construction of university and hospital buildings and for federal, provincial and municipal government projects.
Present spending intentions call for a higher level of investment in 1962 in eight of the ten provinces. Only in Alberta and British Columbia, where very large programs of pipe line construction were completed last year, is a lower level of capital spending anticipated.
A capital expenditure program of the size indicated will reinforce the expansion in general activity now under way in Canada. Higher outlays for both new construction and new machinery and equipment will mean increased activity in the construction and related trades and in equipment producing industries. The results of the survey show also that a continuing high proportion of the national product is being devoted to the renewal and expansion of capital facilities.
The two copies I am tabling have been printed in English, which has been the custom over the years. However, I am also having copies printed in French, and they will be made available very shortly.


Mr. Speaker:: I take it these documents are not submitted under statutory obligation. Will the house give the minister leave to table the documents in question?


Some hon. Members:: Agreed.



REQUEST FOR TABLING OF CANADIAN ECONOMIC OUTLOOK, 1962

[Stage Direction]
On the orders of the day:
Hon. J. W. Pickersgill (Bonavisia-Twillin-gale):: I wonder if I might direct a question to the Minister of Trade and Commerce and ask him if he could accompany the tabling of the document he tabled this morning by tabling the document called The Canadian Economic Outlook, 1962, which is prepared in his department.



CANADIAN NATIONAL RAILWAYS


Hon. Leon Balcer (Minister of Transport):: By leave of the house I beg to table two copies of the draft arrangement with the Canadian National Railway Company as to the terms and conditions under which the company will act as agent of the crown for the construction, maintenance, management and operation of the Gaspe railway. The order in council to be passed setting out the terms and conditions as shown in the draft arrangement will constitute the agreement with the Canadian National, as was done in the case of the Hudson Bay railway.



FINANCE


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: I would like to ask the Minister of Finance whether he would care to comment on the Canadian tax foundation's estimate of a $812 million deficit for the fiscal year ending this month, and an estimated $700 million deficit for the forthcoming year.


Hon. Donald M. Fleming (Minister of Finance):: The Canadian tax foundation makes a study of this nature every year with varying degrees of accuracy in relation to what may prove to be the official government figures in this regard.



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Mr. Erhart Regier (Burnaby-Coquillam):: would like to ask the Secretary of State for External Affairs, in the light of the ugly rumours and speculation now prevailing in the newspapers, whether in the public interest he has any additional statement to make concerning Canadians now serving with the international truce commissions in Asia?


Hon. Howard C. Green (Secretary of State for External Affairs):: I dealt with this during the debate last night. I stated at the time that I thought it would not be in the public interest for me to go further than I had gone, and I am still of that opinion.


Hon. Paul Hellyer (Trinity):: As a supplementary question, when it is a matter of such deep concern surely in the public interest the minister should take the earliest opportunity to inform the house as to what this involves and the steps being taken.


Mr. Speaker:: Order. I just want to say to the hon. member that it is hardly a supplementary question he is asking.


Howard Charles Green: In reply to the statement by the hon. member for Trinity I suggest that he look up the records when his party were in office, and I think he will find they did exactly the same thing.


Paul Theodore Hellyer: I am sure if that is the case-


Some hon. Members:: Order.


Paul Theodore Hellyer: -it is no excuse. This is a serious matter.


Mr. Speaker:: Order. The hon. member for Trinity is an experienced member of the house, and knows this is not a time for debate.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. E. Nasserden (Rosihern):: I would like to direct a question to the Acting Minister of Agriculture. Has the minister received any requests from the prairie provinces for assistance in providing feed and seed?


Hon. D. S. Harkness (Acting Minister of Agriculture):: The federal government and the provinces of Manitoba, Saskatchewan and Alberta have been sharing jointly since last July in a program of assistance toward the cost of transporting fodder into feed deficient areas. This is still in effect.
Inquiries of the Ministry
Requests have been received from the provinces of Saskatchewan and Manitoba for the federal government to share with the provinces the costs of a program of freight assistance on seed where it is necessary to bring seed from a distance, and this is now under consideration. I may say that the hon. member for Timiskaming asked a somewhat similar question a day or two ago and this will serve as an answer to it.



TRANSPORT


[Stage Direction]
On the orders of the day:
Hon. Lionel Chevrier (Laurier):: Mr. Speaker, may I direct a question to the Minister of Transport and ask him when he will be in a position to table the annual reports of Canadian National Railways and Trans-Canada Air Lines, and when he expects it will be possible for the special committee dealing with government owned operations to convene in order to study these reports.


Léon Balcer: Mr. Speaker, I expect these reports to be tabled toward the end of next week.


Lionel Chevrier: I should like to ask the Minister of Transport a supplementary question.


Mr. Churchill:: I will take it as notice.


Lionel Chevrier: He was in the house a moment ago, and I see he is coming back to his seat now. In relation to his answer to my question a moment ago, that he expected to table the annual reports of the two crown corporations next week, I wonder whether the minister has been in communication with the presidents of these two corporations and whether he can tell the house when the special committee is likely to meet to discuss these annual reports.


Léon Balcer: Mr. Speaker, whenever a decision is taken for the committee to sit, it will be announced in the proper fashion in the house.



TRENT CANAL


[Stage Direction]
On the orders of the day:
Mr. Walter Pitman (Peterborough):: I should like to direct a question to the Minister of Transport. Is consideration being given at any level in the Department of Transport to the imposition of some form of tolls on the Trent canal?


Léon Balcer: No change in the present situation is contemplated at the present time.

Inquiries of the Ministry (Translation):



DEPARTMENT OF FORESTRY


[Stage Direction]
On the orders of the day:
Mr. L. J. Pigeon (Jolieite-L'Assomption-Monlcalm):: Mr. Speaker, I should like to address a question to the Minister of Forestry. Does he intend to appoint a Frenchspeaking assistant deputy minister in his department? If so, could he give us his name?
(Text) :


Hon. H. J. Flemming (Minister of Forestry):: Mr. Speaker, the answer to my hon. friend's question is yes. Arrangements have been made to secure the services of Dr. L. Z. Rousseau, distinguished member of the faculty of Laval University and dean of forestry in that institution. He will be assuming these duties and responsibilities on April 1. The government and the department are very pleased that the services of this distinguished forester and educationalist will be available for the benefit of Canada in the important field of forestry.



INQUIRY AS TO APPOINTMENT OF UNDER SECRETARY OF STATE

[Stage Direction]
On the orders of the day:
Lionel Chevrier: Mr. Speaker, may I direct a question to the Prime Minister. In the light of one answer which we have received this morning, may I ask the Prime Minister when he will be in a position to announce the appointment of the under secretary of state.


John George Diefenbaker: Mr. Speaker, I have nothing to add to what has been said on a number of previous occasions.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Hon. Paul Martin (Essex East):: Mr. Speaker, may I ask the Secretary of State for External Affairs if it is the intention at the earliest moment to set up the external affairs committee.


Howard Charles Green: Mr. Speaker, that is a question to be dealt with by the house leader. The hon. member for Essex East knows that the estimates cannot be referred until they have been introduced. They have not yet been called.
[Mr. Balcer.l



LIVESTOCK


[Stage Direction]
On the orders of the day:
Mr. J. J. Martel (Chapleau):: Mr. Speaker, I should like to direct a question to the Minister of Agriculture, or in his absence to the acting minister or his parliamentary secretary, notice of which I gave to his department. My question is as follows.
(Translation):
Could the Minister of Agriculture tell the house if his department has kept complete records of all cases of rabies among animals in the province of Quebec, since the beginning of its immunization program to check the ravages of this disease which even threatens human beings?
I should also like to proceed immediately with the second part of my question, which is: If the answer to the first part is yes, what was the amount of the compensation paid for animals destroyed because of this disease, under the agreement signed with the government of Ontario, and what share of these payments did the federal government pay?
Furthermore, is the federal Department of Agriculture willing to see that similar benefits are paid to Quebec farmers, many of whom have suffered from the ravages of this terrible disease, especially in the constituencies of Pontiac-Temiscamingue, Villeneuve and Chapleau-
(Text):


Mr. Speaker:: Order. Before the hon. member comes to the third part of his question I think I should remind him that while the first part seemed to be relevant, long questions of that kind asking for statistical information are more properly put on the order paper and dealt with in writing.


Jean-Jacques Martel: Mr. Speaker, I humbly submit that the second part is very important, too, because this matter has been delayed for a long time.


John Whitney Pickersgill: Like everything else by this government.


Jean-Jacques Martel: I have almost completed the second part of my question.


Mr. Speaker:: Has the hon. member got his question fully on the record now?


Jean-Jacques Martel: Well, I gave notice to the minister.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
On the orders of the day:
Léon Balcer: On Wednesday the hon. member for North-umberland-Miramichi asked a question concerning the Canadian National Railways freight and express offices at Chatham, New Brunswick.
I am advised by the management of the railway that studies have been under way concerning the handling of freight and express in the whole maritime area, but no decision has been made with respect to any change in the offices at Chatham.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: wish to direct a question to the Minister of Justice. My question is based on a telegram I have received from a representative of the fraternal council of reformed Doukhobors, generally known as the Sons of Freedom. It reads as follows:
I was instructed by fraternal council of reformed Doukhobors bring your attention re matters Kootenay district. February 19 council notified Magistrate Evans of Nelson in presence of R.C.M.P. that a curfew be in effect on our settlement. This was further brought to attention of Justice Minister Fulton, Ottawa-


Some hon. Members:: Question.


Mr. Speaker:: Order. I take it the hon. member's question relates to the imposition of a curfew as requested by the telegram. As was well pointed out yesterday, the immediate responsibility for curfew and such matters is not federal but provincial. If there is anything relating to the responsibility of the Minister of Justice, perhaps the hon. member would ask his question.


Herbert Wilfred Herridge: I think there is a related responsibility. I shall not read further, but I wish to ask the Minister of Justice this question because he is interested in the maintenance of law and order in Canada. In view of this suggestion coming from the fraternal council itself that a curfew be imposed on their own community, would the minister bring this to the attention of the attorney general of British Columbia as it may offer a first step toward getting some control over this situation, with the voluntary co-operation of these people?
Inquiries of the Ministry


Hon. E. D. Fulton (Minister of Justice):: I am sorry it has taken so long to bring out the facts, but this has already been done through the channels of the R.C.M.P.


Herbert Wilfred Herridge: Very glad to hear it.



UNEMPLOYMENT INSURANCE


[Stage Direction]
On the orders of the day:
Mr. R. D. Thrasher (Parliamentary Secretary to the Minister of Labour):: Yesterday the unofficial leader of the opposition, the hon. member for Kootenay West, asked a question regarding facilities for payment of unemployment insurance in the Kootenays as a result of the unfortunate incident which took place there. I may say that on March 7 the commission received a report that there were 300 people currently laid off and that a further 600 to 700 might be laid off subsequently. The chief commissioner and the director of insurance are now in Vancouver, and all the necessary steps are being taken to ensure adequate service.



INQUIRIES FOR RETURNS

[Stage Direction]
On the orders of the day:
Mr. H. J. Robichaud (Gloucester):: I should like to direct a question to the Secretary of State. Can the minister inform the house when I may expect a reply to my question No. 31 on A. V. Roe steel operations, which was made an order for return on February 5?
(Translation):


Hon. Noel Dorion (Secretary of State):: Mr. Speaker, I must say that in all such matters we try to do what is necessary to gather all the required documents so that they can be tabled. My hon. colleague can rest assured that I will do my utmost to proceed with all possible dispatch.


Lionel Chevrier: Mr. Speaker, did the minister have time to make inquiries about the question I put to him yesterday?


Noël Dorion: After making inquiries, I shall give the hon. member the same reply as yesterday.


Lionel Chevrier: But, Mr. Speaker-


Noël Dorion: If the hon. member will allow me-I take for granted that he is familiar with the Secretary of State's duties-I shall remind him that after a motion for papers is made an order for return, my functions are

Inquiries of the Ministry to ensure that the required research be undertaken so that the documents requested may be tabled. In this case various departments are involved. I am following the same procedure as always. In every case I attended to the matter.


Lionel Chevrier: Could the Secretary of State give me an approximate date on which those documents or that correspondence will be tabled?


Noël Dorion: I would be very pleased to give this information to the hon. member, but it is impossible for me to do so, because it does not depend entirely on me but also on officials of various departments. It is difficult to give a definite date.
(Text):



HOUSING


[Stage Direction]
On the orders of the day:
Paul Theodore Hellyer: I should like to direct a question to the Minister of Public Works. Has there been any discussion between Central Mortgage and Housing Corporation and the province of Ontario in respect to the possibility of a federal-provincial purchase of properties in the Blue Water area at Sarnia?


Hon. D. J. Walker (Minister of Public Works):: Mr. Speaker, I wish to thank the hon. member for Trinity for giving me notice of the question. In reply I would say that there have been no discussions between C.M.H.C and the province of Ontario respecting federal-provincial purchases of properties in Blue Water under section 36 of the National Housing Act.
The hon. member may be referring to the Blue Water redevelopment project. This project within the confines of the city of Sarnia is actually under way and has been undertaken by the city of Sarnia with a federal contribution under section 23 of the N.H.A. That is for urban redevelopment.
One requirement of the N.H.A. is that the province approve the acquisition and clearance of the area by the municipality. This approval has been received. I understand further that the province of Ontario has agreed to make a contribution to the city.


Paul Theodore Hellyer: I have a supplementary question. Can the minister say whether there is any agreement or understanding with the city of Sarnia that part of the lands be made available to the Polymer Corporation?


David James Walker: I should be happy to look into that matter, Mr. Speaker.
[Mr. Dorion.)



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Paul Joseph James Martin: Mr. Speaker, may I ask the Secretary of State for External Affairs a question, which I put to him at this time because I understand he will be leaving on Monday to attend the disarmament conference in Geneva on the 14th day of this month. I am sure that I express on behalf of all hon. members our sincere wish that something constructive will flow from these deliberations. We wish the minister every success.
Is the minister in a position to indicate to the house the general attitude Canada will take? Are we going to support the general proposals already given by the United States, with the support that has attended that move by the United Kingdom? Bearing in mind the question asked of the minister yesterday by the Leader of the Opposition, has the minister's attention been directed to the statement of the minister of defence in the United Kingdom, Mr. Watkinson, who observed that the start in the talks ought to be a test ban agreement? He said this would not only alter the whole climate, but could be the beginning of general disarmament.


Some hon. Members:: Order.


Mr. Marlin (Essex Easl):: Would the minister comment on this matter as well as give us an indication of the government's attitude?


Howard Charles Green: Personally, Mr. Speaker, I thank the hon. member for his good wishes in respect of my trip to Geneva, which I plan to start on Monday.
Yesterday the Leader of the Opposition asked a question about the interrelationship between working out an agreement on a nuclear test ban and general disarmament negotiations, and I dealt with the question at that time. There is nothing further that I can add today.
For a number of weeks a very intensive study has been conducted by the five western powers, including Canada, which participated in the 10 nation disarmament committee negotiations in 1960. The plan which was proposed by President Kennedy to the United Nations last September remains the basic western approach to the disarmament negotiations and many parts of that plan were proposed in the first place by Canada. Others, of course, were proposed by other members of the group of five. A genuine effort has been made by the five western nations to work out a disarmament proposal which will

go as far as possible to meet the suggestions of the five communist nations. I do not think any one of the western five is being inflexible. As negotiations proceed, changes may have to be made in the western proposals.
As the hon. member knows, Canada has taken the position that it would be a good thing to have countries added to the group of 10 for these new negotiations. That has been done, with India and Burma being added from Asia; Sweden from Europe; the United Arab Republic, Nigeria and Ethiopia from Africa; and Mexico and Brazil from Latin America. We think the fact that these eight other countries are participating may help to prevent the negotiations from being deadlocked. Of course no one can tell just what will be the actual result of the negotiations. However, we think it is helpful to have these other eight nations participating. They too have been doing a great deal in the way of preparatory work for the negotiations. We have been in touch with most of them and, as a matter of fact, have worked quite closely with some of them at the United Nations over a long period in connection with this question of disarmament.
The negotiations will probably take some time. As the house knows, they are opening at the foreign ministers level. However, I would expect that before very long the negotiators will get down to the actual business of trying to work out terms of a treaty. I would hope that would be the course followed rather than that of having a whole series of speeches. Later on when some progress has been made, or even if no progress is made, it is possible that the heads of state will meet in Geneva. That matter, of course, has not yet been settled. However, a report must be made to the United Nations disarmament commission before the first day of June. I think we can expect that there may be a meeting of the heads of state before the expiration of that time.
I am very hopeful that it will be possible to achieve results as, of course, not only is there the question of reducing arms but also of preventing the development of more deadly weapons, something which I think is even more serious than the problem of cutting down armaments which at present exist. It seems to me that this disarmament conference in Geneva is of vital importance not only to Canada but to the whole world.


POST OFFICE DEPARTMENT
[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: Mr. Speaker, I have a question for the Postmaster
Inquiries of the Ministry General, and I should like to get the information as quickly as possible. In view of the fact that one can address a letter to a government department in Ottawa and not pay postage simply by franking the envelope "O.H.M.S.", can the Postmaster General explain why local postmasters are advising people that they must pay postage on letters addressed to the Department of National Revenue in Ottawa?


Hon. W. M. Hamilton (Postmaster General):: Obviously, Mr. Speaker, this is a vital, urgent and tremendously important question. The answer simply is that mail addressed to the headquarters of the department at Ottawa is franked. Branches of the department here in Ottawa which are operating as local offices are in exactly the same position in Ottawa as branches in any other part of Canada, and postage must be paid on mail addressed to them.


Herbert Wilfred Herridge: I should like to ask a supplementary question. I did not quite get the full import of the minister's answer, and a number of people are curious about this matter. Does his answer mean that letters posted from British Columbia to a branch of the Department of National Revenue must have postage paid on them?


William McLean Hamilton: Mr. Speaker, is it not a little stupid at this point to take up the time of all other members of the House of Commons with a question of detail which can be settled behind the curtains in two minutes?


HEALTH AND WELFARE
[Stage Direction]
On the orders of the day:
Douglas Mason Fisher: Mr. Speaker, I should like to ask the Minister of National Health and Welfare whether his department has any plans for this year to meet the problem brought out by Dr. Morrell, one of his officials, in a very recent article in which he said that uncontrolled American drug advertising coming into Canada has very bad effects?


Hon. J. W. Monteith (Minister of National Health and Welfare):: The department is watching this situation, of course, at all times


CANADIAN NATIONAL RAILWAYS
[Stage Direction]
The house resumed, from Wednesday, March 7, consideration in committee of Bill No. C-67, to authorize the construction and operation on behalf of Her Majesty of a line
1644	HOUSE OF
Canadian National Railways of railway in the province of Quebec between Matane and Ste. Anne des Monts-Mr. Balcer -Mr. Chown in the chair.
On clause 1-Construction and operation of railway line.
Douglas Mason Fisher: Mr. Chairman, the other day I had almost exhausted the time allotted to me for remarks upon this bill. There are a number of further points I wish to make in connection with this rail line and why we in this group are very sceptical about the whole proposal. The first point I should like to make today is taken from the report of the royal commission on transportation, volume 2. The commission's views on the provision of new rail facilities are expressed on page 145, and it seems to me that they should be put on the record in relation to the project now before us. The report reads as follows:
As has been Indicated previously. Canada will continue to require new rail lines. The expected economic developments, particularly in mineral and forest products, will require the transportation of large tonnages at low cost. Rail transport will play a vital role in these developments. Such developments will he of great benefit to Canada and should at the same time improve the financial position of the railways.
If I may interpolate here, it seems to me that there is no guarantee or even prospect of a large tonnage of either mineral or forest products on the railway in question so far as the evidence produced by the minister is concerned. The commission goes on to say:
Parliament should assure itself that any proposal for a new line is economically sound before approving it. The commission notes that this has in recent years been the policy that parliament has followed. We heartily approve this procedure. This is not to say that parliament should not under certain circumstances authorize construction of lines for developmental purposes when the immediate revenue cannot be expected to meet all costs. Under these circumstances, the government should be prepared to meet the deficit from public funds and not place the burden on other shippers. We have earlier recommended that the burden of existing uneconomic lines be removed from the shipper. Consequently, we cannot do otherwise than state that new lines should not become a burden. However, it is unlikely that the building of any substantial number of developmental lines will be required in the future.
I should like the minister to note this.
In general it may well be that the provision of road or air transport as the initial transport in new areas is the best procedure to follow.
I interpolate here that the area in question already has an efficient system of road transport and, as the commission points out repeatedly, wherever you have trucking you tend to have efficient competition because it is the kind of field that an entrepreneur can get into fairly cheaply and reasonably. It seems to me that the point of the commission,


that the provision of road or air transport as the initial transport is the best procedure to follow, has been made so far as this area is concerned, and we have no guarantee or indication of those high volume tonnage prospects in forest and mineral products that the commission suggests should be the main reason for putting in a branch line. The commission goes on to say:
The commission has no need to make specific recommendations on building new rail facilities. Each such facility will require the approval of parliament and at that time parliament will have an opportunity to assure itself that the scheme is economically sound.
Have we had any assurance that this scheme is economically sound? I should like hon. members to look at the figure of $14 million as the estimated total cost and the maximum figure of $250,000 as the estimated operating reveune in the first year or years. The Canadian Pacific Railway is one of the few railways in Canada that makes some kind of a profit and pays a dividend, and anyone who owns Canadian Pacific shares knows that in recent years the railway has not earned over 4 per cent. Let us assume that Canadian National Railways can make a profit on this line with operating revenue of $250,000 a year. If it even matches Canadian Pacific's profit on operating revenue, what will the figure amount to? It will probably amount to $12,000 a year. That is the likely profit prospect based on an operating revenue of $250,000 a year. How then can they possibly come anywhere near meeting the capital investment cost of $14 million? I suggest that we simply have not had from the minister or his officials any indication of the economic feasibility of this line.
The hon. member for Joliette-L'Assomp-tion-Montcalm, in a friendly way, said that we should call this line the Belzile-English line. I thought it was a pleasant remark. However, I wonder if these two gentlemen are worth respectively, in these terms, $7 million each. Here we have a situation where to develop an area the sum of $14 million is going to be expended, and we can hardly see any economic justification for that expenditure.
Now, I think any members of this house looking at the regions of the country that have fallen behind in economic growth, want to see national resources developed to help them. I think, for example, the sympathy for the maritimes in the rest of the country is enormous in this regard. I would assume that Gaspe has the same difficulties, if not compounded. In this sense we are very strongly for national aid going to this area to improve the economy. However, the particular means

that has been taken to accomplish this purpose, it seems to me will do very little and cost a great deal. The sum of $14 million is substantial enough that, applied in another way, it would mean a subsidy to every individual in that area, according to the population figures, of almost $200.


Mr. Morris:: I wonder if I might ask the hon. gentleman a question. Is he aware that we in the maritimes, of whom he has just spoken, regard the provision of adequate rail service not as a matter of growth but as a matter of right?


Douglas Mason Fisher: The hon. member has made this point, and I should like to give him an answer that the minister gave to a question in committee concerning rail facilities today. If the hon. member will read the report of the royal commission on transportation he will find that is no more a matter of right than the right to have television reception. The whole theme of this report is that we need to have a balanced transportation system in our economy, and the question is whether a railway line, in this particular case, meets that objective.


The Deputy Chairman:: I am sorry to interrupt the hon. member, but his time has expired.
(Translation):


Mr. Bourgei:: Mr. Chairman, when we discussed the matter, Wednesday, I asked the minister if he could table the agreement passed between the federal government and the Canada and Gulf Terminal in 1903 or 1904; is the minister now in a position to table that document?


Léon Balcer: Yes, Mr. Chairman, I have here two copies of the contract passed between the Matane and Gaspe Railways Company, whose name was later changed to Canada and Gulf Terminal, and I wish to table both documents.


Maurice Bourget: Are those documents both in French and English?


Léon Balcer: No, in English only.


Maurice Bourget: Why is there no French copy of those agreements? It has been two days since I asked the minister to table that document and there is none yet in French. And we often hear them boast that everything goes fast with the Conservatives. It is the same situation with regard to the recent agreement passed between the Canadian National Railway company and the government, which has been written in English only. Why has the minister not seen to it that the agreement be published in both languages?
Canadian National Railways


Léon Balcer: Mr. Chairman, I have been in the House of Commons for 13 years and I think the record of this government, on that count, is quite an improvement over what was done in the past.
The documents I am now tabling are in English. Because of our desire to accommodate hon. members, all documents they may require are tabled and we readily do so. But in this case, we did not have any French copy. In any case, you may rest assured, Mr. Chairman, that we are now having the document translated and that it will probably be tabled in the house today-I could not say at what time exactly

but it will be very soon. It is an eight page document, in very small type, and I think the translation of such a document will require several hours' work by our translators.
I wish to assure the house that it is with pleasure that we are doing this, and besides, all documents from my department are treated in the same way.


Mr. English:: Mr. Chairman, I did not intend to speak again on this bill. However, now that I have listened closely to the remarks made by the hon. member for Port Arthur (Mr. Fisher) I cannot do otherwise than give the house a few explanations.
I am always more and more amazed at the fact that we have here, in this house, what could be commonly called a "superman". Here is a man who knows everything and who can discuss forestry, agriculture or anything that concerns Canada.
I truly respect his great competence but I cannot help adding that there is nothing worse than a man who has two eyes and refuses to see or two ears and refuses to listen.
On several instances, I have, like many others, explained in this house the economic possibilities of the Gaspe peninsula. I do not think I have to accept any lecture from the hon. member for Port Arthur, who does not even know the size of my constituency, who has never visited the people I represent and who has never become acquainted with the correct situation in the Gaspe area.
As for me, I have been sitting in this house since 1957. I have heard discussions on problems concerning western Canada, with which I was not familiar; I listened carefully to the speakers and I showed interest in their problems but without taking part in the discussion. I would be very ill-advised to discuss problems I know nothing about. I am bright enough to realize it.

Canadian National Railways


An hon. Member:: He is an expert.


Roland Léo English: We have particular problems in the Gaspe peninsula. When he speaks about the trucking industry, it is obvious that the hon. member for Port Arthur does not know much about the situation in my area. With regard to the province of Quebec or my riding, he is prompted by a certain feeling of hatred for all projects of interest to the province of Quebec. That is all. It is merely a personal revenge and I feel bound to draw the house's attention to it.
(Text):


Mr. Martin (Timmins):: Under the rules of the house has any hon. member the right to impute motives to another hon. member?


Louis-Joseph Pigeon: We have approved.


Gordon Campbell Chown: I should caution the parliamentary secretary at this stage. I was having some difficulty in hearing the interpretation because of his close proximity to the Chair, but I do wish to caution him and ask him to keep his contribution on a more impersonal basis, if he will.
(Translation):


Roland Léo English: Mr. Chairman, if I made unparliamentary remarks-


Mr. Johnson:: Not at all.


Roland Léo English: -I shall take them back and say this: when the hon. member for Port Arthur went to Quebec city, he said that we had nothing in the province of Quebec except Maurice Richard and Lili St. Cyr. I ask the hon. member for Port Arthur whether those are not the actual words he said when he was in Quebec city. Let him raise a point of order if he believes I am wrong. Besides, I wonder which one of us is wrong if not the one who made such a statement in the province of Quebec.


Louis-Joseph Pigeon: Mr. Chairman, may I direct a question to the hon. member for Gaspe (Mr. English)?
Does he not believe that if the hon. member for Port Arthur met Lili St. Cyr, he would change his opinion about the province of Quebec?


Paul Léo Maurice Johnson: She was not from Quebec.


Roland Léo English: He would not change his mind but his outlook would be different.
Mr. Chairman, all hon. members feel very strongly about the construction of that line. I know that every one of us, including members


of the opposition who have received the visits of numerous delegations and who have considered the problem, agree that the Gaspe peninsula will finally be developed.
I may not have the knowledge of the hon. member for Port Arthur, but I know full well, for instance, that there is a mine in operation in the Gaspe area, the Gaspe Copper Mines in Murdochville. I am sure that the owners of that mine will be glad to hear that a railroad will be built in the district. Indeed, a delegation from Murdochville came to see me in that connection and they asked me to support the project.
I am aware of the fact that at present those people have to transport the ore by truck over a distance of 65 miles to ship it by rail. Those additional costs paralyse the future development of the Gaspe peninsula, Mr. Chairman.
We also have in the district, the Federal Metals Company; its president, Mr. Pierre Beauchemin, is also president of the East Sullivan Gold Mine Company. That mine is as rich as that of the Gaspe Copper Mines and its president is willing to spend millions to operate it but he clearly stated, when he accompanied a delegation to Ottawa, that he will not spend a red cent on the mine as long as there is no railroad. I cannot blame him. It does not make sense to transport ore by truck from that part of Gaspe North, back of Ste. Anne des Monts, to Matane, then put it on board a privately operated train up to Mont Joli and from there on board a C.N.R. train- to Montreal or the United States.
We cannot urge these people to spend millions of dollars in the Gaspe peninsula without first providing them with adequate means of communication.
Mr. Chairman, I should like to see trucking companies take the ore from the Gaspe mines and try to carry it to the United States or elsewhere over the roads in this area. I should like to see that. I have yet to see them do it. I know that trucks cannot undertake such a job, because they cannot carry enough of the ore taken from our mines.
The hon. member for Port Arthur said that he fails to see why we ought to spend millions on a railway line in that part of Gaspe. It is very easy to come here and talk about expenditures and of this and that. But I think that if the hon. member had any love for the province of Quebec and also for the Gaspe peninsula, he would have no objection, for I believe that, in its whole history, this

is the only substantial amount Gaspe has ever received. And yet, it was discovered in 1534. It seems to me that the hon. member for Port Arthur is in no position to come to us and criticize the government for spending the sum of $16 million on a railway.
Mr. Chairman, let me point out that this sum of $16 million in not as much as it seems, because, instead of paying unemployment insurance benefits as we do now, we will be giving work to our people, therefore that it will be a good investment for the government of Canada.
The hon. member for Port Arthur dealt only with pulpwood, quoting certain figures on the quantity of this product being shipped from that district. If I asked him where pulp-wood is cut in the Gaspe area, he would be quite puzzled.
Let me tell you, Mr. Chairman, that statistics show that exactly 412,145 cords of pulpwood were cut in the Gaspe peninsula. Those statistics have been worked out and if the hon. member for Port Arthur wants more information, I am willing to spend a half hour with him to explain the situation, inasmuch as he can understand, of course.
Mr. Chairman, let us consider the weight of a cord of wood. A cord of dry wood, if I am not mistaken, weighs about 3,000 pounds. If he wants to know how many tons, he can figure it out for himself.
Of course, before one can discuss that matter, he must know the difference between pulpwood and lumber.
The hon. member for Port Arthur said nothing about the Gaspe lumber industry. However, it is one of the main industries of that region. The only company, the James Richardson Company, with Mr. James Russell as chairman has cut down and sawn 26 million fbm of lumber last year. That is only one company and it has 600 employees.
Mr. Chairman, reference was made to water hauling. Well, I am not saying that ships are not useful. But suppose, for instance, you operate a mill in the Gaspe peninsula and you cut 26 million feet of lumber, are you going to keep your employees on the payroll all year round, knowing that water hauling is in operation only five or six months and that you cannot ship by boat the rest of the year? In such a case, you will wait until the next year to ship your lumber. If the hon. member for Port Arthur had come in my district even two weeks ago, he would have seen the condition of the roads, especially after the rains
Canadian National Railways we had, which made them very slippery and very hazardous for trucking over long hauls because sawn lumber is now being shipped to Montreal. When you think that it has to be carried by truck to Matane, and from there by a private railway to Mont Joli and then transferred to the C.N.R., you realize that it is costly and that the people in the area are unable to compete on the Montreal market.
At the present time, those engaged in cutting pulpwood in our district are earning less than lumbermen in other parts of the country. It is easy to understand. That wood has to be transported by truck to the railroad, which is for them more costly than it is for those whose logging operations are located in the vicinity of a railway line and who can have their wood shipped direct to Montreal, Quebec city or elsewhere.
In the committee on railways, canals and telegraph lines, the hon. member asked some questions as to the economic aspect of the project. And yet, if he had taken the trouble to read my speech, he would have found that I had put a letter on record dealing with that subject. It was not a letter written by myself but a letter from the East Sullivan Mines Limited to Mr. Roland Gagnon.
Incidentally, I wish to point out to the house that there are only four smelters in Canada and that the Gaspe Peninsula is fortunate in having one at Murdochville. Here is what the secretary treasurer of the East Sullivan Mines said about the smelter in the Gaspe peninsula which will surely know an extraordinary development:
Further to our telephone conversation, I am glad to confirm the following information:
Solbec Copper Mines Limited is a new subsidiary which is developing a copper and zinc mine in the Black lake area, in the eastern townships. The estimated copper production will be close to 20,000 tons of concentrate per year.
We are aware that the smelter of Gaspe Copper would be a proper place to treat our ores, if that plant were not completely isolated due to the lack of communication facilities. We find it unfortunate for the Gaspe peninsula as well as for the eastern part of the province of Quebec that lack of communication facilities forces us, as it were, to have our concentrates treated outside the country, namely in Europe or in the United States.
Mr. Chairman, something has to be done to improve that situation. As a matter of fact, the president of the East Sullivan Mines Limited, says that he is ready to ship concentrates to Gaspe to have them treated. Furthermore, the Federal Metals Corporation is ready to start developing its mine as soon as the railroad is constructed.

Canadian National Railways
Mr. Chairman, I have looked into all the representations made in favour of the construction of that branch line, under the Liberal administration as well as under the present administration. I admit that the situation 20 or 25 years ago was not what it is today; we must recognize that it is only since 1952 that the development of the Gaspe Copper Mines has revealed the huge resources of the Gaspe peninsula.
Now, if you travel from Montreal to Gaspe South, you take the train for Nova Scotia or New Brunswick; when you reach Matapedia, the train for the maritimes, the Ocean Limited, continues on its way; you transfer at Matapedia and you go past Perce to reach the tip of Gaspe. Please note that this situation has existed for almost a hundred years, although the region of Gaspe South does not know the mining development of Gaspe North, because there is not any mine in Gaspe South. And yet, that railway line has always been operated to the benefit of the southern region of the Gaspe peninsula.
On the other hand, when we ask for the construction of a railway line from Gaspe to Matane, that is a distance of approximately 160 or 165 miles, and we are granted a line running for 57 miles only, in order to promote the industrial and mining development of the northern region of the Gaspe peninsula, there is an uproar. Why? Because the government wants to have a sum of $16 million voted, not only to give a railway to the Gaspe peninsula but to develop its mining resources.
I have already quoted the letter from Mr. Westmore, manager of the St. Lawrence Corporation Limited of Three Rivers, in which he said he was interested in negotiating with three saw mills in the Gaspe peninsula, because his company was experiencing difficulties in obtaining wood waste products and he thought the construction of that railway line would enable them to get them more easily.
And there, Mr. Chairman, it is not a question of only 25,000 tons, as suggested by the hon. member for Port Arthur, but a much larger quantity. As a matter of fact, when we say 35,000 tons, the hon. member says it is 20,000 tons, and when we say 25,000 tons, he says 10,000.
Mr. Chairman, there is no doubt that the production of wood waste could be doubled or even tripled.
Mr. Chairman, there is always talk in the nouse of considerable development, for

example in the Yukon or other regions of Canada. On many occasions, in this chamber, it has been said that a railroad was essential to the development of a region, and that such a service should come before and not after the development. If the development of our country had to wait until railway lines were built, very few industries would come to invest millions of dollars to develop our plants.
Mr. Chairman, I could make further observations, but I think I have answered some of the objections raised by the hon. member for Port Arthur. On another occasion, I would like to give more explanations.
Besides, we are not the first to recognize the need for a railway line in that region, because in 1881-that is going back a long time-the newspaper La Minerve said:
The Gaspe peninsula is a separate section of French Canada, as are the Magdalen islands or even old Acadia (which became part of Canada in 1867). It is little known in the province of Quebec itself. In the olden days, that area had its own government and had little to do with those of Quebec, Three Rivers and Montreal, which were a compact and homogeneous group. Nowadays, relations between them have become more frequent, without, however, taking on the intimate and entirely uniform nature which is characteristic of relations between other districts on the St. Lawrence.
We still look upon Gaspe and its people as some sort of distant colony, as brothers who are separated from us, in the same way as the Acadians. The situation is, first of all, due to the remoteness of Gaspe which is hundreds of miles away from Quebec city-and to the lack of communications in some parts of the peninsula,
The Gulf steamers and the Intercolonial have brought the Gaspe peninsula nearer to Canada and also to the rest of the continent. But the seaway is of little help and the railway is still far away from the real Gaspe district. People in the central areas, who went to settle those faraway places and dedicate themselves to their development-like Dr. Fortin and Dr. Robitaille- did even more to inform the people of Gaspe about us and to tell us about them.
It would be in the best interests of the Gaspe people to end their isolation. They could only benefit from such a move, particularly if it resulted in giving them a taste for farming and, moreover, enabling them to take advantage of our fisheries-
Well, Mr. Chairman, that reminds me of what a good physician in my riding said, the other day, when I was spending a short time in my district. This is what he said: "There is a lot of talk about separatism in the province of Quebec. Now, we, in Gaspe, have been separated for three quarters of a century."
He certainly was right. I am sure that all hon. members will approve the bill and rejoice with me, five years hence, that they voted for it.

(Text):


Walter George Pitman: Mr. Chairman, I think if anything could confirm one's suspicions about this particular action of the government it has been the immoderate and I think unfortunate attack by the parliamentary secretary upon the hon. member for Port Arthur. Throughout this debate that particular member has carried on an extremely conservative-with a small "c"-assessment based on completely economic lines. I think to impute hatred, even lack of interest, on the part of any hon. member of this house, in this national parliament of the people, no matter from what group or whatever province in any other part of the country, is extremely improper and unfortunate.
The hon. member for Port Arthur has been trying to find out what are the economic possibilities. The parliamentary secretary said there were great economic possibilities. Where are they? I am sure that every member of this committee, perhaps over the lunch hour, will sit and read this evidence given before the standing committee on railways, canals, and telegraph lines. If, afterwards, he can come to the same conclusion as the previous speaker I shall be very much surprised. I invite hon. members to do just that, to read this evidence and secure any feeling of confidence that this line would either be of any great benefit to the area or constitute a paying proposition or an economic reality.
The previous speaker misses the point. It is not that this group has no sympathy with the people in this area. It is not that at all. We simply state that one cannot solve all the social, economic and political problems of an area simply by building a railway. You can only spend money once, and $16 million is a great deal of money. The same sum put into a Gaspe development fund, which might encourage people to come into that area, might very well prove of far greater use than this line which could be an economic embarrassment to the community 10 or 20 years from now. As I say, we are interested in the development of this area, but we believe there are more realistic, more economic ways of dealing with this question than by putting down two lines of steel.


Roland Léo English: Wait till the next election.


Walter George Pitman: The hon. member refers to the next election. That is precisely the point. You cannot deal with a national transportation system on a constituency basis in terms of 1962. We are not fighting an election campaign in Gaspe in this chamber.
Canadian National Railways


Mr. Jones:: The hon. member is imputing motives which are improper. I think it was adequately pointed out by the hon. member from Gaspe that the purpose of the railway is to benefit the area. The election has nothing to do with it.


Walter George Pitman: It was not the hon. member who brought up the subject of elections at all; it was the parliamentary secretary who, speaking from his seat, interjected this matter into the debate while the speech was going on. As I was saying, we are interested in the development of this area, but we believe this development can be accomplished in better ways than the one now suggested. We have just had the benefit of a report by a royal commission. So far that report has not been acted on by this government. I am not blaming the government; I am not suggesting there has been undue delay. I am simply stating that nothing has been done in connection with this report, and that this is a time for reassessment; it is not a time for building lines and for undermining the proposals in this report, which will have to be acted upon by the government when it comes to deal with the recommendations.
My hon. friend from Port Arthur has already drawn attention to this aspect of the question, so I shall not refer to this report at any length. However, I remind the committee that it is not only the hon. members of this house who have studied this report; its recommendations have left an impression across the whole country. I could draw the attention of the committee to an article by Walter Gray in the Globe and Mail of February 16 under the heading "Railways Looking for Cut-back Discover Friends in Commission". I should not take up time by reading from this article, but I would point out that these are the views which are held across this country. I wonder how hon. members in every part of this chamber are going to explain the building of this railway to their constituents on the basis of the economic prospects, or rather the lack of economic prospects revealed in the standing committee on railways, canals and telegraph lines, at a time when the various railway companies in Canada are cutting back their services.
I come from a constituency which is off the main lines of the major railways in Canada. We have experienced a certain amount of cutback of services. An attempt has been made to slow down this cutting back, and naturally so because various economic groups in the

Canadian National Railways community are concerned about it, but on the whole there has been an intelligent understanding of the realities of our national transportation problems today; it is realized in the community that certain services are no longer feasible or economic.
I realize that these circumstances do not represent a complete comparison with development lines such as we are discussing here. I am simply saying that people across this country are ready and willing to accept a reasonable assessment of national rail transportation. They realize that we are in a new age and that other means of transportation may have to take the place of railways. They realize there might have to be a redevelopment of our old concepts of railway economics in certain areas. The hon. member for Port Arthur has told us there are lines in his constituency which are rusting away right now because services have been cut off completely. How can hon. members in any part of this chamber go to their constituents and explain why we should spend $16 million on a railway when there is no real assurance that it will help the economy of the area? If there were any agreements with mining companies or pulp and paper companies I think there would a good case to argue, but I do not think such a basis can be found in the transcript of the evidence which has been placed before this committee.
I wonder how hon. members in the Liberal party can support this line. Last fall they showed an apparent concern-no, I will say it was a real concern-about the Pine Point railway. The feeling on the part of this party was that the Pine Point railway was economically unrealistic. I ask hon. members in the Liberal party to compare the economic possibilities of the Pine Point railway with those of this railway. I think they will find that the disadvantage will lie on the side of the railway we are discussing at the present time, and I wonder how they will react to this problem when it comes to putting their opinions on record.
I do not intend to take up the time of the committee any longer. I simply ask hon. members to take a slow, reasonable look at this proposed railway and to read the evidence on the subject. I am sure the answer will be obvious.
(Translation):


Paul Léo Maurice Johnson: Mr. Chairman, I have been sitting in this house for the past four years, and I wonder why the hon. members for Port Arthur (Mr. Fisher) and Peterborough (Mr. Pitman) are making such a fuss today.

I shall immediately take up the comparison made by the hon. member for Peterborough between the matter of the Pine Point railway and the bill on the Gaspe railway which is now before the house.
I do think the attitude taken by the members of the new party somewhat odd, and I would like to know whether, if the railway were built in some part of the province, or of the constituency of the member for Peterborough or Port Arthur, we would witness as much opposition and hear so many questions asked as to the ability of the railway to pay its own way by the people who are advocating the socialization of public services. How can these gentlemen reconcile their doctrine with the statements they made today? How can they reconcile the doctrine which they preach in public, through their leaders, not only their federal leader, but the leader of the party in the province of Quebec, Mr. Chartrand, among others, to the effect that public services must primarily serve the people without regard to the economy of those services, how can they reconcile this doctrine with the arguments which they have put forward against the bill in this house today? How can they, on the one hand, preach socialization for our provinces, and, on the other hand, get up in this house and say: "Look at what has been said before the committee on railways, canals and telegraph lines, and you will see that this railway will not be economically feasible."
One of these two alternatives must be right, Mr. Chairman: the railway will be economically feasible or it will not. If it is-and the member for Gaspe so contends-we have no reason to refuse to approve its construction. If, by chance it is not, it would be wrong to deny this area of the province of Quebec the development it hopes for.
Economists and people familiar with the subject have stated repeatedly that the province of Quebec has not received its fair share in the way of railways. There have been improvements recently, and here is one granted this year by the present government. Are we going to deny Gaspe its railway and access to the development it desires under the pretext that it will not be economically feasible, which is but an assumption? If my memory serves me right, the member for Gaspe noted before the committee on railways, canals and telegraph lines that the truckers associations of the area were not able to offer the required services and that a railway was necessary. The member for Gaspe brought evidence to

the effect that the producers and the manufacturers want this line because they do not have adequate services. This evidence was not denied before the committee.
If the member for Port Arthur has evidence to the effect that what the member for Gaspe stated before the committee on railways is not correct, let him bring it forward and we will then be able to discuss it. I wonder how these people who have voted in favour of the principle of the bill, on the motion for second reading, can now contradict themselves?
I ask them to be sincere and honest once and for all, to stop pretending in their conventions that they recognize the needs of the province of Quebec as much as those of other provinces, that they recognize national equality of the French Canadians of Quebec, while getting up in this house trying to convince the government to refuse an economic advantage to this important area of the province of Quebec. I am asking them to be honest once and for all, to take a definite stand. If they consider this railway as uneconomic, they should give up their theory that railways should first of all serve the public, the areas which need them, without regard to profits, without regard to surplus or deficit. They should take a definite stand and vote for or against this railroad building project. In this way we will be able to assess their sincerity and later on we will let the people judge for themselves.
The hon. member for Gaspe did not bring up the question of an election, but the hon. member for Peterborough did.
If the members of the new party are so courageous, if the members of the new deceased party are so courageous, let them go to the country and account for their actions in the next election.
But before that, let them vote for or against this measure on third reading. I invite the hon. members for Peterborough and Port Arthur to do so. Just vote against it and then we shall see if you are sincere.


Louis-Joseph Pigeon: Just one word, Mr. Chairman. Being aware of the work done by the present Minister of Transport, in co-operation with the hon. member for Gaspe (Mr. English) and the hon. member for Matapedia-Matane (Mr. Belzile), for the construction of that railroad which will bring considerable economic activity to that part of the province of Quebec, I urge the Minister of Transport to ask the C.N.R. authorities that this line be called the Balcer-Belzile-English line.
Canadian National Railways
I should very much like the Minister of Transport to pass on to the proper authorities that suggestion which is the wish of all members in this house, in order to emphasize the work done by the present minister in cooperation with both hon. members concerned.
I should be very happy to hear what the minister has to say about that. I know that the decision is not his, since it is up to the C.N.R. authorities to decide, but just the same I should be very happy to hear his views.


Léon Balcer: Mr. Chairman, I shall not tell my hon. friend from Joliette-L'Assomption-Montcalm that I am leaving right away for Montreal, to meet the railway authorities for the very purpose he just mentioned, but I thank him very much for having mentioned my name and I know that he did so out of friendship.
Just the same, I feel that this railway which is called by the whole population of the lower St. Lawrence "The Gaspe railway" will be a factor of prosperity and development for that area in years to come.
When this government decided to build a "development" railway in that area, it made a decision which the future will prove to be right, I am sure.
Besides, is it not my hon. friend from Port Arthur who mentioned the fact that the Mac-Pherson royal commission, at page 145, volume 2 of its report, suggested that when a railway is not self-sustaining the first year of operation, instead of having the railway companies bear the operation deficit incurred or the capital depreciation, the government should face its responsibilities and undertake to pay those deficits through appropriate grants, but that it should never place the burden on the railways.
Well, that is precisely what we are doing; besides, it has been recommended, not only by the MacPherson royal commission, but also by the Turgeon royal commission. In 1951, the Turgeon report recommended exactly the same thing, namely not to let the C.N.R. suffer any deficit or losses as a result of noneconomical operations in the first years.
Now, my hon. friend from Port Arthur referred to the information we supplied to the committee on railways, canals and telegraph lines, to the effect that the railway would not be self-sustaining the first years.
We acknowledged that fact. We admit that the volume of assured traffic is comparatively small at present. But we believe it is a fair minimum.

Canadian National Railways
Those were the figures obtained through a study of the present situation of industry and trade in that area.
I actually went to the Gaspe peninsula where I met businessmen and industrialists. They all explained to me that the construction of this line with the resulting lower freight rates, will enable them to develop their industries or business and to increase their production.
As a matter of fact, that is the problem and that is why no one ever thought of setting up industries in the Gaspe peninsula.
Industries already established in the area were not interested in further development because shipment of their output to the market of central Canada would be too costly.
They had to pay part of their shipping costs to the C.N.R., part to the Canada and Gulf Terminal and further costs for trucking. They will now have more reasonable shipping costs and that is precisely what is needed in the Gaspe peninsula.
As far as possibilities are concerned, we merely have to take an unbiased look at the situation to realize that in view of the mineral output in that area until now, and of the large quantity of standing pulpwood and timber, reasonable shipping costs are a necessity.
Above all, I believe that the main reason why the government is willing to take over, for a few years to come, the deficits of this line, is that it is the human thing to do. The area has over 100,000 industrious people. All they want is a chance to prove that they have not lost those qualities for which they have long been noted.
A moment ago, my hon. friend from Peterborough (Mr. Pitman) was saying that it was awful to realize that there were places in Canada where a railway had been built to develop a certain mine, and once the mine had been closed, the railway remained inoperative and was rusting away.
It is precisely the great difference that exists between the proposed railway and the others which, fairly often, are built by the Canadian National Railways. In the case of a mine, as at Mattagami for instance, the railway winds its way through the bush, where there is not a single soul living. Well, I suggest it would be criminal on the part of the railway company or of the government to build such a railway if we had no guarantee it would be self-supporting. I think it is absolutely essential for the government and for railway


companies to have a clear and definite guarantee that those railways will be selfsupporting.
But the case of the Gaspe peninsula is quite different. We have there an area which has been developed for four hundred years. People have lived there for a few centuries. We find villages and a fully established community; all sorts of small industries are to be found there that did not have the opportunity of developing as they should have. Just the same, everything is there at present; there is a potential. Furthermore, there is an interesting potential in natural resources. Well, this is a challenge for us. Are we going to invest the taxpayers' money in a place like that?
In introducing this measure, I believe the government has made a courageous gesture, a gesture that the future will prove reasonable, a gesture which will substantially contribute to the development of one of the most picturesque and interesting areas in Canada.


Mr. Denis:: Mr. Chairman, allow me to say just a few words to follow up the suggestion made by the hon. member for Joliette-L'Assomption-Montcalm (Mr. Pigeon), to name that line "The Balcer trunk line".
Perhaps I could make a few suggestions myself about that. We could perhaps call it the "Pigeon line", since some people will be "carried" on that line. As we know, the hon. member for Joliette-L'Assomption-Montcalm travels in various parts of the world, much like a carrier-pigeon, and for that reason I think it would be more appropriate to call that line the "Pigeon line" rather than the "Balcer trunk line".
But, on the whole, in order that people may recall the Conservative regime under which that line has been built, I wonder, Mr. Chairman, whether it should not be called "No one will suffer".
(Text):


Douglas Mason Fisher: Mr. Chairman, the hon. member who is most concerned with this railway has made some points on which I think I should try to touch. First of all, he said that I had made no mention of the lumber potential. I think I indicated in my previous speech that at the present time this was the one real source of traffic, but my point was that there was an alternative route into the Montreal market for much of the year by water, and that this means of shipping is usually and normally considered much cheaper than shipping by rail.

There are a couple of other points in relation to the potential of this line that I think need to be looked at. As found on page 38 of the evidence taken before the committee, the minister was asked at the bottom of the page about the potential of the region, and with reference to the north shore area across the St. Lawrence he said:
They are now in process of building a highway to Seven Islands. Most of the population that works on the north shore comes from the south shore. There is only one farm on the north shore; whereas the south shore is a farming community, and there was no connection between the two shores. This present government has instituted a ferry service between Rimouski and Baie Comeau. This service has been operating for a period of two months and is a tremendous success. Its success has been far beyond all expectations.
Then he went on to say:
Last week we authorized the building of a new ship, new harbour facilities and a new service between St. Simeon and Riviere du Loup; we are building a new wharf at Matane, and we have approved the establishment of a new "roll on, roll off'' service between Matane and Godbout. This new branch line will help to assist the ferry service between Ste. Anne des Monts and Seven Islands. Within a very few years I think you will have a completely different picture of the economic situation of the lower St. Lawrence.
It seems to me that these are very reasonable proposals. Anyone who has looked at the economic indicators knows that the north shore of the St. Lawrence has had a phenomenal development, and it is quite understandable that it has been a magnet in drawing people from the south shore. It is quite understandable that the farmers on the south shore, where this railway is going to be built, are looking forward to feeding the growing population on the north shore. It is also good to know that marine services and so on are being set up to enable this to be done.
But here again my point is that all of us know enough about rail services to realize that where you have a water haul, as in this case, rail service in terms of moving these farm goods to the ferry and then across to the north shore is just not feasible in economic terms. The railway cannot really fulfil a function in carrying perishables, such as most farm products are, for a distance of say 50 miles, to be transported thence across the St. Lawrence by ferry. I think the minister and his economic adviser will admit that this is an area where trucking is much more likely and almost certain to play the real role. So it seems to me that in the provision of farm products for the north shore region the railway in common sense really cannot fit into the picture.
In so far as the question of mineral production is concerned, the royal commission
Canadian National Railways emphasizes that we must build railway lines to exploit large volume tonnage where there is any kind of considerable haul because this is far and away the cheapest means of transport. But the point I think the minister has to acknowledge is that every railway today is out to get some kind of iron-clad agreement or guarantee within the general situation of the mining industry. I pointed out that this is the situation at the present time at Steep Rock.
I suggest to the hon. member for Chambly-Rouville that I have complained before in the house about a branch line that was built in my area, a completely uneconomic one, that went into Manitouwadge a few years ago, which was just straight wastefulness. I can tell him that north of Nakina on the Canadian National Railways we have a large ore body on which over $10 million has been spent in development, and I would not vote for a measure to put a branch line in there unless there was some kind of contract with Anaconda, which is doing the development. Steep Rock Iron Mines has a very large iron ore prospect in the area north of Sioux Lookout near lake St. Joseph. I think it would be folly for this government or the Canadian National to put a branch line in there, no matter what the mining promoter might want, until the mining promoter was prepared to give some kind of guaranteed tonnage over some period of time.
On page 33 of the committee evidence the minister is reported as saying:
-we have a letter from Mr. Beauchemln stating that the moment the railway is built he will go ahead with the development of the East Sullivan Mines deposit in that precise area. He has always shown a tremendous interest in a railway in that area, and he has always considered the construction of this line as one of the main conditions for the development or exploitation of those deposits.
Fine, but where is the contract? Where is the undertaking? All you have is a letter expressing a pious wish. We can only assume it is a pious wish if the Canadian National Railway demands contracts from mining promoters in other parts of the country and does not get one here. Why can you not get one here? This seems to me to be the question that should be answered. If these ore bodies are so good, and if the only thing impeding ore development is the question of rail facilities, let us get a contract and go ahead. Let us put the rail line right into the mine and not bother just going to Ste. Anne des Monts. It seems to me this is the reasonable thing to do. All over Canada we have

Canadian National Railways ore bodies proven up, but there are usually economic considerations that determine whether or not we should proceed with development. If these particular projects were at a stage of development where the tonnage was known and they had some idea of markets, then it would seem to me that they would be prepared to offer at least a tentative agrement. However, you have not got that.
There is another point I should like to make. I gather from a quick look at the geology of the area that most of the ore bodies that exist are not in the field of iron ore where you get the largest bulk shipments, but are in the field of base metals. It is very rarely that base metal ore is shipped for long distances because of the various weight factors. The ore is almost always treated and reduced to concentrate form on the property itself. This would not mean that there would not be a large tonnage of concentrates shipped, but nothing in the nature of the huge production that moves out of an iron range, something in the nature of millions of tons a year. I submit that this being the case, why justify a line like this on the basis of mineral development if you cannot get something concrete from the developer?
The hon. member for Gaspe made a point that this was nothing but, I think he said, a certain hatred in my heart toward the people of Quebec. I wanted to bring to the attention of the committee the fact that I have been talking to French Canadians in Quebec who are opposed to this line. I wanted to put their views on the record. I did not find I could not deal with them. I have here a copy of a letter sent to the hon. member for Gaspe signed by Romeo Blouin, secretary general, Quebec trucking association.


Some hon. Members:: Oh, oh.


Douglas Mason Fisher: All I can say, Mr. Chairman, is that this represents a point of view in that province that is very doubtful about the railway. I think it is worth while to put it on the record. This letter is dated March 3, 1962, and it is in French. I hope hon. members will forgive the pronunciation as I give it.


Léon Balcer: Are you using Lili St. Cyr's language to read this?


Douglas Mason Fisher: No; I think there is a misunderstanding about that whole incident. However, this is not the place to attempt to straighten it out. The letter reads as follows:
(Translation):
Dear Sir:
I am informed that during the debate on the second reading of the bill concerning the construction of a railway line between Matane and Ste.

Anne des Monts in the Gaspe peninsula, you stated that three truckers are not opposed to the project which the Canadian National Railways Company intends to carry out.
I am sending you herewith copy of a motion which was adopted at our general meeting held at the Chateau Frontenac, in Quebec, on the 26th, 27th and 28th of February last.
It is true that three truckers of the Gaspe peninsula are not opposed to this project, but I should like to point out that the above mentioned motion was introduced by a large number of truckers from the lower St. Lawrence region and the Gaspe peninsula that group included truckers from Riviere du Loup, Trois Pistoles, Cap Chat, Riviere au Renard, Mont Joli, Rimouski and Matane.
I do hope, dear Mr. English, that after studying this motion, you will understand why we do not want the federal government to provide over fifteen million dollars for the construction of this railroad since existing transportation facilities in that district give full satisfaction.
Yours truly,
Romeo Blouin, secretary general Quebec Trucking Association Inc.
(Text):


The Chairman:: Perhaps this would be a good point at which to call it one o'clock.
At one o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 2.30 p.m.
Douglas Mason Fisher: Before the luncheon adjournment I put on the record a letter sent by the Quebec trucking association to the hon. member for Gaspe. This letter was occasioned by a press report referring to the evidence that the hon. member for Gaspe gave before the committee, in relation to objections from the trucking organization.
The motion that is referred to by the secretary of the Quebec trucking association is motion No. 28, and I should like to read it as it has been forwarded to me by the association in translation form. It is entitled "Why a railroad in the Gaspesia region," and reads as follows:
In the speech from the throne, upon the opening of the parliament in Ottawa, the federal government has announced the construction of a railroad, out of the public funds, at the cost of $16 million, in the Gaspesia peninsula, from Matane to Ste. Anne des Monts, namely a distance of about bO miles.
Whereas the MacPheirson royal commission of inquiry on transportation has recommended the abandonment by the railways of non-profitable
services;
Whereas three trucking! companies, bus lines, local truckers and taxi companies have invested moneys and are already at the disposal of the public in that region of the province of Quebec, to transport goods or passengers;
Whereas these transport enterprises operate their services without public subsidies;

It is moved to ask the federal government to make a survey in that region to find out if the trucking firms, bus and taxi lines meet the public needs. If those services are satisfactory and that the survey recommends that to help the Gaspesia region, there should be a reduction of rates, subsidies be granted to the existing enterprises rather than investing $16 million in an enterprise which will never be profitable and would constantly be a burden upon the taxpayers.
Whatever other appeal that argument may-have I think it certainly makes the point that there is a strong body of opinion in the province of Quebec which has no relationship to me, and I would say no particular interest in me, but which is objecting to this railroad. I would ask the hon. member for Gaspe to remember that, when he makes the charge that I am speaking only out of some kind of hatred in my heart.
I would underline again that I represent the fourth largest constituency in Canada. It has more miles of railroad track in it than any other constituency in Canada. At its broadest point there are 365 miles of transcontinental railway. Two transcontinental railways run through it and in addition there are a number of branch lines, although I can truly say that some of those branch lines are practically rusting at the present time.
Now it seems to me that this is enough reason to be critical of this line even if one has not the national picture at heart and if one is not interested in the recommendations of the royal commission on transportation.
I do appreciate the rebuttal argument, if one could call it that, made by the Minister of Transport. He seems to suggest that there is no possibility of getting industries interested in the Gaspesia area until there is rail transportation provided there. However I can tell him that there are many parts of the country which do have rail transportation and they do not seem to be able to get industries interested in them. There are places in southern Ontario-I am thinking of communities such as Barrie which has had a great development in industry of the most desirable kind, secondary industry, clustered around that town-where the railway services have been restricted and restrained. In other words the indication is that the incentives which bring secondary manufacturers into an area usually depend less upon transportation than upon access or relationship to markets.
The argument is made that industries cannot get to markets from the Gaspesia region because of the lack of a railroad but my point is that, on the grounds of distance from any place there to the large cities such as Quebec and Montreal, the difference between rail transportation and truck transportation is in many cases nil unless you have a large volume of tonnage that can be looked upon in some
26207-1-105
Canadian National Railways way as capital that is going to develop. This large volume of tonnage can only come from products of the forests and mines, and here we have nothing but very nebulous promises.
The hon. member for Chambly-Rouville brought up a good debating point. He made the suggestion that the particular party I am associated with has a certain argument that it is presenting to Quebec at the moment and he wondered whether my approach was not a contradiction of it in that, in a sense, it seemed to be an anti-socialist argument. I do not know what conception one has of what a socialist is in Canada but I would hope that whether one is a socialist, a capitalist, a Liberal, a Conservative or a Social Crediter, as a member of parliament no matter what one's background might be he would want to see enterprises approved by parliament that had a good future and that really dovetailed into some kind of an operational plan.
I return again to the evidence. The C.N.R. representative who appeared before our committee was not pressed deeply on any question but there is no indication in this evidence that the C.N.R. has even surveyed the situation for potential in the particular region. As a matter of fact there is no indication of what kind of rates may be struck. It was suggested that the ordinary rates would apply; that is, the railway has not even given this the consideration of what kind of incentives it can bring.
I had the impression-perhaps the minister can contradict this-that the C.N.R. officials who will be constructing this line and running it have not had any relationship with this great copper property at Murdochville or this potential East Sullivan property of Mr. Beauchemin. This I can only look upon as inadequate planning. I do not use the word "planning" in a nagging sense, but surely for an expenditure of this scale there should be some kind of projection by the agent who is going to have the responsibility.
It comes down to this. Can this railway line carry passengers effectively? The answer is no. There is hardly a railway line anywhere in North America today, except in the most concentrated populated areas, that is carrying passengers effectively to make any money. What else can it carry, then, other than freight? Is this the kind of region that is going to have a great deal of piggyback services or concentrated market services where there is a fairly large volume of high rated traffic going to be generated? Not at all. And it is already served by the St. Lawrence waterway, in my opinion the greatest waterway in the world.
1656	HOUSE OF
Canadian National Railways
I understand that the Gaspe region is well served by air transportation, or at least comparatively well served. The trucking association claims that there is a good trucking set up in there at the present time and that there is a competitive trucking set up there. I am not suggesting that we should accept their argument in toto, but we have no indication that the C.N.R. has looked into this aspect of it. We were told at the committee that the C.N.R. had no plans for using its trucking operations to dovetail into this extension of the branch line; in other words, they have not even gone that far to build up a conception of service around this line. It is for all these reasons that we have grave doubts about the line.
There is one other point that I think needs to be underlined, and that is the position of the provincial government in this whole matter. I admire this government for its efforts in the field of the roads to resources program, its attempt to work out in forestry and other fields a co-operative program that brings federal and provincial initiative together for development projects. I cannot find any indications in the record that the roads to resources program has been touched upon at all in this particular region; that there have been any demands or requests for it. I must admit that I have only looked at the records that have been provided me about the roads to resources program. Maybe there has been something, but I have not been able to find it. But we have from the minister himself an indication that he has not been in touch with the provincial authorities on this matter, and I would just like to note that on the record. I asked the minister this question:
In Ontario much of the development in railway-extension is taking place under provincial auspices. What approach did you make to the government of the province here in order to work out some kind of arrangement under which they would bear part of the cost?
I went on to ask another question:
What approach did you make to the province to get assistance or support?


Léon Balcer: We did not make any.
I went on:
Could you tell me why you did not? The reason I ask is that before the royal commission on transportation a Quebec minister gave evidence in which he indicated that the province of Quebec was ready to build a railway line if necessary to help development.
I did not mean for this particular area; I meant generally, of course. My question went on:
Since that time Mr. Levesque has also indicated that the Quebec government would not hesitate,


in order to develop the province, to build railway lines. With statements of that kind on the record and with a project which in the short run you say is uneconomic, why was the province not drawn in for assistance?
Here is the minister's answer:
We feel that this project should have been built a long time ago, and that it is a federal responsibility. The federal government is convinced that the long term benefits from this railway will prove we acted wisely when we built the railway.
Here you have a situation where a provincial minister appearing before a royal commission on transportation sets out a bunch of potential branch lines for the province. As a matter of fact the minister who did it is a brother of the hon. member from Chambly-Rouville. I thought the presentation he made before the royal commission was an excellent one; it put the case for development railways in Quebec as I read it, and I certainly understood that the Quebec government was ready to give the lead and if necessary to take the lead in development railways.
Given that situation, plus the statements of Mr. Levesque, why were not the provincial governments approached? Here is the government that is in charge of mineral resources; here is the government that is in charge of forest resources-and the minister himself says these are basic to the development-and yet they did not bother to approach that government to see whether this was the line they wanted or whether it would dovetail in any way. Could the minister indicate that the provincial government is going to support this development with any concrete plans? I do not get that impression from the evidence, and I think the minister should tell us. Until he tells us I can only assume that no liaison has been established at all with the provincial government in connection with this matter. The minister seems to rest his case upon this, that it should have been built a long time ago and that it is a federal responsibility.
Surely in view of the royal commission we are not building railways today to make up for something that was not done some years ago; surely we are building them because they are going to serve an economic need. Given this kind of a situation, I wonder how the government can proceed with this kind of an expenditure that I know on the face of it is attractive, but without any liaison or project in unison with the provincial government.
This government has, I think-I was going to say made great play, but that might suggest something nasty-certainly given the impression that it is anxious at all times to work co-operatively with the provinces, and this is an attempt to develop a region of a

province through its natural resources. Yet, Mr. Chairman, the minister has not bothered to talk to the province concerned about it at all. I can only express surprise and certain regret about that.
There is one other point. The hon. member for Gaspe pointed out that this would create work in the Gaspe region. Of course it will: building a line does. But I should like to refer him to the words that were given to us by the Minister of Public Works on this very question as to whether public projects could be any substantial answer to the unemployment situation. I think the minister will remember these words. I have not them here, but I think I can remember the gist of them fairly well. He said that the unemployment problem could not be met in the long run by building public projects. It seems to me that is a point of view of the government that would gainsay the argument that this is or could be primarily a project to meet the unemployment situation.
Surely, there are more effective ways of spending money in that area. At the present time the area seems to be served by highways and by water for approximately eight months of the year. It seems to have some air facilities. It has neither rail nor pipe line facilities. I would reiterate that today this is not considered to be a major lack in most parts of the North American continent unless the transportation demand or need is for large volume traffic usually related to products of the forest or of the mine. In this particular case I submit we really have not had the evidence that this is the potential.
When I am moving around the country I often hear from people about the cadre of experts and economic wizards which the federal government seems to be building up here in Ottawa. People say the civil service is expanding at a fantastic rate-that the government is plucking bright people from the universities and sticking them in, with the result that we are getting a top heavy bureaucracy that is likely to plan far too much of our lives and activities. All I do in this regard is to refer these people to the branch line proposed between Matane and Ste. Anne des Monts, because this seems to me a case where these economic experts have made practically no contribution at all and where the investigations which have been conducted turn out, at the most, to be tentative and sketchy.
(Translation):


Mr, Morissette:: Mr. Chairman, it is only proper that as the member for Rimouski, I should thank the government, and more particularly the Minister of Transport (Mr. 26207-1-105&
Canadian National Railways Balcer), for having met the wishes so often expressed by my fellow citizens of the lower St. Lawrence and by public organizations of that area and the Gaspe peninsula.
Actually, the construction of a new railroad in that part of the province marks the end of a long wait on the part of the taxpayers involved.
As everyone knows, since Mont Joli is to become one of this railroad's terminals, I have very special reasons for being pleased with the decision taken by the government and the Minister of Transport.
Indeed, Mr. Chairman, we had lost all hope of ever seeing the construction of that famous railroad which has been mentioned for half a century and has afforded to Liberal politicians for 25 years the opportunity of deliberately making false representations and repeated promises.
I remember the promises those politicians used to make in my constituency, the riding of Rimouski, when as a young student I was getting interested in the material problems of the district.
The least we can say is that it is not too early for the construction of the railroad. That project is part of the general policy followed by the Conservative party in the field of transportation and will provide eastern Quebec with adequate means of communication.
Realizing that transportation facilities are the basis and, in a way, the lifeblood of our district's economy, the Minister of Transport has kindly taken the necessary action in that respect and has introduced the bill under consideration to put an end to the procrastination favoured by the Liberals.
Moreover, this is but one item in the general program which is being carried out in my area. I should like to mention another concrete measure from which taxpayers in my constituency are already benefiting. Father Point and Baie Comeau are now connected by means of a year-round ferry service.
With your permission, Mr. Chairman, I should like to refer to an interruption recently made by the hon. member for Laurier (Mr. Chevrier), during the debate on the resolution. The hon. gentleman, in a desperate attempt to save his party's chances, undertook to repeat the suggestions contained in a report prepared by the distinguished professor, Mr. Camu, on "Transportation problems in the lower St. Lawrence region''. One of Mr. Camu's suggestions was the establishment of three ferry services, including one between
1658	HOUSE OF
Canadian National Railways Father Point and Baie Comeau. Now, this last service, which interests me most since it is in the constituency of Rimouski, which I represent, has recently been inaugurated, and the company which operates it has just been granted a substantial subsidy by the government. I therefore propose to the house the following dilemma: either the hon. member for Laurier knew nothing of the initiative of the people of my region who set up that service with government assistance-and then it is wrong for him to act important and pretend he is interested in the problems of my constituency-or he was aware of the facts and he tried, once more, to minimize them or to lead people to believe that such facts, although they are official, did not exist and in that case, such an approach was prompted, once again, by shabby partisan motives.
To come back to my subject, I should like to point out that before setting up that ferry service I mentioned a while ago, tremendous engineering works had to be carried out at Father Point, to an estimated amount of $4 million; likewise, millions of dollars will soon be allocated to similar undertakings at Baie Comeau.
So, to use a word much in favour today, I would say that thanks to the mover of this bill, the transportation bottleneck in the lower St. Lawrence area is a thing of the past. This leads me to the following conclusion: if Mr. Pierre Camu has found some satisfaction in having his remarks taken out of context and quoted or misquoted by the member for Laurier, he must have been much happier to find that the government was implementing his recommendations. And personally I would add that this is further evidence that the Conservative government has put an end to the era of Liberal promises and that it is resolutely engaged on the road towards achievements. I doubt very much that the cackle of the Liberal parrots will hoodwink the people who have been misled for too long by the party of the member for Laurier.


Louis-Joseph Pigeon: The wandering Canadian.


Mr. Morissette:: Mr. Chairman, getting
back to the railway between Matane and Ste. Anne des Monts-


An hon. Member:: To serious things.


Émilien Morissette: -I would like to be allowed to pay homage to all those who, for many years fought with courage, determination and perseverance to secure the construction of that railway line. I am thinking in particular of the public corporations of


the lower St. Lawrence and the Gaspe peninsula, the chambers of commerce, the municipal councils of these points and the council for economic planning of the lower St. Lawrence. I am thinking in particular of my colleagues, the members for Gaspe, Matapedia-Matane and Bonaventure (Messrs. English, Belzile and Grenier).
I do not wish to repeat in this discussion the appropriate remarks made by my colleagues about the obvious benefits that will result from the extension of the railway line between Matane and Ste. Anne des Monts. I prefer to bring up another problem that immediately comes to mind when transportation in the lower St. Lawrence and the Gaspe peninsula is mentioned. That problem results from the competition between the various means of transportation, particularly between the trucking companies and the railways.
The businessmen of my area have established sound trucking enterprises. They have invested considerable amounts of money in those enterprises. Thanks to the initiative and competence of our businessmen, those enterprises are playing a vital role in the local economy. They have created hundreds of jobs for our workers, and they are rendering immense services to the population, industrialists, businessmen and contractors. I think the time has come when managers of those trucking enterprises, on the one hand, and the Canadian National Railways authorities, on the other, should consider the possibility of extending to the eastern part of Quebec the piggyback service, which has given excellent results in other areas of the province and the country. No doubt we have there a possible solution to the problem created by the competition between trucks and railways. The trucking contractors of my constituency, and it is the case of Beaudet Express of Mont Joli, have undertaken negotiations to that effect with the C.N.R., and for reasons unknown to me, so far the C.N.R. has shown very little enthusiasm.
I do not pretend that the piggyback service would solve all the problems. I simply feel that we should give it a sincere trial. To the extent that the C.N.R. would agree to apply suitable rates, it seems evident to me that a piggyback service would help to reduce the operating costs and the costs of trucking companies. At last, the National Railways and trucking companies would have common interests. The lower St. Lawrence contractors could more cheaply haul several products that could not be shipped previously because it was impossible to compete with other producers of nearby or remote areas.

Just as the construction of a railway is going to give a new impetus to the economy of the Gaspe area and of the lower St. Lawrence valley, I believe it would be proper to suggest to whoever may be interested that the whole problem of relations between the railway and the trucking industry should be reviewed in the light of the new requirements and of the regional needs.
Mr. Chairman, those are the few remarks that I intended to make on this bill. But before taking my seat, I wish to avail myself of the opportunity of thanking the hon. member for Port Arthur (Mr. Fisher) for the unexpected help he is giving me and my colleagues from the lower St. Lawrence valley, by denouncing, in such strong terms and in such a narrow-minded way, this railway construction project between Matane and St. Anne des Monts.
I repeat that I want to thank him for the help he is giving us. There is obviously in my area what they call "units", to use a popular terminology within the new party.
Thus, there is one in my home-town of Mont Joli-where I still live-and I just have before me a statement from the chairman of the local new party association in that town, Mr. J. T. D. Rioux, who is also chairman of the C.B.R.T. and G.W. in which he says that the railway project between Matane and Ste. Anne des Monts will be the prelude to great prosperity for the people of Gaspe who, for half a century, have been waiting for adequate service.
Mr. Chairman, it might be that some followers of the new party, in the Lower St. Lawrence, are brighter than some members of the new party in this house, and that they are even so bright that my colleagues and myself have every reason to trust that they will give us their support in the next general election.


Mr. Belzile:: Mr. Chairman, I have only a few remarks to make. Indeed, at the resolution stage, I had an adequate opportunity of elaborating on matters of interest for my district which would justify the building of a railway line from Matane to Ste. Anne des Monts.
It is well known that this railway will start at Matane, the county seat in my riding, and end at the wonderful village of Ste. Anne des Monts, 57 miles away. That is to say that half the railroad will be in the Matapedia-Matane riding.
As I said, having discussed this matter at length in the past, I would like today to make a few remarks on the political aspect of the
Canadian National Railways project and on the humanitarian feelings on which it is based. I am pleased that this debate, besides promoting the project, is also informative as to the reasons for which the situation remained unchanged for so long in the past.
The contribution to this debate by the hon. members for Port Arthur (Mr. Fisher) and Peterborough (Mr. Pitman) gave me, and probably all other hon. members and the whole of Canada, the solution to the problem I was facing. I shall explain this.
I am from Gaspe, and I was born in the Matapedia valley in that peninsula. Since I attained maturity, I frequently heard serious-minded men, representing social and economic associations, and public men say that Gaspe did not receive all the consideration which it had a right to expect from the various governments.
Since I represent the constituency of Matapedia-Matane, I have an opportunity of making an on the spot study of the basic problems in that part of Gaspe-which had been so badly neglected by public men in the past-and I frequently ponder the matter.
I fail to understand why the governments did not also consider those problems, and did not consider an area which had been the first spot where white men landed in 1534. I could not understand why this part of our country, the Gaspe peninsula, was not getting what it needed for its economical development: adequate means of transportation. Now, Mr. Chairman, I understand.
Before 1958, there must certainly have been in this house other members like the member for Port Arthur and the member for Peterborough who took strong exception to the fact that the leaders of the Canadian government should give Gaspe its rightful share.


Mr. Tremblay:: That is what Mr. Chevrier did in our area.


Mr. Lessard:: Put politics aside.


Léonard-David Sweezey Tremblay: Tell us all about Mr. Chevrier. Let him come in our area and say that.


H.-Pit Lessard: A visit there would be
enough.


Léonard-David Sweezey Tremblay: Once will surely be enough.


Alfred Belzile: I was saying, Mr. Chairman, that I am from Gaspe.


An hon. Member:: We know it.


Alfred Belzile: What is Gaspe?


An hon. Member:: You are not well brought up.

Canadian National Railways


Alfred Belzile: Mr. Chairman, the Gaspe peninsula is a little province by itself. It has an immense territory. The Perron boulevard, which surrounds it, extends for almost 600 miles. As I said a moment ago, Mr. Chairman, it is the land discovered by white men. Gaspe has tremendous natural resources. Its forests potential is immense. The Gaspe woodlands are vital. Probably on account of our climate, reforestation is very rapid. The area also offers good prospects for agriculture. I am aware of the fact that we have to contend with a short summer. However, in many places, the soil is rich.
Abundant fisheries are another resource in our area. The subsoil also contains numerous resources. If, economically speaking, Gaspe has not developed as fast as the other parts of the country, the reasons for this delay are exactly those I mentioned a few minutes ago: our representatives have not grasped the entire scope of the problem. We have understood it, and so has the present government.
The Minister of Transport (Mr. Balcer) understood it.
A few minutes ago, Mr. Chairman, I heard the hon. member for Port Arthur talk about nebulous promises. There have been nebulous promises. I have never heard a man in public life talk with such strength and sincerity as the Minister of Transport. We understand that income is derived from land transportation and the railway line will be a tremendous asset.
We know how to deal with economic problems. We wanted, in all fairness, to supply the people of that part of our country with adequate transportation facilities.
The hon. member for Port Arthur also said that he had asked this question in the railways, canals and telegraph lines committee:
Will it be used to carry passengers?
And the answer was "No, I do not think so". I was there also and I do not think that the answer was a flat "no".
I think I remember having heard the Minister of Transport say:
It will carry passengers, but this is not the number one item on which we depend.
The hon. member for Port Arthur, in his argument, goes on to refer to the representations of the trucking associations of the province of Quebec and says that he is not the only one to oppose the project, but that there are also people in the province of Quebec such as the trucking associations.

I do not deny it, but here again are differences of opinion. Mr. Chairman, truckers and trucking associations are not unanimous in opposing the construction of the Matane-Ste. Anne des Monts railway.
I have here a copy of the letter which the hon. member for Port Arthur read. Incidentally, I wish to congratulate him on how he gets along in French. I urge him to keep on practising during the time left to him. But I wish him good luck for the next election; then he may continue to practise French in the House of Commons.
So I was saying, Mr. Chairman, that in the letter which the hon. member read this morning, it is said that three truckers did not oppose the project which the C.N.R. had in mind.
I have a copy of the letter addressed to the hon. member for Gaspe North (Mr. English) by the Quebec truckers association inc., over the signature of Mr. Romeo Blouin.
Well, Mr. Chairman, I have here a message from another trucking association, this one in the constituency of Gaspe:
Cap Chat, February 17
At a meeting of the independent truckers of Gaspe, held yesterday, the 16th day of February, in Cap Chat, it was moved by Damase Vallee and adopted unanimously that congratulations be sent to the member for Gaspe and conveyed also to the right hon. the Prime Minister and to the Minister of Transport, for the decision taken by the government to provide Gaspe north with a railway line it has been clamouring for during the past fifty years. At this same meeting, it was decided to protest strongly against the objections which may be raised by the Quebec truckers association concerning this project which is essential to the development of our region.
Robert G. Gagnon
Garage Robert G. Gagnon Ltee.
I have the copy of another telegram, sent this time to Hon. Leon Balcer, Minister of Transport, House of Commons, Ottawa, Ontario.
Cap Chat, Quebec, February 17, 1962
Hope pressures three small transportation firms shamelessly exploiting us will not change your decision re Matane-Ste. Anne railroad.
Signed: James G. Russel.
From: James Richardson Co. Ltd.
Mr. Chairman, I have still another one sent to Hon. Leon Balcer.
Cap Chat, P.Q., 17 February, 1962
Hon. Leon Balcer,
Minister of Transport,
House of Commons,
Ottawa, Ont.
We approve of telegram sent by J. G. Russel re railway.
Louis Landry, Sec. Treas.
James Richardson Co. Ltd.
and its 600 employees.

Mr. Chairman, I feel I have given sufficient evidence that, within the transport industry, trucking associations do not offer a united front, that they are not of a single mind. On the other hand, I recognize that it is their privilege to feel that building a railway between Matane and Ste. Anne des Monts will somewhat encroach upon their rights and deprive them of part of their income. I realize that it is their privilege to make representations.
But we, members of the House of Commons, have not been elected to protect the private interests of an individual, association or company, but to safeguard the general interests of our constituents. We are here to look after the interests of the population of our constituencies, our provinces and our country. I feel that it is my duty to speak this way and I wish to thank you, Mr. Chairman.
(Text):


Douglas Mason Fisher: Mr. Chairman, there was a point raised by the hon. member on which I want to touch. I should like to tell him that my own particular imagination in relation to this rail line would have been much more attracted and I would have conceived it as much more imaginative if the rail line was going to go all the way through say to Murdochville or all the way round the Gaspe coast. I should like to point out to him that it is only an extension of a line that exists at the present time. There is no indication from the minister that it is to be anything more than that.
The other point he made, and it was made by other members, is that Gaspe has been asking for this line for 50 years. Well, 50 years ago was the railway age; that was when railways were important for transporting goods. But the experience in recent years has been different, otherwise we would not have truckers appearing all over the place giving evidence; we would not have presidential commissions or the royal commission on transportation going into this whole matter. All these things mean there are great problems in connection with the over-expansion of railways.
I want to put on the record a point Mr. Donald Gordon of Canadian National Railways made a few years ago in relation to the expansion of rail lines, branch lines, so far as the Canadian National Railway is concerned. I am quoting from page 227 of the evidence of the 1955 committee on railways and shipping. At the time, Mr. Gordon was being queried by the present member for
Canadian National Railways Notre Dame de Grace and the present member for Greenwood. The present member for Greenwood said:
What do the words "traffic guarantee" mean?
The question was asked in relation to the development of branch lines by Canadian National. Mr. Gordon's reply was as follows:
It is a formula which we have devised which may apply in different ways. For example, to give you one example take the building of our line from Terrace to Kitimat, B.C. There we are servicing one industry. At the time that industry was proposed we said to the Aluminum Company: "We will build a line if you can satisfy us that traffic will be forthcoming" and they said: "Of course it will be forthcoming". We said: "Well, how do we know your plans are going to work out? We are not prepared to build the line and find nothing there. If you will undertake with us to provide a specified amount of traffic and undertake to reimburse us if you don't provide it, we will build the line."
Now, if the traffic materializes it costs them nothing.
He is referring there to the Kitimat organization.
If the traffic does not materialize then they put us in the position as if the traffic had materialized. That is a simple form of traffic guarantee, but when we get into a line of this kind it becomes more complicated.
He is referring here to the line between Chibougamau, St. Felicien and Beattyville. Mr. Gordon goes on:
I am not too sure we can work it out. because a great number of shippers may be involved, but if we can get enough traffic guaranteed from individual shippers of a kind which we can depend on, assuring us of traffic, then we would be willing to build the line.
Now, that does apply to the Beattyville-Chibou-gamau branch that we are building now. We have received traffic guarantees from the interested shippers which will justify us in building the line. Incidentally of course, like all these things, there are many facets to the agreement, and we credit the line with the freight that may materialize whether it is from those shippers or not.
Now that, it seems to me, is a very clear and succinct outline of how Canadian National Railways approaches the building of branch lines. It is quite apparent that Canadian National would not touch this particular branch line as part of its normal program. They have to go ahead because the minister has accepted responsibility and the government is putting up the money. The government is going to look after the deficits or profit whatever the case may be. The Canadian National is merely the agent, and as the agent of the government the Canadian National has to do what it is told. There is no quarrel about this at all. We did not get any indication, Mr. Chairman, from the Canadian National witnesses who appeared before the committee that the Canadian National had even looked into the construction of this

Canadian National Railways line very deeply. Now, what kind of railway building scheme is it when the government agency has not looked into it?
In 1955 Mr. Gordon told, and he has repeated it almost every year in one form or another before every committee, how careful the Canadian National is not to get itself into some kind of scheme that is not going to have some future in it. Hon. members of this house know that I am not a great admirer of the president of Canadian National Railways. This may be an understatement. Certainly, however, I have the impression he will build a branch line when he thinks there are any prospects at all for business. He will send his men in, they will work out surveys and make agreements. They will ask shippers. They will do all these things and yet, in so far as this line is concerned, I should like to point out again Canadian National does not seem to have done these things. Surely, we have no better underline-ment of the economic weaknesses of this line.
In order to conclude my remarks at this stage of the bill, I should like to reiterate that I feel it is a very bad day for the parliament of Canada when a member gets up to express views about something that fits into the national transportation picture-at least the minister indicated it fitted into the national transportation picture-and he is told by other members of the house, in effect, he should really mind his own business; that this is outside of his province. He should sit and, I suppose, listen to the people who come from that particular area. This is a point of view that I cannot do any more than regret.
But I should like to make it very clear that if anyone wants to criticize railway developments in northwestern Ontario or in Port Arthur-I have a hunch we will be getting a branch line or two in the next few years-I would say they would be more than welcome. I do not see how you can look at the railway transportation picture in this country without being worried about the scale of development. Only in the last few weeks, I have been involved in negotiations relating to union contracts. I have just finished reading the presidential report in the United States, which is going to have ramifications in the Canadian situation. We are going to get the Canadian National annual report very shortly, and it is going to show another substantial deficit. We are going to have deficits on both private and public air lines, in the transcontinental sense.
There is nothing in our transportation picture where railways are concerned, that leads us to be optimistic about their capacity to meet the immediate challenge unless we 
open up and change our whole attitude towards transportation. Although I may disagree, and I have known all kinds of other people much more expert than I am who disagree, with some of the recommendations in the report of the royal commission on transportation, I fail to see how the government can go ahead with this particular project with so little research and so little planning. It seems to me to reveal quite a lot of the recommendations in this volume upon which I think the government will be acting very early.


Murdo William Martin: I am quite surprised, Mr. Chairman, that we have not had any comment from the minister in regard to many of these points that have been raised by the hon. member for Port Arthur.


An hon. Member:: You were not here.


Murdo William Martin: Whether or not hon. members were looking, I was here all morning during this debate. Whenever any real study or real pertinent questions are being asked by members of the opposition, I know that it is so much easier for members on the government side, instead of doing any thinking or research, to reach for the paint brush and just start smearing, distorting and things of that nature. The hon. member for Beauce-no, I mean the hon. member for Gaspe-


Paul Léo Maurice Johnson: Does the hon. member not know where the region is?


Murdo William Martin: If the hon. member will contain himself for just a few minutes, he will understand. I have a little bit of knowledge of what I am talking about. I know that one of the favourite sports these days in the province of Quebec is to comment on how much the hon. member for Port Arthur is supposed to be against the province of Quebec.


Léon Balcer: We do not think he is that important.


Murdo William Martin: I do not think hon. members opposite, with the imagination they display on occasions, can even begin to try and make the same charge stick about myself. I was born and raised in the province of Quebec. In fact I even had the honour of serving with a French Canadian regiment which came from Riviere du Loup-


Henry Frank Jones: On a point of order, surely the remarks of the hon. member might be directed towards this bill rather than to where he was born.


Murdo William Martin: What was the point of the hon. member?


Mr. Carter:: He never has a point.


Some hon. Members:: Irrelevancy.

(Translation):


Émilien Morissette: Does the hon. member claim that he was born in the riding of Rimouski?
(Text):


Murdo William Martin: However, Mr. Chairman, I thought that the case put forward by the hon. member for Port Arthur displayed the fact that he had done a tremendous amount of work on this subject. I thought he marshalled his facts and his thoughts very well. On two or three occasions throughout his remarks he insisted that we are not ignorant of the fact that this part of Quebec has been neglected for many years and that it has been bypassed in the development of this country. We also feel that it should be looked after and his only criticism, his only argument, was to examine this bill to see whether it was in fact what should be done to make up for this neglect over many years.
To hear some of the remarks of the hon. gentleman from Gaspe you would think the New Democratic party was responsible for this neglect. I think we should remind the hon. gentleman that the New Democratic party has not been the government for the past 95 years in this country. Any blame for the neglect cannot be laid at our door. It has to be laid at somebody else's door.
In this regard I was very interested to read in Le Devoir of January 20, 1962, a report of the remarks of the hon. member for La-belle, where he said:
(Translation):
Speaking of the construction in the Gaspe peninsula of the railway line announced in the speech from the throne, he said that up until now that region has been left to itself and "isolated from the rest of the province of Quebec and even from the country."
(Text):
On the same day on another page we find a quotation from the provincial legislature of the province of Quebec, by Mr. Gerard Levesque:
(Translation):
The leader of the opposition-
(Text):
-who, incidentally, happens, to be a brother of one of the honourable members who took part in this debate, here,-
(Translation):
The leader of the opposition, he said, who was the minister of water resources under the Union Nationale administration, had answered the pleas from the people requesting electrical power: "$15 million, that is too much money."
(Text):
If electrification of this whole area at a price of $15 million is too expensive, then what objective would there be in spending
26207-1-106
Canadian National Railways approximately the same amount of money for a railroad? Surely electrification is something which is going to affect each and every solitary citizen of that particular area every day in almost every way, whereas the railroad at best would only affect a certain percentage of the citizens. That is why we find it very difficult to understand why hon. members from the particular ridings involved can get quite excited if there is any question or doubt thrown on a plan like this.
Now we all like to fight very hard for matters that deeply affect our own particular ridings, sometimes even if they are not in the best interests of the country as a whole or really in the long term interests of the ridings themselves. After all an hon. member likes to have a sense of accomplishment in knowing he has succeeded in getting something which his riding has wanted for 50 or 100 years. However we sometimes fail to realize that what was vitally necessary 50 or 100 years ago may not now be as useful as it once could have been, and that the same amount of money devoted to some other project could accomplish far more and give far more lasting benefit to the people of the area.
I found it very strange to listen to the remarks of the hon. member for Gaspe. He construed the criticisms, doubts and points brought up by the hon. member for Port Arthur as expressions of the hatred in the heart of the hon. member for the people in the province of Quebec. I certainly would not accuse the hon. member for Gaspe of having hatred in his heart, regardless of how much evidence I might have to that effect, but I find it rather strange to see him displaying such tremendous interest in this area now, contrary to what he might have displayed when he was deputy minister of fisheries in the Union Nationale government from 1944 to 1953. If some of the zeal and energy he displayed today had been expended on that region during his term of office, then I think his riding would have benefited very much, and so would the whole province of Quebec.
It is alright for the hon. members who are immediately involved in this particular area to get up and sound off, but this is not a private member's bill. This is a bill brought forward by the government and I think the hon. minister owes it to the house to examine some of these arguments put forward by the hon. member for Port Arthur, give us some explanation as to what was done, and in fact give some explanation why some of these things were not done.
For example, why was the provincial government not consulted? At least we have no evidence whatsoever to that effect, and the

Canadian National Railways province of Quebec is well known to resent deeply any actions of the federal government when no consultations are held with the province. Certainly they are very justified in doing so. I do not see that any federal government can feel it is that much of a big brother or great paternal father that it can make decisions which are going to affect the provinces without having consultations with the provinces. This certainly merits some explanation and I think the minister should give the house some explanation of it.
According to the evidence presented by the hon. member for Port Arthur I would like to ask why the recommendations of the royal commission on transportation are being so completely ignored in this regard. What is the use in this parliament setting up the royal commission at considerable expense, a commission that sat for many months and brought out very lengthy recommendations, that has underlined them and reunderlined them, and then before the print is completely dry on the recommendations the government takes a move that completely ignores those recommendations?
These are matters that the minister should explain to the committee. I believe he should give an explanation, if he knows, as to why the C.N.R. itself apparently will not touch this with a ten-foot pole. There must be some reasons for this, and I think the minister owes it to the committee to give us those reasons, at least to the extent that he knows them.
I hope that before this matter goes any further we will hear some explanation, not from one of the hon. members who may be very emotionally involved in this matter, but from the government, because after all this is a government bill and I think we should have the explanation from a representative of that government.


Léon Balcer: Mr. Chairman, I just want to answer briefly a few of the questions that have been asked. I want to say right now that I am not going to repeat for the fifteenth time the same arguments and answer the same questions that were answered both here in the house at the time of the resolution and in detail in the committee.
The hon. member for Port Arthur and the hon. member for Timmins tried to make a great big case and cause great excitement over the fact that we have not consulted the province of Quebec. This has not been done in 25 years by any government building railroads in Canada. The provinces have never been consulted. They do not want to be consulted, because they tell us "Look, railways are your baby. Don't try to get any money out of us to build railways; we are
[Mr. Martin (Timmins) .1

not interested". So it is absolutely utopian to think that the province of Quebec will give us money to build railroads. There are two provincial railways in Canada, and they do not come to us for money with which to build railroads. They would laugh at us if we went to them and asked for money to build railroads. This is exactly what will happen in the province of Quebec. This has never been done.
The hon. member for Timmins, following the hon. member for Port Arthur, raised the matter that no proper study has been made of the project, that we did not have any reports, and so on. The Canadian National Railways has made many studies of this situation; they have made reports to the Department of Transport and to myself. In 1957 they made a very extensive study and came to the conclusion that it was not in the interests of Canadian National Railways to build a line themselves, but they made a very detailed report to the department. It was on these reports and on other studies made by economists of the department and private individuals-quite independent economists- and also taking into account the great contribution of the chambers of commerce and different organizations in the area, that we reached this decision. Since I have been Minister of Transport it has always fascinated me to see the great effort that is being made in this part of the province of Quebec by the people helping themselves before coming to the government to try to obtain handouts. In the lower St. Lawrence the chambers of commerce got together; they set up study groups and hired economists and engineers to make special surveys. They have paid for that, and these reports have been extremely helpful to the experts of my department. All these various reports and factors were considered by the government in reaching the decision to go ahead with this railway.
As far as the MacPherson report is concerned, there is nothing in that report which says the government should stop building development railways. The MacPherson report made a great difference between national policy and a national transportation policy. The railway being considered by the committee at the present time is a development railway, and as such it is a matter of national policy and should be the responsibility of the government. The government did not saddle the Canadian National Railway with the expenses of this railway; this is absolutely in line with the MacPherson royal commission report and with the philosophy of that report. Therefore I do not think we have to worry, because it is not going against the recommendations of the MacPherson royal commission report.

Of course, we are all anxious to see this railway line pay, and it will pay. It is a matter of when it will start to pay after the amortization of the capital. Personally I am very confident that it will come sooner than we think, because we have examples in this area of Canada that the people are hard working and are determined to see their natural resources exploited and developed so they can carry on living in the area and building up a future for their children.


Douglas Mason Fisher: Mr. Chairman, I just want to make some very brief remarks on what the minister has said. He indicated, as he did before-and I appreciate it-that this is a matter of national policy. My hon. friend from this region seemed to question that anyone from outside the province should comment upon it, and right in the minister's own argument we have this explanation that it is a matter of national policy; that is, government policy in the transportation field.
There is one other point I should like to put on the record in relation to motives. The present government, for example, right within my own home city and part of my constituency is spending approximately $9 million for just one dock and one terminal facility. This is much appreciated. Approximately $1 million a year goes into the estimates of the Department of Transport and the Department of Public Works to keep up the facilities there. Over half of the bridge subsidy of $7 million a year for rail traffic relates to the rail lines in my constituency. I say this to emphasize that I do not raise this matter from any point of view of being mean or hesitant about the spending of money. We appreciate the money that is spent in our area. However, surely it is worth while examining this matter very closely, given the rusting branch lines in many parts of the country- and not less in our area, where there is a great deal of large volume tonnage-and we should be as analytical as possible in approaching a proposition such as this. I can only say, with all respect for the fairness of the minister's comments, that neither the evidence of the committee nor what he said here has convinced us that in principle this is a good proposition for a development railway.
(Translation):


Azellus Denis: If I understood him well, the minister stated that trunk line will probably not be self-supporting, especially in the near future, but that it will be perhaps a little later; however, he has decided to build it.
How is it that, using the same argument, he has refused to admit that the Richelieu-Vercheres people were right about the Richelieu waterway, while he himself stated that 26207-1-106i
Canadian National Railways he did not consider the Richelieu waterway because the project was not self-supporting?


Léon Balcer: Mr. Chairman, I am glad my hon. friend should give me the opportunity of stating the facts of the matter.
What I said, at the time, while my hon. friend from Richelieu-Vercheres was asking me questions, was that the reports we then had, established that the project was not selfsupporting. Since then, we have received further reports, the latest ones having enabled us to deem it proper to have a full inquiry by engineers in order to ascertain its precise cost. The initial reports indicated a much higher cost; on the other hand, the latest ones we have are very encouraging, and that is why the government has decided to proceed with this enquiry which will allow us to ascertain precisely not only the cost of the project, but the depth that the canal should have.


Azellus Denis: If I understand well, Mr. Chairman, there are two policies: one for the Gaspe peninsula, and the other for Richelieu-Vercheres. Because the Richelieu waterway was not considered self-supporting, you decided not to go ahead with it. As far as this trunk line in the Gaspe peninsula is concerned, you have indicated it was not selfsupporting, but just the same you have decided to build it. Consequently, what you are doing for the Gaspe peninsula, you refuse to do for the Richelieu-Vercheres people.
(Text):


[Stage Direction]
Clause agreed to.
On clause 2-Estimates.
Maurice Bourget: This morning the minister tabled the draft arrangements of the C.N.R., and in these draft arrangements there are some conditions set out, especially on page 1 where there is a clause or condition, No. 5, in which it is said that Her Majesty will pay to the company certain sums of money in respect to various services. In particular, the draft talks about the expenses or costs of supervision, accounting, treasury, law, engineering, maintenance of service and other miscellaneous expenses.
I wonder whether the minister has, first of all, a breakdown of these expenditures, and, second, if he can tell us whether all these expenses are included in the $14 million mentioned in the schedule.


Léon Balcer: I think the hon. member is quoting from page 2, paragraph 5.


Maurice Bourget: Yes. That is the first page. That is the reason I called it page No. 1. It is marked page 2.


Léon Balcer: Is it paragraph 5?

Canadian National Railways


Maurice Bourget: Yes, it is.


Léon Balcer: Paragraph 5 says that Her Majesty will pay to the company for and in respect to the work of construction of the line of railway the actual cost to the company of performing the work of construction of the said line, including supervision, accounting and so on. Yes, that is all included in the $14 million. This is all counted as construction cost; it is all part of the capital cost of the railway.


Maurice Bourget: It is included in the $14 million. I still believe it would be of advantage to have a breakdown of these figures, particularly as to the expense of engineering costs, because I see that 5 or 6 per cent is contemplated for plans and specifications. That would amount to some $840,000, an important consideration, and I think it would be interesting to have the breakdown. Otherwise, I do not know how we can arrive at a useful judgment on this estimate of $14 million.


Léon Balcer: In the construction of these branch lines and the preparation of estimates of cost, the railway companies are, of course, guided by their experience of such matters. The items referred to by the hon. member are all separate expenses, but the costs will be kept by the company and all the figures will be submitted to accounting. The bills, when presented, will be reviewed by our accountants and paid by the government. If the hon. member asks, for example, how much will be spent in legal fees, I am afraid I cannot say at the present time and I do not think many people could. But based on its experience of rail construction in Canada in the last 50 years the railway company has been able to make a certain estimate as to the cost of this, as well as the other services which the hon. member mentioned. The company knows for instance, that so many bridges will have to be built. It has to determine what the cost is likely to be in order that we might have a bill before us which the house could approve.
The hon. member will note that we add 15 per cent to the $14 million-that is done in clause 3, where the phrase "not exceeding in any case the sum of $16,100,000" appears. This 15 per cent is intended to cover any difference between the estimates and the actual cost.
(Translation):


Maurice Bourget: Mr. Chairman, I fully understand all the arguments put forward by the minister, but what I want to know-and he must surely realize it-is this: what will the work cost?
It has been said that $14 million, or perhaps 15 per cent more, will be spent if necessary.


I find it strange that we are not given any information on particulars as important as those mentioned in clause 5. We are unable to obtain any definite figure.
For instance, engineering costs are mentioned. If you figure that out at 5 or 6 per cent, the minister will realize that this is an important item. If I remember well the information given to us last week in committee, it was mentioned that the only survey made was an aerial survey. I fail to understand how the cost could be estimated at $14 million after an aerial survey only had been made. The minister might answer that the C.N.R. has wide experience when it comes to estimating construction costs on a mileage basis, but, on the other hand, construction costs of an overpass, for instance, can vary considerably because of the nature of the soil and foundations.
Consequently, I feel we are entitled to more information concerning a $14 million contract.
I do not want to insist, sir, since we are in favour of the project, but I feel that the committee should have this kind of information in view of the circumstances, because it is important for us to know what will happen in the future. That is why I would ask the minister to give us that information. I will even go further to help the minister; if he does not have that information at present, he could give it to us later on so that we may have a breakdown of that amount.
(Text):


Léon Balcer: According to clause 6:
The Minister of Transport shall present to parliament during the first thirty days of each session held prior to the date of completion fixed by or under section 1, a statement showing in detail the nature and extent of the work done under the authority of this act during the previous calendar year, and the expenditure thereon, and the estimated expenditure for the current calendar year, together with the amount of any payments made under section 4, and such further information as the Minister of Transport may direct.
I think it would be an excellent opportunity at that time for my hon. friend to get it.


Maurice Bourget: What is the minister reading from?


Léon Balcer: I am reading from the bill itself, clause 6. The questions that my hon. friend is asking are with relation to matters that are usually handled by the management of the C.N.R. This is really in their domain. It is really a management breakdown that my hon. friend is asking for at the present time. I have not this information and we do not have it in the department. This is a C.N.R. matter.


Maurice Bourget: The C.N.R. is acting as an agent and should know.

Canadian National Railways


Léon Balcer: They will make their survey so little in the way of particulars with regard and then they will be able to assess how much to the engineering structure and as far as the is going to go for overhead.	breakdown of costs is concerned.


Maurice Bourget: I am not going to pursue the matter now. However, what I should like the minister to do is this, if he would be kind enough to do it. Will he give us detailed estimates maybe later on, say some time next week, so that we will know and be informed of the cost?


Léon Balcer: I will not be in a position to do that next week. A complete survey is needed in order to find out how much it is going to cost for every precise detail that is listed in this subsection 5. We need a complete survey. The survey is going to start right away. We figure that the survey will be over next fall and that is when we will start the actual construction. However, until the survey is done, I do not know how much engineering there is going to be and how much of the breakdown is for that purpose. The way in which we arrive at $14 million is this. It is based on the experience with other branch lines of the same length, over the same kind of terrain and under the same regional conditions.


Maurice Bourget: The minister said that the survey will be completed next fall. Does he mean that the land survey will be completed or does he mean also that all the plans will be ready and in shape so that the C.N.R. will be able to ask for tenders.


Léon Balcer: In the latter part of the summer the survey will be over and the plans will be made and we will be ready to start actual construction early in the fall.


Gordon Campbell Chown: Shall clause 2 carry?


Douglas Mason Fisher: I wanted to ask the minister again about the very point that has been raised. We have the evidence that only a preliminary survey has been made by the C.N.R. from aerial photographs. I should like to ask him this question and it relates to this question of the estimated expenditures. Is this the normal practice in building a line? Is it the normal practice to have such a superficial survey as this-and it seems to me that an aerial survey is a superficial one-as a basis for an estimate of the cost? I suppose in a way this is what the hon. member for Levis was asking but I am putting it in a much more direct way. I was disturbed by what has been indicated. The minister said that the C.N.R. surveyed this thing from an economic point of view. This is something which I cannot quite understand. How could they make such a thorough economic survey as he indicated just a short time ago and yet have


Léon Balcer: All this is absolutely normal. Whenever the C.N.R. decides to build a branch line or rather I should say before they decide to build a branch line they make a general survey. It is not a detailed survey but it is a general survey. This survey is made so that they may have an idea of what the thing is all about. On this preliminary survey they come to certain conclusions, whether it is worth it or whether it is not worth it. Then when the branch line is voted here, they have enough money with which really to go ahead and make the actual detailed engineering survey from which the detailed costs of construction will be arrived at. However, you cannot expect the C.N.R. to have a complete engineering survey of all kinds of proposals for branch lines and to keep that process going on all the time. It would cost a fortune. Millions of dollars would be wasted. Therefore, whenever there is talk of building a railway, the C.N.R. makes a kind of preliminary survey. It is not a detailed survey. However, it is a survey that gives them a chance to have a general idea of what is required so that they may make approximate estimates. That is precisely why we have in every branch line bill before the house this provision of 15 per cent in order to allow the difference between the actual costs and the preliminary estimate.


[Stage Direction]
Clause agreed to.
On clause 3-Maximum expenditure.
Maurice Bourget: Has the minister any information about the cost of the land that will be required for the right-of-way?


Léon Balcer: I was going to say yes, but I am afraid I would surprise my hon. friend too much. I was in the Gaspe peninsula and I may tell my hon. friend that the value of the land varies from one place to another. There is there some very valuable land and there is also some less valuable land. However, I have not the figures with me.


[Stage Direction]
Clause agreed to.
On clause 4-How payments to be made.
Douglas Mason Fisher: I should like to ask the minister a question in relation to this clause. I understand the funds for the payment for construction and later on the payment of any deficits will come out of the consolidated revenue fund. Therefore in this sense we will not have a continuing account to indicate the cost of the capital to the government in so far as it relates to this specific problem. I assume that to be so. That being the case,

Canadian National Railways has the minister an estimate of the cost of amortizing or paying for this particular road and over what period of years has the projection been made, assuming let us say, taking the most pessimistic view, that there will be enough revenue to take care of the capital expenditure plus the interest?


Léon Balcer: I am informed that in the studies we have done in the Department of Transport we have sort of taken into account the operating costs but not the amortization. What I mean is that we have based the estimate on operating costs and the revenues of the railway on actual potential traffic. However, we have not taken into account the traffic that will develop as a result of the fact that a new railway is being developed in that area. We are quite confident that there will be bulk cargo of the type of mineral ore. As a matter of fact we are convinced of it. However, in our setting up of the accounting for the thing, we have not taken account of that factor at all. As far as the construction cost is concerned, it will be paid to the C.N.R. which will act as our agent. If there is any surplus it will come back to the Receiver General of Canada and if there is any deficit it will be paid out of the consolidated revenue fund.


Douglas Mason Fisher: I take it from the minister's answer that the $14 million-


Léon Balcer: Actually I am not too sure whether I understood the question correctly.


Douglas Mason Fisher: In other words, the $14 million is being supplied from the general taxation revenues and there will be no particular record kept of it. It will never be balanced against the economic feasibility of this line in the long term.


Léon Balcer: A record will be kept of all the capital expenses as well as the operating expenses. This will be reviewed in parliament as an item in the estimates of the Department of Transport. We will keep a record of the capital cost of the construction and when there is a net revenue it will be credited to the amortization of the capital cost.


Douglas Mason Fisher: The capital cost will be a fixed sum, whatever the total cost will be, and it will not bear any interest developing from year to year to increase that amount. Is that correct? I ask the minister this because he knows that, for instance, the Jacques Cartier bridge is an example of a government enterprise where not only did the income not meet the operating costs for many years but also it did not come close to meeting the interest charges upon the debt, and so instead of the amortization on the Jacques Cartier bridge
[Mr. Fisher.}
fading away over the years it has been piling up. I would assume that that would not be so in this particular case.


Léon Balcer: It will not. It will not be money borrowed from the government on which interest will pile up and finally develop into a huge amount of money. It will be a one-shot payment but a record will be kept of it and if there is any surplus revenue it will go toward amortizing the capital cost. Actually it comes back to the government. It is simply a bookkeeping entry, but there will not be interest paid on this $14 million.


Douglas Mason Fisher: Could I ask one question following that? Can the minister give us an example of a similar kind of payment in the railway field since the government took office? I just want to check the situation for my own purposes.


Léon Balcer: Not exactly the same. For instance, we are subsidizing the Pine Point railway but that is a different financial arrangement. As far as the Chibougamau railway is concerned, there is a subsidy of $25,000 a mile so it is a different financial set-up. This one is a development railway, as I have said so many times, and it is a different financial set-up which will be established by order in council incorporating the draft agreement that I have tabled in the house.


Douglas Mason Fisher: I thank the minister for his reply. It is as stark as I had thought. In other words, we will have probably $14 million as a minimum, though it may vary 15 per cent up or down, going out of the revenues of the government in the next year or so directly into this project. In this sense it is an unusual expenditure in this particular field in that there are no precedents that I know of for this particular kind of railway expenditure. I am making this assumption. Every year we have a railway bill or two before us and I should like to be sure that I understand this one completely. I am assuming that this is a unique precedent, shall I say, for the construction of a branch line in modern times.


Léon Balcer: No, Mr. Chairman. This branch line is very similar to the Hudson Bay Railway. The Hudson Bay Railway was built at government expense. At first it did not make any money but the revenue grew and finally it was transferred to the C.N.R. It is now a paying proposition. It was the same set-up. The government paid for the construction and the C.N.R. acted as agent. Only in 1957 was the Hudson Bay Railway included in the C.N.R. international system.


Douglas Mason Fisher: Does the minister mean that the Hudson Bay Railway did not have a debt structure? I have not got the reports here but

I understood that it did have a debt structure and that there were annual charges against the debt. It seems to me that the scheme in this instance is a unique approach to railway building, but the minister says it is like the Hudson Bay Railway. Am I wrong in my memory about the Hudson Bay Railway? Does the minister mean that the capital cost of the Hudson Bay Railway was met out of the consolidated revenue fund and there were never any interest charges on the debt?


Léon Balcer: All of the construction costs were paid out of the consolidated revenue fund and all deficit costs on the operation were paid out of the estimates of the Department of Transport. My information, subject to correction, is that these moneys did not carry any interest charges, so the situations are similar.


Douglas Mason Fisher: I might indicate why I am curious about this matter and why I want to come back to it again. As the minister can imagine, if the idea of taking a lump sum out of the current revenues of the government and putting it into a branch line is a unique precedent, it will be an attractive way to many sectors of the country to get railway developments there. I have to accept the minister's judgment that the Hudson Bay Railway was a precedent of the same kind though from my memory it did not strike me that way. I want to ask the minister this question. In the consideration of how to approach the matter of how to finance this road, was the alternative considered of setting aside a fund or was the C.N.R. approached with the suggestion that "we will give you a subsidy of $50,000 a mile for so many years as an operating subsidy and then the matter will fall directly within Canadian National Railways". It is pretty apparent from the nature of my remarks and my phrasing that my knowledge of how capital is handled in a financial way is not very extensive, but the thing that intrigues me is that I have always understood it is considered poor practice for a government to use money from the consolidated revenue fund en bloc in this way for what might be called a current project with no consideration being given to the payment of the cost over a number of years, and the normal interest charges upon that cost.
I have seen the point made in a number of places, including economic textbooks, that this is really bad management. It is the sort of thing, for example, that most tax regulations will not allow private corporations if it can possibly be avoided. It seems to wipe out the whole idea of the regular amortization of debt. I wanted to get it very straight in my mind because I would imagine that this is a very clear precedent and we will have
Canadian National Railways other sections of the country coming here, not only in relation to railways but the building of canals, requesting the same treatment. I can think of a project such as the Richelieu waterway. We have a canal project up our way leading off lake Superior, and we would like it set up on the very same basis.


Léon Balcer: Crown companies do amortize their capital expenditures, but I am informed that the government often pays a direct subsidy out of the consolidated revenue fund, without any interest being charged. I think a good example of this is the ferry boat Abegweit and the William Carson. These ships were built by the government. The government pays the cost of construction of the ship, say it is $14 million or $15 million, and then the ship is turned over to the Canadian National for operation. The Canadian National acts as agent for the government.


[Stage Direction]
Clause agreed to.
On clause 5-Adjustment of surplus or deficit.
Douglas Mason Fisher: I wanted to ask a question in relation to this clause. In clause 7 of the memorandum of agreement, I find these words:
That the company will maintain and make available as and when required for audit by the appropriate officers of Her Majesty accounting records of the said line of railway showing the cost of management, operation and maintenance thereof and a record of all revenues accruing to the said line of railway for the services rendered or facilities provided.
Does this mean the Auditor General?
I should like to have this very clear in my mind because one of the things I have always advocated has been that the Auditor General be turned loose in Canadian National Railways. I think it would really set the chickens flying. I should like to think that this clause means the Auditor General would be the proper officer of Her Majesty in this regard. I bring up the question on this clause, Mr. Chairman, because the clause goes into the question of annual operation.


Léon Balcer: It will be an officer of the Department of Transport who will do that or an officer designated by the Minister of Transport.


Douglas Mason Fisher: In other words, it is not the Auditor General?


Léon Balcer: No.


Douglas Mason Fisher: Was any consideration given to specifying the Auditor General?


Léon Balcer: I shall be pleased to consider that.
1670	HOUSE OF
Canadian National Railways


Douglas Mason Fisher: I hope the minister will consider it because, as I take it he is probably aware, the present Auditor General, in a review that has been made of the role of his department within the past year and by a parliamentary committee this year, has given an indication in his annual report that he is interested in and would like to be responsible for the auditing of a number of crown corporations. It seems to me that this is a good example of how we can get an investigation, distinct from the Canadian National auditors. I know Canadian National Railways auditors are appointed by parliament through the minister. I do not want to suggest by my remarks that I have a criticism or suspicion of these auditors. However, I should like to make the point that in a case like this I do not believe this particular set of auditors who look after Canadian National should be the ones to make this annual review or audit for the Minister of Transport.


Léon Balcer: I just want to add that this railway will be our own property. It will be the responsibility of the Department of Transport. It will be studied here as an item in the estimates of the Department of Transport, and as such it will be audited by the Auditor General as are all other items of the Department of Transport.


Douglas Mason Fisher: In connection with this annual investigation, would the minister indicate what arrangements Canadian National Railways have in mind in so far as the servicing of this line is concerned? It will have quite a bearing on the annual operating accounts, for example. What is going to be the divisional point for the operation of this line, will it be Mont Joli? Has he had an estimate from the railway, say after five years, as to the amount of equipment or the number of employees that will be employed in the annual operation?


Léon Balcer: The Canadian National will act as agent. They will supply the equipment and the labour force needed. They are the ones who are qualified to decide where the divisional point is going to be, where we are going to have stations, and things like that. They will act as agent of the government, so there will be a management of this rail line.


Mr. Benidickson:: I think we have an interesting point here in connection with the auditing of an asset that is with Canadian National Railways simply for the purpose of management. Now, I do not know that inspection by an officer of the Department of Transport, from the point of view of auditing, can be very extensive. Parliament


apparently does not place very much responsibility on the Department of Transport in connection with the operation of other entities belonging to the crown which are managed by Canadian National Railways. I assume this would be an asset that might be put into this category. When one reads the vote it says that we will pay to Canadian National Railways Company, hereinafter called the company, such deficits as are certified by the auditors of the company. Then, they go on to refer to some of these other entities such as the Newfoundland ferry terminal, the Newfoundland car ferries, which are all part of our transportation system, but not something Canadian National put into its own system.
When the minister rose to refer to the precedent of the Hudson Bay Railway, I was about to make the same suggestion. I thought perhaps the policy being followed here was similar to what was followed in the case of the Hudson Bay Railway. I do not recall now what has happened to the accounts of the Hudson Bay Railway because the Hudson Bay Railway is not one of the entities in the book of estimates for which parliament is asked to make up the deficit. Does it mean that in recent years there has no longer been a deficit on the operation of the Hudson Bay Railway, or have I a proper recollection that in some manner these lines which were originally called the Hudson Bay Railway were transferred directly to the Canadian National Railways, are now part and parcel of that system, and anything related to them comes in under the reports of the C.N.R.?


Léon Balcer: A few minutes ago I mentioned our ferry services. It is going to be the same system. It is the property of the Department of Transport and the Canadian National Railways act as an agent. The C.N.R. keeps all the records and our own Department of Transport people will receive them. The C.N.R. are responsible to the Department of Transport and the records will be subject to the auditing of the Auditor General of Canada. It will be exactly the same thing. The services, operation and costs of construction of this branch line will be under the auditing of the Auditor General.


William Moore Benidickson: That is not what it says in the book of estimates. It says that the minister is obligated to pay to the Canadian National Railways what its auditors, the company's auditors, certify was the deficit in the operation of these enterprises. The other question was, did the Hudson Bay Railway not operate originally in the manner in which the minister proposes in this bill with respect to the Matane railway?

Canadian National Railways
Did it not at one time, like the ferry serv- Mr. Fisher: I take it from that that ques-ices, present an annual deficit which parlia- tioning will not be ruled out so far as the ment was asked to pay to the Canadian Na- actual development is concerned, but the tional Railways?	main limitations-


Léon Balcer: These were annual deficits that were included in the estimates of the Department of Transport as such.


William Moore Benidickson: But they are not now.


Léon Balcer: That is not what it is. In this present case there will be an item in the estimates for the construction of the railway, and also if there is anything further to be paid it will be paid by an item in the estimates, but all of this will be subject to the auditing of the Auditor General.


[Stage Direction]
Clause agreed to.
On clause 6-Report to parliament.
Douglas Mason Fisher: I want to ask a question relating to clause 6. In the committee the minister indicated that we would be able to discuss this when the government estimates came before the house, which is a privilege that we are very pleased to have. Certainly there are enough opportunities at various times in any session to debate the situation with regard to the C.N.R. in this house. Every year we have a number of motions which give us an opportunity to speak on matters relating to the railway, but the best opportunity an hon. member really has to review the operations is when something comes before the parliamentary committee.
I would like confirmation of what I had assumed from the evidence given in committee, that is, that every year when the C.N.R. report comes before the sessional committee on railways and shipping we shall have the opportunity to go fully into the operations of this particular branch line with the minister and the head of the C.N.R., who will be there ready to answer any questions that relate to this. Have I got the correct understanding on this point?


Léon Balcer: All answers that can be given by the president of the C.N.R. to the standing committee on railways, canals and telegraph lines will be given as president of the agency. He will be there in his capacity as an agent for the Department of Transport, but the proper questioning will be done in the house when the Department of Transport estimates are called. Of course if the estimates of the department are sent to the committee on estimates hon. members will have the opportunity to go into details there. Any questioning of the president of the Canadian National Railways that is done with regard to the railway in the special committee on the C.N.R. and T.C.A., will be in his role as agent for the Department of Transport.


Léon Balcer: It will be left to the committee to decide.


Douglas Mason Fisher: I have one point to raise in connection with this draft arrangement with the C.N.R. and its terms and conditions. In drawing up this particular draft arrangement could the minister tell us was there a precedent in so far as this particular arrangement is concerned, or is this form of arrangement again a new precedent? I am curious and anxious to know what was the model for this particular draft.


Léon Balcer: This draft arrangement was prepared by the officials of my department and the officials of the C.N.R. They took as a basis for this agreement similar agreements which we have with the C.N.R., where the C.N.R. have done some work of maintenance for the Department of Transport. It is a sort of similar draft agreement.


Douglas Mason Fisher: I take it from his answer that there are partial precedents in terms of this draft arrangement, but there was no other arrangement identical with this to which we could turn to see whether this had been used before.


Léon Balcer: I am not aware of any.


[Stage Direction]
Clause agreed to.
Schedule agreed to.
Preamble agreed to.
Gordon Campbell Chown: Shall the title
carry?


Douglas Mason Fisher: On division.


[Stage Direction]
Title agreed to.
Gordon Campbell Chown: Shall the bill carry?


Douglas Mason Fisher: On division.
Bill reported.


The Acting Speaker (Mr. Chown):: When shall the bill be read a third time? Now?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Chown):: Before giving the floor to the hon. member for Port Arthur (Mr. Fisher) there was a document presented for tabling by the sponsoring Minister of Transport, and I should like to get leave from the house to table the document now. Has the minister leave to table the agreement which was filed with the table when Bill C-67 was being considered in committee of the whole?


Some hon. Members:: Agreed.

Canadian National Railways


Léon Balcer: the third reading of the bill.


Douglas Mason Fisher: Mr. Speaker, in the admittedly voluminous discussion that has taken place upon this measure in committee we have expressed our doubts about this line and its economic feasibility. We think that, from our point of view at least, we have indicated that here is a most unusual one shot, $14 million take from the consolidated revenue fund to develop a railway line that on the face of it, as we look at it, has not any economic substance or any bright economic future. I say the rail line, not the area through which the rail line will go. We feel that we should put our criticism into the proper parliamentary form, and for that reason I should like to move, seconded by the hon. member for Timmins (Mr. Martin):
That this bill be not now read a third time but that it be referred back to the committee of the whole with instructions to add thereto, immediately after clause 6 thereof, a clause 7 to provide
That the coming into force of this bill be deferred until such time, not exceeding one year from this date, as the standing committee on railways, canals and telegraph lines has undertaken a study of and reported upon the feasibility of expending the moneys authorized by this bill in such a way as to provide for increased economic development of, and more appropriate transportation facilities for Gaspe peninsula.


The Acting Speaker (Mr. Chown):: Perhaps one of the hon. gentlemen in the house would be prepared to assist the Chair in arriving at a decision as to whether or not this amendment is in order, particularly with reference to the question of whether or not it introduces new material to the bill itself.


Erhart Regier: Mr. Speaker, I believe that at the time the house gave second reading to this bill it endorsed the principle that there be expended a certain specified amount of money in order to aid in the transportation problems of the Gaspe region of Canada.
I believe that, after having accepted the principle that money should be made available to aid and relieve the transportation problems of this region, it is perfectly in order upon third reading to refer the bill back to a committee and to ask the committee to explore other possibilities whereby the transportation problems of this area might be assisted.
I see no conflict between the amendment now offered and the basic principles that were endorsed by this house on second reading, and therefore I contend that the amendment moved by the hon. member for Port Arthur (Mr. Fisher) is very much in order.


Gordon Minto Churchill: Mr. Speaker, on examining the amendment we find that it is not doing
[The Acting Speaker (Mr. Chown).]

what amendments of this nature normally do, that is refer a bill back for some immediate action by the committee of the whole house either to make some amendment to the bill or some change.
This amendment is asking that the bill be referred back to the committee to add an additional clause, and in that additional clause various things are set up for the standing committee on railways, canals and telegraph lines to do. The amendment says that within one year that committee would be empowered to undertake "a study of the feasibility of expending the moneys authorized by this bill in such a way as to provide for increased economic development of, and more appropriate transportation facilities for, Gaspe peninsula".
Surely it would involve considerable expense on the part of the standing committee to undertake a study of the feasibility of expending the moneys that are being suggested for the purpose of this railway-


Erhart Regier: This is really new in Canadian parliamentary history. The expenditure by a committee is now raised as an objection.


Gordon Minto Churchill: -and it is not directed to determining the feasibility of the railway branch line itself. The amendment talks about "increased economic development", which encompasses a very wide field indeed, I suggest, and might involve general surveys of the entire land in the Gaspe peninsula. It might involve testing for mineral wealth, and things of that nature. It might involve an assessment of the forest products there and the methods of dealing with them. It would be a very large study indeed when the amendment goes as far afield as talking about the "increased economic development of, and more appropriate transportation facilities for, Gaspe peninsula".
I do not know whether that means more appropriate transportation than the proposed railway line itself. If it does, then it means surveys with regard to other means of transportation; highways, or perhaps water transportation or air transportation. The result is that this amendment, if adopted, would destroy the purpose of the bill itself, and of course it is obviously intended to be just a delaying factor. If the hon. members do not approve of the proposed railway line in the Gaspe peninsula, they should simply vote against the measure.


Herbert Wilfred Herridge: Mr. Speaker, I regret very much that I have been absent from the chamber a great deal of the time this important measure has been under discussion, but my recently enlarged duties are the cause of that. I find that delegations coming to Ottawa go to the Prime Minister's office, and the great

majority then come to see me. That has kept me out of the chamber a great deal more than in the past.


Some hon. Members:: Oh, oh.


Herbert Wilfred Herridge: However, in our group we always discuss these matters thoroughly in caucus; every measure that comes before this house is thoroughly discussed in our caucus, where we have our advisers. This measure, similar to others, was given considerable discussion in our caucus, and to be quite certain that we knew all the facts and were on sound ground we called in two economic advisers from French Canada who know the area quite well and who know the problems. We wanted to be certain that we came to a decision which, in our opinion, was best for the inhabitants of the region which the provisions of this bill would affect. I do not intend to repeat the excellent arguments which were advanced by the member for Port Arthur (Mr. Fisher). My hon. friend from Port Arthur is, our spokesman on questions of transport-


The Acting Speaker (Mr. Chown):: I am
looking for the hon. member for Kootenay West to assist me in coming to a decision as to the admissibility of this amendment and I would ask him to stay closely to that point.


Herbert Wilfred Herridge: I was under the impression that you had allowed the amendment. I shall have to rise again in order to make a few remarks and advance my argument, but, like the hon. member for Burnaby-Coquitlam I have never before in 17 years of experience in this house heard advanced as a reason for an amendment being out of order the statement that it might cause an expense on the part of a committee of this house. I think the leader of the house was on very unsound ground in making that contention.
I suggest the amendment is in order because it is a constructive alternative to the proposal now before us in the form of this bill. It has the same spirit and purpose as the bill itself but it is designed to provide a second look to see whether we can do something better than spend this $14 million as proposed in the bill.


Mr. Browne (St. John's West):: Mr. Speaker, I draw your attention to section 418 of Beau-chesne, fourth edition, at page 288 which reads as follows:
The question for the third reading is put immediately after the report from the committee of the whole. All amendments which may be moved on a second reading of a bill may be moved on the third reading with the restriction that they cannot deal with any matter which is not contained in the bill. On the second reading of a bill, an amendment may be moved expressing opinions as to any circumstances connected with its introduction or prosecution, or seeking further information in relation to the bill by committees or commissioners.
Canadian National Railways the production of papers or other evidence, or the opinion of judges. This cannot be done on the third reading because it is not directly connected with any provision of the bill.
Therefore, I suggest that such an amendment as the hon. member proposes is out of order.


The Acting Speaker (Mr. Chown):: The
Chair was in some difficulty in considering this amendment because there was a reasonable doubt as to whether the material introduced was or was not extraneous to the purpose of the bill. I am grateful to hon. members who have assisted me in arriving at a decision. I wanted to refer the house to May's 16th edition, where the paragraph at the top of page 578 reads as follows:
As the debate on the third reading should be confined to the contents of the bill, reasoned amendments which raise matters not included in the provisions of the bill are not permissible.
This is the rather fine point over which I was having some difficulty. The citation read to the house by the Solicitor General is, however, a little more mandatory in its wording. I shall quote only part of what the hon. gentleman read from Beauchesne:
On the second reading of a bill, an amendment may be moved expressing opinions as to any circumstances connected with its introduction or prosecution, or seeking further information in relation to the bill by committees or commissioners, the production of papers or other evidence, or the opinion of judges. This cannot be done on the third reading because it is not directly connected with any provision of the bill.
These are the words which satisfy me it would be difficult to admit this amendment as a proper one. Accordingly, I must rule that it is out of order.


Herbert Wilfred Herridge: This is the first time in my experience in this house that one third of my speech has been on a point of order and the remaining two-thirds on the second reading of the bill-


Some hon. Members:: Third reading.


Herbert Wilfred Herridge: Third reading. We are opposed to this bill because we think it is a completely uneconomic proposition designed to the disadvantage of the area concerned and to the disadvantage of the Canadian people as a whole.
There is an investment of $14 million proposed and we have been told, according to the evidence of the committee, that there will be a gross annual revenue of around $250,000. Surely, anybody who looks at this proposition from a sound business point of view must realize that if there is no chance of increasing this gross revenue there will be little opportunity of paying the cost on the capital or the operating costs. I understand that this is in the nature of a grant, but whether this is so

Small Loans Act
or not, this money has a certain earning power for the people of Canada, and the charges have to be met from some source. It is obvious that for many years, if not for the life of this railroad, there will be a heavy annual loss to be borne by the Canadian taxpayer in the absence of anything to counter that loss or to ensure the economic operation of this railroad in the future.
We fully appreciate the attitude of the members who have spoken in support of this bill-those hon. members who have the honour to represent the areas directly affected. We understand their anxiety to get this bill through. What we do question is their method of trying to assist the area concerned. Their method is to press for the construction of an uneconomic railroad. We support this expenditure of $14 million, but for the reasons given by the various members of this group who have spoken, led, in this case, by the hon. member for Port Arthur, we suggest an alternative proposal as was mentioned in our amendment which was ruled out of order. For these reasons this group proposed that amendment and opposes the proposal contained in the text of this measure.


Mr. Speaker:: The hon. member for Burnaby-Coquitlam rose to speak, I understand.


Erhart Regier: Yes, I rose to speak, and I intend to offer an amendment.


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


FINANCE
[Stage Direction]
On the order:
Second reading of Bill No. C-18, an act respecting the printing of negotiable instruments in the English and the French languages-Mr. Pigeon.
An hon. Member:: Stands.


Mr. Speaker:: Does this order, order No. 1, stand at the request of the government?


Gordon Minto Churchill: No.


Mr. Speaker:: Dropped.


SMALL LOANS ACT
Mr. Hazen Argue (Assiniboia) moved: the second reading of Bill No. C-19 to amend the Small Loans Act.
He said: The purpose of this bill is to set a limit of 1 per cent per month as the maximum interest rate which could be

charged by small loans companies on loans up to $1,000. The reason it is worded in this way is that the Small Loans Act at this time sets a smaller rate for loans in excess of $1,000. As long ago as 1955, Mr. Speaker, I had the honour to introduce in this house a bill which would limit the interest rates on small loans to 1 per cent per month. At that time there were very few facilities available to many people in the country who wished to obtain small loans for personal needs. The measure that I presented at that time received a good deal of support across this country. I had a great many communications at that time in support of that general proposition and I have had a great many since then.
In 1956 the government of the day brought in a government measure which was sent to the banking and commerce committee of this house and which went some distance toward reducing interest rates that could be charged by small loans companies.
Up until 1956 the maximum rate was 2 per cent per month on loans from zero to $500. Beyond that point there was no control. In 1956, the measure of that day set an interest limit of 2 per cent per month on loans from zero to $300; 1 per cent per month on loans of $300 to $1000; and one half of one per cent per month on loans from $1,000 to $1,500. This was an important step forward.
Those who spoke at that time on behalf of the small loans companies in this country said that the measure of that day would bring financial ruin to the small loans companies. They said it would mean that they would be going out of business, that they would be obliged to curtail their loans. This dire forecast has not been fulfilled. The small loans companies have continued to expand and to increase their business and their profits. However, the campaign, if I might call it that, which was started in this parliament in 1955 has been continued since then and, I would suggest, has received a more sympathetic hearing year after year.
The problem of high interest rates charged to ordinary borrowers has impressed itself on a larger and larger number of members of this house. The problem, of course, is not confined to small loans companies and loans from small loans companies only. The problem results in the tremendous or fantastic interest rates that are very often charged on second mortgages-these fantastic interest rates may go as high as 20 per cent or 25 per cent per year-and the fantastic rates that are often charged on instalment credit. In other words, the ordinary small borrower with a low income who had to borrow for personal purchases, for household purchases or in order to deal with family emergencies,

very often in the past has been a victim of the unscrupulous lender who has charged very high interest rates.
Some people have decided to attack this problem from various angles. When I first introduced this bill the then hon. member for Saskatoon, Mr. R. R. Knight, introduced another bill which, if it had been passed, would have made it necessary for small loans companies in their advertising to set forth the interest rate they would charge. An amplification of or an improvement on this idea was brought forward in the Senate last year by Senator Croll. There is before the other place at this time a bill which would provide that in any loans made by financial institutions the actual interest charged must be set forth in the contract. The hon. member for Rosthern this year in this chamber introduced a bill which is similar to the bill introduced in the other place.
These are two good bills. I hope the bill in the other place reaches a vote and I hope that it is passed. I hope the bill of the hon. member for Rosthern might reach a vote in this session and be passed. That is a hope I have, Mr. Speaker, but it is not much more than that. We all know what happens to private members' bills; and with the new arrangement-and I am not complaining about it; I think it is an improved arrangement-with a one hour debate, the chance of a bill coming to a vote, unless all of the parties wish it to do so, is indeed extremely remote. However, the fact that a member of this house and a member of the other place have decided this field was important enough to warrant their putting forward bills asking that the interest rate be set forth in contracts so that the borrower might readily understand the interest rates that must be paid is, in my opinion, a very good omen. I have had on the order paper another bill which would set a general interest ceiling across this country of one per cent per month. If such a measure were passed by this house, then of course this particular measure with its more detailed application would not be necessary.
I would suggest, Mr. Speaker, that the time has arrived once again when the whole problem of high interest rates charged by small loans companies, finance companies and moneylenders and including interest rates charged on second mortgages and on instalment credit, should be referred to the banking and commerce committee of the house. I believe that witnesses should be called, that evidence should be heard and that parliament itself should decide to deal with this very important problem in a more effective way than it has been dealt with in the past.
Small Loans Act
In recent years there have been some improvements in this general field of lending money to lower income earners and in lending money at lower interest rates. A very important institution in this country and one of growing importance is the credit union or the caisse populaire. The credit unions are serving the Canadian nation well in a very important way. The credit unions across this country are growing and are providing an excellent service. I have in my hand a publication which is entitled "Credit Unions in Canada, 1960" and which is published by the economics division, Canada Department of Agriculture. It shows that in 1960 there were 4,667 chartered credit unions in Canada with a membership of 2,544,300 and that the number has been growing at a very significant rate. In 1950, for example, there were 2,965 chartered credit unions with a membership at that time of just over one million, being 7.5 per cent of the population. By 1960 membership in the credit unions was 2,554,300, being 13.9 per cent of the Canadian population, and assets had increased from $312 million in 1950 to $1,299 million in 1960.
Credit unions provide credit to their membership at cost. They charge as a maximum rate 1 per cent per month, and they have been able to do a large and successful business. As a matter of fact, many credit unions are able to pay dividends both to persons who have invested money in the credit union and to the persons who are borrowing money from it.
The 1 per cent interest rate that I have suggested in this bill would not in any way affect the credit unions, and I think their success together with the success of the small loans companies with the new interest rates of 1956 suggest that if this bill were passed even the small loans companies would be able to continue in business and make a return.
There are a great many credit unions that charge much less than 1 per cent per month. In the province from which I come the credit unions very often charge rates of 6, 7 or 8 per cent per year depending on the type of loan. I belong to two or three credit unions.


Mr. Horner (Acadia):: Do you need that many?


Hazen Robert Argue: Oh, I find it is a little easier to borrow sometimes if you have more than one opportunity to do so.


Richard Devere Thrasher: Spread the risk.


Hazen Robert Argue: I try also to pay my accounts on time. One credit union to which I belong is the Assiniboia credit union which makes the boast of being the largest rural credit union in Canada with assets, I believe, of some $4J million. Their lending rate is 7 per

Small Loans Act
cent and loans are life insured so that if the borrower should die the loan is automatically paid up out of their life insurance fund and the estate of the deceased does not have to meet that obligation. In addition, this large and successful credit union in a town in rural Saskatchewan last year paid to the borrower a 10 per cent patronage dividend on the interest that he had paid. In other words, the net interest rate worked out to 6.3 per cent, and this for a life insured loan. I think this indicates an excellent type of lending institution from the standpoint of the small borrower in this particular community.
Credit unions have done and are doing a marvellous job in this country and I am sure that the role they play will be a greater one in the years ahead. I might say that in my experience the credit unions have received the support of the whole community in which they operate. Farmers, small business people, workers and professional people all find that it is to the general advantage of the community itself to have a place where local funds can be deposited, where they can be lent to borrowers who need those funds and where the funds generated in the community will bring about the greatest possible benefit to the community as a whole. So this is an alternative form of borrowing for many who in the past have had to go to small loans companies to get money.
Another alternative form is the chartered banks themselves which in recent years have gone into the small loans field in a very large and successful way and I am sure in a very welcome way. In 1957, for example, loans on the security of household property amounted to less than $8 million while in 1961 the total was $224 million. Other personal loans in 1957 amounted to $400 million while at the end of 1961 the total was over $800 million.
The banks have promoted the small loans field in recent years. Their branches in the cities and towns are being established in the suburban areas and the shopping centres where they are available to meet to a substantial degree the borrowing needs of citizens within the area. This is another method of attacking this very important problem. I am proud of the accomplishments of the past in reducing the cost of small loans to borrowers. I am very pleased with the growing use of credit unions and with the development of the personal loans divisions within the chartered banks.
There are further problems at this time with respect to high interest rates in the second mortgage field and on much instalment credit. This is a great problem. It is receiving more sympathetic consideration from members in all parts of the house. I should like to see

this measure passed. As an alternative I should like to see it sent to the banking and commerce committee so that a further study of the general problem might be made and such bills as those presented in the other place and that of the hon. member for Rosthern (Mr. Nasserden) in conjunction with this one might be studied to the end that the credit needs of ordinary Canadians might be supplied at the lowest possible interest rate.


Mr. R. S. MacLellan (Inverness-Richmond):: Mr. Speaker, Bill No. C-19 which is before us this afternoon proposes an amendment to the Small Loans Act. As has been set forth, the situation at the present time is that under the Small Loans Act a charge of 2 per cent per month may be levied on all loans or balances of loans under $300. Interest of 1 per cent per month may be charged on loans exceeding $300 and up to $1,000 and, in the third category, a charge of one half of one per cent per month on loans over $1,000. The bill would place a ceiling of 1 per cent per month on all loans up to $1,000 and then one half of one per cent on loans over $1,000.
I must say, Mr. Speaker, that I have noted considerable interest among members of the house in the matter of small loans financing and instalment buying in general. There are now some three bills on the order paper which are concerned with this matter, and I think one of the best is that introduced by the member for Rosthern, Bill No. C-6, which would require the cost of servicing these loans to be shown as a percentage of principal. I am sorry I was unable to be present in the house when this bill came up for debate but I had to be in my riding at the time. If I had been here I would have supported the member for Rosthern in what I believe to be a very worthy objective.
I have also noted a very wide interest throughout the country in this matter of consumer financing, and interest rates on small loans. I believe other members of the house have the same experience as I, that they are receiving many letters from day to day on this topic urging that some inquiry be made into the situation. Certainly the problem of consumer financing today, grown as it has to become a giant in the financial world in the nation, is one that concerns everyone.
Only a few years ago the chief lender in the nation was the bank, even for the purpose of a small loan. Now the situation is much more complicated with many borrowers going to small loan companies. Much credit is put out by acceptance corporations which underwrite quite a bit of the merchandising of the nation. I have felt that as this business has grown there has grown with it the need for some form of protection for the consumer of credit similar to the protection that is set

up for the consumers of general merchandise to protect people from fraudulent types of credit just as they are protected from fraudulent merchandising.
I remember not long ago trying a court case at home in which a man had signed an instalment contract in blank to purchase a car. Later, the car was repossessed and an action was brought against him to recover the balance owing on the vehicle after the car had been sold. He came into court to say that he had no idea at all that the finance charges would be as much as they were; that this was a different deal from the one to which he had agreed with the car dealer. The judge felt that the deal seemed to be pretty close to what the dealer represented it to be and he required the defendant in the case to stand by his contract, although he had signed it in blank. The buyer had put his signature on this instalment contract, it had been endorsed for value, and he was therefore, held liable for it. I merely state this to show how often people are deceived into signing documents of this type, and how lightly some enter upon a transaction which could be quite important. Many people who will shop widely for good prices on merchandise will slip very quickly into a proposition that requires them to pay a large amount for carrying charges on the products they buy.
As I have said, I see considerable interest in the country in this problem. Just the other day I had a note from a friend of mine who came originally from Cape Breton but who is now living in Ottawa and is interested in social work. He sent me a clipping from the Western Producer about the bill introduced by the hon. member for Rosthern and suggested I support that bill. In his letter which he attached to the clipping, he simply said, "Bob, is there any way a private member like yourself can help this proposal?" Well, I think that indicates two things: One is the amount of interest of a lot of people in this sort of thing and, second, how very few people realize how much impact the opinion of a private member in the house has upon the government in matters of this kind.
As hon. members are aware, we now have a royal commission on this subject which will be conducting hearings all across Canada in the months to come. I refer to the royal commission on banking and finance in Canada, the appointment of the members of which was announced by the Prime Minister on October 18. It is under the chairmanship of the distinguished Mr. Dana H. Porter, chief justice of Ontario. The other commissioners are, Mr. W. Thomas Brown, of Vancouver, British Columbia; Mr. James Douglas Gibson, of Toronto; Mr. Gordon L. Harrold of Calgary; Mr. Paul H. Leman, Montreal; Dr. W.
Small Loans Act
A. Mackintosh, Kingston; and Mr. John C. MacKeen, a well known businessman from my own province of Nova Scotia. All of these men have excellent qualifications for this work which is before them. The commission is now active; the secretariat has been set up and, as I said, hearings will commence across the nation very soon.
The terms of reference of the royal commission are very broad. They will be considering matters of the kind proposed in this bill today as well as matters of the type proposed in the bill introduced by the hon. member for Rosthern. I think this is an example of how quickly the government acts in matters of this kind, where private members have advocated measures which would deal with consumer financing and have suggested that an inquiry should be made. As hon. members will recall, when bills similar to this were before the house before, most members were inclined to be cautious about having such bills passed. However, many did suggest that an inquiry should be made into the whole field of consumer financing. As a result the government has launched this commission, and it surprises me how few people in the nation seem to know that the inquiry is going ahead. Indeed, the hon. member for Assiniboia suggested that a special committee should be set up to inquire into consumer financing and interest rates. I wonder if he realizes that these matters will be gone into by the royal commission?


Hazen Robert Argue: I have more faith in us than in a royal commission.


Robert Simpson MacLellan: I would say the best way to examine this question and make the detailed inquiry necessary would be by means of a royal commission. They have the staff, they have the facilities and the time to go into this matter very fully, to a much greater extent than we could here in a committee. However, Mr. Speaker, I should like to put on the record the statement of the Minister of Finance when he announced in the commons on June 20, 1961, that this royal commission would be set up later. Speaking of the terms of reference of the commission at that time, as reported on page 6648 of Hansard for June 20, 1961, he said:
Meanwhile, I say that the terms of reference will be broad, covering all aspects of money, banking, credit and finance. The financing of the Canadian economy will be one of the major areas of study. Such broad topics as the pattern and behaviour of interest rates, consumer credit and instalment financing, and the management of the public debt, will be included in the terms of reference. The commission will be asked to study existing financial institutions, such as the chartered banks, the Bank of Canada, and other institutions that perform banking and credit functions, and the various acts of parliament which govern their activities.

Small Loans Act
The commission will also be asked to consider ways and means of encouraging the development of savings institutions. It would be our intention that the report of the commission should be available well in advance of the decennial review of the Bank Act.
I put that on the record to show that this royal commission will be going into matters covered by this bill today. I would suggest to the house that this bill should not be passed until we have had an opportunity to see the report of the royal commission following their exhaustive inquiry.
I am very pleased to see this inquiry taking place. As I have stated on previous occasions in this house, this is a very complicated issue and one which needs to be examined, certainly one which should have a very careful and exhaustive examination before precipitate action is taken. It is very easy to say that 12 per cent should be enough interest for anyone to earn on a loan and indeed, of course, at first blush it is. However, there are many situations, as all hon. members are aware, in which high risk credit is required and this rate may not be high enough to make the loan attractive to the lender. Rates depend on many factors which are always fluctuating. I doubt very much if it would be in the interest of the nation to limit the rate of interest as this bill suggests, without first of all looking fully into all the aspects of the case. Of course, I am in accord with the general principle of the bill.
The rates that are charged at any given time in any sector of the economy will depend upon the money supply at the time, the demands for loans of the type in question and the risk which is involved, as well, of course, as the cost of administering the loan. Everyone will realize that 6 per cent on a $10,000 mortgage loan can be obtained with very much less administration cost than on the same $10,000 advanced in 100 small loans. The administration needed for each of these 100 loans could be even greater than on a mortgage loan of $10,000 which had real estate security behind it. It has been pointed out that credit unions get by with a rate of 1 per cent per month. It has been my experience, working closely with credit unions, that there are many types of loans which a credit union must decline because it wants to keep the interest rates down. They normally require the endorsement of someone having funds on deposit in the credit union, or some other type of endorsement that will more or less guarantee the loan. Many loan companies and instalment companies lend money only on the value of goods, and their security is not nearly as strong in the case of default as the endorsement of a guarantor.
[Mr. MacLellan.j
However there can be no question but that the whole subject of consumer financing is very important and has very widespread economic and social effects. Indeed one is often surprised at the lack of knowledge shown by many people as to what they actually pay for money and what interest costs on many of these instalment transactions. Some time ago I was reading a book which I know is familiar to many hon. members. It is entitled "The Organization Man" by William H. Whyte, Jr. The book deals generally with the development of the new white-collar group in the United States, the young executive people who are climbing the ladder in industry and business, and it surveyed generally the life of the new suburbia which has grown up in the last 20 years.
The book is very interesting, particularly chapter 24, where the author writes of the results of surveys made into the buying and saving habits of these young executives in the suburbs of the larger cities. I think it would be well to bear in mind that the people of whom he speaks are not uneducated people. Most of them have college education or are graduates of high schools. If anyone should understand the mysteries of instalment buying and the cost of credit, and should be able to apply that knowledge, surely these people would be the ones. But this is what Mr. Whyte says as a result of the surveys he has conducted in many of the big subdivisions in the United States. I am quoting from page 326:
For a future capitalist, the organization man displays a remarkable inability to manipulate capital. His handling of "debt consolidation" is a case in point. The growing popularity of loans for this purpose conjures up a picture of chastened citizens tightening their belts and cannily reducing total interest charges. The picture is quite misleading. It is true enough, of course, that in taking out one large loan from a bank a person can cut down the interest he has been paying on a variety of purchases from 25 to 30 per cent to a low of 12 or 18 per cent. But this is not the reason most purchasers take out the loan. In actual practice their consolidating is a sort of check-kiting operation by which they can square themselves away for yet another round of commitments. When these are halfway digested, they will be back again. And again.
They pay dearly for the convenience. Consider, for example, a possible alternative. A mythical couple we will call the Frugals decide to defer all but necessary purchases for enough months to accumulate an extra $500. They will then have a revolving fund of their own which they can use for cash purchases, and instead of paying out a fixed amount each month in instalment loans, they will use these sums to replenish the $500.
Now let's take a normal couple. The Joneses, with precisely the same income, don't put off purchases but instead commit themselves to a combination of instalment loans and revolving-credit plans. At the end of ten years the Joneses would have paid out somewhere around $800 in interest. The Frugals, by contrast would have earned interest -roughly $150. Not counting the extra benefits

they would have reaped by being able to buy for cash, they would be, in toto, almost a thousand dollars better off.
The Frugals, to repeat, are somewhat mythical. Most suburbanites fail to accumulate capital to produce capital, and they fail to manipulate what capital they do have. It rarely occurs to them, for example, to use their savings as collateral in taking out a loan. Were they to do this they could frequently get an actual rate as low as 41 to 41 per cent instead of the usual 10 to 12 per cent- and their savings would still earn them the regular rate of interest.
Again I say the author is speaking of people who are well trained and educated under a formal educational system which is comparable and parallel to our own.
I am very pleased to see that the royal commission is examining this very important matter. I think what is needed in this field is first of all to have forms of finance contracts, perhaps set by statute, which will clearly set forth the cost and legal effects of merchandising under this system. So far as these forms go, I think the fine print on the back should be summarized on the front in block type so that a man who signs one will know what he is signing. For example the form should tell him that the dealer is lending him the merchandise until it is paid for. He should know that if he defaults he is still liable for the price of the goods, even if they are repossessed. It should tell him that if the goods are sold and they do not bring in an amount sufficient to cover the balance of principal and interest then he can be sued in court for the difference. Also I think it should be clearly stated on the face of the form what is the total cost of finance and other charges, shown both as a sum of money and as a percentage of the principal involved.
There are some who will say that this is a free enterprise country and that we should be very careful with the ways in which we interfere with the flow of credit, particularly as much of the manufacturing industry depends on this type of instalment purchasing. I agree with that, but it is my suggestion that free choice depends upon one having a knowledge, of the facts and factors involved, so that a rational choice can be made.
I would like to see my children and all other children across the land taught in schools about this type of financing because they will be meeting it a few years after they leave school. No boy or girl should leave grade 8 without understanding that the retailer in many ways is a financier, and of what problems the consumer can get into unless he knows something about modern day merchandise financing procedures.
Mention was made today of the work done by credit unions and figures were put on the record to show their growth from 1950 to
Small Loans Act
1960. The credit union movement has given a great service to the nation in terms of funds made available to the people, particularly in rural areas, who otherwise would not have this credit obtainable to them. However, I feel one of the greatest contributions which the credit union movement has made has been in the field of education. These organizations have been formed all across the land to bring people together to study matters such as the cost of interest, and the power of savings, and also to show them how with proper handling of their finances so much more can be obtained from a dollar bill. This work of the credit union movement has done a lot of good in the nation. The credit union movement has also pioneered a movement to have some controls set up over consumer financing. This I believe is all to the good.
I would like to conclude by saying again that I am very pleased to see a royal commission on banking and finance set up, which will be inquiring into this problem. This is another example to illustrate that the Minister of Finance and the Prime Minister listen to what is said by hon. members in this house. I am proud to be one of those who have raised their voices since 1958 for an inquiry into this matter of consumer financing and interest rates.


Mr. Nicholas Mandziuk (Marquette):: Any
measure introduced in either of the two houses of parliament which tends to reduce interest rates receives pretty favourable reaction in the country, and is of interest to the people. I believe this bill will receive the same consideration. I am in favour of most of its provisions. It attempts to reduce the interest rates of loans made by the small loan companies. I know that no tears will be shed by our banks, which offer a similar service, if this bill is passed. I am fully aware of the fact that our credit unions would not be hurt; as a matter of fact they would be in favour of this bill going through.
However I realize that the people most concerned, the small loans companies, would raise a hue and cry, as they have in the past, and would say that if interest rates on small loans were reduced from 24 per cent to 12 per cent it would put them out of business.
Previous speakers on this bill have proved -and I intend to add something to that proof -that the banks are doing very well at a set rate of interest. Our credit unions are doing very well too, in spite of the fact that they give more protection and more service than even the banks, and at a lower rate of interest. If we accept the amendment incorporated in this bill and it means


John (Jack) Henry Horner: Mr. Speaker, in rising to speak on Bill No. C-19 I first look back to previous debates when this bill was first introduced and when the interest rate was first set at 2 per cent per month on small loans. Actually it has been in effect since 1939 on loans under $500, and from 1956 on this 2 per cent per month interest rate was allowed on loans under $300.
While I support the idea and the theme behind the bill which is before us, there are several questions that come to my mind with regard to the application of the bill. Will the bill accomplish what the mover is trying to accomplish? Why has he arrived at an interest rate of 12 per cent a year, or 1 per cent a month? This is an old question that has been raised in previous debates but never really answered by the mover of this bill. He has introduced the bill several times but he has never really answered this question; therefore it remains to be answered for anyone questioning the feasibility of the bill.
The other question that I wonder about is this: what is the number of loans made every year which this bill will affect; in other words, how big or how small is the scope of this particular bill? How much money is involved, and what percentage is the money involved compared to all loans made under the Small Loans Act? This bill only sets out to reduce the interest rate on the amount of money on a loan of less than $300 so it is actually a proposal involving only a small amount. It does not cover some of the questions which have bothered me with regard to lending money in recent years; these are mainly connected with credit buying. Actually this bill does not affect loans concerning the sale of goods. In other words, T. Eaton and all the

large chain stores can continue to charge their own interest rates or debit accounts with fixed charges with regard to collection and so on. So I ask: would this bill accomplish the things I would like to see accomplished for the small people who buy goods on time?
I know that in my own home area we are not served by large chain stores to any great extent. Perhaps for this reason I do not usually take advantage of charge accounts, but since coming to Ottawa I have had occasion to make purchases in some of the large stores here, and whenever I have presented cash the clerks seemed slightly annoyed. They seemed to be thinking: why bother with this stuff-put it on the account. I wondered why they wanted me to run up a charge account, and the only conclusion I could reach was that they wanted to make money on my money; in other words they wanted to make more money on my purchases. So far they have not been too successful.


William Moore Benidickson: Bankers instead of merchants.


John (Jack) Henry Horner: As the hon. member for Kenora-Rainy River says, bankers instead of merchants. That, in a sense, is true. But with regard to the amount of money concerned in this measure, we should ask ourselves: are the interest rates too high? Are loan companies making profits that are beyond reason or exorbitant? I do not support the hon. member for Assiniboia in the attitude he has taken in the past with regard to profits. I think people and companies should be allowed to make profits. In this case we must ask ourselves whether the profits are unreasonable. The mover of this bill has not yet produced any evidence which, in my opinion, suggests that the profits are out of line. I have gone back through previous reports and I notice that in 1946 the government of the day introduced an amendment to this act to reduce the interest rate from 2 per cent to 1J per cent. This amendment was referred to the banking and commerce committee following second reading and I imagine it was given exhaustive study by that committee, though I have not had time to look up the records. In any case, the bill was not reported back to the house. Even in that year, 1946, it was stated that the companies were not charging the maximum allowable rate of interest but that they were only charging 1J per cent. However, the measure was not reported back to the house, so I am still in doubt as to whether this figure of 12 per cent
Business of the House or 1 per cent per month which the hon. member has put forward is appropriate or just in the light of all the circumstances.
I certainly support the contention that people taking advantage of small loans should be able to get them at a reasonable rate. I also recognize that when a small sum is borrowed the fixed charges may be as much as they would be on a larger loan and that therefore it is reasonable to expect that the percentage charged would be slightly higher in the case of a small loan than in the case of a larger one.
Today more than ever before we are living in a credit economy. Credit is a very important thing. In fact, I think it the most important thing. I believe that all young people going out into the world should take their credit very seriously. Actually, this bill can only affect those companies which are licensed and which have a federal charter. Loan companies or finance companies with provincial charters can operate within a province and charge any rates they like on loans above $1,500. This is a point which I should like to see covered; I think it would be more beneficial to the borrowers than the particular piece of legislation we have before us because there are a large number of people who borrow sums larger than $1,500. Many people borrow money from finance companies to purchase automobiles and other goods which are necessary in the modern world.


Mr. Speaker:: Order. Would the hon. member permit me to draw his attention to the clock?



BUSINESS OF THE HOUSE

Gordon Minto Churchill: The business for Monday will be third reading of the bill relating to the proposed railway line in the Gaspe peninsula followed by supplementary estimates. If these are disposed of we have other legislative items available.


William Moore Benidickson: Can the minister not indicate what those legislative items may be on Monday or Tuesday?


Gordon Minto Churchill: I must leave it open to see what progress we make with the supplementary estimates which have become urgent. We could go ahead with the resolution standing in my name dealing with amendments to the Veterans Land Act.


[Stage Direction]
At six o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Monday, March 12, 1962