1962-10-23

Right Hon. J. G. Diefenbaker (Prime Minister):: Mr. Speaker, with further reference to the question that was dealt with last evening, there is not a great deal I can add to the statement I made at that time. As yet there have been no confrontations at sea and no counter moves elsewhere in the world, although I would not want my words to be taken as in any way minimizing the seriousness of the situation.
All shades of political opinion in this house have welcomed the decision of the United States to take the matter to the security council of the United Nations. A meeting of the security council is scheduled for this afternoon, I believe at four o'clock, having been postponed this morning to permit the Cuban foreign minister to be present during the deliberations.
At that meeting the United States will call for an end to the action which the Soviet union has taken to convert Cuba into a base for nuclear missiles and other offensive weapons which threaten the security of the western hemisphere. As the Soviet union is a permanent member of the security council there is every likelihood that the resolution which the United States will be introducing will be vetoed. The issue will then likely be carried to the floor of the general assembly.
In connection with the suggestion I made last evening that a group of nations might be given the opportunity of making an onsite inspection in Cuba, lest there be any doubt about my meaning in that connection, I was not, of course, casting any doubts on the facts of the situation as outlined by the President of the United States in his television address. The government had been informed of and it believes that there is ample evidence that bases and equipment for the launching of offensive weapons have been constructed in Cuba and exist in sufficient quantities to threaten the security of this hemisphere.
The purpose I had in mind in suggesting a United Nations on-site inspection was to be ready to put in motion steps which could be taken in the United Nations general assembly in the event of a Soviet veto, or if the Soviet
union denies the existence in Cuba of offensive ballistic missile bases. The suggestion I made was not intended to compete with any proposal of the United States that might be placed before the assembly, but rather to supplement it by providing a way in which the United Nations could begin the heavy task of exercising its primary responsibility in respect of the maintenance of international peace and security. Further moves if any will have to depend on the way the situation develops.

On the orders of the day:


Hon. L. B. Pearson (Leader of the Opposition):: Mr. Speaker, may I ask the Prime Minister whether the government has been asked by the United States for its co-operation and assistance in the plans announced for the quarantine of Cuba and, if so, what was the nature of that request.


John George Diefenbaker: Mr. Speaker, I take it that what the hon. gentleman has in mind is the shipping control that is to be put into effect. There has been no request from the United States government for Canadian co-operation in this connection.


Mr. David Lewis (York South):: Mr. Speaker, may I follow up that question to the Prime Minister and ask whether the government has been informed of any official reaction on the part of the Soviet union to the quarantine of shipping by the United States and, if so, what that official reaction has been.


Hon. Howard C. Green (Secretary of State for External Affairs):: No, Mr. Speaker.


Mr. H. W. Herridge (Kootenay West):: May I
ask a supplementary question of the Secretary of State for External Affairs. Was the government of Canada consulted or informed prior to President Kennedy's statement?


John George Diefenbaker: Mr. Speaker, the government of Canada was informed.


Hon. Paul Hellyer (Trinity):: I should like to direct a question to the Minister of National Defence. With respect to the crisis which has developed, have any direct steps been taken by the Canadian government, other than the withdrawing of landing and transit facilities

Crisis in Cuba
for Soviet aircraft? For example, have Canadian units assigned to NORAD been alerted, and have any special orders been transmitted to naval units in the north Atlantic?


Hon. D. S. Harkness (Minister of National Defence):: Mr. Speaker, by and large the answer to that question is no. Naturally we have been reviewing plans to meet all possible contingencies.


Hon. Paul Martin (Essex East):: May I ask
the Secretary of State for External Affairs whether he feels he should say anything at this time about our diplomatic representation in Cuba; and in view of the statement by the Prime Minister with regard to the likely outcome of the security council proceedings, may I ask the minister if it is his intention to proceed shortly to the United Nations?


Howard Charles Green: Mr. Speaker, I shall not hesitate to go to New York as soon as it appears that I can be of some help there. There has been no change made with regard to Canada's representation in Cuba.


Mr. R. N. Thompson (Red Deer):: Mr. Speaker, I should like to direct a question to the minister of external affairs. Since the election of the leader of the New Democratic party to the House of Commons, has the minister of external affairs received any communication from Mr. Douglas in regard to the present international scene centreing on Cuba?


Howard Charles Green: No, Mr. Speaker.


Mr. J. A. Byrne (Koolenay East):: I should like to direct a question to the Prime Minister. Will the Prime Minister, in a statement to the house, dissociate the government, this house and the people of Canada from the suggestion by a C.B.C. commentator last evening that President Kennedy's momentous decision regarding the Cuban arms build-up announced yesterday was motivated by domestic political considerations?


Mr. Speaker:: Order. The hon. member is now asking a minister of the crown to comment on a statement of this or that individual not within the administrative responsibility of any minister of the crown. The question is therefore quite out of order.


James Allen (Jim) Byrne: May I ask the Prime Minister if he will comment on this suggestion?


Some hon. Members:: No.


Mr. A. B. Patterson (Fraser Valley):: should like to ask the Minister of Labour if he has received any communication from the leadership or the executive of any labour union organization regarding the international crisis centreing on Cuba?


Hon. Michael Starr (Minister of Labour):: Mr. Speaker, no such communication has been brought to my attention.



COMBINES


Hon. Donald M. Fleming (Minister of Justice):: Mr. Speaker, I should like, in view of the interest expressed by hon. members in the subject, to announce the steps which the government proposes to take in order that the drug inquiry being carried on by the restrictive trade practices commission may be completed as quickly as possible.
As hon. members know, the tenure of office of the chairman and members of the commission is prescribed by the Combines Investigation Act to be for a period of ten years. There is no power to appoint any member of the commission for any shorter period, nor is there any power to extend the term of any existing member of the commission for any shorter period than ten years. The terms of office of the chairman, Mr. C. Rhodes Smith and one member, Mr. A. S. Whiteley, will expire on the 31st day of this month.
None of the matters before the existing commission have reached the stage where they cannot be directly turned over to a new commission, except the drug inquiry. The commission has held a series of public hearings across Canada, has now completed the taking of the evidence and the hearing of argument and is currently engaged in drafting the report, but it will not be possible to have this report completed by the end of this month as had been originally hoped.
It would be most inconvenient and would undoubtedly result in delays if this report were left to be completed by a new commission. In order to enable the retiring members of the commission to complete the report, it is proposed to appoint them as special assistants under the provisions of section 24 of the Combines Investigation Act. Under the statute the remaining member of the commission is authorized to exercise and perform all the duties and functions of the commission under the act, and he would do so. The two retiring members will be appointed as special assistants and will participate in the preparation of the report just as if they had continued as members of the commission. However, the final report may be signed on behalf of the commission only by the remaining member then in office, but it will include appropriate reference to the participation and concurrence of the two retiring members in the making of the report. It is expected

that this course will bring the drug inquiry to a conclusion in the most expeditious manner.
I may add, Mr. Speaker, that, as I am sure the house will realize, this will necessitate the government not filling these two vacancies until after the report has been signed, in the way I have indicated, by the remaining member. This arrangement will enable the three gentlemen concerned to devote their entire time to the completion of this report, to this one task, and it is hoped that by devoting their time exclusively to this report they may be able to complete the report by approximately December 31.


Paul Joseph James Martin: Mr. Speaker, the announcement which the Minister of Justice has just made, belated as it is, I am sure will be welcomed by every hon. member of this house. Questions have been asked by several hon. members, notably the hon. members for High Park (Mr. Cameron), Park-dale (Mr. Haidasz) and Rosedale (Mr. Macdonald), about the desirability of finding some method by which the services of these two retiring commissioners might be utilized to complete the very important report following the investigation that was made into the drug industry in this country.
The announcement made by the minister is welcomed, because he will recall that he did not see any way of providing the solution which he has now announced, although it was suggested to him in this house during the last few days that the procedure used in the reappointment of retiring members of the tariff board might well be employed in this instance.


Donald Methuen Fleming: A different statute.


Paul Joseph James Martin: The minister says it is a different statute. Of course it is a different statute, but where there is a will there is a way. In this instance, until this moment we ran the risk of having the valuable investigation made into the state of the drug industry go without avail. There was a long hearing in which the three commissioners participated, and if they had retired there would not have been a report unless the minister had resorted to the unusual procedure of having the new appointees pass judgment on evidence taken during proceedings with respect to which they were not functus officio. However, the minister has now corrected the situation by acting under section 24 of the Combines Investigation Act, though it is regrettable that these appointments were
Public Service
not made at the time, particularly when it was suggested by members of the official opposition.


Mr. Frank Howard (Skeena):: In commenting on the statement made by the Minister of Justice, let me say at the outset that we regret that the services of Mr. Whiteley in this field of restrictive trade practices are to be lost, probably permanently, to Canada.
We think that though the course taken is perhaps not the correct one, in view of all the circumstances it is good enough to promote and hasten the conclusion of this important inquiry which has now been some five years in progress, first by the director of research and investigation and latterly by the commission itself. In the light of the long period of time involved, perhaps these circumstances will be the force which will make the government review the whole procedure relating to such inquiries, and thus speed up any others which may come along. It is obvious that the only reason prompting the minister to make the statement he has made at this time, at the end of this month, is the continuous representation, by way of questions and otherwise, which has been forthcoming from members of this party with regard to this inquiry.



PUBLIC SERVICE


Howard Charles Green: I have an announcement to make as well. Mr. Whiteley has been appointed Canadian consul general at Seattle. I expect he will be taking over as of January 1.


Hon. Paul  Marlin@Essex East: It remains simply for me to observe with regard to this announcement that once again the Minister of Justice has been saved from embarrassment by one of his colleagues.


Donald Methuen Fleming: May I offer a correction. I am saved from embarrassment always by the hon. member for Essex East with his tomfoolery.


Mr. Speaker:: The announcement having been made and commented upon fully, I think
we shall give some other minister who may have something to say on motions the opportunity to say it.


Frank Howard: I should like to make one further comment, and point out that this particular position which Mr. Whiteley is to hold does not involve the combines investigation field.

Inquiries of the Ministry BUSINESS OF THE HOUSE



QUESTION ON ORDER PAPER MADE ORDER FOR RETURN

[Stage Direction]
On the orders of the day:
Hon. J. A. MacLean (Minister of Fisheries):: On a question of privilege, yesterday, in reply to written question No. 342 I tabled an answer which is correct as far as my department is concerned.
But as the question was not limited to my department, and therefore the answer might be misleading, I would ask if I might have unanimous consent to have this question made an order for return.


Mr. Speaker:: Is it agreed?


Some hon. Members:: Agreed.



CONGRATULATIONS TO NEW DEMOCRATIC PARTY ON ELECTION OF LEADER

[Stage Direction]
On the orders of the day:
Robert Norman Thompson: Mr. Speaker, I rise on a question of privilege. I should like to take this opportunity of extending our congratulations to the hon. member for Kootenay West and the members of his party on the election of their leader to this House of Commons.


David Lewis: Flattery will get you nowhere. VETERANS AFFAIRS



FORT WILLIAM, ONT.  INQUIRY AS TO USE OF NON-VETERAN SOLICITORS

[Stage Direction]
On the orders of the day:
Mr. Hubert Badanai (Fort William):: Mr. Speaker, I wish to direct a question to the Minister of Veterans Affairs, notice of intention to ask the question having been sent to the minister. Has the minister received a communication from the Royal Canadian Legion branch No. 6 of Fort William protesting against the practice of the director of the Veterans Land Act in using non-veteran solicitors in the lakehead area? If so, will the minister inform the house-


Mr. Speaker:: Order. I think the hon. member is advancing an argument here, or getting into an argument. I think if he recasts his question it would be far better on the order paper.


Hubert Badanai: I wish to direct a question to the Minister of Veterans Affairs. Is the minister aware that the director of the Veterans Land Act has been using a non-veteran solicitor in the lakehead area?
[Mr. Howard.)


Mr. Speaker:: Order. The hon. member is now trying to advance an argument or to proffer some information to the minister and to the house and the question is quite out of order.


Hubert Badanai: I rise on a point of order, Mr. Speaker. I am asking the minister-and I think I am right-whether he is aware that a non-veteran solicitor is being used in the lakehead area. That is all I wish to know.


Mr. Speaker:: It is still not a question for the orders of the day.



AIRPORTS


[Stage Direction]
On the orders of the day:
Hon. Leon Balcer (Minister of Transport):: Mr. Speaker, on Friday last the hon. member for Grand Falls-White Bay-Labrador inquired about catering service at Gander.
The restaurant service in the terminal building at Gander has been operating under commercial contract to my department. In view of increasing losses on this operation, plans were initiated to convert the operation to a self-service cafeteria in order to reduce the losses. It is understood that this action will involve some staff adjustment on the part of the contractor.


Mr. C. R. Granger (Grand Falls-While Bay-Labrador):: If I may be permitted to do so, Mr. Speaker, I should like to ask a supplementary question. I would ask the minister if he would reconsider that decision in view of the representations which are being made.


Léon Balcer: Mr. Speaker, this decision has been reached at the request of the concessionaire as well as the department. It was agreed on by both parties.
(Translation):



REPORTS OF BANK OF CANADA


[Stage Direction]
On the orders of the day:
Mr. Albert Bechard (Bonavenlure):: Mr. Speaker, may I direct a question to the Minister of Finance? I am preparing a submission in connection with the present debate, and I need to consult the monthly reports of the Bank of Canada. Could the minister tell me if these reports are published in French; if so, where could I find a copy?
(Text):


Hon. George C. Nowlan (Minister of Finance):: The hon. member will find it in the library.

(Translation):



REQUEST FOR FRENCH EDITION OF GOVERNMENT TELEPHONE DIRECTORY

[Stage Direction]
On the orders of the day:
Mr. Gilles Gregoire (Lapointe):: Mr. Speaker, I have here the Government of Canada Telephone Directory. May I ask the Prime Minister if he intends to have it translated into French?
(Text):



INQUIRY OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: Mr. Speaker, this is my first question to the Secretary of State. Has the Secretary of State received from Dr. Comfort a report with respect to the Chrysler paintings that would bring some comfort to the hon. member for Niagara Falls (Miss LaMarsh)?



WAYS AND MEANS

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

[Stage Direction]
Resolved,-that it is expedient to introduce a measure to amend the Income Tax Act to provide among other things:
1.	That for the 1962 and subsequent taxation years the amount deductible in computing taxable income in respect of a child qualified for family allowance be increased to $300 and the amount deductible in respect of other dependants be increased to $550 each.
2.	That with respect to income earned after March 31, 1962 a corporation whose principal business is manufacturing or processing (not including a corporation whose principal business is shipbuilding, mining, logging or the operation of oil or gas wells) be allowed to deduct from its tax otherwise payable an amount equal to 50 per cent of the tax on the first $50,000, of its taxable income attributable to increased sales and an amount equal to 25 per cent of the tax on the remainder of its taxable income so attributable.
3.	That with respect to its first taxation year ending after April 10, 1962 and the next succeeding four taxation years a corporation be permitted to deduct in computing income 150 per cent of the amount by which expenditures of a current and capital nature on scientific research in Canada incurred by it in the year exceed expenditures of a current and capital nature on scientific research in Canada incurred by it in its last taxation year ending on or before April 10, 1962.
4.	That for the 1962 to 1966 taxation years both inclusive the deduction from tax allowed to corporations in respect of taxable income earned in a province be increased from 9 per cent to 10 per cent in a prescribed province in which arrangements exist for the replacement of federal grants to universities by additional provincial grants in accordance with the proposed amendments to the Federal-Provincial Fiscal Arrangements Act.
5.	That with respect to taxation years commencing in 1962 a taxpayer be allowed a deduction from tax of an amount equal to the lesser of two thirds of the amount payable for the year to a province as a tax on income from logging operations or § of 10 per cent of the taxpayer's income from logging operations in the province, and the right to
Income Tax Act
deduct in computing income amounts paid to a province as tax on income from logging operations be repealed.
6.	That with respect to expenses incurred after April 10, 1962 any corporation be allowed to deduct in computing income the drilling and exploration expenses, including all general geological and geophysical expenses, incurred by it on or in respect of exploring or drilling for petroleum or natural gas in Canada and the prospecting, exploration and development expenses incurred by it in searching for minerals in Canada not exceeding its income for the year from oil or gas wells in Canada.
7.	That with respect to expenses incurred after April 10, 1962 an individual be allowed to deduct in computing income the drilling and exploration expenses, including all general geological and geophysical expenses, incurred by him on or in respect of exploring or drilling for petroleum or natural gas in Canada not exceeding his income for the year from oil or gas wells in Canada.
8.	That with respect to acquisitions after April 10, 1962 amounts paid by
(a)	a corporation whose principal business is production, refining or marketing of petroleum, petroleum products or natural gas, or exploring or drilling for petroleum or natural gas, or mining or exploring for minerals,
(b)	an association, partnership or syndicate formed for the purpose of exploring or drilling for petroleum or natural gas,
(c)	a corporation (other than a corporation that qualifies under (a)), or
(d)	an individual for a right, licence or privilege to explore for, drill or take petroleum or natural gas in Canada shall be classed as drilling or exploration expenses for purposes of computing deductions from income.
9.	That with respect to sales of property acquired after April 10, 1962 there shall be included in the income of a taxpayer any amount received as consideration for the disposition of a right, licence or privilege to explore for, drill for or take petroleum or natural gas except where the right, licence or privilege was acquired by inheritance or bequest.
10.	That the right of a successor corporation to deduct drilling, exploration, prospecting and development expenses incurred by a predecessor corporation from the income of the successor corporation attributable to the production of petroleum or natural gas from wells, or the production of minerals from mines, situated on property acquired from the predecessor corporation shall not be lost by reason of the fact that the successor corporation assumed liabilities of the predecessor corporation.
11.	That a joint exploration corporation may renounce an appropriate share of the drilling, exploration, prospecting and development expenses incurred by it after 1956 in searching for oil, gas or minerals in Canada in favour of a shareholder corporation whose principal business is
(a)	production, refining or marketing of petroleum, petroleum products or natural gas, or exploring or drilling for petroleum or natural gas,
(b)	mining or exploring for minerals,
(c)	processing mineral ores for the purpose of recovering metals therefrom,
(d)	a combination of
(i)	processing mineral ores for the purpose of recovering metals therefrom, and
(ii)	processing metals recovered from the ores so processed, or
(e)	fabricating metals,
and in such case the expenses renounced shall be deductible by the shareholder corporation and not by the joint exploration corporation.
12.	That the right of a successor corporation to deduct drilling, exploration, prospecting and development expenses incurred by a predecessor corporation from the income of the successor corporation attributable to the production of petroleum or
[Stage Direction]
Income Tax Act
natural gas from wells, or the production of minerals from mines, situated on property acquired from the predecessor corporation be extended to a second successor corporation which has acquired the property from a predecessor corporation which was itself a successor corporation.
13.	That for the 1962 and subsequent taxation years income earned in Canada by a non-resident corporation whose principal business is mining iron ore in Canada, be exempt from the additional 15 per cent tax imposed by Part IIIA on profits earned in Canada by non-resident corporations.
14.	That where an employee who is a member of one deferred profit sharing plan becomes a member of another deferred profit sharing plan the amount to his credit in the first mentioned plan may be transferred to his credit in the second mentioned plan without attracting tax on the amount so transferred.
15.	That the amount to the credit of an annuitant under a registered retirement savings plan may be transferred at any time before the maturity of the plan to another registered retirement savings plan or to a registered pension fund or plan without attracting tax on the amount so transferred.
Mr. Gordon:: Mr. Chairman, in looking over Hansard for last evening I see that I left out one of the points in the Liberal party's program for economic development and expansion. I should like to place it on the record now as point No. 10 of that program.
We believe there is need for an economic council with an experienced full time staff. Its purpose would include continuous study of long term economic trends and advising the government of changes in policy that may be called for under changing circumstances. In addition, this economic council should be asked to undertake studies of special problems before rather than after they reach crisis proportions.
Now, I wish to emphasize that this council should have no executive responsibility. It should not be a substitute for government, but it could be helpful to government and a useful addition to the existing administrative machinery. This concept of planning or forward thinking was anathema to the Conservatives until quite recently, and it is just possible it is anathema still to some of them. According to the Minister of Finance, the government, or at least some of the influential members of the cabinet, have been converted. I listened with great interest to what the minister had to say about the proposed economic development board. If the substitution of the word "board" for the word "council" is the only difference between what the minister has in mind and what has been in the Liberal program for some years, then we shall be happy to support this proposal.
I noticed, however, that he did not say anything about the full time staff that an economic council or economic board will need if it is to be effective. I think one might almost say a council of this kind will be as good as, and not much better than, its full
[Mr. Herridge.l
time professional directors or officials. An advisory committee chosen presumably from various occupational groups and interests will make a very valuable contribution. In addition, they will provide the full time staff with contacts and connections that otherwise might be more difficult to develop. But a part time advisory committee, no matter how eminent its membership may be, cannot carry out what must be a full time operation. This is one of the weaknesses of the present productivity council.
Before ten o'clock last night I had been reviewing some of the many things that have happened since the budget of April 10 was presented to, but not debated by the previous parliament. I had just finished saying it was a free spending budget with a large deficit, despite which ministers had been going around the country during the election campaign promising to increase expenditures for such things as a causeway in the east and a second trans-Canada highway.


Donald Methuen Fleming: You were the one who advocated the big increase in expenditures.


Walter Lockhart Gordon: I shall try to refrain from noticing the Minister of Justice this afternoon, unless he keeps provoking me.


Donald Methuen Fleming: Wouldn't that be too bad.


Walter Lockhart Gordon: What happened immediately after the election? We did not hear any more about this new spending. On the contrary, the government has decided to spend somewhat less that it had said it would. The speech that the minister of finance made on budget night last April, that is the previous minister of finance, defending his policies at that time does not stand up as a defence today. That budget has been thrown out, and the minister has been removed to a less vulnerable portfolio. The policies have been repudiated.
But what has been put in their place? We do not deny the government's right to change its mind and repudiate its old budget. However, in that case the country is entitled to a new accounting, a new budget. We are told there is not going to be a new budget for this year.
What would anyone think of the manager of a trade union or a farmers' co-operative or a business corporation who refused to give a financial accounting to the members? At the very least the people who were treated in this way would become suspicious. They would want to now whether the books were in a mess; they would want to know whether the manager was incompetent or just plain

arrogant in refusing to give a proper accounting of his stewardship and what he planned to do. They would suspect that something serious was wrong.
The refusal of this government to give a proper financial accounting of its stewardship is bound to create doubts. It is bound to increase public misgivings as to its ability to manage our affairs. It is bound to convince an increasing number of Canadians that the sooner this government is dismissed from office the better it will be for all of us.
In my professional experience as a practising chartered accountant over a period of 30 years, there have been only a very few occasions when normally honest and responsible people have tried to refuse to give an accounting of their stewardship, when they have tried to get out of being questioned about their policies and plans in the usually accepted way. It is serious enough, even though it may not happen very often, when private individuals try to circumvent the rules and customary practices. It is much more serious when this is done by the government. This kind of disregard for established practice, this sort of trickery-and it is that-is holding parliament in contempt.
The Leader of the Opposition made it quite plain on October 19, when he said the official opposition had decided to allow interim supply to go through without debate, that we were doing so in order to permit the government to bring forward its long range financial and economic proposals for dealing with our country's basic problems. These proposals or that program, if one exists at all, should be presented in the form of a budget before the government comes back for further interim supply. This will give the government ample time to reconsider a decision that, despite all the words and all the arguments of the Minister of Justice, will set a very dangerous precedent.
(Translation):


Gilles Grégoire: Mr. Chairman, after listening to the famous Conservative financial troika, I believe that we could also talk of a Liberal troika with one good wheel, a wheel that works, that of the hon. member for Davenport (Mr. Gordon), who, on various points, is getting very close tb the Social Credit policy. This is quite an encouragement and, before long, with all the intelligence we know him to have, he will come over to us. As to the second wheel, it was not in the house, at least not on the floor of the house last night, it was to be found in the gallery. That is a wheel with a flat tire, which has been flat for quite a time after several punctures. I am thinking of the financial expert of the Liberal party, a would-
Income Tax Act
be member of parliament for the riding of Quebec East, who last night was sitting in the gallery.


An hon. Member:: You should not attack
those who are absent.


Gilles Grégoire: The third wheel is a somewhat square wheel which goes only in one direction, that of the bankers' and the chartered banks' friends. I mean the hon. member for the chartered banks, the hon. member for Laurier (Mr. Chevrier). That is the Liberal troika.
Mr. Chairman, I listened with much attention yesterday to the Minister of Finance (Mr. Nowlan). I have his speech here in my hands, I read and re-read it, and after the first few pages, I wondered whether the Minister of Finance made a budget statement for Canada.
"The Canadian economy has been expanding", he said, "the performance of the economy is impressive, production is achieving gains" and "the increase is encouraging". "Unemployment is decreasing" and "employment increasing" while "automobile sales are establishing a record this year". Finally, we are wondering why there should be an austerity program, if everything is going so well.
Those first pages are to make us believe that we are in a period of full prosperity, and to convince us that everything will be for the best, thanks to the legislation indicated in the second part of the budget. Those pages are there to explain that the austerity prevailing in Canada does not exist.
Let us take an instance. It is not surprising to see that "automobile sales have increased". But we also find that the number of cars bought on the instalment plan has increased, and that the amount of loans by finance companies, who are charging 24 per cent interest a year has reached $1,067,000. Now, the average loan is for $500 which means nevertheless that a million individuals, in spite of our supposedly flourishing expansion, are poor and have to borrow from those companies.
Mr. Chairman, we have here various things that are rather striking. I notice, among other things, in the speech of the Minister of Finance, that, in spite of some cuts in spending, there are some increases and the total amount of interest payable on the public debt this year, will reach $40 million more than was foreseen six months ago. Thus, the financiers of the chartered banks shall get from this country's budget $40 million more in the form of interest.
On the other hand, Mr. Chairman, we note on page 333 of the revised estimates for the Department of Public Works, that the amount earmarked for projects which would benefit

Income Tax Act
Canadian workers now unemployed has been cut by $30,076,443. We therefore see that the budgetary revision helps, after all, those who are profiting from the debt system in this country, but not the Canadian people. Public works are curtailed for those who hunger for bread and work.
Mr. Chairman, I will suggest to you later on how the Minister of Finance could save several hundred million dollars on his revised budget. After having dealt with the performance of the Minister of Finance, I would be remiss in not dealing with some points of the speech made by the hon. member for Davenport (Mr. Gordon), on the budget.
Mr. Chairman, I said a moment ago that the hon. member for Davenport had somewhat the same views as Social Credit on certain points. I would be remiss if I did not mention some of the ideas he put forth. As we can see on page 816 of Hansard-and here I wish to point out to the house that, at the noon hour we had not yet received the French edition of yesterday's official report, even though we have had the English edition since nine o'clock this morning. As I was saying, page 816 of Hansard reports the hon. member for Davenport as setting forth various objectives that should be achieved. As the first essential of the program, he mentioned the following:
(Text):
The first essential of this program is an easy money policy. By this I mean much freer credit and lower interest rates instead of the tight money policy that is an integral part of the government's austerity program.
(Translation):
Mr. Chairman, I feel that at least half the hon. members should agree on that point. It is not by imposing credit restrictions but by expanding credit that we will truly make Canada prosperous. However, in doing that, we should not follow the principles put forward by the Liberal party's chief economist, Mr. Maurice Lamontagne, about a year ago, when he stated that credit must be made easy when there is a recession and that it must be tightened when a country's economy is prosperous. Personally, I believe that credit must, at all times, be expanded so as to keep pace with the development of resources and the growth of the country, not only in certain periods, for the purpose of getting more votes.
In that respect, I should like to suggest that the hon. member for Davenport carefully examine the fist of objectives he gave us yesterday and the principles set down by his party's chief economist. After that, I am sure he will want to join us.
There is another point that the hon. member for Davenport raised in the course of his

speech which I must not forget to mention. On page 816 of Hansard, he is quoted as saying:
(Text) :
I do wish to emphasize however that in the kind of program I am proposing the government must assume full responsibility for monetary policy. The carrying out of that policy is the duty of the Bank of Canada. But the responsibility is the government's and there can be no room for misunderstanding about that.
(Translation) :
Mr. Chairman, that is what the Social Crediters have been advocating for a long time. The responsibility for our monetary and financial policies must not be left to the chartered banks, whatever the views of the hon. member for Laurier (Mr. Chevrier) on this question, but must be assumed by the government, and it is incumbent on the Bank of Canada to carry out such policies. That is one of the main points of Social Credit.
Mr. Chairman, I now come to another point raised by the hon. member for Davenport. In fact, as can be seen on page 817 of Hansard, he stated that the solution to our yearly deficit does not lie in foreign investment in our country, because the withdrawal of interest each year would be a constant source of problems.
We are satisfied that investments in our country, instead of being made by foreign investors, should be made through capital created by the Bank of Canada, which would contribute to the development of Canada.
If, in the past, foreign investors have been able to find the required capital to come and develop our country, why should we not, as citizens of Canada, be able to develop our own natural wealth, our own natural resources in order to develop our country.
Mr. Chairman, a few months ago, immediately before or after the election, it was said that there was a flight of foreign capital from our country. I remember very well how all political parties complained and moaned then on this flight of foreign capital from our country. We, of the Social Credit party, were the only one to greet the news and to say: "If foreign capital wants to run away from this country, let the Bank of Canada create capital to replace it". If you exchange one form of capital for another, there is no reason for inflation. Foreign investments are leaving our country to go elsewhere, we create new capital, our own capital, by which we shall be able to take over the control of our nation. One form of capital for another, there is no inflation; let us become our own masters with regard to the development of our natural wealth.

And now, Mr. Chairman, I should like to suggest to the Minister of Finance and to the government certain ways and means for making some savings in the estimates now before us.
For instance, when I refer to page 104 of the revised estimates-I have to refer to the English version since we have not yet received the French version-I see, at the bottom of the page, "Public debt charges", which include the interest on the public debt, the servicing of public debt, as well as the cost and the payments to agents, etc., amounting to $788,181,300. This means that the debt of Canada will cost us this year $788,181,300, in interest only.


Some hon. Members:: Shame.


Gilles Grégoire: Mr. Chairman, if we were able to set up in our country a system under which we could live without debt, I believe that, such an amount being saved, we would then be able to balance the whole budgetary deficit estimated for this year, in spite of the revised estimates approximating $640 million-


An hon. Member:: $540 million.


Gilles Grégoire: $540 million. If only we were able to pay off our debt, we would save $780 million a year.
How can we do it, Mr. Chairman? We are not here simply to state the problems, but we also want to help by providing answers.
Mr. Chairman, by changing only one word in the Bank Act we would be able to repay our debt over a period of five, six or seven years.
This is what I find in volume I of the Statutes of Canada, 1953-54, chapter 48, page 294, section 71, paragraph 1:
The bank shall maintain a cash reserve in the form of a deposit with the Bank of Canada and of Bank of Canada notes held by the bank, and such reserve shall be not less on the average during any month than 8 per cent.
Mr. Chairman, let us change this "8 per cent" gradually, step by step, until it reaches 100 per cent, thus increasing the banks' cash reserves gradually up to 100 per cent over a given period of years. Then, the chartered banks, which need cash reserves so that they will not have to tighten credit and cut loans already made, will have to get other cash reserves.
Where will they get these other cash reserves? At one single place, at the Bank of Canada, which will supply them against redemption of Canadian government bonds.
Income Tax Act
In this way, and without reaching for money in the pockets of Canadian citizens, through taxes, the Canadian government will be in a position to repay the country's debt and save $788 million interest per year.
Now, Mr. Chairman, there is also a second way in which the government could save money, in this case an amount of approximately $700 million per year. When we have changed the word I mentioned in the statutes, the chartered banks will not be able any more to create money and credit in Canada, because then they will have to keep cash reserves at 100 per cent.
If, instead of the chartered banks, the Bank of Canada created what is now being created each year by these banks, this would give it an additional income of $700 million per year.
Mr. Speaker, to prove that money is actually being created by chartered banks in this country, I have here many passages from the 1939 report of the standing committee on banking and commerce. I would like to quote especially many questions directed to the then governor of the Bank of Canada, Mr. Towers, and his replies.
I find, among others, on page 75 of this report, a question from Mr. McGeer and Mr. Towers' reply:
Q. I mean to say the deposit in the banker's book is the actual money?
A. Yes.
Another question from Mr. McGeer:
That is, it is not money; but it is the effective substitute for money which modern practice in banking and commerce has developed?
To which Mr. Towers replied:
Exactly.
Again, another question from Mr. McGeer: So that 95 per cent of our monetary transactions are now carried on by using a medium which is an efficient and effective substitute for money?
Ninety five per cent, Mr. Chairman. And here is Mr. Towers' reply:
Which, in fact, is money for the purpose of our
discussion.
And, please note, Mr. McGeer goes on to say:
Therefore, those who are empowered to issue bank deposits as a substitute for money are the ones who control the volume of the medium of exchange in circulation?
Here, Mr. Towers said:
No, they do not; because their powers to do it are limited by legislation.
830

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Now, Mr. McGeer asked another question: Within these powers of their legislation?
Answer by Mr. Towers:
And the amount of the cash reserve, which is determined by the Bank of Canada, determines the extent to which the chartered banks can go in the way you mentioned.
Another question by Mr. McGeer:
As a matter of fact, the fact is that 95 per cent of our monetary transactions are now maintained by the use of bank deposits. That is the fact. So that under the powers enjoyed by the banks under our laws, they do issue 95 per cent of the medium of exchange, or they issue the medium of exchange which transacts 95 per cent of the business of the people and the state.
And a little further down, on page 75, Mr. McGeer said:
-But I am dealing with the power to issue that form of money. That is a privilege of the chartered banks?
Mr. Towers answered:
That has been banking for centuries, yes.
And here, another question by Mr. McGeer: Well, that is a privilege of the chartered banks?
And notice that in that moment, Mr. McGeer was insisting and Mr. Towers answered: Yes, exactly.
Mr. McGeer goes on:
It is a right which they have, subject to all the restrictions and limitations of the law?


Mr. Towers:: Yes.
Now, Mr. McGeer asked a more practical question:
Am I right in saying that a bank deposit can be created in this way? A banker can purchase a dominion government bond by accepting from the government, we will say, a bond for $1,000 and giving to the government a deposit in the bank of $1,000?


Thomas Gordon Towers: Yes.
Question by Mr. McGeer:
When a bank takes a bond from the government, what the government receives is a credit entry in the banker's books showing the banker as a debtor to the government to the value of $1,000?
Mr. Towers replied:
Yes.
Mr. McGeer said:
And, in law, all the bank has to hold in the way of cash to issue that deposit liability is 5 per cent?
Mr. Towers replied:
A. Yes.
That is clear enough, Mr. Chairman. And that is not all. Mr. McGeer asks another question about the war debt:
So that a considerable portion of the war financing came through the increase of Canadian bank deposits?
[Mr. Gregoire.l
Mr. Towers replied:
Yes.
Another question was put by Mr. McGeer: As a matter of fact, we financed our war costs pretty much by-
And his question ends, a little bit further: -by internal financing in Canada.
Mr. Towers replied:
Yes.


The Chairman:: Order.
(Text):
I wish to caution the hon. member who has the floor about the use of Hansard for extensive and exhaustive quotations. There is no fixed rule limiting the amount or extent of the quotations that one may put on record in Hansard directly from a reference volume, but I notice that the hon. member has been reading extensively and for some period of time from the volume he has in his hand, and I wish to caution him that this is not a practice which is normally permitted in committee.
(Translation):


Gilles Grégoire: Mr. Chairman, there are so many people in this country who still think that money grows in potato fields, that it comes from heaven, that if one fine day, someone explains to them from where the money comes in Canada, I think that it is worthwhile listening to him.
I do not propose to quote a great number of excerpts in this book, but I wish to read the main parts which point out what body creates money and the source of our money. This argument is advanced every day and we are asked: "Where does money come from"? I am even convinced that several hon. members in this house do not know it yet. As a case in point, I remember that the hon. member for Hull (Mr. Caron) told me that the money supply Is based on our gold reserves. If they can be shown the source of our money everybody will benefit from it.
Mr. Chairman, there is something else besides the reports I have just mentioned. I should like to quote certain extracts and even certain replies given by Mr. Towers, and also some statistics to prove that the chartered banks create money in Canada.
Before I do that, however, I should like to read an extract of a speech which more than bears out my point of view. It was delivered at a dinner by the American secretary of the treasury, Mr. Robert B. Anderson. Here is what he said, according to the May 4, 1959 issue of the U.S. News and World Report.
(Text):
Suppose I wanted to write cheques for $100 million starting tomorrow morning, but the treasury was out of money. If I called up a bank and said,

"Will you loan me $100 million at 51 per cent for six months if I send you over a note to that effect?" the banker would probably say, "Yes, I will."
Where would he get the $100 million with which to credit the account of the United States treasury? Would he take it from the account of someone else? No, certainly not. He would merely create that much money, subject to reserve requirements, by crediting our account in that sum and accepting the government's note as an asset. When X had finished writing cheques for $100 million the operation would have added that sum to the money supply. Now certainly that approaches the same degree of monetization as if I had called down to the bureau of engraving and printing and said "Please print me up $100 million worth of greenbacks which I can pay out tomorrow". (Translation):
Again, Mr. Chairman, that amply proves my point.
The expression "funny money" that some hon. members are so fond of should not be used to describe the money with which Canadians purchase their country's products but the money that is being taken from the taxpayers' pockets when Canadians do not have money to benefit from the enormous amount of available Canadian goods. That is what we would truly call "funny money" or "plenty money".
As for the role played by the banking system, I have here some figures which show that chartered banks create money and credit in Canada. Thus, according to page 1124 of the 1961 edition of the Canada Year Book, the chartered banks paid up capital amounted to $265 million, in 1960. Therefore, the chartered banks have $265 million. Now, according to page 1126 of the Canada Year Book, their net earnings for the same year totalled $196.5 million. Their total operating earnings amounted to $842.4 million and their paid up capital amounted to $265 million.


An hon. Member:: They are not making any money.


Gilles Grégoire: They complain that they do not make enough profits.


An hon. Member:: Times are hard.


Gilles Grégoire: Now, Mr. Chairman, according to pages 1122-23 of the Canada Year Book, the Bank of Canada deposits and notes for those whose paid up capital amounts to $265 million amount to $992 million; treasury bills of the government of Canada, to $967 million; government of Canada direct and guaranteed bonds to $2,088 million; other Canadian securities, insured residential mortgages and loans in Canada, to $8,511 million.


An hon. Member:: They do not print money.
27507-3-534
Income Tax Act


Gilles Grégoire: No, they do not print money.
Cash, securities and foreign loans: $2,725 million; total, $16,917 million.
Where does the difference come from, Mr. Chairman? That is the $64 question.
The difference can be explained this way: as found on page 1124 of the Canada Year Book, under the title "Canadian Cash Reserves", the average cash reserve ratio is 8.2 per cent, that is $625 million in Bank of Canada deposits and $360 million in Bank of Canada notes, which makes a total of $985 million.
I mentioned a moment ago section 71 of the Bank Act, which prescribes that this reserve must not be less than 8 per cent during a given month. However, the banks keep an average reserve of exactly 8.2 per cent.
Mr. Chairman, one is perfectly aware that the chartered banks have the right to create by a stroke of the pen currency and credit in Canada as the former governor of the Bank of Canada clearly stated.
Therefore, each year, if we take the average for the last ten years, the chartered banks have created-in the way I just explained- about $700 million, or $7 billion in the last ten years, at the rate of $700 million per year. Now, Mr. Chairman, this amount added to the $788 million of possible savings by the Canadian government should they accept the suggestion we offered a few moments ago would enable Canada to pay off her debts in full.
Statistics confirm that the money supply is increasing from year to year. Obviously it represents an increase in the coffers of the chartered banks.
There is a third way for the government to increase their revenue without raising taxes.
If the government ever decided of course, after having retaken the control of money and credit, and after amending the Bank Act by substituting in section 71, and elsewhere if necessary, 100 per cent to 8 per cent- to create each year as much money and credit as there is production, the result would be this. As recorded on page 1091 of the Canada Year Book, 1961, from 1926 to 1960, the yearly increase in production was as follows: in 1926, it was $5,152 million and in 1960 it was $35,959 million. So, each year we see that our production has increased. If we take the figures for the last ten years,

Income Tax Act
we note that production has jumped from $21,170 million in 1951 to $35,959 million in 1960, that is, an average increase of $1,400 million a year.
Mr. Chairman, it never occurred to anyone to finance that increase in production by the creation of new credit, free of any debt, through the Bank of Canada.
If we had done that, if we did that in this year's budget, we could thus find new sources of income, new money which would be created by the Bank of Canada, in an amount of some $1,400 million. If you add the $788 million which could be saved on debt interest, $700 million to create money, which could now be created in place of chartered banks, and $1,400 million to balance production against purchasing power, you get a total of $2,900 million.
Mr. Chairman, if we examine the speeches made by the Minister of Finance and by the hon. member for Davenport (Mr. Gordon), and in the light of the explanations I have just given, we note that both sides want to promote a public works program in order to increase employment.
We are in favour of a public works program, since we feel it is the only way to stop unemployment in Canada, and check the present economic crisis. But we also know that public works are being carried out at all levels of government, and that they come under the federal, provincial and municipal governments, as well as under school boards.
To follow up the suggestion I made about chartered banks, I would suggest to this government to revise the basis of taxation, more particularly in regard to personal income and corporation taxes, as well as to estate taxes, which would permit provinces to benefit from additional income. That increased income would make it possible for the provinces, the municipalities and the school boards to carry out their projects. It seems to me that all members, and especially those from the province of Quebec, should set their hearts on promoting the redistribution of revenue sources.
I should like to quote from the report of the royal commission on constitutional problems, which deals with the redistribution of sources of revenue at the various levels. The following statement is to be found on page 205 of part 2 of volume 3:

In Canada, the cultural duality is one of the main reasons for the federative nature of our political system, and the province of Quebec is specifically responsible for the trusteeship of one of those existing cultures. On account of the common good, for which it is partly responsible, it is incumbent upon the central government, in the exercise of its own jurisdictions, to set up its policy according to the cultural requirements of the groups recognized by the constitution, and to co-operate with the province which is, in this regard, invested with a particular responsibility-
And on page 240:
The federal government, sole master of indirect taxation, thus has at its disposal an important source of revenue. It thus has also very large powers of political initiative which it uses, without having to consult the provinces, in the way which it deems best for the general interests of the country.
And this is what I find on page 241:
Similarly, the provinces should be given the taxes which, by their impact on the way of life, the institutions, the social life, are most directly connected with their constitutional responsibilities: land taxes, vested in the municipalities by the provinces, estate taxes, taxes on the development of natural resources, personal and corporation income tax.
Mr. Chairman, a redistribution of the revenue would thus allow provincial governments, as well as municipalities and school boards, to carry out the projects which come under their jurisdiction, and to undertake developments according to their several needs as well as those of the country.
We know that under the British North America Act, the federal government is the only one responsible for monetary policies in the country, the only one responsible for creating money, and that it can thus find revenue sources. I believe that the federal government must yield certain sources of revenue to the provinces, so as to make it possible for them to develop themselves as they should.
Mr. Chairman, many people wonder if Social Credit is right in suggesting that there is a gap between production and purchasing power. I should like to come back on that subject and give some explanations.
In the "Canada Year Book" published by d.b.s. for the year 1958 the national income, including salaries, social security allowances, supplementary revenues, military allowances, corporate revenues, investment revenues, revenues of non-agricultural industries and professional fees amount to $24,673 million. For the same year, the national product was $32,509 million. That is fine. But some people

say that between the two figures, national revenue and national production-we must also be careful not to forget indirect taxes and depreciation-we had a national revenue of $32,509 million. Some people include in the national revenue the amount collected by the government as indirect taxes, because those amounts are totally redistributed through social security allowances, and all those amounts make up purchasing power. We admit that the taxes collected constitute purchasing power for those who receive salaries or allowances from the federal government. But salaries and allowances are already included in the national income. Indeed, when a worker receives, out of indirect taxes, a salary for helping to build a post office, that salary is taken into account in Canada's national income at the end of the year. The same thing goes for the person who receives welfare allowances during the year, out of taxes. Those allowances are included in the national income, as shown in the Canada Year Book.
Therefore, Mr. Speaker, it is obvious that if the same figures are included twice, three times, columns of figures can be balanced. But indirect taxes which are levied upon the people will then reduce their purchasing power by the same amount, and when you return this amount to them in the form of welfare allowances or salaries, it will be included in the total national income, under the different items. There you will always have the same $8 billion gap, for 1958-59, between the national income and the national product.
And in the face of all those facts, when we talk about increasing the buying power, many hon. members in this house will raise the cry of inflation because they do not know better. They wonder whether the implementation of the Social Credit doctrine would not bring about inflation.
To keep explaining things, let us come back to the matter of inflation. First, may I say that as far as the inflation we have had in Canada over the last 22 or 23 years is concerned, Social Credit cannot be held responsible for it, since that party was not in power.
Let us recall what happened since 1939.
In 1939, out of each production dollar in Canada 30 cents were paid out in salaries and wages. In 1960, out of each production dollar, 20 cents are paid out in salaries and wages. So, inflation was not caused in Canada by salary increases. In 1939, on every production dollar, companies were getting 10.2 cents as profits. In 1960, the profit is only 8.6 cents on every dollar production. In 1939, 11
Income Tax Act
cents out of every dollar of production went for taxes, whereas in 1960, 46 cents went for taxes out of every dollar of production. That is where inflation comes from.


An hon. Member:: We will talk about that later.


Gilles Grégoire: Mr. Chairman, does anyone wonder who is responsible for inflation? One can say that the responsibility rests with the Liberals who were in power from 1939 to 1957, because they organized that taxation system applied by ruthless inspectors, who have hearts of stone, who can get blood out of a stone, who are there to hurt the taxpayer and to make life miserable for the people instead of helping them.
People are turned into the street without pity. The bureaucrats in the income tax division act heartlessly and thoughtlessly; all that proves that the Liberal administration, together with its friends in the police, has terrorized the Canadian citizen to make him pay income tax when he had no money left.
It is, finally, the Liberal government which has set up this taxation system, which has established, especially from 1939 to 1952, the taxation machinery that is ours today; the taxes we know today were increased during that period.
The Conservative government followed suit but still it was the Liberals who started the whole thing.
Inflation is the result of taxes and taxation.
Mr. Chairman, unemployment is another of the serious problems which was dealt with in the budget presentation. Therefore, we should like to make a few suggestions to this government.
First, I listened very carefully when the present Minister of Labour (Mr. Starr) gave us the number of unemployed in Canada. The number of jobless registered on December 28 reached 286,724. This figure, Mr. Chairman, includes those drawing unemployment benefits, but not those who are not eligible to these benefits, nor those who draw social benefits instead of unemployment benefits.
Mr. Chairman, all this put together, the final result is about double this figure.
Judging by what is happening in my county, in my section of the country, I am convinced that in the province of Quebec, in the whole of Canada, the number of unemployed is fairly high and that everything indicates that one of the most serious unemployment crisis ever experienced in Canada

Income Tax Act
since the last war is in the offing. Mr. Chairman, considering these facts, I believe it necessary to offer some suggestions to the present government.


An hon. Member:: Vote for the Conservatives.
Another hon. Member: Just wait a minute.


Gilles Grégoire: If, at least, the member for St. Jean-Iberville-Napierville (Mr. Dupuis) had suggestions to make, but he has nothing new to tell us.
Mr. Chairman, if we want to settle the unemployment problem, we must first understand that it is not by putting all the workers to work in the plants that we will do so.
With the progress of our modem world, automation and the present expansion of our country, machinery increasingly replaces workers. That is progress and we must not be against it. Workers are being thrown out of manufacturing by machinery.
Consequently, we must direct our youth towards others jobs than those of long standing rather than plan their lives. Indeed no human being wants to submit to outside planning.
A hundred years ago, there was in a manner of speech, only one kind of work. Most citizens were engaged in production. Thus, it was the shoemaker himself who sold the shoes he made by hand. It was the same man who performed all the operations of that job.
Because of the introduction of machinery, a new field of work was discovered; sales. At that stage many workers left the field of production for that of marketing. Then we had two fields of work.
But today, the sectors of both production and sales are saturated. Indeed, there are so many salesmen at the present time that some of them canvass from door to door in our Canadian homes in order to sell their goods: dictionaries, perfume, encyclopaedias, soap and so forth, while others even sell courses in salesmanship.


Mr. Dupuis:: Others sell Social Credit.


Gilles Grégoire: Mr. Speaker, that is to say, we have come to a bottleneck in the field of distribution.
But there is a third field to which the government should devote some effort, and I do not mean the field of production or marketing, but rather of services. The federal government should direct our youth not toward the fields of production or distribution, but

rather toward a realm of endeavour where they may accomplish useful and needed things for the country.
Let us take for instance the case of school teachers. When we think that at present in the province of Quebec there is an average of one teacher for 40 pupils-and even more than that in some grades-while all educational specialists agree that the required average to ensure a better education would be one teacher for 12 or 14 pupils, it means that in the province of Quebec alone, we are short about 110,000 school teachers, and the figures published by the Department of Labour indicate that there are some 90,000 unemployed in the province of Quebec at the present time.
Mr. Chairman, if the Liberal government of 20 years ago, when it was time to do so, had seen what was coming, and had started, at that time to direct our youth, not towards plants, as was done for too long, but towards occupations which could have provided work for them-


An hon. Member:: That comes under the province.


Gilles Grégoire: I know and I shall come to that.
If the federal government had directed our youth towards occupations which could have provided work for them, it would have helped them prepare for the future, and we would not find ourselves faced with an unemployment crisis as we are today.


Yvon Dupuis: It is Duplessis who was in power.


An hon. Member:: For 20 years.


Gilles Grégoire: This is true, and I am happy that this matter has been raised. But you will find, Mr. Chairman, that before putting forward my argument, I took good care on the basis of sound evidence, to ask the federal government for a re-distribution of revenue sources, so as to enable the provinces to deal with whatever is under their jurisdiction, that is to look after education, road building, health-


Yvon Dupuis: Do not condemn your friends.


Gilles Grégoire: Mr. Chairman, I took good care to start by pointing out to the federal government that it could find some sources of revenue which would bring in a further $2,900 million a year, and I invited it later, to give back some sources of revenue to the provinces, so that they might develop those fields.
But, 10, 15 or 20 years ago, the federal government kept for itself, as it is still keeping for itself, all sources of revenue, so that the provinces who want to expand in the field of

education as well as in others, realize very soon that their revenue is inadequate.
We may try to set up things, and to wish, as the Liberal minister from Quebec-and the hon. member of St. Jean-Iberville-Na-pierville (Mr. Dupuis) realizes that, despite his good will-


Mr. Boulanger:: Mr. Chairman, on a point of order. I wonder whether an hon. member observes standing orders by using his speaking time talking about provincial politics, whereas he should realize that he is representing national interests, and not those of any political party which paid him a salary for a couple of years.


Gilles Grégoire: Mr. Chairman, I think that my hon. friend's question is innocent. It is up to him to judge and to decide. He does not seem to understand that the discussion is on the economic position of his country, and that the serious problem at this time is unemployment.
(Text):


Prosper Boulanger: On the point of order, Mr. Chairman, I say that the hon. member is speaking about provincial affairs instead of federal affairs. I should like to know if he is in order.


Gordon Campbell Chown: I was relating his comments somewhat to the remarks he made about the diversion of some money from the federal field into the provincial field for the furthering of education. I am inclined perhaps to view this on the basis of the understanding to which we came before we got into this debate to allow pretty wide scope to all hon. members, especially those who are newcomers to the house, many of whom perhaps are making their maiden speeches during this debate. However, I shall pay close attention to what is being said and if I feel an hon. member is transgressing the rule of relevancy to too great an extent, I will intercede.
(Translation):


Gilles Grégoire: Thank you, Mr. Chairman.
The problem of unemployment is evidently the most important one to solve but if the Liberals choose to ignore it-


An hon. Member:: So do the Conservatives.


Gilles Grégoire: Mr. Chairman, when it comes to dividing responsibility in that field, we must admit that each level of government has its share of responsibility, but it is up to the federal government to bring about a situation whereby it will be possible for the provinces to discharge their obligations in that field and to assume their share of responsibility.
Income Tax Act
Therefore, Mr. Chairman, I suggest, as a solution to the unemployment problem, that the federal government rather than pushing our young people into plants and factories guide them to some other fields-


Yvon Dupuis: That comes under provincial jurisdiction.


Gilles Grégoire: Mr. Chairman, in spite of the efforts which must be made in that field, if we stop to consider the number of unemployed in the province of Quebec, we notice that the figure of 90,000 is lower than the number of school teachers who are needed in our province, and we thus realize that the problem of unemployment can be solved. So much for school teaching, but there are many other fields, besides school teaching, towards which our young people can be directed, so that they do not have to face, in 20 years, the problems which our citizens are facing today. I am thinking of town planning, medicine, science, engineering and of many other fields.
If our young people are directed towards other professions, other occupations, we shall then be able to solve the unemployment problem. But each government must do its share, and the share of the federal government must be to give to the provinces, to the municipalities and to the school boards adequate sources of revenue to allow for their development in their respective fields.
For instance, when I think that this year, in September, in my own riding of Lapointe, from 600 to 700 young people have been turned down in high schools, technical schools and colleges-


An hon. Member:: That still comes under provincial jurisdiction.


Gilles Grégoire: -because there was no place for them, I believe that if the federal government had set up interest free loans to promote the building of technical schools, high schools-


Yvon Dupuis: What about autonomy?


Gilles Grégoire: -and colleges, there would be 500 or 600 more young men, in my riding, attending these institutions. On the other hand, in 15 years from now there would be from 500 to 600 more Canadian citizens who would be better prepared to earn their living, and who would not have to fear unemployment.
Mr. Chairman, it is said that this matter comes under the jurisdiction of the provincial government, but my personal view is that the problem exists at all levels of government,

Income Tax Act
and that each government has its part of responsibility. It is up to the federal government-and this is what I have been trying to explain during these last minutes-to create a financial monetary system which would allow other administrative levels to be in a position to build schools, pay their professors, etc.
But, meanwhile, and until our young people will have been directed towards professions having a future, in which they will be able to find their place in this country, until they have been guided towards professions and occupations which will utilize their services later on, I share the view expressed by the hon. member for Davenport. As a matter of fact, among the objectives he enumerated, the hon. member did mention a public works program.
Mr. Chairman, in order to give work to the unemployed who cannot even wait until their children have received the necessary training to prepare them for the future, but who are in need of work right now, I suggest that a vast public works program be set up at once for those who are now unemployed or who are not prepared to face the future.
A public works program comprising the construction of roads, bridges, schools, hospitals, sewers, water mains etc., could be financed by the Bank of Canada, interest free.
The Canadian people could be put to work immediately, and while the unemployed of today will be at work on the expansion and development of the nation, providing it with all its needs, we will prepare adequately the younger generation to face tomorrow.
Mr. Chairman, we should find such a solution. However, we will never succeed in that respect without reforming, first, our monetary system. Let us start by making the necessary changes in order that the government may come to control its money and its credit, and through this control, solve all financial matters and all development matters; thus, we will solve the present crisis.
Mr. Chairman, I would like to refer to an extract from the report of proceedings of the banking and commerce committee for May 5, 1939, when Mr. McGeer questioned Mr. Towers, the then governor of the Bank of Canada. In the light of the questions and answers I will read, you will see what I mean.
This is what I find on page 394 of the proceedings for May 5, 1939:
On your own evidence it is now established that the money of Canada is a creature of the laws of Canada?
[Mr. Gregoire.l
A. Yes.
Q. That parliament does, by enacting laws, provide the means of creating, issuing and, in a measure, controlling and regulating the circulation of Canadian money. That is correct?
A. The amount; hardly the circulation.
And please take note of this, because this is a point I want to emphasize:
Q. Will you tell me why a government endowed with the power to create money should give that power away to a private monopoly and then borrow back that which parliament can create itself at interest to the point of national bankruptcy, because, if we cannot finance the things that are necessary, it means that this nation cannot meet its current obligations. But we will eliminate the question of bankruptcy and leave the question; Why should a government with power to create money borrow that money at interest?
Please notice the answer.
Presumably it does so because it wants to give the people a medium of exchange with which they will be satisfied.


An hon. Member:: It is expensive.


Gilles Grégoire: I continue:
Now, speaking of borrowing that money, we realize of course that the amount which is paid provides part of the operating cost of the banks and some interest on deposits.
That was Mr. Towers.
Now, if parliament wants to change the operation of the banking system, then certainly that is within the power of parliament.
Note this carefully:
I put the question to you: If I as an individual-
Mr. McGeer is asking the question.
If I as an individual had the power to create money, do you think that I would ever give that power away and then borrow back that money and pay interest on money which I could create, unless I was a very poor business man indeed?
Note the answer given by the governor of the Bank of Canada.
If you thought it was more profitable and more effective to do so, I dare say you would.
Imagine. Now what about this other question:
If I did that, I would find myself loaded up with unpayable debts.
A. Is your sole vocation, under this assumption, one of creating money?
It is Mr. Towers' turn to ask a question:
Is your sole vocation, under this assumption, one of creating money?
To which Mr. McGeer replies:
Yes, and carrying on my normal activity.
Mr. Chairman, from the replies given by Mr. Towers, it is obvious that the government has the right and the power to change the operation of our money system just as

one can change a word. Since there are not so many words to alter in our present system, such a change could be done gradually, step by step, so as not to upset our whole economy.
When the commission on the banking system in Canada was established in 1940, the liquid reserve of the banks was set at 5 per cent. It was then increased to 8 per cent. Let us change this percentage gradually from 8 per cent to 100 per cent in five, six or seven years from now. Then, at that time, Mr. Chairman, the government will have regained control of money and credit.
We have the choice. Such a solution may displease the chartered banks, but we have to choose between the chartered banks and the people. Some have already made their choice, they have taken the side of the chartered banks and they have been appointed to the boards of chartered banks and there is at least one in this house.
Mr. Chairman, we Social Crediters prefer to side with the people. We have chosen the people because the laws must be made for them. We have decided for the people because they are the wealth and the strength of this country. We leave the chartered banks to those who chose them and we are asking the government to accept our suggestions. That way, it would be much easier to administer the country; if they accept the suggestions we have put before them and make their option for the people instead of the chartered banks, the government will be rid of its present headaches and will be relieved from many problems.
(Text):


Mr. Cameron (Nanaimo-Cowichan-The Islands):: Mr. Chairman, I should like to begin by first pointing out that I and my colleagues in this group are wearing what I am afraid is a rather unattractive vegetable, but it is meant to signify an event which is of great importance to this parliament, that is, the imminent appearance here of Mr. Thomas Douglas, the leader of this party in the House of Commons.


Mr. Langlois:: Flattery.


Colin Cameron: This was not flattery. This was merely reassuring the house that its tone was to be lifted and its intellectual content increased.
Before I proceed with what I intended to say, I wish to say a few words about the speech made by the hon. member who has just taken his seat. I am particularly interested in his views with regard to the creation of money. As a British Columbian I am also specially interested in his quota-27507-3-54
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tions from the late lamented "Gerry" McGeer, a very eminent British Columbian who in his later years had some rather odd ideas about money, and who came to Ottawa to promote those ideas.
I am dealing with this because I think it is-shall I say to be polite-a rather simplified version of the situation with regard to the creation of money in our economy' and it is an extremely dangerous thing in our society today.


Mr. Leboe:: What about Major Douglas' theory?


Colin Cameron: You can ask T. C. Douglas about that when he comes to the house. I believe he will be here on November 5. I have some slight knowledge of the nature and functions of money and I have never been able to understand why my good friends in the Social Credit party fail to realize that the commercial banks are an integral part of the machinery by which money is introduced into the economy in this country and that, at the same time, they stand firmly on their purity as free enterprisers and reject strenuously any suggestion that the chartered banks should become part of a nationalized banking system.


Bert Raymond Leboe: That shows how little you know, because that has not been suggested.


Colin Cameron: I know you do not suggest it; that is just the point I am making. You do not suggest that; but what you suggest, in effect, is that the functions of the present chartered banks should be taken away from them and that in some mysterious way those functions should be performed by the central bank, without having established any complementary institutions throughout the country to take the place of the present chartered banks.
Our hon. friend over here tells us, as though it were a startling revelation, that money is the creature of Canadian statute law. Well, anybody knows that. Anybody has only to read the Bank of Canada Act to know that is the case. When Mr. Towers was suggesting to that committee that if the Canadian parliament wished to change the function of the chartered banks it could do so, he undoubtedly had this in mind, that if you wish to change those functions by depriving them of their present function as part of the money creating facility of this country, then you have to put something in their place. It is very simple for our hon. friends to suggest that the answer to all our problems is to have Mr. Rasminsky set to work in the basement of the Bank of Canada, turning over the printing press.

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An hon. Member:: No, that was not suggested. That is not so. That is your version.


Colin Cameron: In effect, Mr. Chairman, that is the suggestion of my hon. friends in the Social Credit party, because they have the mistaken idea that the problem in our society is a lack of purchasing power, rather than a faulty distributidn of the purchasing power. Their method of solving the problem is this, very simply; we produce $100 worth of goods, and unfortunately only a certain proportion of that $100 worth of value is distributed in the form of purchasing power that is used for daily living. Therefore, supposing that is ten per cent; we will make another $10; so for every $100 worth of goods we produce another $10, and that will solve our problem.


An hon. Member:: That is your version, sir.


Frank Howard: We would like very much to hear yours.
Mr.	Cameron	(Nanaimo-Cowichan-The
Islands): I listened with very great interest, because I was sharing the platform with him, to the co-leader of your party not long ago in the city of Vancouver.


Frank Howard: Which co-leader?
Mr.	Cameron	(Nanaimo-Cowichan-The
Islands): The hon. member for Villeneuve.


Frank Howard: Who is not here at the moment, which is not unusual.


Colin Cameron: He is absent at present. I do not know whether that is unusual or not. I listened with great interest to him in the city of Vancouver and I was very interested to hear him promulgate this idea as a solution to our economic problems, that every Canadian should be provided with $100. On top of that, in answer to a question he told his audience that the Social Credit party was out to abolish all taxation.
Mr. Chairman, I would suggest that that can only mean this party is advocating wildcat inflation. Certainly that was the impression of everyone who listened to the hon. member for Villeneuve on that occasion. It may be, of course, that his views are not shared by other members of his party; but those were the views he expressed on that occasion. Now, sir, I must ask your forgiveness for perhaps having strayed from the resolutions that are before us today and the matter that is open for discussion.


Frank Howard: You are not the first.


Colin Cameron: I am not the first, and I undoubtedly shall not be the last. We are faced with a rather peculiar situation today, Mr. 
Chairman. We have had budgets and we have had baby budgets and now we have this rather curious exercise in economic review to which I would hesitate to give a name. Perhaps it would be sufficient to say that it was conceived and bom in the most distressing and embarrassing circumstances. I will leave it at that. We are asked to assume that the resolutions being presented by the Minister of Finance are in some way connected with the budget that his predecessor presented in the spring. But, Mr. Chairman, this is no longer the spring; this is the fall, and all the bright green leaves of hope that inspired that budget in the spring have withered and fallen to the ground, along with the hopes of the government. In fact, I regret that the Leader of the Opposition is not here, because I know he has a weakness for Shakespearean quotations and I have one which I think fits this situation very well as a description of our government's recent actions:
Like little wanton boys that swim on bladders, this many summers in a sea of glory.
Now the bladders have been pricked, summer has gone and the glory has departed, and we have been dumped in the cold waters of austerity. Here is the curious thing, Mr. Chairman; having been dumped in these waters, the government now comes to us and suggests that we should take their word for it that the raft they are constructing is seaworthy and that they know where they are going. But they will not let us have a peek at the chart by which they presume to navigate our course. I would suggest, Mr. Chairman, that there is all too much evidence to suggest that the chart they are employing is out of date and that it will lead us, not safely to land but into the very stormy waters of a real depression. Rather like a stern parent admonishing his profligate children, the government has told us that we must tighten our belts, we must all put our shoulders to the wheel, we must all pull together; and yet in the midst of all this clamour of virtue raging rampant, I hear a still, small voice saying, "Whose belt? Whose shoulder gets the muddy end of the wheel?"
If we look at these revised estimates that have come before the house, we find out. We find out that the group of people which has always been subjected to savage belt tightening by governments that get into financial difficulties are the ones who are going to take the rap in the first place, the civil service. I have noticed in the course of having sat opposite governments of almost every complexion, and even some that had a mottled complexion, being coalition, that they are very fond on occasion of protesting their great devotion to the principles of the

sanctity of contracts. But I have also noticed something else, that it all depends on the economic status of the person with whom the contract is drawn just how much sanctity that contract has. The higher up you go, the more sacred it is; the lower down you go, the less sacred. And when you come to people in the unfortunate position of civil servants, who not only are low on the economic totem pole but also have been denied any opportunity to have a written contract, then of course they are the ones whose belts we logically tighten as ruthlessly as possible.
Then they do some other things. I noticed this in these estimates, and I heard a great deal of wailing and gnashing of teeth in the corridors of parliament, when members compared the revised estimates with the original ones, over the cuts in public works throughout the country. My own gnashing was perhaps as loud and noisy as anyone's, because the cuts have been perhaps as severe in my constituency as anywhere. Yet while I regret from a local point of view the failure to provide needed facilities, I am still more disturbed by the fact that the government considers it is helping to solve our economic problems by adding to the unemployment problem this winter. I very much doubt whether on even a strictly financial basis these cuts in public expenditure will show a profit to this government. I think that when we add up all the items on the wrong side of the ledger-the additional unemployment insurance which would have to be provided, the social assistance which will have to be provided by provincial and municipal governments for people who cannot get employment -we shall find that they easily out-balance any savings which may have been made, and this without considering the encouragement which well directed government expenditures can give to private enterprise in the same area.
Another cut which was to my mind not only disastrous economically but shocking from the viewpoint of national morality was the cut of nearly 75 per cent, or more than $8 million, in the Colombo plan appropriation. This appears to me as another instance of the shortsightedness of this government-its belief that the only way to solve the problem is to cut down expenditure. For the benefit of those who take the position that we should look after ourselves before we look after others- and I have heard such a view expressed here in this chamber-I would point out that every dollar made available under the Colombo plan has to be spent on Canadian goods provided by Canadian workers. This cut is, in the first instance, another blow to the economy of this country; another blow to employment 27507-3-544
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prospects this winter. Furthermore, this meagre saving deals a blow to Canada's prestige in the world. Our reputation for generosity in the world is not very well founded at the best of times. Our aid under the Colombo plan and through other international agencies has been meagre, to say the least. This cut, I say, is mean, stupid and ineffective.
We hear a great deal about the cuts made in defence spending, and I am aware that to speak on the question of defence spending in the shadow of recent events may be very incautious. Nevertheless, I propose to do this. I propose to do it for this reason: that if there is anything which has been proven by the recent crisis in the Caribbean it is Canada's complete irrelevance in a military sense. The government has made great play with the fact that it has cut defence spending by $85 million, or some 5 per cent. Well, $85 million seems a lot of money, and it is a great deal of money, and would be to you and me. But $85 million seen in the context of the $1,600 million that we still propose to spend on defence is reduced to the status of small change.
Every year since I first sat in this chamber some nine years ago, we have been spending in the neighbourhood of between $1,600 million and $1,700 million on defence-at least, that is what we have been told we were spending it on-and I have listened to successive ministers of defence-four of them, if I remember correctly-not one of whom was ever able to make out a case which indicated that this expenditure contributed in any way to the defence of Canada. Not only that, but we have been bombarded continuously by the reports of qualified scientists and even military men stressing the fact that today there is literally no defence. I suggest to you, Mr. Chairman, that the sooner Canada faces this fact, the sooner we forget these vast expenditures on defence and begin directing these efforts in other directions, the better it will be for us all. I repeat: if anything has been proven by the Cuban crisis, it is that Canada, the next door neighbour to the United States, has not even been approached to make any contribution toward the solving of this crisis. We have been shown to be completely irrelevant. Someone described us once as militarily obsolete. I suggest that rather than cut down expenditure on useful services and useful works within our country, rather than cut down contributions to the Colombo plan which, incidentally, provides work for our people here in Canada, we should be seeking ways in which to reduce these staggering defence expenditures.
I have been suspicious of these expenditures ever since an occasion in this chamber when I happened to notice that for two years

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in succession exactly the same total amount was being sought for defence spending-the same amount to the last nickel. But here was the curious thing: the sub-totals making up that total were altogether different in the two years. Something had been taken from this and put into that, which indicated clearly to me that the defence appropriation was not based on any calculation of our supposed defence requirements, but rather on the assumption that this was the amount of money we had to spend, and which we intended to spend-"You boys decide how it is going to be divided". That is why I have been suspicious of these defence estimates ever since.
It might be said that while it is true that we in Canada cannot defend our shores in the modern world, nevertheless by pooling resources with others we can at least help to defend the North American continent. Again, I would point out that this does not seem to have been the case in the present crisis; we have not been called upon to aid our neighbour in this situation. I would suggest strongly both to this government and to the Leader of the Opposition that a 5 per cent cut in defence spending will not go very far, even in the shadow of the Cuban crisis, however long or short that may be, toward assuaging the misgivings of a large and growing number of Canadians who have become convinced that our defence program is nothing but a vast, elaborate and expensive hoax.
We have, I think, to look further behind the economic scene to understand the actions of the government as revealed in the revised estimates. We have to consider what were the causes of the action taken by the government. What had taken place to make them suddenly decide that we had passed out of the glorious summer and moved into winter? I might digress for a few moments and remark on how entertained I was the other day by the performance-and an excellent performance it was-put on for our benefit by the hon. member for St. Lawrence-St. George and by the Minister of Finance. I thought there was something appropriate in the fact that the hon. member representing St. George should have sallied into the lists to defeat the dragon. I was much impressed with the poise, the aplomb and the clarity with which he presented his case for the production of information regarding exchange transactions. As a very provincial British Columbian, I took some satisfaction from this further demonstration of the intellectually stimulating effect of having been reared on the western slopes of the Rocky mountains.
As I say, I was very much impressed by the hon. member's clarity, precision and aplomb, and I could not fail to say that I was
[Mr. Cameron (Nanaimo-Cowichan-The Islands) .1
also very impressed with the performance of our Minister of Finance. One could not help but admire the skill, ease, celerity and grace with which he pirouetted around awkward corners, and the very great timing and sense of theatre that told him the exact moment to twitch the rug from underneath St. George. But however entertaining it was-and it was entertaining-I should say that perhaps the most amusing feature was that St. George was quite sure that he was going into the lists against a reluctant dragon, and lo and behold it turned out to be the good old-fashioned fire-breathing dragon which one sees right off the stage at children's panto-mines, papier mache tail and all. But his performance was one which had much more significance than the actual case in point. It had significance in this way. It showed a preoccupation, or an apparent preoccupation, on the part of both the Liberal opposition and the Conservative government with symptoms rather than causes. The idea at that time seemed to be that this crisis in exchange was something which could be regarded in isolation, something which could be cured by some monetary specific, without reference to the economic framework in which it had taken place.


Mr. Stewart:: Oh, nonsense.


Colin Cameron: I hear someone say "Oh, nonsense".


John B. Stewart: That is right.


Colin Cameron: Then I would suggest this, that there seems to me to have been no other reason for the official opposition to have based almost all of its attack on the government in the first week of this session on this one point of the foreign exchange situation in Canada, and on whether or not the government knew about it.
Mr. Chairman, at this time I should like to say this, and I trust that my hon. friend, the hon. member for Bonavista-Twillingate, will not consider me too cynical. I suggest that if this government did know of a foreign exchange crisis before the election, and if it did conceal that knowledge, then it would certainly be acting in the traditions of Canadian governments. If it had failed to hide that knowledge, it would have been unique in governments in Canada, and I think that everyone in this chamber is well aware of that. But again, it was a striking thing that throughout the first week of the session the whole attack upon the government and the whole defence of the government was on the

one point as to whether or not the government had known of this foreign exchange crisis and concealed it from the people of Canada.
I suggest that the foreign exchange crisis was merely a symptom. It was a symptom of the course of events which started long, long ago. Incidentally, it started, for the benefit of the hon. member for Davenport, long before 1957, which I know is the sort of cut-off date, the date which divides heaven from hell. Nevertheless, statistics will show us that the train of events which finally culminated in this exchange crisis was set in motion long before that date. I suppose that one might say it was set in motion right after the end of the second world war. We can see the steady distortion of the Canadian economy which began to take place some 15 years ago if we examine the figures for private business investment for those years. We would find that there was a mad boom of investments in certain sectors of the economy during that period, investment which was designed to promote the production of certain goods for export, in the main raw and semi-manufactured materials. These seemed to be profitable fields, and that is where investment rushed. There was no attempt on the part of governments of that day to issue any words of warning.
The compulsions of this type of production produced some other effects. It produced, of course, the effect of creating a very grave imbalance in our international trade. It created a situation where we became more and more dependent upon imports for the materials of our daily living, and it created some other situations too. It created a situation whereby foreign capital came to Canada in the form of equity capital in large amounts, and was welcomed by the government of the day because it helped to solve this problem of the imbalance of payments. The exchange crisis took place later and was, of course, in large measure due to the fact that this inflow of foreign capital had begun to be reduced quite drastically.
I would point out, sir, that this impasse which we have reached has been largely the result of a misconception of the purposes of export trade. It is a misconception that I think was very well exemplified not long before I left my home to come here, when I was at a club luncheon. I do not often get invited to them, but in a moment of weakness an invitation was extended to me to listen, as a matter of fact, to the then minister of finance. Sitting across the table from me at that luncheon was a man connected with the oil industry. He was being subjected to quite a lot of ribbing by the rest of the people at the table over the recent increase in the price
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of gasoline and was being asked why it had been necessary to soak the customers a little more. Finally, after having been sort of "chivvied" around, he came out with this rather extraordinary explanation. He said: "Well, the trouble, of course, is that we have got too much oil". I gnawed rather hastily at my service club chicken, and then I asked him whether that applied to other things as well. He thought it did. He said: "We have too much timber, too much minerals; in fact, we have too much of everything", and that was the cause of our poverty. Now, on the face of it this seems absurd, but actually, from his point of view, it was strictly common sense. Because his point of view, Mr. Chairman, was that the only purpose and value of natural resources is for someone or for some group to make money out of them, and it is very difficult to make money out of commodities which are in very plentiful supply.
This is the approach that one hears repeatedly. We have to export these goods because we have got them, because we have enormous resources in oil, because we have enormous resources in timber, because we have enormous resources in minerals. We have to make every effort to develop them now, to get rid of them now where we can at any cost. I suggest that there is only one purpose, from the point of view of the ordinary Canadian citizen and of the Canadian economy as a whole, of exports, and that is to supplement the living standards of the Canadian people, to fill in the gaps in our own production, to fill in the gaps in our structure that it is either impossible, difficult or too costly for us to develop.
We have been travelling a long way along this road of depending on the exports of a few commodities in order to solve our problems. I have been interested to note the intentions apparently of this government and of the official opposition with regard to solving our problems. Having in mind that this has been the pattern of investment over the last 15 years, a pattern of investment which has created this distortion, I was interested to find, in the speech from the throne and in the submission of the Minister of Finance as far as the government was concerned, that they considered the solution to this problem was to offer incentives to business in order to speed up investment.
I was also interested to hear the hon. member for Davenport yesterday advance the same theory, namely that what is required are incentives to business to invest more. I am interested in that theory. I am surprised that the hon. member for Davenport should advance this theory as one of his solutions to our problem. Surely he must

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have read the history of investment in Canada over the last few years. Surely he must have realized that during that period from the early 50's up to 1957-and in 1957 it tapered off-when we had booming investment that has proved in the end to be somewhat dislocating to our economy, to say the least, the tax burden was at least as onerous as it is now, if not more onerous. In fact, I would suggest that it is considerably less onerous now than it was on that occasion.
It is obvious that tax incentives are not the means by which investment is going to be encouraged. During that period when we had the booming investment we find that we had at the same time a situation in which the taxation of the period was considerably greater than it is now. In 1953 and 1954 we were taxing corporations at the rate of 20 per cent on the first $20,000 of taxable income and 47 per cent on the excess over $20,000 taxable income. This was during the period when we had booming investment and, I might say, unplanned rather headlong investment. When we come to 1959, 1960 and 1961, what we do find? We find that in 1959 and 1960 the taxation burden of the corporations is only 21 per cent on the first $25,000 and 50 per cent on the excess over $25,000; and that in 1961 it is 21 per cent on the first $35,000 and 50 per cent on the excess over $35,000 of taxable income. In that period when we had booming investment a corporation having taxable income of $50,000 paid at that time some $18,500 in corporation tax or income tax. In the period in which we are now, a company having taxable income of $50,000 will pay only slightly over $14,000. I suggest this is proof enough that the answer to our problem is not to offer tax incentives to corporations. They were not required in that period when we had booming expansion.
As a matter of fact, the whole idea that corporations are not investing because they are short of funds is knocked on the head when we consult the dominion bureau of statistics for the business gross savings that have been taking place, and they have been going up steadily throughout the whole of this period. It is not shortage of funds that has prevented investment. It has been shortage of demand or shortage of the expectation of demand. I make that distinction. Very obviously in the period of booming investment the expectations of profit were ill founded, as we immediately had a vast over expansion in various sectors of the economy; and that was done when the tax burden was much heavier than it is now. Yet this government and the official opposition feel that the answer to our problem is to hold out more carrots to the reluctant donkey in order to persuade business to invest when business

already has many carrots in its own pocket. I suggest that you are not going to persuade them to invest merely by giving them tax incentives and that it will be necessary to create some other condition of demand that will cause the investment to be made.


The Deputy Chairman:: Order. It being five o'clock, it is my duty to leave the chair in order that the house may proceed to the consideration of private members' business pursuant to section 3 of standing order 15.


PRIVATE BILL
Mr. J. N. Ormisfon (Melville) moved: the second reading of Bill No. S-4, respecting Canadian Pacific Railway Company.
He said: Mr. Speaker, the purpose of this bill is to grant authority to the Canadian Pacific Railway to build a branch line in the province of Saskatchewan from the town of Bredenbury to the site of the International Minerals and Chemical Corporation (Canada) Limited plant at Esterhazy.
Before discussing the need for the line I should like to give some brief information regarding the industry which this branch line will serve. I have before me an excerpt from Business Week of July 21, of this year, in which there is a glaring headline which reads as follows: "Prairie province goes wild over potash". Under it there are three pages of enthusiastic comment on the formation of the potash industry; and the development has caught the imaginations not only of people in Saskatchewan but of those in other places.
In the Esterhazy area of Saskatchewan, in the southeastern part of the province, the I.M.C. has invested over $40 million in a potash mine and mill which, when in full production, will produce over one million tons of potash per year and will be the largest potash mine in the world.
The company is a fully owned Canadian subsidiary of a United States corporation. This is the classic type of investment we like to see in Canada. While the capital investment is American, the staff is Canadian and, whenever procurable, Canadian material is used.
The total value of the product will range from $22 million to $25 million a year, of which 50 per cent to 60 per cent could be exported overseas, mainly to the Orient. At present the I.M.C. officials see their market as 40 per cent to Japan, 15 per cent to eastern Canada and the remainder to the United States. This same industry has brought smaller complementary industries to the area besides quite a large inflow of rail tonnage which serves the industry itself.

Experts believe that within the next decade the production of the potash industry in Saskatchewan could increase in capacity to become the second industry next to wheat. That is, the dollar value of the product could be greater than oil and petroleum products. The development of this industry is dependent upon an efficient and low cost rail transportation. Although presently served by a spur from the Canadian National, the International Minerals and Chemical Corporation wishes the facilities of both railroads in order that the fullest and best distribution of their product is assured.
Being served by the Canadian Pacific will ensure maximum rail coverage to the country. In the event of the destruction of one line by physical and natural causes, other lines would be available. The equipment of both lines is needed for the most practical method of handling potash. The ideal carrier for the product is the covered hopper car and the supply of this type of car cannot be met even by the combined stock of both the Canadian Pacific and the Canadian National.
The Canadian Pacific branch line from Bredenbury is 15| miles long and the right of way has been acquired and surveyed. The cost of the line is estimated to be in the neighbourhood of $680,000. Over 80 men will be employed and it is hoped to complete this line in about six weeks. The branch line connects with the Canadian Pacific line between Saskatoon and Winnipeg on which there is a daily freight service. Additional staff, however, would be required at Bredenbury which is the divisional point on the line just mentioned.
The revenue collected by the railways as the result of the potash development is presently estimated in excess of $10 million. These rail facilities will be required for years to come since International Minerals and Chemical Corporation rates its ore deposits as adequate for 200 years at full mine and mill capacity. This company has 200,000 acres under lease and four other companies have
200,000	under permit, so further activity is expected. The Canadian Pacific is anxious to complete the branch line before the weather becomes too inclement and the co-operation of all parties in the house would be appreciated to expedite the passage of this bill.


Hon. Lionel Chevrier (Laurier):: I have listened with interest to the remarks made by the hon. member for Melville. This is a branch line which the Canadian Pacific Railway seeks to construct and is, apart from the reasons given by the hon. member, one of those lines which comes before the house for approval. Having listened to the
Canadian Pacific Railway hon. member, I am impressed by one or two matters that cannot help striking those of us who sit here.
In the first place, the line is a short one of 15.5 miles. The cost of it is not exorbitant, at about $600,000. It is being sought in order to develop, logically, a potash plant which has been under construction or is about completed in the province of Saskatchewan. But what I think is extraordinary and perhaps very fascinating about this line, is the manner in which the potash was discovered. I think the company, the International Minerals and Chemical Corporation deserves a great deal of credit for the effort and expense to which it has gone in finding these deposits. These deposits were, so I am informed, 3,200 feet under the surface of the earth. Because of the geological formation, it was extremely expensive and difficult to reach the deposits. These people who have spent, as I am informed by the hon. gentleman, some $40 million to find the deposits deserve, in our opinion, every bit of help, assistance and consideration that can be given under these circumstances.
There is one point that impresses me, or at least affects the opposition, and it is the fact that Canadian National Railways have a line in that area. The hon. member for Melville has stated that this line is being sought on behalf of the Canadian Pacific Railway because there is not a sufficient number of covered hopper cars, and no matter whether the two lines are there, there will even then not be a sufficient number of covered hopper cars to meet the production of potash planned. This being the case, if it is accurate-and I presume that it is the intention of the hon. member to see that this bill goes to the committee on railways, canals and telegraph lines so that evidence can be given to that effect-then I am sure everyone in the House of Commons would want to be sure there is no unnecessary duplication. I am not suggesting for a moment there is. From information which I have it would appear there is not, but none the less I am sure the house would want this point carefully looked into by the committee.
There is, too, another matter which impresses me and it is what the hon. member has read from the newspaper concerning this development: "Prairie province goes wild over potash". Well it may. This is an extraordinary deposit which will mean, when the plant will have reached its full capacity, that this will be one of the largest mines of this character in the world. I am sure the house, and all of those who sit here, will be delighted to know that these deposits are being found in the province of Saskatchewan

Canadian Pacific Railway where the main industry is wheat, and more recently it has been oil. Now, there is being found potash which will add tremendously to the economy of the province as well as to the national well-being.
I think the fact that much of this mineral will be exported is also a good thing for the economy of Canada. On the whole, therefore, we on this side of the house will support the measure that my friend is proposing, on condition of course, and I wish the hon. member would give that assurance, that the bill will go to the committee where it will receive the usual careful consideration.
May I ask the hon. member if it is the intention to move that the bill be sent to committee?


Mr. Speaker:: Order; regardless of the hon. member's assurance, undertaking or what have you, standing order 105 directs that the bill shall go to that committee.


Bert Raymond Leboe: Mr. Speaker, in rising to speak for just a moment about the bill before us, I should like first of all to say that we are very pleased that this business is coming to the province of Saskatchewan. While we notice there is foreign money being invested in the province of Saskatchewan, we must realize that any additional flow of money in that direction would increase the living standards of the people in the province.
We are very pleased to see some permanent industry in Saskatchewan. I understand it will last for 200 years, and I am sure I shall not be around to see when the potash is exhausted.


An hon. Member:: You are not ambitious.


Bert Raymond Leboe: Oh, I have a little bit of ambition to live as long as I can in this good old world, in spite of all its shortcomings.
There is a short paragraph in the speech from the throne, something like five lines, which in effect says that we are going to make Canada a favourable country for foreign investment. If we believe that, then this is one opportunity to assist and make it possible.
I might add that this is a change from the continual requests by railroads for permission to abandon lines. We must recognize that there are changing patterns in railroading so far as the movement of freight is concerned. The smaller articles for short hauls are being taken over by the trucking industry, and more and more we are finding that the Canadian National, Canadian Pacific and other railways are being confined to the hauling of carload lots over long distances.
I can see a great advantage in the present bill allowing for freight competition for such a short stem of railroad. It means that we


shall get a better freight rate. This is something I am particularly conscious of, because in the Cariboo there are places where there is no competition from trucks and thus we meet adverse conditions so far as freight rates are concerned.
We also know that in the province of Alberta we have a joint operation by Canadian National and Canadian Pacific Railways of the line running north from Edmonton, and this demonstrates that they are willing to co-operate where of necessity it is in the best interests of the Canadian people. Bearing that example and other things in mind we certainly wish to support this bill and hope it will have speedy passage.


Mr. T. S. Barnett (Comox-Alberni):: I have no desire to prolong unnecessarily the debate on this bill. I simply wish to say that having listened to the speech made by the hon. member who introduced it and to the discussion that followed, I and my colleagues are quite happy to support it on the second reading and we shall see it gets proper scrutiny in the committee when it reaches that stage.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on railways, canals and telegraph lines.

Mr. Arnold Peters (Timiskaming) moved: the second reading of Bill No. C-8, respecting the jurisdiction of the Exchequer Court of Canada.
He said: Mr. Speaker, this is not a new bill. It has been introduced previously, and I have allowed it to stand on several occasions because it was my hope that either the government or a member of the other house would introduce a bill which would find favour with the government of the day and would obtain the support of this house. This does not mean that in my introducing the bill I find anything in it which would not commend itself to the support of individual hon. members, but I had hoped because of the discussion which took place late last session that something might be done about this matter other than through a bill such as this. We have waited, but nothing has happened. Now the matter is crucial for six or seven hundred people in the province of Quebec, and for that reason I believe a discussion on it at this time can be of some value.
The explanatory note accompanying the bill points out that marriages can only be dissolved by a private act of parliament for residents in the province of Quebec and in the province of Newfoundland. By the terms

of the bill I suggest that rather than using the method now in use, namely the presenting of petitions to parliament, that these be directed to the exchequer court.
During the last two or three years discussions have taken place on individual divorce bills. As a result, in some cases information has been given to the Minister of Justice and to the provincial ministers of justice and attorneys general, which in turn has had particular results. Most hon. members will remember that late last year a flagrant disregard for the rules of normal court procedure by detectives in the city of Montreal was brought to the attention of the Minister of Justice. This resulted in one court case, and a sentence which I believe was fully justified. I mention this because it pinpoints some of the problems we are faced with in parliament in our handling of divorces. There are other reasons why the procedure should be changed.
Many church organizations have discussed the problem and most of them, together with the majority of the leading editorial writers in Canada, have deplored the use of parliament in handling this particular work. I believe most of them have agreed that work being done in the other place in other fields is of great importance. I only cite its work in the field of manpower and resources. These people believe that is the type of work the other place should be engaged in, and that its responsibilities with regard to divorce should be turned over to people better able to handle them.
Why is parliament not the place to handle divorce? Many years ago when divorce was a very simple matter, when there were not very many divorces and the population of Canada was not very large, it was possible to petition parliament in continuance of the British practice of petitioning the Queen or parliament and seeking relief for any particular purpose that a petitioner might have in mind. Over the years this procedure in Canada has reached the stage when it is now almost entirely devoted to the matter of divorce in two particular provinces, and seldom if ever is a petition received for any other purpose, in a legal sense.


Mr. McCleave:: There are about ten a year. The C.P.R. bill is an example.


William Arnold Peters: Yes. There is the procedure of presenting public bills in the names of private members which enters into this particular field; but there are good reasons why we should take a very close look at the problem. Parliament sits seven or eight months, and sometimes longer, each year. During that length of time a great deal of business must
Jurisdiction of Exchequer Court be transacted and, if we were to handle more than the 40 or 50 public bills that normally come before parliament, and were to add to them some 200, 300 or 500 private members bills and give them the scrutiny given to other bills, parliament would go on perpetually. There would be no end to a session, or if there were, it would have to be an arbitrarily decided end, because we would never complete the work that had to be done.
There is no machinery for this very important duty that must be provided on behalf of a private citizen. There is no machinery to handle these matters. There is no method of controlling perjury. There is no method of giving detailed consideration to the needs of the individual concerned. There is no machinery to control the other offences that are sometimes mentioned as having been committed in relation to many of the bills which have been passed in days gone by. Too often charges of perjury, connivance and collusion have been levelled at particular bills pre-sentated to parliament. There is no machinery for examining whether these charges are true.
I think some of the new members will be interested to know that a charge was made publicly-and I think it was supported by all members of this house, as well as all the major newspapers which covered the case- in connection with a case a year or two ago. In that particular case nothing, to my knowledge, has ever been done because there is no machinery for handling this particular problem. While it is true that this falls within the jurisdiction of the Minister of Justice and Attorney General of Canada (Mr. Fleming), the field as set out is not sufficient to allow us to act and give the protection that is due to the people who bring their problems before us.
There are a number of other things that parliament cannot do. The question of our detention facilities has arisen in parliament since I have been here, when some consideration was given to detaining certain people for offences committed before the committee handling these particular cases. The question is, where do you put them? In Canada the tower is pretty well out of date. It is true that we may be able to use the local hoosegow, but this would be asking the municipality or the county in which we are situated to handle something that is none of their business. Also, I doubt whether we are in a position to even finance the detention of people under these circumstances. We have not any proper facilities.
In addition, Mr. Speaker, we have not the right to assess costs and no right to establish the terms of settlement when there is financial difficulty. We have no right to go into the major problem of the custody of children.
846	HOUSE OF
Jurisdiction of Exchequer Court While it may be argued in parliament that custody belongs to the provinces, I think that if this question is to come before a federal court the problem may be resolved as an issue regarding the terms of the British North America Act, which has made matrimony and divorce a federal matter.
Mr. Speaker, another very important problem that affects sociologists is the question of reconciliation, the ability of trained personnel to act in solving the differences that are sometimes solvable; that is, by those people who are capable of understanding the many things behind divorce before adultery becomes the issue. We in parliament are not in a position to do these things. For this reason the court is a necessity, if we are to give to the individual the rights that I believe are his and which should be of prime importance to this parliament.
Also, Mr. Speaker, we have no right to decide on the taxation of costs in relation to lawyers, detectives, bailiffs and agents concerned in these cases. It has always surprised me to learn what immense fees some of these individuals are getting, when we can do nothing about this. If they are before a court, I am told the court looks after its own affairs and the lawyers and others appearing before it are subject to the rules, regulations and decisions of the court.
Why should it be before a court? Mr. Speaker, one of the fundamental rights of justice is the right of appeal, and any case brought before parliament is not, in my opinion, subject to appeal. It is quite true that if these cases are handled in the Senate and are later discussed and handled in the House of Commons and receive the scrutiny that they must and should receive, then there is some consideration being given in this matter of appeal. It is quite true, also, that some of these cases have been found to be fraudulent and a great miscarriage of justice has been prevented by both houses. But it seems to me that the right that should be fundamental is not granted in this particular procedure. I believe this is something all hon. members would be very anxious to provide for everyone.
Also, in connection with the question, why should it be in a court, I believe each individual accused before the court should have the right of cross-examination. We have found too often here that the right of cross-examination is denied because of our use of affidavit evidence. It seems very difficult to accuse a person by affidavit and then prohibit or eliminate the right of cross-examination through the use of this type of evidence.
Finally, we offer no decree. Our decision in parliament, if the bill is passed, is final; there is no interim decree, or decree nisi;


there is no decree absolute. When the decision is made here, there is no getting away from that particular fact. A court will provide, first, the protection of the court and the other things I have mentioned. Second, a court will provide all the necessary machinery for the proper, legal handling of the individual's problems. Third, a court has the trained personnel to handle the problems that come before it, and it has the knowledge and ability to act and perform in a legal manner. Fourth, courts in the main have a reasonable method of taxation and the rates charged are, because they are subject to review by the court, more often reasonable than we find to be the case in connection with people appearing before parliament. Fifth, lawyers themselves who engage in all types of malpractice before the House of Commons and the Senate would be subject to discipline by their own associations and the association of the court, if they were before a court. They would be called before the bar of the court and their provincial bars, and would have to answer to those bodies. People appearing before the federal parliament are not, to my knowledge, under the jurisdiction of their provincial bar associations.


Robert Jardine McCleave: Indeed they are.


William Arnold Peters: Perhaps they are. If they are, there is something wrong with some of the associations. Then the question, Mr. Speaker, is, why the exchequer court? I think it is important that we should decide which court we are going to use and why we should use that particular court. The exchequer court has all the advantages of a competent court. It has a good reputation; it is a well recognized court and there are very skilled and highly trained personnel attached to it.
Second, Mr. Speaker, the exchequer court has the right to travel. It has this right, which is restricted in my bill, because we do not want to force on provinces the acceptance of a court until they wish it. The bill could be very easily amended to include this right when the province is ready to accept the facilities being offered. The court could then travel to that particular province. This facility would only be granted when the province expressed its desire to have such a court. Third, the exchequer court is the obvious avenue through which there is the right of appeal to the supreme court. This would allow the decisions made to be appealed, if so desired by the individual, and the machinery is already available to allow for appeal.
The exchequer court comes under federal jurisdiction. This will allow parliament, when it sees fit, and when the Canadian people are ready to accept changes in the grounds for

divorce and other similar changes in the social sphere, to make amendments in the court's procedure. I believe these things are reasonable. We all remember the heat which was generated last year on this subject. We all know the things which were said, and we all know that at the end of each session of the last parliament a genuine attempt was made by many members of the house to solve this vexing problem.
I offer this bill today hoping that the government will give it consideration. If they wish to take the bill up, I would be happy to relinquish any claim I have to it. It is a simple bill and it asks for very little. I see some hon. members smiling; they do not think this will happen. I suggest to them that the government will have to solve this problem; it will have to reach a solution. I will see that they have to solve it. I offer this bill as a solution. The problem could be solved in a much more difficult way, but hardly in an easier or more acceptable manner. Finally, I hope hon. members will give sympathetic consideration to this measure. Even if they do not pass it, I trust they will give it speedy attention.


Mr. G. W. Baldwin (Parliamentary Secretary to the Prime Minister):: Listening to the hon. member, I recalled that this is not, as he said, the first time on which he has introduced a measure such as the one which is now before us for consideration. I recall, too, that I also spoke upon it on a previous occasion.
A large part of what the hon. member said was an attempt to make a reasoned argument that we in this house should no longer have before us for consideration the various divorce bills he mentioned. I said on a previous occasion, and I still feel the same way, that I am not entirely unsympathetic to that point of view. On the other hand I do feel strongly that this parliament is in effect the court of last resort; if there are people in this country who have injustices, as they may think, to remedy, and if there is no other place to which they can turn for action then, of course, they should always have the right to come to parliament. Anything which the hon. member has said must, I think, be viewed in that light.
I propose to direct the few remarks I have to make to the bill itself. I assume that in seeking to invoke the exchequer court as an instrument for dissolving marriages in certain circumstances, the hon. member is founding his proposed measure on section 101 of the British North America Act which says, in part, that the parliament of Canada may from time to time provide for the establishment of any additional courts for the better administration of the laws of Canada. I emphasize
Jurisdiction of Exchequer Court those words "the laws of Canada" because I think what I have to say is based upon that phrase. In connection with my argument I should also point out that the bill seeks to clothe the exchequer court with jurisdiction to dissolve marriages, and stops there. In my experience of these matters the most difficult part of the whole problem concerns future financial arrangements and, more important than anything else, the custody of the children who, too often, are the innocent victims of divorce proceedings.
When I spoke on this subject on the last occasion I pointed out to the hon. member that, as I saw it, there were certain legal obstacles placed before his attempt to give the exchequer court the type of jurisdiction he suggests it should have. For the life of me, I cannot see how the exchequer court could in any circumstances have jurisdiction either to provide for alimony or maintenance or to provide for the custody of children. It is not a case of an order being made and settled once and for all. Provincial courts, under orders known as decrees nisi, provide for either party to apply from time to time, as they may be advised, with regard to the question of custody when custody has been awarded to one party or another. Circumstances change. The financial or marital situation of the parties can alter and it may well be that the court might decide that the custody of the children should be awarded differently.
I suggest that the limitations which are placed in the way of the hon. member's bill to give the exchequer court jurisdiction with regard to the dissolution of marriages will not allow his measure to go far enough to deal with the care and custody of children. This would mean that the children, or those representing them, would be forced back to another court, a provincial court, where the appropriate orders could be made from time to time as considered necessary. In my opinion this seems to be an absolute barrier in the way of this particular bill.
As I have said, I am not entirely unsympathetic to the hon. member's intention. It may well be that he has himself given some consideration to the point I have raised, and he may be able to provide an answer. Until he does, I must say that in my opinion the measure before us cannot provide that full and complete relief which must be available when a court makes an adjudication upon the matrimonial rights of parties to a marriage.


Mr. Macdonald (Rosedale):: Would the hon. member who has just spoken permit a question? Would he advise the house and, particularly, this member, what arrangements are now made with respect to divorces over

Jurisdiction of Exchequer Court which this parliament has jurisdiction in connection with custody, financial arrangements and so on?


William Arnold Peters: None.


Gerald William Baldwin: The only answer I can give is that in some cases when these matters came up from the province of Quebec, although this parliament can, by an act, declare the marriage dissolved, the parties have to go back to the provincial courts for these questions to be decided. I think that is one of the things the hon. member for Timis-kaming has been complaining about.


William Arnold Peters: Before the hon. member sits down, could I ask a question?


Mr. Speaker:: I see the hon. member wishes to ask a question. I was about to say that if he was rising to speak, or answer, he might be closing the debate.


William Arnold Peters: I would like to do that, too, but I wish to ask a question now. I see that this is a legal problem. The hon. member is closer to the government than I am, and I wonder whether he would care to ask the government whether this particular section of the British North America Act might not be referred to the supreme court for a decision on this important point.


Gerald William Baldwin: I think that goes somewhat beyond this subject of the dissolution of marriage, and I do not think I am able to deal with that question at the present time. Perhaps an hon. member who follows me may be able to take it up.
(Translation):


Mr. Bernard Dumonl (Bellechasse):: Mr. Chairman, kindly allow me, in view of the fact that you were not in the chair when I made my first speech in this house, to congratulate you sincerely upon your appointment. When I went through Edmonton, I was far from thinking that there were men of such quality there, and allow me to add that if you were a Social Crediter, you would have all the qualities a man can have.
With regard to the bill under consideration, we in the catholic province of Quebec consider divorce as a rotten fruit that can only spoil everything with which it comes into contact; it is like trying to make theft legal.
Divorce recognized by law is legalized adultery; it is a law allowing a man to steal another man's wife.
Allow me to add that divorce, at the present time, which allows childless marriages, would result in empty homes.
In two reform schools in the United States, almost three quarters of the children there came from homes broken up by divorce.


In the administration of justice in the United States, at the present time, there is nothing as rotten as this divorce procedure. So, the one thing we, Roman catholics in Quebec, see now is that the way people want divorce cases to be dealt with cannot but allow divorce to spread. Each time we study these problems, we consider the difficulties brought about by legislation and we can realize that divorce is something that must be stopped, curtailed, by examining each case.
If, at the present time, the central government wishes to legislate in matters under provincial jurisdiction, such as health, pensions, roads, agriculture, transport, finance, education, fisheries, then the only thing we, in Quebec, ask in return is that the British North America Act be amended to enable Quebec to legislate on this divorce question.
Never will we accept the idea that Ottawa can come and thrust its opinion respecting divorce on the provinces of Quebec and Newfoundland, the only two without divorce courts at the present time.
Let the British North America Act be amended and let us allow the governments of Catholic provinces, at the present time, to legislate in this field, since there are exceptional cases as permitted by the church, we agree on that, despite the indissolubility of marriage which was accepted by our ancestors and still is by ourselves.
The church, sometimes in agreement with the state, allows, in extreme cases, separation a mensa et thoro.
In the administration of justice, nothing compares with this putrid procedure they have now in the United States.
If we authorize the Exchequer Court of Canada to hand down judgments in divorce cases, we shall witness dramatic incidents like the one that happened recently in the case of Marilyn Monroe, which intimates too much about a life where one can change husbands as often as one can change clothes.
In the United States, a divorce is granted every minute and such legislation is equivalent to making theft legal.
Therefore, what we are asking for in Quebec and the only thing we can accept is an amendment to the British North America Act which will permit the court of the province of Quebec to legislate in matters of divorce, should we come to the conclusion that Ottawa has too much to deal with. That is the only point on which we shall yield.


Frank Howard: Mr. Speaker, 1 had not originally intended to comment on or speak to this particular bill, but the reference to this particular matter and some of its effects made by the hon. member who has just taken his seat has prompted me to make a comment about what he said with respect to this bill. I think the hon. member for Bellechasse (Mr. Dumont), in his unguarded remarks, showed to the floor and to the public what is the general attitude of his own party with respect to minority rights. Obviously his party has no respect whatever for minority rights.


Gilles Grégoire: Look at your own party first.


Bernard Dumont: Do you want to sanctify marriage?


Frank Howard: If my hon. friend wants to engage in debate, I am sure he knows how to do it in a proper manner; he exhibited that this afternoon. If the hon. member for Bellechasse has an honest and forthright attitude with respect to this question of divorce, I am sure that when every single divorce bill comes forward as a private bill to this house he will do everything he can to defeat every last one of them, if it be his opinion that marriage is indissoluble. Or perhaps he will do what others before him have done: when the subject matter is debated, he will run and hide behind the curtains for fear of exposing to the general public his hypocrisy in such matters.
This is a simple question of taking out of parliament a matter which is degrading to parliament and placing it in a court where it properly belongs. When Canada became a dominion, the debates on confederation dealt with this particular section of the British North America Act which gave to the parliament of Canada jurisdiction over the question of divorce. The reason that this jurisdiction over matters of divorce was given to the parliament of Canada, as I gather from reading the debates, was in order to guarantee the protection of minority rights in the province of Quebec; that was evident from the debates. Now the hon. member wants to upset what was done almost one hundred years ago to protect the rights of minorities in any province, and particularly in Quebec, and to use the state to impose upon those who have different views the particular views, perhaps, of one religion in the country.


Mr. H. Russell MacEwan (Piciou):: Mr. Speaker, I have listened with interest to the various speakers on this bill. Generally speaking, the bill has some features which commend themselves to me. I have listened with interest to the remarks of the hon. member
Jurisdiction of Exchequer Court for Timiskaming, having sat with him on the miscellaneous private bills committee for a few years and having heard the evidence which was given before that committee.
Generally it seems to me that the matter of divorce should firstly come before a body other than that of parliament. I know that in the other place the divorce committees deal with various cases coming before them in a proper manner; indeed they have many learned gentlemen who are able to weigh the evidence, and I have nothing to say with regard to that. But speaking from experience of the cases which have been heard by our committee, which during the last few years had as its chairman the parliamentary secretary to the Minister of Public Works (Mr. McCleave), who is also one of the hon. members from Halifax, and who I might say did an excellent job on that committee, certain cases came before the committee which were retried. There was a trial de novo and witnesses were reheard. Although I am not going into the minutes of the committee, Mr. Speaker, I recall one case in which it seemed to me, after having sat until about two o'clock in the morning, that the wrong decision was arrived at. Some of the evidence which was given to the divorce committee of the other place seems to fall into a certain pattern, and it appears to me that perhaps these matters could better be dealt with by a separate court. I am not sure that it should be the exchequer court; I am not yet convinced of that. Perhaps a new court should be set up by parliament to hear these cases. I do not know what name we should place upon it. It may be that the exchequer court is now too busily engaged with other matters which occupy its attention.
Just to divert for a moment, may I say this. Being in the legal profession I heard the remarks of the hon. member for Timiskaming when he stated in effect that if the lawyers who engage in what he called malpractice before parliament, appeared in their own provincial courts or before the exchequer court, they would be subject to their own provincial bar societies and that they are not now subject to those bar societies. I do not think that statement is correct. I think the hon. member is wrong there. Regardless of where a lawyer practises, he is subject to his own particular bar society, whether he comes from Montreal, Ottawa, or any other place and he is answerable to his own discipline committee or whatever the authority might be.
I listened with interest to the parliamentary secretary to the Prime Minister, the hon. member for Peace River, with regard to the matter of custody and maintenance.

Jurisdiction of Exchequer Court From the bill I note that the hon. member for Timiskaming, in the explanatory note, states that the jurisdiction as to alimony, the care of children and other matters will remain in the provincial courts. Possibly this is the way the situation should be. Even if a separate court were set up by the federal government or cases were to be handled in the exchequer court, I do not think it could look into these matters. In the provincial courts, other than in Quebec and Newfoundland, the matter of custody and maintenance is most important as it is also in those provinces. The judge who hears the case, has full knowledge of the facts and has the witnesses before him, can then decide these important matters. The custody and maintenance of children and the maintenance of the wife if she is not the guilty party are, of course, things which could be dealt with by the provincial courts.
If I understood him correctly, the hon. member for Bellechasse suggested that perhaps a federal court should not be set up but that changes should be made in the British North America Act in order to enable provincial courts to be set up in the provinces of Quebec and Newfoundland. If that procedure were acceptable, perhaps that would be the alternative to be followed. If these provinces would go along on that basis, as it is in the other provinces of Canada, then indeed I believe, the matter of divorce could be adequately and more wisely dealt with in that way.
I think there are certain parts of this bill which should probably commend themselves to hon. members and perhaps to the government. As I have said, generally speaking, having regard to the evidence which comes before the other place and at times before our committee, I think some changes need to be made in our divorce law. I think a full study should be made of this matter. The hon. member for Timiskaming would undoubtedly say there has been ample time for this to be done. He has brought this matter before parliament on not too few occasions and he will undoubtedly say that changes should be made now. There are parts of the bill which commend themselves to me as an ordinary backbencher on the government side. I think the matter should be looked into further and that a further study should be made of it. Then possibly some conclusion could be arrived at.


Mr. Andrew Brewin (Greenwood):: Mr. Speaker, I just wish to make one or two comments. This bill does not involve the principle of divorce or the question of whether we approve or disapprove of it. It deals with the forum in which these divorces
[Mr. MacEwan.I
are going to be dealt with or what court or forum should deal with them. I think it is sufficiently obvious to every reasonable person that parliament is not a proper forum in which to deal with these domestic matters. It is not set up for that purpose. It is not qualified to serve that purpose. I hope that some day parliament will recognize its own inability to deal with the matter and also the degradation of being obliged to deal with a matter that is properly one to be sifted by the courts of the land. My suggestion is that parliament should take hold of this matter and decide it soon.
(Translation):


Mr. Speaker:: Unless the hon. member for Bellechasse (Mr. Dumont) is rising to ask a question-


Bernard Dumont: I wanted to ask my hon. friend opposite if he was aware that in 1945, when it was asked to amend the divorce laws, there were a lot fewer divorces in Quebec and Newfoundland than elsewhere. To give you an example, in 1918, there were 2, and in Ontario 10; in 1954, there were 370, and in Ontario, 2,346.
Can my hon. friend explain this situation whereby the number of divorces was maintained at a low level thanks to the province of Quebec?
(Text):


Mr. Speaker:: No question could be put to the hon. member for Timiskaming. A question could be put only to the hon. member for Greenwood. However, the hour for private members' business having now expired, the house will revert to the business that was interrupted at five o'clock.



[Stage Direction]
The house in committee of ways and means, Mr. Paul in the chair.
At six o'clock the committee took recess.

AFTER RECESS

The committee resumed at 8 p.m.
Colin Cameron: Mr. Chairman, at the supper recess I was dealing with the question of business investment in the period between 1957 and 1961. I was pointing out that business investment had declined in that period from $7.3 billion to $6.5 billion, a decline of some 11 per cent. But in the same period business savings had increased from $4.9 billion to $5.1 billion. Yet, Mr. Chairman, both the Conservative government and the Liberal opposition appear convinced that the way in which to speed up investment and stimulate

economic activity is to give more tax concessions to business. I am reminded, sir, when I see them flying in the lace of the experience of the last 10 years and suggesting that this is the key to expansion and development, of the story about a rather crusty English judge who was called upon to adjudicate a fine point in heraldry. After having listened to the various heralds and pursuivants, and so forth, the old judge said- it seemed to him that they were a lot of silly old men who did not know their own silly old business. I suggest that some of these stout defenders of free enterprise do not understand the rules by which their sacred world of business operates.
I was interested last night to hear the hon. member for Davenport have this to say, as reported at page 817 of Hansard for October 22:
Our kind of economy works best in circumstances where responsibility for economic decision making is decentralized and in so far as possible is kept in private hands.
This, Mr. Chairman, after he had spent an hour telling us how our economy was not working satisfactorily in circumstances where the decision making was left in private hands. It is on this point of the faith, the rather touching faith, in the wisdom and acumen of the business community, that we in this party have to part company with both our Conservative and our Liberal friends. How anyone can stand up in this house and affirm his faith in the business community and its collective wisdom after decades of mismanagement, passes my comprehension. This is the business community which in 1939 went on strike in order to force the nation, in its extremity, to pay blackmail; this is the business community that since the end of the war has been on a drunken, staggering course of boom and recession, and overextended some sections of the economy while starving others. This is the business community in which the Liberal and Conservative parties would have us pin our faith and our hope.
I am not concerned so much, Mr. Chairman, with trying to allot the blame between the present government and previous administrations; that would be an exercise in pointless futility. These are not so much crimes of government as crimes of the business world. The crime of government has been that they have stood by and allowed these things to happen. Today, both the Conservatives and the Liberals reveal that they are still wedded to the proposition that the chief purpose of economic activity is to provide an opportunity for a business enterprise to amass profits, with the public welfare entering into the matter
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only incidentally. We are being told today, Mr. Chairman, that there is a new Liberal party. Great stress is laid on the presence in the entourage of the Leader of the Opposition of a number of bright young men, of bright young faces, who we are assured are all Liberal with a small "1". In fact, in private, it is whispered in our ears that they are actually socialists.
However, I noticed during the recent election campaign that there appeared to be no lack of funds for television programs, for jet planes, for huge newspaper advertisements, and so on. From my fairly extensive knowledge about collecting campaign funds in many election campaigns I am constrained to believe that there could only have been one source of the very lavish funds which this new Liberal party had at its disposal during the election last June. This source could only be the surplus of corporate wealth in this country. At the same time that they use the bright young faces of the bright young small "1" Liberals to convince the progressively minded people of this country that we have a new Liberal party dedicated to new propositions, dedicated to changing our way of life, they have of course to reassure the business community that they have nothing to fear from this new Liberal party. It is prepared to do business at the old stand just as it did previously.
This is a difficult and delicate performance calling for very careful footwork. The business world has to be convinced that this one particular party could serve its interests better than the other party, and at the same time the voters have to be persuaded that the same party is more concerned for the common man than for any section of our community. I noted the other day an article in a newspaper written by an eminent member of the press gallery for whose opinions I have the utmost respect, in which the proposition was discussed as to whether or not there would eventually be a merger between the New Democratic party and Liberal party. I have, I think, pointed out that there is an impossible gulf that lies between us, that lies between this party and any party which is convinced that the affairs of our community can safely be left in the hands of the business community, and in particular that dominant section of that community which today dominates the whole of our economic life.
Of course, Mr. Chairman, I am a socialist; in fact I should say an unreconstructed socialist, more convinced today than I was 30 years ago that the solutions to the problems of our nation cannot be found within the framework of private enterprise, of capitalism, of the business world. The institutions of that world.

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the huge corporate organizations that have been built and organized for one purpose and one purpose only, the amassing of profits, cannot be the foundation of a stable world in the future. A world made safe for big business, if indeed that could be achieved, cannot be a world made safe for ordinary men, women and children.
Underlying all the alarms and excursions of this dark and perilous era we are living in is the fact of revolutionary change, a revolutionary change which, if our world survives, must sweep away both the crude and overtly brutal despotisms of what is termed the communist world as well as the concealed and more subtle despotisms of the democratic world, the world of private enterprise, so that there might emerge around this globe a real free world of free men and women.
The one great feature, the one saving grace of the half of the world in which we live, is that with all its evils and all its stupidities it nevertheless offers us the opportunity to make those revolutionary changes, to build those new institutions and develop those new human relationships which are guaranteed to generate the force which will be able to sweep tyranny aside and the oppression of man by man, wherever they may be found.
As we build the new institutions we must begin the demolition of the old. To this work of construction and demolition this party is dedicated, this party which is the successor of the long line of movements of those men and women who, throughout the years, have worked and fought in the socialist movement, and by whose efforts so much of value and so much of decency and rationality have already been imported into the jungle of our predatory society.
Today we stand on the threshold of that new world. The purpose of this party, the reason for its existence is to urge, persuade and encourage the Canadian people to step over that threshhold, to join that revolution, to take courage in both hands to destroy the old and build the new.
We can have no part in attempts to plaster over the widening cracks in the capitalist structure. That structure cannot be shored up, made weatherproof and converted into a satisfactory dwelling place for man because the timbers are rotten, the bricks are cracked, the roof leaks and the floor is collapsing. It is time, and past time to prepare to move out, to build a more fitting dwelling place for the body and the spirit of man-the co-operative commonwealth which will embrace the entire family of man in all quarters of the globe.


Mr. Nugent:: Mr. Chairman, I am quite overwhelmed at the thought of trying to match the type of oratory to which we have just been subjected. I am afraid I am not light enough in spirits to treat it in the same manner as the hon. gentleman because I am a little depressed at the thought that tonight in the Caribbean there is an American naval fleet which may at this very moment be meeting, stopping and searching ships at sea on their way to Cuba. The possible consequences of a refusal to be stopped are such that I am sure we all feel just a little frightened.
I for one, when I contemplate the possible results of any action of that type, think it deserves a word or two in this house to make sure that if we become involved in a conflict that could take place, that we are legally and morally right in what we do.
The state of the United States relationships with Cuba is one of a gradually deteriorating condition over many months. I believe part of the original difficulty stems from the concept of foreign policy which I criticized in this house a year ago, the concept of anti-communism rather than pro-democracy, leading to a position where we sometimes trample on some of those things which we hold dearest in a democratic country.
The United States has certainly some cause to be annoyed with Cuba, and I think I would have support in this house when I say there are not many hon. members who are happy with the direction Cuban politics took and the way its government developed, or with Cuba's great love affair with communist Russia. However it is one thing to be very unhappy with a country and to be quarreling with it, but it is quite another thing to try to impose your own will on that country.
One of the fundamental facts we must recognize is that Cuba is an independent, sovereign nation. Its government may or may not have the public support of its people, although we did have an example not too long ago of an attempted invasion-and I am not sure the United States can think its hands are particularly clean about that-where the invaders found that the populace did not spring to their assistance. If these are a subjugated people they were at least a little reluctant to be saved. We may not like its form of government but I suggest that whether it is a large country or whether it is a country that is friendly to us, it is a sovereign state, and those of us who believe in the rights of sovereign states, as subscribed to in the United Nations charter, must concede that big or small, friendly or unfriendly, whether we like it or not, that country has the same rights as we have.

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Cuba has the right to arm itself with whatever arms it can get. Cuba has the right to make any alliance that it wishes for its own defence, no matter how much we may dislike, disapprove or even fear that alliance.
Last night mention was made of the fact that the United States was taking action because it has suddenly discovered that the military installations being built in Cuba, presumably supplied by Russia, were for offensive weapons intermediate range ballistic missiles. The words "offensive" and "defensive weapons" are sometimes a little indefinite. Sometimes I feel that we call defensive weapons ours, and offensive weapons theirs. Certainly anyone who has listened to the debates over the past few years, who has read the newspapers or heard United States military policy talked about, has heard about the deterrent and has heard the Americans and others say that the only thing that maintained peace in the world was the United States defences, the striking power of the United States strategic air force, weapons designed to carry the fight to the enemy, these weapons being our first line of defence, our main line of defence. Certainly the words "offensive" and "defensive" may have a very different meaning, depending upon which end of the gun you are looking at.
I can understand some feeling of alarm among the American people at having this type of fearsome weapon only 90 miles from their coast. But, Mr. Chairman, many people all over the world have to live with the thought that their next door neighbour, separated by no water at all perhaps, is equipped with much more fearsome weapons than they have. They live in the shadow forever of a larger and more powerful enemy. Cubans, I may say, have been living in the shadow of the fearsome American arsenal for some time. Many of us live in that shadow, and we can only judge of our safety and how much we want to live there by the actions of that large and powerful neighbour who has the strength to overwhelm us-
(Translation):


Mr. Marcoux:: On a point of order, Mr. Chairman. In your opinion, is the hon. member who has the floor at present, dealing with the budget or is he not going slightly astray?


Gordon Campbell Chown: I believe it has been decided by unanimous consent that the debate would be limited only insofar as time is concerned. However, this restriction was not to apply to the official spokesmen of each of the parties.


Guy Marcoux: Thank you, Mr. Chairman.
(Text):


Terence James (Terry) Nugent: Mr. Chairman, the point I am making is this, that when we talked in this house about the action being taken, about the build-up in Cuba and the United States action in taking this matter to the security council and to the United Nations, and said we would help, this I submit is the sort of action that all of us who believe in the United Nations would like to see followed. What I am complaining about and what I am worried about is the action the United States has taken itself in moving in with its own arms and stopping legitimate traffic on the high seas. There is no legal right, other than might, that I can see involved here. There is nothing that I know of that prevents merchant ships sailing to Cuba. I am afraid of an incident happening to a ship refusing to stop and the United States carrying out their threat of firing on that ship. In my view such an action by the United States government would constitute an act of war, would constitute unprovoked aggression.
The United States is our ally. We have not been consulted, although we were informed of the action. I think it is up to us to take a look at our ally, speak to our ally and say, "Any war you get involved in, we must of necessity get involved in too"; but that we cannot, as a nation with a national conscience, permit ourselves to be associated in an action which constitutes unprovoked aggression. I suggest that it is the duty of our government to bring this salient feature to the attention of President Kennedy, to ask him to stay his hand, to not precipitate a fight. I am afraid that the other side will not back down in the face of unprovoked aggression-and where it stops, no one knows.


Gordon Campbell Chown: Order. I am sorry to interrupt the hon. member but I question in my own mind whether or not his discourse on this matter, which is in the field of external affairs, is in the best interests of everybody at this particular moment. I am not unaware of the fact that certain agreements were made in this committee as regards standing order 59(2), which has to do with relevancy. I know that very broad scope was given to all hon. members in connection with this particular debate. But what I am concerned about is the fact that we have a very serious crisis in this particularly narrow field, which is of such moment internationally at this time that the question arises in my mind as to whether it is in the best taste to be dealing with a subject that is so highly sensitive at this particular moment.
I am prepared to hear argument on that score, because I realize I was in the chair when very wide scope was given to this debate. But I feel this is the time when I should charge the committee and each and

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every hon. member with this question: in the light of this international situation and the crisis that is now before us, is it in the best interests of all of us to be discussing a subject that is so highly sensitive, not having already been seized of the facts that perhaps certain people in high places are seized of? Therefore, is it possible for us intelligently to comment on a situation that is so highly sensitized? I would ask the help of the committee on that question. I am not in any way trying to foreclose the hon. member from Edmonton-Strathcona; but I do feel I should have some advice from the committee before he continues with that particular subject.


Terence James (Terry) Nugent: Mr. Chairman, if I might just say this. The fact, of course, of the events that are taking place now means that, should there be conflict our entire program here is going to be changed; the plans we are now discussing are going to be changed. I am sure many hon. members noticed what happened to the stock market between last night and tonight and the fact that this crisis is having a direct bearing on the economic situation of this country at the moment.
I just wanted to add one more remark regarding the effect it is going to have, even if we get over this crisis-


Gordon Campbell Chown: Order. I am sorry to again interrupt the hon. member. All of us know that as far as the field of external affairs is concerned, it has been our custom to treat this as a subject quite separate and apart from the current fiscal problems of our nation, and I feel it is not-I am expressing an opinion and am subject to the guidance of the committee-in the interests of Canada to discuss this subject at the present moment. I only recognize the possibility that anything said with part knowledge or with full knowledge might have a most embarrassing effect on our beloved neighbour to the south. I think this is a subject which should be looked at in retrospect after this crisis has been coped with by the principals involved. Before the hon. member carries on, I feel I should have the guidance of the committee. I recognize that very wide scope was allowed at the beginning of this debate but I would point out to the committee that this question was not before the country at the time the ruling was made. I only ask hon. members to exercise good taste when discussing this very sensitive subject.


Terence James (Terry) Nugent: I will only say that I think you are right, Mr. Chairman. There is not enough scope for individual members to discuss this during this evening's debate. I have made my point and I will rest content.
[The Chairman.]


Mr. Knowles:: I think the point of order should still be considered in case some other hon. member may wish to raise the subject. I believe the question as to whether there should be any inhibition placed on members so far as discussing this subject is concerned should be cleared up. There is no question that in this debate there is wide latitude in discussing all matters of public concern. That is part of the agreement of yesterday, and the international situation can almost certainly be related to the finances and the budget of this country.
I also wonder, Mr. Chairman, with great respect, whether it was in good taste for you to argue with the statement made by the hon. member. In effect you were answering his points and criticizing the statement he made. That is appropriate for another hon. member to do, but for the Chair to do it is another matter and may be called into question. I would also suggest that if we are facing an international crisis, this is the time to protect the right of free speech and the right of hon. members to express their views about these matters. For my part, I do not think the hon. member who has just sat down exceeded the bounds of good taste.


Gordon Campbell Chown: I wish to intervene to tell the hon. member for Winnipeg North Centre that I am sure if he reads my words in Hansard tomorrow he will not find I was arguing with the hon. member for Edmonton-Strathcona at all. Rather, I was seeking the advice of members of the committee before this subject was pursued further in the light of the crisis which is imminent or passing or, at least, of sufficient moment to exercise our minds as to whether or not we should pursue this topic. I hope the hon. member for Edmonton-Strathcona will not take it I was arguing with him, because I had no intention of doing so. I thought that in the light of the fact that we were entering upon the field of external affairs I should seek the advice of members of the committee.


Mr. Fulion:: I think most hon. members will agree that the Chair is in a difficult position with regard to this question, as is the committee. I do not think any hon. member would for a moment suggest that it is not open to the house, whether in committee or not, to discuss a matter of such great importance as what is going on in the Caribbean. I did not take if for a moment, Mr. Chairman, that you were saying that this was a subject beyond the competence of the house or the committee to discuss. I took it rather that you were raising a question as to whether a resolution having to do with income tax, even in the light of the latitude

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so far agreed to, was an appropriate basis upon which to raise this matter of international relations.
It would be my view that if the house wished now to have a discussion of this kind it would make its wishes known in that regard and interrupt its proceedings in order to do so. But as long as we are dealing with an income tax resolution we should surely confine ourselves reasonably closely to that subject; even granted that we have allowed ourselves the latitude to consider general economic matters we have not extended it so widely as to include the specific question of international importance such as I think, Mr. Chairman, you felt the hon. member was trying to introduce.
I believe you were right in drawing the attention of the committee to this question on which you would be required to rule, because if one hon. member was permitted to discuss the situation arising from our concern about Cuba, others would have to be given the same right and we might, on an order dealing with an income tax resolution, find ourselves engaged in an entirely different kind of debate. I think it is the sense of the committee that we should confine ourselves at this stage to the general economic problems which are raised by the resolution before us and proceed at some other time, and under a more appropriate order, with a discussion of the kind which the hon. member for Edmonton-Strathcona was hinting at.
(Translation):


Guy Marcoux: Mr. Chairman, I rise on a point of order. A while ago I wanted to find out if the hon. member was straying from the matter under consideration. I was told that the debate covered a wide scope, but, following the decision made by the deputy chairman, the hon. member had kept on talking.
I respectfully submit, Mr. Chairman, that in committee, this decision does not rest with him. He should not even suggest to the committee to decide whether a member must keep to the matter or not, in view of the fact that he has accepted the wide terms of the debate.
I think that only party leaders can ask a member to go on to another subject. I submit that opinion because if he speaks about Cuba, others may talk about their ridings, their relatives or their friends.
I do not think the committee should have to make decisions each time a member rises to speak. Therefore, those who enforce discipline within the party should tell their members what not to talk about. That is my point of order.
(Text):


Mr. MacEachen:: I should like to say a word on the point of order you have raised, Mr. Chairman, in awareness of the fact that your point was not raised with respect to relevancy. We decided when this debate began that it would be a general debate equivalent to a budget debate during which a wide range of matters could be brought before the committee. If you had raised a point of order in connection with the relevancy of the remarks of the hon. member, then I think we would have occasion to attempt to define the limits of the consent which we gave on Monday. But I understand that your comments are on an entirely different level, namely, you wish to secure from the committee an expression of opinion as to whether at this time, in view of the international crisis, it was proper or in good taste or in the interests of Canada to discuss a matter which has some sensitivity.
I submit to Your Honour that this is a matter that must be determined by each individual member of the committee as he discharges his own responsibility in the House of Commons or in this committee. It is a responsibility that a member of the committee must take for himself, namely, as to whether it is in Canada's best interests, whether it is in good taste, or whether it is proper, to deal with a matter of sensitivity in international affairs. I make these comments, sir, with deference to the request which you made to the committee. I would find it very difficult, speaking to the point of order, to agree that, having determined to embark upon a general debate equivalent to a budget debate, there could be very easily a limit set on the discussion without further reference to the committee in order to obtain consent.


Mr. Churchill:: Mr. Chairman, I appreciate the difficulty under which the committee is functioning at the present moment, and I am sure that no one wishes to limit any freedom of discussion; I certainly do not. But when we made the arrangement with regard to this debate and decided that the rule of relevancy would not apply when the first resolution was before us, the proposition which I put before the house, and which I thought was accepted on Monday, was expressed by me in these terms, as reported at page 703 of Hansard:
This is a departure from the procedure in the past, but it would open the way for a general discussion on economic matters in Canada.
I was limiting the debate to general economic matters so that we would not be restricted precisely to the amendments to the Income Tax Act which happen to be before the committee at the present time. I was not thinking in terms of a wide ranging debate

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such as we have on the speech from the throne, when every subject under the sun can be discussed.
The only suggestion that I would make at this stage is that, for orderly progress of this debate, we restrict our remarks to the general economic conditions in Canada; and as the Minister of Public Works has pointed out, if on a subsequent occasion-perhaps tomorrow, I do not know-the house wishes to discuss some matter of great urgency, why, the time would perhaps be allowed for that purpose. But to mix up this debate with a completely general discussion on any subject which might occur to an hon. member is, I think, hardly in keeping with the arrangement which I thought we made on Friday, and subsequently on Monday.


Mr. Berger:: Mr. Chairman, on the point of order, when the house leader and the government proposed that the rule of relevance be disregarded during the debate, the hon. member for Winnipeg North Centre warned them of what the consequences might be. But they persisted. Now, because one of the hon. members of this committee has chosen to discuss a most urgent matter which, in the opinion of this hon. member at least, is clearly in order, some effort is apparently being made to restrict him. With great respect, Mr. Chairman, I suggest that the hon. member who had the floor, the hon. member for Edmonton-Strathcona, is entitled to proceed in the vein in which he was talking, because the rule of relevancy having been disregarded it cannot be brought back in by the Chair, by the house leader, or by anybody else; it can only be brought back in by this whole committee.


Gordon Campbell Chown: Does the hon. member for Cariboo wish to make a comment?


Bert Raymond Leboe: Mr. Chairman, just a very short observation. I think that due to the fact that this subject has now been opened in this debate, it is obvious to us from the comments which have been made that it is a delicate situation. The matter which bothers me is not the question of the relevancy of debate, but rather that the hon. members who are speaking in this debate could all be speaking on other subjects while one hon. member puts forward a proposal or a line of argument without any balance in the committee. I can see where we could find ourselves with two or three speakers taking the same line, and from those two or three speeches we could get the idea that the committee was in unanimous agreement with that type of thing. This is the danger which I see in what we are doing tonight. I should like to point out to the committee that I fear that this could happen if we do not launch

into a general debate on the subject, so that we can hear from all sides of the house.


Gordon Campbell Chown: Well, I am very much in the hands of the committee, as you all realize. I hope that no one misinterpreted the fact that I rose to my feet, which I very rarely do on my own initiative and without being prompted to do so by some hon. member of the committee. I rose only because I comprehended the larger interests involved, and I can only say I felt I should rise because the narrower scope of the national economic situation in Canada was in my mind at the time the unanimous consent of the committee was obtained. When we got into the broader field of international affairs I felt I should rise and seek your advice.
I cannot back away from the unanimous consent given by the committee to put aside subsection 2 of rule 59 for the purpose of this debate in committee of ways and means, so I can only leave it to the hon. members to determine in their own minds, and indeed to interpret to the letter the ruling or understanding which was come to on unanimous consent yesterday, whether it is in the interest of Canada to proceed to go into a field as broad as the sensitive area of the Cuban situation, which is truly in the field of international affairs.


Mr. Crestohl:: Mr. Chairman, on the point of order; I think you were very judicious in the way you went about seeking the guidance and advice of the committee. I think your point has been made, in giving the committee the benefit of your guidance as chairman of the committee with respect to this very sensitive subject which has been raised. I do not think though, Mr. Chairman, that we should in any way interpret this as a precedent for the continuance of a debate as to what will or will not be relevant. That is the one point that I see in the observations you have made to the committee. I think it was proper for you as Chairman to draw this sensitive situation to the attention of the committee and I think you have made your point. But I do not think you should make a ruling as to whether or not the speaker was or was not in order. Rather, you should leave the committee to continue with the interpretation of the conditions set up for this debate, so that it will not serve as a precedent to any other speaker who may speak in the debate.


Mr. Davis:: Mr. Chairman. I should like to return to a somewhat less sensitive subject than that before the committee tonight, namely Canada's economic prospects. First I should like to congratulate the Minister of

Finance on his appointment to that high office. It is a great responsibility. It is more than looking after the public purse; he is, if he performs his function properly, the grand architect of this nation's financial and economic future. Whether we are poor or rich, whether we are with jobs or unemployed, or whether we lose title to our nation's birthright, is in his hands. His grasp of the sweep of history, his vision, and above all his ability to communicate his plans to the country, will determine whether he has carried out this function well, and whether posterity will regard him as a great man-a great man following many predecessors, as Minister of Finance.
As a new member of this House of Commons I welcome the opportunity to speak in this debate. I would have welcomed it more, however, had the minister given us a better idea of the government's plans and where we were likely to be going in the months immediately ahead. I feel quite keenly the need of a financial blueprint. You see, Mr. Chairman, I have been spoiled. I have been working in a few businesses which have been businesslike. In order to prosper their management has had to know where it was and where, if they did nothing, they would be going, and what they must do in order to change the course of events and make the best outcome realizable.
Surely we in this parliament should be in much the same position. Surely we should have access to all the facts. Surely they should be analysed by competent staff, made up to date and have a sufficient sweep projected into the future for us to be able to get hold of the problems facing us and discuss intelligently among us the alternative courses which may be most advisable. Instead of this, we have separate financial resolutions. These are being put forward piecemeal for consideration, with no background material. Although we have just been through a serious financial crisis, there is no forecast, although in the opinion of many economists we might face a downturn in 1963. There is no budget white paper of the nature normally presented in the United Kingdom and in the United States by the president in the form of the report of his council economic advisers. It is no wonder that we in this House of Commons are confused. It is no wonder that the people across the country are confused and do not know where our economy is going.
In order to sort out my thinking I have established a few priorities. At the top as No. 1 I would put full employment. In second place I would put a continual improvement in productivity. These two dynamic objectives, if realized, would create greater national output and greater income. There is a
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third objective or one which I would rank as No. 3. This is our national purpose to hold on to more of our own resources, to control more of our national destiny. The fact that we have been steadily losing grip is reflected in the $1,000 million gap that we have repeatedly experienced in our balance of payments in recent years. In order to bridge that gap we have been asking others in effect to do the saving for us. They have put up most of the capital which has gone in the expansion of our resource and other industries. They are the ones now who are entitled to a fair return on that investment. I am all in favour of treating them fairly. However, something must surely be done before we find ourselves with a first class financial and-something which is even more serious-political crisis on our hands. The time to do it is now. We should begin at once to put our own financial house in order. Otherwise we are going to witness a few explosions which will be harmful not only to our international relations but also to the future of free enterprise in this country.
Let me say emphatically that I reject nationalization as a comprehensive solution to this difficult problem. Let me also say that laws which require a given proportion of a company's stock to be sold or held in this country are undesirable because they are unlikely to work. I would prefer instead to take a positive approach, namely that of giving to Canadians the greatest opportunity to work their way up, to manage, to invest intelligently, and eventually to own a major share of the corporate wealth of this country. In order to do this they must be well trained and they must have access to up to date information. Annual reports, complete with balance sheets, should be published by all foreign owned companies operating in this country. A majority of Canadians domiciled in Canada should also direct the affairs of subsidiary firms operating here. Then, with inside information and a knowledge of things Canadian, they will be able not only to maintain a cordial relationship with the international corporation's headquarters in other countries but will also be able to help regain a larger measure of our Canadian wealth and direction by Canadians.
The progressive Canadianization of big foreign owned corporations is not my only concern. Canadian initiative should have full play in other fields. Small businesses will be starting up, and flourishing by the thousands. If credit can be made available at reasonable rates of interest and for long enough periods of time, here is where the real flowering of our Canadian entrepreneurial talent can occur. Mind you, it has little chance of success if the present "tight money" policy should
8S8

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remain in force for too long. However, 1 feel sure that, sooner or later, we are going to use Canadian credit to buy back our national heritage. The government can arrange things so that it can borrow cheaply, so that these small people can use the usual commercial channels and so that energetic and far seeing Canadians who would like to own as well as run their own modest share of the Canadian economy, can realize these ambitions.
To turn now to budget matters may I say this. This government is in the habit of running our financial affairs at a loss. It has run up budget deficits amounting to several billions of dollars. Again this year we shall be paying out close to $110 for every $100 which the government recovers in the form of taxes. This practice is bound to be inflationary. Nothing could be better calculated if we persist in this practice, to drive down the value of the dollar. Nothing is likely to drive up prices faster across the nation. To make matters worse, the government keeps saying, that it really intends to balance the budget. The awesome fact that it fails year after year to do what it says it is going to do, merely adds to the confusion. It helps to undermine the confidence of any investor, whether he be a Canadian in this country or a foreigner looking at Canada for opportunities to invest here.
The principal determinants of our national income over the long run are population growth and productivity. Both are lagging right now. If things go on as they are we shall be losing just about as many young native born, well trained Canadians to the United States as we shall be taking into the country in the form of immigrants from other countries. With this hemorrhage of brains going on, the efficiency of our working force is bound to be less than it should be. It has been suffering. Productivity per capita has been roughly standing still ever since 1957. As a result, Canada's total output of goods and services has been edging slowly upward at a rate of between 2 per cent and 3 per cent a year. We are being outdistanced by our friends and our enemies alike. We are in a rut. However, we must and we shall shake ourselves loose again. Of that I am sure.
How to bridge our 10 per cent gap in our budget bothers me as it bothers many other Canadians. I can see us holding the line on expenditures, cutting here and adding there with a view to maintaining as high a level of employment as possible in the construction industry. But greater productivity is the real key. Taxes, in this context at least, must come down. They should be streamlined and they should be shifted if possible, from the

shoulders of those who produce to the shoulders of those who merely consume. More production is really what we need. Let us use some of this excess capacity we have. Let us put more of our people to work. Let us create more wealth by intelligently working harder. This is the only practical way of creating additional revenue without raising taxes and in order to balance our budget in the long run. What we need are incentives. I refer to incentives to develop new products, to introduce new processes, to shift out of inefficient industries and into more productive ones. A policy of freer trade will help, but import competition is a hard taskmaster. We have to know where we are going and beam our research programs, our government assistance, in the right direction. This is one way in which we can virtually pull ourselves up by the bootstraps, by harnessing the driving force of our own free enterprise economy and by letting economic growth, instead of increased taxation, provide us with the additional revenue which we need.
The measures which I applaud include the new tax incentive which the government has outlined in the speech from the throne for corporations undertaking increased expenditure on scientific research in Canada. I would go further, however. I think the government- I hope the government-intends to go further and beam this towards industrial research and development in Canada. It is in the field of applied research that we are so woefully weak. It is in this field that private industry in so many other countries does so much, and we do so little. Our government establishments do a great deal of scientific work but it is not the type of work which can be immediately applied to our resources to provide additional jobs in this country. Again, research would provide the opportunity to repatriate much of the ownership and control of industry in this country. The men who carry out research are on the inside track. They have inside information. The more Canadians we have with this opportunity the more Canadians we will find investing intelligently in our future, the more of our industrial output we will find returned to Canadian ownership and control.
There are numerous other measures which I should like to see implemented. The first is a tax holiday for new industries, especially those prepared to locate in areas of chronic unemployment. Then, I should like to see tax adjustment grants for industries which are seriously hurt by import competition, an adjustment along the lines of that indicated in President Kennedy's trade expansion act. This arrangement would help industries hurt

by overseas competition to adjust to this competition and help them get back on their feet in other lines of endeavour. Then, I should like to see the government remove taxes and other restrictive measures which continue to frustrate trade between Canada and the United States as well as many other countries with which we trade.
Electric power is something about which I know a little bit. It is a case in point. This giant industry has, through its construction program, provided much of the support for our post-war economy. One dollar out of every ten going into investment has to be produced in and through the power industry. Its forecasts, because of our lack of economic growth-these are prepared and published by the industry-indicate an excess of investment of the order of 20 per cent through to 1965. Think of it, $7,000 million worth of investment, 20 per cent of this or almost $1500 million of investment, standing idle at the present time because we are overbuilt. Think of what we could do, what we could earn, if even half of this investment could be used to service adjoining areas in the United States. The income to these utilities could be of the order of $50 million a year. This $50 million a year could be used to reduce power rates in this country. It would be $50 million on the right side of the ledger when it comes to balancing our imbalance of payments.
Now, let me turn to another broader and more important, I think more significant area of our economy, that of the tertiary industries, the service industries. These are the industries which typically are manned by small men, often by Canadians. Let us think of tourism. Why is it that most of the residents of many of our Canadian cities go south? Why is it that most of the people in the city of Vancouver who ski go south to ski? It is because we do not have easy access to much of our own territory in this country. Why not open up our own parklands, with government money if necessary? Why not exploit our own scenery? Why not build more roads that run north and south as well as east and west? Why not assist in the construction of small boat harbours that will allow our own people as well as those from the United States and elsewhere to explore our coast? Why not provide low interest loans with long term repayment clauses to municipalities and others who want to build convention centres? Why not dress up our Indian reserves and make them show places for others as well as our own people? These are imaginative projects. There are people today who are quite enthusiastic about them, and I am sure they could pay dividends.
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I believe this is the direction in which the federal government should be headed. It should be showing the way to innumerable Canadians who want not only to stay in this country but also to earn a respectable living running an enterprise which they own themselves. Here is one way in which we could at the same time open up the country and keep Canada for Canadians. All we have to do is move with the times and use our national credit, our federal resources, in order to support these ventures and to get things done.
Now, my main thesis in speaking tonight is that the government should be planning ahead. It should be forecasting events and the steps it will take to deal with them. Government is the biggest industry in this country and many people now look to government for an understandable solution to their problems. They want us, they want parliament, more than that they want the government to develop blueprints which they can understand. They want these forecasts and these policies reduced to terms which are understandable to the small man, and often this means to Canadians.
This debate, as we all know, has not been a full scale budget debate. It has not given us the opportunity at least of seeing the full program of the government, of seeing it laid out in a rational and understandable manner. Perhaps there is an explanation for this. Indeed, the explanation may be obvious to many of those of us who have sat in this house for the last several weeks. It was not so long ago that the two great protagonists, the Social Credit and Conservative parties, were flexing their muscles and taking wild swings, albeit at safe distances, at one another. They were warming up for the big fight. Now, however, that we are all enclosed within these four walls, what do we find? We find the "You have nothing to lose" boys in this corner are exchanging nods, winks and other amiable gestures with the "You have never had it so good" boys on this side of the house. Every time the bell rings they spring immediately to their feet, but there is no fight left. All is smiles and endless clinches. No blow is struck. There are no casualties to be seen.
Think of it; we have an unholy alliance between the baleful barons from Bay street, who would balance our budget overnight, and the funny money fraternity who would keep printing establishments in this country busy 24 hours a day turning out $100 bills.
One group, the diehard Tories, are financial conscripts; the other group, the slaphappy Socreds, are financial draft dodgers; but yet

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to stay in power or retain a position of influence they secretly cherish each other's company. Occasionally a few rough things are said for public consumption, but they have obviously put aside the high sounding pledges which won them their seats in this house.
Having seen this remarkable transformation take place, many of us can sympathize with the Minister of Finance. He dare not plan ahead. This is one of those sensitive areas in which the Socreds and the Tories are really poles apart.
Echoing the Prime Minister in his statement to the house on October 19, the Minister of Finance in effect said "I am not going to contemplate the future."


An hon. Member:: What are you reading from?


John (Jack) Davis: I regret that he cannot. Indeed I regret that we cannot. So, may I speak for the country-


George Clyde Nowlan: No.


John (Jack) Davis: -and say that the sooner we put an end to these blind financial meander-ings the better it will be.


Mr. Kennedy:: May I ask the hon. member a question? The hon. member made the remark that rather than tax the producer we should tax the consumer. Does he mean an increase in the sales tax and excise tax on goods?


Howard Russell MacEwan: Ask Walter Gordon.


John (Jack) Davis: I believe a strong case can be made for modifying the income tax legislation which we have. I believe it is punitive in respect to production and must be modified in order to provide incentives to give us greater production in this country.


Robert Jardine McCleave: Are you going to support the resolution?


Gordon Campbell Chown: Has the hon. member for Lapointe got a question?
(Translation):


Gilles Grégoire: Mr. Chairman, when the hon. member states that the Social Credit party would have the money machine rolling 24 hours a day, could he tell me where he learned his theory about Social Credit?


An hon. Member:: From you.
Another hon. Member: From your group.


Some hon. Members:: From Caouette.


Mr. Lamy:: You were asleep when he explained it to you.
(Text):


John (Jack) Davis: I have found very little I could learn from Mr. Bennett. I have been tutored by Mr. Howe, Walter Gordon and a few others.


An hon. Member:: That explains it all.


Gordon Campbell Chown: Order. I have been concerned for some time with something which is happening in this debate, and this gives me an opportunity for raising another point. I may be corrected by the hon. member for Winnipeg North Centre, but I have noticed there is quite a growing use of personal names in the committee's deliberations. I am looking at the moment at the hon. member for Bonavista-Twillingate and others. I feel this might be as good a time as any to express my views-and I hope they will not upset the hon. member for Winnipeg North Centre -that this is not in good taste, and I do not think it is within the rules of the committee of the house. I would ask hon. members to endeavour to refer to each other by their constituencies, if they possibly can, notwithstanding the heat that is sometimes generated. I hope hon. members will get this into their minds early in the deliberations of the committee.


Mr. Pickersgill:: On a question of privilege, Mr. Chairman, since Your Honour has chosen to refer specifically to me. I have been trying to cast my mind back and I cannot recall ever having used the name of any hon. member in this house or ever having designated an hon. member in any other way except by his constituency, and I usually try to pronounce the name of his constituency correctly.


Gordon Campbell Chown: I think I should clear this up for the record. I believe most hon. members understood I was pointing to the hon. member for Bonavista-Twillingate-


John Whitney Pickersgill: Bonavista.


Gordon Campbell Chown: -as one of the persons most subject to this sort of treatment in the committee.


Mr. Benson:: Mr. Chairman, after listening to the quality of debate in this house for the past several weeks it is with some hesitancy and humility that I rise to speak for the first time. I should like to say a few words on a subject which is very close to the matters we are debating, namely, taxation. It is never a very popular subject. Since biblical times the tax collector has been looked upon with some disdain by his fellow citizens, although I am sure this does not apply to our Minister of National Revenue.
However Canadians today at least recognize that taxation of some sort is essential if government is to provide all of the services and benefits which are taken as a matter of right by them.
The importance of taxation in our economy can be gauged if we realize that about 32.3 per cent of all goods and services produced

in 1961 was collected by the various levels of governments and redirected by them. The total expenditures of governments at all levels in 1961 amounted to $11.9 billion.
The total funds raised through taxation by this government amounted to $5,157 million in the year ended March 31, 1962, and in his budget of last April 10 it was estimated by the then minister of finance that tax revenues of the federal government in the current fiscal year would amount to $5,155 million. Since that time the additional surtax on imports, as we have been told, will increase this to $5,305 million.
Although it has been said by hon. members opposite that taxes have declined since their government took office, the fact remains that based upon these estimates by the government the Canadian people will pay $682 million more in taxes during the current year than was the case in 1958, and this is not the complete picture.
In addition to the fact that more money has been raised by taxes than ever before, we have, over the five year period from 1958 to 1962, accumulated deficits which amount in total to $2,192.8 million on current account alone, without considering a depletion of some $800 million in the unemployment insurance fund, in spite of a 33J per cent increase in the rate of contributions, and some $150 million in the special defence fund.
In other words, in spite of the fact that the people of Canada have paid over $26 billion in taxes to the federal government in these years, the government managed to spend all of it and still put us in debt to the tune of almost $1,900,000 per day; and these, Mr. Chairman, are cash losses. They do not take into account the losses in productivity due to the slowdown in our rate of economic growth, which have amounted to additional billions of dollars.
I do not want to dwell too long on the past. The record speaks for itself and it is indeed a sorry record. However, in view of the fact that hon. gentlemen opposite seem to dig into the ancient past to justify their improper actions of today, I felt it might be worth while to review briefly once again the record of financial mismanagement during their tenure of office.
According to government forecasts, in the current year in spite of the austerity program and increased taxes levied without the specific approval of parliament, this government will continue to cost the people of Canada $1.5 million a day in excess of total revenues.
Mr. Chairman, I well recognize the difficulties encountered by the present Minister of Finance. Whereas in the last parliament we had a minister of finance who liked to dabble in trade and legal matters-and perhaps this 27507-3-55
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is why he is now Minister of Justice-we now find that we have several persons who like to dabble in finance. First, we have the Minister of Finance, whom I heartily congratulate on his appointment and to whom I offer my sympathy. Second, we have the previous minister of finance who, although he is now Minister of Justice, seems to be still dabbling in financial matters. Third, we have the Minister without Portfolio, who should be of great assistance to the Minister of Finance in plugging tax loopholes, as he must have an intimate knowledge of such matters. Finally, Mr. Chairman-and we must not forget this-we have the hon. member from Villeneuve, who must not be ignored, as it is only with the support of him and his confreres that this government has been able to remain in power. Mr. Chairman, the monetary policies of the hon. member from Villeneuve should add spice to the fiscal and monetary stew to be concocted by these four cooks.
In spite of the fact that he has all this help, in spite of the fact that the financial outlook has been drastically changed by the austerity program, in spite of the fact that it is his moral if not his legal obligation to do so, it is now apparent that the Minister of Finance will not bring down a formal, revised budget for the current fiscal year and allow parliament to debate it in the proper manner. I wonder how long he would last, in similar circumstances, as treasurer of one of the companies of the Minister without Portfolio.
Mr. Chairman, I should like to bring to the attention of this committee some views of the Ottawa Journal, a newspaper not too far distant from the government's heart in this connection. On July 19, 1962 under the heading, "Fall baby budget appears certain", the following information was given to the public:
Another baby budget this fall, revising the last June 20 budget-
If you will pardon me, Mr. Chairman; this must have been an error in their printing, unless there was another budget on June 20 that we have never seen:
Another baby budget this fall, revising the last June 20 budget, appears a certainty after the new parliament assembles. For one thing, Mr. Fleming will be reporting on how much of a cut in his original $745 million budget deficit forecast will result from deductions in government spending and the new tariff surcharges announced in the austerity program June 24.
It continues:
The baby budget will also give the government the opportunity to unveil the "longer term measures of a positive, constructive nature to improve our current international accounts" which Prime Minister Diefenbaker referred to in his June 24 announcement.

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And, Mr. Chairman, on August 4, 1962 under the heading, "Fleming drafting baby-budget", the following was stated by the same newspaper:
Finance Minister Fleming and his departmental "money-men" are at work on a "baby budget". The new budget is being written on Prime Minister Diefenbaker's orders, it was reliably learned today, to present a fresh new financial program to the new parliament, designed to stimulate the economy.
Mr. Chairman, even with all this publicity we still have no formal revised budget. I know that the minister is not bound by newspaper speculation, but I would think that in view of the recent Senate appointment we could assume that information in this newspaper from "reliable sources" would be correct.
Mr. Chairman, if we are not to have a proper budget and the opportunity to debate the promised new fiscal and monetary policies of this government, we must assume that with the modifications indicated to date, through revised estimates and the estimates of additional revenue, the present Minister of Finance is standing on his predecessor's budget statement of April 10, 1962. This budget, we are told, will provide a deficit of $570 million in current accounts.
The Minister of Finance indicated last evening that expense savings indicated in the revised estimates are largely offset by increases in statutory expenses, including an increase of $40 million in interest costs directly attributable to the high interest rates created by this government. Mr. Chairman, interest on the national debt in 1962-63 will be $351 million higher than it was in 1956. This is where a large portion of the additional tax revenue is going. It is not going, as we are led to believe, towards expansion of the Canadian economy.
Let us now consider one or two of the then minister of finance's statements in his budget speech of April 10, 1962. On page 2689 of Hansard he stated:
-our international trade and payments are in better balance than they have been for many years.
Everyone knows what happened after this forecast was made. On May 2 the government had to devalue our dollar in terms of United States currency in an attempt to aid our foreign exchange position. Then on June 24, in order to protect our foreign exchange reserves, the government applied a surtax to discourage imports and a cut-back on the amount of goods which might be brought to Canada duty free by Canadians returning from abroad. Does the Minister of Finance still support this statement of his predecessor?

Then continuing, on page 2692 of Hansard the minister stated on April 10, 1962:
Interest rates in this country are now lower than they were a year ago. The spread between interest rates in Canada and those in the United States has narrowed. Consequently, the incentive to capital inflows has been considerably reduced.
What happened to this forecast, Mr. Chairman? As part of the austerity program the government on June 24 instituted a tight money policy by increasing the lending rate of the Bank of Canada to 6 per cent. Although the rate has now been reduced to 5 per cent, it is still restrictionist in nature.
A further restrictionist action carried out by this government has been the reduction of the money supply. In the latter connection I should like to quote from the September commercial letter of the Canadian Imperial Bank of Commerce:
The latest period of restriction, involving an actual contraction of the money supply, was part of the response to the foreign exchange emergency. The inserted chart illustrates the recent reduction in the money supply. This exceeded half a billion dollars in the brief period from the beginning of July to the end of August 1962.
Mr. Chairman, when the present Minister of Finance refuses to bring before this house a proper revised budget for debate, he is implicitly approving these actions which restrict our economic growth.
The fact of the matter is that this government has no long range policies to bring before this house. Mr. Chairman, what this country needs and what the public is looking for is a broad new program such as that outlined by my colleague, the hon. member for Davenport, last evening. If the present government has nothing better to offer than that which has been outlined to date by them, we should end this fiasco and go back to the people.
Mr. Chairman, I indicated earlier the importance of taxation in our national economy when I indicated that 32.3 per cent of the gross national product is now being collected and redistributed through taxation by governments at all levels. In 1960 this government drained off 17.5 per cent of the gross national product for the operation of the federal government and redirection according to what they thought would best serve the national interests.
There has been, for some time, a feeling among businessmen and other taxpayers in Canada that our taxation system should be reviewed at all levels in order to determine the incidence of taxation in this country. Those on this side of the house have urged that this be done with a view to determining the equity of our present taxation system. A by-product of such a study might be the

assimilation of knowledge to guide the government in predicting the effect of specific tax changes on taxation revenue, and on the gross national product.
After being discouraged by the failure of this government to act on these suggestions, the Canadian Tax Foundation agreed, almost two years ago, to subsidize studies in this area at Queen's University. Finally, last spring, in the midst of an election campaign in which, incidentally, we supported such studies, the Prime Minister decided to make an earth-shaking announcement and indicated that he would appoint a royal commission to examine our taxation system. I am pleased that this election promise at least has been carried out. On September 25, 1962, the privy council appointed a royal commission to this end under the able chairmanship of Mr. Kenneth Carter. It is, I think, interesting to note that in order to man this commission, the Prime Minister had to choose a former civil servant, Mr. Harvey Perry, as one of the members. Although the choice is, in my opinion, an excellent one, it must have been difficult for the government to make this choice in view of their often-expressed adverse opinions of former civil servants.


George Clyde Nowlan: I spent a week persuading him to take it.


Edgar John Benson: The terms of reference of the Carter commission include the following:
-to inquire into and report upon the incidence and effects of taxation imposed by parliament, including any changes made during the currency of the inquiry, upon the operation of the national economy, the conduct of business, the organization of industry and the positions of individuals; and to make recommendations for improvements in tax laws and their administration that may be consistent with the maintenance of a sufficient flow of revenue.
This is an admirable aim, and we wish the commission every success and trust that the government which is in power when it reports-and it certainly will not be the present government-


George Clyde Nowlan: It will.


Edgar John Benson: -will take more heed of its recommendations than was taken of those of the committee on the sales tax, which was also headed by Mr. Carter. We also hope that the government, through the commission, will recognize and encourage the work being carried out under the direction of Professor Slater at Queen's University in order to avoid duplicity in the expenditure of money and effort.
One of the difficulties of royal commissions is the fact that their hearings and analysis take a very long time to complete. It is presently indicated that this commission will 27507-3-55i
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not report until 1964. The aims of the Carter commission are laudable. However, Canada cannot wait two years for action. The government should act now and make bold changes in monetary and fiscal policy, including taxation, in order to speed up Canada's economic growth.
Last evening, my colleague from Davenport indicated that a Liberal government would offer tax concessions to industry locating in the maritimes and other areas where there is chronic unemployment; and here, Mr. Chairman, we are talking of real incentives, not the half hearted measures put forth by this government.
Since it is the practice of Liberals always to be constructive in their criticism, I would like to respectfully suggest to the minister that certain matters in connection with the Income Tax Act be considered by him with a view to improving this legislation:
1.	Under the Income Tax Act, there is no definition of income as such. I do not believe that in 1962 it should be beyond our capacity to make such amendments to the act as are necessary more clearly to distinguish between capital receipts and income.
2.	In this connection, in order that businessmen may more clearly know the possible effects of their actions, I suggest that the minister adopt the practice of giving rulings before the event when requested to do so.
3.	In both the United States and Great Britain there has been, in recent years, tightening up with regard to the deductibility of business expenses. I am not suggesting that there is any abuse in Canada in this regard, but I do suggest to the minister that this matter be examined in order to assure our taxpayers that no one segment of the community is being especially favoured in this respect.
4.	I suggest that the problem of personal corporations, which have no existence in law other than under the Income Tax Act, and which has been under study for some time, be finally resolved.
5.	I suggest the problem of designated surplus be re-examined in order to determine whether or not the present law is adversely affecting legitimate business transactions which might be in the public interest.
In this regard I should like to refer to a speech made to the Canadian club of Toronto the day before yesterday by Mr. A. J. Little, a speech which was quoted almost intact by the almost Tory newspaper, the Globe and Mail. This is what he had to say about designated surplus:
Our tax laws, particularly those dealing with surplus and the movement of surplus, place difficulties in the way of one company acquiring

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another. Our so-called designated surplus provisions fall clearly into this category. No doubt the people who concocted this confusion were well intentioned, but they certainly created a mess in our tax laws. I doubt if anyone now could really justify those restrictions and the hodge-podge of legislative action that has followed.
Going beyond this, I should like to suggest to the minister:
6.	That the period of loss carry back by individuals and corporations be extended from one to three or five years. Three years is the period allowed in the United States, and the five-year period is to be permitted to firms adversely affected by President Kennedy's trade bill. Under our present law, it often happens that losses incurred in the final years of a business enterprise are not deductible even though substantial taxes have been paid over the years. I believe that in a period of trade expansion, it would encourage business to change from one enterprise to another if the carry back period were extended.
7.	I suggest that consideration be given to establishing lower rates of taxation on personal incomes in the higher brackets. The present rates in the top brackets, which range up to 80 per cent, are not particularly productive in revenue, and yet lead to all sorts of avoidance schemes. If the top rates were reduced to 50 per cent, the loss in revenue would amount to only about 1 per cent of total personal income tax revenue.
8.	I would like to suggest that the accounting and legal costs in appealing income tax assessments be allowed as a deductible expense. At present the taxpayer is not only presumed guilty until he has proved his innocence, but also when he hires competent persons to assist him in proving his innocence the costs involved are not deductible under the act.
Finally, Mr. Chairman, 1 believe that everything possible should be done to improve the effectiveness of our taxation system as an economic tool, including perhaps such things as those which have been considered in the United States, where they are considering, and have given authority for, across the board tax decreases to be applied by the government in cases of recession.
(Translation):


Mr. Perron:: Mr. Chairman, I should like first of all to congratulate the Minister of Finance (Mr. Nowlan) for the confidence his party has shown him by appointing him to his present position. That position is usually heavy with responsibilities but it is even more so today because of the problems he is confronted with at present and the complex demands that come from this corner of the house.

Since the beginning of the session, there have been many speeches on our economic and monetary problems. We have heard from the influential adviser and so-called financial expert of the Liberal party. A representative of Canadian banks in the house has told us that it is not the chartered banks which create money and credit in Canada. Yet, we have here proof that for the past 25 or 30 years, the government has been at the mercy of the chartered banks, those dispensers of credit, for any action it has taken either at the national or the international levels.
At this stage, I will refer to a booklet entitled "Our Chartered Banks", published in 1961, which was quoted by the hon. member for Laurier (Mr. Chevrier) and where we find a clear answer to the question:
Do the chartered banks create currency and credit?
In all candor, the reply given is:
Yes, chartered banks create currency and credit in the country.
I do not intend to use big books like the member for Lapointe (Mr. Gregoire) this afternoon.
It was quite an experience this afternoon to hear in this house talks about the austerity program from one side of the house while on the other side the Liberals were talking about the prosperity at the time they were looking after the affairs of the country, whereas we, the older ones, quite vividly remember the Liberal era from 1936 to 1940.
I do not believe they deserve any more confidence in spite of all they have to say against the present government and the administration that preceded them. Indeed they have once more given us evidence, over those 22 years they spent in office, of what they were capable. This is why I came here to ask the Minister of Finance if, in the event of war, we would not be again at the mercy of those who control currency and credit; if so, whether future generations would not have to pay for our present debts.
The interest we pay on our national debt, according to the 1961 year book, amounted to $816.14 per capita in 1951 while in 1961 it amounted to $678.63. This debt is said to have decreased but as is found in the Canada Year Book, the interest which in 1951 was $31.01 per capita amounted to $42.17 in 1960.


Some hon. Members:: Shame, shame.


Gérard Perron: Mention was made of scarce money. Mention was made of tight money,

and of lower interest rates in the last few months, perhaps because of our presence in this house. We would be glad if interest rates had gone down last week or two weeks ago because we are here. It is to be desired that this will keep up in coming months and that the government will implement its promises for the benefit of the people.
I do not believe, however, in the sincerity of those super economists who attempt to talk about development and planning for the Canadian economy, while during the war, they knew very well where to find the money required to fight the war of 1939-45, under a Liberal administration.


Mr. Rouleau:: Mr. Chairman, would the hon. member allow me a question?


Some hon. Members:: Later.


Gérard Perron: Later, when I am finished.


Guy Rouleau: Will you allow me a question?


Gérard Perron: Go ahead.


Guy Rouleau: Is not the hon. member of the opinion that the Canadian people and the Canadian government should not have done all necessary sacrifices during the war, to destroy Mussolini's and Hitler's dictatorship?


Gérard Perron: I am indeed of the opinion that at that time it was absolutely necessary to take part in the destruction of Hitler's and Mussolini's dictatorship, but I think it is high time that we take the necessary steps to destroy the financial dictatorship that exists in our country.
Then, we regretted deeply the austerity program of the Liberals and of the Conservatives, who invented it and even introduced it on television in the month of June.
I must say I am not here to support an austerity program, not any more than to vote with the Conservatives. And you may rest assured, Mr. Chairman, that if the estimates come to a vote, there may be disagreement.


Some hon. Members:: Hear, hear.


Gérard Perron: Since we have been here, has anybody asked whether there was a shortage of farm products in this country at the moment? None of my hon. friends brought up this question. Nobody even dealt with the country's productive capacity.
Our country has enormous potentialities in the field of agriculture as well as in that of manufacturing. Can anyone complain of
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shortages back home, in the stores of his locality-shortages in such items as clothes, footwear, essential food products? Nobody in this house has asked that question.
On the other hand, most discussed monetary matters. Which reminded me, that when you suffer from a corn on a toe, would it be logical to put a bit of ointment behind your ears? No, sir. Let us use adequate remedies for our ills. If the people are now suffering and groaning under the tax burden of taxes at the dominion, provincial, municipal and school levels while indeed a large proportion of our fellow citizens are getting into debts with finance companies, borrowing at exorbitant interest rates. And most of the time the money is supplied to these finance companies by the banks on promissory notes at interest rates of 5, 6 or 7 per cent. Indeed, some finance companies even borrowed public funds through the Canada Council. Such is the case of the Industrial Acceptance Corporation, which borrowed money at 7J per cent, not long ago, to lend it to automobile buyers in the province of Quebec at rates of 18, 24 and 32 per cent.
The Liberals blame the Conservatives for not announcing their austerity program before June 18. It is quite understandable that they did not. The Liberals know more tricks, they go about it in a roundabout way. In 1953-54, they announced credit restrictions imposed by the governor of the Bank of Canada, when they advised the people to tighten their belts, when they applied restrictions on bank credit. We learned about it, in 1954, under the Liberal administration, with Mr. Coyne.
And today they seem to come up with a brand new program, a Liberal program which would assure prosperity, security and even freedom. They go that far even though most of the time they seem to submit the same plans over and over again.
Even if they are not socialist plans, away we go.
Well, gentlemen, I believe that they are not the plans the people expect from us, the law makers. What the people want is a monetary policy which reflects the desires of the Canadian people. The people want to benefit from their work, while at present, society leaves unsecured the small wage earners. Why? Because we live under a system which operates perfectly in time of war, but un-

Income Tax Act
fortunately, in time of peace, the small wage earners are left with their troubles and only plans are submitted to them. Thus, we play into the hands of those against whom we are getting ready to fight very shortly.
I believe that if we do not come to an agreement it may be because we follow false principles or we are not on the same wavelength.
Under the present system, man seems to be the instrument of finance. That is what is happening now in Canada, under the Liberal scheme, with the help of the banks, while the socialists are making plans. Why? To put the individual at the service of the state.
The policy advocated by the Social Credit party would enable every citizen to enjoy security to the greatest possible degree through his labour, science or progress. It is possible for us to achieve something in Canada, and thanks to the relations we maintain with other countries, exchange with them our goods and services. Let us ask the Bank of Canada-I would even say force it-to authorize credit and distribute abundance where it is most needed.
Stores and warehouses are loaded with goods. There is no problem there. It is the families which are deprived. Numerous fathers and mothers demand the security they need.
I heard thousands of people beg for family allowances, that social measure which the Liberal party passed in 1945-probably with the aim not only of having its wartime policies forgotten, which shrunk the size of the stomach to that of sugar coupons and gas coupons, but also its rationing policy of 1939 to 1945-


An hon. Member:: In order to defeat Hitler.


Gérard Perron: The Liberals remained in power up to 1957 and by increasing family allowances by one dollar on the eve of their defeat, they acquired for themselves the benches they now occupy.
I was saying that we are neither singing the same tune on the same wave length, as our friends facing us, when in this twentieth century, when developments in science permit us to hope to land on the moon before long, we do not know how to distribute carrots in this country.
Mr. Chairman, let us revert to factual data, to the real function of industry. When we talk of creating industries and creating production, is the function of industry to give employment, to occupy the labour force, or to produce an adequate volume of goods to

satisfy some requirements of society? If this is its true function, let us take action to put to service the daily commodities we need and let us look elsewhere but rest in the plans suggested to us as so-called solutions to contemporary problems.
Let us put the Canadian dollar back where it belongs, let us make it play its true part, because a monetary system does not exist to create complexity, but rather to ease economic and social dealings among people made to live in society.
The true function of the monetary system is not to create complications but rather to facilitate economic relations between human beings who are expecting from us a policy which will respect the human person, the result of which being that money is placed at the service of man. This is what society expects from us legislators.
Mr. Chairman, when members sitting in this part of the house suggest to place at the disposal of municipalities, through the medium of the Bank of Canada, the credit needed to allow them to undertake vast programs of economic expansion and municipal development, I must say that I have more confidence in their sincerity than in that of those members who are sitting in other parts of the house.
Such a policy would have at least two effects:	first of all, it would allow our
municipalities to stop going into debt with investment dealers or money lenders throughout the world, at exorbitant interest rates.
In addition this would enable us to place the Bank of Canada at the service of the people by providing loans at an interest rate equal to the administrative costs only. That is what we are asking for, and we believe our request is justified.
Mr. Chairman, we have heard our friends opposite ask that interest free loans be granted to foreign countries to encourage the exportation of our wheat surpluses. Are we not more logical in asking that the Bank of Canada lend money to our municipalities, without any interest, to enable us to develop our vast and beautiful country?
Mr. Chairman, may I call it ten o'clock?


Some hon. Members:: No. Keep on.


An hon. Member:: It is only two minutes to ten.


Rémi Paul: Order.


Guy Rouleau: He has two more pages to read.


Rémi Paul: Order. It being ten o'clock, shall I rise, report progress, and request leave to sit again at the next sitting of the house?


Some hon. Members:: Agreed.
(Text):
Progress reported.



BUSINESS OF THE HOUSE

John Whitney Pickersgill: Before you leave the chair, Mr. Speaker, may I ask the leader of the house if he could indicate, on the assumption that this debate is going on tomorrow, what would be taken up if it should be concluded and what the program is after this debate is concluded.


Gordon Minto Churchill: Mr. Speaker, after the general debate is concluded we will then deal with the four resolutions and hope to get those finished before very long. The plan is to carry on tomorrow in committee of ways and means and similarly on Thursday if we
Business of the House
are making good progress. On Friday we will interrupt the committee of ways and means and deal with certain legislative matters. Then if we are still not finished with the resolutions we would revert to them I presume on Monday and Tuesday of next week.


John Whitney Pickersgill: For the convenience of hon. members I wonder whether it would be possible for the leader of the house to indicate what legislative proposals it is contemplated the government will call on Friday, so that hon. members could be prepared to debate them. I feel this information would expedite the debates in the house.


Gordon Minto Churchill: It is the practice always of opposition parties to be prepared at any moment for any debate. However, I will endeavour to meet the hon. member's wishes tomorrow night.


[Stage Direction]
It being two minutes after ten o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Wednesday, October 24, 1962