1963-06-20

Mr. Speaker:: The Minister of Finance seconded by Mr. Pickersgill, moves:
That the house do go into committee of the whole at its next sitting to consider the following proposed resolution which has been recommended to the house by His Excellency:
That it is expedient to introduce a measure to further Canadian participation in the development of industries and undertakings in Canada-
Shall I dispense?


Some hon. Members:: Dispense.


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


Mr. Knowles:: No, Mr. Speaker; this should be transferred to government orders.


Mr. Pickersgill:: We did dispense.


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


Stanley Howard Knowles: What is the motion?


Mr. Speaker:: I will read the motion:
That it is expedient to introduce a measure to further Canadian participation in the development of industries and undertakings in Canada, to increase Canadian participation in the ownership of undertakings in Canada, and generally to further the development of the resources and industries of Canada; and for such purposes to establish an investment company, to be called the Canada Development Corporation, with a share capital structure whereby the largest possible numbers of Canadians may directly and indirectly invest capital in and profit from the ownership of Canadian industries and undertakings and the development of Canada; to authorize the guarantee by Canada of certain obligations of the corporation; to provide for the approval by the Minister of Finance of issues of guaranteed obligations of the corporation; to provide that the total liabilities of the corporation outstanding at any time shall not exceed one thousand million dollars; and to provide further for other related and incidental matters.
Is it the pleasure of the house to adopt the said motion?


Some hon. Members:: Agreed.


Stanley Howard Knowles: My point of order, Mr. Speaker, was not a request that you should read the whole motion. It was that under standing order 21(2) the calling of this motion merely means
that it is transferred to and ordered for consideration under government orders in the same or at the next sitting of the house. We do not debate it at this point, we just transfer it.


Mr. Speaker:: May I be permitted to call the attention of the hon. member to standing order 21(1), which reads as follows:
Government notices of motions for the house to go into a committee of the whole at the next sitting of the house when put from the Chair shall be decided without debate or amendment.
The next subsection reads:
(2) When any other government notice of motion is called from the Chair, it shall be deemed to have been forthwith transferred to and ordered for consideration under government orders in the same or at the next sitting of the house.
Is the motion carried?


Some hon. Members:: Carried.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Leader of the Opposition):: I should like to direct a question to the Minister of Finance and ask him something he did not explain yesterday. Why was this 30 per cent tax on securities suspended so suddenly and precipitously, and why did the government not wait for the closing of the stock exchanges before making this announcement? The minister will have noticed there were tremendous dealings yesterday and large amounts were made and lost. Why was there a departure in this case from the regular course which has been followed in this house throughout the years?


Hon. Walter L. Gordon (Minister of Finance):: The government thought that as soon as a decision had been reached it should be announced as early as possible.


Some hon. Members:: Oh.


John George Diefenbaker: I can well understand the desire of the government to do something to meet the zero hour of the 60 days of decision, but I ask the minister this. Is he now prepared, in view of the fact that there were very large windfall profits made on stock exchanges, to permit the setting up

Inquiries of the Ministry of a committee or an inquiry to be made into this whole transaction so that the people of Canada may understand the reason for such action which, to numbers of us who try to follow constitutional principles, is entirely inexcusable and unwarranted?


Some hon. Members:: Order.


Mr. Speaker:: Order. I certainly do not enjoy intervening at this stage, but I think I must if the rules of the house are to be applied. May I call the attention of all hon. members to Beauchesne, paragraph 171, where it says:
The purpose of a question is to obtain information and not to supply it to the house.
If hon. members will read on further they will And examples given of questions which should not be asked or things which should not be done. Subparagraph (v) says:
A question oral or written must not . . . anticipate an order of the day or other matters.
I understand the great interest in the matter under discussion, but I wonder whether in the question period we could avoid debate as far as possible and stick to pointed, topical and urgent questions.


John George Diefenbaker: Mr. Speaker, I could not be more in agreement with you. Therefore I say to the minister, why did you do it?


An hon. Member:: Resign.


Walter Lockhart Gordon: I have already answered that question, Mr. Speaker.


Hon. George C. Nowlan (Digby-Annapolis-Kings):: A supplementary question, Mr. Speaker. I should like to ask the Minister of Finance if he will give the house an assurance that there will be no further changes made in the budget during this session until the doors of the stock exchanges have been closed?


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


Mr. Gilles Gregoire (Lapointe):: I should like to direct a question to the Minister of Finance.
Can the minister tell us whether he arrived at his decision prior to or after Mr. Kierans' visit at his office?
(Text):


Walter Lockhart Gordon: As I said yesterday, Mr. Speaker, I took the decision despite the visit of Mr. Kierans to my office.
(Translation):


Gilles Grégoire: Mr. Speaker, I should like to ask a supplementary question.
My question was as follows. Was the decision taken prior to or after Mr. Kierans' visit?

(Text):


Mr. Speaker:: I do not know whether the hon. member heard the reply of the minister, but I did and I thought he replied to the hon. member for Lapointe.
(Translation):


Gilles Grégoire: On a point of order, Mr. Speaker. I think that Hansard will prove tomorrow that my question has not been answered. In fact, my question was as follows. Did the minister make his decision prior to or after Mr. Kierans' visit?
(Text):


Hon. Leon Balcer (Three Rivers):: Mr. Speaker, I should like to ask the minister whether he did consult or receive representations from Senator Louis Gelinas, a prominent investment broker and leading collector for the Liberal party in Montreal-


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order. I understand the hon. member was looking in front of him, but on the other hand he must know by now that off the cuff remarks and that type of question are really extending the rules beyond all comprehension.


Léon Balcer: It was for pure identification. However, hon. members opposite know full well who Senator Louis Gelinas is as far as their party interests are concerned. My question is, did the minister consult or receive representations from Senator Gelinas before taking the decision to withdraw the 30 per cent take-over tax?


Walter Lockhart Gordon: Mr. Speaker, Mr. Kierans was accompanied on his mission by eight or nine- I do not know the exact number-members of the Montreal stock exchange, of whom Senator Gelinas was one.


Mr. Heward Graffley (Brome-Missisquoi):: A supplementary question. I should like to direct my supplementary question to the Prime Minister. In view of reports circulating in financial circles that there was a leak of information in advance of the important announcement by the Minister of Finance yesterday, would the Prime Minister assure the house immediately that there will be a complete and judicial inquiry into the activities on the stock exchange yesterday?


Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, I have received no evidence that there was any such leak, and if the hon. gentleman has any such evidence it is his duty to produce it.
(Translation):


Mr. Pigeon:: Mr. Speaker, may I ask a supplementary question? Does the Minister of Finance-

*(Text):


Mr. Speaker:: Order. There are a few other hon. members on my list and there must be a certain order of precedence. The hon. member for Burnaby-Coquitlam.


Mr. T. C. Douglas (Burnaby-Coquitlam):: Mr. Speaker, I want to ask a supplementary question of the Minister of Finance, and ask him whether Mr. Kierans and the eight or nine other gentlemen who accompanied him received any indication from the minister of his intention to withdraw the take-over tax?


Walter Lockhart Gordon: No.


John George Diefenbaker: They certainly guessed.


Mr. Harold E. Winch (Vancouver East):: should like to direct a question to the Minister of Finance, and it is one of urgency, not political expediency. Will the minister advise this house whether he has received a letter from the Vancouver metropolitan housebuilders association in the name of the president, K. R. Beedie, informing him that if clarification is not forthcoming immediately on the application of the new 11 per cent federal sales tax on construction materials, there has been unanimous agreement by the house building association to stop all construction projects in Vancouver and lay off some 5,000 men? In view of the urgency in this matter, will the minister comment on this situation?


Walter Lockhart Gordon: Mr. Speaker, the letter may be in my office, but I have not seen it if it is.


Léon Balcer: I should like to ask the minister if he did consult with his three outside experts before the withdrawal of the 30 per cent sales tax.


Walter Lockhart Gordon: I did not consult anybody except the Prime Minister before making this decision.


An hon. Member:: That is not what you said yesterday.


Walter Lockhart Gordon: I should like to add that, as I said yesterday, I consulted the Prime Minister and the members of the cabinet. (Translation):


Gilles Grégoire: May I ask a supplementary question, Mr. Speaker? Could the Minister of Finance tell us what are the administrative difficulties which have compelled him to withdraw that tax?
(Text):


Walter Lockhart Gordon: Mr. Speaker, I would be glad to go into that but, although I am not an expert in the rules, I suggest that is a matter that should be taken up in the debate.


Mr. Speaker:: I regret to inform the hon. member for Lapointe that his last supplementary question was in the nature of an
Inquiries of the Ministry argument. It was not a question at all, and the Minister of Finance was quite right in rejecting it.


John George Diefenbaker: I would point out that yesterday the minister told us that in view of certain administrative difficulties he was not withdrawing this tax but suspending it. Certainly the house has the right to know what were the reasons for the withdrawal or suspension. I submit, Mr. Speaker, that is a very proper question, and there is going to be no other opportunity to find out.


Some hon. Members:: Oh, oh.


John George Diefenbaker: With the greatest respect I suggest that the question was proper and the minister should answer because there are circumstances that ought to be clarified in connection with this matter.


Lester Bowles Pearson: In so far as the point raised by the right hon. gentleman is concerned, he may have forgotten that we have a six day debate on the budget.


John George Diefenbaker: I have not forgotten the six day debate, but we are trying to get information. We know this is the 60th day of decision, but we have not had very many decisions.


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


Gilles Grégoire: Mr. Speaker, I rise on a point of order. As a matter of fact, if we wish to take part in a debate on the budget, we have to be informed. That is why we are asking questions today, and we are entitled to get answers.
(Text):


Thomas Clement (Tommy) Douglas: May I ask a supplementary question. May I ask the minister if the administrative difficulties to which he has referred were brought to his attention by the Montreal stock exchange or the officials of his own department?


Walter Lockhart Gordon: They were drawn to my attention by a number of people, including a delegation from the Montreal stock exchange and the officials of my department.


Hon. Paul Mariineau (Poniiac-Temis-camingue):: I have a question for the Prime Minister. In order to allay the state of uncertainty prevailing in financial circles and generally throughout the country because of widespread rumours prevalent this morning-


Some hon. Members:: Order.


Mr. Speaker:: I have said at least twice this afternoon that long statements leading up to what I hope will be short questions should not be permitted. The hon. member I think understands that.

Inquiries of the Ministry


Paul Raymond Martineau: I thank you tor your remarks, Mr. Speaker. I should like to ask a very simple question of the Prime Minister. I should like him to give the house the assurance, in view of the rumour that has prevailed, that should the Minister of Finance hand in his resignation-


Some hon. Members:: Order.


Paul Raymond Martineau: -it will be announced in the house.


Mr. Speaker:: Order. That is not a question asking for information; it is giving information. It is completely out of order.


Hon. Alvin Hamilton (Qu'Appelle):: Mr. Speaker, I should like to direct a question to the Minister of Finance. In view of the fact that the provisions of the budget concerning the extension of write-off provisions for exploration purposes to pipe line companies is running a collision course with the principles and terms-


Some hon. Members:: Order.


Francis Alvin George Hamilton: -of the National Energy Board Act, will the minister postpone this section of the budget until the action contemplated can be reconciled with existing legislation?


Mr. Speaker:: Order. The last time I intervened I was not too successful, and I hope I will have better success this time. I did refer to Beauchesne, and I did mention that under section 171(v) oral and written questions should not anticipate orders of the day; and the order of the day, of course, is to discuss the budget. It seems to me that while a great many of these questions are of great interest, the proper place to raise them and discuss them is at the time the budget is being debated.


Mr. Heber E. Smith (Simcoe North):: Mr. Speaker, I have a question for the Minister of Trade and Commerce. Speaking in Chicago at an American hemisphere dinner very recently the minister is reported in today's Globe and Mail as having said that "higher sales by Canadian subsidiary companies could mean increased profits for United States investors". Does that indicate that we may expect a further change in the budget by the removal of the discriminatory withholding tax on dividends of United States subsidiaries in Canada?


Mr. Speaker:: Order. This again is exactly the type of question I was referring to two and a half minutes ago.


John George Diefenbaker: Mr. Speaker, can the Prime Minister inform the house whether official or unofficial representations have been received from the United States government

regarding any of the proposals in the budget on the ground that they are discriminatory, anti-American and the like?


Lester Bowles Pearson: Mr. Speaker, I have not myself received any representations from the United States government on this matter. Whether any such representations have been received in the Department of External Affairs I do not know, but I will make inquiries.


Mr. H. A. Olson (Medicine Hat):: Mr. Speaker, I would like to direct a question to the Minister of Finance which may be supplementary or related to the one asked by the hon. member for Vancouver East a moment ago. I would like to ask him whether his department, or the Department of National Revenue, has issued a clarifying statement respecting the 11 per cent sales tax on building materials so that those in the construction industry in Canada will know where they stand and where they can go from here?


Walter Lockhart Gordon: No, Mr. Speaker.


Mr. J. H. Horner (Acadia):: Mr. Speaker, I should like to ask a supplementary question of the Minister of Finance. In view of the imposition of the 11 per cent tax on ready-mix transit companies, which form a prominent part of the construction industry across Canada, is the minister prepared to take another look at it and, if he will not bring in relief for this 11 per cent sales tax, does he realize some of these companies will qualify for bankruptcy?
(Translation):
[Later:)


Hon. Theogene Ricard (St. Hyacinthe-Bagot):: Mr. Speaker, I should like to direct a question to the Prime Minister. Had he received a note of protest from the secretary of state, Mr. Luther Hodges, concerning the 30 per cent tax on foreign take-overs, before the Minister of Finance announced its withdrawal in the house yesterday?
(Text):


Lester Bowles Pearson: Mr. Speaker, Mr. Hodges is not secretary of state of the United States. I believe he is secretary of commerce. I answered that question when I replied to the right hon. Leader of the Opposition that I had received no representations from the United States government in connection with this matter.
(Translation):
[Later:)


Mr. Gerard Girouard (Labelle):: Mr. Speaker, I should like to put a question to the Minister of National Revenue. In view of the number

Inquiries of the Ministry
of telephone calls we have been receiving about the application of the 11 per cent sales tax on building materials, could the minister tell the house how, for instance, a plumbing contractor who signed a contract prior to June 14, but has not yet purchased the required materials-


Mr. Speaker:: Order. I regret to interrupt the hon. member, but I must tell him that his question is out of order.
(Text):


Mr. Valade:: A supplementary question to this one, Mr. Speaker.


Mr. Speaker:: There can hardly be a supplementary to a question which is not in order.


Mr.  R. Gordon L. Fairweather@Royal: Mr. Speaker, I would like to ask the Minister of Finance whether he is aware that some investment houses in the United States are advising their customers to sell Canadian shares because of the "on again off again Finnegan"-


Mr. Speaker:: I am sorry. Order, please. (Translation):


Gérard Girouard: On a point of order, Mr. Speaker-


Mr. Speaker:: One moment, please.
(Text):
Just a moment. Is the hon. member asking a question or is he giving information?


Léon Balcer: He is asking a question.


Mr. Fairweather:: I am going to ask the minister will he soon make an announcement designed to restore Canada's image abroad?


Walter Lockhart Gordon: I would just like to say that I think the Prime Minister has done that. (Translation):


Gérard Girouard: Mr. Speaker, could I ask the Minister of National Revenue whether he will reply to the question of which I sent him notice?
(Text):


Mr. Speaker:: Order. I have explained on three occasions this afternoon that that type of question deals with the debate under consideration this afternoon, and in my humble opinion it should not be asked at this time. (Translation):


Mr. Robert Beaule (Quebec East):: Mr. Speaker, I rise on a point of order. In view of the fact that the Minister of National Revenue was ready to answer the question which was put to him by the hon. member for Labelle, would you allow him to give an answer?
(Text):


Mr. Speaker:: I regret to advise the hon. member that no minister is obliged to reply under our rules.
(Translation):


Louis-Joseph Pigeon: Mr. Speaker, I should like to direct a question to the Prime Minister. Does he intend to secure legal advice from the Department of Justice on the constitutional character of the 30 per cent tax on industrial take-overs, the enforcement of which has only been postponed, according to the statement made yesterday by the Minister of Finance?
(Text):


Lester Bowles Pearson: No, Mr. Speaker. No question of the legality of that tax has arisen.
(Translation):


Louis-Joseph Pigeon: A supplementary question, Mr. Speaker. In view of the statement made at 2.45 p.m. yesterday by the Minister of Finance, could the Prime Minister tell the house how many new millionaires, in his estimation, have been made as a result of the speculations on the stock exchanges yesterday?
(Text):


Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Minister of Finance. In view of the many wires that most hon. members are receiving, and in view of the administrative difficulties that are being run into with respect to the 11 per cent sales tax on building materials, will the government consider withdrawing this tax?


Walter Lockhart Gordon: No, Mr. Speaker.


Harold Edward Winch: I have a supplementary question, Mr. Speaker. I have been waiting a long time to put it, but this gives me the opportunity. If I cannot get it one way maybe I can get it another. As a supplementary to my previous question and to the one just asked by the hon. member for Winnipeg North Centre, in view of the minister's answer to my question some time ago, the seriousness of information from the Canadian Press, and the letter which I presume he will have on his desk stating that 5,000 people by unanimous decision of contractors in Vancouver are going to be laid off unless they get clarification of the 11 per cent tax, will the minister tell us what consideration is being given to handle the situation and prevent lay-offs in the construction industry?

Inquiries of the Ministry


Walter Lockhart Gordon: Mr. Speaker, I will certainly .at the very first opportunity this afternoon find that letter, examine it and consider it.


Horace Andrew (Bud) Olson: As a supplementary question, Mr. Speaker, would the Minister of Finance inform the house when he expects this clarifying statement to go forward respecting the application of the new tax?


Mr. Stuart A. Fleming (Okanagan-Revel-sloke):: Mr. Speaker, I have a question for the Minister of Finance. Will non-profit or charitable organizations engaged in the construction of housing projects for senior citizens be required to pay the 11 per cent sales tax on building materials?


Walter Lockhart Gordon: Mr. Speaker, I will have to get a legal opinion on that.


Hon. H. J. Flemming (Victoria-Carleton):: Mr. Speaker, I wish to direct a question to the Minister of Finance. Does the minister think that the application of the 30 per cent security sales tax will be considered as being anti-American?


Walter Lockhart Gordon: In answer to that question, Mr. Speaker, may I say that this tax has been withdrawn subject to a review of the administrative difficulties involved in its application.
(Translation):


Georges-J. Valade: Mr. Speaker, I should like to direct a question to the Minister of Public Works.
Could the minister tell the house whether the construction projects for the world's fair in Montreal will be carried on in spite of the 11 per cent tax imposed by the Minister of Finance on building materials and machinery?
(Text):


Some hon. Members:: Order.


Georges-J. Valade: Mr. Speaker, on a question of privilege, this is a matter of great importance to Montreal.


Mr. Speaker:: Order. Would the hon. member please resume his seat. I do not see any question of privilege in the hon. member's statement.


Georges-J. Valade: The minister does not want to Teply, then?


George Clyde Nowlan: Mr. Speaker, I have a question arising out of the statement made by the Minister of Finance a moment ago with respect to his statement of yesterday. I understood it to be that there was a decision not to decide, that the matter was simply under suspension. Is the 30 per cent tax- I have forgotten the number of the section- definitely withdrawn, so we can be assured that it is withdrawn, or is it simply sus-

pended pending, as the minister said yesterday, further consideration, thereby creating further uncertainty?


Walter Lockhart Gordon: Mr. Speaker, I have nothing to add to the statement I made yesterday.


Some hon. Members:: Oh, oh.


George Clyde Nowlan: Mr. Speaker, surely the minister can clarify the atmosphere with respect to this matter. Either it is withdrawn or it is suspended. The confusion engendered becomes worse every day when we hear this kind of comment from the minister.


Léon Balcer: I wonder, Mr. Speaker, whether the minister can tell us precisely for how long this tax is going to be suspended. Would he give us the precise period?


Walter Lockhart Gordon: In my statement yesterday I said that the resolution had been withdrawn.


Some hon. Members:: No.


Walter Lockhart Gordon: Surely that is clear enough.


Some hon. Members:: You said "suspended".


Mr. Raymond Langlois (Megantic):: Mr. Speaker, I wish to direct a question to the Minister of National Revenue. Will the minister tell the house how he intends to deal with the building contracts signed prior to the application of the 11 per cent tax on building materials, and when he intends to do so?


Mr. Speaker:: Order. This is one of several questions we have had this afternoon on this matter, and I think the hon. member by now understands the attitude of the Chair with regard thereto.
(Translation):


Mr. Remi Paul (Berihier-Maskinonge-Delanaudiere):: With due respect, Mr. Speaker, I rise on a point of order. I should like to comment on the ruling you just made for the fourth time this afternoon. There is nothing on the order paper to indicate that the hon. member who put the question will have an opportunity to take part in the debate. He is asking for information of an urgent nature, and nothing indicates either that the Minister of Finance will have an opportunity to answer those questions or that he will be in the house.
I submit with respect, Mr. Speaker, that the various questions which were put are urgent and that the greatest latitude should be given hon. members to obtain necessary and urgent information. In making your ruling, you are depriving hon. members of information of an urgent character.
(Text):


Mr. Speaker:: I have listened with a great deal of interest and respect to the arguments of the honourable and learned member, but

would he be kind enough to assist the Chair by referring to Beauchesne, citation 171, where the author deals with annotations, comments and precedents? To reply directly to his suggestions, let me say once more that a question, oral or written, must not anticipate an order of the day or other matters. These are the words of Beauchesne.
I was basing myself on this recognized authority, not to prevent hon. members from getting information but in an effort to control the course of asking for information. It does seem to me that if we could get on with the orders of the day and come to the business which lies ahead, a great deal of information could be supplied and a good many of the questions which are now being asked could be answered.
(Translation):


Rémi Paul: Yes, Mr. Speaker, but there is nothing on the order paper to indicate that the hon. members will get the information they ask for today, because nothing indicates that they will be able to take part in the debate or that the Minister of Finance will then be able to supply the requested information.
I respectfully submit that Beauchesne citation 173 you just quoted does not apply to the nature of questions which are being addressed to the Minister of Finance.
(Text):


John Whitney Pickersgill: I had understood that Your Honour had made a ruling, and I had also understood that the rulings of the Chair could not be debated.


Stanley Howard Knowles: I rise on a question of privilege. A moment ago the Minister of Finance told us he had nothing to add to what he said yesterday. Then he said the provision was withdrawn.


Walter Lockhart Gordon: The resolution.


Stanley Howard Knowles: The resolution was withdrawn. Paragraph 2 of the minister's statement as reported in yesterday's Hansard at page 1321 reads as follows:
It may take a little time to work out satisfactorily the difficulties referred to. Pending a solution, the government proposes to withdraw paragraph 11 of the budget resolution respecting the Excise Tax Act.
I submit there is considerable difference between a statement that it is withdrawn and a statement that it is withdrawn pending a solution.


Walter Lockhart Gordon: That particular resolution has been withdrawn. Whether or not there will be another resolution depends on government policy, and it also depends on whether these difficulties are subject to being resolved.


George Clyde Nowlan: Indecision.


Georges-J. Valade: On the point of order which was raised earlier, I wish to refer Your 28902-5-88
Inquiries of the Ministry Honour respectfully to citation 178 of Beauchesne, which states:
Questions addressed to ministers should relate to the public affairs with which they are officially connected, to proceedings pending in parliament, or to any matter of administration for which the minister is responsible. Within these lines an explanation can be sought regarding the intentions of the government, but not an expression of opinion upon matters of policy.
I asked the Minister of Public Works what the intention of the government was with regard to the world fair. I respectfully suggest that my question was in order and that the refusal of the minister to reply is another sign that this government is arrogant.


Hon. J. P. Deschaielels (Minister of Public Works):: I refused to answer this question on one ground alone. The hon. member was not asking for information, he was asking for a legal opinion. That is the only reason I did not answer. If the hon. member wishes to have any information on matters within my jurisdiction I ask him to go ahead, because I shall be pleased to answer him at any time.


Mr. Thomas M. Bell (Saint John-Alberl):: Will the Minister of Finance give the house an assurance that if a new resolution is brought in, as he has suggested, it will be announced after the stock market is closed for the day?
(Translation):


Gilles Grégoire: Mr. Speaker, I have a question for the Secretary of State. Can the minister explain why, after instructions were given in this house, the letter from Mr. Kierans was printed only in English and does not appear in today's French edition of Hansard?
(Text):


John Whitney Pickersgill: It may be that Mr. Kierans' letter was untranslatable, but I am neither the editor of debates nor have I any constitutional responsibility for the editor of debates. However, I have no doubt the hon. gentleman's question will be taken notice of by the editor, and that any deficiency will be remedied. (Translation):


Gilles Grégoire: I should like to ask a supplementary question. In my opinion, I would say rather to the Secretary of State that it is true that false theories are hardly translatable in French.
(Text):


Mr. Terry Nugent (Edmonton-Strathcona):: Mr. Speaker, my question is really supplementary to the one asked of the Prime Minister by the hon. member for Brome-Missis-quoi a while ago. In view of the Prime Minister's reply to the effect that any member

Inquiries of the Ministry having evidence in connection with an inquiry-should bring it forward, do I take it that the government will only institute that inquiry if somebody brings evidence forward, and will the government institute an inquiry if evidence is presented?


Lester Bowles Pearson: Mr. Speaker, if any hon. member has any evidence of substance to bring forward in this matter we will certainly institute an inquiry.


Gilles Grégoire: Mr. Speaker, I think I have evidence. I think the visit of Mr. Kierans to the office of the minister before he announced the withdrawal of this tax is evidence.


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order. I have the greatest respect for the hon. member, as he well knows, but his statement at this time is really out of order.


Gilles Grégoire: On a point of order, the Prime Minister asked whether some members of this house had some evidence, so I think I am completely in order in answering the Prime Minister and giving the evidence that I have. I maintain the visit of Mr. Kierans is evidence that we should have a committee of inquiry into the matter.


Mr. Speaker:: The hon. member's information is very interesting if given at the proper time.


Gilles Grégoire: On a point of order-


Mr. Speaker:: I am sorry; the hon. member must resume his seat.


Mr. Lawrence E. Kindt (Macleod):: Mr. Speaker, can the Minister of Finance give the house a revised figure of the over-all budget deficit, considering the withdrawal of the 30 per cent tax? Will it exceed the billion mark now?


Walter Lockhart Gordon: No, Mr. Speaker.


Terence James (Terry) Nugent: I have a supplementary question to that asked by the hon. member for Brome-Missisquoi. Was not the purpose of the inquiry which the hon. member asked about to see whether there was any evidence, and if there was not, to restore the confidence of the people in budget security?


Lester Bowles Pearson: Apparently the hon. member would convert the inquiry into an inquisition.
(Translation):


Gilles Grégoire: May I direct a supplementary question to the Prime Minister, Mr. Speaker? Does the Prime Minister consider that Mr. Kierans' visit to the office of the Minister of Finance may constitute a basis for the establishment of an inquiry committee on the withdrawal of the 30 per cent tax?
(Text):


Lester Bowles Pearson: No, Mr. Speaker.

(Translation):


Mr. Maurice Cote (Chicoutimi):: Mr. Speaker, may I direct a question to the Minister of Finance? How could the government yield to a man like Mr. Kierans, who insulted the Liberal government by writing in his letter:
Will we not, in the final analysis, find our capital in the Ottawa printing presses rather than the capital markets of the world?


Mr. Vincent Drouin (Argenteuil-Deux-Montagnes):: Mr. Speaker, further to a question asked a little while ago by the hon. member for Lapointe, could the Secretary of State tell us if the government intends to have a translation made of Major Douglas' books which constitute the misleading doctrine of the Social Credit, in order to enable certain Social Crediters to be conversant with Social Credit.
(Text):


Hon. J. W. Monteith (Perth):: Mr. Speaker, in view of the fact that the question by the hon. member for Saint John-Albert to the Minister of Finance a few moments ago was not answered, I wonder whether I might ask the Prime Minister if he can assure the house that any new resolution which may be brought down in conjunction with this 30 per cent tax would not be announced until after stock market hours?


Lester Bowles Pearson: Mr. Speaker, these matters will be done in the proper way.


Mr. Speaker:: The hon. member for Comox-Alberni.


Thomas Miller Bell: May I ask the Prime Minister what he thinks is the right way?


Mr. Speaker:: Order. If the hon. member wishes to ask a question would he kindly address the Chair first? Otherwise we cannot have any order in our proceedings.


Mr. E. Nasserden (Rosthern):: Mr. Speaker, I rise on a point of order. A few minutes ago the hon. member for Royal asked a question of the Minister of Finance which I believe he was prepared to answer but in the confusion did not do so. I wonder whether he could answer it now.


Mr. Speaker:: The hon. member for Prince Edward-Lennox.


Edward Nasserden: Would the minister answer that question put by the hon. member for Royal?


Mr. Speaker:: The hon. member well knows that the minister is the best judge of his own actions.


Mr. A. D. Alkenbrack (Prince Edward-Lennox):: Mr. Speaker, my question is for the Minister of Finance. According to a statement

appearing on page 1006 of Hansard the 30 per cent tax on $50,000 stock sales by Canadian residents to non-residents went into effect last Thursday night. I should like to ask the Minister of Finance how much revenue this tax yielded during its brief life?


Walter Lockhart Gordon: Mr. Speaker, if the hon. gentleman would put the question on the order paper I will be very glad to get the information for him.


Mr. Erik Nielsen (Yukon):: Mr. Speaker, I have a question for the Minister of Finance, or if he does not care to answer perhaps his parliamentary assistant who sits beside him might do so. Were the visitors to the minister's office, Mr. Kierans and the several others, obliged to take an oath of secrecy before they left?
(Translation):


Georges-J. Valade: Mr. Sneaker, I should like to direct a question to the Minister of Public Works, and I hope that the Secretary of State will not answer in his place. Could the minister tell us whether the construction work for the world exhibition will continue in spite of the imposition of the 11 per cent sales tax on building materials and machinery?


Jean-Paul Deschatelets: Mr. Speaker, may 1 suggest that the hon. member put this question to the mayor of Montreal who will give him an answer.


Georges-J. Valade: A supplementary question, Mr. Speaker. Does the minister intend to indemnify the authorities of the city of Montreal for the outlays resulting from the application of this measure?
(Text):


Mr. Speaker:: Order. The hon. member must know that is a question that must be put on the order paper.


Horace Andrew (Bud) Olson: 1 should like to address a question to the Minister of Finance or the Minister of National Revenue. I do not wish to transgress any ruling that you have made, Mr. Speaker, so I refer you to citation 178 of Beauchesne's fourth edition, wherein it is stated:
Questions addressed to ministers should relate to the public affairs with which they are officially connected, proceedings pending in parliament,-
And so on. What I should like to know is whether one or the other of the ministers would inform the house when they expect to issue a clarifying statement on the application of this new sales tax. I think it is a matter of urgent public importance. Furthermore, I have no assurance that either the Minister of Finance or the Minister of 28902-5-88J
Inquiries of the Ministry National Revenue is going to take part in the debate today. I would appeal to you, therefore, to allow this question so the construction industry across Canada can obtain some information as to when they can expect a clarification of this newly imposed tax.


Walter Lockhart Gordon: I must say that I think this is a very reasonable question. I will discuss it with my colleague the Minister of National Revenue at five o'clock, and I hope we will be able to accommodate the hon. gentleman at that time.


Mr. G. W. Baldwin (Peace River):: I have a question for the Minister of Finance, Mr. Speaker. Are we to take it from what has been said today that the people of this country must assume the government is in doubt as to whether the recommendation contained in section 11 of the budget resolution, in the same or other form, will be reinstituted?


Walter Lockhart Gordon: No, Mr. Speaker.



FAMILY ALLOWANCES


[Stage Direction]
On the orders oi tne day:
Mr. Roberi Muir (Cape Breton North and Victoria):: Mr. Speaker, since this is a rather important day I would like to direct a question to the determined, non-smoking Minister of National Health and Welfare. When will the government take action to extend the family allowances beyond the present age of 16 years for children attending school, as was promised during the election campaign?


Hon. Judy V. LaMarsh (Minister of National Health and Welfare):: Mr. Speaker, this being a matter of government policy, an announcement will be made when the government deems it expedient.



INCOME TAX


[Stage Direction]
On the orders of the day:
John (Jack) Henry Horner: Mr. Speaker, on Tuesday the Minister of Finance promised an answer to a question I put to him asking for the names of six companies which sought exemptions with regard to income tax. Is the minister now in a position to give that information to the house?


Walter Lockhart Gordon: I apologize to the hon. member. I have been occupied. I have not got the answer to his question. I will try to get it and give it to him tomorrow or the next day.

Inquiries of the Ministry POWER



COLUMBIA RIVER


[Stage Direction]
On the orders of the day:
Mr. Speaker:: Before the hon. member for Kootenay West puts his question, has it to do with the Columbia river?


An hon. Member:: What else?


Mr. Herridge:: I confess it has, Mr. Speaker.


Mr. Speaker:: Well, I must say it gives me a great deal of pain to make these remarks, especially to the hon. member who has been a close friend for many years, but he was kind enough to send me notice of this question as well as sending the original to the Prime Minister and I must say first of all that the question is a page and a half long. The first part is a long statement and the latter part begins, "Does the Prime Minister think".


Some hon. Members:: Oh, oh.


Mr. Speaker:: That is a matter of opinion, and the purpose of a question is to obtain information and not to supply it to the house. In the circumstances I wonder whether the hon. member could quickly rephrase his question if he still desires to give information rather than ask a question.


Herbert Wilfred Herridge: Mr. Speaker, as a result of your admonition I shall try to revise the question but it is owing to the particular circumstances surrounding the question that I considered it had to be somewhat lengthy. I ask this question of the Prime Minister at the request of quite a number of people in my constituency and the Kootenays, including some prominent Liberals. In view of the fact that the Prime Minister during the election campaign informed audiences in British Columbia and Alberta that the Columbia river treaty was a bad treaty and in view of the fact that he promised various groups-


Mr. Speaker:: Order. The hon. member is doing something indirectly that I ruled against directly, and I do think he should make his question short, crisp and to the point.


Herbert Wilfred Herridge: Well, Mr. Speaker, I will come to the question. Does the Prime Minister consider he has lived up to the expectations aroused by his criticism of the treaty, and kept his promise to these various organizations and people by undertaking to have the revised treaty referred to the external affairs committee after a Liberal government -mind you, not parliament-has made a
[Mr. Gordon.!
decision with respect to agreement with the government of British Columbia and the government of the United States?


Lester Bowles Pearson: Mr. Speaker, it is the intention of the government, as already indicated, to bring about changes to the Columbia river treaty in accordance with statements made by myself and others during the election campaign and prior to it. It is our intention to try and do that. When those changes are made and are in the form of an agreement with the province of British Columbia and the government of the United States it is our intention, as it is our constitutional responsibility, to bring that agreement before parliament and submit it to the committee on external affairs where the agreement can be considered. If parliament does not agree with it, then parliament can reject it.



POST OFFICE DEPARTMENT


[Stage Direction]
On the orders of the day:
Mr. O. W. Weichel (Waterloo North):: Mr. Speaker, I would like to direct a question to the Postmaster General, and I am sorry I have not been able to give him notice of it. Has the Postmaster General given further consideration to pay increases for the rural route mail carriers?


Hon. Azellus Denis (Postmaster General):: Mr. Speaker, as this concerns government policy it will be announced in due course in the house.



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. C. O. Cooper (Rosetown-Biggar):: Mr. Speaker, I should like to direct a question to the Prime Minister. In view of the rising concern on the prairies over the plans of the government concerning railway line abandonment, would the Prime Minister indicate the approximate time when legislation dealing with the MacPherson report can be expected; and will he make a more definite statement of the government's intention toward the understanding reached by the Conservative government with the railway companies, the provincial governments and the elevator companies?
Right Hon L. B. Pearson (Prime Minister):
Mr. Speaker, so far as the question of legislation is concerned with regard to the MacPherson report, that is a matter of government policy and will be announced in due

course. So far as the other part of the question is concerned, my hon. friend the Minister of Transport may wish to repeat what he has already said two or three times in the house on this matter.


Clarence Owen Cooper: A supplementary question, Mr. Speaker. Has the government given any undertaking to the other parties to that understanding that they stand by commitments made last January?


Hon. G. J. Mcllrailh (Minister of Transport):: Mr. Speaker, some days ago I made a statement on that matter in this house in answer to a question, and the statement still stands.



P.E.I. CAUSEWAY  INQUIRY AS TO CONSTRUCTION

[Stage Direction]
On the orders of the day:
Mr. Heath Macquarrie (Queens):: Mr. Speaker, I have a one sentence question relating to the intentions of the government on a matter of urgent importance, namely the Prince Edward Island causeway. I direct my question to the Prime Minister. Noting the lack of any announcement in this house beyond that of the Minister of Public Works to the effect that the matter was under consideration, may I ask the Prime Minister if the government is now in a position to give an assurance that its predecessors commitment to build the causeway, as given in the House of Commons on April 17, 1962 by the then prime minister, will be honoured and the construction of the great project speedily commenced?


Lester Bowles Pearson: Mr. Speaker, we hope to act more effectively and speedily in this matter than the government which preceded us.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. Thomas S. Barnett (Comox-AIberni):: Mr. Speaker, the Minister of Fisheries has been having a rest and I would not want him to feel neglected. Therefore I would ask the minister whether he can tell us what has been happening recently in respect to the conversations concerning the North Pacific fisheries commission. Can the minister give us an up to date report as to the stage these conversations have reached at the present time?


Hon. H. J. Robichaud (Minister of Fisheries):: Mr. Speaker, as there is a possibility that the convention now taking place in Washington
Inquiries of the Ministry may recess today or tomorrow, I expect to make a statement to the house probably on Monday.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. W. M. Howe (Wellinglon-Huron):: Mr. Speaker, I have a question for the Minister of National Health and Welfare. It arises out of an article in last night's Toronto Telegram entitled "Invisible-but it kills". My question has to do with the direct relationship that has been proven to exist between the number of pounds of pollutants in our air and the number of deaths due to lung cancer. In the increased research that is taking place in relation to cigarette smoking, is added emphasis also being given to research into air pollution.


Julia Verlyn (Judy) LaMarsh: Mr. Speaker, I am not certain of the answer, and with my hon. friend's permission I would take this question as notice.



REQUEST FOR TRUE STATEMENT RESPECTING RADIOACTIVE FALL-OUT

[Stage Direction]
On the orders of the day:
Thomas Clement (Tommy) Douglas: May I direct a question to the Minister of National Health and Welfare. In view of a report in yesterday's Montreal Gazette that Dr. Gatthard Stehr of the Ontario department of lands and forests has stated that national health and welfare officials are "whitewashing the truth about atomic fall-out", would the minister assure the house that the unvarnished truth will be forthcoming?


Julia Verlyn (Judy) LaMarsh: The hon. member knows my propensity for seeking out the truth at all times. I hasten to assure him and all hon. members that now having seen the clipping to which he has referred, I shall take the matter up with representatives of my department and give him an answer at the earliest opportunity.



WHEAT-EXTENSION OF FURTHER CREDIT TO RED CHINA

[Stage Direction]
On the orders of the day:
Mr. Eldon M. Woolliams (Bow River):: Mr. Speaker, I should like to direct a question to the Minister of Trade and Commerce. Is the government considering extending further credit to communist China so that China can

Inquiries of the Ministry continue to buy Canadian wheat, particularly after the commission has returned from Hong Kong?


Hon. Mitchell Sharp (Minister of Trade and Commerce):: As I said in reply to a similar question the other day, Mr. Speaker,
I do not think it would help in the sale of wheat to China if I were to discuss the respective positions of those who are engaged in the negotiations. I am sure my hon. friend would agree with this.



STATEMENT AS TO DELIVERY QUOTAS

[Stage Direction]
On the orders of the day:
Mitchell William Sharp: Mr. Speaker, may I reply to a question that was asked of me on June 10 by the hon. member for Lisgar concerning delivery quotas on grain. I indicated at that time that the wheat board was conducting a survey among country elevator operators across western Canada to determine how much additional grain farmers had available Jor marketing prior to the end of the crop year.
On the basis of this survey the wheat board has decided to raise the general delivery quota to 12 bushels per specified acre effective Monday, June 24, at nearly half the delivery points. The board will make every attempt to equalize quotas at that level throughout western Canada by the end of the crop year. I have also been informed that the wheat board will raise the quota on Durum wheat to 15 bushels per seeded acre.
Hon. members will appreciate that this quota level will enable the vast majority of producers to deliver all the grain they wish to deliver with the exception of Durum wheat. In the case of Durum wheat, production during the last crop year was at an all time high and, rather than congest the grain marketing facilities with supplies of Durum wheat far in excess of market requirements, the board has decided to limit the Durum quota to 15 bushels per seeded acre.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. A. D. Hales (Wellington South):: I have a question for the Minister of Agriculture; I would not want him to think we have been neglecting him lately. Will the minister advise the house whether, as a result of the decision by the European common market to raise tariffs on United States poultry by more than 200 per cent, he has decided to

change the quotas on turkeys entering Canada from the United States?


Hon. Harry W. Hays (Minister of Agriculture):: I had lunch with one of these gentlemen at noon.


An hon. Member:: Did you have turkey?


Harry William Hays: We had lobster. We have these things under consideration. While I am on my feet I would like the hon. member to know that conditions in agriculture are good. The price of milk is up. Crops are good. Butter stocks are disappearing.


Alfred Dryden Hales: I should like to ask the minister what that has to do with turkeys.


Harry William Hays: We will have lots of wheat to feed them.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Mr. D. M. Fisher (Port Arthur):: I should like to ask the Prime Minister a question about something which is not domestic and relates to his reputation as a diplomat of peace. In view of the precedent of his predecessor in joining the Bermuda conference of Messrs. Kennedy and Macmillan, is he giving consideration to joining these heads of state in London next week?


Lester Bowles Pearson: Mr. Speaker, I have not been invited. No doubt my hon. friends at this conference know that I am very busy here.



UNEMPLOYMENT INSURANCE


[Stage Direction]
On the orders of the day:
Thomas Speakman Barnett: I
should like to ask the Minister of Labour whether, in view of the very serious situation in respect of the financial condition of the unemployment insurance fund, his department has taken any other steps than that of the announcement in the Canada Gazette that the unemployment insurance advisory commission is asking to have any representations made to them on this question prior to an early date in July.


Hon. A. J. MacEachen (Minister of Labour):: Mr. Speaker, this government has taken action to see that the fund is supplied with resources to meet its obligations. As the hon. gentleman realizes, the fund was in the red to the extent of approximately $23 million at the end of April and the speech from the throne indicated, pending presentation to

parliament of proposed changes in the act, that the government will continue to provide the fund with the necessary resources.
(Translation):



DOMINION-PROVINCIAL RELATIONS QUEBEC    REQUEST FOR DELAY IN CONVENING CONFERENCE

[Stage Direction]
On the orders of the day:
Rémi Paul: Has the Prime Minister any comments to make concerning the request Mr. Jean Lesage, premier of the province of Quebec, made to him in a letter dated June 7 of this month for the adjournment of the discussion of the federal aid to municipalities program until after the interprovincial conference which is to be held in Halifax at the beginning of August?
(Text):


Lester Bowles Pearson: No, Mr. Speaker. A reply to this communication is now under consideration.
(Translation):
[Later:)


Louis-Joseph Pigeon: Mr. Speaker, I should like to direct a question to the Prime Minister, following the answer he gave to the hon. member for Berthier-Maskinonge-Delanau-diere.
Does the Prime Minister intend to table the letter in which Mr. Lesage asked that the loans to municipalities bill be postponed until the interprovincial conference which will take place this fall?
(Text):


Lester Bowles Pearson: I will be very glad to table it, Mr. Speaker. I believe Mr. Lesage has already made it public.



PUBLIC SERVICE


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Prime Minister. In view of the statement of the Prime Minister on May 17 that the government was committed to legislation providing for collective bargaining in the public service, can he say how long it will be before this legislation is introduced?


Lester Bowles Pearson: As soon, Mr. Speaker, as we have been able to make progress with legislation on the order paper.
20, 1963	1383
Inquiries of the Ministry NATIONAL PARKS



CAPE BRETON HIGHLANDS


[Stage Direction]
On the orders of the day:
Robert Muir: I have a question for my good friend the Minister of Northern Affairs and National Resources. 1 hope you will bear with me, Mr. Speaker, because whatever decision is reached on this matter has a bearing on whether some of my constituents will be working, and that is important and urgent.
Since it was the intention of the previous administration to construct a golf club house-


Mr. Speaker:: Order. This is a question which should be put on the order paper.


Robert Muir: With all due respect, Mr. Speaker, I may say that I have been in communication with the minister's office by letter and by telephone. How do I get this information? I should like to know why a contract has not been awarded since the tenders have been closed.


Mr. Speaker:: There may be similar questions to the one the hon. member has asked which every member would want to ask for every constituency in the house. Obviously, therefore, this is a question for the order paper.


Robert Muir: Mr. Speaker, I have a question I should like to direct to a fellow Cape Bretoner, the Minister of Labour. Will he use his influence to urge the Minister of Northern Affairs and National Resources to get on with projects pending within Cape Breton Highlands park?


Allan Joseph MacEachen: I will be glad to do that, Mr. Speaker.



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Harold Edward Winch: I should like to ask the Minister of Labour whether, in view of the desperate situation which has arisen following the failure of 12 months of negotiation in Vancouver and a strike vote of 95 per cent of the people affected, any special attention or consideration of mediation is in the mind of the minister to prevent a work stoppage on the Vancouver waterfront and prevent the loss of some $3 million a day.


Allan Joseph MacEachen: The officials of the Department of Labour are keeping in close touch with this situation,

The Budget-Mr. Gregoire and the latest information I have is that all parties are contemplating intensive negotiations with a view to the resolution of this dispute. It would seem to me that while the parties are preparing to undertake negotiations the Department of Labour ought to stand ready to assist if assistance would be helpful.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, I should like to direct a question to the Secretary of State. It relates to a notice of motion by his colleague the Minister of National Health and Welfare, but I think it is appropriate that I put the question to the Secretary of State. I am not neglecting the Minister of National Health and Welfare. Indeed, I am glad to see her motion on the notice paper with regard to pensions, but my question relates to the establishment of the committee on drugs. May I remind the Secretary of State that we were told, during the meetings of the striking committee, that this committee would consist of 15 members. We sent in the names of our group accordingly, but the motion says 24 members. Could this be clarified?


John Whitney Pickersgill: I must confess I was taken as much by surprise as the hon. gentleman. I shall make inquiries and endeavour to give as much clarification as possible.


Mr. Speaker:: May I suggest to hon. members that the time has come when we should proceed with orders of the day.



THE BUDGET


[Stage Direction]
The house resumed from Wednesday, June 19, consideration of the motion of Hon. Walter L. Gordon (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Nowlan.
(Translation) :
Gilles Grégoire: Mr. Speaker, I think that today's discussion on the budget will remain unforgettable because of some accompanying circumstances. As far as I am concerned, I have no intention of trying to raise a scandal where there is none. I would not in any way like to question the honesty and sincerity of the Minister of Finance (Mr. Gordon). Indeed, I think that there can be no [Mr. MacEachen.l
doubt in that respect. Neither would I like to create a scandal around the fact that the Minister of Finance may have some advisers or experts in attendance when preparing his budget. All I want to do is to point out that in the past, the Liberal party, to which the minister belongs, has probably been the political party in Canada which specialized more than any other in stirring up scandal where there was none, or to distort the truth as much as possible, while raising unjustified doubt. And, today, the Liberal party is caught at its own game. Indeed, it taught others well enough how to create a scandal, and that is why it has to bear the consequences today.
As far as we are concerned, Mr. Speaker, we never wanted such a policy. We did not accept it in the past, when applied by the Liberals. Neither shall we accept it when the same happens at the expense of the Liberals, and the proof is that, just a few days ago, I did not hesitate a moment to give a chance to the Minister of Finance himself to clear up any doubt that might have existed, whereas some hon. members wanted to prevent him from explaining a point raised by the hon. member of Calgary North (Mr. Harkness).
Mr. Speaker, we think that politics should have higher standards. If the Minister of Finance is to be blamed for anything, it is not because he consulted some advisers, but because he chose the wrong ones. People realize it today, because we see that the Minister of Finance has to take out of his budget some proposals and even some words which the wrong advisers put in his mouth, so to speak.
What is most important is that today we are living some hours of great significance for our country, when it appears without doubt that Canada is ruled by a government which kowtows to international finance.
The Minister of Finance submits a budget. Afterwards, protest is raised by the humble folk everywhere, by those who are employed in house construction, in the production and sale of building materials. Indeed, the Minister of Finance stated himself that he received letters and telegrams of protest from all sorts of organizations and societies. But nobody bothered. Not a single answer has been received with regard to those protests. The legislation itself is not clear and nobody bothers to explain it. The little man is left in complete ignorance of the nature of that legislation and the way it will be administered.
But now we have protests flowing in from the president of the Toronto stock exchange and the president of the Montreal stock exchange, from the American under secretary of state, from investment brokers, from big

financiers, one of whom was named a while ago, from the president, vice president or director of a large Montreal brokerage house. They come from big men of finance, not from ordinary Canadian citizens who make up the majority of the people, but from big financiers in Canada and especially from outside Canada.
It did not take long, Mr. Speaker, just a few days. The present government and its finance minister bowed, accepted, gave way before the protests of the big financial interests and withdrew the legislation under which a 30 per cent tax was imposed on the sale of Canadian corporations' shares to foreign interests. Mr. Speaker, I say this is a serious matter.
We see that the very same man, Mr. Eric Kierans, who during the last election campaign went from one end of the country to the other, spreading lies, distorting the Social Credit doctrine the better to fight and destroy it, I repeat, distorting it and lying shamelessly the better to fight Social Credit, that same man who stood up for American financial interests at that time, paid a visit to the Minister of Finance and, just 12 or 15 hours later, the tax on the sale of Canadian shares to non-residents was cancelled and withdrawn from the budget. So, Mr. Speaker, I maintain it is a shame to bow like that before the big men of finance in this country.
Please note, Mr. Speaker, that they put on quite a show. The Minister of Finance seemed annoyed by the tone of Mr. Kierans' letter, but he accepted Mr. Kierans' claims. He said that Mr. Kierans was wrong, but he accepted his claims.
Here we witness the greatest performance, I would even say the best show of hypocrisy ever seen. The president of the Montreal stock exchange and the Minister of Finance seemed to have daggers drawn, but the latter bowed before the president of the Montreal stock exchange who is the direct link with the American financiers, as president of the Montreal stock exchange and the Canadian stock exchange. That is, Mr. Speaker, the situation.
Faced with facts, Mr. Speaker, as I said a few moments ago, I do not want to doubt the honesty and sincerity of the Minister of Finance. I believe him to be a gentleman, polite and amiable but after what happened I think that if he has any pride or decency, he will admit that it is his duty, today, to resign as Minister of Finance of Canada.
The Budget-Mr. Gregoire
When we see that the person responsible for controlling the budget bends and crawls before the big financiers, then, Mr. Speaker, in view of the circumstances, I think that he has no other alternative but to leave honourably the post which he now occupies. He will show greater courage and strength than he has in the last 24 or 36 hours, if he resigns those functions that require its incumbent to be much more Canadian than he has shown himself to be in these last hours.
Having said that, Mr. Speaker, I would like now to get to the heart of the debate. First of all; I notice-and I will use the speech of the Minister of Finance himself-that there is nothing new under the sun.
One remembers very well that the Liberals, when they were in opposition-and, here, it is spelled out-were against railway subsidies with regard to freight rates. The Minister of Finance said:
The initial series of payments has continued since-
-and we have been forced to provide $20 million for this purpose in the present fiscal year.
Forced. What forced him, Mr. Speaker? One fact only: there is nothing new under the sun.
Then he added:
In light of the continuing confusion in railway matters, the previous government appointed a royal commission on transportation in 1959.
And there, it says:
The failure of the previous government to deal effectively with the railway question thus means that we are faced with special railway subsidies this year aggregating $70 million.
"We are faced with", as if this were an obligation. It is just that two governments, the two old parties, have always travelled the same road. There is nothing new under the sun-things go on as they were.
And that is not all, Mr. Speaker. Here are other examples:
I indicated when I tabled these estimates that we have been forced to bring forward for this budget the expenditure estimates prepared by the previous government.
Forced by what? There is always the same motive being invoked, and the more it changes, the more it remains the same.
And a little further on:

The Budget-Mr. Gregoire
An examination of the tax structure shows clearly that taxes are already very high, but that the revenue they produce continues to fall short of necessary expenditures.
And it still goes on-our tax structure "shows clearly that taxes are already very high". But taxes are increased again. The more it changes, Mr. Speaker, the more it remains the same. Going still further, I find other instances. I quote the Minister of Finance:
Taxes must provide revenue sufficient to allow an important step toward budgetary balance. And since the increased outlays under certain new programs will be tapered off or stopped in two or three years time, provision can also be made for some revenue of a non-recurring nature.
Now, he says-
While it would not be correct to describe any tax as being popular anywhere-
Those are the words of the Minister of Finance-
-it is the case that indirect taxes such as the sales tax are now regarded with more favour in quite a number of countries than in the past.
Exactly as it was before. There is an attempt to hide taxes so that they should go unnoticed, and that Canadians would swallow them more easily. It is all the same thing over again-the more it changes, the more it remains the same, Mr. Speaker.
I heard the Liberals, when they were in the opposition, complain about deficits, claiming it was a shame for the country when the Conservatives had deficits. But today I notice that we have a deficit of $585 million, not counting what will be added, since the 30 per cent tax on the sale of Canadian securities has been abolished. Formerly, we had deficits of $600 or $700 million, but this year we have one of $585 million. The more it changes, Mr. Speaker, the more it remains the same.
And further on we find this:
Our net cash requirements for 1963-64, both budgetary and non-budgetary-
And this will increase it even more-
-are thus estimated to be about $850 million.
This is worse than last year. Here, we may say that the more things change, the worse they get.
Mr. Speaker, I can go on and find in this budget endless facts which prove that the more it changes, the more it remains the same.
But, what we would have liked to see, for instance, is the carrying out of the Liberal platform, because it had some good points.

We see, among other things, that the Liberal party will see to it that there is full employment, Mr. Speaker. I received yesterday from the Minister of Labour a word, a letter or rather a message, about the employment and unemployment situation for the week ended May 18, 1963, that is 30 days after the beginning of the 60-day period. Incidentally, Mr. Speaker, it ends today and I wish the Prime Minister a happy anniversary for his 60 days of decision, specially since he has not decided anything apart from increasing the taxes.


Louis-Joseph Pigeon: May I put a question to the hon. member for Lapointe?


Gilles Grégoire: Certainly.


Louis-Joseph Pigeon: Would he be willing to grant them three days of grace?


Gilles Grégoire: Would it bring some special sanctifying grace to the Canadians? I do not think so.
So, Mr. Speaker, the Liberals were talking-it is to be found at the very beginning of their platform-about full employment. Let us see what the situation is today: on May 19, 1962, that is a year ago, there were, according to statistics, 336,000 unemployed; on May 18, 1963, there were 346,000 unemployed or 10,000 more.
We should have liked to see the platform of the Liberal party carried into effect but we see the reverse. And what else do we see? "Slums clearance to make room for better houses".
The Minister of National Revenue said: We shall give $500 to everyone who builds a home during the winter months, while we know that in winter the cost is increased by more than $500. The following day or a few days after, the Minister of Finance announces his tax.
Now, Mr. Speaker, here are some figures to show if the Minister of Finance with his tax has really encouraged home building and the clearance of slums. I have before me a book which I received yesterday morning, in English only, from the dominion bureau of statistics, which comes under the Department of Trade and Commerce. I have not received the French version. It bears the catalogue No. 64002. I only have it since yesterday. It points out that in 1962, 104,279 houses were built; at $500 per house, it comes to $52,139,500.
Now, the Minister of Finance expects that by adding his tax on building materials during the six remaining months of this year, it

would yield $170 million, which for a complete year, that is for 1964-1965, it would bring in $365 million and he would only have to spend $52 million.
He is actually taking back seven times more than what he is giving us. That is exactly the opposite of what was announced in the program of the Liberal party. It is not through such action that the Minister of Finance will promote home building.
Mention was also made in that program of improved health care. However, the matter is not even mentioned in the budget. This is what we would have liked to find there, but it is exactly the opposite that happens.
There had been some talk about increasing to $75 the allowances paid to blind and disabled persons. Yet, no such reference is made in the budget. We had been promised an increase to $75 in the old age pensions paid to widows and unmarried women at age 60. We are unable to find anything to that effect in the budget, in fact, we find exactly the opposite.
All that was very useful before the election. But afterwards, I bet that the Prime Minister (Mr. Pearson) and the Minister of Finance (Mr. Gordon) have never even thought of it. Those were only election promises, Mr. Speaker.
With respect to the budget properly, one can notice that the Minister of Finance is concerned about several important questions, the main one being unemployment. I shall come back to this later on.
One of his major concerns besides unemployment, Mr. Speaker, has to do with the excessive outflow of capital to foreign countries. The Minister of Finance mentions that our balance of payments deficit on current account has averaged $1.2 billion in the past six years. One notices also a little further that the Minister of Finance mentions that while unemployment is the major problem, we must not overlook other problems, the most serious being the continuing deficit in our balance of international payments, with the budgetary deficits of the federal government being next. The most serious problem then is the continuing deficit in our balance of international payments.
I have received yesterday, or the day before, another booklet in English only, also from the dominion bureau of statistics, entitled "National Accounts and Balance on Payments of Dividends". What is it about? It concerns our international trade for three months, that is the first quarter of 1963, which shows a 28902-5-89J
The Budget-Mr. Gregoire deficit of $243 million. For the exchange of goods there is a surplus of $62 million for a three-month period. On the other hand, there is a deficit in the matter of payments, capital transactions, of some $305 million in three months. This is due to dividends of $154 million and interest of $60 million and other short term capital transactions which form a total of $305 million.
So, when the Minister of Finance says that the most serious problem is still the balance of payments, the cause is inevitably the outflow of our capital by way of interest and dividends.
But what does the minister say then? Let us see what the Minister of Finance has to say on that subject.
There is a clearly recognized danger that if deficits continue at this rate, they will lead to a growing measure of control of our economy passing abroad.
In that respect, we certainly agree with the Minister of Finance; he is perfectly right.
But a little further he says;
In view of this situation we are entitled to take pride in the harmonious relations which have been maintained with the holders of foreign capital in Canada.
Mr. Speaker there is certainly a mistake there, either in the translation or the drafting, because the Minister of Finance warns us against too large a control by foreign capital and, the next moment, that is a few pages later, he tells us that we can take pride in the harmonious relations which exist with the holders of foreign capital.
He did not say it only once but he repeated it about two pages further in his budget address. I quote:
Above all, I am convinced that a growing partnership between Canadians and investors abroad is the best way of strengthening the harmonious relations with foreign capital which it is our object to preserve.
There you have another inconsistency, Mr. Speaker. But there is no end to inconsistencies in the field. About 12 pages further, the Minister of Finance said:
I referred earlier this evening to the need for a continuing inflow of foreign capital.
And I repeat what he said:
-the need for a continuing flow of foreign capital.
And there you have yet another inconsistency.
A little further, Mr. Speaker, the minister said:
As I indicated earlier, it is the policy of this government to encourage direct foreign investment in new enterprises in this country.

The Budget-Mr. Gregoire
But in the very same paragraph-and this is when I began to think I had not been given a true copy of the budget address-* he added:
It is our view that non-resident take-overs of established Canadian companies rarely confer any benefit on the Canadian economy.
Mr. Speaker, those are the contradictions we find in the address of the Minister of Finance. On the other hand, I found in it a rather encouraging passage-at least I hope we shall feel encouraged before long. On page 2 of his address, the Minister of Finance, speaking about our very heavy international balance of payments deficit, said:
This has meant that we have been importing goods and services which we should have produced at home-
But what are the most important services which we have imported from abroad? Foreign capital of course.
However, we heard the minister state that we should have produced at home services which we have been importing.
Mr. Speaker, why does the Minister of Finance not use an institution which is at his command, I mean the Bank of Canada? Why does he not use the Bank of Canada to find at home the services, or in other words the funds which are required?
This is but one of the measures we suggest to the Minister of Finance. If he were willing to put it into practice, he might solve some of the current problems, more particularly the problem of our international balance of payments deficit.
Mr. Speaker, I am not too surprised that the budget should give the results we have seen today considering especially that the Minister of Finance has based his whole argument and the budget on the confidence that the government of the day has created in Canada. Listen to this carefully:
As I say, our country Is just recovering from the loss of confidence that was engendered by the poor financial and economic administration of the previous government.
The minister adds the following:
However, confidence is not an element on which you can rely or which can be measured physically. It is a state of mind, a psychological phenomenon.
I do not have to go any further since that gives us an idea of the financial policy the government advocates. We all know that the best music teachers are not always the best singers. The best professors of economics are not always the best economists.
[Mr. Gregoire.l
Mr. Speaker, I am sure the members for Outremont-St. Jean, Drummond-Arthabaska and Matapedia-Matane (Messrs. Lamontagne, Pepin and Tremblay) will agree with me when I say that political economy could be defined as the science which deals with the production, exchange and consumption of the natural and industrial resources of a country. Indeed, that is the very definition that my hon. friends learned and taught. Political economy is a science-that word is most important-which is based on statistics, facts and figures just like physics is based on accurate figures.
When a rocket is launched in the atmosphere it is with the help of facts and statistical data, not through a state of mind or thanks to a psychological phenomenon.
If American physicists were to administer their interplanetary program through a psychological state of mind, they would not get their rockets off the ground.
The economists of the Liberal government have never considered economics as a science. In their opinion, it is a state of mind, a psychological phenomenon. That is why we are not getting anywhere. We have not even started off. That is also why the Minister of Finance stated: We could have procured commodities and services at home but we went abroad to get them.
If we are in such a pitiful situation today, it is because the government fails to realize that economics is a science based on statistics and accurate data and that economists should analyse the latter and use the Bank of Canada to provide credit in accordance with the possibilities and resources of the country. It is also because our economists are only concerned with states of mind and psychological phenomena.
With one hand, we give $52 million to go and get $360 with the other. This a psychological phenomenon. We maintain the deficit budget as before; these again are psychological phenomena.
Mr. Speaker, I suggest that our economists should go back to school and become scholars in economics and not people who believe in chance, chance of the seven fat cows and the seven lean cows. I have heard before the President of the Privy Council speaking about progression and regression cycles, just like the seven fat cows and the seven lean cows. At that time, he lived on a psychological phenomenon.


Mr. Speaker:: I must inform the hon. member that his time is up, unless he proposes an amendment.
(Text):


Some hon. Members:: Carry on.


John Whitney Pickersgill: Mr. Speaker, I have the impression that the hon. gentleman did not realize he was limited to 30 minutes. If the hon. member for Burnaby-Coquitlam (Mr. Douglas), or whoever is going to speak on his behalf, does not object, I would hope there would be unanimous consent to let the hon. gentleman continue briefly.


Thomas Clement (Tommy) Douglas: There is no objection, Mr. Speaker. The hon. member for Nanaimo-Cowichan-The Islands would like to begin his speech in time to have his half hour before five o'clock.


John Whitney Pickersgill: I would hope, Mr. Speaker, it would be agreeable to the hon. member not to go beyond 40 minutes.
(Translation):


Mr. Dupuis:: I should like to point out the fact that during the debate on the budget, last year, my hon. friend was against my being granted a few more minutes, but nevertheless it is a pleasure for me to give him a little more time.
(Text):


Mr. Speaker:: Is it the intention of the hon. member to propose a subamendment? If not, his time is limited to 30 minutes unless he secures the consent of the house to continue.


Some hon. Members:: Let him go on. Agreed. (Translation):


Gilles Grégoire: I must thank the hon. members for letting me continue my remarks.
Mr. Speaker, I think that the second serious problem, second only to the problem of international trade balance is the problem of the national debt. The budget speech mentions the debt, but it is mainly concerned with the interest aspect of it, namely $918 million, which caused the heavy deficit of this government.
I believe that this is a most important matter. It has been raised on several occasions previously, therefore I will certainly be permitted to come back to it and ask the Minister of Finance to consider-it is true that I do not represent a large financial group, I am only a member of this house- but I would suggest to him that he consider the proposal I made to him in connection
The Budget-Mr. Gregoire with refinancing the national debt through the Bank of Canada. This way, we could pay the nation's debt and at the same time the service charges in the amount of $918 million.
Mr. Speaker, I shall refrain from dealing with one or two problems and, since my time is running short, I shall come to a point the Minister of Finance raised in his budget speech, and I quote:
I shall begin with a word regarding monetary policy.
At that point, the Minister of Finance dealt with this government's monetary policy. You will see what great monetary policy we have.
This government favours the kind of credit conditions which will encourage economic expansion. In saying this I am aware, of course, that our balance of payment situation must at all times be kept in mind.
Then we come to the policy which, to sum up the three paragraphs dealing with monetary policy, mean simple weekly visits to the governor of the Bank of Canada.
A little further in the speech we find the following statement:
The royal commission on banking and finance will no doubt be considering whether-
In other words he repeated that he shall meet almost continually with the governor of the Bank of Canada. This is the only element I seem to be able to find in the present day monetary policy of this government.
There was another Minister of Finance, some 20 years ago, who had very advanced ideas on the nation's monetary policy. In 1942, the Minister of Finance in the Liberal administration of the day implemented an important monetary reform. He eliminated the small five cent coin to replace it with a large nickel.
Another point on which I would like to insist today is that again and again, during his budget speech, the Minister of Finance talked about the take-over of our economy and indicated that Canadians must take over the economy of the country. In fact, here is what he said on that matter and there again inconsistencies can be noted.
But we must recognize that the extent of nonresident ownership and control which it has produced in Canada goes far beyond anything found in other countries in a comparable stage of industrial maturity.
So, the minister recognizes that there is a problem in that respect. And he added immediately:
-we are entitled to take pride in the harmonious relations which have been maintained with the holders of foreign capital in Canada.

The Budget-Mr. Gregoire
And even if the minister recognizes that foreigners hold a very substantial ownership of our economy, he suggests provisions or at least makes observations with a view to encouraging foreigners to acquire a greater part of our economy.
And when the minister proposes to reduce the taxes in a proportion of 5 per cent for corporations, when 25 per cent of their shares are held by Canadians, he really thinks he will assist Canadian industry. For that matter,
I can foresee that Canada will no longer be a country in which 75 per cent of the industry is controlled in a proportion of 100 per cent by foreigners, but a country in which 100 per cent of the industry is controlled in a proportion of 75 per cent by foreign interests.
For the information of the minister, I must tell him that when you require only 25 per cent Canadian ownership, you want to leave nothing but crumbs to Canadians so that the greater proportion of 75 per cent is left to foreign interests because it is a known fact that the one who owns 51 per cent of the shares of a company is still the one who controls the company and not the one who owns only 25 per cent. On that occasion, the Minister of Finance gave us evidence that instead of being 100 per cent Canadian, the present government is only 25 per cent Canadian.
Mr. Speaker, I would have liked to say more about the new taxes, but since my allotted time forbids me to do so, I shall talk about the federal-provincial fiscal relations.
In my opinion, the budget speech of the Minister of Finance has put an end to the hopes of those who believed that the relations between the central government and the government of the province of Quebec would be improved, thanks to a better distribution, and even through the return to the province of her sources of revenue.
In his budget speech, the Minister of Finance seemed to bring to an end the hopes of the government of the province of Quebec for the recovery of 25 per cent of personal and corporate income taxes. But when we consider that the objective of the province of Quebec is not only to recover 25 per cent but indeed 100 per cent of her sources of revenue, we may rest assured that from now on we shall have to fight a battle which will result in the victory for the ideas *of the province of Quebec in this field, despite the ideas put forward by the Minister *of Finance.
The Minister of Finance stated that the government would be able to have more influence on the economic activity through fiscal policy; I must tell him that he is completely

wrong, because we cannot influence the economy by keeping all fiscal policies. On the contrary, we impose restriction on the economy of a country, because taxes increase steadily instead of decreasing, and as taxes increase steadily, they always result in restrictions. Now, if the government reduced taxes in a substantial way, then we might say that a certain amount of influence could be felt, but in our country, taxes have always increased and never decreased.
Mr. Speaker, before resuming my seat, may I say that the present budget is stagnant and shows that the government is lacking in imagination, in daring, in energy and in vigour. Indeed, I suggest that the government should be more confident in the future of Canada, in the Canadian people and in the capacity for development of our country.
(Text):


Mr. Colin Cameron (Nanaimo-Cowichan-The Islands):: Mr. Speaker, I began preparation of this speech some time ago and today I find myself somewhat inhibited as to the remarks I had proposed to make on this occasion. Possibly it is a sign of old age, a certain mellowing of my disposition, but I have a certain reluctance about kicking somebody who is already down, and when one sees the government which came into office with such a fanfare of trumpets a few months ago in such complete disarray today, it is a saddening sight.
There are, after all, elements of Greek tragedy about this and I cannot help thinking that the unfortunate Minister of Finance is a victim of what the old Greeks called the sin of hubris, overweening pride, which invites the furies, of course, and the inevitable punishment. I am not competent to go into the vexed question of the legality or illegality of the hon. gentleman's use of unorthodox aid, or advisers, in the preparation of his budget. In view of recent revelations, I am not quite sure whether we should regard this as anything very sinister but rather in the nature of an old-fashioned quilting bee in which the Minister of Finance (Mr. Gordon) gathered around him an assemblage of people to help him patch together a patchwork quilt made out of a lot of scraps of pre-Keynesian economies, tattered attempts at modern economics, and in the end producing a bed cover that is not going to keep us very warm in the forthcoming cold weather. I do not think this is too sinister now in that regard, but I do say that this house has a right to ask the government to make sure that if it is going to get unorthodox help from outside, that that

help should be competent. Because unfortunately the events of the last two days have proved that the help the minister relied on was grossly incompetent and should never have been permitted near the budget-making, not for fear that they would reveal secrets but because they were hopelessly incompetent to perform the tasks that the minister expected of them. I have no particular tears to shed over those in our society who failed to make a fortune yesterday, and I hold no brief for those who did. But I do suggest that if the minister is going to conduct our economic affairs on the basis of some sort of equity, then we should allow all thieves to have a licence at the same time.
In the course of his long address the minister mentioned on a number of occasions that to him the overriding problem in Canada today was that of unemployment, and with that estimate I am sure very few of us would disagree. He also said something else in the course of his long address on the budget, and when I read it today I wondered if this was the sentence that the furies were listening to. You recall, Mr. Speaker, that he told us that there has been a resurgence of confidence since the election. We would all agree with him that unemployment is the major problem of today, but I would suggest that it is possible to overestimate the power of words, and that unless they are translated into action and into reality they tend to become blown away by the winds of time. Our finance minister made a bow, I may say a much less pronounced bow than he made in his volume which dealt with a former troubled Canada, presumably a different one from the Canada that is troubled today, a very slight bow in the direction of acknowledging the role that deficit financing has in periods of economic stagnation and high unemployment. I was relieved to hear him say that, but then astounded a few minutes later to hear him produce a complete non sequitur and to proceed to chase a "will o' the wisp" of a balanced budget when he told us that we must begin now to move towards balancing the budget under conditions of high employment. I am sure, Mr. Speaker, that the 500,000 or however many unemployed there are today will be completely stupefied by this statement of the minister and will be asking themselves, what high employment is the man taking about? This move in the direction of a balanced budget is, of course, well calculated by every respectable economic opinion in the country, and indeed in the world, to prove a complete
The Budget-Mr. C. Cameron obstacle to attaining that period of high employment and economic activity towards which the minister is looking.
I looked up some of the minister's earlier statements before he was promoted to his present position. He was a private member of this house on October 22, 1962, and on that date, as reported at page 817 of Hansard, he had this to tell us:
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. However, it has been necessary in the past to invest some public capital in large undertakings and developments when sufficient private capital was not available. I think we should be perfectly willing to do the same thing again when it is necessary to get industrial developments going.
I am interested in that statement when I compare it with what the minister has been telling us in the last few days in his budget address. I wonder if he has decided that our economy was not in such a perilous condition as he was telling us eight months ago, and that he was mistaken; or can he possibly be telling us that in the course of these magic 60 days this government has solved all these problems and that they are now no longer with us? Because obviously if large capital expenditures of public funds were necessary eight months ago, one would assume that they were necessary today. But the minister seems to have changed his mind.
Admittedly the government came into power with stars in their eyes, and even though those stars have become a little tarnished in recent days no doubt there is enough glitter in them yet to blind them to some facts in this fact-finding budget. Fact number one, and it is one of which I would have thought the Minister of Finance would be aware, is that you do not cure depressed economic conditions by a hold-the-line policy. Yet that is what he outlined in his budget address. This was to be a hold-the-line policy, and he took great pride in the fact that he was going to reduce by some $200 million the deficit that had been anticipated by his predecessor in office.
Now, Mr. Speaker, this strikes me as rather peculiar when we compare the situation with things which happen in other parts of the world. For instance, in Sweden, which is a country of high economic activity at the present time, they have been prepared to maintain over a very long period of time, and are maintaining it to the present day in conditions of almost complete full employment, a deficit of somewhere in the neighbourhood of 2.9 per cent of their gross national product. Our Minister of Finance, in the face of unemployment and a stagnating economy,

The Budget-Mr. C. Cameron takes pride in the fact that he hopes to reduce this ratio between our deficit and our gross national product to some 1.5 per cent. I suggest to you that this indicates a complete lack of understanding of the role of modern economics in solving these problems. He has, of course, a number of measures in addition to the budget which he intends to use as incentives to economic stimulation. One of them is the old one which has been brought up year after year by both Conservative and Liberal governments-the idea that the way you get prosperity is to give tax incentives to private entrepreneurs. They persist in doing this even to the present day and even in the face of authoritative statements on the part of such organizations as the Canadian tax foundation, which reveal the real relationship between tax levels and levels of investment.
Between 1955 and 1957, as I am sure the Minister of Finance must know having come across this in the operations of his private business, there was a booming investment in Canada. At that time levels of corporation taxation ran from 45.9 per cent on profits over $500,000, 41.6 per cent on profits over $100,000, 36.2 per cent over $50,000, and so on. In 1962 the rate on profits of $500,000 and over was reduced to 39 per cent, on $100,000 and over to 30.9 per cent, and on $50,000 and over to 20.7 per cent. I suggest to you that this is clear proof that tax incentives are not what is required to stimulate private investments. What is required, of course, is effective demand.
This brings me to another of the items in this government's extraordinary incentive program. The Atlantic development board is going to be encouraged in its operations by providing a three-year tax holiday for firms which will enter that particular part of the country. In fact, it is being suggested to them that they will have a tax exemption for three years in which they could have no hope of making profits, because if there had been that hope they would have been there. The records show that if there were profits available, then firms would be there.
The minister has some rather curious method by which he plans to stimulate the economy. One of these has been discussed at intervals or attempts have been made to discuss it, and you have been hard put, Mr. Speaker, to head off a debate on it. I refer to the extension of the sales tax to building materials. This, in my opinion, is one of the most extraordinary combinations of measures ever presented by a Minister of Finance. We are told on the one hand that the government intends to stimulate building activity, particularly in the winter, by making a minis-
[Mr. Cameron (Nanaimo-Cowichan-The Islands) .1
cule reduction in interest rate, by reducing the down payment and by providing a $500 bonus to those who undertake building in the winter. Then, in order to completely offset that the minister is going to extend the sales tax to all building material. Of course, the building of houses is only a part, perhaps a very small part, of the economy that is going to be battered by this expansion of the sales tax.
One can readily see what is going to happen when we read the report from the Ottawa city council last night. As a result of the minister's decision to extend the sales tax to building materials, they are going to sharply reduce their capital expenditures in the forthcoming year. This will be a great help to employment in the capital city. This action, of course, will be repeated in every city in Canada. It will find its reflection also in other major construction projects. We have, in my own province of British Columbia, some major construction projects which are in the wind, one at least of which it is contemplated will be undertaken. The added cost now provided by the minister's expansionary measure may stall proceedings on these projects.
What does he expect to get out of it? Here is the amazing part of it. The most he hopes to get out of it is $170 million. I am going to suggest he will not even get that because he will find that the quantities of materials on which the 11 per cent tax would be paid will sharply decline. In addition to that, the government's expenditures are going to go up as a result of coping with the consequent unemployment. Nothing could have been more spendthrift and irresponsible than this ridiculous method of pretending to stimulate the economy.
Then, we come to the municipal loans provision. I have mentioned the city council of Ottawa, and I should like to mention some comments in general terms about it. I would suggest to you, Mr. Speaker, that this is all inextricably mixed up with the budget. The loans to municipalities are going to exclude the very things that are the great problems of municipalities, the provision of such things as schools, hospitals, sewers and public housing. In fact, one is almost at a loss to know upon what a municipality is supposed to spend the money. Perhaps it could be used to raise aldermen's salaries or something of that sort. It is a very difficult thing to know what they could possibly do.
Then, we have the Canadian development corporation which is going to solve all our economic troubles by bringing some order into the investment field. However, this is not an expansionary measure at all. It is a measure that is only going to pool existing savings

unless the government is contemplating that it will have to make good on the various guarantees it is going to give. Otherwise, this will not be expansionary at all. This will merely be changing existing capital, existing savings, from one field to another.
Now, Mr. Speaker, the minister has-I will not say fallen from grace because he has not fallen yet-been under considerable fire over another of his measures to rectify the errors in the Canadian economy. I am very sympathetic to his idea that it is time Canada, the Canadian people and the Canadian government took a very long, serious look at this growing development of foreign ownership of our resources and our industry. But what an extraordinary way he went about trying to achieve that laudable purpose. I will not go again into the tizzy he caused in the stock market which set it bouncing around like a yo-yo. I am glad to find that some of the millionaires are in Vancouver. After all, it is time we had our share of the millionaires. However, this strikes me as typical of the methods by which this government, this Minister of Finance, proposed to solve the problem of foreign ownership.
They also have something which I think might be called the Liberal party's apostles creed. In the budget address we find a paragraph which starts with, "We believe":
We believe that industry in Canada, wherever it is controlled, should operate with due regard to the over-all interest of Canadians and the Canadian economy. This means that Canadian raw materials should be processed to the greatest possible extent in Canada ... It means that export markets should be sought actively wherever they may be found-
-a conscious effort to purchase its raw materials, components and supply from Canadian sources whenever those sources are competitive.
It means that industry should employ Canadian service firms wherever possible-
It means that industry should exert itself to expand in Canada all the industrial functions which can efficiently be carried on here-
It means that industry should seek to provide the fullest opportunity for Canadian employees at all levels, including managerial, scientific and technical personnel.
In fact, Mr. Speaker, our Minister of Finance would have our national economy organized on the basis of categorical imperatives. Unfortunately, the categorical imperative does not apply. No doubt these people should do this sort of thing, and no doubt they would have been doing it today had it been the profitable thing for them to do. Our finance minister does not suggest how we are going to persuade or convince them that this is the most profitable thing for them to do.
Then, of course, at the tail end of this curious group he has here, I was very interested to find this statement. It is rather ironic to read it today in the wake of yesterday's events:
The Budget-Mr. C. Cameron
Above all, I am convinced that a growing partnership between Canadians and investors abroad is the best way of strengthening the harmonious relations with foreign capital which it is our object to preserve. Foreign investors can further the growth of this partnership by selling minority interests in their enterprises to Canadians-
Again, this is something they should do, but there is no indication of just how we are going to get them to do this. I would suggest, Mr. Speaker, that the Minister of Finance, like all previous ministers of finance in Canada, in trying to deal with this problem is trying to deal with something that is insoluble within the framework of our traditional economic and social relationships For one thing, we have a constitutional problem in Canada to be considered because the provinces have complete control over the bulk of the natural resources on which foreign corporations have built their industries.
To my mind, Mr. Speaker, there is only one sort of solution for this problem, the solution of public investment to regain control of the resources on which these industries are based, and if the federal government were to embark on a program of financial assistance to provinces prepared to embark on such a recovery of their natural resources I think this would be the sensible way to go about the problem of foreign ownership. Certainly none of the methods provided by the minister are anything but derisory in their nature.
We have also heard quite a bit in the budget debate about the question of liberalizing trade. Our Minister of Trade and Commerce (Mr. Sharp) has gone through the world, and he is hoping he did something at GATT that will help our problems. I should like to ask him and also ask the Minister of Finance (Mr. Gordon) this. It is asked quite seriously and I hope they have given some consideration to it. About a month ago the Right Hon. Harold Wilson, speaking to the United States chamber of commerce in London, pointed out the dangers of merely liberalizing trade without taking some steps in regard to international liquidity. I have no doubt whatever that the Minister of Trade and Commerce noted this speech and the proposals that were made by Mr. Wilson at that time, proposals, incidentally, that have been made before by economists. Dr. Triffin was one, and in a much earlier time, of course, a similar proposal was made by the late John Maynard Keynes. The proposal was that the international monetary fund should be established in effect as an international central bank.
Mr. Wilson points out that in the world as a whole we are now facing exactly the same problem that national economies were facing at the time they were tied to gold and which required increases in the volumes

The Budget-Mr. C. Cameron of gold before there could be economic expansion. He points out that we are in virtually the same position today internationally and that sooner or later we have to take steps in that regard in establishing the international monetary fund or a similar international body as, in effect, an international central bank enabled to create credit for the development of the undeveloped areas, and also in order to enable developed countries to avoid the recurring exchange crises which the present situation always imposes upon them when expansionary policies are embarked upon. I should like to hear at some time from the government whether they have taken part in any such discussions, whether they have advanced any of these ideas at international gatherings and what their views on this matter are.
I have been criticizing the government's budget, but I do not think that is enough for a member of the house to do. I think we should also present our ideas of what sort of things the budget should have attempted to do and I have attempted in very rough terms to present some projects that we should be understaking in Canada, with their probable costs or possible costs, shall we say. For instance, I understand that the Minister of National Health and Welfare (Miss LaMarsh) has today announced an increase in the old age pension of $10. I would suggest on behalf of this party that this is not going nearly far enough, that there has gone on for long enough in Canada the pathetic picture of people who reach the age of 65, who are forced into retirement by their employers and have five years to wait before they can draw the old age pension. We claim that we shall not be dealing with this problem until we bring the 65 to 69 group under the old age pension at the rate of $75 a month. With the increase granted today there will be a total there of some $500 millions.
Then we have something that has been promised to the people of Canada year after year by successive Liberal governments, and more recently by a Conservative government, and that is a comprehensive national plan of health insurance. It is very difficult to estimate what the cost of such a plan would be. Some estimates run as high as $500 million and suggest that the federal government's share would be some $300 million.
Then we have the question of the municipal loan fund which the government is proposing. I suggest to you, sir, that $400 million spread over three years will have the most minute effect in stimulating the economy and that the amount should be something more in the order of $300 million or $400 million a year, once the municipalities get under way on this project. Then there is the question of the difference in the interest rate on these loans.
[Mr. Cameron (Nanaimo-Cowichan-The Islands) .1
I do not think we have been told what that is to be. Certainly unless the government is going to shoulder quite a bit of the cost of the interest rate the municipalities are not going to be in a position to borrow from the fund, as the government apparently hopes they are going to do.
I suggest to you. Mr. Speaker, that these suggestions for very great increases of governmental expenditure, with their consequent deficits, are in no way out of line with the experience of countries which are at least as progressive as Canada and which are at least as economically efficient as Canada, and that we should be considering taking a leaf out of their books. I mentioned earlier and I repeat now that in Sweden there has been for many years a deficit carried by the government of anything up to 3 per cent of their gross national product and that today in a time of full employment in Sweden it is still 2.9 per cent of the Swedish gross national product; whereas the deficit so proudly announced by the minister, unless he is adding to it today or tomorrow-we do not know and we will never be sure-amounts to some 1.5 per cent of the gross national product. That in itself in my view condemns this government and this budget and, as I said on budget night, "presented as a means of stimulating the economy, it is nothing but a fraud".
I would beg the government and hon. members in all parties not to be frightened by the sort of suggestions I have made, with their large deficits perhaps running up into billion and a half figures, because these are the sort of figures that progressive countries are now adopting. I would remind you, sir, that without blinking an eye we are prepared to spend very much more than that on defences which so far have proved rather dubious.
These things will not, of course, solve our problems permanently. We in this group do not think they can be solved permanently within the terms of our present economy but they will give it a breathing spell in order to lay the groundwork for those sweeping social and economic changes which are obviously on the horizon. With the ever more collective world of which the eloquent and charming lady member for Northumberland spoke in the first speech to this twenty sixth parliament-


Mr. Speaker:: Order. I regret to interrupt the hon. member but his time is up.


Colin Cameron: May I have a couple of minutes?


John Whitney Pickersgill: Is the hon. gentleman proposing to move any motion? If so he would have another ten minutes.


Colin Cameron: No, I am not. I will only be a couple of minutes.


Thomas Clement (Tommy) Douglas: He has only two or three sentences.


John Whitney Pickersgill: Could we have agreement to allow the hon. gentleman to finish?


Mr. Speaker:: Is it agreed?


Some hon. Members:: Agreed.


Colin Cameron: As I was saying, in the ever increasingly collective world referred to by the lady member for Northumberland these proposals I am making, while not a permanent solution, would give us a breathing spell to make the adjustments that are going to be required of us in the very near future. Finally, Mr. Speaker, let me say that as a Canadian, as one who has lived nearly all his life in Canada, as one whose children and grandchildren have been born here, it affords me no pleasure to see the government of my country in such hopeless disarray as it is today. I would conclude as my final word to the government on this occasion: For heaven's sake, pull yourselves together. We cannot afford any more of these follies, any more of these ineptitudes, because all the rest of we Canadians have to cringe along with you at the ridiculous spectacle you are presenting to the rest of the world.


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



PRIVATE BILLS


[Stage Direction]
The house resumed from Tuesday, June 18, consideration of the motion of Mr. Wahn for the second reading of Bill No. S-13, to incorporate Standard Trust Company.
Mr. Speaker:: The hon. member for Kootenay West.


Herbert Wilfred Herridge: Mr. Speaker, here is one occasion when you are inviting me to speak, after dampening me down a bit this afternoon. When debate on this bill ceased last Tuesday I had suggested that it was not good enough for the hon. member for St. Paul's (Mr. Wahn) to introduce the bill and then say he would answer questions, which I understand is all he did. I am looking around to see if I can locate him in the house. I do not see him, but I wish to say it is our view that we are entitled to a full explanation and history of the development of this company, since a similar type of
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Coastal Fisheries Protection Act bill was introduced some time ago and we should now like to know the need for this new bill.
We want some assurance that this company will be Canadian controlled, and this is in line with our party policy.
Since the sponsor is absent it is rather difficult for me to raise certain questions I intended to raise, and so because of his absence I would at this point conclude my remarks.


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


Some hon. Members:: Agreed.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on banking and commerce.


Mr. Barry Maiher (New Westminster) moved: the second reading of Bill No. C-ll, to amend the Coastal Fisheries Protection Act (twelve mile fishing zone).
He said: Mr. Speaker, the purpose of this bill is to extend the present three mile fishing limit to 12 miles off our shores. It would also provide a year for negotiations to that end. I hope for its passage today, or at least for its referral to committee where it might be discussed in line with other pending legislation of a similar nature.
I am very well aware of the fact that the government has announced its intention of introducing legislation to establish the 12-mile limit, and I have earlier congratulated the government on that intention. However, I have left my bill on the order paper because I am not yet just sure what kind of 12-mile limit the government has in mind, and I am not sure whether the government knows exactly itself. It may be, that, as in some other departments, there are changes to be made, or that the policy is not quite clear on that point.
Another reason for leaving the bill on the order paper is because I think it affords a timely example of how the passage of time enables the administration to catch up with the policies of the party I represent, because this bill was introduced last session and also in the session of 1961. In both sessions it either failed to reach second reading or was talked out. However, it is still here today, and the bill states clearly what it means. It represents the views of the great bulk of the fishing industry, particularly in the Pacific area with which I am most familiar, and it would give those rights to Canadian fishermen which fishermen in so many other countries enjoy.
1396	HOUSE OF
Coastal Fisheries Protection Act
It calls for:
-a declaration by the Queen in parliament that Canada within those twelve marine miles seaward of her coasts has, to the sole use and benefit of her nationals, the right to fish exclusive of all others: as well as an affirmation of Canada's obligation to protect and conserve the live resources of those seas to that same end.
The bill would repeal section 2(b) of the Coastal Fisheries Protection Act and substitute the following therefor:
(b) 'Canadian territorial waters' means a fishing zone extending seaward to a limit twelve nautical miles from the baseline from which the breadth of the territorial seas of Canada are measured headland to headland and includes inland waters of Canada.
The bill is in geographical line with the stand taken by the Fisheries Council of Canada and such organizations as the united fishermen and allied workers' union of B.C. It represents the feeling of the great bulk of the fishing industry on both coasts.
The fisheries council, for instance, presses for the 12 mile limit and also proposes the straight headland to headland baseline which would enclose national waters. In the Pacific this baseline would go from headland to headland along the west side of Vancouver island and the Queen Charlotte islands, and the 12-mile exclusive area would extend seaward from that line. In the Atlantic it would connect at the international boundary and enclose the bay of Fundy and gulf of St. Lawrence.
It may be worthy of note that a special committee of the B.C. legislature has endorsed the 12-mile limit, and has urged also that Canada take unilateral action, if necessary, to establish the baseline and declare exclusive fishing rights for a distance of 12 miles from this baseline, and "be prepared to enforce such measures".
In other parts of the world the 12-mile limit for territorial waters has been established by Iceland, Norway and Russia since the 1960 Geenva conference. Denmark has set the 12-mile limit around Greenland, and Iceland has successfully established her 12-mile zone even against active opposition. I think, Mr. Speaker, that Canada, like so many other countries, should now take the perfectly reasonable step of staking out her 12-mile limit and offering time to others to negotiate to that end. Over 50 countries have now established their fishing limits and one country, Peru, has actually established a fishing zone of 200 miles exclusive to itself.
However, I think that with respect to allowing the United States to continue to fish inside the 12-mile limit in the Pacific we had better understand at once that it is almost solely the United States who fishes there now. There will be little change in the betterment of our


Canadian fisheries industry if there is to be no change in who fishes in that zone. We look to the government, if it proceeds with the 12-mile legislation or brings forward other similar proposals, to do so upon the basis of putting Canada's interests first. We have no desire to injure our United States friends or their fishing interests, but we believe it is a reasonable proposition that Canada should establish her own rights and limits and be willing to negotiate to keep them. We can undertake to respect the 12-mile fishing limits of other lands on the basis of their respecting ours.
Mr. Speaker, Canada needs to have the reasonable protection this bill can provide. On the east coast the large Canadian trawlers are by law kept 12-miles out so as not to destroy the inshore nursery grounds with their heavy trawls. Big trawlers of numerous nations, however, fish right up to our three-mile limit and on occasion have had the gall to call up the Canadian patrol boats upon seeing Canadian trawlers fishing closer than 12 miles and have asked that they be arrested. The bill before us also follows along the line of the former administration's ideas as expressed in the proposal of the Canadian government at the end of 1959 by the then secretary of state for external affairs at the United Nations conference on the law of the sea. We agreed with the position taken by the government at that time, but we did not agree with their failure or inability to bring about the establishment of this 12-mile zone. The present government, as I understand it from what has been announced, has decided upon the establishment and adoption of the principle of the 12-mile limit and has probably worked out some details for putting this decision into legislative form. So that in the view of those in this party, the former administration and the present government we have a very large measure of agreement in the house on the need for such legislation. I think this agreement is shared particularly by all hon. members from British Columbia, no matter to what party they belong.
I think we should realize, however, that the mere establishment of this zone will not solve our fisheries problems. British Columbia salmon, for instance, are caught as far as
1,000	miles from shore; sometimes they are found 2,000 miles out from their home in the Fraser river area. The 12-mile limit will assist in conservation but it will do little to improve Canadian salmon harvesting. But bottom fish will be protected by the 12-mile zone, and this will certainly be a benefit to Canada.
In conclusion, Mr. Speaker, I personally am very much impressed by the views of Senator Reid who comes from my own constituency

of New Westminster. He is an authority of many years and has a great deal of knowledge on this question. He has stated that in the protection of our fisheries Canada cannot ignore Russia. Russia has large and efficient floating cannery fleets heading down the Pacific coast which are much more modern than our own fishing units. They are not doing anything illegal but they interfere with our nets. This is a problem for us because of the present lack of efficient or effective regulations to control them. This also applies to Japan. If the United States, Japan and Canada are to come to some agreement regarding their share of the conservation and harvesting of the Pacific fisheries they must, in my opinion, bring Russia into such an agreement and make her subject to the over-all Pacific fishery regulations. Our fisheries could be put in a very grave situation, whether or not we establish a 12-mile limit, if Japan drops out of the Pacific agreement, because she may well ask why she should hold her hand while Russia does not.
The situation in the Pacific is that of a pool of water in which four people are fishing, three of them under some form of co-operative agreement and the fourth is not. This produces an embarrassing situation and makes it most difficult to proceed with any advantage, whether or not we obtain a 12-mile fishing limit, although this would certainly remove some part of the problem.
In conclusion, Mr. Speaker, I would like to put on the record, so we may get a proper perspective of the matter, the fishing catches of the major Pacific fishing nations for 1961. These figures are in metric tons, which are 240 pounds more than our own. We find, for example, that in 1961 Japan caught 6,711,000 tons; the U.S.S.R.,	3,250,000; the United
States, 2,874,000; and Canada, 1,000,400. I would urge all hon. members to support this measure, which I think is timely. If it should not be approved, I would hope that at least it might be referred to the appropriate committee for further detailed consideration.


Mr. Ron Basford (Vancouver-Burrard):: wish at this time, Mr. Speaker, to rise in support of the principle of the bill of the hon. member for New Westminster (Mr. Mather). I am somewhat surprised that it has been left on the order paper, in view of the government's declaration of June 4, when the Prime Minister (Mr. Pearson) announced that they had decided to establish a 12-mile limit on a headland to headland basis and would be entering into discussions and negotiations with those countries which have historic or treaty rights in our waters. It was said that we would declare this limit one year from the time of the Prime Minister's announcement. However, the presence of the bill on the
20. 1963
Coastal Fisheries Protection Act order paper will allow for a valuable discussion this afternoon in the house, and in committee, for a careful examination of the whole subject of a 12-mile fishing limit.
I have one small, technical objection to the bill as it is drawn. I have brought this to the attention of the hon. member privately, and I see no difficulty in having it rectified. If hon. members look at section 2(b) of the Coastal Fisheries Protection Act they will see envisaged in that section two methods by which Canada can acquire territorial waters. One is by designation by act of parliament or the governor in council, and the other is in any event those waters contained within three miles of our coasts. The amendment the hon. member proposes strikes out one of those methods that by which we can acquire territorial jurisdiction by act of parliament or declaration of the governor in council. This is a rather small point, but I think it is a very important one. Either now or in the future Canada's sovereignty in certain sections of our far north may be called into question, and I think it should be very clear in our statutes that we are entitled by act of parliament to declare sovereignty and jurisdiction over those areas. No doubt that is something which can be cleared up in committee.
The hon. member for New Westminster made reference to some of the aspects of the fishing industry in British Columbia. I should like to add to those remarks in order that hon. members who are not from the west coast may realize the tremendous importance which the fishing industry is to us. The industry employs some 14,000 independent fishermen. In 1961, the department, as will be shown in its annual report, issued 21,898 commercial fishing licences. About
6.000	plant and packing boat workers are directly dependant on the industry and some
75.000	are indirectly dependant upon it. Production on a five-year average totals some $71.5 million worth of fish, fish products, oil and meal, 60 per cent of which is exported, a most important consideration to the economy of our country.
Our fishing industry operates up and down the whole coast, from the United States border in the south to the Alaska Panhandle and the Bering sea in the north. Many areas in British Columbia are entirely dependant on the fishery. This is particularly true of our Indian population which is scattered up and down the coast in isolated bays and inlets in small communities on reserves. Their well-being is totally dependant on the fish they catch. The cultivation and maintenance of our fishery resources is vitally important to the province, not only because of the economic advantages the industry brings to the country but also because thousands of our

Coastal Fisheries Protection Act fishermen, their wives and their children, are looking to the resources of the sea for their future livelihood.
The hon. member for New Westminster mentioned that there are several ways of protecting our resources. I am sure many in this chamber are familiar with them. All the work of the Department of Fisheries is connected with the protection of our resources. The establishment of artificial spawning beds, catch limits, restrictions on gear and so on are ways in which this protection is afforded, but the two most important means of protection were those mentioned by the hon. member, namely, the means provided in this act and by the government in its declaration with regard to the establishment of a 12-mile limit to protect our coastal and inshore fisheries, and membership in international agreements to protect our resources on the high seas.
It is important to point out that the provision of a 12-mile limit is not a complete answer to the protection of our resources. Canada in the past has always shown a great willingness to co-operate with other nations in the protection of her resources on the high seas. At the present time we are members of some seven international agreements relative to fishing and the resources of the seas. These are the international Pacific salmon fisheries commission, which deals with sockeye and chum salmon on the Fraser; the international Pacific halibut commission; the international north Pacific fisheries commission; the international commission for the northern Atlantic fisheries; the great lakes fisheries commission; the north Pacific fur seal commission, and the international whaling commission.
It is essential that we should protect our fishery resources by maintaining our membership in these international agreements. This is the only way in which we can protect our resources on the high seas. I say this particularly because there are elements in British Columbia, some of which I think I can properly call irresponsible, which are now pouring scorn on the fact that Canada is a member of some of these agreements and issuing propaganda to the effect that we should pull out of them. If we are to protect our own interests on the high seas we must take all possible steps not only to preserve but to strengthen the terms of these agreements because, without them, foreign fleets could fish right up to our territorial limits.


Thomas Speakman Barnett: Would the hon. member permit a question? As he knows, I am one of the members from British Columbia. If I heard the hon. member rightly he said certain in-

terests or organizations in British Columbia were suggesting we should pull out of our international agreements. That remark puzzled me because I am not aware that any such suggestions have been made in British Columbia. I wonder whether the hon. member can be more specific.


Stanley Ronald Basford: I can assure the hon. member for Comox-Alberni that I was not referring to any members of this house. I was referring to material which I have received advocating a policy which would, I think, destroy the north Pacific salmon agreement. Certain organizations are advocating a policy which, if adopted by the government, would in my opinion result in the members forsaking this agreement and leaving us without any agreement at all. The importance of this agreement to the west coast fisheries cannot be overemphasized.
As the hon. member for New Westminster said, the salmon is the truly important fish on the west coast. This is a fish which spawns in the rivers, goes down the river as a finger-ling and makes its way thousands of miles into the mid-Pacific to grow to full size before returning to the river of its birth. Under the NORPAC agreement our salmon are protected as they go out into the Pacific. To illustrate the importance to British Columbia of maintaining this agreement, I should like to quote briefly from the concluding observations of the fisheries association of British Columbia to the special committee on fisheries of the British Columbia legislative assembly:
The one salient fact that cannot be ignored, regardless of all emotional appeal designed to arouse a pseudo-nationalistic bravado, is that the north Pacific treaty and the abstention principle is all that is preventing the Japanese from exploiting the fishery resource of British Columbia within three miles of our shores.
To turn now to the bill itself and what it will mean for Canada, may I say that it involves two things. It involves the establishment of a baseline drawn from headland to headland. This means that the line from which we draw the 12-mile limit will not run parallel to the coastline but from one principal head land to the next. This, on the west coast, will mean the inclusion of such huge bodies of water as Queen Charlotte sound, Hecate straits and Dixon entrance.
On the east coast it will include the bay of Fundy and the gulf of St. Lawrence which will be of great benefit in protecting the eastern fisheries. Thus, when we talk of a 12-mile limit, it is important to remember that it is the intention of the government as stated in its declaration on June 4 to establish a territorial limit, to be drawn from headland to headland, for which there are

important precedents, as the hon. member pointed out. There are many nations which have already established their limits according to that principle, following the Anglo-Swedish case in 1951.
There are two ways of declaring a 12-mile limit. It is possible to declare such a limit for all purposes, or a government can establish what is called a divided territorial jurisdiction. Under such a system the limit would, for example, be divided into two distances of six miles each, or it could be divided in a different proportion. The first six miles, say, would be territorial waters for all purposes including defence, pollution, the enforcement of customs regulations, and so on. The additional six miles would be an exclusive fishing zone.
The bill before us provides for a 12-mile fishing or territorial limit for all purposes. I support the six by six formula by which we would draw our baseline from headland to headland, and from that baseline have a territorial jurisdiction for the first six miles and a fishing zone for the next six miles, giving a total fishing zone of 12 miles. The reason I suggest that the six by six formula would be better is because that was the formula involved in a resolution supported by Canada and the United States at the international conference on the law of the sea which received almost enough, but not quite enough, support to carry. It was sponsored jointly at the second United Nations conference on the law of the sea in 1960 by the United States and Canada. I should like to read the first two paragraphs of the resolution which we sponsored:
1.	A state is entitled to fix the breadth of its territorial sea up to a maximum of six nautical miles measured from the applicable baseline.
2.	A state is entitled to establish a fishing zone contiguous to its territorial sea extending to a maximum limit of twelve nautical miles from the baseline from which the breadth of its territorial sea is measured, in which it shall have the same rights in respect to fishing and the exploitations of the living resources of the sea as it has in its territorial sea.
I would support a six by six formula of territorial jurisdiction because it has been widely supported at this international conference. If we adopt that method of measurement those nations, including the United States, which supported our resolution at the international conference are going to have a far more difficult time now opposing Canada's declaration of this 12-mile limit. If they supported us at the international conference I suggest they can hardly oppose us now and say we are not entitled to make this declaration.
In the negotiations which must follow a declaration of a 12-mile limit outlined in the bill before us which comes into force in July 1964,
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Coastal Fisheries Protection Act and the Prime Minister (Mr. Pearson) having said the declaration would come into force one year from the date of his announcement, in this interim period we will have to negotiate with the United States and countries which have historic or treaty rights to fish in the additional nine miles area we are now claiming. I understand that on the east coast quite a number of nations are involved. On the west coast only the United States is involved. While our fisheries are possibly threatened by Russian and Japanese fleets, and maybe in years to come by others, at the moment they have acquired no historic or treaty rights in this area. I would urge that in negotiations with the United States we should remember we have always tried to maintain close and friendly relations with them, and it is important to maintain those relations.
One very important aspect of this, Mr. Speaker, if we are going to make a declaration of this sort and tell United States fishermen that they cannot fish in that area, is that it is likely to result in drastic repercussions on our own fishermen. Much of the halibut caught by our fishermen is caught in an area of the Bering sea which conceivably could become United States territory, if they made the same kind of declaration we hope to make. If Canada were to take a very hard line now with the United States, we could end up with our own Canadian fishermen being cut out of much of the Bering sea halibut grounds which they now fish. Therefore in negotiations with the United States we must be careful not to jeopardize the rights of our own fishermen who fish in the Bering sea. In the future the United States may make a declaration similar to this, which would include much of this area off the coast of the Aleutian islands. I think the government now in office-


Mr. Deputy Speaker:: Order. I regret interrupting the hon. gentleman, but I must inform him that his time has expired.


Mr. C. R. Granger (Grand Falls-White Bay-Labrador):: Mr. Speaker, the matter under consideration is one of great interest to my province, and as a matter of fact to all the east coast area. It is a matter on which I have spoken in support on previous occasions. The proposal in the bill to extend fishing limits to 12 miles is one in which, as has been said already, there is a great deal of agreement. Such a proposal is long overdue, because if my reading of history is correct the problem of other nations utilizing our waters began almost as soon as Canada was discovered. In 1497 John Cabot discovered Newfoundland and Canada, and at the same time discovered that the waters of the area were full of fish. He began the real industrial

Coastal Fisheries Protection Act development of this nation. According to history, two years afterwards not only were the English fishing the area but the Basques, the Portuguese, and others, many of whom have fished there ever since. The problems which were created around the year 1500 have accumulated and multiplied, until it now becomes important to us to decide what we really mean when we say that Canada extends from sea to sea, whether our jurisdiction stops at the sea shore, or does in fact include Canadian territorial waters.
I agree with the sponsor of the bill that we must put Canada's interests first, and in doing that we are only doing our duty. We are not unmindful of the rights of others, but we must be mindful of the fact that the waters of Canada and what they produce are just as much Canadian as the soil of Canada and what it produces. It is unthinkable that the land of Canada should be exploited to the advantage of our competitors and those who are not Canadians. Is it not just as logical for us to assume that the waters of Canada and the fish contained therein belong to Canadians first, and that they should be looked upon as a great Canadian resource? We have not only to recognize this ourselves but to convince others as well.
The 12-mile limit in itself is not a cure-all. But it is a great help, and if it is applied on the baseline principle it will do two things. It will reserve for Canadians sections of waters to fish. At the same time it will contribute substantially toward conservation. Unfortunately that is not an answer in itself. If the 12-mile limit simply followed the contour of the coast and somewhat widened that thin fringe around our coast it would not be effective. If the baseline principle is observed and the line is drawn from headland to headland, waters within 12 miles from the coast would be considered Canadian and would become Canadian. We will have preserved for our fishermen that which is essential, if the fisheries of Canada are to be exploited as they ought to be, if the fishing industry is going to give the fishermen the living it ought to give them and if the productivity of the sea is going to give to Canada the income it ought to give. All these things will be accomplished by the institution of a 12-mile limit which is founded on the baseline principle.
Perhaps nothing is more evident than the fact that our waters are being exploited. Everybody knows it. The three-mile limit gives too narrow a fringe around the coast. It can easily be infringed upon over night, and often it is. It is a known fact that during the night ships do move inside the three-mile limit. Such a narrow strip of water is very difficult to police. Despite the fact that the

declaration of the 12-mile limit will mean there will be greater areas to police, it will be easier to protect this greater area of water than it is to protect the three-mile limit.
Figures show that Canada's production of fish is poor, and that in comparison the production of fish by other nations is rather alarming. We began the fishing industry in the western hemisphere. We have the wealthiest fishing ground in the world. We have allowed our competitors to take the fish away from us, and what is worse they have taken it away from within sight of our shores. These Canadian waters should be preserved for the use of Canadian fishermen. In my personal opinion the gulf of St. Lawrence ought to be a Canadian sea. I believe the same statement applies to the inland seas formed by the islands of the west coast. These, I believe, are vital to the survival of Canada as a great fishing country. These I believe to be vital, if our fishermen are going to have the use of the productive grounds much longer, because at the present time fish are being taken from within sight of our shores at such a rate that our fishermen will not have a chance to survive.
If our oldest industry goes it will adversely affect many thousands of people directly and indirectly, and will affect all of Canada. As a matter of fact, Mr. Speaker, I have often thought that because our fishing industry is so old it has, like a lot of old industries, accumulated the problems of centuries. We have been inclined not to look upon it in the light in which it ought to be viewed. Although the fishing industry is old, the production of the fishing industry is being used in ever greater amounts every year. Despite the fact that, like other ancient industries, it does have problems that have grown over the years, none of these problems is insurmountable. There is nothing wrong with the fishing industry which cannot be solved. The biggest problem facing the fishing industry is the fact that we look upon these problems as insoluble. However, in reality, we are faced with a group of small problems which, if attacked individually could be solved and the industry could be made much more profitable.
Figures prove, I believe, that there is more salt codfish being consumed today than there was 30 years ago. Salt codfish production is the oldest part of the industry. The fresh fish industry has been expanding rapidly. The problem is not that the world is using too little, although that might well be the case, of the products of the sea, but that we in Canada have not been getting our share of the world market. This is one problem that has to be tackled and it can be tackled

effectively, just as any other problem that affects the fishing industry can be attacked separately and solved.
Keeping in mind the existence of other problems, this is one that is basic, the establishment of a 12-mile limit founded on the baseline principle. This is necessary if we are going to reserve for Canadian use the sections of water along our coast which are highly productive of fish, waters which can be utilized by our fishermen in order that they may enjoy a better livelihood and make Canada's place in the world markets more secure than it is today.


Mr. A. B. Patterson (Fraser Valley):: There are three reasons, Mr. Speaker, why my intervention will be very brief this afternoon. The first is that the Prime Minister (Mr. Pearson) has already announced that the government is going to proclaim this 12-mile limit. The second is that the case has been very ably presented by the hon. member for New Westminster (Mr. Mather) in his address this afternoon. The third reason is that I do not want to be charged with talking out this measure that I believe is of vital importance to us. -
However, I do rise at this time to indicate our support for this particular bill. I believe that the principle is very sound and, furthermore, I believe that its necessity has been established without any question. The need has been indicated from two particular points of view: one, the saving of this particular resource for Canadian fishermen and, of course, the Canadian consumer as well; second, the principle of conservation and that representations have been made to the various parties in this house by those associated with the fishing industry. I do not believe anyone would question the importance of these two principles.
Not only have we had the presentation of this bill this afternoon, but we are reminded, of course, of the many other representations that have been made in connection with the establishment of the 12-mile limit. We have, for instance, the presentation that was made by a delegation from the united fishermen and allied workers' union during the last parliament. It was also reinforced by a delegation that was heard just recently and met, I believe, representatives of the various parties in the house. I should like to take one short paragraph from a publication that was issued by the united fishermen and allied workers' union headed, "Urgent appeal for action." Under the heading, "British Columbia fishermen strongly urge decisive action". I find this in paragraph number 4:
Declaration of a 12-mile territorial waters limit by the Canadian government. Our waters would
Coastal Fisheries Protection Act extend 12 miles outside of a "headland to headland" baseline drawn in such manner as to include the waters of Queen Charlotte sound, Hecate strait and Dixon entrance.
We also have a reference to this matter in a communication to the minister of fisheries under the former government from the amalgamated conservation society, which is made up of 12 associations and organizations. Paragraph 3 of their letter states:
The law of the sea conference held at Geneva in 1960 found Canada's proposed 12-mile limit defeated by only one vote. An acceptable agreement for a 12-mile limit had been worked out beforehand between the United States and Canada, why did these two nations not ratify an agreement on the 12-mile limit between themselves? Smaller nations in order to conserve their fisheries were forced to establish such a limit which they have enforced and for which they are to be commended.
Reference has also been made today to the report submitted by the special committee appointed by the British Columbia legislature to inquire into certain matters affecting the commercial fishing industry in British Columbia. I should like to read a paragraph from this report presented on March 26, 1963.
Your committee also noted basic agreement by all segments of the industry with the pressing need to amend the now obsolete three-mile limitation of Canada's territorial waters. All submissions advocated a straight baseline drawn from headland to headland of British Columbia's outer coastline, and to provide protection for Canadian fisheries for a distance of 12 miles to seaward in support of the arguments offered. As a result thereof your committee further recommends that another resolution containing this request be forwarded to the government of Canada, as follows:
Whereas precedent exists whereby nations have established the width of their territorial seas; and
Whereas the present 3-mile limit is inadequate for the protection of Canadian fisheries;
Therefore be it resolved, that Canada take unilateral action to establish a headland to headland baseline along its outer coastal shoreline as recommended jointly by Canada and the United States of America at the 1960 United Nations conference on the law of the sea; and
Be it further resolved, that Canada, while recognizing reciprocal fishing rights with the United States of America, declare exclusive fishing rights for a distance of 12 miles to seaward of that baseline; and
Be it further resolved, that upon such declaration, Canada be prepared to enforce such measures.
I think that these statements from the various organizations and from the British Columbia legislature point up the necessity of action on the particular bill that has been presented by the hon. member for New Westminster (Mr. Mather). There is reference, of course, to historic rights, but I would suggest that we cannot allow our Canadian resources to be depleted or destroyed, nor can we deprive Canadian fishermen of their rightful first claim to those resources. As has been pointed out, and I mentioned this previously, from the two points of view of conserving our resources
1402	HOUSE OF
Coastal Fisheries Protection Act for Canadians and also conserving fishery resources as a whole I believe that this action is very essential.
We appreciated the reference in the speech from the throne to the effect that a fisheries program for Canada was going to be worked out in co-operation with the provinces. I do not know just how far this is going to go, but perhaps it will have some effect and influence on this particular matter.
Once again I would remind the house that representations have been made to the effect that the committee on marine and fisheries should be set up and all these matters referred to it for consideration. I do not know just when that committee is going to be established or when it is going to have its first meeting. However, in view of all these problems, including the one mentioned today, I believe it is absolutely essential that the fishermen and those who are concerned have ample opportunity to make their representations to that committee and to the house. Therefore I am happy to speak in support of the principle of the bill that is now before us.


Mr. Granf Deachman (Vancouver Quadra):: Mr. Speaker, unlike the hon. member for Fraser Valley (Mr. Patterson) I have no fears at all about being found on my feet at six o'clock speaking on this bill, because the house has already been given a clear indication by the Prime Minister (Mr. Pearson) that the question of a 12-mile limit is under advisement, that talks have already taken place between the Prime Minister and the President of the United States and that Canada is moving rapidly in that direction. Therefore, while all of us in the house are in agreement in respect of the main principle of the bill of the hon. member for New Westminster (Mr. Mather) his bill is to a certain extent redundant, however much it may provide an opportunity to the house to discuss a measure of the utmost importance to Canada.
On that score I might remind my hon. friend of the statement made by the Prime Minister in respect of a 12-mile limit, as found on page 621 of Hansard for June 4. In concluding his statement he said:
It may be recalled that in my discussions with President Kennedy at Hyannis Port I informed him that the Canadian government would shortly be taking decisions to establish a 12-mile fishing zone. The president reserved the longstanding American position in support of the 3-mile limit. He also called attention to the ''historic" and treaty fishing rights of the U.S.A., and I assured him that these rights would be taken into account. Discussions will be held with the United States with a view to determining the nature and extent of the U.S.A. rights and interests which may be affected by the action which Canada is taking. Discussions will also be opened as soon as possible with other countries affected, and it is our hope and belief that we will be able to reach agreement with such countries on mutually satisfactory arrangements.


I think that to proceed in this way with regard to the rights of a neighbour to whom we are exporters of fish is the correct manner in which to proceed in relation to a 12-mile limit for our own fisheries on the Atlantic and Pacific coasts.
(Translation):


Mr. Deputy Speaker:: It being six o'clock and the hour appointed for the consideration of private members' business having expired, I do now leave the chair.
At six o'clock the house took recess.
(Text):


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.


[Stage Direction]
The house resumed consideration of the motion of Hon. Walter L. Gordon (Minister of Finance) that Mr. Speaker do now leave the chair for the house to go into committee of ways and means, and the amendment thereto of Mr. Nowlan.
Eldon Mattison Woolliams: 
Walter Lockhart Gordon: Mr. Speaker, everyone who assisted me with the preparation of the budget took the oath of secrecy.
He did not answer the question unequivocally. He did not come clean with the facts at that time until he was pressed further by other hon. members of the opposition. The hon. member for Parry Sound-Muskoka (Mr. Aiken) then asked this:
Mr. Speaker, I should like to ask the Minister of Finance whether there were persons who left his office prior to six o'clock last night with knowledge of the budget contents?


Walter Lockhart Gordon: I left my office before six o'clock last night and I was fully familiar with the budget, Mr. Speaker.
Then the leader of the New Democratic party said:
Mr. Speaker, may I ask the minister if persons other than the officials of his department participated in the preparation of last night's budget?


Walter Lockhart Gordon: Yes, Mr. Speaker; various officials of various departments participated-*
But he did not say at that time that three consultants were brought in, outside of government officials. Then there was a question by the hon. member for Pontiac-Temisca-mingue (Mr. Martineau). I do not know if I would have put the question at that time because it was such that if he had got the opposite answer it would not have been such a good answer, because it was such a direct question; but I admire the hon. member for Pontiac-Temiscamingue who put the question to the minister and finally put his finger on the problem we are now debating:
I should like to ask the Minister of Finance if any of the outside persons who advised him on budget matters were informed in advance of any of the contents of the budget?


Walter Lockhart Gordon: I do not think I can say any more.
He wanted to remain silent, but he did not remain silent too long because he knew then there was a storm brewing, not only in the House of Commons and across the country, but in the ranks who form the front of his party. Then the Secretary of State (Mr. Pickersgill) said to the Minister of Finance, "I think under the circumstances, with this type of interrogation, you must make a clean breast of the situation".


John Whitney Pickersgill: Is that mind reading?


Paul Raymond Martineau: Crystal gazing.


Eldon Mattison Woolliams: I do not know whether it is mind reading or even crystal gazing that the Secretary of State often practises. I would ask these questions, and these are the questions we wanted answered at that time. Who were these people? What are their connections? What special interests do they represent? Like other previous speakers in reference to this matter, I want to make it quite clear that nothing I say in this regard


means that I am at this time, from the facts that are before us, suggesting that any of these men are not men of integrity, nor am I making any reflection on the integrity of the Minister of Finance. But facts are facts and the Canadian people are entitled to know how and in what manner this partisan document known as the budget is put together. Who were these people? What firms were they connected with? There was Dr. M. P. O'Connell, of Harris and Partners in Toronto, chartered accountants; there was Mr. G. A. Conway, a chartered accountant from Toronto, and Mr. D. C. H. Stanley of Wood, Gundy and Company. Two of these people are agents, employees, connected with, or owners or shareholders of the companies in question. These are two large financial institutions in the city of Toronto. After further interrogation it was suggested that these men had taken an oath of secrecy. Then there was a question as to whether or not there was an order in council. The hon. member for Winnipeg North Centre (Mr. Knowles) said he had checked and there was no order in council. Then we had the Prime Minister (Mr. Pearson) saying, "Oh, well, it was not an order in council after all. We used a special act. They were actually hired by contract", like you buy and sell property. These are some of the things we want to find out. I suggest, first of all, that we should have a select committee composed of hon. members of this House of Commons. All the people connected with this matter should be brought before that committee, under oath, to give evidence. In this way we could determine the facts and this house would be in a position to come to a decision and pass judgment.
I ask this question: What precedent exists in reference to conduct such as having outsiders prepare the budget, such as having ghost writers prepare the budget? At first one was prone to ask: What is wrong with getting outside help? In fact, some of the newspapers asked this question. It was also asked: What is wrong with getting the most experienced brains to assist in the preparation of the budget? I think the Minister of Finance asked that himself. On the face of it there would appear to be nothing wrong; but what does precedent say about this, and what is the principle behind this precedent? The answer is clear in this regard, for it is based on a very sound principle and tradition, which is that the contents of our budget must be kept secret. Any violation of this principle, any indiscretion which might affect and undermine the principle of secrecy has in Great Britain, as well as in other countries which have the same parliamentary

system as our own, brought about the immediate resignation of the minister of finance who might have been guilty of such indiscretion. The principle is a very simple one. It is to avoid evil and the appearance of evil. I would point out also, as some other hon. members have done, that it is the standard procedure in Canadian parliamentary life that no persons other than members of the government and officials of the government shall have any knowledge of what is in the budget.
It must be remembered that these consultants were employed and attached to certain financial institutions which stood to make millions of dollars if they had prior knowledge of what was in the budget, and probably stood to lose millions of dollars if they did not have that knowledge. No one is suggesting-I repeat this-that these outsiders brought in as ghost writers actually informed their employers of the new tax structure as far as its affecting the sale of stocks and bonds was concerned. But to ask these people, these human beings, to carry this kind of load and not to use the information that they have now, and had at the time, when they are transacting business deals, is asking too much of any Canadian or any other person. I say that only supernatural men could be expected to toe the line in that regard, and I do not think anyone would suggest that these men are supernatural. I put this forward as an illustration of my point.
Anyone who has practised law before the bar of justice knows that sometimes in a most serious criminal case, such as murder, inadmissible evidence gets before the jury. The jury hear it and the judge hears it. The judge may advise the jury to overlook what they have heard, but we who are defending these people before the bar of justice profess that it is very difficult to clear one's mind of what one has heard. The jury may draw inferences from the facts, or what they think are inferences, because they had that knowledge deep-seated in their own minds.
There are two interesting precedents as far as secrecy of the budget is concerned. One concerns a cabinet minister in England by the name of the Hon. Mr. Thomas, who was the colonial secretary in 1936. What did he do? He merely remarked something about the price of some commodity, tobacco or tea-


An hon. Member:: Beer.


Eldon Mattison Woolliams: Well, it was beer. That may be a better commodity. He made some small remark as to the price of this commodity to a Mr. Butt, who was also a member of parliament. Mr. Butt then made some remark to someone else, and there was a leak of the budget contents. What happened? Mr. Thomas
The Budget-Mr. Woolliams resigned in 1936. I repeat, he was the colonial secretary and he resigned because of that indiscretion. I might mention there are some authorities in this connection. There is Keith's book on the British cabinet system, which says that the most fundamental thing in the preparation of the budget is secrecy, to avoid evil and the appearance of evil. I should like to quote from page 89 of this book, Mr. Speaker. It was said by the writer, who was dealing with this question, that even the closest cabinet colleagues should not have absolute knowledge of what is actually in the final draft of the budget; that only the minister of finance should have this knowledge, and the officials of the minister of finance in the government. Then he said this:
There are clear disadvantages in this procedure-
The Minister of Finance admits that; he said there were some disadvantages in not getting outside help, because apparently he did not feel he had the kind of officials who could do the job:
*-necessary though it may be in the interest of secrecy in so far as the chancellor is allowed to prepare his plans without the valuable aid which is naturally provided by examination by a committee of the cabinet.
In effect, Mr. Speaker, what Keith said in his book was that although, as was pointed out by the present Minister of Finance, there may be some disadvantage in not getting outside help or even help from a special committee of government officials, that disadvantage is overshadowed by the necessity that the facts in connection with the budget must at all times be kept secret, because otherwise individuals stand to enrich themselves, or could enrich themselves at the expense of their fellow men in society. Putting it in more simple terms, why should-and this is what Canadians across the country are asking tonight-three or four Canadians have this information prior to the budget coming down, when 18 million or 20 million Canadians must stand the rap of extra taxation when the budget is brought down? There is the fundamental principle behind the doctrine of secrecy that prevails when the budget is drafted. What happened? Mr. Thomas resigned. I do not know what ramifications may follow in reference to the present Minister of Finance. That is a responsibility he must assume himself and make his own decision on.
Let us for a few moments look at a second illustration. The second interesting resignation to which I refer is in reference to Sir Hugh Dalton. This is discussed fully in his memoirs which are called "High tide and after". These are his memoirs for the period 1945 to 1960. There is a chapter called "My resignation". What did he do? When he left his office

The Budget-Mr, Woolliams on the night he was going to deliver his budget he spoke to a fellow by the name of John Carvel, who was a correspondent for the Star, who was standing in the lobby.
He made a little remark to him in that regard. It was only some passing remark. Then he went to his place to deliver the budget. The next morning, when the cabinet ministers were attending a cabinet meeting, he got a note saying there had been some leakage of the contents of the budget. Immediately, he said he recalled making that statement and although there had been no harm done to the state, because very few newspapers had reached the public before the budget speech was delivered, he felt it was his duty to resign. And he did resign. These are his exact words used in the House of Commons. He said on that occasion in 1947:
I very much regret to tell the house that the publication to which the hon. member refers arose out of an incident which occurred as I was entering the chamber to make my speech yesterday. In reply to questions put to me by the lobby correspondent of the Star newspaper, I indicated to him the subject matter contained in the publication in question. I appreciate that this was a grave indiscretion on my part, for which I offer my deep apologies to the house.
This is the point: No real harm had been done to the state, because no knowledge had leaked out in time for fortunes to be made. But because there had been an appearance of indiscretion, the minister resigned. This was the principle involved. Let us compare those facts with the situation we have before us now in this house. I say again that it is the minister's responsibility; it is his decision. This is what Mr. Dalton said in his letter of resignation:
My dear Prime Minister,
In view of the incident which was raised today in the house I think it is my duty to offer you my resignation. If you accept it I shall continue, though now outside its ranks, to do my utmost to support the government-
He goes on to say he will continue to support the party. To that letter, the prime minister replied, expressing again the same old tradition in succinct words in the second paragraph:
I realize that this indiscretion in itself did not result in any action detrimental to the state, but the principle of the inviolability of the budget is of the highest importance and the discretion of ibe Chancellor of the Exchequer, who necessarily receives many confidential communications, must be beyond question.
Those were the feelings of the prime minister about the matter. Sir Winston Churchill had this to say:
In the circumstances we all regret that you have to resign but I must acknowledge with frankness that because of the indiscretion there was no alternative.


What was the result? The debate on the budget proceeded but a select committee was set up to inquire into the circumstances of the case. That committee made certain findings as to the facts. What were those findings? They were:
1.	Mr. Dalton made a premature and unpremeditated disclosure to Mr. Carvel of the contents of his budget, which disclosure he had no right to-make.
2.	Mr. Dalton did not make his disclosure for premature publication and believed there was no possibility of such publication.
3.	Mr. Carvel disclosed that information to his newspapers in the guise of a forecast, believing at the time that he was at liberty to do so. That belief was mistaken-
The report goes on to point out that no harm had been done to the state but that there had been an indiscretion.
I say, briefly, this: who are these people? What are the backgrounds of these people whose advice he sought? I say the minister has not only done harm to the economy of the country, he has not only upset confidence in financial circles but he has undermined his own people, because Mr. Harris is the majority owner of a millionaire company called Harris and Partners Ltd. I say the hon. gentleman is undermining the position of the Prime Minister himself. For who is Mr. Harris? He is married to a lady called Ethel Bowles who is first cousin to the Prime Minister. That is the spot on which the hon. gentleman has put his own leader. That is the spot on which he has put his own government. I say that the indiscretion here is far greater than anything that happened in the cases of Thomas and Dalton.
I could say the same about the expert who came from Wood, Gundy and Company. The basis for success in the government bond business is the ability to predict with some accuracy the future decisions of the government, because they affect tremendously the market. In making this statement nobody is implying dishonesty-


Some hon. Members:: Oh, oh.


Eldon Mattison Woolliams: I hear hon. members saying "Oh". Well, if they have other evidence let them come forward and tell the House of Commons. As I said, in making this statement no one is implying any dishonesty, but everything about these facts is contrary to traditions of budget secrecy here in Canada, as well as in the old country. The worst part is that whatever steps the government may take in the future, long after these experts have returned to advise their own firms, the suspicion always will be present in the public mind that both those firms have benefited.
I say that the indiscretion which has taken place in this case is the type of indiscretion

which should be examined by a select committee of the House of Commons where we could question witnesses and find out the facts. Members of the House of Commons are entitled to these facts. The people of Canada are entitled to them, because there has been some indiscretion.
Now I wish to deal with the contents of the budget itself.


Some hon. Members:: No.


Eldon Mattison Woolliams: Well, I said I would be indicting the government and the minister on two counts. This is the second. Let me draw attention to what the building contractors have to say about these proposals. The government told us it was going to create employment. It was going to cure unemployment. That was the major problem, and the government intended to solve it. Well, this is what they have been saying in the city of Calgary:
Hard to believe that the new budget re sales tax on building materials can be of any use to our construction industry. It will create at least a 27 per cent drop in starts this year.
This is how this government intends to cure unemployment.


John (Jack) Henry Horner: Right across Canada the same.


Eldon Mattison Woolliams: That telegram was from one of the officers of the building trade. One of the ministers-I think it was the Minister of Labour (Mr. MacEachen)-said: We are going to be very gracious; we are going to pay upwards of $75 a month in certain circumstances. The hon. gentleman himself said the government intended to give everybody $500, who wished to build a house. But take ten per cent of $15,000, which is the average price of a new bungalow today. Make that calculation and hon. members will find the government has taken away $1,500. That is $1,000 benefit to the Department of National Revenue. And this is the kind of budget which was intended to help cure unemployment.
I said at the beginning that this government got to office not as a result of the last election but because of the fraud they perpetrated across the country on the issue of the pegging of the dollar and on the question of unemployment, as well as on account of another question which they added during the last campaign. We said: Canada for Canadians. We said: Canada should own its own industry. When we came forward with a program along those lines and took some imaginative steps in that regard, what did they say, those people who now sit on the government benches? They said:	Anti-
American. Well, they have learned now, the Americans, to beware of gifts and, sometimes
The Budget-Mr. Davis of friends who offer gifts. This budget is going to do more to destroy investment from foreign lands than any which has been brought to this house in the last 15 years.


An hon. Member:: What about our image abroad now?


Eldon Mattison Woolliams: Yes, that was the big thing. The Minister of National Defence (Mr. Hellyer) said we had lost our image abroad. What about that image, now? In West Germany they rushed to the stock markets to unload Canadian stock yesterday. There were sales all over Europe and the United States. There were very few sales in Canada until-


Mr. Depuiy Speaker:: Order. I regret I must interrupt the hon. gentleman but I must advise him his time has expired.


Eldon Mattison Woolliams: I should like to finish that last sentence.


Some hon. Members:: No.


Mr. Deputy Speaker:: The hon. member's time has expired and he can continue only with unanimous consent of the house.


Some hon. Members:: Closure.


Mr. Deputy Speaker:: I distinctly heard a number of nays.


John (Jack) Henry Horner: They did not like what they heard.


Mr. Jack Davis (Parliamentary Secretary to Prime Minister):: Mr. Speaker, those of us who are new members in this house I know are dismayed by the cynical attitude which some hon. members take toward the basic integrity and intelligence of other hon. members of the house. We have guilt by association. There is a fundamental lack of courtesy in recognizing that a man should not be judged guilty till he is proven guilty. We seem to lack the basic manners which the public at large expect of Canadians living together, and living democratically one with the other. I think epithets like "rogue" and "fool" are wrong and beneath the dignity not only of parliament but of the hon. members of parliament.
We are here tonight to discuss the budget and we have heard very little about the budget. We need to discuss the details, but before doing so we should have before us the findings of a national economic council, one which would show us basically where we have been and where we are going. We lack a good deal of that information now. We need to be able to agree on the facts, and having agreed on the facts we can then argue about the policies which we should adopt in order to correct the trends we see ahead of us.

The Budget-Mr. Davis In recent years we have had some wide swings in production and employment. We had in the late 40's and early 50's a very fortunate set of circumstances for this country. Our competitors abroad had been damaged by war. We did not have to compete as effectively then as we do now for our markets at home and elsewhere. We also had looking to this country, investors who were interested in raw materials for the industries, not only of the United States, but overseas. We had a tremendous amount of capital flowing into this country and it created a good deal of excess capacity. This excess capacity resulted in a slow down in investment in industry in the late 50's. Now we are witnessing some sort of upturn, perhaps towards a more normal state of affairs, but we are still investing only in the order of 22 per cent of our total output in new plant, equipment, buildings, homes and so on. A few years ago, in the middle 50's, this figure was more like 27 per cent. This is one of the fundamental reasons why employment has sagged in recent years and why unemployment will continue to be one of the most difficult problems we face in the years immediately ahead. Accompanying this sag in employment has been a drop in investment in industry. Industry which formerly invested as much as 17 per cent of our gross national product is down around 13 per cent.
The investment trends, particularly in respect of foreign ownership, are very important, and I should like to outline a few of them. Foreign ownership and control is a matter of great concern to those of us Canadians concerned with our survival as an independent political entity north of the 49th parallel. Here are some figures which come from an indisputable source, the dominion bureau of statistics. Direct foreign financing of our gross capital formation in this country rose from 19 per cent in the late 40's to 25 per cent in the early 50's, and has gone on to about 33 per cent in the late 50's. In other words, the participation of foreign investors in the growth of this country, in the installation of new plant and equipment, has been growing. It was large in the 40's, growing in the early 50's and has been increasing steadily ever since. We have witnessed in parallel an increasing foreign ownership of our manufacturing, mining and other basic industries. It has risen from the order of 55 per cent foreign ownership in 1944 to 61 per cent in 1957 and on to 63 per cent in 1959. I would venture to guess that perhaps two-thirds of the ownership and control of the industry of this country is now in the hands of people who do not normally reside within our borders. In other words, they own the most dynamic elements of our economy and the 
total amount of this ownership is in the vicinity of $25 billion. This is their book value.
If the assets were put on the auction block tomorrow they would undoubtedly fetch prices considerably in excess of this figure, perhaps $30 million, or more. This figure is in the order of magnitude of the total personal income of this country. In other words, every one of us would have to work for a year to buy out this foreign ownership. It is equal to something like $1,300 for every man, woman and child in the country, or more than $4,000 for every wage earner or salary earner in Canada. Obviously it will take us a long time to save up enough to buy out the foreigner, if we had the desire so to do. We have to set aside something in the order of $250 per year per wage earner in order merely to pay a reasonable rate of return on that investment, something in the order of 5 or 6 per cent. Many of these industries are capable of earning a good deal more, and therefore I suggest our annual bill in interest and dividends alone could well be upwards of $250 per person.
The character of this foreign ownership has changed to some degree. In this country it has largely taken a form of equity ownership, ownership which means real control over our destiny. It is not in the form of debt. It is not in the form of bonds, for example. It is not the type of financing done by foreigners in the early growth year of the United States. Even in the years immediately before world war I when the United States was still heavily dependant on the United Kingdom and western Europe, the great majority of the investment consisted of bonds, the fixed debt obligations paying fixed rates of interest and with a fixed life. As the lives of these bonds ended they were retired, and that indebtedness was extinguished.
This is not the type of indebtedness which we have in Canada today. In the last dozen years some 250 Canadian owned firms of substance have been bought out by residents of other countries. This tempo has been increasing. The rate at which these firms have been bought out has been doubled in the last half dozen years, compared to the rate for the previous six years. There has been an acceleration in this trend, and therefore it is a matter of some considerable concern to those Canadians who want to have some say in the destiny of this country, in the ownership of its resources, and more particularly in the management of the basic industrial activities which take place here.


Paul Raymond Martineau: Would the hon. member permit a question?


John (Jack) Davis: I do not expect to be speaking for the full 30 minutes and would be glad to entertain a question at the end of my remarks. I do not want to infer that these outside investors have in any way been unfriendly to Canada. We have set the laws. We have set the ground rules. We have welcomed them in. They have invested in industries where they expected the industries to grow, where they expected them to pay dividends. We would certainly not be doing ourselves any good to reverse this attitude towards foreign ownership or foreign investment in this country.
However, foreign firms do not always behave precisely as do Canadian-owned firms. For example, while most foreign owned companies make tremendous contributions to every aspect of our life, particularly taxation, a few are not good citizens. One important area where these firms hurt us is in the service area. Insurance agents who have served a company for generations while it was Canadian-owned find the new foreign owner giving all his business to agencies outside the country. It is often found that these firms employ consulting engineers from, for example, a United States firm with whom they are familiar. Understandably they turn to these firms that they know. They turn to foreign firms to carry out market surveys, and foreign firms to do their advertising for them. All of these people are their friends and well known associates in other countries. This is not always to the good of Canada because it means that these foreign owned corporations tend to look abroad for services and for other things which, initially at least, we might expect them to find here in this country.
Then, too, in respect of charitable donations it is frequently found that foreign firms do not behave as Canadian firms do. Agencies which have long been dependant upon support of Canadian firms suddenly find this type of contribution for educational or other charitable purposes is not available for collection here.
The question now arises as to what we do about this situation. We can do nothing and allow the trend to continue towards even greater foreign ownership. Or we can release one of the great driving forces for socialization in this country. Governments, national, provincial or even municipal, could take over some of these activities. This was one of the main driving forces half a century ago, behind the formation of Ontario hydro. It is not exclusively a Canadian attitude towards foreign ownership. But, we have more government ownership and control of some industries 28902-5-90
The Budget-Mr. Davis because there is no other way to Canadianize industry or ensure that Canadians generally participate in their ownership and operation.
There is a Liberal answer as well to this question. It was foreshadowed by the report of the royal commission on Canada's economic prospects back in 1957. I merely read a summary of the recommendations of that report. It is as follows:
1.	Wherever possible, such concerns-
-this is foreign-owned concerns-
-should employ Canadians in senior management and technical positions, should retain Canadian engineering and other professional and service personnel, and should do their purchasing of supplies, materials and equipment in this country:
2.	They should publish their financial statements and make full disclosure of the results of their Canadian operations;
3.	They should include on their boards of directors a number of independent Canadians and they should sell an appreciable interest in their equity stock to Canadians.
The commissioners said that they had in mind something of the order of 20 per cent to 25 per cent.
I should like to summarize the contents of the present budget which follow, quite logically and consistently from these recommendations of a half dozen years ago. I will itemize several of the most important:
1.	A withholding tax, a tax holdback on dividends. This is to be reduced from 15 per cent to 10 per cent for companies which are 25 per cent Canadian-owned. In other words, companies which are at least one quarter owned by Canadians do not have to pay as substantial a tax when the dividends are remitted out of the country as others which have a lesser extent of Canadian ownership.
2.	The withholding taxes on dividends to be increased to 20 per cent on January 1, 1965, for companies which are not 25 per cent Canadian-owned.
3.	Accelerated depreciation in areas of high unemployment, and only available to companies with at least 25 per cent Canadian ownership.
On the other side of the coin, and this applies to bonds, the withholding tax on interest is removed for non-taxable investors abroad. These are the basic considerations in the present budget.
Now, I should like to move on from foreign ownership and control, which I believe to be one of the principal elements of this budget and certainly an element which addresses itself to fundamental Canadian problems with which we have been living for some time, and about which we have done next to nothing, to certain other details of the budget.
In so far as the budget deficit is concerned, we have not been taxing to the extent

The Budget-Mr. Davis that we have been spending in this country. Our expenditures have, however, risen sharply. They have risen from roughly 26 per cent of our total national output in 1956 to something like 33 per cent currently. We will have, roughly, to match this increase in the proportion of our national wealth that comes back to the government in the form of taxes, or this vast budget deficit which we have continued to live with in recent years will grow with the passage of time. We will cause other people to lose faith in this country, to reduce their investments and cause simultaneously an increase in unemployment and a lack of confidence at home amongst Canadians.
One small item in the budget which I believe goes in the right direction is a reduction in the tax in respect of the export of electric power. This is of interest to me and to my province. I should like to focus on it for a moment. I concentrate on this tax because it is the one last remaining export taxes that is in effect in Canada. It has been in effect since 1925. Roughly speaking it amounted to about 10 per cent of the selling value of the power moving out of this country. It continued to be levied although the power was only circulated in and out of the country, out at one point and in at another, making a balance of the total amount in energy terms. The tax was merely applied to the outgoing amount. We need connections with adjoining areas to reduce the amount with standby capacity. This can account for a tremendous saving, and also could provide additional employment by actually providing power to the neighbouring areas of the United States.
I should like to indicate something of the magnitude of the power industry. Roughly 10 per cent of all the investment in this country, one out of ten of all the dollars that go into new construction goes into power plants and transmission lines. Some $5000 million of these assets exist in Canada today, but roughly $1,000 million worth of these facilities stand idle. We do not need all of this excess capacity to look after breakdowns or emergencies or exceptional upsurges in demand. We could get by with half as much. If we could sell the other half to the United States on a short term basis, this would currently return us something in the order of $50 million. Within six or seven years it could be $100 million. It could be a substantial item going towards balancing our presently unfavourable external account.
One item I hope to see in the budget next year is an extension of the concessions to research and development. Research and development is really the industry of ideas. It is the industry which, on this continent and elsewhere, has been growing far faster
[Mr. Davis.1
than the rest of the economy. It has doubled during the last five or six years. I believe we would do well in this country, because we have very little research, to declare Canada a tax heaven. In other words, the earnings, royalties, the yield on research and development, should be declared, for a substantial period of years at least, income tax free. This would cause firms not only at home but abroad to look upon Canada as a place in which to reduce costs, a place where they would encounter lower costs for research and development, and this would keep many of our own people at home. It would provide jobs for some of our younger people who expect exciting new job opportunities in fields like research which look ahead towards the shape of things to come. It would help us in respect of new products, in respect of cost cutting processes and would not only cause our economy to be better rounded but would also improve the efficiency of the industry we have here.
I think that even more important is the ownership aspect. When men are in a position of knowing what the forward thinking of a company or industry is in the area of research and development they are better able to invest more intelligently in the future of their company or firm. We do very little of this in Canada. We do about one fifth or one sixth as much as do the British and the Americans, and less still compared with West Germany and certain other countries. We must provide this sort of job opportunity for our people, both to give them the satisfaction of working in wonderful industries such as research and development and to improve the efficiency of our economy and to buy back some of the ownership in our own nation.
Finally, I should like to stress again that this budget, as I see it, has faced up to several substantial realities in Canada. One I have highlighted has been ownership and control. I think any other country would do the same. In fact, no other country in the world that I know of has done so little about this nagging and difficult problem of outside investment within their own country and particularly within the most dynamic segments of their industrial make-up.
In this government we are not anti-American and we are not anti-big business or antistock market. We are pro-Canadian and we are pro-enterprise, private and public. We are all for Canadians being able to buy more of the stocks in enterprises in this country, whether the majority of ownership is held outside of Canada or here. Confidence, I think, is the real key and Canadians fundamentally are a confident people. They want a little less talk and a little more action. I am sure they

want us here tonight to concentrate on the budget, on fundamental ideas in the budget and to take a positive attitude toward the future by being positive in our criticism and positive in our suggestions as to how to run the financial affairs of the country.


Paul Raymond Martineau: Mr. Speaker, I wonder whether the hon. member would be kind enough to answer a question at this point? As a matter of fact, I have two questions. First of all, does the member believe that the 30 per cent securities tax proposed and then withdrawn by the Minister of Finance is a practical formula for regaining control and ownership of our industry? Second, when he suggested a tax haven for Canada was he speaking on behalf of the government?


John (Jack) Davis: In respect of the first question, may I say there are undoubtedly many measures which are required and they will have to dovetail together in order to ensure a substantial measure of Canadian ownership and control. I believe that the 30 per cent tax, or something of that type, is one of the essential ingredients necessary in order to arrest at least the substantial swing to foreign ownership and control. In respect of the second question, may I say I have a few ideas of my own. Certainly a budget cannot encompass everything. Research and development happens to be one of my pet enthusiasms and I believe that sooner or later I will be able to convince not only some of the members of this party but also other members of the house that the suggestion I made is a good one.


William Heward Grafftey: Mr. Speaker, yesterday this house was informed that the 60 days of so-called decision are now to be known as the 60 days of revision. The other night, as the Minister of Finance (Mr. Gordon) leaped from point to point like an overweight gazelle in his speech, the house was treated to a budget speech laced with partisan platitudes, a budget speech unprecedented in this house since confederation, I am told. Today hon. members of the party I support in the House of Commons have demanded a committee of inquiry. We are not pointing the finger of accusation but we are saying that because of the unprecedented action taken by the Minister of Finance, suspicion has been cast around the budget.
I believe it was Lord Haldane who said that justice must not only be just but must also seem just. So as a Canadian I say to the minister, in the name of goodness give us this committee of inquiry and show the people of Canada and members of the house his good faith.
There is one special item I want to deal with in the budget which relates to federal-provincial relations. During the election cam-28902-5-90J
The Budget-Mr. Grafftey paign we were told in the province of Quebec that a Liberal government in Ottawa and a Liberal government in Quebec would solve all our problems. Oh, Mr. Speaker, the climate was wonderful in those days in the province of Quebec. The Prime Minister (Mr. Pearson) embraced Mr. Lesage and then Mr. Lesage embraced the Prime Minister.
What have we seen subsequently? We have seen senior members on the treasury benches opposite not even let on that they know of Mr. Lesage or his ultimatum. Within a few short weeks the Minister of Finance (Mr. Gordon) turned his back not only on Mr. Lesage but on all ten provincial premiers in Canada. The Liberals told us in the last election that they were going to sweep French Canada. But now, whoosh, in four paragraphs of the budget address they have swept French Canada under the rug. Sir, this is not a new broom which is sweeping clean. It is not even a new broom that is passing over lightly. It is a broom that is passing over completely.
I am speaking as a Canadian interested in provincial rights. This is not a problem that is concerning Mr. Lesage alone, but one that is concerning all the provincial premiers. The Liberal party created a high degree of expectancy in this area; but now, as I say, in four paragraphs of the budget speech the Minister of Finance has turned his back on the provincial premiers.
I am talking as a Canadian, not as a Conservative and certainly not as a Liberal, when I say that I am most concerned with what is going on between Quebec and Ottawa today. What is going on today between Quebec and Ottawa is the culmination of years and years of Liberal divide and rule policy.
Another item of the budget that interests me is the $500 prize for those who decide to build their houses in winter. How charming this is, Mr. Speaker. The citizen is rewarded for his industry with this sop to his home-loving spirit. He is conscious, of course, that the house is going to cost at least $2,000 more when he has finished paying the taxes on building materials, but no doubt he will touch his forelock in gratitude for the crumb. Let him eat cake is out; let him eat crumbs is in. There is no improvement here for the average Canadian homebuilder.
There is an old Scottish song which goes, "A Gordon for me, a Gordon for me". I am told it is usually sung by a young lass in a kilt. She can have her Gordon, and I think she had better take him back to the bonnie banks and teach him something about banking. I was staggered to hear a minister of the crown, in a speech like the budget sink to what can only be described as sheer, arrogant hop-scotch with the past, and then produce a tired haggis of a budget.

The Budget-Mr. Grafftey Mr. Dupuis: Sing another song.
(Translation):


Rémi Paul: Mr. Speaker, you have recognized the hon. member for Brome-Missisquoi (Mr. Grafftey) and I wonder what right have the hon. members opposite to constantly interrupt him, without your leave?
(Text):


William Heward Grafftey: I am not going into the political gaucherie which the Minister of Finance displayed in getting outside help. Other hon. members of the house have already pointed out to him something he should have learned in childhood. I am not questioning that; but what I am questioning is the fact that when he gets someone else to do his homework for him, in the name of goodness please let him get someone who knows what he is doing.
We have seen the withdrawal of the 30 per cent tax. If the minister had the simple courtesy to consult with officials of the Department of National Revenue it would have become easily and quickly apparent that this measure was impossible to administer. Again I say I am not so much concerned with the fact that he sought outside advice. What I am concerned with is that apparently the advice he got was bad advice.
(Translation):
Mr. Speaker, today I propose to deal with a single aspect of the budget, but, before doing so, I want to call your attention briefly to one or two points which have been raised by several hon. members earlier in the discussion.
First of all, hon. members know that the first and foremost task of the government does not consist in creating or in starting an economic system, but in pursuing the progressive trend which has already been given to this country's economy.
I shall not be presumptuous enough to say that the administration which I have supported for several years in this house has settled all economic problems in Canada. But we should never forget that the present government inherited a house in good order. Most of the basic indices of our economy were rising when the present government took over.
Under our administration, i.e., since 1956, the total increase in our exports of manufactured goods has reached 84.5 per cent. Second, the annual increase in living costs between 1958 and 1961 was 1.1 per cent, which means a smaller rise than in any other country in the world save one.

Those are the basic figures of a sound economic development.
Mr. Speaker, all hon. members will realize that for the welfare of our great young country, Canada, we should settle several problems as soon as possible, and pass legislation thereon. With that in my mind, 1 sincerely regret, with the whole Canadian people, that the speech the hon. Minister of Finance made before the house last Thursday night had such a partisan flavour. Indeed, his budget speech was one of the most partisan speeches ever made in this house by a minister of finance since confederation. His remarks, as I pointed out a few minutes ago, were full of partisan platitudes.
Once again, the leaders of the Liberal party are thinking that the welfare of their party is more important than the welfare of this country.
Hon. members, the return to power of the party I support in this house will be based on responsibility and principle. We are offering Canada a definite program. We shall not let systematic reflection be cast on the high office of the prime minister in power, nor allow that our country's prestige be diminished here, or abroad.
(Text):
A few moments ago I said that I wanted to discuss one of the principles that is very close to the party I support in the House of Commons. Burke, one of the fathers of Conservative principle, had a high regard for the notion of "local self-agency." In Canada today this merely means that our federation only works when our provinces, cities, towns and municipalities are strong and able to carry out their constitutional responsibilities.
When the party I support in this house came to power in 1957, total federal contributions and payments to all provinces amounted to $689,352,000 for the fiscal year 1956-57. In the year 1962-63, for the same purposes, the figure amounted to $1,794,061,000. In the fiscal year 1956-57 total grants to the province of Quebec amounted to $177,463,000 while in the fiscal year 1962-63 the amount was $491,608,000 for the same purposes.
I hope, Mr. Speaker, hon. members will excuse me for quoting statistics at such great length, but these figures demonstrate our administration played a positive role in strengthening the position of our provinces from coast to coast. At the same time I fully realize that many problems touching upon federal-provincial affairs remain to be solved. To this end I wish to discuss the federal-provincial relations section of the budget. Hon. members opposite on the treasury

benches are burying their heads in the sand if they do not realize that a healthy confederation and a healthy spirit of biculturalism will only continue if the Minister of Finance understands that the taxing powers of the provinces mean a lot. I am sure he not only got no outside advice in relation to the federal-provincial relations section of his budget, but that he got no advice at all.
It was with great dismay I noticed the apparent lack of understanding by the Minister of Finance of some basic issues which face our people today within the general framework of the question of federal-provincial relations and biculturalism. During the past election campaign the Prime Minister and the premier of Quebec got together. I am not quite sure what they talked about. It must have been about something; and then we were told in Quebec that in order to save confederation all we had to do was elect Liberal governments in Ottawa and Quebec. But, Mr. Speaker, what have we seen since a Liberal government has taken office here in Ottawa? On the one hand they talk of co-operative federalism, while on the other hand their throne speech and plans indicate a degree of centralization unprecedented in the history of Canada. Intricate legislation, such as loans to municipalities, was proposed and, after continued questioning of the ministry, we learned that none of the provinces was consulted in general or specific terms. While provincial premiers speak out for a thorough re-examination of our constitutional approach, the budget clearly demonstrates that unless the federal government acts immediately, and not tomorrow, the provinces will be faced with a fait accompli at the next federal-provincial conference whenever it is decided to be held.
Liberal spokesmen have created by their campaign tactics a high degree of expectancy in this house. One program in Quebec, another program in the rest of Canada; they have been at their old game. I suggest that the Minister of Finance (Mr. Gordon) turns around and faces Mr. Lesage and the other ten provincial premiers. After sitting in this house for a number of weeks and after hearing, especially, the budget address, it has become apparent to me and it is my firm belief that the problem of federal-provincial relations and biculturalism has received no serious thought on the part of the present government. New, not old, approaches must be used and many of the problems, sir, cannot wait for the findings of royal commissions. We were criticized, when we were in office, when we set up royal commissions. This government is now setting up a royal commission for one of the most important problems that is facing Canada today. I see
The Budget-Mr. Grafftey the government whip laughing. He would not laugh in his constituency. His constituents are looking for a solution to the problems in the province of Quebec that this Liberal government, this centralizing government, said they would bring about.


Some hon. Members:: Hear, hear.


Mr. Martin (Essex East):: There was not much applause there.


William Heward Grafftey: I am not looking for applause, like the Secretary of State for External Affairs (Mr. Martin). Conservative thinkers fully realize that in a confederation such as Canada, where the federal government has distinct powers and responsibilities, decentralization can be carried too far. We know that the federal treasury is not like a munificent cow with an endless supply of milk. But we all recognize that since confederation the provinces-


Some hon. Members:: Oh, oh.


William Heward Grafftey: Hon. members opposite laugh, Mr. Speaker. They do not realize that today the provinces of Canada are looking to them for an answer to this problem. The Secretary of State for External Affairs laughs. I say to him; Laugh in front of your people. That is cynicism not worthy of the minister. While the Minister of Finance turns his back on the provincial premiers, the Secretary of State for External Affairs laughs. But this is the question of saving confederation; it is not a laughing matter.
(Translation):
Mr. Martin in the province of Quebec and Mr. Martin in the province of Ontario.
(Text):


An hon. Member:: Laugh that one off.


William Heward Grafftey: Here in Ottawa our basic thinking must change, and within the spirit of co-operative federalism, sir, I wish to make some specific suggestions. The motion-


An hon. Member:: Where did you get that
phrase?


William Heward Grafftey: It is a phrase that hon. members opposite think they initiated. But the motion of co-operative federalism constitutes by no means a novel approach. The ARDA legislation, initiated by the previous administration, and progress made in the resources field basically involve a high degree and a high notion of co-operative federalism. A similar concept must also involve fiscal relations and, in fact, all federal-provincial relations. If such were the case, no longer would the federal authority propose legislation involving the provinces without prior consultation; no longer would the provincial

The Budget-Mr. Grafftey and federal governments approach the summit of federal-provincial conferences at opposite ends of the pole without previous attempts at negotiating points of view and without any basic consultation since the last conference. Fiscal relations are at the heart of many of the problems facing the healthy continuance of our federal union, and true biculturalism. Immediate changes are imperative.
For some time now, sir, I with other hon. members in this house have advocated the creation of a secretariat for federal-provincial relations. Such a secretariat would increase the efficiency of separated powers, whether exercised alone or in a common endeavour. In many areas the provinces and federal government have consulted merely on a disorganized, ad hoc basis in relation to problems that need to be planned and executed only on the basis of continued and detailed communication and co-operation. Long and short term planning is involved here, and immediately our attention is drawn to the legal, financial, tariff, tax and resources aspects of the question. Today we see a no man's land of waste authority. We see as well the need for a continued review of the British North America Act and joint planning and administration of fishery, forestry, farming, housing, urban redevelopment, employment, human rights and other joint programs. We also see the need for joint action in the field of automation and the location and development of industry and secondary industry.


An hon. Member:: Faster.


William Heward Grafftey: When we consider that economic factors never seemed to be the most important considerations which contributed to confederation in the first place, such a proposal for the establishment today of a federal-provincial permanent secretariat, when economic and fiscal matters are of such great importance, is of such vital concern to my way of thinking and to the way of thinking of many hon. members, that it must be acted upon immediately.
Not long ago, when the provincial premiers met in Victoria, British Columbia, Premier Lesage of Quebec mentioned the strong possibility that the provinces might join together to form their own permanent secretariat. He noted that many areas require co-operation simply among the provinces themselves, without mentioning the necessity for co-operation among the provinces and the federal government. This is most notable, perhaps, in the resources field. The first steps to be taken seem to involve the immediate necessity for the provinces and the federal government to set up their respective general secretariats. We need not fear the idea of competing secretariats if we carry the whole idea one


step further and look at progress already made with the joint national resources council which came into being under the last administration. This was the first concept of true co-operative federalism.
All provinces, under this system, and the federal government are represented and we see here the idea of a super-provincial-federal organization. Nothing is imposed on the provinces. They are never presented with a fait accompli. Working formulas are negotiated and evolved on a continuing basis. Surely, Mr. Speaker, this concept must be widened to include at least fiscal arrangements. Perhaps there are those who feel the provinces and the federal government should not set up separate secretariats before one general joint secretariat is set up. For this reason I have purposefully not entered into details. On the other hand, I do hope these broad proposals may play some small part- I am addressing these words to the Minister of Finance-in solving a problem which Canadians of all political parties fully realize must be dealt with immediately. The Minister of Finance of this Liberal party would not, I am sure, be too pleased if he saw the behaviour of his party in the province of Quebec. But the province of Quebec, with the other provinces, wants action now because of the way the Liberals behaved during the election campaign. This is the party that was going to save confederation. Therefore I say to the government, show the people of Quebec and all provinces of Canada your good faith.
With the people of my province, Mr. Speaker, I am optimistic about the future of confederation. Yet I am a realistic optimist, and realism dictates that the Minister of Finance and his colleagues indicate that they are doing some positive thinking and are ready to act. Such an approach to the question of dominion-provincial relations and to the question of biculturalism will help to ensure that 1967 will be a true celebration for all the provinces of Canada and for all Canadians.


Mr. Jack Roxburgh (Norfolk):: I intend to to deal tonight with a subject which is very controversial, one which is possibly as controversial as the budget itself.


An hon. Member:: That's for sure.


John Maxwell Roxburgh: One thing is for sure: at least, I sincerely hope we shall not be battling each other back and forth, because this is a subject above that. The controversial subject with which 1 intend to deal is tobacco.
I think hon. members will agree with me that anything which would cause our lovely lady, the Minister of National Health and

Welfare (Miss LaMarsh) to change her mind at this time of life is really quite important.


Some hon. Members:: Oh, oh.


John Maxwell Roxburgh: Wait for it, boys; we are coming to the subject. I feel sure we all acknowledge that the stand taken by the minister with regard to cigarette smoking has been motivated only by her keen and sincere concern for the future health of the youth of this country. I think we must all commend her for her ideas in that direction. It is not my intention in any way to dispute the findings of the medical authorities. But I want to say this: if the medical authorities are truly sincere in their efforts to protect the health of this nation, they had better take a really long look in some other directions and at some other products. Let us take one such product, for example, tranquillizers. Tranquillizers are being used today not only by adults but increasingly by the youth of our nation. I think hon. members will have to realize that these drugs are going a long way towards breaking down the mental and moral health of our young people.
Then, of course, there is that likeable and friendly old fellow, old John Barleycorn. In fact, I like to get friendly with him once in a while. And when I talk about friendly old John I hope the Leader of the Opposition (Mr. Diefenbaker) will not think I am referring to him. I would like to take dear old John and cut him up into three pieces. The first one has to do with health. I think everyone knows that there is a great deal of evidence about the effect of dear old John on the health of the nation in more ways than one. Indeed, medical men are beginning to think of too great an indulgence in alcohol as being a disease. They are actually contemplating putting up institutions to handle people suffering from this disease. This is where the comparison with tobacco comes in. I think that if comparable experiments were made the adverse effects on health caused by dear old John would easily outweigh those of tobacco.
Then there is the effect of alcohol in relation to our mental institutions. I often wonder whether the medical authorities know anything about the mental institutions which exist in the Dominion of Canada today. I am not blaming dear old John for putting the majority of the present inmates into these institutions, but I think every hon. member here will realize that he is responsible for a great number of these people finding themselves in institutions.
Then there is the moral angle. There are the broken homes. Let us face the fact that the effects of too much alcohol go a long way towards breaking down the moral fibre of this
The Budget-Mr. Roxburgh country. Again, I should like to say that if the medical men in Canada want to take a look at some of these things they had better take a long, hard look at some of these other products, because the tobacco situation is nothing but peanuts compared with them.
We grow it in good old Norfolk county- between $40 millions and $50 millions worth. Tobacco in Ontario today is a multi-million dollar business. It is an established business and a proven business. Are we going to sell it down the drain? I should like to bring a few facts to the attention of hon. members. I know they will smile when I refer to a certain product and compare it with tobacco. Believe it or not, that product is wheat, and wheat is the lifeblood of Canada, grown of course by those great farmers out in western Canada. Wheat returns to those farmers something like $500 million a year, but even so the government has to subsidize the wheat growers of western Canada through the Prairie Farm Assistance Act, through grants in respect of unharvested crops, acreage payments, storage payments, and so on to the tune of about $100 million a year. The tobacco industry returns to the growers of Ontario around $100 million a year. It has returned to the government by way of excise duty and taxes hundreds of millions of dollars over the years. On the average it returns every year approximately $400 million in taxes. This is derived from somewhere between 120 to 130 thousand acres of land in Ontario. This area produces the highest grade tobacco in the world. Hon. members will say it is a new industry, 35 to 40 years of age. But any new industry needs help from older industries, and from the United States came the boys from North and South Carolina and other places, and they taught us how to grow tobacco. When the season was over they went back to their homes in the Carolinas and Virginia, taking with them hands of tobacco grown in Ontario. What did they do with those hands of tobacco? They thought they would have a little fun and gave them to their relatives and friends to enter as exhibits in tobacco shows in the United States. And what happened? They just walked away with the prizes.
Mr Speaker, this is an industry that has not been living out of the pockets of the country. Tobacco growing is an industry which has been putting money back into the country's pockets, not taking it out like some other industries within the dominion. If ever there was an industry which needs adjustment assistance and help in the research field, it is the tobacco industry. I am sure every hon. member here will agree that this industry has earned its right to expect some help, because as I say, for years it has been

The Budget-Mr. Roxburgh pouring hundreds of millions of dollars into the pockets of Canada to help keep other industries going ahead. Are we going to kill an industry? Are we going to cut the head off the goose that laid the golden egg?


Some hon. Members:: No.


John Maxwell Roxburgh: Good. I realize there has been a lot of unwarranted publicity given to this subject recently. Suggestions have been made that programs are to be worked out to reduce or even eliminate the habit of smoking cigarettes. If such is really the case then this government should take a forward step in stopping expansion of the tobacco industry and leave it where it is now. It is a stabilized industry, and if this obnoxious weed is so obnoxious and if these statements are correct, as I expect they are, then its growth should go no further and the people responsible for the industry and who have invested money should be protected. The government of the day should give certain protection to this industry, which has proven itself. This could be done by making a sincere effort to bring about national marketing board legislation. This should not be delayed. I think we all realize it cannot be done without the co-operation of the provinces. That is also true of portable pensions, contributory old age pensions and so on, and I know the present government will take immediate steps to put this legislation before the house. I ask the present government to do this on behalf of a $100 million business returning, as I say, $400 million a year to the government in tax.
A substantial effort should also be made to export this product. Many hon. members will smile and say that it has been tried but we have not had very much luck. The United States has already put forward ideas to expand their export trade. We have some of our own which we intend to carry out, but we can always learn from others. I think one of the best ideas which has come across the line is this. They have employed men- call them, if you like, good relations officers- who are sent to countries to which the United States exports a great deal. They work in conjunction with the United States embassy, and when any product, whether it be tobacco, machinery, or what have you, is exported to that country they are there to give advice. Suppose we export tobacco to a country and it does not arrive there in the condition it should. Naturally the importer is perturbed and will not pay the price. Or suppose for some reason or other the product is in good condition but the importer thinks he can pull a fast one and says it has not arrived in good condition. The men employed by the United States would follow up such a complaint. If it concerned an export from that country they would talk


things over. This would bring them closer together and get them to forget their differences. The United States has proven that by this method they have not only kept their export trade but have increased it.
The hon. members may ask what are the possibilities of exports? A lot of people say it is no use going to a different country to export because the United States exports to that country, or somebody else does. Well, if we all took that attitude no new industry would start up either in this or any other country. Speaking as a fruit grower, when we have a large crop of apples or peaches, or whatever it may be, if we sat on our fannies all the time we certainly would not sell very much fruit. We have to get out and work for it.
Now, I should like to point out to you that Great Britain imports from Canada 11 per cent, from the United States 50 per cent. Belgium imports from Canada one third of 1 per cent, and 28 per cent from the United States. West Germany imports 1 per cent from Canada, and 40 per cent from the United States, and so on. One could go on so far as this part is concerned, and talk about this industry and the return it has made to this country in the form of taxes. We can, without taking one cent in the form of taxes from any other product, take some of the $400 million to help this industry while it is fighting for its life. After all, this is an industry that has poured money into the governments of Canada for the last number of years. We can spend money for experimental purposes. We can spend money for marketing. We can spend money for research in the interests of the tobacco industry. This money will come from the tobacco industry itself.
I know that a number of salesmen and other people will say that the subsidies paid by the United States government represent the reason their tobacco is selling overseas and ours is not. I know that at the mention of subsidies everybody will throw up their hands and say, "Oh, not another subsidy for an agricultural product". I should like to say to my hon. friends opposite that this money can be taken from the industry itself. Surely an industry that has poured the money into our pockets that this industry has over the years deserves some consideration. We are not asking that money should come from any other product to help subsidize us. Surely* we can use some of this money to subsidize the industry now.
In summing up, I should like to say that I think one of the most important factors is to stop further expansion of tobacco growing. I should like to repeat that tobacco farmers in Ontario produce 99.9 per cent of the tobacco Canada uses. If all these facts that

the medical profession claim are true, and I am not denying them, then why should this or any other government allow the Farm Credit Corporation and other corporations to lend money to people to grow more tobacco? It just is not sensible. We have all we need at the present time. In other words, the present tobacco farm marketing board is being backed to the tune of millions of dollars to try to help sell this surplus tobacco.
Then, there should be a subsidy given for assistance in research. Here is an industry which, if it is not looked after, not given just a little bit of help, might go down the drain. No one is saying that in five months or five years the research people will not make it possible for everybody to continue to smoke cigarettes without any detriment. In my opinion it might be possible for the Department of Trade and Commerce to have people work through the embassies to sell our tobacco.
Let me point out again, Mr. Speaker, that this is a proven business, a business that is going to need some form of protection while it adjusts itself to the new problem facing it today. In my opinion at least, it is only good common sense that such a business should be protected because, in the long run, it is going to return millions of dollars to governments now and in the future, and is going to be of value in other ways and do more good than we will ever realize.


Erik Nielsen: Mr. Speaker, in joining in this debate I must first of all congratulate you on your appointment as Deputy Speaker. Of course, I must congratulate the Speaker as well. This traditional honour, I think, falls on very worthy shoulders. Before commencing my remarks this evening I must say that I have been a friend of the Speaker for some time. He was one of those who assisted me when I first came here in 1957.
I want to make my remarks on the budget under three main headings this evening. The first one is the tax incentives as they are applicable to northern development. The second is the budget as it applies or does not apply to the mining economy of the north. Third, I want to state some facts for the record in connection with the Dawson city festival which has received so much lampooning and so many unkind remarks from the government side of the house.
Before doing this, however, I want to comment very briefly on the manner in which this budget was prepared. It seems to me, Mr. Speaker, that the charges that were levelled at the former government now the official opposition, last year and the year before in connection with fumbling and bumbling, in connection with lack of decision, are applicable now with more force 28902-5-91
The Budget-Mr. Nielsen than ever to the members of the treasury benches. This is particularly true when one views the panic into which the stock exchanges of this country were thrown as a result of the premature announcement by the Minister of Finance (Mr. Gordon) yesterday.
Another thing upon which I should like to comment before going into the matter of the budget as it affects northern development, is the question of tax incentives about which the Minister of Finance had written for so long, and which the Liberal government had promised for so long for the encouragement and development of industry in Canada. Representations have been made for a long time to the government, to the officials of the Department of Finance, the Department of Mines and Technical Surveys, to northern affairs and national resources, to the effect that new mines in the north should be granted an increased tax exempt period. As we all know this period is three years for new mines. This is not enough. Over the past decade representations have been made repeatedly that this exempt period should be increased to at least five years. Out of the Northwest Territories Council have come resolutions to this effect. Out of the northern resources conference in Edmonton and from the associated boards of trade of the Pacific northwest meeting in Whitehorse has come the same sort of recommendation.
We do not see any mention of this in the budget, and this is supposed to be a budget to induce the development of Canada's resources and to induce the development of secondary industry. So it would appear that the Minister of Mines and Technical Surveys (Mr. Benidickson) either is not familiar with the problems that confront the mining industry and has not impressed upon his colleagues the need for this added incentive in the north, or his representations have had no effect on the Minister of Finance. In this regard, when I speak of the north I do not mean merely the north above the 60th parallel but the northern portion of Canada which comprises about 80 per cent of the nation.
I think the same observation can be made pretty well with regard to the Minister of Northern Affairs and National Resources (Mr. Laing) because certainly he has had sufficient time now to have become familiar with the problems of the north. He has made a visit there and I have no doubt he has spoken to many people in the mining industry. As a matter of fact, he has made speeches in this connection. Yet even his influence has had no effect in impressing the Minister of

The Budget-Mr. Nielsen Finance with the need for this type of incentive for the development of the mining industry in the north.
When this country was developing from east to west it was the resources of the west that finally made that contribution to national development which made the west what it is today. If the Minister of Finance and his colleagues, the Minister of Mines and Technical Surveys and the Minister of Northern Affairs and National Resources, had projected their thoughts in the creation of the budget along the same line of thinking that made for success in Sir John A. Macdonald's time, we might have had more incentive to encourage risk capital to go into the north for the purpose of developing the resources there.
Many people have no idea just how extensive the resources of the north are. If I were to tell hon. members that in the Yukon river basin alone there is a potential of 50 billion kilowatt hours of hydroelectric power and contrasted that with the total potential of the nation, it might impress them. If I were to say also that the oil and gas reserves in Canada above the 60th parallel total 50 billion barrels compared with 4.77 billion for the known reserves in the rest of Canada surely that might be some ground for the Minister of Finance to offer these incentives to the development of Canadian resources in the north.
I intend to say a word or two about the mining economy of the north a little later in my remarks, but I will pass now to the question of directing people into developing the industry of the north from the point of view of the budget that the Minister of Finance has presented. Along with the representations that have been made for tax incentives to the mining industry that would develop industry in the north, there have been hand in hand representations made by several organizations, both industrial and labour, for an increased personal tax exemption in the north. As recently as last year a delegation from the international union of mine, mill and smelter workers presented a brief to several members of the cabinet calling for an increase in the basic income tax exemption of individuals in the north to help to compensate for the higher cost of living there.
Obviously the government recognizes the principle that it is desirable to offset the difference between the cost of living in the north and that in the more southerly portions of Canada. They do this by offering what are known as isolated post allowances to civil servants who are required to go to the north for the purpose of discharging their respon-

sibilities and duties. Isolated post allowances vary from a maximum of $2,600 a year for a married man who happens to be stationed in the more remote areas of Canada's north, such as Alert, to a low of $750 for a single man who happens to be posted in any area of northern Canada. Again I should like to draw the attention of the house to the fact that in this sense northern Canada includes those portions of northern Canada below the 60th parallel.
The government does this for the purpose of compensating the civil servant for the difference in the cost of living between that experienced by him if he performs his functions in the south and the cost of living in northern Canada. If it is a right principle to offer civil servants a cost of living bonus, which in essence is what it is, in the form of isolated post allowances, then the organizations that have made these representations to the government from time to time feel that it is just as right in principle that some sort of compensation should be offered to other citizens in the north in order to assist settlement in northern Canada and in order to eliminate what amounts to a discriminatory fiscal measure which is applicable only to civil servants and not to ordinary citizens in the north.
The government of Canada, which subsidizes wages for its civil servants through isolated post allowances because of the high cost of living in the north, should make provision for income tax allowances for other citizens. Representations have been made several times in this regard and I am rather surprised that the Minister of Finance has so forgotten Canadian citizens in the north as to have overlooked these representations, or even mention of them. Just as the government of Canada and the governments of the provinces and territories build roads to facilitate industry, which has been carried on in the last six years to a degree that has brought about development of resources in the north, and in the northern portions of the provinces, more than at any other time in Canada's history, there should be special recognition of this factor of the higher cost of living. We propose that it should be done by granting to all taxpayers in the Yukon and Northwest Territories an increased basic exemption, and if not based on a formula comparable to that used in calculating isolated post allowances then it should be on a flat rate.
May I call it ten o'clock, Mr. Speaker.


[Stage Direction]
At ten o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Friday, June 21, 1963