1963-10-31

Mr. Speaker:: May I ask the indulgence of the house in order to make a statement on a matter of urgent, general interest to the house.
It is now slightly more than five months since I was given the great honour by all hon. members of assuming the position of presiding officer in the Canadian House of Commons. When I undertook to be your servant I said that "it will be my duty to preserve the precious heritage of this historic chamber, to maintain decorum and order in debate and above all to exercise fairness and impartiality in protecting the rights of every individual member."
As might have been foreseen, the Chair has had its difficulties in attempting to carry out this effort, not because of any undue lack of co-operation by hon. members but because of the very nature of those self assigned functions in the circumstances in which we find ourselves.
There is one area of the work of the house which has caused me grave concern; it is that of oral questions on orders of the day. For that reason, as well as others, I listened with satisfaction to the debate last week leading to the establishment of a committee on procedure and reform with the wholehearted support of all groups in this house.
That committee will meet shortly and will, I have no doubt, conduct its deliberations with the single purpose in mind of improving the techniques and rules of our internal administration, so as to render the best possible service to parliament and to the country. It goes without saying, however, that while deliberations may be conducted and representations may be received, some time will elapse before any proposals can be made to the house from the committee.
The problem of the question period before the orders of the day is not a new one, and it has disturbed previous occupants of the chair as well as many members of the house, not only in the present parliament but in those which have gone before. As long ago as 1956 the then Speaker of the House of Commons was sufficiently concerned, to give a learned 28902-5-269J
and valuable discourse on the rules to be followed on asking questions before the orders of the day. For those hon. members who are interested, as I think we should all be, I can do no better than refer to Mr. Speaker Beaudoin's observations as they are cited at page 2206 in the debates of the House of Commons of 1956.
I wish to state that having read Mr. Speaker Beaudoin's remarks on that occasion I am in complete agreement with them, both in substance and in form, and during the course of my own treatment of the problem I intend to incorporate some of the basic suggestions made by Mr. Speaker Beaudoin into my own remarks.
Mr. Beaudoin was followed in the chair by Hon. Roland Michener, who left behind him a reputation of impartiality and wisdom which has been a source of strength not only to me but I am sure to my hon. friend from Edmonton West, and I am equally sure, to Speakers who will follow us both.
For further study of the subject I can do no better than to refer hon. members to Mr. Speaker Michener's suggestions as found on page 1393 of the debates of the House of Commons of February 26, 1959.
Finally, as the most recent authority, if any were needed, I would direct the attention of hon. members to the very comprehensive statement on the matter by my predecessor,. Mr. Speaker Lambert, the present member of this house for Edmonton West.
May I take the liberty of offering a synopsis of the principles stated on these occasions by these most learned and distinguished Speakers. They are as follows:
1.	The form of questions is governed by the terms of standing order 39, section 1, providing in part that in putting a question no argument or opinion is to be offered nor any facts stated, except so far as might be necessary to explain the question. (Mr. Speaker Lambert, page 565, October 16. 1962.)
2.	Questions should be offered only in connection with urgent and important matters of public concern when, because of immediacy, the regular procedure relating to questions cannot be utilized. (Mr. Speaker Lambert, page 565, October 16, 1962.)
3.	An explanation can be sought regarding the intention of the government, but not an explanation of opinion upon matters of policy.
4206	HOUSE OF
Statement by Mr. Speaker on Questions (Mr. Speaker Michener, page 1393, February 26, 1959.)
4.	Supplementary questions are matters of grace. (Mr. Speaker Michener, page 1393, February 26, 1959.)
5.	A minister is entitled to notice, and answers cannot be insisted upon nor is it regular to comment on the refusal to answer oral questions. (Mr. Speaker Michener, page 1393, February 16, 1959.)
It may be opportune at this time to draw the attention of the house to citation 171 of the fourth edition of Beauchesne, from which I have extracted a number of the rules there set forth. The citation may be abbreviated in part as follows:
In putting a question a member must confine himself to the narrowest limits.
In making a question, observations which might lead to debate cannot be regarded as coming within the proper limits of a question.
The purpose of a question is to obtain information and not to supply it to the house.
A question, oral or written, must not:
-be trivial, vague or meaningless:
-multiply with slight variations, a similar question on the same point;
-repeat in substance a question already answered or to which an answer has been refused;
-inquire whether statements made in a newspaper are true;
-contain an expression of opinion;
-be hypothetical;
-be a speech, however short; .... nor be of unreasonable length;
-seek for purposes of argument, information on matters of past history;
-ask a solution of a legal proposition, such as the interpretation of a statute or of a minister's own powers, etc. . . ;
-refer to a debate or to answers to questions during the current session;
-embody a series of questions which should be moved as an address or order;
-anticipate an order of the day or other matters; [DOT]-raise a matter of policy too large to be dealt with in the limits of an answer to a question;
-refer to speeches made outside the house; but in the case of a cabinet minister, it is permissible to

ask the Prime Minister whether such speech represents government policy;
-ask the government's opinion on matters of policy;
-seek information set forth in documents equally accessible to the questioner, as statutes, published reports, etc. . . . ;
-seek information about proceedings in a committee which has not yet made its report to the house;
-relate to matters which passed outside the walls of the house and do not relate to any bill or motion before the house.
We all recognize that the opposition has the right and, indeed, the duty to question the conduct of the government, and every effort should be made in the enforcement of our rules and in their implementation to safeguard that right.
The oral question period is, however, unknown to our rules, and that fact greatly increases the difficulties of the Chair. My authority for this statement is based on standing order 39, which provides only for questions to be placed on the order paper, and standing order 41 which requires 48 hours' notice. Beauchesne's fourth edition deals with this matter in citation 173.
A breakdown of the oral questions amongst parties and groups since September 30 to date shows the following totals: Liberal party, 23; Progressive Conservative party, 574; New Democratic party, 208 and the combined Social Credit party, 222. With the permission of the house, a detailed breakdown of those totals is herewith tabled. If I may have permission, I should like to table it. Agreed?


Some hon. Members:: Agreed.
[Editor's note: The table above referred to is as follows:]
Questions asked on orders of the day being called (since house reconvened) for the period September 30 to October 30, 1963.
Date 1963	Lib.	P.C.	N.D.P.	S.C.Sept.	30	2	55	7	10Oct.	1	1	42	10	20Oct.	2	-	24	11	20Oct.	3	-	37	7	14Oct.	4	2	30	6	15Oct.	7	-	-	11	8Oct.	8	2	36	10	11Oct.	9	1	11	2	11Oct.	10	1	57	14	15Oct.	11	-	6	4	5Oct.	14	1	21	14	9Oct.	15	3	15	9	6Oct.	16	2	17	5	9Oct.	17	-	-	-	Date 1963	Lib.	P.C.Oct.	18	45Oct.	21	1	25Oct.	22	36Oct.	23	-	15Oct.	24	1	18Oct.	25	5	28Oct.	28	1	16Oct.	29	-	26Oct.	30	-	14Totals	23	574
Statement by Mr. Speaker on Questions
N.D.P.		S.C.
15		6
9	(165)	6
	S.C.	S.C.R
11	4	43	1	1010	5	712	2	819	-	58	2	311	(15) 1 (57)	(42) 5208	222


Mr. Speaker:: In making these observations, I am fortified by statements made by the Prime Minister and the Leader of the Opposition of the present house during the course of the past year or so, and these statements have been very much in my mind since last Wednesday, October 23, when the most interesting debate on the setting up of the committee on procedure and reform took place.
As a private member I recall with great interest hearing the statement made by that most experienced parliamentarian, the present Leader of the Opposition, the right hon. gentleman who, when prime minister said- and it was referred to last week-as found on page 2011 of the House of Commons debates, November 26, 1962:
As far as questions are concerned, it is not for me to suggest, but I think that the number of these questions could be greatly reduced; and if we were also to have a self-denying ordinance that, under ordinary circumstances, we would not go over half an hour on questions before orders of the day we would save 15 full days in an ordinary session without, as I see it, losing any ground that might be gained through questions or in any way interfering with the rights of the opposition.
That position was restated by the right hon. gentleman on Wednesday, October 23 last at page 3926, when he said:
Provided the answers given by the government are not evasive, provided they place the facts before us, provided they do not hide and cover up, as was alleged today and last night, I would be inclined to believe that if, in addition to the regular questions on the order paper, we all agreed to the self-denying ordinance to which the Prime Minister made reference, oral questions could very well be limited considerably. To what extent would be a matter for determination and recommendation by the committee. In the United Kingdom the period is an hour and that covers written as well as oral questions.
During the same debate the present Prime Minister referred to his own remarks on the subject in 1962, and I quote him in that
reference as found once again at page 3925 of the debates of October 23, 1963. He said:
We have agreed to a reduction, if it is a reduction, to 30 minutes of the time spent on oral questions on orders of the day.
The leaders of the New Democratic party and the Social Credit party also spoke in that debate and referred to the need for an examination of the practices governing our question period, and the latter reminded us of the practice in New Zealand where a daily 30 minute limit on the question period is observed.
This leads me to a suggestion which I respectfully intend to make now to the house. It is a suggestion upon which hon. members may care to reflect between now and the opening of the house on Monday next. My proposal, which I shall put as concisely as possible, is as follows.
1.	In placing questions, hon. members seeking information from ministers will be expected to adhere to the rules governing questions as enunciated by my predecessors and as set forth in the previously mentioned extracts from section 171 of the fourth edition of Beauchesne.
If these rules are not observed by hon. members posing their questions, I would immediately and without further discussion inform the hon. member that the question is out of order, and pass at once to the next question.
At the same time it should be remembered that ministers too have a responsibility not to abuse the question period. In that regard may I remind hon. ministers of paragraph I of citation 181, Beauchesne's fourth edition, which reads as follows:
Questions must be answered briefly and distinctly, and be limited to the necessary explanations, though a certain latitude is permitted to ministers of the crown whenever they find it necessary to extend their remarks with the view of clearly explaining the matter in question.
2.	No more than two supplementary questions, which must be genuine supplementary

Statement by Mr. Speaker on Questions questions and which, I remind hon. members, are matters of grace, might be asked. These supplementary questions might only be asked by the member who posed the original question, as is the case in the house of commons at Westminster.
3.	I would take it upon myself to select questioners in rough ratio to the number of hon. members comprising any one body in the house.
4.	No more than 30 minutes would be allowed to elapse from the time on the clock when the first question was asked.
5.	Although points of order and questions of privilege would not be allowed with respect to any ruling during the question period, any member who felt himself seriously aggrieved might be permitted to raise a question of privilege about a decision of the chair at the close of the question period. Any such question of privilege would have to be concisely stated and disposed of promptly without appeal.
6.	These proposals would be on a trial basis only and considered as experimental for the balance of the present session.
I invite hon. members now or next Monday, which might be better, after they have had a chance to consider these suggestions, to express their views.
If these suggestions meet with the general approval of the house, I propose that they be enforced as of next Monday for the balance of this session.


Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, I am not going to discuss the direction you have given. As an officer of the house I naturally want to do everything I can to join with you in making the house effective. However, I note that you have engaged in a rather statistical outline and summary, and I feel that the full record should be available. I suggest that a similar record showing the questions asked by the several parties covering the period 1961 and 1962 would be beneficial.
As far as the general purpose is concerned I join with you in a desire to ensure that this house shall be effective and efficient, without denying to hon. members their full right to secure information from the government. I suggest that having available the necessary staff to prepare these statistics, which are very detailed, it would be of great interest to the house, and most helpful in view of your reference to previous speakers, Mr. Speaker Lambert and Mr. Speaker Michener, -to see what the situation was during those years.


Mr. T. C. Douglas (Burnaby-Coquitlam):: am sure the house is grateful to Your Honour

for giving such careful thought to this matter of questions on the orders of the day. There has been a great deal of press talk about the length of time which has been taken.
I think two points should be made. The first is that questions are important inasmuch as they are the one method by which members can quickly obtain a response from the government on some important matter. It is the duty of all members of the house, particularly of members who sit in the opposition groups, to question the government from time to time regarding its activities and statements of policy. This is not so true of members who support the government, and the figures show they have not been very active in this regard. That is understandable. On the other hand it is true, I think, that the question period has got out of hand, and many of the questions asked would be better placed on the order paper or left until departmental estimates are before the house.
As far as members of the New Democratic party are concerned, we are prepared to cooperate with Your Honour and with all groups in trying to cut down the question period. We would go so far as to be prepared to limit ourselves to three questions a day, and agree among ourselves who were to ask these questions. We would be prepared to agree to some self denying ordinance. One of the difficulties about setting a time limit is that if ministers insist on reading two and three page replies, the 30 minutes will expire very quickly. If they are evasive and two or three supplementary questions are necessary before we receive the answer we should have been given in the first place, time will again be wasted. But we are prepared to co-operate with Your Honour in any way you think the question period can be improved. If the 30 minutes rule does not work out satisfactorily we can try some other method, but we do wish to expedite the business of the house and we will co-operate with Your Honour in that regard.


Mr. R. N. Thompson (Red Deer):: May I join with those who have already expressed their appreciation to Your Honour for having given us this helpful and detailed statement explaining again what this question period is supposed to be, and calling attention to the views of some of your predecessors on this subject. We are grateful for the suggestions you have made with a view to rendering the question period more profitable and efficient.
I am convinced that the question period is one of the most fruitful periods we spend in this house and that there should be no attempt to limit the privilege of obtaining information from ministers of the crown. But I do agree we must co-operate, all of us, in

Statement on Paving of Alaska Highway
making this period more effective and more efficient. I would have one suggestion to make to you, and it is this. When there are matters of urgent importance which may arise in a particular sitting, the questions which cannot be asked on one day might take precedent over those which might be asked on following days. There could be periods when the more legitimate questions might be dealt with.
I assure Your Honour of our co-operation in this matter. If it means limiting the number of questions we ask we shall be happy to go along with that proposal. If it means a self disciplining through co-operative arrangements among ourselves on a gentlemanly basis, we would be pleased to cooperate. We regard most highly the importance of your position in this house, Mr. Speaker, and at all times you can be assured of our support in the Social Credit party.


Mr. Real Caouelie (Villeneuve):: Mr. Speaker, we greatly appreciate the six-point suggestions you are making to the house today.
In my view, this period for oral questions could have been cut down substantially if ministers had taken less time on many occasions to answer questions. Then, each member of the house would have received a swift reply to his query.
Members of the Ralliement Creditistes are certainly happy to offer you their full cooperation.
However, we were both scared and reassured by item 3 of your suggestions, in which you said:

I would take it upon myself to select questioners in rough ratio to the number of hon. members comprising any one body in the house.

We have confidence in your fair-minded judgment, Mr. Speaker, and I think we can rest assured that although we are sitting far from you in the house, you will recognize us when we have reasonable questions to address to the various ministers of the crown.


Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, questions, of course, are of particular concern, and rightly so, to the opposition. I think all members on this side have heard with satisfaction the statements that have been made by the Leader of the Opposition and the leaders of the other opposition parties in respect of the proposal you have put to us. We would like to join them, Mr. Speaker, in expressing appreciation to you for the consideration you have given this matter.
At first reading it looks as if the proposals you have made are constructive and will facilitate and make more effective the question period. The Leader of the Opposition has suggested that the statistics might be extended to cover last year and the year before. I think that is quite a reasonable suggestion for those who are interested in statistics.


John George Diefenbaker: The Minister of Agriculture does not belong to that group.


Lester Bowles Pearson: I might say it is desirable, as your memorandum suggests, to make the questions short and the answers short. I am sure it is the experience of the house that if questions are asked in the correct way, without unnecessary or controversial verbiage, then the answer is more likely to be short. I mention this just to show that there is a responsibility on both sides of the house in respect of making the question period effective. I am sure all members on both sides of the house will do what they can to make it effective. I think your proposals, sir, are helpful, and to that end they will certainly receive the support of the house.



NORTHERN AFFAIRS


Hon. Paul Martin (Secretary of State for External Affairs):: Mr. Speaker, I should like to deal with a question which the hon. member for Yukon raised the other day. On October 29 the hon. member for Yukon suggested that I might not have given full information to the house in the answer I gave to him on October 21 in reply to his question No. 1,235.
In the reply quoted by the hon. member I indicated that of the five subjects about which he inquired, only the question of the Haines cut-off highway had recently been discussed with the United States authorities. On October 29 the hon. member implied that in indicating that none of the other four subjects had been discussed with the United States, my information was not accurate. My answer was in fact an accurate statement, and I tell the hon. gentleman it was intended to be helpful to him.
The hon. member will recall that in his question he referred to "consultations". I used the words "negotiations" and "discussions" instead of the word "consultations", because the former terms seemed to me more precise. I also qualified my reply by using the word "recent", as I assumed that the hon. member was interested in fairly current developments and not in history.

Statement on Paving of Alaska Highway
In the course of his remarks the hon. member read from a letter written to someone by the officer in charge of Canadian affairs in the department of state, Washington. The hon. member did not table the letter from which he read, and I am therefore at somewhat of a disadvantage in fully commenting upon it. According to the part which he did read, this letter mentioned that, and I quote: "Discussions have also been held in the past with officials of the Canadian government", concerning the question of paving the Canadian portion of the Alaska highway. Now I really do not understand this vague reference, but it may refer to some conversations which I understand took place as long ago as 1959 under the previous administration. In any case, as my original reply made clear, neither I nor any of the officials of my department, nor any of the officials of other departments whom we have consulted, have any knowledge of recent conversations of this type.
My hon. friend also quoted from another section of this letter a reference which is factually correct and which is not at all inconsistent with what I said. Not long ago officials of the United States embassy inquired from officials of my department whether a reported statement made by the Minister of Northern Affairs and National Resources was a new governmental decision in regard to paving the Alaska highway. My officials, on the basis of information supplied to them by the department of northern affairs, answered this inquiry from members of the United States embassy in the negative. I do not consider that a negative response to an inquiry as to whether there has been a change of policy can be termed "discussions", "negotiations" or "consultations" in any normal usage of these words. My answer to question No. 1,235 on October 21 was correct in all respects, with one exception, namely that in the last sentence I inadvertently referred to page 3165 of Hansard when I should have referred to page 3156.


Mr. Erik Nielsen (Yukon):: Mr. Speaker, I think I should reply very briefly to the minister. This differentiation which he makes between the words "consultations", "negotiations" and "discussions" is an exercise in semantics, a trait for which my hon. friend is noted.


Paul Joseph James Martin: Mr. Speaker, I took no exception to what my hon. friend said, and I do not take exception now. However, I have sought to give him a forthright answer today, and I should have thought he would reply in kind.


Erik Nielsen: Mr. Speaker-


An hon. Member:: Sit down.


Erik Nielsen: I do not think I will sit down, Mr. Speaker. I think I am entitled to reply without commands from the government side to sit down.


Mr. Speaker:: Order. I do not wish to interrupt the hon. member because it is a basic question of privilege, and it is in the interest of everyone to clear it up. However, it would be helpful if the hon. member would say that he either accepts the statement or he does not, because I do not think this is the time to debate it.


Erik Nielsen: I have no intention of debating it. If members on the government side would not shout across at me to sit down I might be given an opportunity to answer the minister.
The explanation given by the minister today did not deal with that portion of the letter from the officer in charge of Canadian affairs, department of state, Washington, which I read into the record on October 29, as follows:
Following a recent report of an alleged renewed interest on the part of the Canadian Minister of Northern Affairs and National resources, Arthur Laing, the department requested the embassy in Ottawa to seek clarification from responsible Canadian officials. Upon inquiry the embassy learned that the story was apparently based on a passing comment to a reporter and was not an official statement.
Then followed this portion of the letter which I read into the record:
The embassy has been informed that this statement reflects the official position of the Canadian government.
This is what the Canadian embassy informed the officials in Washington, according to this portion of the letter which I read into the record. This indicates to me that discussions have been held between the United States officials and the Canadian government, or consultations have been had, whichever word the minister chooses to use. His answer to my question No. 1235 indicated that there were no discussions and no consultations held whatever.
I am quite prepared to accept the minister's explanation, if that is what he wishes the house to believe, but I would implore him to look into that question and perhaps give me a more detailed answer-


Paul Joseph James Martin: I have answered completely.


Erik Nielsen: -otherwise, as was mentioned in your statement today, Mr. Speaker, members who do not get complete answers are going to have to place questions on the order paper over and over again. This is one of the reasons there are so many questions

Question of Privilege
on the order paper. We do not get the that the Canadian government declares policy, information we request and we have to ask not an official in the foreign office of another the question again.	country.


Mr.   Marlin@Essex East: I do not want to debate the matter, but may I ask the hon. gentleman to table the letter?


Erik Nielsen: I have no objection to tabling the letter. The document I have is a copy of-


Some hon. Members:: Oh, oh.


Erik Nielsen: -a letter written by an officer in charge of Canadian affairs at Washington.


Mr. Speaker:: Order. This is certainly not the time to indulge in a lengthy debate over a question of privilege, upon which I assume the minister rose. It seems to me this is a rather useless type of debate at this time, and I suggest we stop right now and get on with the business of the house.


Erik Nielsen: The minister has asked me to table the letter. I have said I have no objection to tabling the letter, but in view of the decisions which have been made by Your Honour, and the objections which have been taken by hon. members and ministers on the other side in respect of tabling a certain document, particularly one produced by the hon. member for Grey-Bruce, I am rather surprised at this request. However, I have no objection.


Erik Nielsen: Mr. Speaker, has it been considered that the letter which I produced has been tabled? If not, with unanimous consent and at the request of the minister I would ask that the letter be tabled.


Mr. Speaker:: Does the house give unanimous consent to the tabling of this copy of a letter, as I understand it?


Some hon. Members:: Agreed.

On the orders of the day:


Erik Nielsen: Mr. Speaker, I have a question for the Secretary of State for External Affairs. Now that he has had an opportunity to read the letter which has been tabled he will notice that the officer in charge of Canadian affairs in the United States state department said on the second page of the letter that the contents thereof reflected official Canadian policy. Can the minister say whether Mr. Carlson is correct in that regard?


Paul Joseph James Martin: Mr. Speaker, I have already dealt with this point, and I believe my answers today and on other days clearly indicate



PRIVILEGE


Mr. Gilles Gregoire (Lapointe):: Mr. Speaker,
I should like to rise on a question of privilege which affects the privileges of the members of our party in this corner of the house.
We found out, after inquiry, that two of the three leaders of political parties recognized by courtesy of the house as opposition parties, in other words, the three minor parties, have each a suite of three offices in parliament.
Since the hon. member for Villeneuve (Mr. Caouette) is the leader of a political party in the house and still has only one office, I feel, Mr. Speaker,-


Mr. Speaker:: Order. It is of course my duty to determine whether there is a prima facie case of privilege and I have not the slightest hesitation in saying there is no privilege in the question raised by the hon. member. He has discussed this several times with me. This is a question of administration, and if there are not sufficient offices to distribute, I do not know what anyone can expect the Speaker to do unless he vacates his own.
This is purely a question of administration. The hon. member knows this, having discussed it with me, having sent me letters to this effect, and he also knows we are doing our utmost to correct any inequalities and make sure the different leaders of the different groups, if I may use that term, are treated impartially, fairly and on the same basis.



AGRICULTURE


Hon. J. W. Pickersgill (Secretary of State):: Mr. Speaker, in compliance with the request by the hon. member for Medicine Hat (Mr. Olson), the hon. member for Burnaby-Coquitlam (Mr. Douglas) and one or two other hon. members opposite, a request which I took to the government this morning, I would be prepared now if I had unanimous consent to move, seconded by Mr. Hays:
That the following reports, namely, 1, the report of the Department of Agriculture for Canada for the year ended March 31, 1963; 2, report of the agricultural stabilization hoard for the year ended March 31, 1963; 3, report for 1962 of the board of grain commissioners for Canada; 4, report of the Canadian wheat board for the crop year ended
4212	HOUSE OF
Reports Referred to Agriculture Committee July 31, 1962; and 5, the supplementary report of the Canadian wheat board for 1961-62 pool accounts for wheat, be referred to the standing committee on agriculture and colonization.
I might say if this is done it seems to me it would enable the committee to discuss all the matters that have been raised by hon. gentlemen opposite, and I am informed that it is not necessary, because the committee has already been given power to report to the house, to do more than make the reference. [Translation]


Gilles Grégoire: Mr. Speaker, could the Secretary of State be asked to include also the annual report we have just received from the Minister of Finance concerning the Farm Improvement Loans Act? [Text]


John Whitney Pickersgill: I will be glad to take that under consideration, and it could be referred in another motion later.


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


Thomas Clement (Tommy) Douglas: Mr. Speaker, I agree with the Secretary of State that these reports should certainly be sent to the committee on agriculture and colonization, but I doubt very much whether his other statement, that this will cover the items we had in mind, is quite valid. However, I think we should start with an investigation and examination of these reports, and then I hope the government will give serious consideration to the other matters, one of which is to look into bread and milling prices, which is a very important question at this time and which will not come under these reports.
Second, there is the matter which the Minister of Agriculture himself has raised from time to time, namely the cost of farm machinery, a study which the committee on agriculture and colonization began in 1961 and I do not think was ever completed. This would be an excellent study for the committee to carry on at a later date, but the reports which the minister has now proposed referring to the committee are a good beginning. As I have said, I hope the government will consider referring the other two matters to the committee at a later date.


Mr. H. A. Olson (Medicine Hai):: Just very briefly, Mr. Speaker, I want to say I accept the statement of the Secretary of State that within the ambit of all the things referred to the committee it is possible to study the specific subject matter I brought up and asked for unanimous consent the other day. But in accepting this I suggest to Your Honour and to the Secretary of State that


the matter of feed grain prices should be given some precedence because of the urgency of the need to look into it. Perhaps the house may take some decision to do something about this wide discrepancy in price, but with that reservation I am suggesting that this can be investigated within the terms of the motion made.


[Stage Direction]
Motion agreed to.

[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, regarding the two Canadians in custody in Cuba, would the Secretary of State for External Affairs inform the house whether the Canadian embassy has been able to communicate with them, and what efforts have been made so far by the government of Canada to assure that these men will receive a fair trial and not a mockery of a trial?


Hon. Paul  Marlin@Secretary of Slate for External Affairs: Mr. Speaker, the Canadian embassy in Havana is in close communication with the Department of External Affairs in Ottawa concerning the recent arrest in Cuba of two Canadian citizens whose names have been given in public and which I need not repeat. The circumstances and background concerning the arrest of these persons are not fully known but are being looked into carefully. The Canadian embassy in Havana is taking all steps appropriate under international practice to ensure that the interests of the two Canadian citizens are adequately safeguarded.


John George Diefenbaker: Can the minister state whether the government in Cuba has permitted representatives of the embassy to see these men personally?


Paul Joseph James Martin: Yes, Mr. Speaker. [Later:]


Paul Joseph James Martin: I wonder if the right hon. gentleman would allow me to qualify the answer I just gave. I believe that is the situation, but a message has just come in saying permission has been asked by the consul for an immediate visit with the Canadian prisoners, and it is agreed by the Cuban government that arrangements should be made for this. We have further asked that we be kept fully informed of any judicial proceedings against the two parties.



SHIPPING


[Stage Direction]
On the orders of the day:
Hon. Michael Siarr (Ontario):: Mr. Speaker,
I would like to ask the Minister of Transport whether he is preparing amendments to the Canada Shipping Act and the St. Lawrence Seaway Act in accordance with the recommendations of Mr. Justice Norris and, if so, when does he expect to bring these amendments before the house?


Hon. G. J. Mcllrailh (Minister of Transport):: Mr. Speaker, legislation on both these subjects will be brought before the house. It is being prepared, but at the moment I am not prepared to disclose its contents in answer to questions on orders of the day.



COMMONWEALTH RELATIONS


[Stage Direction]
On the orders of the day:
Thomas Clement (Tommy) Douglas: Mr. Speaker, may I direct a question to the right hon. Prime Minister. In view of the fact that the republic of South Africa has left the commonwealth and is pursuing policies which are at variance with everything the commonwealth stands for, is the government giving any thought to discontinuing the commonwealth preferences which we now extend to that country?


Lester Bowles Pearson: Mr. Speaker, no immediate consideration is being given to that matter. It has been under consideration in the past, but if there has been any change in the situation in recent weeks or months I will be glad to let my hon. friend know.


Mr. Speaker:: The hon. member for Red Deer.


Robert Norman Thompson: My question has been answered, Mr. Speaker.



TRANS-CANADA AIR LINES RECOMMENDATION RESPECTING PURCHASE OF NEW PLANES

[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I have a very short question for the Minister of Transport, and he can give the information required in a very few words. Has the board of directors of Trans-Canada Air Lines made a recommendation to the government as to what new jet plane
Inquiries of the Ministry T.C.A. should purchase, and which of the three planes concerned has been so recommended?


George James McIlraith: Yes, Mr. Speaker, they have made a report to the government.


Stanley Howard Knowles: What about the second part of the question; which of the three planes has been so recommended?


George James McIlraith: I am not prepared to answer that question at the moment.



PEACE RIVER


[Stage Direction]
On the orders of the day:
Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I have a question for the Minister of Public Works, notice of which I sent to him. I should say that as a result of the caveat which Your Honour has just laid before us I have changed the form of the question somewhat. What action, if any, does the government propose to take in respect of the continuing failure of the British Columbia government or the agency of that government engaged in the construction of the Peace river dam to file an application for approval under the Navigable Waters Protection Act?


Hon. J. P. Deschatelets (Minister of Public Works):: Mr. Speaker, the notice just reached me in the house a few minutes ago, and I am not in a position to answer the question today. I will take it as notice, and within the next few days I shall give the information desired.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. J. H. Horner (Acadia):: Mr. Speaker, I should like to direct a question to the Minister of Trade and Commerce. Can he now inform the house whether it is true that he is now prepared to accept the policy of the former minister of agriculture with regard to the growing of wheat in western Canada, namely that farmers can grow all they are able to grow?


Hon. Mitchell Sharp (Minister of Trade and Commerce):: Mr. Speaker, when I make my statements I make them about this government's policy. I do not have any reference to the past.


John (Jack) Henry Horner: A supplementary
question. Can the minister clarify the issue, then, with regard to whether the farmers should grow all the wheat they can?

Inquiries of the Ministry


Mitchell William Sharp: Mr. Speaker, I said in answer to a question the other day that I hoped before seeding time the government would give a clear explanation of the marketing outlook affecting all grains, on the basis of which farmers could make their plans.



SPREAD BETWEEN PRICES PAID AND RECEIVED IN CANADA

[Stage Direction]
On the orders of the day:
Mr. Raymond Langlois (Megantic):: Mr. Speaker, my question is directed to the Minister of Agriculture and relates to a question asked last week. With regard to the price paid to western farmers and the price paid by eastern farmers for grain, will the minister tell the house who causes such an increase between the selling and purchasing prices? Has he found that out yet, and would he tell the house what his findings are?


Hon. Harry W. Hays (Minister of Agriculture):: Mr. Speaker, I believe this question is going to be discussed by the standing committee on agriculture and colonization.



INQUIRY AS TO FREEZING OF DELIVERY QUOTAS

[Stage Direction]
On the orders of the day:
Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, I have a question for the Minister of Trade and Commerce. In view of the wide disparity in grain delivery quotas in the west, has the minister given instructions to freeze delivery quotas at three bushels so that those points on the initial quota can catch up to the two and three bushel delivery quotas before proceeding with a four and five bushel open quota?


Mitchell William Sharp: No, Mr. Speaker, I have not given any such instructions. I am sure it is in the interests of all western farmers that as much grain as possible should move through our ports this year, and I have given every freedom to the Canadian wheat board to do that in a way that is satisfactory to the western farmers and that will accomplish the objectives they have before them.


Stanley James Korchinski: A supplementary question. How can the minister suggest, for example, that points on the initial quota are receiving fair treatment? How does he expect to equalize deliveries? Some points on the initial delivery quota are only ten miles away from points where there is a three bushel quota. Where is there any parity there?


Mitchell William Sharp: I have complete confidence that the wheat board is trying to do everything possible to expedite the movement of wheat and to achieve as much equality as can be achieved with that limitation upon them, and


I really do not think it would be in my interests or in the interests of the western farmers to instruct them otherwise.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. Robert Muir (Cape Breton North and Victoria):: Mr. Speaker, may I direct a question to the Minister of National Defence. Now that the minister has allayed the fears of the people of Prince Edward Island by making a statement in the house regarding the future of the R.C.A.F. base at Summerside, for which I commend him, will he now assure the people of Cape Breton island that the plans for expansion at the Point Edward naval base will now be carried out and that the activities of the base will not be diminished in any way, thus eliminating fears that have arisen in this regard?


Hon. Paul Hellyer (Minister of National Defence):: Mr. Speaker, I am not aware of any plans for expansion, but I think this is the type of question which might wait until our estimates are before the house.


Robert Muir: On a question of privilege, with all due respect to you, sir, this is a most urgent and important question to the people of Cape Breton island, who are in fear of the curtailment of activity at this base which will affect the livelihood of many people there. Certainly I do not think the matter should be sloughed off in this manner.



CANADIAN FLAG


[Stage Direction]
On the orders of the day:
Mr. George Muir (Lisgar):: Mr. Speaker, I should like do direct a question to the Prime Minister arising out of an answer he gave to the hon. member for Chapleau in the house yesterday, when he assured the hon. member that a truly Canadian flag would be flown on the occasion of the 1967 world fair in Montreal. Would the Prime Minister inform the house and the country if it is the government's intention to rescind the order in council designating the red ensign as an appropriate flag for Canada?


Lester Bowles Pearson: Mr. Speaker, I have nothing to add to what I said on this matter yesterday and previously.



FINANCE


[Stage Direction]
On the orders of the day:
Horace Andrew (Bud) Olson: Mr. Speaker, I should like to direct a question to the Minister of Finance. Has the minister published or given wide publicity to the regulations respecting the application of the sales tax increments during the various stages, as he promised to do earlier this session? This matter is becoming urgent, as construction tenders now being called will be affected by the future application of these regulations.


Hon. Walter L. Gordon (Minister of Finance):: Mr. Speaker, I thank the hon. member for sending me notice of this question which, strictly speaking, falls within the purview of the Minister of National Revenue. However, I am pleased to advise him that the Department of National Revenue has given wide distribution to the amendments to the Excise Tax Act, explanatory bulletins and circulars. These have been distributed to known or potential licences, to interested associations and to individuals concerned, and have been advertised and made available in all customs and excise ports, district excise tax audit and excise tax collection offices throughout Canada.



SUGGESTED REDUCTION IN TAX ON CHILDREN'S CLOTHING

[Stage Direction]
On the orders of the day:
Mr. L. P. Anioine Belanger (Charlevoix):: Mr. Speaker, may I direct a question to the Minister of Finance? Could the minister tell the house whether he is considering the advisability of abolishing the 11 per cent tax on children's clothes?


Walter Lockhart Gordon: No, Mr. Speaker; not at the present time.



ROYAL CANADIAN AIR FORCE


[Stage Direction]
On the orders of the day:
Mr. Lawrence E. Kindt (Macleod):: Mr. Speaker, I have a question for the Minister of Agriculture concerning the Penhold air base. Did the minister sign a petition that Penhold be not set aside as or made a jet training base?


Harry William Hays: Mr. Speaker, I did not sign any petitions.
Inquiries of the Ministry UNEMPLOYMENT INSURANCE



KITIMAT, B.C.-CLOSING OF OFFICES

[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: Mr. Speaker, I should like to direct a question to the Minister of Labour. Inasmuch as today was to have been the deadline for the closing of the unemployment insurance and national employment service offices in Kitimat, B.C., has any extension been made of that deadline, or does the government intend to proceed as was originally declared?


Hon. A. J. MacEachen (Minister of Labour):: Mr. Speaker, the unemployment insurance commission have given no indication that they have reversed their decision to close this office, for reasons which have been explained.



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Michael Starr: Mr. Speaker, I should like to direct a question to the Minister of Justice. Has he anything to report to the house with regard to the report of the special counsel retained by him to look into the Norris commission evidence, and is he now prepared to take the house into his confidence with regard to whether the report of counsel states that there is evidence justifying the laying of charges?


Hon. Lionel Chevrier (Minister of Justice):: Yes, Mr. Speaker, I have an answer to the hon. gentleman's question. Upon the advice of special counsel appointed to consider the evidence in connection with the Norris report, a charge has been laid against Hal Banks in Montreal for conspiring to commit an assault occasioning bodily harm upon Captain Walsh. Mr. Jean Martineau, Q.C., special counsel, will prosecute.
Counsel are considering other charges against the president and certain other officers of the S.I.U. arising out of the Norris report and the recent illegal strike. The charge already laid against Mr. Banks and referred to above will be pressed forward in conjunction with these other charges when counsel have come to a conclusion in regard to them and the necessary preparations have been completed.


John George Diefenbaker: Mr. Speaker, with respect to the laying of the charge against Mr. Banks, what is the date of the alleged conspiracy

Inquiries of the Ministry respecting the assault occasioning bodily harm? Was that alleged assault committed before or after the Norris report?


Lionel Chevrier: The alleged date is some time in 1957.


John George Diefenbaker: Has this not been outlawed by effluxion of time? Why not a more recent charge?


Lionel Chevrier: The two special counsel who were appointed were to deal with the Norris report; and the offences under the Norris report, as they were reported to me by the special counsel, dealt in particular with two offences, one of them committed in August 1957 and the other in 1960. My statement dealt in part with that and in part with other offences.


Hon. Leon Balcer (Three Rivers):: I wonder if the minister can tell us whether there will be a prosecution following the beating up of an elderly couple in my own riding of Three Rivers last year.


Lionel Chevrier: As the hon. member knows, the two counsel who have been appointed are to deal with all the offences, and the matter is under investigation by them.



UNITED NATIONS


[Stage Direction]
On the orders of the day:
Mr. Heath Macquarrie (Queens):: Mr. Speaker, my question is for the Secretary of State for External Affairs and concerns the Canadian delegation to the United Nations general assembly. Can the minister advise if our delegation abstained on the third committee resolution against racial discrimination, and the reasons for our abstention?


Paul Joseph James Martin: Mr. Speaker, we did
abstain in the committee on this resolution because of certain clauses in the resolution which involved matters that are not within the jurisdiction of this parliament.



REQUEST FOR INQUIRY INTO PRICE INCREASES

[Stage Direction]
On the orders of the day:
Mr. E. Nasserden (Rosthern):: Mr. Speaker, I should like to direct a question to the Minister of Trade and Commerce. Would he be able to inquire into the reasons for the

recent substantial increases in the price of flour and report to the house in that regard?



OLD AGE SECURITY


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Minister of National Health and Welfare. In view of reports of homes for the aged in Ontario and in Manitoba taking most or all of the $10 pension increase recently provided by parliament in higher rents, will the government see what can be done to protect our old age pensioners against this practice?


Hon. Judy V. LaMarsh (Minister of National Health and Welfare):: As my hon. friend knows, the federal government in bringing about the increase in the old age pension had hoped it would be passed to the pensioners to alleviate some of their need. It has been disturbing to notice in the last couple of days that in various provinces this amount is not being passed to the pensioners. While this decision appears to lie within provincial jurisdiction, my hon. friend may be assured that whatever can be done will' be done by the federal government to encourage the passing on of this money to the pensioners.
Mr Knowles: A supplementary question, Mr. Speaker. Will the minister ascertain whether any of these homes are homes which have been built with financial aid from federal sources?


Hon. J. R. Garland (Minister of National Revenue):: Mr. Speaker, I wonder if the hon. gentleman would permit me to reply to that particular aspect of his question.


Stanley Howard Knowles: Delighted.


John Richard Garland: I noticed this item in the newspaper today, and I rather suspected there would be inquiries. I am happy to tell my hon. friend that the Fairview project is a senior citizens' home and is not one in which Central Mortgage and Housing Corporation of the federal government is involved financially or otherwise. As the house is aware, we have taken steps to see that no increases are to be brought into effect for elderly citizens as a result of the increased pension in any housing projects over which C.M.H.C. has control of the rents. This refers to limited dividend projects and to public housing projects in which there are elderly citizens.



POST OFFICE DEPARTMENT


[Stage Direction]
On the orders of the day:
Hon. Azellus Denis (Postmaster General):: In reply to a question asked yesterday by the hon. member for Hastings-Frontenac about the postmastership at Belleville, I wish to inform the house that charges were made to effect that the postmaster at Belleville, John A. Ireland, had engaged actively in politics contrary to section 61 of the Civil Service Act. The postmaster admitted the charges in a sworn declaration, which reads in part as follows:
I, John Alexander Ireland, do solemnly declare that in the political campaigns of 1957, 1958, 1962 and 1963, I acted as campaign manager for Mr. Lee Grills. I have acted as postmaster Belleville sub office No. 5 since 1960-
Mr. Grills is the former Conservative member of parliament for Hastings South. He was elected in 1957, re-elected in 1958 and 1962 and was the defeated Conservative candidate in 1963. Mr. Ireland's dismissal was approved on October 15 last.


Mr. R. A. Webb (Hastings-Frontenac):: Mr. Speaker, I wish to thank the Postmaster General for that information, but that was not the complaint. While I am on my feet I should like to ask the Postmaster General did he or did he not have representation made to him by Mr. Royce Frith, who I believe is past president of the Ontario Liberal association, on behalf of Mrs. Clare Stewart of Enterprise, Ontario?


Azellus Denis: Mr. Speaker, I am not aware of that, but I would not wish to prevent anyone from making representations or applying for the position.



BROADCASTING


[Stage Direction]
On the orders of the day:
Mr. D. M. Fisher (Port Arthur):: Mr. Speaker, I should like to ask a non-controversial type of question of the Secretary of State. I should like to ask him whether he has informed any of the many members of the board of broadcast governors whose appointments expire in the next few days that they will not be reappointed?


John Whitney Pickersgill: No, sir, I do not think that is any part of my duty. When the government has made up its mind to recommend appointments, those persons will be appointed in the usual way.
Income Tax Act


Douglas Mason Fisher: A supplementary question. In view of the minister's own expression about the broadcasting industry requiring a period of stability, has he given any consideration to taking this step in order to help settle the confusion which might follow from a complete replacement of the board?


John Whitney Pickersgill: There is no possibility of a complete replacement of the board, as the hon. gentleman, who is a very well informed member of the house, must know.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. Henri Latulippe (Compion-Fronlenac):: Mr. Speaker, I should like to direct a question to the Minister of Labour. Considering the increase of unemployment in Canada and especially in the province of Quebec, does the government intend to establish a commission of experts which would carry out an investigation on seasonal unemployment as was done by the Quebec government?


Mr. Speaker:: This is surely a question for the order paper.



INCOME TAX ACT

[Stage Direction]
The house resumed, from Wednesday, October 30, consideration in committee of Bill No. C-95, to amend the Income Tax Act-Mr. Gordon-Mr. Lamoureux in the chair.
On clause 1.
Henry P. Latulippe: Concerning Bill C-95, I was telling the Minister of Finance (Mr. Gordon) yesterday that we were happy about the fact that he has decided to provide tax incentives for the new industries which will be set up in areas designated as depressed areas.
However, I should like to draw his attention on the situation of the small industries which can barely survive at present and which also need tax exemptions to expand. In my opinion, it would be easier to help existing small industries than to establish new ones. If those small industries had the opportunity to increase their capital in order to expand, the local economy would have a chance to improve. Such a move would benefit the whole Canadian economy.
But with all the taxes they have to pay nowadays, it is not easy for our industries to cope with the situation. We are taxed at 52 per cent of the cost value and we

Income Tax Act
are on the threshold of an economical and political disaster. Taxes are a direct cause of the lack of enthusiasm on the part of our investors who tie up close to $7 billion in the banks. It is not a paying proposition to go into business and venture one's future, to work to support unproductive bureaucrats who increase in an alarming manner from year to year.
How can you explain the national debt, which is close to $40 billion, in a country where you have close to one million unemployed people? How can you explain that a country such as ours cannot finance a population of 19 million when France, Germany and Italy, with a much smaller territory devastated by wars, can support over 50 million people with no unemployment and even have to go to less industrialized countries to get manpower?
The answer is simple. Canada is controlled by international finance and crushed under economic slavery. The application of Social Credit techniques would put an end to that situation for the good of everybody. The national debt, now close to $40 billion, should completely disappear forever within ten years if we used the Bank of Canada.
The monetary policy advocated by the Social Credit would change completely the economic aspect of this country. There would be more activity in the field of public works, our industrial processes would improve, the development of our natural resources and their processing into finished products inside Canada would know a new expansion. We would overcome all difficulties in such an economic advance. We would build an economy able to go ahead not only in wartime, but especially in peacetime.
We cannot think any more in terms of old rusted traditions; we must use our imagination to improve constantly economic, industrial and financial techniques for the liberation of man.
We should be in a position to give back to the provinces their taxation share so that they can administer public affairs according to the rights acquired when they entered confederation.
The lack of realism shown by the present government is such that the extremist elements find a fertile soil to talk of inde-pendentism. Why? Because the province of Quebec is the last to recover economically.
Here we have a large work force but we are short of capital and processing industries; the unfairness resulting from the present system is obvious to the French Canadian people and gives them an inferiority complex. They feel swamped and dispossessed of their wealth in their own stronghold.
[Mr. Latulippe.l
With the monetary theory advocated by our group, which would put credit in the hands of the consumers, with the large work force and the wealth of Quebec, our province would experience a period of material and cultural prosperity.
But we know that democracy has to struggle to survive, and to conquer it must prove its superiority, protect its rights and help the peoples get rid of tyranny, whatever it may be.
We must feel the evils that the masses endure, talk to them from the bottom of our heart, the minds must be captivated by our minds; coming from the people, we know their aspirations. We must talk to them about their hopes, which are ours.
We must bring harmony and natural understanding between all segments of the nation by securing a decent standard of living for everyone.
Nobody, in Canada, can understand how in an affluent society poverty can exist. Problems and political solutions appear insurmountable; the reins of government are not in the hands of the people but in those of a few professional politicians.
The great complexity of taxes artificially complicated must be simplified in order that the masses may understand them and follow us.
If the people give us the power to solve their problems and regulate their finances, we must do so in the most simple, the most straightforward, the most Christian way, with good sense, tact and moderation, for one purpose: to serve with equity and fairness the most important being on earth, man, and also the most important of Canada, the citizen of this great country of ours.
The last point I want to draw to the attention of the committee, Mr. Chairman, relates to the startling number of bankruptcies and to the extreme losses suffered by our industrialists in the province of Quebec and throughout Canada. Of course, the owners of small businesses were the most severely affected.
In the province of Quebec, for the year 1962 alone, 1,099 bankruptcies were filed in nonsummary proceedings. The debtors' estimates totalled $32,159,365 on the credit side, and $69,989,460 on the debit side. The number of closed bankruptcies was 543, with apparent losses of $15,695,662.
During the same year, 1,261 bankruptcies were filed in summary proceedings the debtors' estimates totalled $1,549,215 on the credit side, $10,749,735 on the debit side. The number of closed bankruptcies was 915, with apparent losses of $5,779,801.

In the whole of Canada for the year 1962, the apparent losses amounted to $37,102,192 as regards non-summary proceedings in the case of 1,126 closed brankruptcies out of a reported number of 1,946. As to the bankruptcies of the summary proceedings variety, 1,646 were closed out of 2,351, with apparent losses of $13,764,469.
In themselves, these very dry and impersonal statistics prove however that nearly half of those bankruptcies and losses happen in the province of Quebec.
The situation has become unbearable for the industrialists, big and small, as well as for the financial backers and the big financiers who control the life and development of those industries. That is why it is urgent to do something, to bring forward legislation which will at least guarantee a minimum of security, especially to owners of small industries.
Therefore, I move, seconded by the hon. member for Chapleau:
That the house recommend to the Minister of Finance that he take into serious consideration the need to grant all taxpayers a 10 per cent exemption for all charitable donations on the first $1,000 of income and a 7J per cent exemption on each additional amount of $1,000 of income, without having to submit charitable donation receipts.


Thomas Clement (Tommy) Douglas: Surely, Mr. Chairman, you are going to give some ruling upon whether it is possible to move an amendment such as this to clause 1 of the bill. On its face it is transparently out of order.


The Chairman:: This is possibly the type of amendment which might be moved on another occasion. I respectfully submit it cannot be moved at this time. I should like to cite standing order 59(2) which reads as follows:
Speeches in committee of the whole house must be strictly relevant to the item or clause under consideration.
Certainly the proposal now made by this amendment goes away beyond the terms of clause 1, which is before the committee. I suggest, too, that this is a substantive motion covering a new proposal, and for these reasons I submit that the proposed amendment is out of order.


Gilles Grégoire: Mr. Chairman, could I say a few words about your ruling?


Lucien Lamoureux: Naturally I should have liked it better if the comments had been made before I gave my ruling. I was hoping that hon. members would get on their feet to express their point of view or make comments on the admissibility of the amendment. However, I should not want to restrict in any way the discussion on the amendment and if
Income Tax Act
the hon. member for Lapointe has some remarks to make, even at this stage, I would not interrupt him. I must point out though that it might have been better if he had spoken before the Chair made its ruling. However, as I say, I have no objection to the hon. member for Lapointe making comments at this time.


John Whitney Pickersgill: I hope, sir, you will allow the hon. member for Lapointe to say a word on this matter.


Gilles Grégoire: Mr. Chairman, the hon. member for Compton-Frontenac was supposed to speak on second reading, and, at the request of the Secretary of State, we interrupted our speeches at that stage to resume them when discussing clause 1 of Bill C-95. Inevitably, there would have been more latitude to present such a motion on second reading. After all, this motion is only a request to the Minister of Finance to take the question into consideration now.
The Secretary of State said that during debate on the first clause of the bill-which is presently before us-he would grant the hon. member for Compton-Frontenac all the required latitude, and that is why the amendment is presented today.
Now, Mr. Chairman, I am of the opinion that this may come within section 59(2), since we are precisely studying amendments to the Income Tax Act. Now, the amendment moved by the hon. member for Compton-Frontenac suggests a change to be made in the Income Tax Act. Consequently, the proposed amendment refers purely and simply to what we are now discussing, and that is why we maintain that the amendment is in order.


Walter Lockhart Gordon: I should like to say very briefly that a number of hon. members have already spoken about this question of charitable donations. I have had a word with the Minister of National Revenue about it, and I have raised this question and all the other proposals and suggestions that have been made during the course of this debate with the officials of my department. I have asked them to keep a record of these, and they will be carefully considered before the next budget is presented.


Gilles Grégoire: I have only one question for the Minister of Finance. Are we to understand, then, that the minister is ready to consider the necessity for amending this portion of the Income Tax Act?


Walter Lockhart Gordon: I was not indicating that I thought a formal amendment at this moment was in order. I am sure it is not. I do sajr

Income Tax Act
that I will seriously consider this point, as well as the others that have been brought up during this debate. I have asked my officials to make a record of them.


Gilles Grégoire: We will accept the word of the Minister of Finance, Mr. Chairman.


Mr. Rynard:: Mr. Chairman, I want to speak briefly on two aspects of Bill No. C-95. I am sure the Minister of Finance will agree when I say that it was much easier to offer suggestions and criticisms when he was in the opposition than it is today to run his department. I am sure also that he will say it was a lot easier to criticize before he was even elected to parliament. In the light of experience I am sure he has a different view, and probably yearns for those old days.
I am sure that no one questions the integrity of the Minister of Finance. I am sure too that just as he himself probably thought at one time, there are at least a thousand people across Canada who believe they could run his department better than he is doing today.


Walter Lockhart Gordon: Good luck.


Philip Bernard Rynard: Yes, I can even remember when the minister was bold enough to say, as an opposition member, that he did not have to wait for the report of the royal commission on taxation; a few lawyers and accountants could fix up the taxing statutes. It seems to me that since that time the minister has made a few amendments and in my opinion made a few more loopholes in the act.
Speaking seriously, I think it is about time, Mr. Chairman, the laws and rules in relation to income tax were made simple enough for the people who pay the taxes to be able to understand them. Well, the critic of yesterday is the minister of today, and the Income Tax Act grows more complicated. No business firm could afford to hire a workman or executive who made similar fumbles in the conduct of business. Some of these fumbles that are apparent in Bill No. C-95 are important, and I will refer to one of them, the 15 per cent withholding tax on dividends of United States companies operating in Canada. This is to be increased to 20 per cent by 1965 if the United States subsidiary has not sold 25 per cent of its shares to Canadians.
In my opinion, Mr. Chairman, there are three inherent dangers in this provision. First, as soon as the United States government realizes that this provision is in force they will simply retaliate by removing their 15 per cent tax and automatically the withholding tax on the other side of the line will

go up to 30 per cent. This will apply to all Canadian subsidiaries in the United States.
Then I should like to know from the minister how in the world he is going to force Canadian investors to buy these stocks. In many cases the investor will receive a lower rate of dividend than he would receive from an investment in a Canadian company. Then if the investment is made, how in the world is the minister going to make the investor hold on to it?
The third danger is that you will scare investors away, and the people of the United States are the big investors in Canada. I submit, Mr. Chairman, this is an anti-American rule. You do this, and you take comfort in the fact that Mexico, France and other countries have done it. It is my opinion, Mr. Chairman, that such restriction should be imposed at the time of the incorporation of the company. Then the restrictions are known and accepted by the foreign investor at the time he makes his commitment, and not after. Here you are trying to change the rules of the game after he has invested his money. In my opinion such a policy must be regarded as evidence of bad faith.
Now, what happens to our Canadian subsidiaries in the United States? On the whole, Mr. Chairman, they are larger than their American counterparts in Canada. They are operating in a big market, about ten times the size of the market in Canada. The Canadian investment is substantial, and I could mention many firms such as Massey-Harris, Moore Corporation and Electrohome as well as the brewing and distilling interests. They are doing well in the United States market. At the moment the United States government is planning on lowering the corporation tax from 52 per cent to 45 per cent, a reduction of 7 per cent, leaving a larger portion of the profits subject to the 30 per cent withholding tax. If the Americans retaliate against our tax hike-and in the light of experience we know they have always done this-it will mean that the Canadian investor will have a larger cut taken from him. Let us take the example of a company earning $1 million profit, a corporation that is taxed in the United States. Under the new tax it will pay $450,000, leaving a balance of $550,000. Then there is the 30 per cent withholding tax amounting to $165,000, before any of the profit is returned to Canada. Then when this is remitted to the taxpayer he pays a third tax, income tax. This is a triple tax, and I submit that triple taxes are bad.
The Canadian operation or subsidiary in the United States is generally larger than the Canadian parent, and the Canadian operator wants a rather better dividend than

the American operator because interest rates are higher in Canada. If he does not get this better dividend then he is not satisfied. In my opinion many of the Canadian subsidiaries in the United States will move their head offices to the United States. Not only that, but I believe a United States subsidiary in Canada is in a much better position. It is, as I have said, smaller in relation to the parent company, and it can plow back its dividends for two, three or four years until the tax is changed. Those are my reasons for saying this is a bad tax which will work against the Canadian economy.
I want to dwell for a few minutes on the matter of incentives to businesses in depressed areas. The first point I want to make deals with the basis of picking a depressed area, an area with 50 per cent of the national employment average over an eight year period, and an area of low employment over the summer months from May to October, again on an eight year basis. I understand the figures are supplied by the Department of Labour. This is all done on a statistical basis, and I object to that because it is open to all the mistakes statistics make when they try to analyse human reaction.
In one area I know of, cars full of people go to work in a neighbouring city 50 miles away. They have been doing so for years; and I wonder, especially with the populated areas in western Ontario, how one can pick out a depressed area when people travel back and forth from it, 50 and 60 miles, to work in another centre. Surely there is something wrong when the mayor of a city does not know he lives in a depressed area. The premier of British Columbia did not know his home town was a depressed area, nor did the people of Edmundston know their town was a depressed area.
I have here an article from the Globe and Mail, and I would like to put some extracts from it on the record:
In this Edmundston sets an example that might profitably he followed by many Canadians elsewhere, who now accept the proposition that it is the duty of higher governmental authority to establish that climate in which enterprise can thrive. Edmundston is undertaking that task on its own, creating a city where, as the mayor put it, their sons will want to remain and industrial executives will want to live. For an area that a welfare minded federal government has declared to be depressed, the climate is remarkably bracing. Would that some of our so-called prosperous areas had as much energetic enterprise.
But over and above all that, this is a direct contravention of provincial-municipal rights, and my own province of Ontario has a law which says no municipality shall offer incentives to industry.
Further, Mr. Chairman, I would like to know what research has been done in the
Income Tax Act
depressed areas. By that I mean have they a suitable climate for industry? Is industry likely to grow and expand in them? One has to ask those questions because otherwise you are wasting the taxpayer's dollar. At one time or another many of these areas had a great deal of industry, which has moved out of them. Have the reasons been ascertained why this industry moved out, or do they still exist and are they likely to drive industry out once more?
The tax incentives include tax free holidays, 50 per cent write-off in two years and a write-off of 20 per cent over a five year period. These are hedged in by specific regulations that will be, according to the Financial Post, a source of continuing friction.
Three types of industry will respond to these incentives. One is new industry just incorporated and establishing itself. This is the type needed. Another type is a presently established industry engaged in changing its manufacturing enough to qualify for the incentive, leaving its present location where its move creates unemployment, and going to another area to create employment, with no useful result following the expenditure of the taxpayer's dollar. The third type is the United States industry coming into this country, being subsidized and picking up hundreds of thousands of dollars to establish the very thing which the Minister of Finance decries. He has said the United States already has 60 per cent ownership of Canadian industry, and I think he added "It is later than you think."
In conclusion I say let us spread out our incentives, making it a little more attractive for the workingman, the businessman and the professional man to invest in the development of Canadian industry. Let us give the Canadian people, the people who work in industry, the people who work in shops across Canada, a tax free holiday on money that they put into Canadian industry. In this way Canadian ownership of our factories will be built up and our citizens will have a pride in owning them.
At the same time we should cut out our anti-Americanism with our discriminatory taxes on their investment in Canadian industry. By doing this we will allow our Canadian industry in the United States to flourish unhampered by discriminatory taxes in an area where they have huge markets. This bill is an immature bill, is very discriminatory and should be changed.


Mr. Otto:: Mr. Chairman, I want to dwell on the section about which the hon. member for Simcoe East has just spoken, but before doing so I wish to say there has been a lot of talk in the past about Canadians owning

Income Tax Act
their own industry, and there has been some confusion about the reasons that we must own our own industry.
Many hon. members on this side, and I know most hon. members on the other side of the house, have received a very calm and clear indication from Americans, from the owners and representatives of United States parent companies which have subsidiaries operating in Canada, to the effect that all they want to do is make money. They say if a product can be manufactured more efficiently in Canada and exported elsewhere they will do this. They do not care where their money goes.
I must admit that this seemed a very good argument until I recalled the Korean war, during which tune cold rolled steel was put on a priority list and could not be exported from the United States when it was needed for the war effort there. I recall that during those years 40 per cent of the appliances sold in Canada were brought in from the United States.
Quite recently I read the report of Canadian Westinghouse, which had sales of upwards of $129 million with losses between $300,000 and $2 million. It is pretty difficult to say what portion of the expenditures of Canadian Westinghouse were on parts brought in from the United States, but I am inclined to think that United States capital, despite all it says, is isolationist. Capitalists in the United States want their money in the United States where they can always put their hands on it; therefore it is very important for Canadians to own their own industry. It is not an emotional issue.
We have been saying, and hon. gentlemen on the other side when they occupied these seats always said, we must have more industry in Canada, more secondary industry. But we must also acknowledge that we want more Canadians to gamble or risk their money in new industry. Most of us are aware that Canadians are not buyers of shares, except shares of Bell Telephone Company, Hiram Walker or something of that nature. We are great mortgage buyers and great savers.
We have about $13 billion in savings and in transit. If we can judge how much we have in safety deposit boxes, taking as a standard the proceeds of robberies such as that in Brockville, we may have another $13 billion there. We want to put this money to use, but the Canadian has always been known as a reluctant investor. We are cautious, and the reason is that the money we have has been hard come by, and the money we risk in shares is usually money that came by way of dividends and profits. If we do not have that money we are not going to have more money to risk and thereby to expand. The

essential thing is that Canadians have to invest in their own industry. Every year $250 million in Canadian dollars goes across the border to be invested in United States industry. We want to have that money invested here.
But I do agree with the hon. member who spoke just before me. I still have doubt that by this differentiation in the withholding tax on companies we are actually going to convince Canadians to buy shares or, for that matter, convince United States shareholders to sell shares because it is the shareholders we must influence, not the companies.
I know that the minister has it in mind to induce Canadians eventually to buy shares in our industries or to purchase back shares from the Americans, English or Swiss who now hold them. I think the incentives should be directed toward the Canadian investor. If we can convince Canadians to take their money out of bricks and mortar, out of those things in which they have always been accustomed to invest, out of mortgages and other very secure investments and invest that money with a little bit of risk I think we will achieve something. We could do this initially in my view by an amendment which I think should have been included. I suggest that we should put the Canadian investor in the same class as a businessman, so that he can deduct his losses from his profits. I think this would be an inducement to Canadians.
I know from several conversations with the minister that his ideas are good. I was one of the first to call him a reformer and I believe he is a reformer. I believe this legislation is good. If the minister has made mistakes he has admitted them. With all respect, I say that every member of the house should support the ideas expressed in the bill and support them very strongly.


Mr. Cameron (Nanaimo-Cowichan-The Islands):: Mr. Chairman, I shall not hold up the committee very long, but there is one particular point I want to bring to the minister's attention. I suspect it has already been brought to his attention but I wish to do so again. I refer to the position of part time students in Canada with regard to the deduction from their taxable incomes of the sums they pay in fees. I do not know whether the minister was able to see the delegation which came from Montreal, but I understand his parliamentary secretary did so. That delegation consisted of representatives from the evening students association of Sir George Williams University, the students council of Sir George Williams evening high school and the University of Montreal.
They pointed out to us in the course of their brief and in the course of the interview

the anomalous position in which they are placed in relation to the position of full time students in Canada. They are not permitted to deduct from their taxable incomes the amounts they pay in fees and educational costs because they are part time students and are employed.
One of the most striking anomalies is that a corporation which decides that it will finance some of its employees in further educational courses or a corporation which decides it will establish bursaries and scholarships can deduct the cost from their taxable income for income tax purposes. It does seem to me this in itself is a great injustice but it also seems to me very shortsighted because surely there is nothing more important in Canada than that young people, particularly those with the enterprise and determination to go on with their education after they have moved into the adult world and are working for their living, should have every encouragement.
It seems to me that this is one instance where we really have the opportunity for an investment in the improvement of the whole quality of life in Canada. Who knows what will happen, Mr. Chairman? If we can encourage sufficiently those who are uneducated we in this chamber may find ourselves replaced by much more effective members of parliament in the future. I should like to plead strongly with the minister to take this problem under very serious consideration immediately. Across Canada I imagine that these students probably number now some 700,000, inasmuch as the dominion bureau of statistics reported that in 1959-60 there were 664,000.
It is true enough that only some 45 per cent of those are engaged in professional courses leading to degrees or diplomas and 44 per cent are in general or cultural courses, but it seems to me that those who are working toward a diploma or a degree certainly should have some help. I have made some rough calculations as to what it might cost the treasury. I am not sure I am even approximately correct but I would imagine it might cost between $12 million and $15 million. I do not know whether that is a correct estimate, but I should like to impress on the minister the necessity of doing something for these young people who are so determined to improve themselves in a world which badly needs educated people.


Mr. Pigeon:: Mr. Chairman, I would like to make a few remarks which concern the bill directly and indirectly. I would like to point out that I entirely agree with the remarks the hon. member in this corner of the house made to the effect that the government should
Income Tax Act
consider the deduction of school fees. I think it would help education without impinging on provincial autonomy.
Such a deduction would encourage parents, and even the students themselves, to pursue their studies and acquire a greater degree of specialization which would give them a place in the sun in later life, and prevent their becoming a liability. I would like the hon. minister carefully to study the request made today. At the same time, we would be interested to know the reasons which would prevent the government from acting in this way, and we would also like to know how many million dollars a year such legislation would represent for the government, if the request were accepted.
Mr. Chairman, it would be essential, to my mind, to locate in each area of this country, a representative of the national revenue department, to meet the taxpayers and help them prepare their returns. I think it might be consistent to have, during the months of February and March, i.e. for two months, experts of the Department of National Revenue visit a given area, Joliette, for instance, where they would be at the disposal of taxpayers and companies who would want some points cleared up as well as some advice in preparing their income tax returns.
I believe, Mr. Chairman, that the government would gain much by doing so, because by informing the people those experts would prevent a number of errors and alleviate the burden of the national revenue department staff which has to check those returns.
I think that if the suggestion were accepted by the government, and some officials of the Department of National Revenue were sent here and there in every province of this country, such action would be very much appreciated by the whole Canadian population.
It has been said many times in the house, that the Income Tax Act is very complicated and even accountants often have to ask lawyers to explain certain points before knowing what to do.
Mr. Chairman, I read in the paper a statement by the former mayor of Toronto, Mr. Leslie Saunders, who expressed the following opinion:
The delivery of receipts for gifts to charitable institutions, as practised in the province of Quebec "is nothing more than a racket".
Mr. Chairman, the former mayor of Toronto was entitled to his own views, but I do not share his opinion, far from it, I denounce it and I consider that such a statement is damaging to national unity. To my mind, a

Income Tax Act
citizen has no right to make such a statement, which is unfair to the people of the province of Quebec. There surely has been some abuse in that province, as in any other province of Canada. I do not share this individual's opinion at all and publicly denounce it. I think that such a statement is only a "breeding medium" for separatism.
If the idea of separatism is making some progress, these days, it is probably because of statements like that. I am sure that the people of Quebec are just as honest as anybody else.
Mr. Chairman, I have here a notice of assessment which was sent by the Department of National Revenue to a resident of the province of Quebec. This photocopy reads as follows:
After checking, your deduction for charitable donations to the parish has been reduced from $340 to $250.
In my opinion, that is absolutely meaningless. No good reason is given for reducing the deduction for charitable donations. In my opinion, officials of the Department of National Revenue have no authority under the act to reduce arbitrarily the amount of a receipt for charitable donation. Consequently, I object to such a practice.
I feel that the minister should seriously seek means to settle this problem once and for all. Several members have made interesting suggestions in that connection, but I do not fully agree with them. I will come back to that later on.
I should also like to know the total amount of the receipts for several years rejected by the Department of National Revenue. What is the total amount of those receipts? Every year, I am surprised when officials of the Department of National Revenue even go to rectories to check receipts for charitable donations.
In my opinion, it is an insult to so question the honesty of the clergy of the province of Quebec and of other provinces because, I am convinced that the same practice must be followed elsewhere and inspectors from the Department of National Revenue must be sent to check along these lines.
I should like to know whether in fact, the officials of the national revenue department audit the books of the Red Cross, for instance, or of the various community chests in the country. I wonder whether that is done with as much care as the investigations in the clergy houses where direct insults are made to the religious authorities.
I think that our Income Tax Act should be completely revised and adapted, not only to the Protestant denominations which I respect, but also in taking into consideration the Catholic religion. And on that matter, I should

like to quote into the record from a speech by Mr. Frangois-Albert Angers.
The story of the famous income tax receipts illustrates once more the troubles resulting for French Canadians or Catholics from a legislation conceived according to the philosophy of the English Protestant majority. Because as it was clearly established by the Tremblay commission, income tax is a matter which should remain entirely provincial, precisely because that is the tax which calls for interference into a multitude of family and private traditions: treatment of the children, concept of the relations between spouses, relations between parents and children, for instance, and the matter of salaries to be paid to the sons of farmers, etc., etc.
Consequently, I think it would be in our interest to revise completely our Income Tax Act and particularly that section.
Like other hon. members who made similar statements, I think we should find some scheme to eliminate those famous receipts. Some contend that there should be an automatic deduction of 10 per cent on the income. I think those people who advocate that system do not realize its impact.
In fact, if the government granted an automatic 10 per cent deduction without asking for charity receipts, that would be detrimental to those in the lower income brackets and the people in the higher brackets would profit from it.
I would prefer a 10 per cent exemption with a maximum of $500 without asking for receipts of course. That would mean that the taxpayers whose annual income is not over $5,000 would not have to ask for receipts every year in order to deduct 10 per cent from their taxable income. I think this is a constructive suggestion which should be taken into consideration by the government.
I just said that if the government granted an automatic 10 per cent deduction, it would discriminate against those in the lower income brackets.
As a matter of fact, before adopting makeshift solutions, it might be advisable to give some thought to the matter. The removal of the 10 per cent exemption for charitable donations would have, of course, the advantage of simplifying the matter, but it would not be the ideal solution.
Let us take for instance, the two provinces with the highest per capita income: Ontario and British Columbia. In the province of Ontario, out of 1,734,782 taxpayers, 1,168,669, or 62 per cent, use formula "A", that is, they claim the $100 exemption without submitting receipts.
In British Columbia, out of 443,252 taxpayers, 349,160, or 78.9 per cent, do not submit receipts for charitable donations. Even in the province of Quebec, the exemptions claimed do not represent 10 per cent of the taxable

incomes, but range about 8 per cent. Those figures were taken from the fiscal statistics for 1958.
Mr. Chairman, as I have already said, it is imperative that we come to a solution, for those investigations made in priest houses to check the receipts certainly cost thousands of dollars to the government. I -think that if the minister could find a solution similar to the one I am advocating, the Canadian people would be grateful to him.
Mr. Chairman, those were the few comments I wanted to make. On the other hand, I shall have other suggestions to offer when the bill is studied clause by clause.


Mr. Freneiie:: Mr. Chairman, the study of a measure such as the present one is certainly an excellent opportunity for the members of the opposition to express their views, and I think that one of the most important parts played by the members of the opposition is precisely to contribute to the administration of the country by suggesting amendments to the present legislation and by objecting to some extent to those which could be prejudicial to the development of the country.
The introduction of Bill C-95 could have been a fine opportunity for the government to correct certain mistakes made in the last budget by advocating tax adjustments which would have encouraged worth-while efforts, but the government did not make the most of it.
But while this measure is not entirely satisfactory, we have to admit all the same that it effects some improvements and, in many cases, includes an incentive for Canadian-controlled industries, in short, an incentive for investments in our own industries. And there again, it must be recognized once more that the Minister of Finance (Mr. Gordon) is consistent, that his program for the emancipation of the Canadian economy is going merrily along and that, thanks to everybody, it will probably be such as to give us this emancipation we are all hoping for.
The bill also contains provisions to encourage the establishment of new industries in designated areas through tax reductions to the companies concerned. Here again, I feel the minister should be given some credit for having taken such a step, to enable those areas which, though I am not going to describe them as underdeveloped, are still suffering from chronic unemployment, to grow and to get rid of the evil of unemployment.
However, as far as the designated areas are concerned, I would have liked the government to take into account, in its classification, certain opinions, as it were, of intermediate public bodies which would surely have been invaluable to the departmental officials responsible for that classification.
Income Tax Act
And I am thinking here of the contribution which municipal councillors could have made in the designation of the areas because, being the government closest to the people, they are certainly in a position to have a better idea of the requirements of the people.
I believe that this tax exemption extended to industries, in designated areas, will bear its fruits a little late, and I am of the opinion that that exemption period of 36 months is not sufficient to ensure the stabilization of industry in those areas.
By the way, this tax exemption in the designated areas bears a strange resemblance to the policy followed by a great many municipalities in granting municipal tax reductions for three years, five years or even for longer periods to industries which decided to set up there. That system turned out to be ineffective because it was temporary, and sometimes it only promoted the interests of some swindlers.
However, I still hope this measure will bring better results and that this experience will be more profitable.
Mr. Chairman, we hear a good deal about designated areas. Statistics show that in the province of Quebec, we unfortunately have- it is not a record to be envied-40 per cent of the unemployed in the country.
It is enough to wonder whether the Minister of Finance should not have so designated the whole province of Quebec, thus allowing for a more considerable development of industry.
The other point I should like to clear up, Mr. Chairman, is the problem of industries already existing in those areas and which are eager to develop through the advantages granted new industries. I am not sure that those industries will have the same tax abatements as the new industries, but I will follow the discussion closely in order to learn a little more about that matter. I consider that the already existing industries should deserve at least the same treatment as the new industries which will set up in those areas.
In our day and age, Mr. Chairman, everything increasingly tends to centralization. It is not with half-measures, such as those advocated in Bill C-95, that we may effectively check that trend.
For several years now, we have been witnessing the invasion of the taxation field by the federal government. The provinces and the municipalities do no longer dare to increase the taxation level and consequently, are increasingly involved in long term loans, thus binding future generations to meet present needs.
The government which is the closest to the people, namely the municipal administration.

Income Tax Act
is the most seriously affected. As I said a moment ago, being better acquainted with the tax-paying capacity of its people, the municipal administration does not dare to increase taxes. This leads us to conclude- and it is becoming urgent-that we should completely review our taxation system with a view to decentralization.
Mr. Chairman, in all sincerity, I would like to make a few suggestions to the Minister of Finance, concerning income tax.
One of those I would like to see adopted is an exemption which, I believe, could be allowed to individuals who possess their own house, their own dwelling; they would be granted an exemption based on the cost of municipal and school taxes, for instance, if a citizen has to pay $500 per annum for municipal and school taxes, he would be entitled to deduct that amount of $500 from his taxable income. I believe that such a measure would be an encouragement to housing construction and, following other measures which have already been taken, it would certainly stimulate construction and encourage people to own their homes.
Mr. Chairman, I am convinced this exemption based on the cost of municipal and school taxes would be much less costly to the departments of finance and national revenue than the present system, which has to cope with difficulties caused by the requirement in regard to charity receipts, about which much was said this afternoon and to which I do not wish to refer again.
I am of the opinion it would be much easier to control this tax exemption than that we have presently; not that I am opposed to this one, of which we may avail ourselves by producing charity receipts, but I am convinced it would be an additional exemption which would certainly be to the advantage of Canadians.
On the other hand, I would bring to your attention, Mr. Chairman, that this tax exemption based on municipal and school taxes already exists in the United States; and if we may say that everything coming from the United States is not good, it must be recognized, however, that we have some lessons to draw from those people as far as economic measures to be taken are concerned.
Mr. Chairman, I shall also take the liberty of suggesting to the Minister of Finance or other responsible people, that further consideration should be given to the case of the heads of family whose children are attending university, since the present exemption is utterly ridiculous, when we take into consideration the expenses relating to the education of these children.
I am coming back to another point already raised, I believe, by another member who
[Mr. Frenette.l
said-I am sorry to come back to it but I am convinced that it is important-that a particular tax exemption should also be granted to workers and loggers who are forced to lay out money for the purchase of some working equipment. If I am not mistaken, I think that some professionals are granted a tax exemption when they have to buy equipment. It would therefore be fair, natural and normal that our Canadian workers be treated in the same way as some categories of professional people because, in fact, they also have their role to play in the country.
Other suggestions have been made of course, Mr. Chairman, and I do not want to repeat them. However, aware as I am of the good will of the Minister of Finance, I know he will take notes and that probably, in the course of the debate that will follow, will be glad to inform the house of new tax relief with regard to personal income. On the other hand, we understand very well the needs of the government which is faced with an ever increasing deficit and which sees its expenditures go up each year. But unfortunately, we find that those who are most opposed to new taxes are precisely those who want most.
We are now witnessing, Mr. Chairman, a contest between the three government levels concerning taxing, a contest whose costs have unfortunately to be paid, as always, by the Canadian taxpayer.
In the field of industry, people are concerned and inquisive about the future. The tax burden is so heavy it has become an obstacle to development and progress. We are in a vicious circle, Mr. Chairman. As long as we refuse to admit that the present situation is contrary to what existed 50 years ago, namely that the main problem which faces us at the present time concerns distribution and consumption, and not production, there is no reason to roam the world over to find possible markets. We have the market right here in Canada. We must give Canadians efficient means to allow them to play their part as producers and consumers.
Mr. Chairman, may I read here an extract from a speech delivered by Mr. Orland, businessman from Halifax, at a convention of the chamber of commerce, when he said:
Immediate steps are required to alleviate the fiscal burden before it stifles the economic growth. Mr. Orland calls taxes a major problem which increases all the time, and he blames federal, provincial and municipal governments for "levying all taxes you can think of".
If taxes go on increasing at the same pace as in these last years, "a disproportionate part of the gross national product will be channelled to government coffers to the detriment of private enterprise".

Correspondence on Union Trusteeship
And Mr. Orland goes on to say:
The frantic efforts made to stamp out economic malnutrition and which consist in blood transfusions from the patient himself are doomed to failure.


Lucien Lamoureux: Order.

It being five o'clock it is my duty to leave the chair in order that the house may proceed to the consideration of private members' business pursuant to section 3 of standing order No. 15.


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



PRIVATE BILLS


[Stage Direction]
On the order:
House in committee of the whole on Bill S-28, an act to incorporate Allstate Life Insurance Company of Canada (without amendment).
Mr. S. Perry Ryan (Spadina):: At the request of the hon. member for Villeneuve (Mr. Caouette), I should like this motion to stand until next Thursday.
Motion stands.



THE MANUFACTURERS LIFE INSURANCE COMPANY

Mr. Ian Grant Wahn (St. Paul's) moved: the second reading of Bill No. S-43, respecting The Manufacturers Life Insurance Company.
He said: This bill is simply intended to give the company a French name, the name set out in the bill, which is "La Compagnie d'Assu-rance-Vie Manufacturers''. The company is one of those companies which have taken advantage of the statute which permits mutualization. The purchase of the stock of the company has been completed, so that it is now a mutual company. I am informed that there are 14 directors and all but one of the directors are Canadians. This company has a substantial number of policies in force in the province of Quebec, and it is very active there. For that reason, it is anxious to have a French name.
I do not believe I can add anything more, except to assure the house it is a Canadian company and I trust the bill will be referred in the usual way to a standing committee.


Louis-Joseph Pigeon: I have only one remark to make, Mr. Speaker. Far from being against the
28902-5-270
suggested amendment, I am in favour of it, but I would hope that the government would amend the federal Companies Act so that any company which seeks incorporation in the future will be forced to have two names, one in English and one in French.
I hope the Companies Act will be amended along those lines. In my opinion, we would not have to deal with such requests now if that had been done in years past.


Hon. Theogene Ricard (Si. Hyacinlhe-Bagol):: I should like to ask the hon. member what proportion of the company is controlled by this one foreign investor?


Mr. Deputy Speaker:: May I remind the house that if the hon. member speaks now, he will close the debate?


Ian Grant Wahn: Mr. Speaker, the stock of the company has been purchased by the company itself, so there are no shareholders. At the present time, the company is really owned by its policyholders and, in that sense, it is a mutual company. I am informed that the policies in force in Canada have a face value of $1,663,962,000, and of this amount more than $271 million is in force in Quebec. I have not the information concerning the face amount of policies issued to persons resident outside of Canada. It is my understanding, however, that the company is primarily a Canadian company and that most of the policies would be Canadian policies. However, I have no specific information on the number of policies owned abroad, but this information could be provided in committee.


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


Hon. Paul Martineau (Pontiac-Temisca-mingue) moved:: That an humble address be presented to His Excellency praying that he will cause to be laid before this house a copy of all telegrams, correspondence, communications and other documents and replies thereto between the government of the United States of America, or any of its departments, and the government of Canada, or any of its departments, concerning the great lakes shipping situation and the proposed trusteeship of Canadian maritime unions since the 6th of July 1963.
He said: Mr. Speaker, this is a motion for the production of certain papers exchanged between the government of Canada and the government of the United States dealing with the great lakes shipping situation and the trusteeship that has been set up as a result

Correspondence on Union Trusteeship oi the recommendations of the Norris commission. The motion has been submitted to the house because of the general principle that parliament is vested with the power to order that a document be laid before it that may be necessary for its information.
I might point out that such a power is broad enough to include documents of a confidential nature if the house believes that it requires their production. The fact the documents are confidential cannot be invoked to block their production, because the necessity for providing parliament with information would take precedence. These documents are being requested because they have been introduced already on a piecemeal basis into the debates of this house. Surely the house cannot be fully informed without their production.
I could cite quite a number of occasions within the last 10 or 15 days when references have been made by the Prime Minister (Mr. Pearson) and other members of the cabinet to these documents as well as to statements made by members of the United States administration. For instance, on October 15 at page 3525 of Hansard the Prime Minister is recorded as referring to the unhelpful intervention by the United States secretary of labour. He referred also to the statement by the President of the United States which in his view, indicated that the President would co-operate to see that Canadian shipping in United States ports would be free from harassment and sabotage.
On October 11, 1963, page 3441 of Hansard, the Prime Minister is reported as referring to the apparent failure of both the secretary of labour of the United States government and the president of the A.F.L.-C.I.O. to appreciate fully the fact that the dispute on the great lakes is essentially a Canadian dispute, although of course it has international ramifications. Then, the Prime Minister also stated that this matter-


Paul Joseph James Martin: I rise on a point of order, Mr. Speaker. I do not want to intervene unfairly in the remarks of my hon. friend, but I am sure he is aware that in the discussion of this matter, under this particular procedure, it is not open to discuss anything other than the particular motion. One cannot discuss the merits of any dispute that may have some relationship to the problem. The only issue before us is whether or not these documents should be produced. What my hon. friend is now discussing is not a matter involved in the documents, but a matter of public statements by certain individuals already designated by the hon. gentleman.


Paul Raymond Martineau: Speaking to the point of order, I may say that the reason I quoted
[Mr. Martineau.l
these extracts from Hansard is simply to bring out the fact that the documents and statements have already been referred to in the course of debate in this house. This is the only purpose. It is necessary for the house to know this in order to decide if the documents should be tabled. I am not arguing in any way about the merits of the situation in connection with great lakes shipping or the trusteeship.
I was stating, Mr. Speaker, that the United States secretary of labour had brought this matter within the domain of public concern by issuing public statements. I refer, for instance, to the statement made by the Minister of Labour (Mr. MacEachen) on October 11, as recorded on page 3457 of Hansard, in which the minister refers to a statement by the United States secretary of labour as follows:
I have expressed through formal channels the continuing willingness of the United States government to seek an accord which will meet fully the public as well as the private interests which are involved here.
Then, on October 8, as recorded on page 3304 of Hansard, the Minister of Labour stated:
I have discussed this matter with the officials of the labour department... the Canadian ambassador discussed this matter yesterday in the United States... the United States authorities will fully comply with United States law with respect to this situation.
On October 4, page 3203 of Hansard, the Minister of Labour referred to the fact that the discussions have not produced any clear conclusions. This again indicates that there were discussions. On October 3, at page 3149, the Minister of Labour referred to discussions with Mr. Reynolds, United States under secretary of labour, and finally on September 30, at page 3026, the Minister of Labour referred to a meeting at Boston with the secretary of labour.
In summary, Mr. Speaker, it is my submission that in this particular case public policy does not preclude the production of these documents. Indeed public policy calls for their production because, as the Prime Minister himself and other members of the ministry recognized, this is a purely Canadian matter and there has been, in the words of the Prime Minister, both a shocking and unhelpful intervention by the United States in it. Surely under these circumstances public policy dictates that the whole question be brought into the open.


Paul Joseph James Martin: On a point of order, Mr. Speaker, I do not want to labour the point but my hon. friend knows perfectly well that the line he is now pursuing is out of order and is not permitted under this particular motion. The question before the house is whether or not these particular

Correspondence on Union Trusteeship
documents should be produced. That and nothing else is the issue. What my hon. friend is now doing is to quote from statements made by the Prime Minister and others on the main question itself, this delicate and important question which faces the Canadian people. This part of the problem is not before the house, and any discussion of it is outside the provisions provided for in the procedure now open to us.


Paul Raymond Martineau: On the point of order, and with due deference to the minister, I have not been quoting during the last few minutes from anything that was said. I was simply summarizing my own views as to why these documents should be produced, and one of the objections to their production was that public policy demanded they be not produced.
I have simply stated-and this is not a quotation from anyone; it is my own prose such as it may be-that in this case public policy, far from precluding production calls for production, because of the fact that statements made in the house have indicated there has been an exchange of views, correspondence and the rest, between the two governments, and also because it has been declared to be a strictly Canadian matter. If it is a strictly Canadian matter, we want to know why there has been interference, and the extent of the interference.
That is why we want the production of these papers. In summary, as I said before, we have had interference. We have had parts of these documents referred to publicly by those who made them in the United States. They issued statements to the press concerning their views on this matter, and we have had the Prime Minister and other ministers of the crown bring them into open debate in this house. Finally we have the claim of the Prime Minister that this is strictly a Canadian affair.
In view of this situation surely parliament is entitled to a full disclosure, and so far as diplomatic usage is concerned in all these documents or discussions of state between the state department and the Department of External Affairs, some of them have been exchanged through normal diplomatic channels, but others did not take that route and were exchanged directly between the labour officials of both governments, with a followup in the press when parts of the documents were sent for publication.
With regard to those parts of the documents that may be privileged or secret communications, naturally I do not want to rob them of their confidentiality; but even in this case the government should give the house an assurance that, because of the fact this is an exclusively Canadian affair, it will ask 28902-5-270J
permission from the United States government to file any part of the documents.
Concerning precedents, Mr. Speaker, there are a number of precedents where documents involving two countries have been tabled in the house. The government is continually tabling international air agreements between various countries. The latest I believe was in November, 1962, when an agreement between Canada and the United Kingdom concerning air traffic was tabled. Last session the hon. member for Winnipeg North Centre (Mr. Knowles) submitted a motion to the house, which was accepted, for the tabling of correspondence with other countries concerning the drug thalidomide.
We had the precedent which took place this very afternoon when the Secretary of State for External Affairs requested the hon. member for Yukon (Mr. Nielsen) to table a copy of a letter from the officer in charge of Canadian affairs in the United States state department to a chamber of commerce, I believe in Montana.


Paul Joseph James Martin: You will have to get a better precedent than that.


Paul Raymond Martineau: I think that is a precedent which goes far beyond normal diplomatic usage, and certainly there was less justification for tabling such a letter than in seeking the tabling of documents which are required for a serious purpose on a vital matter.


Horace Andrew (Bud) Olson: Mr. Speaker, before the Secretary of State for External Affairs attempts to call me to order I would like to draw his attention to the fact that the quotations given by the hon. member for Pontiac-Temiscamingue (Mr. Martineau) are completely relevant to the debate. I say that for the reason that when there are press releases issued by officials of another government usually there has been privileged communication between that government and the country referred to.
Further there has been what the Prime Minister may have referred to as embarrassing statements. I am not too sure if he used that expression, but he certainly used some rather strong language about statements issued by secretary of labour Wirtz and other people in the United States respecting their attitude to the Canadian trusteeship bill and various other problems connected with the S.I.U. Therefore if the normal course has been followed, there has been communication between the United States government and the Canadian government prior to the press releases that were issued by officials of the United States government, and surely this is relevant to the argument that there must exist some related documents that could be produced.
4230	HOUSE OF
Correspondence on Union Trusteeship
It would be well for us to know if there are such documents in existence. I am not prepared to suggest that all documents be released, but certainly those which relate to the press releases should be forthcoming so that we can see the extent to which the United States government attempted to interfere in a purely Canadian matter. Further, the government has complained recently that the United States revealed confidential information respecting wheat sales. Therefore I cannot see how reference to these press releases can be regarded as irrelevant to this debate.
I would like to remind the Secretary of State for External Affairs of the support the Minister of Labour received when he honestly, openly and frankly came before the house with legislation which we recognized was necessary to deal with a very serious situation. There was almost unanimous support given to the Minister of Labour to deal with that very tough and yet delicate situation. I am sure that a matter so serious as the interference of another government in our internal affairs will receive the same measure and degree of support.
It is obvious to all hon. members that the immediate problem facing the government and the board of trustees is the harassment and picketing of Canadian ships in the United States.
We have apparently reached the point, so far as the Canadian unions are concerned-


Paul Joseph James Martin: Mr. Speaker, I hope the hon. gentleman will not misunderstand me when I rise again on a point of order. It is not that I do not believe the matter he is now discussing is not vital and important. It is. But I submit to him and to you, sir, with the greatest confidence-and I recall the discussions we had last session on this very matter-that on this motion it is not open to any hon. member to discuss the merits of the question which gives rise to the motion itself.
The motion before us is for the production of papers with regard to this matter. It is not open to any hon. member to discuss the matter itself. All he can discuss are reasons, based on precedents and parliamentary practice, why the particular motion to produce certain papers involved in the negotiations between the two governments should be accepted. This is the only issue. My hon. friend is complaining about the picketing in the United States. I am in full accord with such complaints but it is not open to us at this moment, at this hour and under this procedure, to discuss that question.


Horace Andrew (Bud) Olson: On the point of order, first of all may I say that the purpose of asking for
[Mr. Olson.1

these papers is to provide the house with the information that is vital and necessary in making the decisions that it must make to deal with the situation. It is spelled out in the motion that it is to deal with the proposed trusteeship of Canadian maritime unions. If the house is going to deal with the interference of the United States government and the possibility that the Canadian government was warned that this harassment and picketing was going to take place, then I think members of the House of Commons have the right to have a look at these documents and know all the facts.


The Acting Speaker (Mr. Batten):: Order. We have had three points of order raised on this matter and it is not the first time in recent days. I should like to point out that over the years a number of Speakers' rulings have been made on this particular matter explaining the narrow limits of debate on a motion of this kind. I should point out to the house that under the motion now before us members do not have the right to discuss the shipping situation on the great lakes, nor do they have the right to discuss the merits or demerits of the trusteeship. The only question before the house at the moment is whether or not these documents should be tabled and in the ensuing debate I think members should confine themselves strictly to that question.


Paul Raymond Martineau: On a point of order, I think what the hon. member for Medicine Hat was trying to bring out was that, because of the situation with regard to great lakes shipping and the trusteeship and because of the exchange of documents it is necessary that these documents now be filed. That was the basis of his argument. I think the Secretary of State for External Affairs took absolutely the wrong view in interpreting the remarks of the hon. member, because the hon. member did not even touch upon the merits or demerits of the situation. He said that because of that situation these documents should be filed. That was the crux of his argument.


Horace Andrew (Bud) Olson: Mr. Speaker, in closing I should like to urge the Secretary of State for External Affairs to consider the matter raised in the motion, to recall also the support that the house gave the Minister of Labour (Mr. MacEachen) when he was faced with a serious situation and to remember that if this harassment and picketing of Canadian ships in the United States goes on further action by the house may be required to deal with that situation. I earnestly plead that the minister take the house into his confidence and give hon. members the necessary information to make intelligent decisions.

Correspondence on Union Trusteeship


The Acting Speaker (Mr. Batten):: Is the
house ready for the question?


Paul Joseph James Martin: Mr. Speaker, I am sure we will all agree with the last observation of the hon. member who has just taken his seat, that from day to day the Minister of Labour (Mr. MacEaehen) has given the house all the information on this matter that he could give and, indeed, in his handling of this matter he won commendation from the Leader of the Opposition (Mr. Diefenbaker) for the forthright manner in which he dealt with the problem. I realize that members of the house generally in all quarters have recognized the importance of this matter and have taken a responsible position on the merits of the dispute which, however, is not the issue before us at this moment.
The issue before us arises out of a motion in the name of the hon. member for Fontiac-Temiscamingue (Mr. Martineau). It is important for us to read the resolution to see what the issue is and what the implications are. The motion reads as follows:
That an humble address be presented to His Excellency praying that he will cause to be laid before this house a copy of all telegrams, correspondence, communications and other documents and replies thereto between the government of the United States of America, or any of its departments, and the government of Canada, or any of its departments, concerning the great lakes shipping situation and the proposed trusteeship of Canadian maritime unions since the 6th of Julv 1963.


Mr. Aiken:: Would the minister allow me to ask him a question? Would the minister read it again so the house can be sure of it?


Paul Joseph James Martin: I would read it again if I thought my hon. friend had not already read it carefully, but as I think he has and is not serious in the intervention he has made I will just accord him the same pleasant reaction that he is now giving me. I think it is important for us to see exactly what the issue is. If we were discussing the merits of this dispute the matter would be handled by the Minister of Labour; but it is a matter concerning relations with the United States that is involved in this motion. It is on this account that I, as Secretary of State for External Affairs, am dealing with it.
When this motion was called on the 16th of October I expressed the view, and I reiterate it now, that it would be contrary to diplomatic usage and against the public interest to table all of the confidential papers requested by the hon. gentleman. As the hon. member for Pontiac-Temiscamingue well knows out of his rich experience as a minister, the precedents in May, Bourinot, Beauchesne and practically
every other textbook dealing with parliamentary practice establish clearly that diplomatic correspondence of this nature cannot be required under these circumstances.


John George Diefenbaker: Why does the minister say this was diplomatic correspondence? Was it not interference?


Paul Joseph James Martin: It was diplomatic correspondence in the sense that it involved, as the Leader of the Opposition well knows, exchanges between the two governments, and in that sense when we talk about the intercourse of one country with another we characterize this as diplomatic intercourse.


Paul Raymond Martineau: May I ask the minister why some of these statements were published in the press and given to the press by those who made them?


Paul Joseph James Martin: I will deal with that in a moment.


John George Diefenbaker: Why the selective nature of the information?


Paul Joseph James Martin: I will deal with that in a moment. With regard to the first point it would, of course, be contrary to diplomatic usage to table these papers at the present time without the prior agreement of the government of the United States. I can tell the house that the concern we have in this matter is shared by the government of the United States. That alone is sufficient reason to encourage the hon. gentleman to withdraw the motion.


John George Diefenbaker: Would the minister allow a question? Has the United States been communicated with and has the United States administration stated that it would not want these documents produced?


Mr.   Marlin@Essex East: I have discussed this question with the appropriate persons representing the government of the United States in this matter.


John George Diefenbaker: That is not an answer.


Mr.   Marlin@Essex Easl: My hon. friend says that is not an answer. It is not the answer he wanted but it is an effective answer.


John George Diefenbaker: An effective smokescreen.


Mr.   Marlin@Essex Easl: It is true that documents exchanged between Canada and the United States have sometimes been tabled in the house. I will come to that. He mentioned the air agreement. While this is not the kind of agreement envisaged by my last statement, such an agreement obviously carries with it the implied agreement of the two countries.
4232	HOUSE OF
Correspondence on Union Trusteeship
But it has been a long established principle that in this house there is absolutely no obligation on the government to produce correspondence or documents when such action is deemed contrary to the public interest, and not only in this house but in the United Kingdom parliament.


Paul Raymond Martineau: Unless the house so orders.


Mr.   Marlin@Essex Easl: If the house so orders then the government will have to consider, in the light of its responsibilities, what course it should take. That would be the situation resulting from a decision of this house of that kind. In the present case, as I have already made clear, the govermnent does not consider that it would be in the public interest to table the correspondence requested by the hon. member for Pontiac-Temiscamingue. It is our opinion that compliance with this motion would be prejudicial to the continuation of informal discussions between Canadian and United States authorities who are attempting to find a solution to this problem. Accordingly, the government cannot agree to the suggestion made by the hon. member.
I think that is a correct statement of the usage and the practice in this house with regard to such a matter. The house has never quarreled with this position. Certainly during this very parliament this kind of defence or explanation was always accepted when it was offered by the administration. Repeatedly the hon. member for Kootenay West (Mr. Her-ridge) has asked me questions concerning the negotiations with regard to the Columbia river project. He wanted to know what progress we were making in the matter of price, what progress we were making with respect to other matters having to do with the Columbia treaty project, and I had to tell him repeatedly, and as an experienced and distinguished parliamentarian in this house he always accepted this, that it could not be done. I would say to him: "Of course, my hon. friend knows that while negotiations are under way it is not desirable or in the public interest to give such information". Then my hon. friend would sit down in the gentlemanly way in which he always sits down, and never did he take exception. Nor did anyone else; because it is obvious that if the government were to disclose correspondence between two governments in respect of a matter that is current and which, on that account, may be said to be in negotiation, such efforts would be prejudiced by publication of the documents. I cannot agree with my hon. friend when he says that the government has violated its defence against this motion by the action which he says it has taken from time to time by revealing in bits and pieces portions of


what normally could be said to be regarded as confidential. Certainly I cannot accept that statement, and nothing that the hon. gentleman has said justifies this allegation.
What has my hon. friend done, Mr. Speaker? He has quoted from public statements of personalities involved in the matter both in this country and in the United States. I had to take him to task because I thought he was out of order. His course involved a discussion on the merits. But the point I am seeking to make is that the quotations referred to by my hon. friend were not from confidential documents; they were statements made by personalities to the public press or to the communications system in one form or another. Nothing has been adduced here which could be regarded as being a portion of a confidential document, as is understood within the meaning of the words involved in this motion.


Paul Raymond Martineau: May I ask the minister a question. What has he to say with regard to the ruling or the explanation given by Mr. Speaker a few days ago, in which he stated that the confidential nature of documents does not constitute a valid objection to their production?


Paul Joseph James Martin: My hon. friend does not answer my question by introducing a question of his own on an altogether different subject, which is what he has just done. What I am doing now is to deal with my hon. friend's argument that the government, by bits and pieces, was revealing confidential information which it refused to give under this motion. I am dealing with that argument and saying-


Paul Raymond Martineau: On a point of privilege, I did not make that argument; I simply said that the fact that bits and pieces of these documents had already been referred to in debate in this house was a reason for their full production and disclosure.


Mr.   Marlin@Essex Easl: Well, I did not take issue with my hon. friend, but I suggest that this is not a question of privilege. I said that he has offered no evidence to substantiate the contention that the government was, by bits and pieces, revealing information that it was denying to the house through another procedure. The statement of the hon. member does not alter the situation when he says it is a purely Canadian matter. It is essentially a Canadian problem, but its final solution depends, as the hon. gentleman knows, upon the co-operation received from another administration in another jurisdiction. It is because of that that my hon. friend would agree, I am sure, on reflection, that it is not desirable to give information involved

Correspondence on Union Trusteeship
in processes which do warrant our characterizing the whole dispute as one which has not only a Canadian but a United States interest as well.
My hon. friend referred to the air traffic agreement and cited this as a precedent. He said that we must produce these documents because on another occasion the governments of the United States and Canada tabled agreements which had been concluded between the two governments with respect to air policy. I am sure my hon. friend does not really expect the house to take that argument seriously. The air agreements were concluded and negotiations in connection with them had terminated, and as a result the agreements between the two governments were made public, as is always done in matters of that sort. But my hon. friend forgot to mention that, when we were discussing agreements involving the security of the state not very long ago in this house, even those agreements had been finalized this house decided that they should not be produced.


Paul Raymond Martineau: May I ask a question. Does the minister consider that the present documents involve the security of the state?


Mr.   Marlin@Essex East: I did not say that. I was just dealing with my hon. friend's argument that every agreement between the two countries was tabled. That was the argument to which I was addressing myself, and I was pointing out the difference between the air agreements and other kinds of agreements, to bolster the suggestion I am now making that the argument made with regard to the air agreement has no application whatever to this situation.
My hon. friend would be the first to admit that while those air agreements were being negotiated any motion for the production of papers in connection with the matters under negotiation would be denied. That is exactly the situation confronting us at the present time. So, Mr. Speaker, I cannot believe that the hon. gentleman, in pursuing this motion, really intends us to take his motion seriously. I am sure that his experience as a member of this house establishes a justification for our belief that he knows that in a matter of such vital importance as this, not yet finalized, and involving the relations of the two countries, they would be concerned about the publication of these matters. This motion should not be accepted. I therefore resist it in view of the precedents in support of the position I have taken.


Frank Howard: Mr. Speaker, I want to make only a comment or two, if I may, with respect to the reply or the arguments of the Secretary of State for External Affairs (Mr. Martin). The whole nub of his
argument that these papers should not be produced revolved around what he classified as the public interest. It is oft times difficult to determine, especially when it is the Secretary of State for External Affairs who is speaking, whether he means the public interest or whether he means the government's interest. He expanded upon this question of the public interest to a point where, if I may paraphrase his remarks now, he said that it was never the practice in this House of Commons to give passage to a motion for the production of documents or correspondence with any other country in the world when the subject matter referred to by that correspondence was currently under discussion, because it might be prejudicial to the then current discussions or negotiations. I take it this was the argument.


Paul Joseph James Martin: I do not think I said "never." I said it was not the practice.


Frank Howard: The minister points out that he said it was not the practice. In essence, then, I am correct in the interpretation I have placed upon what he said, with the exception of the difference between "never" and "not", which might be a grammatical difference if anything.
We dealt yesterday with some motions for the production of papers, and I am sure that if the Secretary of State for External Affairs would just cast his mind back to yesterday he would find that this house agreed, because of the announcement of a minister of the crown, to produce just such documents and correspondence between Canada and the government of another country, documents dealing with a subject matter currently under discussion and negotiation. I refer, of course, to the correspondence between the government of this country and the government of the Soviet union regarding the halibut fishery, which is one of the fisheries covered by the north Pacific fisheries treaty, which treaty is currently under discussion between Canada, United States and Japan.
Surely the argument that it has not been the practice to agree to this sort of motion falls flat when we see that in substance, yesterday, we did agree to just such a motion. It seems to me that unless there is something which the Canadian government wants to hide, which may well be the case, this should be produced. My hon. friend the Secretary of State for External Affairs shakes his head, indicating, I take it, that there is nothing that this government wants to hide. The other side of the coin is, then, that it must be agreeable to disclosing this particular information. If there is nothing to hide, there is no reason why the government, apart from this nebulous question of public
4234	HOUSE OF
Correspondence on Union Trusteeship interest about which the minister talked, should not table and make public this particular correspondence about one of the most vital subjects that was ever involved in Canadian-United States relations. To me it would be a simple question-I am sure the Secretary of State for External Affairs agrees with this-to ask the United States government if they would be agreeable to tabling and making public the particular correspondence asked for in this motion.


Paul Joseph James Martin: I have already indicated that the proper spokesman of the government of the United States expressed concern about the publication at this time of these documents.


Frank Howard: Well, I express my concern too. But surely the minister could tell the house whether they wanted to say yes or no. If the United States government said no, I am sure that out of respect for diplomatic relationships, no one in this house would want to press the issue to a conclusion. But in the absence of any indication of that sort it seems to me that all the Secretary of State for External Affairs (Mr. Martin) has been doing is to use his usual reservoir of words to cover up the facts; that what he means by the public interest is, in reality, the government interest, and that he is trying to hide something from the Canadian public.


Mr. M. L. Klein (Cartier):: The reason primarily advanced as justification for the request for the production of these papers is the statement that there has been interference in Canadian affairs and that it is necessary to know the extent of this interference.
I should like, if it were possible, to see the documents which were exchanged between the C.I.O. and the A.F.L. and the seamen's international union, because it is here that the real interference in Canada took place.
It would seem to me that whenever there is an opportunity for this house to make a jibe at the United States, it does so. In my view it is far more important that we should accentuate those things which would tend to improve our relationship with the United States rather than try constantly to introduce questions which would divide us. I intend to refer, now, to a situation for which I do not say the entire blame rests with members on the other side of the house: blame rests with those who sit on this side, too. But I would say the country is sick to death of the manner in which we are still fighting the last election, and I say the demand for the production of these papers is merely a continuation of the election campaign.


Paul Raymond Martineau: On a point of order; as the Secretary of State for External Affairs


said a while ago, all that is pertinent to this debate are matters pertaining to the reasons why these papers should be produced or not. The hon. member has strayed far from that particular subject and I ask that he be requested to return to it.


Milton L. Klein: It would seem to me to be a prime principle of law that when a person introduces a subject we are entitled to answer that person.


Paul Raymond Martineau: That is not what the minister said. I must insist on a ruling and I am sure I shall be supported in this by the Secretary of State for External Affairs.


The Acting Speaker (Mr. Batten):: I must repeat what I said a few moments ago-and if it should be necessary to inform the house further, I may say that I am armed with a number of rulings made by previous Speakers. I would again point out that the question before us is whether or not the documents mentioned in this motion should be tabled, and we should confine the debate as closely as we can to that particular question.


Milton L. Klein: I am merely trying to indicate what effect the production of these papers could have. The one issue which supersedes all others is the precarious situation which now exists with respect to the wheat deal. It is important that this wheat be delivered. I have a strong feeling that if this correspondence were tabled it might seriously affect the conclusion of the wheat deal which we are so anxious to see completed. We seem to be debating this question on the assumption that this whole matter has now been settled, that wheat deliveries are going along fine and that Canada has no problem with respect to the biggest task which faces the country. Yet only last night it was reported-I forget in which newspaper-that seamen were leaving their ships in United States ports. This indicates the delicate condition of the present shipping situation.


Horace Andrew (Bud) Olson: Could I ask the hon. member a question? Is he suggesting that there is contained within these documents a threat, or something like that, from the United States government that either we knuckle under or our wheat deal will be in jeopardy?


Milton L. Klein: I am not suggesting that for a moment. I do not know what the documents contain. But I do know that filing these documents could not possibly improve the situation; and if it cannot improve the situation, why take the chance that it might worsen it? The question asked on October 16 was asked in connection with the proposed trusteeship. I suggest that the trusteeship is now in effect and that the filing of these documents

in such circumstances would be an anticlimax. The only effect the production of these documents could possibly have at this time would be to stir up a situation which this government at this moment has been able to pacify. The situation on the great lakes at this moment is quiet and I say there is far too much at stake for us to do anything that might jeopardize the wheat deal. I think we are living next door to one of the finest neighbours that any country could wish to have and I am certain that were we living north of the Soviet union instead of north of the United States many people would not dare to say about the Soviet union the things they say against the United States and its people. I believe it is in the best interests of the economy of this country, and especially in connection with the employment situation in this country, that we should do nothing at this time to imperil the thousands of jobs which will be created as a result of the wheat deal.


Some hon. Members:: Question.


Milton L. Klein: May I call it six o'clock, Mr. Speaker?


Some hon. Members:: No.


Mr. D. S. Macdonald (Parliamentary Secretary to Minister of Justice):: I should like to deal with this question on the basis of the so-called precedents cited by the hon. member who has lately resumed his place, and also on the basis of principle. However, I note that it is now six o'clock.


Mr. Deputy Speaker:: It being six o'clock, the hour devoted to consideration of private members' business has expired and the house will revert to the business which was interrupted at five o'clock.



INCOME TAX ACT

[Stage Direction]
The house resumed consideration in committee of Bill No. C-95, to amend the Income Tax Act-Mr. Gordon-Mr. Batten in the chair.
Herman Maxwell Batten: It being six o'clock, I do now leave the chair.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 7 p.m.
Jean-Louis Frenette: Mr. Chairman, at five o'clock this afternoon, I was concluding my remarks by quoting the words of a businessman who
28902-5-271
Income Tax Act
was wondering about the economic prospects of our country, considering the ever-increasing tax burden.
With your permission, I shall quote another distinguished businessman, namely Mr. Graham Towers, who said at the annual assembly of Canada Life Insurance Company among other things:
I repeat without hesitation the opinion I already expressed at our last annual assembly: the expenses at all levels of government and the taxes which they bring forth are so high that they are apt to slow down economy, increase costs and the trend towards import, and tend to increase the problem of our international balance.
The United States government, acting on the advice of numerous economists, is contemplating a tax reduction. And yet, its expenses account for only 29 per cent of the gross national product, while in our country it is 33 per cent.
At any rate, the problem is becoming increasingly acute. In fact, it is time to turn aside from the beaten track to give a fair try to new economic and financial doctrines.
Our group advocates something entirely new in this field. We do not claim to possess a monopoly on truth, but we sincerely believe that the steps we suggest should be taken as the situation makes it possible.
New capital, coming from the Bank of Canada, could be put to work a little at a time, for instance in the municipal loan fund, and it would mean new blood for our very ill economic body.
We are convinced that the beneficial results of those measures would prove us right and would open the way to splendid achievements for a stronger Canada, economically as well as socially.


Mr. Horner (Jasper-Edson):: I should like to make a few brief comments with regard to Bill No. C-95, and particularly that section of it relating to the incentive to industry. I think it should be made clear, and I do not believe it has as yet, that there is a large segment of the country for which this provision in the bill will provide no help at all, but that area will be expected to pay for it. I am talking about western Canada. I think it needs to be put on the record that we do not object to this. However, on occasion we have heard some objection in this house when legislation has been passed that benefited only western Canada. I think it should be noted that we in western Canada are going to pay in several different ways for the provision now before us. Since this is the case, I feel we have a right to comment upon whether or not this is the best way to do it. I do not think it is. I do not

Income Tax Act
think the minister has given us enough information concerning the giving of incentives to industry in these depressed areas.
Perhaps there are better ways of accomplishing his purpose. Has he or his department made any detailed calculations as to which method is going to give the taxpayers of this country the most for their money? As I have said, we in western Canada cannot benefit from this particular part of the legislation. We are just going to pay for it. When you consider the effect that the sales tax has had already in a province like Alberta, you will find we are paying double. This year construction is down 30 per cent as compared with a year ago. When you consider that this is a new part of the country, when you consider that we are trying to get new proces-ing and manufacturing industries established in that part of the country, then you realize that we are paying for this provision in a number of ways.
We have heard nothing from the minister, or in the detailed speech by the hon. member for Northumberland, as to other alternatives. Certainly, nothing has been said as to why we do not try other ways, why we do not use direct grants to get industries established in these areas. It seems to me there is an argument in favour of this method because it would do a lot of things. First and foremost, of course, it would provide capital for the prospective manufacturer to get started right away. Second, it would do away with all the red tape. I should like the minister to tell me how many more people he is going to need in his department to administer this incentive provision. How many inspectors will he need, how many clerks, auditors and accountants? This is a very indirect, complicated and discriminatory method of giving help in depressed areas. Can the minister tell me if his department has investigated these aspects, or will this just be another case of empire building within the department, and the provision of more and more men to curb private industry.
Perhaps the department could look into the possibility of providing facilities in those areas to encourage manufacturers to get started there. Has any work along this line been done? What are the costs going to be for what we are going to get out of this particular type of program? Has the department looked into the possibility of providing credit for manufacturers setting up in those areas? It seems to me that this would be a logical and much more direct approach to providing incentives for industries in those areas, and at a far less cost. This method would be better than the indirect method with all its red tape which has been put

before us. I say this section of the bill is bad because it is not going to do what we all want it to do. This method will involve a large civil service to administer it. There will be political machinations in connection with it. It is all very well to say that these are going to be designated areas, and not depressed areas, but this manoeuvering has already started. As I understand it, there has already been some political manoeuvring with this segment of the bill.
There are other ways that this could be done better. What is wrong with providing incentives to industry all across Canada, and then additional incentives in these depressed areas? This was the platform of the Liberal party at election time, that they were going to provide incentive to industry not only in depressed areas but right across the country. My Liberal opponent in that election came out and said, "You Tories did not provide the right climate in Alberta. You did not get a pulpmill in Whitecourt." The reason we did not was because the markets were not there and transportation costs were too high. You need some incentive to get that mill in Whitecourt. According to my Liberal opponent this government would do that; but instead it has come up with a very complicated mixture of red tape, and I will be very surprised if it provides any additional jobs at all.
Why not take the direct approach? Why can we not have a simple formula to provide assistance to industry to go into the designated areas? Why can we not have some program designed to increase Canadian participation in industry? There are other things which the government has already done for the designated areas, such as additional assistance under winter works programs and the speed up of government works in these areas. This is fine; we all want to see these areas improve; but this should not be done as a prop or through the form of a subsidy just to keep something going. It has to be something of a permanent nature. There has to be investigation and research to determine that it will be a long term thing, and that it is not just relocation of a plant from one city to another.
When the minister replies I would like to hear him say something with regard to the other methods that are available but which were not chosen. To me it seems a simpler method to give a direct grant to a manufacturer in order to encourage him to go into a designated area, and to provide facilities such as roads and rails.
Another matter which I want to mention deals with the designation of these areas and the criteria used to do so. We have read a long communique outlining how this is being done, detailing so many years unemployment figures and growth rate; but I would point out

that there are areas in Canada which have only recently been settled and which deserve some incentive. The whole existence of some of these more isolated areas depends on one industry, and one of the criteria which should be used in designating these areas ought to be an examination of the industry an area already has, and how to prevent it becoming a depressed area in the future. We can do that by providing encouragement for secondary industry, and this has specific reference to certain pulp towns and mining towns which, if they lose the one industry they have, become ghost towns. As an example I refer to Hinton, in my own riding, which is a pulp town pure and simple, and which has been seeking another industry for many years. I think it should be possible for the government to provide incentives so that it would secure a secondary paper manufacturing industry.
The same applies to many towns in northern Ontario. We have to do more than just take those things which are already there. We have to try to develop policies which will prevent areas becoming depressed in the future.
As I have said, all this government has done in western Canada so far has been to cost us a lot of money. We are paying through the nose. We are paying additional sales taxes, and now we will be paying for these incentives for designated areas. We want to be sure that our money is going to be well spent. We do not think it will now, because there is too much red tape involved, and once again I ask the minister why not make direct grants and provide credit and other facilities instead of doing it this way? The job could be done quicker, cheaper and with less red tape. As the scheme stands at present people are not going to know whether it is worth while for them to do anything at all.
I hope the minister's officials have studied what has happened in other countries and which is the best way to provide these jobs for Canadians. In western Canada we have felt over the years that we have been milked a little bit by the industrial east, and our great ambition is that we become more industrialized. We would like to see some incentive in that direction. There is wide scope for this type of incentive, and something should be done to encourage the manufacture of products presently being imported from other countries.
The government can only go so far in providing subsidies or support to try and make a particular area prosperous, because after all manufacturing must depend on the resources available and the supply of raw material. We have the raw material in abun-28902-5-2714
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dance in western Canada and many different types of industry could be founded on it.
I want to make it clear we do not mind paying an additional bonus to help the east out. On occasion they have helped us out; but we do want to make sure our money will be spent wisely. When he replies I hope the minister does not refer to the speech made by the hon. member for Northumberland, which was a very general, rambling sort of contribution which did not deal with specific instances or give details of the things that should be done. Instead I hope he will deal with this question of direct assistance to manufacturers.
There is one other comment I wish to make with regard to the anti-American segment of the bill. We in western Canada have been dependent upon American capital to develop our resources. I do not suggest this is an exceptionally good thing, but if it had not come in it is very doubtful whether these resources would have been developed to the extent they have been. We want to be sure that this capital will still come into the country. Of course we would like to see American subsidiaries have some Canadian content as they develop, but we do not want to scare them out because we need their capital for development.
Rather than take a negative attitude by increasing the tax on American money, the government should provide some incentives for Canadians to put their own money into the development of Canada. The positive approach would give us better results in the long term, and I hope the minister will give us some answers in that respect. I also hope he will take into consideration, in his financial manoeuverings over the next little while, that we in western Canada also need some incentives. We are just a young developing part of the country and we want our own industrial complex to provide the jobs which machinery is now taking away from our workers, particularly in the agricultural field. It is just as important to prevent areas becoming designated areas as it is to help them once they become designated areas; and I hope the government will take into account the very important old theme that an ounce of prevention is worth a pound of cure.


Mr. Gelber:: Mr. Chairman, Napoleon said every private soldier had a marshal's baton in his knapsack. I suppose every private member has a budget inside his coat pocket, which means that there are probably at least 265 varieties of budgets in this house. I should like to say a word in preface about some of the remarks which the Minister of Finance made in his budget speech. It was an important social document. The Minister of

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Finance said that it was both the policy and the responsibility of the government to provide for full employment in this country and to have policies directed toward that end. We did not have the provincial governments rushing forward and saying that it was their responsibility. This is a responsibility which the federal government has assumed and this is an important economic and social objective which was enunciated by the Minister of Finance.
There is another aspect of his budget address which has a very important social objective. It is not a major part of the program but certainly it is an indicator of his thinking and a milestone along the road. I refer to the very important provision for the retraining of men 45 and over. It showed an important, social conscience, an objective which can be enlarged upon and a significant departure in the economic policy of the country.
The Minister of Finance said that his budget was expansionist and it is this aspect of his budget and his policy about which I should like to say a few words in light of the legislation now before the committee. I believe it is expansionist. If this country is going to develop we have to encourage an increasing rate of capital investment. We must encourage capital investment. We must assure that we build the plants and factories, the arterial roads, the cities and the whole complex of industrial development.
The budget has provided very important incentives for the development of capital for building the physical plant and the complex in which the economy may develop and prosper. The hon. member for Northumberland, not in a rambling speech but in a very able speech, said that in the policies of the government there were aspects of discrimination. I think that is very true. Discrimination is the choice between alternatives, and the government must select those alternatives which it believes are important for the country and must encourage the development of the economy along those paths.
That is why the government introduced accelerated depreciation allowances. It is encouraging a certain type of capital investment. By allowing depreciation on equipment on a two-year basis the government is giving a most important incentive to investment. Special allowances for particular areas are again discrimination, in the terms in which the hon. member for Northumberland discussed it, in order to improve the productive capacity of slow growth areas. The special incentives offered in designated areas again are an important aspect of the encouragement of private investment in Canada.

It has been suggested that we should copy the policy proposed for the United States, with a tax cut. I maintain that the incentives which the government is providing are in effect an aspect of a tax cut. Instead of across the board incentives, it is providing incentives in several areas to meet special development. This type of discrimination, in terms of the more productive areas of our country, is an important aspect of the budget.
I have some figures here which I think are very revealing. They deal with the relative position of the budgetary deficits in Canada and the United States, expressed in terms of gross national product and adjusted for the two countries in terms of the comparative size. In the year 1960 the United States, in billions of United States dollars, showed a surplus of 1.2. Canada, in terms of Canadian dollars, showed a deficit of 5.8. In 1961 the United States showed a deficit of 3.9 while Canada showed a deficit of 4.8. In
1962	the United States showed a deficit of 6.4 and Canada showed a deficit of 11.1. In
1963	the United States had a deficit of 8.2 and Canada's deficit was 9.9.
This means, Mr. Chairman, that the area for manoeuvring by the Canadian government is that much less. It means we have used up some of that advantage, if there is an advantage, which is being advocated for the United States. We have used up some of that advantage.
There are other aspects in our economy which make our budgetary position less flexible than that of the United States. It seems to me that the government of Canada, in offering these incentives in specialized areas in order to increase the productive capacity of Canada, in order to encourage those areas of the economy which contribute most notably to the gross national product, is following an expansionist policy, and the legislation before us today is an important step along this road.
In terms of investment there has been a lot of discussion about withholding taxes. There is one aspect that has not been mentioned in the house. If the minister is successful in encouraging United States subsidiaries to become public corporations it will provide on the stock exchanges of this country a new series of blue chip stocks. One of the factors which is curtailing Canadian investment in Canadian companies is the limited number of securities in Canadian stock exchanges which can be considered to be blue chips. Some of the prime corporations of the country, some of the most important ones, are United States branch plants and as private companies are not available for direct

Canadian investment. Should the minister be successful by this gentle urging through the withholding tax in having some of these corporations become public corporations, it will open up a very important area for investment by Canadians in Canadian industry.
It seems to me that more can be done to encourage investment by Canadians in Canada. We might take a look at our succession duties and do something along the lines we did some years ago when we gave a 20 per cent income tax benefit. We might give a differential benefit in succession duties to encourage Canadians to hold Canadian equities. We might take a look at our taxing policies in relation to insurance companies in order to encourage greater investment of their portfolios in Canadian equities.
The budget has made important steps in the direction of making the economy of Canada more buoyant and more balanced and giving it the direction and leadership which it requires. In the legislation before us today we have new and important directions in Canadian policies which I believe entitle the minister to the support of the house.


Douglas Mason Fisher: Mr. Chairman, I suppose the Minister of Finance is aware that because a point of order was raised when he was speaking on the amendment to the motion for second reading of the bill and because of the tremendous spirit of co-operation that existed in giving second reading to the bill, we really have not had from him the complete review at the second reading stage that some of us had perhaps anticipated. Therefore I would hope that in the relative freedom of the committee he will take the opportunity to do something about it.
I might comment, Mr. Chairman, on how delighted I was to hear the generous spirit expressed by the hon. member for Jasper-Edson. He may remember that a number of years ago the C.B.C. had a satirical program on the various crests and mottos in different parts of the country. The Ontario crest was the three gold balls of the pawnbroker on a black velvet background with the motto, semper non vaca, which meant in substance: We are no milch cows for the west. It seems to me that the hon. member should be advocating something along the same line, some kind of golden cornucopia overflowing with wheat in red on a white background. I do not know what motto I should recommend to him, but certainly the generosity of spirit he displayed is the kind of thing that warms the hearts of all of us in Ontario, particularly those of us in areas of Ontario through which the grain from the west passes.
The point I want to speak about relates to something that has been beaten pretty hard,
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the question of incentives. I should like to be able to accept, with the grace with which the hon. member for Northumberland gave her analysis, her appraisal of what were the weaknesses of the present set-up for determining designated areas. I think this is one of the sloppiest bits of designating that one can imagine. I am not blaming the minister and I am not blaming the new Minister of Industry. It really relates to the weakness of the federal organization in the statistical and economic field.
We have the dominion bureau of statistics. We have the economics and research branch of the Department of Labour. We have certain statistical work being done in the Department of Trade and Commerce as distinct from the bureau of statistics. Yet in none of these agencies have we really had any concentrated work upon the problem that is involved in determining designated areas.
I can give some excellent examples from my own region to point out the injustice of this particular kind of designation. I would fasten the blame, and I think some blame should be fastened, on the people who were in charge of the Department of Labour in the past, including the senior officials and the minister, for their failure to give the economics and research branch an establishment and directives to go out and collect the information. There is a certain irony in the fact that the best series of statistics and the best analysis we have had of the whole problem were provided by the Senate committee on manpower a couple of years ago. Much of the material was ad hoc to the situation at that time, and this body of material which was established seems to have faded away. At the present time we have a crash program in the Department of Labour to try to meet the situation. The Minister of Industry and his deputy are recruiting as quickly as they can a whole group of people to undertake the assignments set out by the act in the determination of the national effort of area development. When you look at the formula which has been developed here for designated areas, they have nothing to start with in terms of a really precise or flexible economic tool.
I should like to give a couple of examples to show this in relation to my own area. I would argue to both ministers involved- there is really a third minister as well, the Minister of Labour-that the age composition of an area's population is a much more important factor to be considered than just the number unemployed during the summer months. It seems to me that what we want to be concerned with in addition to age composition and the resultant number of people who will be going into the labour force is the

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possible mobility of certain regions in relation to other regions where there is a better growth potential. One of the specific things we need to know is more in terms of, you might say, individual watersheds of industrial production. We need to know much more about the effect of the establishment of a new plan upon the real growth in a number of jobs.
One of the things which is really ridiculous in relation to my area is that we have made a study, a study encouraged by the federal Department of Labour, although two years ago they were not able to give us any statistical help or the help of any economists. We were not able to get statistical help from the provincial government either, because it was no better fixed-probably worse fixed- in this field than the federal government. We established a commission of an informal kind which was taken quite seriously. It published its report and we now know how serious is the situation. Yet we could not possibly come close to qualifying as a designated area because of the peculiar kind of economic base which we have to our industries.
One of the things which has happened in the woods industry over the last five or six years as a result of the introduction of mechanical techniques is that more and more wood is being cut in the pulp forests in the summer instead of in the winter. As a consequence of this, the summer, which used to be a slack period in terms of bush work, is now a busy period and the winter is the tough period. The winter is also a tough period in terms of people who work in the transportation industry and the grain trade.
This particular transition or change in the woods industry is not really reflected as yet in the statistics under which designated areas are worked out, yet it is a fundamental fact that it is one of the flaws in our economy at the present time. We have a tremendously high number of unemployed in the wintertime. In the summer things go relatively well. We happen to be an entrepot of the west and most of the big traffic from coast to coast goes through because of the fact that we get this summer work in the woods cutting the pulp for our paper mills.
The situation as determined by our northwestern Ontario commission on employment is a rather grim one. It may be put this way in very simple terms. They say that between 1951 and 1961 the twin-city population increased by over 25,000 persons. In other words, we were really in on that great big boom in the early fifties. Young people came in and married, a lot of homes were established, and we are now being flooded by school construction to meet the burst of

children in the high schools. Yet although we should be planning and taking advantage of incentives to meet the problems two, three and four years ahead when these people go out into the market, because of the particular statistical base used for this formula we will not be able to take advantage of these incentives at all. This report points out that our population has increased by 35 per cent and that job opportunities have increased in that period by 12 per cent. The immediate result has been an increase in unemployment, particularly since 1956. There are about three times as many unemployment insurance registrants now as there were in 1956, and over six times the number in 1951. The population increase will have its major effect on employment between 1963 and 1970. Here is the point: our crisis is almost on us, but it is not reflected in the present statistics. Yet now is the time in all reasonable terms to establish plants and receive the incentives offered those kinds of projects to get under way. We really cannot get any advantage out of this present formula. The report goes on to indicate that by 1966 there will be at least 1,200 extra job seekers coming each year from the schools. Our present rate of increase in jobs is about half the required rate. It is obvious that our most strenuous efforts will be necessary to meet the employment problems of the sixties, the report concludes.
The hon. member who lives in Guelph- I have forgotten the name of his constituency -raised cain about the problem of Brantford compared with Guelph and Galt. I have some sympathies with him, partly because of the fact that Brantford, if it is an area which can be properly designated, happens to be a fairly concentrated industrial region, where areas are short. On the question of labour mobility, what are we going to do in Port Arthur when people cannot get work and there is also nothing in Fort William? Your nearest industrial centre is 500 miles west to Winnipeg, or 850 to 900 miles to the east down to Toronto or over 600 miles to Sudbury. This is a terribly difficult factor in terms of encouraging people to move and to exchange. As a matter of fact, the mobility in our region has been very high. One of the reasons is that we happen to have the kind of people who came in and settled fairly recently in our area, and who are prepared to go out and look for jobs. Therefore they will head out. But this is going to become much more difficult for these young people, particularly the ones coming along who are not going to be able to take advantage, perhaps because of a lack of talent, of some of the more attractive opportunities. I do not know what we are going to do with these people,

and this legislation will not do them any good either. This is one of the main criticisms which I have of the designated area formula.
The other criticism I have again relates to the complete unselectivity of our area. The town of Geraldton is 125 miles away from Port Arthur, deep in the northern Ontario bush. Yet it is in the Port Arthur district. The town of Geraldton has a population of 5,000 people. I want to take another town, the town of Sioux Lookout in the riding of Kenora-Rainy River, which has a population of a little over 2,000 and is about 150 or 160 miles from Kenora, which I understand is the district base for the figures used in the formula. Neither Geraldton nor Sioux Lookout has added any considerable growth in job opportunities in the last decade-particularly Sioux Lookout. I talked to one chap who recently established a lumber mill in Sioux Lookout and he was quite bitter about this legislation, or the intent of it, because of the fact that he will not have the opportunity really to apply it in a tough town, tough in employment terms, which I am sure will probably meet this particular situation, because the town happens to fall in another district. The same applies to Geraldton.
There is one other factor which is not looked at in relation to this formula, and again it comes back to the question of mobility. Sioux Lookout happens to be my home town. The job opportunities have not grown there at all; they have diminished and diminished. But the young people have moved away, and the fact they have moved away gives a false picture in terms of the opportunities of the formula used in terms of growth. It is for this reason that I feel we must request a crash effort on the part of the Department of Industry in particular to make this designated area formula more flexible, and it must take into account more factors than it does at the present time.
One of the advantages which would be gained if this was done, it seems to me, is that we would overcome the psychological block involved in this designated area-depressed area idea. It seems to me that if the formula were more sophisticated there would be less hesitation on the part of groups such as chambers of commerce to see their area designated, and there would be a tendency for them to take a closer look with a deeper insight into the problems of their areas in economic terms.
The last point I want to make in relation to this is one of the most galling features of the federal structure in a federal society. I could give as an example the difficulties we encountered in trying to get this commission started, to obtain support for it and to get a report
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out. The hon. member for Fort William will, I am sure, agree with me as to the problems we encountered. Businessmen and people in public life in our area were concerned about the tremendous burgeoning of young people in our schools. We could see there was struggle ahead and we decided it was our responsibility to face the situation and do something about it. We went to the provincial government. They said: we do not see any way to help you; you should see the federal government. So we went to the federal government. We sent delegations down and we pounded on a number of doors. The Minister of Labour said: Don't come down here and tell me things are wrong; tell me what is wrong and what you want me to do about it. We responded to that challenge and we began to prepare some material. We needed sophisticated help; we needed the help of some expert economists. But we were able to get the help of one economist from the Department of Labour for a week or ten days, only. We managed to scrounge some funds from one of the provincial agencies and for that we were very grateful. But here again the help was very limited. The province could not come forward with any real assistance as far as statistics were concerned. They are not set up to provide this kind of assistance and there seems to be little indication that they are moving in that direction in Ontario. When we finally got our material prepared, we ran into a difficulty which is inherent in a private effort to get at the roots of the trouble in an area. A number of the people who had shared the work of the commission or who had contributed to it were very discouraged by the prognosis which was reached. They felt that if it were divulged in detail a great deal of harm would be caused to the future of the area. I did not agree with this view. It was not my wish to complain, but I felt one should face up to realities. However, I could understand why they felt the report should be played down. In the event, it was played down and this report never had the impact which could have been expected. But no wonder they played it down. We gave the report to the federal authorities. We said: Here is what we have found; here are our recommendations; what can you do about it?
What did we find? We met with weeks and months of silence. I believe the hon. member for Fort William made various representations. I telephoned, wrote and badgered. Finally, we got out of the deputy minister of the Department of Labour one of the cagiest letters I have ever received, expressing a tremendous amount of sympathy but no real response. In essence, he commended our recommendations but said there was nothing to be done about them. This, to my

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mind, illustrates the sad state of economic analysis and the tools we have available to do something about the intentions of the government in this field, good as they may be. I think this press release which the Department of Industry put out amounts, really, to a tremendous condemnation of the educational system of our country, or the civil service of this country, or of this expertise we are supposed to have built up, as we have created this huge civil service. I am sure that if we were to take this proposal to the United States, to some of their economists, they would choke on the formula which has been advanced, because of its rudimentary, primary character.
I am not put up by my party to try to amend this particular proposal for designating areas, but I should like to do what a number of other members have done, that is, to appeal for something immediate, something quick, to convert what is one of the rudest rules of thumb I have ever seen to something that is more useful and more understandable than this formula-something which could be applied to many more areas so as to take care of a number of variables which this press release and the statement by the minister seem to have ignored almost completely.


Mr. Greene:: I should like to align myself with the hon. member for York South in saying that the budget, which is the precursor of the bill we have before us tonight, will go down in the history of this country as a most important document.
I think it will be remembered largely as showing for the first time the road which I think Liberalism will take in the future. This involves not only what is encompassed within the budget but what is contained in ancillary bills such as the measures setting up the Department of Industry and the economic council. These measures, taken together, indicate I think that in the future this party will devote itself to massive intervention of government in the direction of business and industry for social ends. I think this type of Liberalism has been propounded in the United States very largely by Professor Galbraith and is known there as Galbraithian liberalism. I think this is the first example in Canada of bold Liberal intervention in what was formerly a sacrosanct precinct of private enterprise. I think, also, that in a few years this may lead to something which has been badly needed in this country for many years, namely a clear and definite distinction between the two old parties in this house. I suggest that the party of hon. gentlemen opposite, from the speeches I have heard and, quite properly, by virtue of its historical
background, is more inclined to shy away from this type of intervention into the private sector of the economy.
The Leader of the Opposition has often championed the supremacy of the individual. He has often expressed fears about the intervention of government in business affairs because of the fact that it might encroach on the rights of the individual. I am not one who has ever scoffed at this very genuine fear. Yet I think we on this side have determined to face this challenge and accept the fact that it is necessary for government to intervene for the sake of achieving the satisfaction of certain social needs and purposes. I think possibly that in future years this will be one of the great distinctions between the two major parties, the one favouring massive government intervention for social purposes and the other, possibly, favouring a more restricted type of private enterprise with less government intervention. If the parties could divide on these lines I think it would give the electorate a much clearer choice between the parties than has been the case in the past and I think it would be to the political advantage of the nation as a whole.
With respect to the members of this house I think also it might be an advantage, because certainly the massive intervention of government in business and industry and in what were formerly purely private affairs will be a challenge to see to it that these new encroachments of government do not impair the rights and liberties of the individual to too great a degree. It may be possible that in future years it will be the role of the private member to guard zealously against the encroachments of the rights of the individual during this new march of government into an area which was formerly an area of private affairs. If that be the case, that, too, will be to the good, because it is possible that this house will become something more than a private theatre which plays a little act every day before a select audience in the press gallery, which is apparently its main purpose of existence today.
Having stated that proposition, as a member of the party which sits on this side, may I say I agree 100 per cent with the general premise that it is time the government intervened to a very large extent in business and industrial affairs, as the budget and the other bills which I have associated with the budget, are set up to do. However, I must confess that, though I support these measures generally, and support this party, and believe very sincerely that its leadership is exactly what is needed in this country today and is the best possible leadership available, I still

do not agree entirely with the details of the measures presented. I am familiar with the precepts set down by Mr. Edmund Burke which are probably those followed by most hon. members. I may say these precepts are so highly regarded by the hon. gentleman in the other place who sometimes writes editorials for one of the Ottawa newspapers, as to be held almost sacrosanct. Burke would say that having encompassed a belief that a bill is for the good of the country as a whole, a member is not a delegate of his constituents but was in parliament to do as he thinks best for the nation as a whole. That was the gist of his great Bristol speech. If we accept that principle then, at this time, I should have to sit down.
However, Mr. Chairman, 1 believe that in a federal state such as ours a member is to a far greater degree a delegate of his constituents than he is in a unitary state such as Great Britain. I do believe that even though a member may agree with the legislation and with the leadership of his party, he does have a duty to speak for his constituents. When he is a member of the government party, this is always a difficult choice, the choice between duty to his constituents and loyalty to his party. I feel it my duty to point out to the minister, and I hope that my words may have some effect, the slight defect in the measure, as compared with the measure as a whole, which affected my constituents.
I refer in particular to that provision which is, to some degree, to the detriment of my constituents, relating to the designated areas and the manner in which those areas are selected. I appreciate fully that this is something new, a new approach in keeping with the policies and philosophy of this government. They have moved boldly into a new field, and in so doing they have been honest enough to admit that at times they have not achieved perfection overnight. I suggest that in this area there is room for improvement, there is room for development. I am going to take the liberty of suggesting an area in which there is room for improvement. I think the method by which these designated areas have been selected has, at least in isolated instances, brought inequity to certain municipalities. I point, in this case, to an editorial in the Renfrew Advance. It is the follow-up of a great deal of editorial and news commentary in the newspapers in my riding. While I do not hold a slavish respect for the press, at times they are right. I suggest that this editorial is a correct one. The editorial is entitled, "Depressing", and reads in part as follows:
The "distressed area" legislation planned by the federal government has, like many programs of
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this government, run into criticism. And whether or not the legislation is any good, very obviously, the reasoning whereby the slow growth areas were chosen for special assistance in Renfrew county are downright silly.
As pointed out by industrial commissioners here "if Deep River is a depressed area, then Renfrew is a ghost town".
Deep river, of course, falls within the national employment area centering on Pembroke but it is obviously not a community desperately in need of special tax assistance as proposed by the legislation. Yet it qualifies for special assistance and tax concessions.
It is probably difficult to define exact areas of need but statistics or not, we cannot see how Renfrew county can be divided into two areas, one prosperous and the other depressed. It is just not possible.
I suggest that the rules of the game, as they were conceived, resulted in just this situation. We certainly have a contradiction here. For instance, the municipality of Deep River, which as hon. gentlemen know is the home of atomic energy projects, probably never had any unemployment. On the other hand, the town of Renfrew has striven valiantly to attract industry. It has appointed industrial commissions, hired industrial commissioners, and has done everything possible to attract industry. It is not easy to attract industry into areas such as the Ottawa valley. I point to the statistics which show that in the year 1894 the population of the town of Renfrew was 2,568; in 1901, 3,153; 1930, 5,019, and in 1962, 8,555.
I suggest that this surely indicates better than any words of mine could that this is a slow growth area. When this legislation was promulgated it was obvious that some means had to be found whereby these depressed areas might be defined so that the benefits of the legislation might be given as soon as possible. It was equally natural that the standard to be used would be the unemployment insurance areas or the national employment service areas, as I think they are properly described. This was a standard that the Department of Labour had used, and with which they had been working for many years.
However, these areas had not been set up in the first place as a means of deciding whether or not an area would get tax incentives. This consideration had not entered the matter at all. Often the areas grew up haphazardly. There is a possibility that some of them grew up through political considerations, or as a result of the facility for travelling for unemployment insurance officers. However, now they are being used to determine who gets the benefits. Inequities are bound to result from this situation, but I hope such instances are isolated and I believe they are.

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We must bear in mind that over the past 15 years there has been a tremendous competition, certainly in the province of Ontario, among urban municipalities, small and large, for industry. This had nothing to do with the unemployment insurance areas. It was the municipalities themselves that were competing with one another for industry. Now that we have chosen the unemployment insurance areas as a standard, the result is that some municipalities are preferred over others and in many cases the one municipality is equally as well off as the other by any other test, except the specific test we apply of these unemployment insurance areas. I have cited one example, the municipality of Deep River, which is undoubtedly one of the most prosperous in Canada. It is now in a designated area and entitled to tax incentives. The town of Renfrew, however, with many unemployed, with plants closed and without industries that were once thriving, has been found to be unworthy of incentives. I suggest that there were bound to be some of these areas in which mistakes were made as a result of setting up a definite, immovable, set of statistics as the only guide.
In my humble submission, I think the task of selecting areas is closer to a judicial task. We deplore ad hoc decisions. Let us set up a tribunal to decide each case on its merits. There is a tendency for top level civil servants to fear political interference in such a case. Surely, there are areas in which this type of decision must be made on the merits of each case by an impartial tribunal. I believe that in this land we have grown up to the point that we could appoint that kind of tribunal, if need be, and that kind of tribunal could operate without fear of political interference. This type of tribunal, in making its decisions, would not be bound by eight years or three years. I do not see how you can say with certainty that it is only the statistics for eight years that decide whether or not a community needs help. I have cited these statistics to show that this is one of the older, settled parts of Canada which has grown almost imperceptibly in the last 50 or 60 years. In the case of this municipality the test is, has it not been a slow growth area for 50 or 60 years and not just eight years? Unemployment is not the only test.
In so far as these statistics are concerned, it is difficult to determine what percentage of the unemployment was industrial. We have had to include construction workers, workers in hospitals and in old age homes, people of this nature, who are not separated from industrial workers in the statistics kept by the Department of Labour. The whole purpose of the legislation, of course, is not

related to people who work in the service industries, but is to encourage industrial growth.
I suggest that to some degree we have used the production of oranges to determine whether we should grow bananas. I think in so doing in isolated areas errors have been made, and I submit that the Minister of Finance, as I know he will, and also the Minister of Industry, as was inherent in all their speeches on these matters, will see to it that there will be a continuing review held so that a second, third and fourth look may be taken at some of these areas where inequities have resulted. I am sure every attempt will be made to right the wrong so that with two municipalities, one as poverty stricken as the other, as is the case between Pembroke and Renfrew, 40 miles apart, one will not suddenly lose all hope of getting industry which now will go to the other. I have every confidence, from the leadership that this government has shown, that inequities of this sort will be reviewed and righted in the not too distant future.
I would like to point out one other thing to the minister in this regard. There is another area on behalf of which, as the delegate of my constituents, I would like to register a complaint concerning this incentive type of legislation. It concerns the quasi rural areas. I do not believe that in those areas the incentives of quick depreciation and tax incentives alone will bring new industrial growth and employment. I think there are areas where a very special type of aid, possibly capital grants, possibly some other type of help, will be needed if the people in them are to have the opportunity of employment and share in some degree in the growth of this great land in the future.
We have seen that this government implicitly approves of that type of thinking by virtue of the fact that it has given $100 million in capital grants to the Atlantic provinces, where that type of special help, over and above these incentives, was needed. The only problem is that the maritime provinces are a large area. They were able to bring strong representations before this house, both to this government and to the previous government, to sell their needs. In addition they have had powerful cabinet ministers in office, both with the previous government and this government, who were able to sell the needs of the maritime provinces. But isolated areas, whose need I submit is just as great, areas such as those in the west end of my riding, are not able to muster this large group power to show their needs. They are not able to do much more than send one inept voice to this house in order to plead their cause.

In this regard I would point to a few more statistics. The west end of my riding was great lumber country at one time, but now the timber resources are depleted and nothing has come to take their place. I do not think anything will come to take the place of these resources, unless the government helps in some way, and I would point to a few statistics with regard to the west end of my riding to show the need in that matter.
Again we are dealing with one of the oldest settled parts of Canada, close to our great national capital, which one would have thought would have developed and shared in the growth of the country by its very proximity to the national capital, but such has not been the case. In 1930 the population of Eganville was 1,026; in 1962 it was 1,490. In 1930 the population of Killaloe was 560, and in 1962 it was 905. In 1937 Barrys Bay had 1,051 people and today it has 1,442. In 1861 the towns of Brudnell, the townships of Raglan, Lyndock, and Radcliffe had 1,023 people. Today they have 971 people.
The people in this area have largely stayed there. They are third and fourth generation Canadians, most of them of Polish descent. I know there is a great emphasis today, as there must be in our economy, on efficiency, and efficiency dictates that these people move to the metropolitan areas where, for the purposes of efficiency, great industrial plants exist. Efficiency dictates that they get out and leave their homes, but it is the tradition of this party that we do not expect people who wish to remain in their homes, who have stayed in them for three or four generations, to leave them merely for crass economic reasons.
I would point out that these people are efficient people. During the war we had an aircraft industry which came into the outskirts of the area I have been speaking of, the outskirts of Renfrew. I spoke to the head of one aircraft plant, a man who came over from England and who had been running an aircraft plant in England for many years. I asked him how did these people, these Polish people from the west end of south Renfrew, fit into an aircraft factory. I thought they might have been square pegs in round holes, but he told me that in all his experience he never had people more adaptable or who became more quickly expert and efficient in the aircraft industry, even people in Great Britain who had worked in that industry for many years. It was bound to be that they would be self-sufficient and adaptable, because anyone who has scratched out an existence in that country for three or four generations has had to be adaptable.
I suggest, Mr. Chairman, that in these areas we will not only serve these people well but
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we will serve Canada well if in some measure we develop larger scale incentives for smaller areas such as these, in just the same way as we have seen fit to do for the Atlantic provinces. Just because these people are not in large areas and cannot speak in great and powerful groups, it does not say their need is not the same. Their problem is the same and if there should be, as I agree there should, $100 million for the Atlantic provinces, then there should be similar incentives for areas such as the west end of south Renfrew, which for a period of 100 years has gone forgotten and ignored.
I would that these Polish people had their own Chopin to play a polonaise today to persuade this house of their needs, because if the Polish people in the old country have suffered over generations under the heels of oppressors, surely our Polish people here are suffering just as greatly; because it hurts just as much to die through 100 years of economic attrition as it does under the heels of an oppressor. I urge that the minister take a second look at some of these areas which are in need of very special incentives, and I may say I am sure there are many others of a similar type all across Canada.


Mr. Slenson:: Mr. Chairman, I feel compelled to say a few words on the amendments to the Income Tax Act outlined in Bill C-95. I have refrained from speaking as often as I should have, but this legislation affects my constituency as well as many others to such an extent that I feel obliged to say a few words about the act and the proposed amendments. I am referring in particular to section 15.
I would like to congratulate the hon. member for Renfrew South on the statements he has just made. I have always felt that a good many members on the government side must be disturbed about this bill. When the Liberal government selected the depressed areas on the basis of unemployment figures for the summer months instead of the more important winter months, it is apparent many of the designated areas would not have qualified for this special attention if the figures had been taken for the winter months.
I think it was entirely unfair and extremely unrealistic for the federal government to try to design any formula to control the basic trends and developments which, in the course of events, could be rectified by the law of supply and demand. This new action the government has instigated will confuse the issue further through the movement of industry from stronger industrial centres to those designated as distressed areas. This movement will develop new areas of labour distress and in all probability will not solve

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the problems of those areas which are designated as being in need of new employment opportunities.
The employment figures in Peterborough and other cities that enjoy increased summer activity due to the tourist influx are raised by this activity which lasts only a few short months. This type of employment does not demand a high wage scale. I would not suggest that Peterborough be included among those cities designated by the federal government as distressed areas. We listened to the hon. member for Northumberland make a very good speech last Friday. I know she would not want to see Peterborough designated as a distressed area, nor would I want to see her constituency designated as a distressed area. But this is what is happening in western Ontario around Windsor and Brantford. Cities that have hired industrial commissioners to tackle this problem or which have set up strong committees within their own councils or chambers of commerce are going to find this a hazardous blow to their communities.
Mr. Karl B. Hines, president of Nashua Canada Limited, wrote a letter to the Peterborough Examiner several weeks ago noting the hazards of the depressed area legislation from an industrialist's point of view. He noted that a difference of 130 jobs put Brantford in the depressed area category but kept Guelph out. As the Peterborough Examiner comments:
Soon after this was revealed, Magnetic Metals of Canada moved from Guelph to Brantford to take advantage of Brantford's preferred position. Its departure could conceivably put enough people out of work in Guelph to qualify that city for depressed classification, and its arrival in Brantford may reduce the unemployment population ratio below the depressed level.
All the legislation is doing is shifting jobs rather than helping to create them. I am only mentioning this to show that areas other than western Ontario are worried about this legislation.
I should like to ask the Minister of Justice if he discussed the planning of the new penitentiary at Warkworth with the Minister of Industry and why he did not place it in a depressed area. I am very happy that he picked Warkworth, which is in Northumberland riding, but it bothers me why the government did not see fit to have it set up in a depressed area, for this is what he is asking private capital to do.
I should like to ask the Minister of Public Works where he is going to build the new Royal Canadian Mint. Maybe the hon. member for Renfrew will receive this new building.

To come back to the question of industrial commissioners, I should like to ask the Minister of Industry or the Minister of Finance what help the government is recommending for these commissioners or new industries not contemplating moving to depressed areas. I am told that commissioners trying to secure industries for their particular areas are met with a blank stare and aloofness when they confront members of the government in Ottawa to inquire about federal aid. They are told that new industries should go to the designated areas.
I realize the concern that is prevalent in western Ontario but I can say quite frankly that this same concern, no matter where you go, is felt all across Canada. The formula which is being used shows that a difference of a few tenths of 1 per cent in the unemployment ratio to population is all that is required to bring an area into the designated class and at the same time leave out other areas. If a complete and more realistic analysis were made of the situation, it is entirely probable that Peterborough would be found to be in the same situation as Brantford. A complete section appearing in the Financial Post a few months ago on the city of Brantford indicated that they were experiencing unprecedented development in the growth of their existing industries and the arrival of new ones.
I would ask the Minister of Finance and the Minister of Industry to reconsider seriously the legislation which they have introduced because I feel that the 50 per cent straight line depreciation which is being allowed companies that are settling in designated areas should be extended to all types of industry, whether or not they are controlled by foreign interests. If this were the case it would provide an incentive for all types of industry, no matter how they are controlled, to expand their production activities and thus provide additional employment opportunities.
We in Peterborough feel that the industries already located there should have as much consideration when they expand or increase their productivity as new industries are being offered at the present time. Why should they not have the same advantage as competitors? I feel the same way about this matter as the hon. member for Wellington South. The clause pertaining to industry should be withdrawn, as it makes for a most discriminatory piece of legislation.
Before I sit down I should like to point out to the Minister of Finance the increased trade this country has received and is still receiving due to the aggressive steps taken by the former minister of trade and commerce. This was accomplished by one man

and the staff in his department. One cannot help but wonder what the outcome will be, now that the Liberal government has set up its Department of Industry. We know about the great numbers of staff they are accumulating to deal with these problems, at a tremendous expense to our country, and we wonder whether the results will justify this expenditure when so much was accomplished by so few under the last government.


Walter Lockhart Gordon: Mr. Chairman, in rising to answer some of the questions that have been raised on clause 1 of the bill perhaps I may be permitted to deal with one or two of the questions that were raised earlier in debate. Before doing so may I say I am sure the Minister of Trade and Commerce would join me in agreeing with the hon. member for Peterborough that the ex-member for Broadview, who at one time was minister of trade and commerce, did do a good job. I should like to see him back in the house some day.
Many suggestions have been made during the course of the debate about ways to improve the Income Tax Act and, as I said earlier today, the officials of my department are making notes of all these points. I am thinking particularly, as I said earlier, of the point made by the hon. member for Quebec West and others about charitable donations. I am thinking about the point made with regard to deductions for part time students and a number of other suggestions that have been made for concessions and assistance to various worthy groups in our society. These will be recorded and they will be studied and considered before the next budget.
I do not think it would be profitable to repeat the remarks I made at the outset of the debate on second reading, which was over two weeks ago, as to the objects and the purpose of the bill. If I may, I would, however, like to refer to one or two of the speeches that have been made. If hon. members will cast their minds back a couple of weeks they will recall the interesting and wide ranging speech made by the hon. member for Nanaimo-Cowichan-The Islands in which he discussed, among other things, the whole process of budget making. He also referred to the effect that the United States interest equalization tax might have and suggested that Canada might take the lead in finding a solution to the international balance of payments problem. I can assure him that Canada is prepared to take an active part in the studies on international liquidity that are now being undertaken by the international monetary fund, and by some of the more important countries that are associated with that fund, including our own.
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On other occasions both the Prime Minister and I have referred to the preparation of the annual budget, the way it is proceeded with in Canada and ways of improving it. There are those who suggested that they prefer the United States system under which the administration makes proposals to congress which are debated fully before the final legislation is decided upon. There are advantages in that approach and there are also disadvantages so far as tax changes are concerned. I suggest that it gives ample advantage, perhaps too much advantage, to powerful lobbyists to block measures which, while perhaps advantageous to the public as a whole, would be restricting the privileges and preferences of certain interest groups. In any event, our system of government is quite different from that of the United States. We do not have the same separation, as all hon. members know, of the executive and legislative arms of government, and for this reason I suggest that their system would not be appropriate for us.
It has been suggested that we should hold public hearings prior to the presentation of the budget and solicit suggestions and proposals in this way. We have given a lot of thought to this. If it were done it would be necessary to create some sort of board or permanent commission of officials to receive representations and have them argued out before that board or commission. I have not been able to think of any way to do this which would not involve considerable duplication and overlapping of functions and administrative machinery. I suggest that periodical public debates and representations from interested groups can be extremely valuable.
Usually, in our country royal commissions are established for that purpose; and I would remind hon. members that the royal commission on taxation is holding hearings at the present time and will probably go on doing so for some months to come. However, I do not believe that some kind of permanent royal commission would be helpful. I do not quite know what the answer is, although I think the question deserves a great deal more thought and study. In the meantime I should like to take this opportunity to invite special bodies, such as the Canadian Labour Congress, the Canadian Chamber of Commerce, the Canadian Federation of Agriculture, the Canadian Manufacturers' Association, the consumers groups and all other interested groups and associations, to submit their annual presentations to the government as early as possible, and in any event not later than January 31 of next year. I should like to extend a similar invitation to any individuals who may have representations which they would like to submit. In this

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way there could be at least some public debate of the proposals which these main associations wish to put forward well in advance of the time when budget decisions are made, and I propose to write to all the principal organizations to this general effect.
A lot has been said during the course of this debate about designated areas, and I would again, with respect, refer hon. members to the speech made the other day by the hon. member for Northumberland. I do not think anyone has suggested that the formula proposed is perfect. A number of criticisms of it have been made. I think it should be remembered, as has been said, that the formula will be subject to change and modification. On the other hand, I suggest to hon. members that if we wait until we get the perfect solution to this or many of the other proposals included in the bill it will be a long, long time before we accomplish anything; and with the greatest respect I suggest that we will make more progress if we proceed with the measures which have been proposed, even though some of them may not be perfect. Then, as we discover through experience their defects, if there are defects, we will proceed to amend them and improve them.
I do not think it would be helpful at this stage of the debate to deal with all the questions which have been raised on the detailed items included in the bill; I think we will make more progress perhaps if we do that when we come to the relevant clauses. However, I should like to deal with a number of the points raised by the hon. member for Edmonton West in his speech the other day, some of which he made before, during the debate at the resolution stage. The hon. member raised the question of the desirability in certain of these clauses to place the emphasis on residence rather than citizenship. This arises in connection with clause 28 which deals with Canadian ownership and control. The hon. member's remarks concern the rule which refers to ownership of 25 per cent or more of the shares of a corporation by individual residents in Canada and to the rule that 25 per cent of the directors must be resident in Canada. The Canadian Income Tax Act taxes on the basis of residence. This concept is well established and understood. To introduce a test based on citizenship would, I suggest, introduce a completely new concept into the Income Tax Act. Moreover, such a rule would require corporations wishing to qualify as Canadian under the 25 per cent share ownership test to inquire into the citizenship status of- perhaps the hon. member did not mean of their shareholders, but at least of their directors.

I have some reservations about this proposal. Residents of Canada have to have homes here and are part of the Canadian community. There is no guarantee that a citizen in the technical sense would be less likely than a resident who is not a citizen to participate in the arrangements based on trustees and nominees of owners to which the hon. member referred. I think in particular when I say this of many of the new Canadians who, for one reason or another, are not yet Canadian citizens in the legal sense but who nevertheless are making a great contribution to this country. I do not think anyone would wish that they be excluded from consideration in these matters.
The next point that the hon. member for Edmonton West raised had to do with associated companies. I think he has raised the same point on other occasions. He suggests that the rules concerning association of companies discourage the successful businessman who controls a company from investing in new companies, because the company he owns and the new companies would then become associated. This association would come about only if the businessman takes a controlling interest in the shares of the new company, which, the hon. member suggests is usually necessary. I suggest that the hon. member for Edmonton West is arguing that if a successful businessman puts his money into more than one company, all the companies he controls should enjoy the lower rate on the first $35,000 of taxable income. I suggest that acceptance of this proposal would lead to allowing all companies, or a great many companies, to take the lower rate on the first $35,000 whether associated or not. The lower rate on the first $35,000 of company income was intended to help small businessmen. It is not intended to provide a tax concession to businessmen who hold a majority interest in a number of companies.
The hon. member has argued that the minority shareholders in the associated company are penalized by reason of the association rule. But this is the result of giving control to a person who controls other companies and who chooses to allot the benefit of a lower rate to a more favoured company. The amendment in the bill does not change the principle or intent of the law concerning companies; it is only intended to strengthen the present rule, which has existed for many years, that only one of a group of associated companies shall be allowed the benefit of the lower rate on the first $35,000 of taxable income.
The next point raised by the hon. member was in connection with the ownership of assets for purposes of the new section 71A.

He referred to the requirement that 95 per cent of the assets owned by the taxpayer must be in the designated area, and must be new if the business is to qualify as a new business. The hon. member seemed to suggest that the word "own" or "ownership" should be defined. I am not at all sure that that word can be defined for this particular purpose. I suggest to him that there are well established tests and rules concerning ownership and that it is not necessary to define this concept for other parts of the income tax law. Capital cost allowances are granted to owners of depreciable assets and the Department of National Revenue has not experienced difficulty in determining who is the owner of property for this purpose. The same rules would apply in connection with this section.
I should like to mention one other point which was raised by the hon. member for Edmonton West. He posed the question whether the coming into force of this bill would terminate article 11 of the Canada-United States tax convention. There can be, no doubt that the increased rate of 20 per cent is not imposed until it is actually withheld from dividends. Article 11 of the Can-ada-U.S. tax agreement is specific in saying that tax must be imposed. It was desired to give advance notice of this change in the tax rate and the effective way to do this is to pass the necessary legislation now but to provide for it to go into effect at some future date. The date provided is January 1, 1965. Not only does this arrangement give companies time to rearrange their affairs if they wish to do so, but it also provides time for negotiations to be entered into with the United States with a view to the revision of the Canada-United States income tax convention to take account of Canada's new tax policies and the special circumstances which have made these changes desirable. Preliminary steps have been taken in connection with these negotiations, but obviously they cannot proceed very far until the tax changes proposed by Canada have been enacted into law.
I think I said that was the final point raised by the hon. member for Edmonton West with which I wanted to deal. However, I should like to say a brief word about the remarks he made in connection with the right of appeal from ministerial rulings relating to dividend stripping. With respect, I disagree with the hon. member's interpretation of the effect of this section. The bill gives the tax appeal board or the exchequer court a specific right to vacate the direction of a minister if the board or the court on consideration of the relevant facts reaches a
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conclusion which is different from the conclusion of the minister. In arriving at this conclusion, the relevant facts may be reviewed and findings made thereon.
I do not like being in the position of proposing new discretionary power for my colleague the Minister of National Revenue, but we are confronted with this situation: there is a wide open loophole in the tax law as it stands at present. The royal commission on taxation has not yet reached a conclusion as to how it might best be dealt with. I had lunch with the chairman day before yesterday. So we face this position: We can leave things as they are until the royal commission has considered the subject and reported, or we can close the loophole now and stop this milking of the treasury though not in the way we would, perhaps, prefer to do it-an effective way, notwithstanding, and a way we would hope to change as soon as the report of the royal commission has been received, provided a satisfactory alternative is recommended. It seems to me we are confronted with two evils, but that one of the evils is a lot worse than the other.
I should be glad to deal with the various other questions which have been raised by members of this committee as we come to the appropriate clauses in the bill.


Mr. Woolliams:: Before the minister proceeds, may I say I think the hon. gentleman will agree with my contention that, once ministerial discretion has been exercised judiciously, it is very difficult to get that decision upset on appeal. Once the minister or, in fact, the department, has exercised its discretion it is very hard to upset the ruling, provided the discretion has been exercised on the proper facts and exercised judiciously.


Walter Lockhart Gordon: If it has been exercised judiciously on the basis of the proper facts I would have to agree with the hon. member that it would, indeed, be difficult to get the decision reversed. But what is the alternative? Should we leave this door wide open until we have a report from the royal commission, or should we do something now to close the loophole? That seems to be the dilemma we encounter.
I was about to say that if members of this committee would not think it unusual or improper I should like to venture an observation or two about clause 1 of this bill. This particular clause-and I suggest hon. members might like to read it, or look at it-is designed to plug a loophole. The amendment is to section 5 (1) (a) of the act which requires that income from employment including value of board, lodging and other benefits received by virtue of the employment must be included in an employee's income. An exception is

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provided for benefits received by an employee from his employer's contributions to certain insurance or retirement plans, such as a registered pension plan, a group sickness plan and, as the law reads at present, to a group life insurance plan. The amendment inserts the expression "group term life insurance plan" in place of the present words "group life", in this list of exceptions. The effect of the amendment is that the benefit derived by an employee through his employer's contributions or premiums under a group life insurance plan will in future be excluded from income only if the employer's contributions are to provide term insurance.
It has been intended in the past that this exemption from income would apply only for term insurance and generally this has been the kind of insurance provided under employees group life insurance plans. However, recently there have been indications that some employers were arranging to provide a few key employees with substantial tax-free benefits in the form of permanent type life insurance policies with cash surrender values. This amendment is intended to make sure that this kind of benefit does not go tax-free.
The expression "group term life insurance policy" is defined in clause 27 as a group life insurance policy, under which no amount is payable except in the event of the death or disability of the taxpayer.


Mr. Dionne:: Mr. Chairman, not having had the chance yet to express my views in the budget debate, I take this opportunity to make known the representations I received from the voters of the riding of Kamouraska following the budget speech delivered by the Minister of Finance.
At the beginning of my remarks, I will first point out the disastrous results of the 11 per cent sales tax on building materials. I will dwell on this a little and then I will mention some decisions taken quite recently about depressed areas or other matters, but I will insist especially on the government's decision to tax building materials and manufacturing equipment.
That decision is unfair in many respects.
In spite of numerous protests, the government decided to reduce the 11 per cent tax to 4 per cent, with the avowed intention to increase it eventually to 8 per cent, then to 11 per cent.
Considering that the budget has already been greatly amended, I still think that the voters of the county of Kamouraska and all Canadian voters would he quite happy if the

minister could find another solution and did not implement his decision to increase the tax up to 11 per cent.
In view of the amendments already made and the numerous representations coming from here and there, we are still hopeful that the minister will reconsider his original decision and that this famous tax will finally be abolished.
We have every reason to believe that the minister's advisers are not much aware of the importance of the wood products industry, because they would not have advised him to levy a tax on machinery required by that industry. While I am speaking of advisers, perhaps I might venture to give some advice to the Minister of Finance in the preparation of his next budget: I urge him also to consult labour and farm organization leaders, and representatives of Canadian families, instead of consulting only the representatives of high finance.
Of course, in the field of forestry, large companies are concerned when it comes to the payment of taxes on operating equipment. But there are also thousands of medium and small businesses, which can hardly live and often suffer heavy losses and even must be closed following such a disturbance in the organization of their operations.
We know perfectly that when a firm has to pay a 4 per cent tax on the purchase of a bulldozer costing say $30,000, its operating costs will be increased and this will be taken into account when the finished product will be sold and competition will thus create difficulties in many cases.
In short, such a tax will have unfavourable repercussions in the building field and will inevitably cause a price increase-


Some hon. Members:: Order.


Charles-Eugène Dionne: I am sorry-


Mr. Macaluso:: I rise on a point of order, Mr. Chairman. These remarks are completely out of order. The hon. member seems to be talking about the sales tax bill rather than the income tax bill which is presently before the committee. I hope therefore that the Chair will kindly bring the hon. member back to the income tax bill which is under discussion.


Mr. Beaule:: Mr. Chairman, just a word on the point of order. A while ago, the hon. member for Renfrew spoke about everything under the sun except Bill No. C-95, but nobody objected.


Herman Maxwell Batten: There has been some general agreement that on this first clause hon. members will not be limited too strictly, but I think it might be worth while if we were to stick as closely as possible to the measure under discussion.


Charles-Eugène Dionne: Of course, I would have much to say on this matter which I did not have the opportunity to discuss during the budget speech debate. Because of the many objections which could be raised, I will restrict my remarks to the matter under study.
I realize that we are now considering various steps to relieve unemployment. Following various investigations, some areas have been designated as depressed areas. I find quite ridiculous that after three centuries, during which our people have worked and toiled on Canadian soil, certain areas in the province of Quebec and throughout Canada have to apply to the minister and state all kinds of reasons in order to be recognized as depressed areas and obtain some assistance from the government to get out of an unbearable situation created by a rather senseless system.
I know that few people understand this bill. It is too complicated; it is like a maze designed to confuse the people of Canada.
The granting of tax exemptions to companies which have 25 per cent Canadian ownership will not bring about new industries unless the latter have guarantees that they will be able to sell their products. Otherwise, how could an industry be interested in establishing itself in a given area? However, before there is any question of selling products, one must determine whether purchasing power is high enough in Canada.
Some will say that this is irrelevant but I can connect my remarks to the debate. For instance, the people in the lumber industry are being forgotten. On the other hand, when he goes to work in the United States-if I may be allowed to bring this up in the house- in order to earn some $1,500 and then comes back to Canada to get enough unemployment insurance stamps to live on during the off season, he is required to pay income tax on what he earned across the border. For instance, suppose he earns $1,500 in the United States and $1,000 in Canada, he only gets a $2,000 exemption and pays taxes on $500. He is no longer forgotten when the time comes to collect taxes. Let us see to it that the act is amended so that workers can live a decent life when they are going through hard times.
To restore economic stability in Canada, it will not be enough to reform our tax struc-
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tures, our industrial structures or what have you.
A reform of morals and institutions is certainly needed, but all those reforms will remain useless and ineffective as long as a real monetary reform is not effected.
The financial system involves taxation which annoys everybody, whereas a monetary reform would result in the distribution of a national dividend based on the difference between total production and total purchasing power. If you look into the possibilities you will see that it is just plain common sense.
Manufactured products would be more easily and entirely disposed of, so that industries would be more interested in developing the country. It would not be necessary to discuss for weeks to try and take a little money from this one to give a little more to that one, that is, the system of robbing Peter to pay Paul. This is a topsy-turvy system.
We are attempting, with great difficulty, to overcome a disastrous economic situation which is leading us to ruin.
That is why we are unable to solve the unemployment problem which has been with us for too long.


John (Jack) Henry Horner: Mr. Chairman, I rise to take part in what has been so far a very interesting debate on Bill No. C-95. This measure has been the subject of continual controversy which dates back to the budget. I was interested in hearing the hon. member for Renfrew South refer to the budget at the opening of his speech as one of the great documents that will go down in history. It will never be forgotten, Mr. Chairman. It was the most irresponsible, ridiculous budget that has ever been introduced into the parliament of Canada or perhaps ever will be introduced into the parliament of Canada. Certainly it was ill conceived and certain portions of it were hastily withdrawn.
However, this one provision dealing with foreign investment we see again in Bill No. C-95. Today we are facing a problem in Canada in trying to get Canadian development by Canadians. We see the provision in Bill No. C-95 which is designed to encourage development in specific areas, depressed areas as they are called, across the country. On the other hand, we see a provision in Bill No. C-95 which is designed, to some extent, to discourage foreign investment in our country. We certainly have conflicting purposes here. On the one hand, we are trying to encourage development and on the other hand we are trying to limit investment in the developing industries of this country. Some experts may have suggested to the minister that the government should interfere more with invest-

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ment in Canada. Other experts may say that the government should adopt greater measures of control over the developing industries of Canada. I do not believe Canadians want this. Canadians are becoming more and more concerned with government controls, and want less and less interference from the government and a greater opportunity to contribute to the development of Canada.
At various times the minister has said that he does not like this power of discretion that results from the implementation of Bill No. C-95. However, he sees no other way of getting around the problem. This results in a further increase in government interference with Canadian industry. The government seems to think that it can run and develop Canadian industry better than private enterprise. The Canadian wants a chance to share in this development of Canada. He wants a chance to aid in the development of Canada. Above all, he wants a greater opportunity in Canada for all Canadians.
These provisions will result in the slowing up of Canadian growth because we are trying to discourage foreign investment. How will this provide greater opportunities for Canadians, Mr. Chairman? The most recent edition of the Financial Post estimates that our gross national product will increase by something like 6 per cent this year. How does this compare with a 9 per cent increase last year? Their forecast for the coming year is only a possible 3 or 4 per cent, and I ask how does this hold out any great opportunities for Canadians to participate in industry? I suggest it does not.
I suggest that most parts of this bill are highly impractical. The Minister of Finance is stubbornly, doggedly hanging on to the remaining part of his budget; otherwise he would scrap the whole bill. It singles out foreign companies, which have less than 25 per cent of their shares on Canadian stock exchanges, for a greater rate of tax. How can we determine the nationality and the residence of invested capital? Even if this bill passes, how long will the government have to continue to keep a careful watch on the percentage and Canadian residence of investment in various stocks? I would be quite interested to hear what Mr. Kierans had to say about this particular clause. To me it seems very impractical, if not bordering on the impossible.
Think of the growth in the number of civil servants required to police this part of the bill. Here again we see Parkinson's law in action, greater and greater bureaucracy, and greater and greater control over the development of Canada.
[Mr. Horner (Acadia) .1
When one looks at Canada's growth over the past 10 years he must realize that foreign investment played a major part in it. Coming from Alberta it is perhaps natural that I should look at that province. We were fortunate enough to have oil and gas below ground and had United States capital coming in to develop new industry. There has been a great growth in the service industries, and I see no harm in foreign investment in those industries.
Last week I noticed an article in the Globe and Mail for October 23 headed, "Tax plan called a bar to realty investment." Our real estate boards have met and condemned this tax plan in Bill C-95 because they say it will limit investment in real estate throughout Canada. Many more service industries will be affected, and I see no harm in allowing foreign investment to develop these industries thus providing jobs and work opportunities for people all across the country.
I spoke on the resolution stage of this bill about the need for greater capital being loaned to Canadians. In this way we could give them an opportunity to share in the development of Canada. I suggested that the development bank should be transferred to the new Department of Industry where the people running it could work in close liaison with that department. This is a prime necessity. If we want Canadians to invest we must help them, show them, and provide the necessary capital for them to get into business.
In this bill we see a tightening up, or a penalty clause for foreign investment on the one hand; but yet if foreign investors do come into Canada and locate industries in depressed areas we will give them a big helping hand. In effect this does nothing more than complicate the tax structure of the country. At present there is a royal commission studying it, and the tax structure has been said to have become too complicated. Certainly Canadians generally will agree with that contention. We want a greater simplification of the tax structure instead of giving incentives with one hand and taking them back with the other. You may keep the pot boiling by doing this, but it adds nothing to create opportunities and provide jobs for Canadians. It only increases bureaucracy on the part of the government and encourages creeping socialism; and Canadians have said from time to time that we have gone too far in that direction and should give private enterprise a greater chance to develop the country.
It is interesting to note that in U.S. News and World Report of October 14 last, on the page headed, "Business around the world", world bank chief Mr. Woods made that plain

in his spsech on September 30 at a meeting in Washington of the World Bank and International Monetary Fund. I think the minister attended that meeting or had representatives there. The article says:
In blunt terms he criticized countries that permit wild inflation.
What has been the position here since April 8? The cost of living went up by three points, while under the former administration it increased by only six points in six years. I do not know whether this would be termed wild inflation, but it is certainly rapid inflation. What are we doing to stop it? We are doing very little in the budget and nothing in Bill C-95. The article continues:
He hit hard against the grabbing of private businesses by governments.
Under this bill we will have greater control and greater bureaucracy. Mr. Woods went on to say:
Progress will come fastest in countries that attract private capital.
What are we doing under Bill C-95? We are discouraging foreign investment. Mr. Woods went on to say:
.. .give private enterprise a chance to flourish and expand. These ideas... brought a few cheers.
I do not know whether the minister was one of those who cheered, but there certainly is mounting concern throughout the world at government bureaucracy, and at governments placing their peoples in strait-jackets, not allowing them to expand industry and create work opportunities.
We have heard a lot of talk about depressed areas. How are they decided? The Minister of Industry has circulated a sheet of paper outlining the depressed areas and how they were placed in that classification. He said they were basically areas of slow economic growth and that N.E.S. figures were used.
In this connection it was interesting to hear the hon. member for Renfrew South speak of his area as a possible depressed area. He led us to believe that its timber resources were now depleted and that it should be considered as a depressed area. He said that with that vast depleted forest industry one part of his constituency had been left in a depressed state; but it is interesting that in the 1961 census for Canada, under the heading forest products, the total value in Renfrew county was $916,519, the greatest total forest value of any county in the province of Ontario. The next county in Ontario had only half that forest product value in a given year; yet he led us to believe that his county was a depleted forest area.
I only point this out to illustrate the difficulty of trying to put your finger on one part of the country as a depressed area, and
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on another as not. One part of my constituency actually made application to the previous government to be considered as a manpower surplus area which needed incentives, but almost overnight that area has now been told it is no longer a manpower surplus area and cannot be considered under the new depressed area legislation. It has no opportunity to appeal that decision. The minister was invited out there but he did not come. He said he was looking at statistics.
I am not like the Minister of Agriculture. I do not think statistics are for losers, but I do not think they paint an accurate picture of a given situation. In any case they do not take into consideration many of the feasible and practical applications that actually are at work in the economy of given areas of the country. Certainly much thought must be given to determining depressed areas. I was interested in the suggestion that an area development agency would be set up in the Department of Industry to assist in the economic development of the designated areas. Has this development agency been set up yet? What is the representation on it? I should like to see the representation contain members from Alberta and western Canada generally. Certainly when one looks at the 1961 census figures he realizes that Alberta has grown faster populationwise than any other province in Canada. Why has it? Because of the development of industry which has been financed to a large extent by foreign investment.
Certainly there should be men from Alberta on the development agency. Maybe they could offer wise counsel and wise advice when consideration was being given to what and where should be a designated area. With respect to part of my constituency, I could quote the census figures to show that in 1921 there was a certain population, that in 1931 the population was nearly the same, that in 1941 it had not grown and that in 1951 and 1961 the population was the same. Over a period of 40 years the population remained the same. Would you not determine that area as being one of slow economic growth? Would you not determine that area as being one certainly in need of industry incentives?
Apparently the minister did not wait to establish the area development agency before he picked what he called depressed areas. I think he should have. He should have taken counsel from all across Canada before making these rapid-fire decisions. This is all part of the 60 days of decision and perhaps the only part they have not yet withdrawn.
I look at the list of designated areas and I wonder what similarity there is to the patronage list of the Postmaster General. I wonder

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what similarity there is between that list and this list. I am inclined to think they may be a whole lot closer than you and I would wish them to be.
I have referred to the area extending from Drumheller east to the border, an area that has certainly had the slowest economic growth of any part of the province of Alberta, an area which has had a slow population growth in comparison with any other part of Canada. Certainly this area should be considered as a designated area from the point of view of offering incentives to industry to establish there.
We look at another clause in the bill concerning lease rental and lease option arrangements. The minister says he wants to plug these loopholes. The plugging of the loophole he is trying to plug in this particular case will do nothing to provide opportunities for Canadians. It will do nothing to provide jobs for Canadians. All we have to do is to go out across the country and look at the situation. Contractors make their bids on jobs and if they get a contract they are prepared to go out and rent the equipment to do the job, in the hope that in many cases the rent can be applied against the purchase price of the equipment if they should desire to purchase.
But the minister says: Oh, no, this is a loophole we are going to plug. Certainly it may be abused in many cases; but I should like to see a piece of legislation that has been passed by this house that somebody will not abuse. If there ever was such a piece of legislation it would put us in a strait-jacket so that not one of us could do anything. That is just about an impossibility. While to some people there may appear to be a loophole, it is still a great aid to contractors throughout the country in making their bids on and taking jobs that are perhaps a little larger than their present equipment allows them to take.
It is interesting to note that on the one hand the Minister of Finance is trying to control the rental of equipment by agreement. Actually he is not going to be too successful in doing this because contractors will get around the provisions. They will buy the equipment. All they will have to do is to buy the equipment in the year in which they rent it and this will defeat the minister's objective in including this clause.
It is interesting to note his action with regard to rental agreements on machinery generally, including farm machinery. It is interesting to note his observations in this regard and those of the Minister of Agriculture. The Minister of Agriculture said in a speech not long ago that one of the main problems of farmers today is the high cost of farm machinery. He went on to say that he thought rental depots should be set up

across the country so that farmers could rent their equipment for a given job rather than buying it.
Again we have two ministers with somewhat conflicting ideas on a given subject. It is not the first time we have seen two ministers in the same spot. I can remember the Minister of Labour offering $500 for new home construction and the Minister of Finance taking away $800 through the sales tax. Whether the same thing will apply in this instance I do not know. As a farmer, if I want to rent machinery to do a job I want to have the opportunity to let the rent apply on the purchase price of the machine if I decide to buy the machine. I see nothing wrong with that. I think it is a good thing. I think if a person has to put out half the price of a machine in rent he should be able to allow that rent to apply as the down payment on the machine, if he decides to buy it. There is nothing wrong with that.
The loophole that the minister is trying to plug in this regard will still exist. He will not be successful in plugging it. He will just make it more difficult for contractors, farmers and all those who wish to rent equipment rather than buy it for the purpose of taking on any job or contract they may be bidding on. In fact, if the minister plugs all the loopholes he is trying to plug, even if it were feasible to plug them all it would not increase the general revenue of the country to any great extent. It would increase it by far less than 1 per cent of the deficit the government is going to have this year, and certainly it is going to be a large one. We are all well aware of that.
Actually the minister issued a grave warning that Canada's political destiny is at stake. He issued this warning in his initial speech in introducing Bill No. C-95. Canada's sovereignty is at stake if the present cabinet does not take a stand on many issues with which it is confronted involving labour, wheat sales, finance, nuclear weapons, and so on down the line. Certainly job opportunities must be provided for Canadians. In my opinion Bill No. C-95 does not measure up to the need for greater resource development in Canada. At best Bill No. C-95 does nothing more than legalize patronage. I suggest that is what is happening in the naming of these depressed areas. It is nothing more than legalized patronage. It is nothing more than a continuance of the Liberal party plan-more bureaucracy, more socialism, more patronage.
Canadians want none of these things. Canadians want a more simplified income tax form, more opportunity and a chance to share in the commercial growth and development of the resources of Canada. I am disappointed with Bill No. C-95. It does not do the things

that I think Canadians want. It does not provide them with the opportunity to have a part in the development of Canada.


Gordon Harvey Aiken: Mr. Chairman, I should like to say a few words on clause 1 of the bill and to comment on something that the minister has said several times today. He said that basically it does not matter what you do as long as you do something. I must admit that I like to see ideas tried. I like to see progressive legislation brought forward. I think we have to try new ideas and make new efforts from time to time. Otherwise our legislation and our national economy become stale. I think that this particular theory of "Don't just stand there, do something" is a very good one in military circles, where action of some kind must be taken or you will be shot down. But in matters of finance and taxation one has to move very slowly. I think the minister moved much too quickly and as a result has got himself into some difficulty.
There is one intriguing part of this budget I should like to mention tonight in connection with income tax. It was introduced by the minister in these words, to be found at page 1007 of Hansard for June 13:
The source of revenue which we shall seek on a non-recurring basis relates to the income tax on corporations. It is desirable that corporations should pay their income tax as their income is earned to a greater extent than they do at present.
I must admit that what has intrigued me about this particular paragraph, the import of which is now clause 13, is that it is a tax increase which is not a tax increase. It is the old hat trick where there is an increase in taxation which is in fact not an increase. It has made me wonder how the minister could draw this rabbit out of the hat to the extent of $220 million in corporation income tax without increasing taxation.
I have looked into this matter and, after investigation, I am led to the belief that it was just a gimmick and in fact will not do what it is intended to do. I think the minister intended to use this means to raise another $220 million revenue without damaging the corporation tax structure or increasing corporation income tax, and he did it by the simple expedient of making the tax payable earlier. In my opinion, Mr. Chairman, making the tax payable earlier is no different, in the circumstances in which it has been introduced, from paying more tax. It is called a non-recurring tax, and certainly it cannot recur. Because instead of starting to pay tax at the end of June in each year when returns are filed, the tax is now payable two months *earlier, or at least the payments are started two months earlier.
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There are two difficulties in this connection. The first difficulty is the accounting one. I do not want to take issue with the minister on the subject of accounting, but I am told that the taxation at an earlier date, even if the returns do not have to be filed until later, is going to cause a great deal of difficulty for accountants who are doing work both on personal income tax and corporation tax. In any case the accountants-


Mr. Benson:: Mr. Chairman, could I ask the hon. member a question?


Gordon Harvey Aiken: Yes.


Edgar John Benson: Could he explain to me how one can cause an accounting problem merely by corporations paying their taxes faster?


Gordon Harvey Aiken: Yes, Mr. Chairman. My information is that accountants are required to make an estimate or calculation of the income tax due by April 30, because that is the date on which the first payment is made. On that date a calculation of income tax must be estimated by the accountant. I am saying to the parliamentary secretary that I am told- and I have to go on what I am told-that at this time most accountants are deeply involved in personal income tax matters and-


Edgar John Benson: Mr. Chairman-


Gordon Harvey Aiken: May I just finish; I will be glad to have the parliamentary secretary correct me if I am wrong. I am told that at this time accountants are very much involved in personal income tax matters, and that they must make estimates for a good many of the corporations in connection with payments which begin at the end of April. The second difficulty is that in fact the tax becomes payable earlier, and while it is nonrecurring in the year in which this tax now becomes payable, there is an additional $220 million payable, and payable at a time when a good many of the corporations involved are making expenditures for the current year's business. This is money which could very well be used to prepare for the year's business rather than to make earlier payments of income tax. I am advised that the earlier payment of tax does in fact increase the revenue, although it does not appear to. I would be glad to answer the parliamentary secretary now.


Edgar John Benson: I have another question, if the hon. member would permit it. Does he not know that all that is required in order to calculate one's instalment of tax is merely to take one eleventh of the previous year's tax and pay it each month? This involves no accounting difficulty except a simple division, and as a practising accountant I can see no serious problem.

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Gordon Harvey Aiken: Then, I do not know why the clause has been written in the way it has, because there are two alternatives and I presume the alternative which is better for the taxpayer is the one he will adopt. He can either pay on the basis of the last year's tax or he can pay on the basis of his estimated tax for the current year. If he just chooses to pay on last year's basis, this is perfectly all right, but it may not be to his benefit as a taxpayer. He may be a fairly new taxpayer and may have increased or decreased his business substantially. He may have branched out into new fields, and if he only pays his estimated tax for the previous year then I ask why the alternative is put into the clause. Because he can do it on either basis. I am told that as a matter of practice this causes difficulty. However, I do not want to argue with the parliamentary secretary about it because he has his opinions and I will be glad to hear them; but I have to rely on things people who are in the business tell me.
On page 1003 of Hansard for June 13 the minister mentioned tax incentives for industry. He said:
This means, Mr. Speaker, that we have no alternative but to look to our tax structure not only with a view to providing incentives for increased employment and industrial growth, but also in a search for additional sources of revenue.
It was our understanding at that time that the minister intended to produce tax incentives in order to get industry going. These incentives have in fact not been incentives at all but the reverse. We have had tax increases, and on the particular item we are discussing the accelerated payment of corporation income tax is a tax increase regardless of how you go about it. The corporations have to pay $220 million more to the government, and you cannot call it anything else but a tax increase for that particular sector of the economy we are trying to help.
I do not want to go into the increases in sales tax; in fact I could not do so. Nor shall I discuss the question of the increase in taxation to finance the old age pension, part of which will come from the corporate field. Nevertheless, I do want to point out at this time that there have been very few incentives in corporate income tax; on the contrary there have been tax increases at a time when we ought to be encouraging industry.
I know, Mr. Chairman, that we all want to proceed with the bill. There are other matters to be discussed at the time we reach them clause by clause, but I should like this particular point clarified. I am not a believer
[Mr. Benson.1
in miracles, but I do know that the minister has tried to produce one here. However, I say a tax is a tax.


Mr. Laprise:: Mr. Chairman, I should like to take this opportunity to make a few remarks on Bill C-95, to amend the Income Tax Act.
I must say, at once, that this bill has not impressed me much. We must admit, and nearly all those who have spoken before me have done so, that the Income Tax Act is a rather complicated document, quite difficult to understand and to sort out. I think that the amendments which the government intends to bring will only make it more complicated.
In studying this act, I had the impression that it resembled abstract art. Abstract art, Mr. Chairman, represents something which cannot be easily understood. An abstract painting, an abstract sculpture represents something that anyone can look at and then find in it very different meanings.
The Income Tax Act is just like that painting; everyone can study it and find in it different aspects and meanings. That is why those lucky enough to have at their service people who can spend long hours studying that abstract measure, can succeed in finding ways to evade some taxes.
We have heard of some proceedings instituted against some companies, some businessmen who allegedly succeeded in evading taxes they should have paid to the treasury. And again recently, some politicians took the liberty of doing such a thing.
Mr. Chairman, if you study the Income Tax Act and consider it in relation to abstract art, as I did, you can see that the present government's actions look strangely abstract too.
The government's actions are often out of touch with reality. Indeed, as reported on page 4183 of Hansard for last October 30, no later than yesterday, the hon. member for Lake St. John put the following question to the Minister of National Revenue:
Could the minister inform the house if his department has given instructions to reduce the amounts claimed for charitable donations, as is being done in the province of Quebec, without first making an investigation to ascertain whether or not the receipts are genuine?
The minister's reply was negative. Then, who ordered officials of the taxation division to reduce the amounts claimed for charitable donations as they did throughout the province of Quebec, at least this year? Who gave them such instructions? If they took it upon themselves to act in that fashion, without getting any orders from a member of the government, I wonder where we are going and what has happened to cabinet responsibility.

Mr. Chairman, in the budget speech made by the Minister of Finance (Mr. Gordon) in this house on June 13 last, we find quite another story. As reported in the fourth paragraph, second column, on page 1004, the Minister of Finance stated:
The government is directing the Department of National Revenue to tighten up its administration of the law and to pursue a policy of vigorous enforcement.
This is the order given by the government to the Department of National Revenue. We find that this order has been carried out to the letter merely by looking at the situation that prevailed last summer in the province of Quebec. I refer to the province of Quebec because I am more familiar with it, and more especially my riding. Our workers, our miners, our lumbermen, in short all our fellow citizens have seen their receipts for charitable donations reduced by half and sometimes more. They were entitled to them, because the law provides for an exemption for charitable donations, up to 10 per cent of the net income. Besides, this is stipulated on income tax forms.
Why were those exemptions reduced this year, Mr. Chairman? The answer is to be found in the same budget speech. Here are the words of the Minister of Finance which are taken from the same page as the previous quotation:
There is a double purpose here. One is to increase our revenues-
Well, Mr. Chairman, that is the reason. Claims made for charitable donations were reduced to increase government revenues this year and, next spring, we will be told-as I imagine was often the case in the past-that it is thanks to the Liberal party that the country's revenues have greatly increased. However, nothing will be said about the fact that this increase was achieved at the expense of our workers.
Mr. Chairman, we should put an end to this kind of thing as soon as possible. I appreciate that the government has the right to increase its revenues but instead of depending on those who already have very little, it should seek the additional income somewhere else.
The Creditiste group, of which I am a member, made various suggestions during the last session and this session in order to facilitate to the government the administration of the country without further taxation.
I can see smiles on the other side of the house. While the government laughs at the suggestions of the Social Credit, families cry all over Canada because the government has no solution to offer them. Instead of laughing
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at the proposals of the Social Credit, the government should endeavour to run the country in such a way as to respect human values. The old regimes have failed: that has been established. We have a monumental debt. Each year we must pay extravagant interests to the financiers who profit by that system.
Mr. Chairman, it would be a good thing if a way could be found to allow the worker to decide for himself how to look after his income. I would have hoped that Bill C-95, to amend the Income Tax Act, would do more than it promises to do to lighten the Canadian taxpayer's burden. As a matter of fact, the bill only provides for ways and means to levy greater sums of money which the government could easily obtain elsewhere. All it would have to do would be to use the Bank of Canada.
Mr. Chairman, I do hope that in the course of the debate to follow, during which the bill will be discussed clause by clause, certain suggestions will be made so that this legislation can be more readily understood by the Canadian people, something which would increase their respect for the government.


Mr. Hales:: Having spoken once before on this bill after the minister had introduced it on second reading, my remarks now will be brief, but I should like to take a little of the time of the committee in order to deal with two aspects of the measure before us, namely clause 16 having to do with designated areas, and the clause having to do with the withholding tax.
When I spoke before on the clause dealing with the designated areas, I brought to the attention of the minister and of the house five reasons why I felt this legislation was ill conceived. I felt at that time, and I still do, that it was discriminatory. I felt the criteria used to select the areas were unfair and impracticable. Third, I felt it was a contradictory piece of legislation; fourth, that it disregarded municipal and provincial autonomy and, fifth, that industrialists are not satisfied with these particular provisions. I am not going back over this, other than to make a few remarks concerning some of those members who have spoken from the government side on this particular section of the bill. I was astonished to see so few members on the government side rising to defend their minister with regard to this particular section. In view of the amount of criticism there has been throughout this country, the editorials and comments in the newspapers concerning the designating of depressed areas, I would have thought there would be a number of members on the government side

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rise to defend their policies, their government and this piece of legislation.
The hon. member for Northumberland made a very comprehensive speech on this subject. It was the result of a great deal of research and study, I am sure. However, it was very philosophical in its outlook and was very theoretical. In my humble opinion, it lacked the practical touch.
In so far as the criterion being used in connection with these designated areas is concerned, the fact that the six summer months have been chosen as a basis is absolutely wrong in principle. Tonight the hon. member for Port Arthur gave reasons why these summer months are not practical for his area. The hon. member for Jasper-Edson gave us very good reasons why this criterion was not suitable for western Canada. The fact that the summer months were chosen would make a real difference in the riding of the hon. member for Niagara Falls. I am sure she would like to see some industries in her riding. However, her area would not be designated, because during the summer months there is a great influx of tourists with the resultant high employment. Her riding, therefore, would be ruled out. The same situation would apply to summer resort areas which have high employment during the summer months. They would not be able to qualify under his criterion.
Brantford, Ontario, qualified for designation because it is primarily an agricultural implement manufacturing city. This industry is busy during the winter and early spring in order to provide farm machinery for summer use. They lay off their men in the summer and therefore this area qualified under this criterion. At least, this is one of the reasons for its qualification. I say, therefore, that if we are going to use unemployment figures, the only fair way to do it is to take the 12 months rather than take the six months in summer or six months in the winter.
The minister has told us in his press release that this method of designation will be reviewed at the end of the year. I suggest, Mr. Chairman, that this is too long a period. I feel this method should be reviewed in a shorter period of time, possibly four months or at the most six months. A year is a long time when you consider that one area could be given incentives which an area close by would not receive.
I was interested to note that the hon. member for Renfrew South has been experiencing the same problems as the hon. member for Wellington South. He intimated tonight that the criterion was wrong. He begged of his own minister to review the situation in his area. Pembroke has been designated as a

depressed area while Renfrew has not been designated. The same situation exists as between Guelph and Brantford, which are only some 40 miles apart.
I come back to the fact that the criterion is wrong in principle. It needs to be corrected, and it needs to be corrected right away because there is a serious situation in many parts of the country. I feel that this is the reason Liberal members have not risen in their places and spoken in defence of this provision relating to designated areas in this legislation.
There is another factor which should be considered in connection with this criterion. I refer to the mileage factor. I feel that a distance of about 100 miles should separate these areas and that this would overcome many of the problems. When you designate one part of a highly industrialized area and do not designate another part which is separated by only 30 miles, you are bound to have trouble. This has been the experience in southwestern Ontario. It is conceivable that you can give an industry pie in the sky; you can give an industry everything it wants, but there are certain fundamental things required in order to start a business. For example, if Canada Dry wanted to start a factory in my community we could give them free land, railway sidings and tax concessions, but they still would not come into that area unless the water was of the particular type they wanted for manufacturing their product. I say, therefore, these incentives can only go so far, because an industry that wishes to locate in any particular area considers many other things than the incentives this government is going to offer.
These industries even go so far as to hire a firm of consultants. They say to the consultants: We want to locate in Canada; we will leave it to you to pick out the best location you can find for us, bearing in mind the closeness to the raw product, closeness to our market and our labour supply, as well as other items. This principle of incentives, therefore, does not work as well as the government thought it would.
The minister has said that he realized the formula was not perfect when he advanced it. I remind him that it is dangerous to jump in and do these things without giving thought to them. Often the results to the communities are costly. The result to my community has been costly because we have lost a very good industry. I am sure there are other parts of Canada that have had a similar experience. These are the remarks I intended to make in respect of the designated area section of the bill.
In so far as the withholding tax provision is concerned, I do not know of any piece of

legislation that has drawn as much attention from those in financial circles as this withholding tax provision. It was unfortunate that the government did not see fit to send this bill to the banking and commerce committee so that these firms could present briefs to the committee. However, this move was voted down the other day. I feel that we should review first the details in the resolution concerning this withholding tax. Discriminatory tax treatment of foreign investors in Canada was proposed in the budget of June 13, 1953, and it disregarded one of the most fundamental principles of Canada-United States fiscal relations, namely the capital flowing between the two countries. The minister, in his zeal to expand export markets and help solve the balance of payments problem, took into consideration the fact that so much of our export industry is owned by United States parent companies that United States subsidiaries would be competing with their own products in their own domestic market The minister believed that their problems would be eased if the Canadian subsidiaries were owned, at least in part, by Canadian investors.
He proposed two things, as I see it, in this regard. First, as an incentive, he is attempting to make the sale of Canadian bonds in the United States easier by cancelling out the withholding tax on interest. He would also reduce the dividend withholding tax from 15 per cent to 10 per cent for foreign companies which have made a reasonable proportion of their equity shares available to the Canadian public by 1965.
The second step might be referred to as a fine or penalty. For those companies which do not choose this incentive, the withholding tax will be increased to 20 per cent for foreign controlled companies which do not make such shares available by 1965. The original budget proposal, which called for a degree of Canadian ownership or control, stated that 25 per cent of the shares of foreign subsidiaries were to be held by Canadian residents. The amazing thing is that the minister himself has conceded there is simply not enough Canadian capital available in Canada to buy 25 per cent of all foreign owned companies.
The Globe and Mail under date of October 2 stated:
The test will not be whether a company is 25 per cent owned in Canada, but whether at least 25 per cent of its shares are available for public subscription... It is one thing to ensure that shares in foreign owned companies will be available to Canadians, and quite another to ensure that Canadians will buy them.
In addition, there is an acute reluctance on behalf of Canadian businessmen to invest in anything other than a sure bet.
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Income Tax Act
The overriding objection to the minister's scheme, however, is that it is punitive. In so far as the United States is concerned he is taking a gamble in that the United States-Canadian tax convention specifically provides that the paragraph of the agreement setting the 15 per cent withholding tax on dividends paid by United States subsidiaries to Canadian parent companies may be terminated without notice, by either country raising the rate of withholding tax above 15 per cent. Furthermore, the United States internal revenue code makes allowance for a 30 per cent withholding tax if this paragraph is terminated. It looks as though the finance minister seems to hope that he can persuade the United States to leave its withholding tax at the present 15 per cent, but it is a pretty shaky hope at best.
In addition, the normal procedure a country follows when adopting restrictions of this nature is as follows: A company seeking incorporation is required to meet specific standards relative to domestic equity participation. At that time the company has the advantage of being known and accepted by the foreign investor before he has made a commitment. It is believed that the adoption of such a policy as announced by the minister will be regarded by foreign investors as an act of bad faith, because Canada is attempting to change the rules after the non-resident has invested his capital in the country.
Because of these budget proposals, together with the United States proposal of imposing an interest equalization tax, the Canadian and American committee, at its regular semiannual meeting on September 27 and 28 stated:
For the first time in their histories, the Canadian and American governments have each proposed to institute a measure which-however different in their origin and nature-will have much the same effect: impairment of capital flows between the two countries.
The committee discussed the damage already done and the further harm these proposals will inflict if put into effect.
First, they would have both direct and indirect effects on the cost and efficiency of capital for industrial development in both countries.
Second, they will tend to inhibit and to complicate the development of closer and freer trading relations between the two countries.
Third, the tensions and uncertainties produced in financial relationships will undoubtedly spread -indeed, are already spreading-to other aspects of Canadian-American economic relations.
Fourth, non-discriminatory treatment of foreign investment has long been a principle which Canada and the United States have been endeavouring to induce other nations to apply in their treatment of Canadian and American investors in their economies. If Canada or the United States now breach this principle, they can hardly expect other countries to honour it.

Income Tax Act
In conclusion they say:
In today's world, neither Canada nor the United States can afford to forgo any of the advantages they have long derived from the North American common market for capital resources.
Those are the remarks I have to make on these two clauses of the bill at this time. When we get into more detailed clause by clause examination I will have something more to say in this regard, but it seems as though this is another case of where the government has jumped in before it studied the legislation thoroughly, and it is a very serious matter for investors and communities when these errors in judgment are made. They become a costly venture for those concerned.


Walter Lockhart Gordon: Mr. Chairman, we have covered a lot of subjects today and it is now getting close to 10.30 p.m. I think hon. members of the committee will have noticed that we are beginning to go over the same ground again, and I wonder if they would be willing at this point to pass clause 1 of the bill just to show that we have accomplished something in a long day.


J.-H.-Théogène Ricard: Mr. Chairman, I do not intend to speak very long and even if some members of the government have some more or less unkind remarks to make when we rise, I wish just the same to make a few suggestions to the Minister of Finance (Mr. Gordon).
Following representations made on both sides of the house, there is no doubt that the measure under consideration is far from perfect. I would not have any reason to speak in this way if the objections raised or the loopholes mentioned came only from this side of the house, but we have heard today some members of the government criticize this measure.
It is for that reason and in order to offer two constructive suggestions, that I intend to make a few remarks, knowing that I will be finished before 10.30.
Mr. Chairman, I feel that we are again studying a hastily drawn up measure. In fact, I think that the provincial and municipal authorities, which are surely interested in it, should have been consulted; but as we noticed on several occasions since the beginning of this session, the present government simply prepared a bill and then told the municipal and provincial authorities concerned: Here is what we have decided, you will have to agree to it since we have reached the conclusion that it is in your interest.
Mr. Chairman, allow me to remind the house that, in the past, there was some competition between the various municipalities

wanting to encourage industries to settle within their limits.
To do so, municipal councils were offering advantages with which other municipalities could not compete, and throughout the province, every municipality was trying to outbid the others; but this was unfavourable for some of them who could not be as generous as others to attract industries. This happened in Quebec as well as in Ontario. The provincial governments were even forced to pass legislation in order to prevent this unfair competition between the various municipalities, in the interests of all concerned.
Mr. Chairman, it seems that the small industry was not given all the necessary attention in the drafting of the bill under study. In fact, I wonder if the small industry is not needlessly taxed or placed at a disadvantage from the standpoint of competition.
However commendable it might be to urge certain industries to settle in particular areas and to wish that the Canadian people control its own industry, in short its own economy, it remains nevertheless most important that such control be not established to the detriment of those industries which are just starting their operations in this country, or those small ones which are a family affair.
Mr. Chairman, it seems to me that it would have been wise to extend certain privileges to the small industries and to family industries which, especially in the province of Quebec, are an important part of our national life. Indeed, on account of the provisions of the new legislation, small industries and family industries will often find themselves in an inferior position to compete with new industries or the markets of the province and of the country at large.
It seems to me that those industries which have played a major role in our economic expansion should have received more consideration from those who prepared the present legislation.
In my opinion, to be fair to this important area of our economy, the minister should take the time to have his officials make a more thorough examination of the situation to provide those smaller industries with all the protection they need.
I should also like to say a few words concerning income tax itself. Once again, I urge the minister to give special consideration to the exemptions granted to our factory workers. It seems to me that we would have the opportunity now to make a readjustment as well as a complete review of tax rates and exemptions as regards the low bracket workers. By refusing them the protection they are entitled to, we are cheating people of this group who have but modest resources.

I think the minister should keep on with the work he has begun and pay particular attention to that problem in his amendments to Bill C-95.
Since he has already cancelled certain decisions he had taken and since he has also reconsidered certain parts of the legislation, I am of the opinion that it would be beneficial to bring forward a well thought out measure that would not be so detrimental to people from all walks of life.
Mr. Chairman, those were the few remarks I wanted to make.


Mr. Skoreyko:: Mr. Chairman, may I call it 10.30?


Some hon. Members:: Go ahead.


Lucien Lamoureux: There is a minute or two left. Perhaps the hon. member might begin his remarks.


William Skoreyko: Thank you, Mr. Chairman. I was very much interested indeed in listening to the Minister of Finance a moment ago when he said that this had been a long day indeed and we should pass clause 1 before we conclude today's sitting. I suggest that there are many features about the bill before the house, including 28 amendments, and that they all require considerable discussion. I am speaking specifically on clause 1, although I serve notice on the minister now that at a later time I intend to move certain amendments which I think are required and necessary for the benefit not only of the people of my area but the people of Canada as a whole. May I now call it 10.30, Mr. Chairman?
Clause 1 stands.
Progress reported.



BUSINESS OF THE HOUSE

Mr. Churchill:: Would the house leader let us know what estimates will be taken up tomorrow? We know the other business, which we presume will be the Income Tax Act. Could he inform us whether he is insisting on a supply motion on Monday and Tuesday? I am thinking of his members who like to be away sometimes.


John Whitney Pickersgill: I must say that the hon. member for Winnipeg South Centre becomes increasingly helpful as time goes on. He is
Business of the House
quite right in his anticipation of a supply motion on Monday, and also of the first business for tomorrow, which will be the continuation of the discussion on the first clause, and I hope the proceeding to the other clauses of the income tax bill.
As I indicated earlier, there was an understanding that when we had completed it we would call the motion in the name of the Solicitor General and that there would be one speaker from each group for not more than ten minutes each. If we can get the C.N.R. committee set up after that, with very little debate, it will be a great help generally because we will be able to get on with a lot of the railway legislation once that is done.
In addition, we would like to get the two bills respecting the Northwest Territories through second reading tomorrow, so they can be sent to committee where a number of hon. members want to examine them in detail. If all these matters are finished before five o'clock we will take the vocational training resolution for the rest of the time until five o'clock.


Gordon Minto Churchill: I am sorry I asked the question.


John Whitney Pickersgill: I just wanted to indicate some of the more urgent things to which the government would like the house to give attention.


Stanley Howard Knowles: What about the Canada pension plan?


John Whitney Pickersgill: The Canada pension plan has its place in the scheme of things, and if the hon. gentleman could exercise some influence on some of the members on the other side of the house he could bring it forward a lot faster.
Tomorrow evening, as I indicated earlier, it is the intention to call the estimates of the Department of Forestry, and when they have been completed the Minister of Public Works will be available to complete his estimates. If both these departments should be completed before 10.30 the government would be prepared to call any other department that is now open.


Erik Nielsen: Let us have the Post Office Department.


[Stage Direction]
It being twenty six minutes before eleven o'clock the house adjourned, without question put.
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[Stage Direction]


		
		
		
		
		
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[Stage Direction]

Friday, November 1, 1963