1963-06-13

HOUSE OF COMMONS DEBATES


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[Lfj£	VOLUME II, 1963
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28902-5-621
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Thursday, June 13, 1963


Hon. Paul  Marlin@Secretary of Stale for External Affairs: Mr. Speaker, I should like to inform the house that the Canadian government has authorized the seconding of Canadian personnel for service with the United Nations observation mission in the Yemen. As hon. members are aware, the United Nations security council on June 11 approved a resolution authorizing the secretary general to establish this observation group, whose presence in the Yemen is a prerequisite to the implementation of the undertakings which have been given by the governments of the United Arab Republic and Saudi Arabia for disengagement in the Yemen. It is hoped that this will bring about the termination of a situation in that country which has become increasingly acute since the establishment of the present republican government in September of last year, and will help to avoid the danger of the internal conflict in that country developing into more widespread hostilities throughout the area.
It is intended that a substantial proportion of the officers required for the new observation group in the Yemen will be drawn from personnel already serving in the area with the United Nations emergency force and the United Nations truce supervisory organization. Mr. Speaker, Canada has consistently played a leading role in the United Nations peace keeping operations, and it is the government's intention to strengthen this fundamental role by all practical means.


Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, there will be general support in all parts of the house and the country for the action announced by the Secretary of State for External Affairs. As he pointed out, the situation has become very critical, and there is need at the earliest possible date for an observer team or group from the United Nations to go into that area in Yemen in order to permit of the disengagement of some 28,000 Saudi Arabian troops which are there, and also to cut off the supplies which are being sent into that country from Saudi Arabia. However, the
minister did not refer to the question of cost, and I had hoped he would have said something in that connection.


Mr. Martin (Essex East):: Mr. Speaker, the costs will be borne, for the first two months certainly, by the United Arab Republic and Saudi Arabia. At the end of that period this matter will be reviewed.


John George Diefenbaker: The minister has mentioned the division of costs as between these two countries over the first two months. My understanding is that the U.S.S.R. wanted to restrict the period of the operation of this force to two months, and under no circumstances would agree that any of the costs should be paid, in so far as the United Nations is concerned, by other than the security council. I think the argument in this connection on the part of the U.S.S.R. is a serious one and indicates the degree of importance that the various members of the United Nations must attach to a decision being made regarding the responsibility of all nations in the United Nations to contribute a proportionate share to the costs of the peace making machinery of the United Nations.
This announcement by the Secretary of State for External Affairs, particularly the statement he made following my remark as to cost, would indicate that the problem in the United Nations as to financing these operations is still far removed from settlement. However, a makeshift arrangement has been arrived at whereby for the period of time mentioned by the minister the cost will be shared by the two countries named. I am glad that Canada is going to contribute to this operation which, as the minister said, has received the consistent support of successive Canadian governments.


Mr. R. N. Thompson (Red Deer):: Mr. Speaker, I would say, on behalf of our group in this house that we lend our support to the government in its policy of taking part in this all important effort to continue the struggle for peace in the world and to prevent this from being another area adding to the conflagration of localized wars that we already have in different parts of the world.
I personally appreciate very much the fact that Canada is going to make this contribution, because I know Yemen well and the countries around it. If this situation should ever get out of hand it could certainly be
96E

Inquiries of the Ministry another very serious crisis area in the world situation. Without going into the details as to cost and into the other arrangements which are obviously going to have to be worked out, suffice it to say that it is gratifying to note that Canada is again carrying her share of responsibility in the preservation of peace in the world.


Mr. T. C. Douglas (Burnaby-Coquitlam):: Mr. Speaker, the members of this group desire to express their support for the announcement which the Secretary of State for External Affairs has just made to the effect that Canada is going to contribute to the United Nations peace keeping functions in Yemen. Canada has a good record of contributing to peace keeping forces in various parts of the world, and I am sure that in this case we will maintain our good record.
I wish to congratulate the government on having accepted this responsibility, and to say that as far as this group are concerned we shall always give our support to any contribution which Canada may make through serving under the United Nations for the maintenance of peace throughout the world and supplying part of a world peace force.



INQUIRY AS TO SUMMER RECESS

[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, I do not know whether the Prime Minister is in a position at this time to give the house any idea as to the general plans for the session. I recall that a couple of weeks ago in the course of a speech in the house he referred to the fact that certain things would be done in this portion of the session. What are the plans in general as to the continuance of the session, and is he in a position to say whether we are going to carry on throughout the summer and into the fall in order to complete the legislative program?


Righi Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, it is our hope and indeed our purpose to take action on the proposals that are now on the order paper and those which will be put on the order paper next week before thinking of a recess. Whether that hope will be realized I do not know, because it is a matter for the house to decide. It is hoped, however, that we can deal with this legislative program by the middle or end of July, and if that could be done I think it would be desirable to have a recess then and come back in the autumn. Whether that will be possible will depend on the progress we make in the house on the program which is before the house.

Mr. Stanley Knowles (Winnipeg North
Centre):	A supplementary question, Mr. Speaker. Can the Prime Minister indicate what are the pieces of legislation that will be placed on the order paper next week?


Lester Bowles Pearson: I cannot at the moment, but I hope to be able to satisfy the hon. gentleman's very understandable curiosity early next week. We hope to put some additional items on the order paper by the early part of next week, and that will be the program we hope to complete before we think of a recess.


Mr. Knowles:: Will that include the pension legislation?



EXTERNAL AFFAIRS


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On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I wish to address a question to the Secretary of State for External Affairs. My question is based on newspaper reports to the effect that the West German government confirmed yesterday that it had been giving secret military aid to seven African countries, and its admission that the veil of secrecy had harmed West Germany. Can the minister give the house any information with respect to these reports and with respect to the government's attitude toward this secret military action on the part of one of its NATO allies?


Hon. Paul  Marlin@Secretary of Stale for External Affairs: Mr. Speaker, I am not quite certain of the purport of the question asked by the hon. member for Kootenay West, which relates to the supply of military aid by the West German government to several independent African countries. I have, however, seen the press reports according to which the German government announced details of this program yesterday.
We have not as yet received any information about this development from our embassy in Bonn. When we do we will no doubt wish to see whether there is any aspect of the arrangements which would be of direct interest to Canada although, on the basis of the press reports, I am doubtful that this will prove to be the case. I note from these reports that the German government has stressed that this aid was granted as the result of direct requests from the countries concerned to help them maintain internal order and security.


Thomas Clement (Tommy) Douglas: supplementary question, Mr. Speaker. May I ask the Secretary of State for External Affairs

whether any of his officials were aware of this action by the West German government, and whether the NATO ministerial council was consulted by the German government with respect to an action which is bound to have very serious international repercussions?


Paul Joseph James Martin: Mr. Speaker, I cannot add anything to what I have already said.



HEALTH AND WELFARE


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On the orders of the day:
Mr. Barry Mather (New Westminster):: have a question that I should like to direct to the Minister of National Health and Welfare. Yesterday, Mr. Speaker, there was a question on the order paper in my name which in effect asked: (1) How much money did the federal government get in 1962 from the sale of alcoholic beverages? (2) How much money did the government spend in combating alcoholism in the same year?
The answer I received stated that the government's revenue from alcohol amounted to $242,096,000, and that the government spent $11,000 in combating alcoholism. My question today, sir, is are these figures really correct, or has not some error been made in their compilation?


Hon. Judy V. LaMarsh (Minister of National Health and Welfare):: I thank the hon. member for giving me notice of his question, which I received as I entered the chamber. I am having an investigation undertaken to check these figures, and I will advise the hon. member later.

I am now instructed that the figures given in the order for return are correct. Those figures, since they only represent amounts spent by the federal government in response to requests from the provinces, appear somewhat limited. However, they do not include the very much greater amounts which have been spent over a period of years by provincial governments, who have the prime responsibility in this field.



REQUEST FOR STATEMENT ON SMOKING AND CANCER

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On the orders of the day:
Barry Mather: have a question I should like to direct to the Minister of National Health and Welfare. The question is this. About two weeks ago, in answer to a question asked by the hon. member for Simcoe East, the hon. lady stated
Inquiries of the Ministry that any action her department might take with respect to the apparent relationship between smoking and cancer would be a matter of government policy.
In view of the increasingly grave public and medical concern over the situation, I wonder if the minister could give the house anything in the nature of a statement of government policy on this question.


Julia Verlyn (Judy) LaMarsh: Mr. Speaker, I wish to thank my hon. friend for giving me notice of this question. I anticipate making a statement to the house early next week on this question.



DISCUSSIONS WITH BROADCAST GOVERNORS RESPECTING CIGARETTE ADVERTISING

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On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Minister of National Health and Welfare. Can the hon. lady report to the house on the discussions which, according to press reports, she is going to have with the chairman of the board of broadcast governors regarding television and radio advertising of cigarettes?


Julia Verlyn (Judy) LaMarsh: Mr. Speaker, may I say in answer to the hon. gentleman's question that I learned from the same source he did that I was to have such meetings, namely through reading the public press.



ROYAL COMMISSION


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On the orders of the day:
Lester Bowles Pearson: Mr. Speaker, yesterday the hon. member for Burnaby-Coquitlam inquired as to when we might expect the report of the royal commission on health services. The chairman of the commission has reported to me in the following terms:
Some months ago I indicated that we expected to be able to complete our report and to have it in the hands of the official translators and printers by the end of June. Unfortunately we cannot meet this objective. We commissioned a number of studies and had contracted that all these would be completed by the end of February at the latest. Several of the studies have in fact been completed but a number have not, including economic computations, manpower forecasts and certain tables which are needed as part of the text of the report. The commission will meet again during the last week of June. It is anticipated that another meeting will be required and it will be held early in September following which volume I of the report will be ready for printing.
This volume I will contain the important and essential parts of the report. There will be one or perhaps two other volumes of supporting material and it is our purpose to publish as appendices certain of the studies made for the commission by our research people.

Inquiries of the Ministry
That is the report I have had from the chairman, Mr. Speaker, and from that report it will be clear that we cannot expect the important volume I before September.



THE MINISTRY


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On the orders of the day:
John George Diefenbaker: In the spirit of co-operation that is so apparent today from the answer the Prime Minister gave to the first question I asked, may I ask if he can tell us whether, in addition to the legislation providing for the establishment of a department of industry and the bifurcation of the Department of Agriculture, it is the intention of the government to abolish the position of Associate Minister of National Defence?


Lester Bowles Pearson: No, Mr. Speaker, it is not our intention to abolish that position.


John George Diefenbaker: I should like to ask the Prime Minister a question regarding a statement he made in that connection on March 5, 1963.


Some hon. Members:: Order.


John George Diefenbaker: At that time he stated he would abolish the position of associate defence minister, so there would be a net gain of only one cabinet portfolio as a result of the action taken to which I referred earlier.


Lester Bowles Pearson: We found when we took office that defence policies were in such a confused condition it was desirable to keep the two ministers.


John George Diefenbaker: In these 60 days of shift, did the Prime Minister not say that with two ministers of defence it would be impossible to secure efficiency?


Lester Bowles Pearson: That may have been an accurate statement in respect of the previous administration.


John George Diefenbaker: So we are going to have a larger cabinet to do the same amount of work.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Hon. Michael Starr (Ontario):: I should like to ask the Minister of Labour whether the United States department of justice has been successful in its efforts to have a federal court

grant an injunction against the picketing and boycotting of the Canadian ship Howard Shaw, which is tied up at Chicago.


Hon. A. J. MacEachen (Minister of Labour):: I understand that a decision in this case will likely be made this afternoon by the federal court in Chicago.



PARLIAMENT HILL


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On the orders of the day:
Mr. J. H. Horner (Acadia):: Mr. Speaker, I wish to address a question to the Minister of Labour. Can he assure the house that members of parliament carrying union cards are not violating union principles in coming up to the parliament buildings and crossing the picket line?


Allan Joseph MacEachen: Mr. Speaker, I think this is a problem for each individual member to decide for himself.




[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: should like to address a question to the Minister of Labour. Would the minister inform the house whether the adjustment amounting to over $6,000 in wages mentioned in his statement yesterday was in relation to work done on the west block in 1962 or 1963 in preparation for the NATO conference? Can the minister assure the house that the regulations governing labour conditions are being fully observed by all contractors engaged on government contracts in the Ottawa area?


Allan Joseph MacEachen: The answer given yesterday applied generally to the contract in connection with the work on the west block. The recovery now being undertaken by the Department of Labour is in connection with work done, I think, in 1962.
The matter which was raised two days ago by the hon. member is currently being investigated to see whether labour conditions are fully complied with. If not, appropriate action will be taken.



BRITISH COLUMBIA


[Stage Direction]
On the orders of the day:
Mr. G. L. Chatlerton (Esquimalt-Saanich):: I have a question for the Minister of Labour. Is the minister aware of the critical labour situation in the Saanich peninsula on Vancouver island, where 300 strawberry pickers are immediately required to harvest the crop which, in any event, cannot fill the demand

of the increasing market? Will the minister use his good offices to assist the berry growers to obtain the necessary help?


Allan Joseph MacEachen: I will certainly draw the hon. member's representations to the attention of the national employment service.



REPORTED CHANGES IN WINTER WORKS PROGRAM

[Stage Direction]
On the orders of the day:
Thomas Clement (Tommy) Douglas: Mr. Speaker, I wish to direct a question to the Minister of Labour. Is the minister's department in the process of making fundamental alterations in the municipal winter works incentive program? If so, what steps are being taken to consult the provincial governments in this regard?


Allan Joseph MacEachen: Mr. Speaker, the changes in the municipal winter works program were announced in the house on Monday. I have taken steps to see that all the provincial governments are advised about these changes in the oncoming winter works program.


Thomas Clement (Tommy) Douglas: A supplementary question, Mr. Speaker. May I take it, then, that the provinces were not consulted prior to these alterations being made?


Allan Joseph MacEachen: Mr. Speaker, I think I can say that the officials of the Department of Labour are constantly in touch with various provincial officials who are interested in these particular programs. Views are exchanged, and I am sure that the views of officials who were contacted in this informal way were reflected in some of the changes that were made.


Thomas Clement (Tommy) Douglas: May I ask a further supplementary question, Mr. Speaker. Is it correct that some of the officials of the provincial governments were asked their views only 24 hours beforehand, and that before they could communicate their views these changes were made, without consultation?


Allan Joseph MacEachen: It may be, Mr. Speaker, that the consultations were so continuous that they were held very close to the time of the announcement.



PENITENTIARIES


[Stage Direction]
On the orders of the day:
Mr. Harold E. Winch (Vancouver East):: desire to ask a question of the Minister of Justice, and I am sorry I was not able to give him notice. I called his office several 28902-5-63
Inquiries of the Ministry times this morning, but I found he was in cabinet. Upon looking at my question, Mr. Speaker, I find it is about the longest single sentence I have ever written.
My question is, in view of the fantastic information which was contained in sessional paper 74A which the minister was good enough, and I may say honest enough, to file yesterday dealing with the cause of the riots at St. Vincent de Paul penitentiary, can the Minister of Justice advise this house whether steps have been taken or will be taken immediately in order to prevent any further recurrence of disturbances by ridding the institution of vermin, rats, bedbugs; by reducing the over-long hours of cell confinement; by making provision whereby hot meals are not cold by the time the inmates can consume them, and by dealing with all matters which are of concern to the officers and inmates in accordance with the sessional paper which was filed yesterday by the minister?


Hon. Lionel Chevrier (Minister of Justice):: Mr. Speaker, the length of the question asked by the hon. member indicates that an equally lengthy reply would be necessary, and it is the custom to deal with matters of this kind on the estimates. However, if the hon. member had read further, as I am sure he has, he would have seen that a number of steps have already been taken, not to deal with all the difficulties that have arisen or that were the cause of the riots, but certainly to deal with those which are of a more immediate nature.



DRUMHELLER, ALTA.-REQUEST FOR CONSTRUCTION OF INSTITUTION

[Stage Direction]
On the orders of the day:
Lionel Chevrier: I should like to deal with a question which was asked some days ago by the hon. member for Bow River in connection with penitentiary construction at Drumheller.
In 1961 the penitentiary service proposed to treasury board a scheme for the construction, between 1962 and 1966, of nine major federal penal institutions in Canada. It was proposed that one of these institutions should be located in the vicinity of Drumheller, Alberta. The penitentiary service contemplated that the necessary land would be acquired in 1962-63 and that construction would commence in 1963-64. The necessary land was acquired accordingly. However, in 1962, in connection with the preparation of estimates, treasury board directed that the program of building should be phased out over a five year period instead of a four

Inquiries of the Ministry year period and that the commencement of construction of a number of institutions should be postponed accordingly.
In the result, after consideration of the relative requirements for inmate accommodation in the various regions of Canada, it was decided that the institution at Drumheller was one of those of which the commencement of construction could be postponed until the fiscal year 1964-65, and that decision was approved by treasury board. I am informed now that there is no intention of changing the decision.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Mr. R. W. Priilie (Burnaby-Richmond):: Mr. Speaker, I wish to direct a question to the Minister of Justice which has to do with the concern over the rights of arrested persons in Montreal. In the light of the apparent contradiction between the coroner's act of Quebec and the Criminal Code and bill of rights, as illustrated by recent events, and in the light of doubts expressed by competent constitutional authorities, will the minister take immediate steps to have the constitutionality of the coroner's act tested in the courts?


Lionel Chevrier: Mr. Speaker, I am grateful to the hon. member for having sent me notice of his question, and the reply is as follows. The Canadian Bill of Rights is expressed to apply to every law of Canada, which expression is defined by section 5(2) of the act to mean an act of the parliament of Canada, any order, rule or regulation made thereunder, and any law in force in Canada or in any part of Canada that is subject to be repealed, abolished or altered by the parliament of Canada. There is, therefore, no contradiction between the Canadian Bill of Rights and the coroner's act of Quebec, and thus no case for referring the act to the courts.
(Translation):



REPRESENTATIONS BY UNIVERSITY PROFESSORS RESPECTING SECURITY INVESTIGATIONS

[Stage Direction]
On the orders of the day:
Hon. Paul Martineau (Ponliac-Temiscamin-gue):: Mr. Speaker, I should also like to put a question to the Minister of Justice.
Does the minister intend to put into effect the recommendation carried at the convention of the Canadian university professors' association held in Quebec, asking for a complete review of procedures concerning state security and intelligence.


Lionel Chevrier: Mr. Speaker, I have not seen the recommendations mentioned by the hon. member for Pontiac-Temiscamingue; I would prefer to see them before giving an opinion on the subject.

I should like to reply to the question asked by the hon. member for Pontiac-Temiscamingue (Mr. Martineau), who was kind enough to send me the newspaper clipping stating that the resolution he was talking about and the representations made by the association of university professors had already been sent to me in a letter. I contacted that association to let them know that I was ready to meet them this week but, unfortunately, the meeting could not be arranged. Under the circumstances, I would prefer to refrain from making any statement on that matter until I have once again been in touch with the association in question.



DOMINION-PROVINCIAL RELATIONS CONFERENCE RESPECTING TAXATION RIGHTS AND JOINT PROGRAMS

[Stage Direction]
On the orders of the day:
Mr. L. J. Pigeon (Jolietle-L'Assomplion-Monlcalm):: Mr. Speaker, I should like to direct a question to the Prime Minister.
Does the government intend to convene a federal-provincial conference this year in order to consider the means of giving back to the provinces their taxation rights and also to review the matter of the famous joint programs?
(Text) :


Lester Bowles Pearson: Mr. Speaker, as already stated in the house it is the intention of the government to call a conference of provincial premiers and federal government representatives this year.


Mr. Heward Graffley (Brome-Missisquoi):: have a supplementary question for the Prime Minister, Mr. Speaker. In view of the province of Quebec's apparent refusal to participate in the federal municipal loan fund legislation, will the Prime Minister assure the house that the legislation will include a compensation formula for provinces that do not wish to apply to the federal government for such loans to municipalities?


Lester Bowles Pearson: Mr. Speaker, my hon. friend's question is based on a premise which is not necessarily correct.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: Mr. Speaker, I wish to ask the Minister of Fisheries a question, notice of which I sent to his office early this morning. What is the name of each of the persons who actually went to Washington recently to attend the meeting relating to the international convention for the high seas fisheries of the north Pacific ocean?


Hon. H. J. Robichaud (Minister of Fisheries):: Mr. Speaker, I wish to thank the hon. member for giving me notice of his intention to ask this question. If he is interested in finding out the names of the members of the Canadian delegation who actually went to Washington last week I would refer him to page 693 of Hansard for June 5, 1963. If he is interested in finding out the names of the persons forming the Japanese and U.S.A. delegations, I suggest he put his question on the order paper.



LONDON, ONT.  INQUIRY AS TO NEW RESEARCH LABORATORY

[Stage Direction]
On the orders of the day:
Mr. W. H. A. Thomas (Middlesex West):: I have another question for the Minister of Fisheries. Can the hon. gentleman tell the house whether a new fisheries research laboratory building is to be constructed in the London area to replace the building now in use there? If so, what progress has been made in connection with this project?


Mr. Speaker:: Order. I have to say that I think this question is really one for the order paper.



SHIPPING


[Stage Direction]
On the orders of the day:
Hon. Leon Balcer (Three Rivers):: I should like to ask the Minister of Transport if it is true that the government has decided not to bring forward amendments to the shipping act for the purpose of reserving the coasting trade in Canadian inland waters to Canadian ships.


Hon. G. J. Mcllraiih (Minister of Transport):: The former minister has put his question in the negative form. Perhaps I had better answer him by saying it is expected that legislation on this subject will be brought forward this session.
28902-5-63i
Inquiries of the Ministry AGRICULTURE



ALBERTA


[Stage Direction]
On the orders of the day:
Mr. Lawrence E. Kindt (Macleod):: I should like to address a question to the Minister of Agriculture. Has the minister anything to report on plans for the construction of a dam on the Flying E site on Willow creek to provide Claresholm and Granum with an adequate supply of water?


Mr. Speaker:: I am sorry to interrupt once more, but this really is a question for the order paper.


Lawrence Elliott Kindt: On a question of privilege, these two towns are in great need of water and this is an urgent matter.
(Translation):



APPOINTMENT OF VICE PRESIDENT OF FARM CREDIT CORPORATION

[Stage Direction]
On the orders of the day:
Mr. Clement Vincent (Nicolet-Yamaska):: Mr. Speaker, I should like to put a question to the Minister of Agriculture. In view of the importance of the farm credit corporation, which lent last year $90 million to the Canadian farmers, is it the minister's intention to recommend soon that the vice presidency of that corporation, which is vacant, be filled? (Text):


Hon. Harry W. Hays (Minister of Agriculture):: These things are under consideration, Mr. Speaker.



JURISDICTION OVER WHEAT BOARD AND GRAIN COMMISSION

Mr. J. E. Pascoe (Moose Jaw-Lake Centre):: This is a question that I wished to put to the Minister of Agriculture as a supplementary question yesterday but I failed to attract the attention of the Chair. I trust, Mr. Speaker, you will say it is still in order.
Replying to an earlier question of mine in connection with a board of grain commissioners hearing on grain handling charges, the minister stated that under the provisions of section 17 of the Canada Grain Act every regulation established by the board must be transmitted to his department. This means that the board of grain commissioners comes under the jurisdiction of the Minister of Agriculture while the Canadian wheat board comes under the jurisdiction of the Minister of Trade and Commerce.
Does the minister consider this arrangement to be in the best interest of agriculture?


Harry William Hays: Yes, Mr. Speaker.

Inquiries of the Ministry



ALBERTA-CONSERVATION OF WATER SUPPLIES

[Stage Direction]
On the orders of the day:
Hon. Alvin Hamilton (Qu'Appelle):: Mr. Speaker, I wonder whether the Minister of Agriculture would consider, in view of the fact that the rains of the last few days have missed such substantial areas of dried out southern Alberta, sending officials of P.F.R.A. to examine the supplies of water available to irrigate crops and see that supplies are stretched out as long as possible? I can assure the minister that the concern of the people in this area is very great with such a heavy drain on the water supplies.


Harry William Hays: Mr. Speaker, in reply to the hon. member I must say we are pleased to see him back in the house. In answer to his question, I can assure him that I am in close touch with the provincial government on the question of moisture in the province of Alberta. I have lived there all my life and farm 5,000 acres, so I do know a little bit about it. We have to watch the situation very closely. This is a provincial matter and they must take the initiative, but at such time as they do the federal government will be on hand.


Francis Alvin George Hamilton: A supplementary question. Would the minister, with his great concern for the people of that area, consider going himself and seeing how dry it really is?


Harry William Hays: In reply to this question, Mr. Speaker, I am leaving tomorrow morning at ten to seven.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. Gene Rheaume (Northwest Territories):: My question is directed to the Minister of National Defence. Are negotiations under way at the present time between the government and the United States air force regarding the closing down of all or parts of the distant early warning line? If so, what proposals does the minister have for alternative use of D.E.W. line installations no longer required for defence purposes?


Hon. Paul Hellyer (Minisler of National Defence):: Some changes are in contemplation, but no decisions have yet been taken. As soon as they have been made they will be announced.



TRANS-CANADA AIR LINES WINNIPEG MAINTENANCE BASE    MEETING WITH MANITOBA DELEGATION

[Stage Direction]
On the orders of the day:
Hon. Gordon Churchill (Winnipeg South Centre):: I should like to ask the Minister of

Transport if he is now in a position to give the time and date of the proposed meeting between representatives of the cabinet and the delegation from Manitoba concerning the retention of the overhaul and maintenance base of Trans-Canada Air Lines in Winnipeg.


George James McIlraith: Yes. Tuesday morning at nine o'clock.


Léon Balcer: While we
are on this subject I should like to ask the minister if he is aware that according to the president of T.C.A. the decision to maintain and overhaul all jet planes belonging to T.C.A. exclusively at the Montreal base was taken in 1956, by approval of the construction of the new $20 million base, by the Liberal government of that day


George James McIlraith: No, Mr. Speaker.


Gordon Minto Churchill: Mr. Speaker, I should like to ask the Minister of Veterans Affairs whether it is his intention to support the Manitoba delegation in its request for the retention of the T.C.A. overhaul and maintenance base in Winnipeg.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. Robert Simpson (Churchill):: I should
like to direct a question to the Minister of Mines and Technical Surveys. Is the minister in a position to tell the house whether the government is considering increasing the assistance under the Emergency Gold Mining Assistance Act, as he is reported to have mentioned at a recent meeting at the Seigniory club?


Hon. W. M. Benidickson (Minister of Mines and Technical Surveys):: The question is in reference to a speech I made to the Quebec metal mining association on Tuesday night. I do not think there was anything I said on that occasion which could in any way be interpreted as other than that the emergency mining act would come up for legislative review this session and would not likely be dealt with before, perhaps, the summer recess.



REPORTED U.S. INTENTION TO RESTRICT IMPORTS

[Stage Direction]
On the orders of the day:
Mr. Eldon M. Woolliams (Bow River):: Mr. Speaker, I should like to ask a question of the Minister of Trade and Commerce arising

Inquiries of the Ministry
out of an answer given yesterday in reply to a question asked by the hon. member for Acadia. It had reference to quotas on exports of crude petroleum from the province of Alberta and other western provinces, and the minister said in effect that he had had some discussions with the Americans and that they were going to have further discussions. I was wondering if he would tell us what concrete proposals he suggested to the Americans.


Some hon. Members:: Order.


Eldon Mattison Woolliams: He has told us about the words and the meanings, but what concrete proposals did he make in order to keep the production of crude petroleum at a level of 800 million barrels a day, taking into account our domestic consumption as well as exports?


Eldon Mattison Woolliams: Mr. Speaker, I want to direct a further question to the Minister of Trade and Commerce. As he did not answer my previous question, do I take it that he made no proposals to the Americans as far as quotas on exports of crude petroleum are concerned from Alberta?


Hon. Mitchell Sharp (Minister of Trade and Commerce):: Mr. Speaker, I did not answer the previous question because I thought it was a speech, but may I say to the hon. member that I gave the results of my conversations with the United States authorities yesterday in discussing the President's proclamation. If the hon. member would read the answer I gave yesterday I think it would answer his question.
(Translation):



REQUEST FOR STATEMENT ON INQUIRY INTO PRICE INCREASES

[Stage Direction]
On the orders of the day:
Mr. Marcel Lessard (Lake St. John):: Mr. Speaker, I wish to put a question to the Minister of Justice. Can the minister inform the house of the developments which may have taken place following his investigation into the sugar price increase?


Lionel Chevrier: Mr. Speaker, it is neither the practice nor the custom of the house to make public the negotiations under way respecting the question the hon. member has just asked. On the other hand, when a decision has been made, through charges, or when a conclusion has been reached through a report, the minister has the responsibility, under the act, to table that report in the house.
(Text):



REQUEST FOR PROMOTION OF GREATER DOMESTIC PRODUCTION

[Stage Direction]
On the orders of the day:
William Howell Arthur Thomas: Mr. Speaker, I have a question to direct to the Minister of Agriculture. As he is going to be away, I think the matter is of sufficient importance that it should be dealt with at once.
In view of the need for more employment opportunities in Canada and the necessity for conserving foreign exchange, and in view of the present buoyancy in the sugar market, will the minister give consideration to promoting increased domestic production of sugar by readjusting the basis of price supports, as requested by the Canadian beet growers association and the Canadian Federation of Agriculture?


Harry William Hays: Mr. Speaker, I wish to thank the hon. member for Middlesex West for giving me notice of this question. The government has not considered any change in the support program for sugar beets for the current year which was announced on March 7. Under present circumstances the market price for sugar should result in returns to growers considerably above the support level.



NATIONAL PARKS


[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I wish to direct a question to the minister of northern affairs, or in his absence to his parliamentary secretary. Is it the intention of the government to acquire land presently owned by the Long Point Company on Long Point island in lake Erie for a national park?


Mr. Speaker:: This is also the sort of question which should be on the order paper.



CANADIAN NATIONAL RAILWAYS


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, may I direct one question to two ministers. The ministers concerned are the Minister of Transport and the Minister of Labour. Is the government aware of the dispute which is looming because of the intention of the C.N.R. to extend its run-through program, particularly in western Canada, on August 18? Will the government use its good offices to avoid such a dispute,

Inquiries of the Ministry particularly bearing in mind the interests of safety?


George James McIlraith: Mr. Speaker, the government is very well aware of this program, and some delegations have been received dealing with the subject. Some correspondence has also been received, and the question is getting very active consideration at the moment.
(Translation):



ARTS, LETTERS AND SCIENCES PROVINCIAL REPLIES TO LETTER RESPECTING ROYAL COMMISSION

[Stage Direction]
On the orders of the day:
Louis-Joseph Pigeon: Mr. Speaker, I should like to direct a question to the Prime Minister to find out if all the provinces have replied to his letter about the royal commission on bi-culturalism.
(Text):


Lester Bowles Pearson: All, Mr. Speaker, but the province of British Columbia.



PENSIONS


[Stage Direction]
On the orders of the day:
Mr.  R. Gordon L. Fairweather@Royal: Mr. Speaker, I wonder whether the Prime Minister could give us today the benefit of his consultations with the minister of health and welfare about portable pensions.


Lester Bowles Pearson: Mr. Speaker, I am grateful to the hon. member for his patience. Naturally I did not want to deal with the matter until I had a heart to heart talk with the minister of health and welfare. Although I have not been able to have that talk, Mr. Speaker, I can now answer my hon. friend that after some discussion of this matter with the minister. It is clear from the hon. gentleman's statement that he is referring to a report of the intention of the provincial government of Quebec to take action in this field. I should think that the announcement merely of intention to take action in this field would not affect any proposals for legislation which are now under consideration by the federal government, but the announcement of such intentions by any provincial government would underline the necessity of keeping in close contact with all provincial governments on such matters of joint concern and responsibility.


(Translation):



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Hon. J. W. Pickersgill (Secretary of Stale):: Mr. Speaker, on June 6, 1963, the hon. member for St. Mary asked me a question about the project concerning the construction of the C.B.C. building in the eastern part of Montreal.
The C.B.C. informs me that under order in council P.C. 1963-4/144 of January 31, 1963, it entered into an agreement with the authorities of the city of Montreal for the purchase of a piece of property in the eastern part of Montreal for that purpose. The corporation is carrying out that project in accordance with the agreement.
(Text):



INQUIRY OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Mr. D. M. Fisher (Port Arthur):: Mr. Speaker, I would like to ask the Prime Minister a topical question about a budget. Could the Prime Minister tell us whether one may assume there is friendly financial significance for his party's budget in the appointment yesterday of two wealthy men to the other place?


Some hon. Members:: Order.



INDUSTRY


[Stage Direction]
The house resumed from Wednesday, June 12, consideration in committee of the following resolution-Mr. Pearson-Mr. Lamoureux in the chair:
That it is expedient to introduce a measure (a) to establish a department of industry to be presided over by a minister of industry who shall be appointed under the Great Seal of Canada, to authorize the appointment of a deputy minister by the governor in council, and to provide for the appointment to the department on a temporary basis of persons having special knowledge of manufacturing industries to assist in the work of the department; (b) to provide for the establishment under the direction of the minister of an area development agency and to provide for the appointment of a commissioner and a deputy commissioner for area development; and (c) to make a consequential amendment to the Salaries Act to provide a salary for the minister.
Mr. Coales:: During my comments yesterday afternoon I discussed, among other things the problems confronting the aircraft firm of Enamel and Heating Products Limited in my constituency, which has been forced to lay off personnel. I urged the Minister of Defence Production, either in his present capacity or in his proposed new capacity as minister of

industry, to assist this firm in obtaining new contracts, especially one specific contract that is under negotiation with firms in the United States at the present time, in order that the people who have been laid off may be re-employed and the firm may have the buoyancy of employment that was so evident during the years when the former Conservative government was in office.
I have a few particulars which I should like to bring to the minister's attention; they came to my desk as the result of a question I asked earlier in the house. The answer came from a number of departments, but dealing with the work load provided by the Department of Defence Production I might say that in the year 1962-63 there were contracts available to this firm totalling $1,843,000. Over the period from April 1, 1957 to the end of the fiscal year 1962-63 they totalled in excess of $10 million. It was indicated in this reply that the value of contracts for the coming year is estimated to be $781,000.
Certainly, Mr. Chairman, unless increased work is provided for this firm either through prime contracts with the department or through subcontracts with either Canadian or United States firms there will be a good deal more unemployment at this plant than is evident today. I hope the minister will go into this matter very carefully and endeavour to do his best to see that this firm gets a work load sufficient to provide work for the people who were employed by it.
I wish to refer to one other aspect that I consider the Minister of Defence Production or minister of industry will have to deal with. I refer to incentives for industries which are willing to locate in depressed areas. In this regard I might put on the record a few comments made by various cabinet ministers of today. When the present Prime Minister was speaking in Fredericton, New Brunswick, on February 27 he had this to say:
Adjustment grants for industries locating in development areas such as northwestern and east New Brunswick and its border and central areas should be provided because industry is so severely needed there. This cannot be achieved by "the free play of economic forces" but only through government intervention.
My question to the minister in this regard is, does this mean that he as minister of industry is going to tell firms in this country who wish to establish in various areas where they are to establish, as has been done in Great Britain? If this is so, what basic incentives are going to be offered to these firms to establish in an area other than the one where they might otherwise wish to locate?
I think we must also anticipate that when the Minister of Finance makes his budget speech later this day we will be informed
Establishment of Industry Department that new tax incentives will be provided to industries that are willing to locate in areas of high unemployment. I should also like to ask the minister a question related to a statement made by the present Secretary of State for External Affairs, who stated at Tecumseh, Ontario, on March 5, 1963:
A majority Liberal government would create a new department of industry to get new industries for all of Canada. "Such a department would get us rolling. It would examine various industries and get Canada back on the economic rail."
My question to the Minister of Defence Production in this regard is this. Just how much more of an increase in the gross national product does the minister anticipate we will enjoy in the year 1963-64 over that enjoyed in the year 1962-63? I should like him to inform the house how he anticipates that an increase greater than 8 per cent is going to be brought about.


An hon. Member:: A new base.


Robert Carman Coates: It would be a new base, all right. If you can get half of 8 per cent you will be doing very well. If you keep tying up industry the way your boards are indicating they are going to tie it up we will be lucky if we have any increase at all. I should like to refer also to a statement made by the present Minister of Finance in Chatham, Ontario, on February 28, 1963 when he said:
Special tax Incentives would encourage construction of new plants, expansion of old ones and location of industry in depressed areas.
In this regard I should like to bring to the minister's attention the fine work of the crown company in Nova Scotia known as Industrial Estates Limited, which has done such a tremendous job in locating industry in that province. Does the minister anticipate that his new department will supplement the work of this crown company in Nova Scotia, or is it going to take over the duties that have been carried out so efficiently by that corporation since the Stanfield government has been in office in that province?
I should also like to bring to the minister's attention the very serious situation that exists in the Joggins area of my constituency, where the only coal mine in that community has been closed and the people are in need of employment. If the minister could do anything to assist this community to get back on the rails, as one of his colleagues has suggested, I know the people would be more than pleased with such action on his part. I can assure him I will assist him in any way possible to bring this about.
I might also bring to his attention the situation that exists in the town of Spring-hill in my constituency, which in 1958 was left without any industry of any kind but which has been brought back tremendously
978	HOUSE OF
Establishment of Industry Department by the actions of both the provincial government and the federal government, though it still needs more employment for its people. Although the location of a penal institution there certainly could not be considered as locating an industry there, this would provide a significant amount of employment for the people and it would be most helpful if it could be got under way as quickly as possible. The Minister of Justice informed me that tenders will not be called for the construction of this institution before October of this year, but if there is anything the minister can do to hurry things along, perhaps by letting the contract for site clearing or something of that nature at an earlier date, it would be a tremendous benefit to the people of the area. May I also say that if there is any way the minister can assist in locating more industry in the town of Springhill it would be very beneficial to the people of that town, to my constituency and to Nova Scotia generally.
The towns of Oxford and Parrsboro also need assistance if the minister is able to provide it, and I might bring to his attention-


The Chairman:: Order. I reget that I must interrupt the hon. member, but his time has expired.


Eldon Mattison Woolliams: Mr. Chairman, I am happy to speak today on this resolution. I noticed that when the Prime Minister introduced the resolution he dealt with three or four subjects. He indicated that he felt that such a new department would service the manufacturing industries and would assist in stepping up production throughout the country so there might be new jobs for approximately
250,000	people coming into the labour pool each year. He also admitted that much of the work this new department will assume is being done at the present time by the Department of Trade and Commerce and the Department of Defence Production, but said that there would not be duplication.
He also said that although it would be necessary to hire more people, to take on more bureaucrats, the numbers involved would not be too great because some of these people would be borrowed from the Department of Trade and Commerce and the Department of Defence Production. He promised that this new department, which would be interested in industry and interested in increasing the productivity of the country, would not be eroding any provincial right. He asked the house, on that basis, to approve the resolution so the government could bring forward the bill to set up this new department.
Whenever I have spoken I have been one of those who have always been against any


increase in the civil service generally, and I am going to base the first part of my argument on that premise. It was interesting to note that today when the Leader of the Opposition asked the Prime Minister a question concerning a statement he made on March 6, the Leader of the Opposition did not get a clearcut answer. I believe we should immediately place on the record the statement the Prime Minister made as quoted by the Ottawa Citizen. I am sure that if a statement is quoted by the Ottawa Citizen it is a fairly accurate record so far as Liberal statements are concerned.
The reference is to a speech made by the Prime Minister, then leader of the opposition, during the campaign on March 6, 1963. At that time he was trying to secure votes from the eastern farmers by pointing out that the Liberals would be cutting the costs of running the government. He held out a solemn promise in this regard, that there would be some reduction so far as departments were concerned, so far as the number of bureaucrats were concerned. This is what he said on this occasion. Of course all of us know that many promises were made during the last election campaign by the Liberals which any reasonable government could not ever hope to carry out. Nevertheless this is what he said on this occasion:
Mr. Pearson's proposed associate minister of agriculture is the second new cabinet appointment he has promised. The first was a minister of industry, to take over part of the function of the Department of Trade and Commerce, but to concentrate particularly on industrial expansion problems.
This is the important part.
However, he also said he would abolish the post of associate defence minister, so there would be a net gain of only one cabinet portfolio.
In other words he was telling the farmers that he was going to set up a new department of industry, create a new deputy minister and hire a lot of bureaucrats, but that he was also going to cut the costs of government by eliminating one portfolio, that of associate defence minister. The answer given by the Prime Minister today was to the effect that this government kept the associate minister because there was some confusion in defence policy. My answer to the Prime Minister, Mr. Chairman, is that if there is any confusion in defence he brought it about.


Lucien Lamoureux: Order. May I draw to the attention of the hon. gentleman the fact that he should confine his remarks to the resolution now before the committee, which deals with the establishment of a department of industry. I have serious doubts as to whether he can discuss other departments.


Eldon Mattison Woolliams: I appreciate your remarks, Mr. Chairman. However, I was dealing with the very important subject of the costs to the country and the solemn promise made by the Prime Minister to eliminate one minister when he set up this particular department.
In any event, I should like now to deal with the subject of the increased cost to the country generally. Let us take a look at the record. At the present time, in 1963, we have on the payroll of the government of Canada 138,167 civil servants. We have on the payrolls of crown corporations 142,164 people making a total of approximately 343,821. That is the number of employees who are working either as civil servants or for crown corporations serving approximately 18 million to 20 million people. These people are active in the federal jurisdiction only. Compare this figure with 1937, when we had approximately
42,000	employees in this field. We see, then, that there has been a tremendous growth in bureaucracy in this country. This is the first point I wanted to make.
As I have said, we have a Department of Trade and Commerce and, according to the Prime Minister who presented this resolution, these things were looked after by that department as well as the Department of Defence Production. I say the establishment of the new department will mean setting up a great bureaucracy in this country that we can ill afford. What is it costing the country today to have these 343,821 people on the payroll? I make this point, that we have now too many employees of government, and it is costing the taxpayers too much. The point I want to make is that if we are going to stimulate industry, stimulate the productivity of this country, then we have to cut costs, cut taxes, so that we will be in a position to meet our competition in this world.
Now I want to come immediately to this question of what all this cost the country from February 1, 1962 to February 1, 1963. I appreciate the fact that there was another government in office at that time. However,
I believe these figures should be put on the record because this government is expanding the bureaucracy, putting more people on the payroll and duplicating what the Department of Trade and Commerce and the Department of Defence Production can do. It is costing the country $1.57 billion-I want to repeat that, $1.57 billion-to pay the salaries of those 343,821 people to serve 18 million people. This figure does not take into consideration the cost of office space, the cost of equipment, buildings and so on. It is not any exaggeration to say that 30 cents out of every dollar collected in taxes in this country goes to pay the wages and operating expenses of the various government departments when
13, 1963	977
Establishment of Industry Department we have a budget of between $6 billion and $6.5 billion. This might be a good time to mention that fact, because the budget will be presented this evening.
I want to repeat that it is costing the country $1.57 billion to pay the wages of these people who make up the bureaucracy of this country. This new department of industry may be the economic baby of the Minister of Finance, and it may have been mentioned in his book "Troubled Canada", about which we have heard so much. I would say, however, that he had a great deal of help from one of the best backroom men in the House of Commons and probably the best member on the treasury benches. I refer to the hon. member for Bonavista-Twillingate, who has the best political machine that anyone has ever known since confederation. I say without hesitation that there are heads of departments-I have said this before and I am not going to name them again-who are pro Liberal. These people will do everything to sabotage any other government. I warn the splinter parties that if they had any hope of forming a government, their ability to operate a government in this country would soon be eroded away by this kind of bureaucracy.
I say this is another method, the setting up of another department to control manufacturing, by which the Liberal party hope to get their political foot in the door of every industry in this country. I say this without any hesitation. I know hon. gentlemen opposite do not like this, but it is correct. This Liberal luxury is already costing the Canadian people $1.57 billion. I say to hon. members opposite that last year we had one of the largest growths in our gross national product, namely 8 per cent.
If the government really wanted to increase the productivity of the country it should think of cutting down the bureaucracy, giving a free hand to industry and seeing that industry keeps healthy by cutting taxes. I would not mind seeing a budget brought down with a deficit if, during that particular year, we had an honest to goodness reduction in taxes. One has only to look at a personal income tax form to realize how high and how many taxes are in force.


Some hon. Members:: Oh, oh.


Eldon Mattison Woolliams: This is a suggestion hon. members opposite have heard many times before from me and I intend to talk about it every opportunity I get. In spite of the fact that I am being heckled from the Liberal side of the house I want to make it clear the Conservatives would be very happy to see a reduction in taxes, and this will have to be done if the Liberals implement the
;	HOUSE OF COMMONS
Establishment of Industry Department
promises they made to the Canadian people in the last general election.
Still talking on industry I draw one example, and one example only. To bring in a comprehensive medicare and health scheme would cost $1 billion, and if you add that to what it costs to operate the bureaucracy, $1.57 million, it takes up more than a third of the budget. On top of that there is the cost of defence. How can we ever hope to cut taxes? Mr. Chairman, I want to deal with that particular subject right now.
I said before that if the government were going to carry out its promises with regard to a health scheme it would mean an increase in expenditure of $1 billion, plus a new system of taxation which would lower the wages earned by the wage earners and also lower the profits of industry. If industry could keep the money or a part of the money that goes into supporting bureaucracy, then it could cut its cost of production, resulting in a lower cost of goods to the consumers in Canada and enabling Canadian industry to compete in world markets.
I say without any hesitation that if taxes were cut, labour unions would not be prone to ask for wage increases. Lots of times we ask ourselves why they are asking for wage increases. I would like to ask in reply, how many families living on the wages they are earning today, even though they are high, have enough left over after they pay their taxes to provide a home and maintenance for their families. If industry could retain part of the money it pays in taxes it would not have to go to organizations of bureaucracy to borrow money to finance expansion, such as the industrial bank of Canada.
The individual has only to earn around $15,000 in this country at present before he is required to pay 47 cents on every dollar he makes. Just think of the cost of that partnership. The biggest partner any business has in this country is the federal government. I do not need to outline the amount of taxes paid by corporations, but they cannot expand their operations when they are faced with such a high scale of taxation.
When the Liberals were in opposition they said they would cut taxes, but with the steps they are now taking they are going to make the Canadian people pay through the eye. Mind you, Mr. Chairman, my words are going to be borne out. This is the sort of thing which is a further step to create a complete welfare state, and I do not think there is much difference between a complete welfare state and this type of suggested legislation. The government is acting as a nursemaid to industry and is attempting to get into private

business in the same way it has gone into welfare enterprises.
Under that kind of system the ambition and initiative of man is removed. Under it, the will of man is not shattered but softened, bent and guided; men are seldom forced by it to act, but are constantly restrained from acting. It prevents existence; it does not tyrannize but it compresses, enervates, extinguishes and stupefies a people until a nation is reduced to nothing better than a flock of timid and industrious folks of which the government is the shepherd. When we reach this conclusion we have then conformed as a socialist state, because there is no difference between the final result of that process and the final result of socialism or the final result of communism.
The socialist state expropriates your property and pays you for it later, sometimes five or six years later. Under the social welfare state, the state takes your profit and is the biggest partner in industry and business. What then is the difference between a complete welfare state and a socialist state? They are only different forms of expropriation. Under communism the state takes your property and your profits, operates your business, and the state ends up with the same amount of control.
I say now without any reservation that I am personally opposed to setting up a new department to enlarge the bureaucracy of our country. Talking about socialisms, Mr. Chairman, it seems to me the Liberals have out-socialized the socialists in Canada. The right wingers of the Liberal party are the members of the New Democratic party. Facts are facts, and what makes the strangest of facts is that there are so many millionaires sitting on the treasury benches, and they want to socialize everybody except themselves. Perhaps they have in mind the final result so far as bureaucracy is concerned.
I think George Bernard Shaw described the end very well in "The Intelligent Woman's Guide to Socialism" when he said:
I also make it quite clear that socialism means equality of income or nothing, and that under socialism you would not be allowed to be poor. You would be forcibly fed, clothed, lodged, taught and employed whether you liked it or not. If it were discovered that you had not character and industry to be worth all this trouble, you might possibly be executed in a kindly manner, but whilst you were permitted to live, you would have to live well.
That is the final result of the kind of bureaucracy which is building up in this country. I know this is rather an exaggeration so far as the socialists are concerned. They do not like it; nevertheless they would force the individual into this or that. They would tell industry it could go into this

phase and could not go into that phase, and when we get into that position the state might as well own all the industrial concerns of the country.
I should like to talk for a few moments more about one particular industry. I dealt with it today when I asked a question of the Minister of Trade and Commerce, and he said I had made a speech. This is in reference to the petroleum industry. When the Conservative government took office, western Canada was producing about 256,000 barrels of crude petroleum a day and had trouble getting rid of it through domestic consumption and exports. Then, under the national petroleum policy developed by the Conservative government, we were able to build that up to 800,000 barrels per day, and brought millions of dollars into the country from the United States to buy that product. That was done by coming to an agreement with the United States on a quota basis, under which western Canada was given a market in the northwestern United States.
When I asked the Minister of Trade and Commerce about it today he shoved my question off and said it was a speech, but when he answered the hon. member for Acadia yesterday, in regard to the same thing, he said "We had a discussion with the Americans and we are going to have another discussion." Words, Mr. Chairman, will never build industry or trade. We want action. We have heard about 60 days of action, but they have turned into 60 days of marathon talk by the Liberals.
If the petroleum industry loses out in reference to that agreement in western Canada it will mean a great loss not only to western Canada but to Canada generally; because for the first time in a great number of years-I think it was 24 years-we were able to have a balance in trade with the United States so far as dollars were concerned. That occurred under the last Conservative government. When the party opposite talks about industry one would almost think they were the fathers of this thing. Canada, without trade, would fade. We must have trade. Who was it in the province of Alberta who for 20 long years opposed the export of natural gas from that province to the United States?


An hon. Member:: The Liberal party.


Eldon Mattison Woolliams: That is right. Somebody is good at answering. That same party is now bidding for office in the province of Alberta, but the people remember that it was the Liberal party, even as late as the time of the last provincial election, which opposed the export of gas from the province of Alberta. Yet what a boom it has brought to industry. It was a Conservative government which set up the national energy board and
13, 1963	979
Establishment of Industry Department it was a Conservative government which set up the Borden commission from which the national energy board legislation flowed, bringing millions of dollars to western Canada. These were measures the Liberals opposed when in opposition there. I will name some of these people. There is Harper Prowse, the former provincial leader who ran federally but who did not make the grade in western Canada. There is my good friend Grant McEwan who used to lead the Liberal party. He was against gas export.


John Whitney Pickersgill: On a point of order. I did not have the opportunity of hearing the first part of Senator Goldwater's-I beg your pardon-of the hon. member for Bow River's speech, but it does seem to me that this is not a place to carry on the Alberta provincial election campaign. We are dealing with the affairs of Canada and with a resolution to precede a bill before this house. Interesting as a political history of Alberta might be-and, incidentally, Alberta has never had a Conservative provincial government in all its history-it is altogether irrelevant to what is before the committee this afternoon.


Paul Raymond Martineau: Might I suggest it would have been more profitable had the Secretary of State been here at the beginning of my hon. friend's speech so that he would know what point the hon. member was making before he butted in.


John Whitney Pickersgill: On the point of order, I understand the hon. member was talking about gas, on which subject, I understand, he is a great authority.


Eldon Mattison Woolliams: I am always happy to have an interjection from the hon. member for Bonavista-Twillingate. I am disappointed he did not hear my opening remarks because I paid him a great compliment this afternoon. I said he was the greatest backroom boy any political party had ever seen, and the most active frontbencher. Given the combination of those two qualities it is unfortunate his title is not that of Prime Minister, because he certainly guides that party and is the leader of that party.


Lucien Lamoureux: If the point of order has been settled, we might return to the subject matter of the resolution.


Eldon Mattison Woolliams: Thank you. I knew you would wish me to answer the hon. member for Bonavista-Twillingate, Mr. Chairman.
I was speaking about a reduction in taxation and I also mentioned something about socialism. Somebody rose on a point of order, and I said the Liberal party were out-socializing the socialists. Most people remember what happened in Saskatchewan when the socialists set up industry there. They took

Establishment of Industry Department over the shoe factory, the boot factory, the lumber industry, the fishing industry and the petroleum industry. And when they were through with them there was no industry left in the province of Saskatchewan. I say this, with respect to members of the Social Credit party, that in Alberta the climate as far as industry is concerned is fairly healthy. But I think it might be interesting, while I am talking about democracy and socialism, to put on the record one last fact, because certainly I am an opponent of the socialist philosophy. The Secretary of State got up in his usual way with his hand over his mouth, hoping to get on the record, and tried to call me Senator Goldwater. Well, maybe Senator Goldwater has some good ideas. He says it is about time we passed laws to repeal the acts setting up some of these bureaucratic departments. That, I say to the Secretary of State, is what his leader promised farmers in the eastern townships he would do when he spoke to them during the election campaign. He has no intention of keeping that promise.
I should like to draw attention to this in order to show what happens to industry when there is too much government control. When premier Douglas promises free medicine for example, this is what happens-this is a good story and I quote from an article which appeared in the Regina Post and is referred to by Robert Tyre in his new book "Douglas in Saskatchewan".
Citizens who had not forgotten those fine promises of 1944-
-and they may not forget those which the present Prime Minister made in 1963-
-would find something tragically ironic in a news story which appeared in the Regina Leader-Post of January 6, 1962. The story reported that a 76-year-old Regina man had collapsed and died in city police court while facing trial.
The man had been charged with failing to pay his hospitalization tax in 1956. And it was the government of Saskatchewan that brought him to trial-a government that won election on a promise to provide the people of Saskatchewan with free health services.
I am going to end on this note. It is the same kind of socialism as we are being promised from the front benches of the Liberal party today. It will curtail industry and strangle it. Instead of increasing, the productivity of this country will slip away and we shall go way down the ladder, as far as being a trading and industrial nation is concerned.


Mr. Peters:: Would the hon. gentleman allow a question before he sits down? Would he not agree that the creation a year ago of the Department of Forestry would fall into a category which would make it subject to the same criticism as he has levelled at this resolution?


Eldon Mattison Woolliams: I would say, no, because that had to do with a particular industry such

as agriculture. We did not put up two ministers of agriculture to put the east against the west. We created a new department to deal with a particular type of industry. But the department which is suggested now is allembracing. This government wants to get in the back and front doors of all the industrial concerns in Canada.
(Translation):


Mr. Rondeau:: Mr. Chairman, I am happy to take part in this debate on the proposed establishment of a department of industry.
The constituency of Shefford, which I have the honour to represent and is well-known to you, Mr. Chairman, is half urban and half rural and can boast of numerous citizens dedicated to the development of its industry and that of the province as a whole.
The city of Granby, the princess of the eastern townships, is recognized for having the greatest number of industrial establishments-and they are of many kinds-within its walls. Being an industrialist myself, I am quite familiar with the numerous problems our industrialists have to face today, and that is why I am pleased to take part in this debate, for we, in this chamber, are not the only ones to be concerned with the problems of industry.
As a matter of fact, we know that every municipal councillor, every mayor, every industrial committee in the province of Quebec and in Canada as a whole is closely and deeply interested in the creation of new industries.
In view of the fact that the economic situation in Canada has changed a lot in the last 50 years, especially in the industrial field, it must be recognized that the problems facing industrialists today are different from those of 50 years ago. In fact, it is logical and normal to refer to a new department problems facing industrialists today, not in order to increase the number of bureaucrats, but to help remove the obstacles which industrialists meet with today, because if that proposal aimed at adding to the number of bureaucrats within the federal administration, it would surely be unwise to create a new department.
Mr. Chairman, today's issue of Le Devoir reports that since April 8 last, there are about
10,000	more unemployed than at the same time last year. We must not believe that we will solve the unemployment problem in Canada only by creating new industries because, for the last 25 years, an increase in the number of new industries has been matched by an increase in unemployment. Why?
Why? Because the solution of the unemployment problem is not to increase the number of industries, since industry's aim is

not to give employment, but products. Indeed, the industrialist today must manufacture' manage and dispose of his goods. A superior quality product must be offered at a competitive price. Any industrial enterprise must also be managed as economically as possible, so as to be able to face competition. And, after having produced goods of the highest possible quality at the lowest possible price, an industry has to dispose of them, and it is more particularly in this field that the federal government, through its new ministry, will have to help industrialists to settle their problems.
Today, industries are not lacking in production, and I do not think that a single member could rise and tell me that we are lacking such and such a thing in Canada, this country of plenty. Indeed, we have an abundance of products and our storehouses are over-stocked. If the government proposes to increase productivity in Canada by creating a department of industry, I think this is a mistake. Indeed, if we persist in applying the same old remedies as in the past nothing will be settled.
What surprises me most, is to hear my good friend, the hon. member for Bow River i Mr. Woolliams) suggest that the means of helping our industry is to ask the federal government to abolish the taxes imposed upon it now. Mr. Chairman, it seems to me that the hon. member should have suggested this three months ago, when his party was in power. As a matter of fact, if he had convinced his party that his suggestion was well-founded, he would hardly need to ask for an abolition of taxes today, because the taxes we are paying now, under Liberal rule, are the same as we paid three months ago, under a Conservative government.
Mr. Chairman, it is strange to see how the Conservatives, now that they are in opposition, have regrets, compunction, and also, within hand-reach, solutions and remedies for any problem to suggest to the government. On the other hand, on the government side of the house, they claim that the country's productivity must increase. But let me tell hon. members of the government that that is not the proper solution for our industrialists, because nowadays it is not production that is failing in Canada but rather the way to dispose of our products, of our resources and the way to empty our warehouses, because our Canadian people would be quite happy to be in a position to buy what already exists.
Mr. Chairman, I think this government should first of all take the heavy tax load off the Canadian industries because taxes
13, 1963	981
Establishment of Industry Department are a factor in production costs; when an industrialist adds up his production costs, he considers his taxes.
When we consider that tonight the new administration in its budget will probably indicate that about 20, 25 and probably 30 per cent of the gross national revenue will be used by the federal government for its own operation, we wonder what is going on, because it means that the cost of federal government for all the industrialists in Canada is somewhere between 25 and 30 per cent of their production.
Well, Mr. Chairman, if we really want to assist our Canadian industrialists and if we are sincere in establishing this new department, we must definitely reduce taxes which burden our industry.
The second suggestion I wish to make to the hon. members who sit on the treasury benches is, first of all, to make available to our Canadian industries the necessary capital to permit an easier turnover in their inventory, their capitalization and their capital investments.
It is a known fact that at the present time the federal government, through its bond issues and its direct and indirect taxes, has monopolized most of the private capital in our country.
This seizure of the savings capital available to us, Canadian industrialists, that investment capital was used to secure government bonds in order to finance the war, or its own financing, has faced us with an accomplished fact: the private capital available to Canadian industries has been engulfed and absorbed by the government.
The second suggestion that the federal government should accept would be, first of all, to make the required capital available to public enterprise in order to withdraw from public enterprise the private capital which has been frozen there until now.
If our industrialists are to finance their own businesses, then the federal government should not finance its operations at their expense, out of the savings made by Canadians to finance private enterprise.
Canadian industrialists do not have to beg for gifts from the federal government. As far as production is concerned, industrialists are far more competent than we members of the federal government to settle problems concerning their respective production. There is no need for a federal government inspector to point out to each industrialist what are his production problems.
What is needed is the assistance of the federal government to settle economic problems, that is to help to balance the consumers' purchasing power at production level, to
982	HOUSE OF COMMONS
Establishment of Industry Department make financially possible in Canada what Canadian industrialists have made physically possible by stocking our shelves and our warehouses in Canada as a whole.
Concerning the solution of the production problem, Canadian industrialists are still intelligent enough to deal with that by themselves, without the help of the federal government. But when it comes to the distribution problem, to the marketing of our products, the federal government has a part to play.
I notice in reading the resolution that one of the primary objects of the new department will be to increase productivity. Well, I think that is putting the cart before the horse. It is not by increasing production when we already have surpluses, when we do not know what to do with them, when Canadian consumers cannot purchase the products we have already, that we will settle the problem.
Mr. Chairman, people may poke fun at Social Credit and deride its solution, its "funny money" theory, but in the present economic context, it will be impossible for the new department of industry to really solve the industrial problems to the satisfaction of Canadian industrialists, if the federal government does not find a way to dispose of their goods.
Mr. Chairman, today, in 1963, we note that automation is replacing to an increasing extent our labour force. While members of this house still advocate full employment, it is possible that, within 25 years there will be only industrial production through machinery and automation. So, Mr. Chairman, I think that we must realize that the time has come to ponder on the proposals advocated by Social Credit in order to make financially possible what our Canadian industrialists have made physically possible.
We have no grudge against capitalism. We are not opposed to our industrialists for if we have today, a Canada which may boast that Canadians in general, including industrialists, are each year increasing their productive capacity, it does not depend on the federal government though it tries to get the credit for doing so, but it happens though to individuals, to private enterprise, to every businessman and industrialist who works hard in his own field to produce quality goods of which there is plenty in Canada.
Mr. Chairman, before concluding, I would have some suggestions to make with regard to the amendment which the new minister of industry might introduce with respect to the industrial development bank.

Everyone knows that, at this time, the industrial development bank, which was created to put some capital at the disposal of industry, only lends funds on real estate, or capital goods, and that this bank from its creation on until today, only has made loans to the biggest corporations in Canada, of which 65 per cent are controlled by American capital.
The industrial development bank has, until now, helped rather the large corporations than smaller business or industry.
It is also well known that it takes a year or a year and a half, to be able to benefit from a loan granted by the industrial development bank and that, on the other hand, that bank never lends anything to corporations which have been less than three years in existence.
This means, therefore, that the industrial development bank mainly helps undertakings which are already launched, whose business is well established, whose name is well known, who have goods on their shelves and which, in a word, are well on the way to success.
Mr. Chairman, I think we should amend the Industrial Development Bank Act so that the bank can help the industries finance their inventories at low interest, since if we were to allow businessmen to finance their inventories at low interest, they would be able to increase their productivity, lower their operation costs and, at the same time, their production costs.
Mr. Chairman, when establishing this new department of industry, which will come to life very soon, the minister must not interfere in the autonomy of the provinces and of the municipalities, in the autonomy of the already existing and numerous industrial groups in the province of Quebec which have rendered valuable services to several of our municipalities throughout the country.
Then, the minister of industry should be called upon to remove the obstacles which stand in the way of industry instead of increasing the foothold of bureaucrats in Canada.
As I said at the outset, if the minister of industry agreed to reduce the tax on industry gradually, that would lower production costs and, by the same token, industry could compete more easily on world markets.
The minister could set up an advisory board to help industry solve the complex problems it is often faced with.

Instead of sending inspectors out in the field to check on industry's bookkeeping, he could offer the services of experts to help industry solve its problems.
Instead of being a nightmare, those experts would lighten the burden which industry has to carry and that would serve the interests of most of those concerned.
(Text):


Mr. Baldwin:: Mr. Chairman, this is one of the much vaunted economic measures which the government has presented to this house and which it is asking to be enacted. To find out what it is all about it is necessary to read very carefully the resolution which is presented and upon which will be based, I assume, the legislation. It is also necessary to read quite carefully what was said by the Prime Minister at the time he introduced the resolution. If you do this, and if you read not only what was said but the implications behind what was said, I am able to say quite definitely that, like all the rest of the measures, stripped of the tinsel of the glittering phrases and the pretentious words it is nothing but a puny and undernourished scarecrow of an economic measure. I do not think there is any question about that. To establish my point I want to deal with just one particular part of the resolution. I think my hon. friend from Bow River has more than adequately disposed of the principal part of the resolution. I want to deal with that part which is set out in section (b) of the resolution, which is:
-to provide for the establishment under the direction of the minister of an area development agency and to provide for the appointment of a commissioner and a deputy commissioner for area development;
To understand that, Mr. Chairman, I think you have to read what the Prime Minister said at the time he introduced the resolution. At page 803 of Hansard he deals with this subject. I am not going to read all his comments, but I would read this particular interpretation of what he considers this legislation can do in so far as these areas are concerned:
It will create in Ottawa a small group of people whose special responsibility, on behalf of the minister of industry, will be to make sure that various federal policies are conceived and co-ordinated in ways which will be of maximum help to the areas of maximum need. Again, the point is to make action more effective by providing a focus for it. In this sense the area development agency will be co-ordinating rather than executive.
Before that, as reported at page 801, when first dealing with the resolution he said this:
13, 1363	983
Establishment of Industry Department
The point and purpose of the department of industry, which it is proposed to set up, will be to assist in transmitting these various ideas into effective action.
"These various ideas" relates back to comments he had just finished making about the establishment of an economic council of Canada. Consequently, it is necessary to have recourse to and examine what he said regarding what this particular measure to establish an economic council of Canada will do, because the Prime Minister himself has introduced this subject into the debate. In so far as concerns this particular aspect of the department of industry which it proposes to deal with, the economic council for Canada will make a study of how economic growth, technological change, automation and international economic changes may affect employment and income in Canada as a whole. It will also study how national economic policies could best foster the balanced economic development of all areas of Canada.
In other words, the economic council is going to be a "think" factory over which will preside, so I am told, the President of the Privy Council. Having developed its thoughts, its ideas-by what formula we do not know, whether by spontaneous combustion or by slaughtering a chicken every morning and examining the entrails to get some ideas and thoughts as to what is calculated to be best in helping the people of Canada-these particular studies will then be transmitted, if I correctly interpret what the Prime Minister said, to the commissioner and the deputy commissioner for area development.
Here we are getting, in my humble opinion, a perfect example of the fragmentation of departments and the consequent futility of the kind of government operations which this government is asking the house to pass and is asking the people of Canada to accept. The President of the Privy Council will probably act as a midwife to preside at the birth of these brainstorms.


John Whitney Pickersgill: That is a rather mixed metaphor.


Gerald William Baldwin: The function of the commissioner and deputy commissioner will probably be that of an adopting agency. They will take these ideas probably without ever having collaborated or worked together with the economic council in developing them. The sole function of this agency, as I interpret it and as I interpret what the Prime Minister said,
984	HOUSE OF
Establishment of Industry Department will then be to foist ideas upon other departments of government. I suggest this is completely wrong and not only will be useless but could be disastrous.
I am going to direct the attention of the committee to a very interesting report which has come to my hand. It is a brief to the lieutenant governor in council of the province of Alberta on administrative problems of government, filed by the Alberta section of the Canadian Bar Association on January 10, 1963. It should be of interest to the speaker who preceded me that this follows another report prepared by the Alberta section of the Canadian Bar Association which referred to the proliferation of administrative boards, tribunals, judicial and semi-judicial agencies in the province of Alberta up to a total of approximately 200, I believe-far more than are found in the province of Ontario with four times the population and having dangerous implications with respect to the system of democratic government as we understand it. On page 10 of the report, section 27, the Alberta section of the bar association made this very significant statement:
The section wishes to state emphatically that the essentials ol a policy to be administered by a tribunal should be stated explicitly wherever possible in the statute-
Of course, we have not got the bill before us yet and I may be quite wrong in the assumptions I am making, but having read the resolution and what the Prime Minister has said I doubt very much that we will find in the bill explicit terms as to the policies to be administered by this particular agency. If I am wrong I will be only too delighted to say so at the appropriate time, but I doubt very much that I shall be wrong.
The report of the Alberta section of the bar association was based in part on an examination of other studies which had been launched in England, the United States and Canada, in particular the Franks committee in England, a committee in Ontario which I will deal with later, the Acheson report in the United States and the Whyatt report in England. One of the reports upon which its recommendations were based was that of the committee on the organization of government in Ontario. In that report starting at page 10 I find some very interesting comments. It points out that one of the general principles on which government organization should proceed is-
-that related functions of government should be grouped wherever possible to limit the number of distinct or separate entities. So stated, the principle could lead into quite a lengthy discussion-
And so on.
The principle is stated in order to point up two dangers to sound organizational growth that are perhaps always present where executive responsibilities are expanding in the pattern we have noted.


In other words, here is a categorical statement that when we attempt to divide various functions between different government entities, departments and boards, which functions could well be concentrated and dealt with under one department, we get into the problem of fragmentation which inevitably leads to difficulties. As a matter of fact, this report on the organization of government in Ontario was prepared by a committee under the chairmanship of the new Minister of Finance. I would certainly suggest to him that when he has completed his present arduous task he should reread it and do a little evangelical work among his colleagues. I think there is an ample and fertile field for him to do so.
As I see it there is the difficulty with this particular program as it is proposed. There is indeed a very serious and urgent need to do something to try to heal the very deep economic wounds on the body of this nation which have persisted for a very long time, but it will not be done by dividing the functions of the organization to deal with them among a number of different departments.
I suggest that we are not without precedent as to how this matter has been dealt with in other countries. In the United Kingdom it was the subject of a long and careful survey over a number of years. Commencing in 1936, I believe, a commission under the chairmanship of Sir Montague Barlow looked into the situation there which was, of course, aggravated in the pre-war years in the United Kingdom. The war intervened and the report was not made until 1944, I believe. In 1945 the report was the subject of legislative enactment in the United Kingdom. It is very interesting to note, particularly in view of the remarks made by the hon. member for Bow River and others, that the legislative enactment of the recommendations of the Barlow report was brought in by a coalition government. It took place before the 1945 election in the United Kingdom and at that time the wartime government under prime minister Churchill, composed of Labour, Conservative and Liberal members, was still in existence. Therefore I would imagine that the act of 1945, known as the distribution of industry act, was probably a synthesis of the views of socialist members of parliament and of those who believed in the principle of private enterprise.
It is also interesting to note that the act passed in 1945 has only been amended twice, once in 1950 and once in 1958. Here you have a situation where a coalition government brought in the legislation which was amended first by a Labour government. It was not a serious amendment, not one which destroyed the fabric and the enunciated purpose of the

legislation. Then it was also amended in 1958 by a Conservative government. Here is an example of where a government dealing with this problem has done so effectively and in such a way that the public had a good idea of precisely what was going to be done.
The bill passed in 1945 consisted of 15 short sections of which perhaps five contained the kernel of the recommendations that had been made. To the extent that my studies have enabled me to come to a determination, it would appear that the legislation has worked fairly well. The remarks I am making now might well have been made on second reading of the bill but after bills are introduced it is, of course, difficult to persuade governments that they have made a mistake. I suggest to the minister and his colleagues that before the bill is brought in it would pay them to take a long and careful look at the legislation and the debate which accompanied second reading of the bill in the House of Commons of the United Kingdom, and that they should also look at the amendments of 1950 and 1958. I make this suggestion because here was a situation where the recommendations which would guide the deliberations of the body charged with responsibility for this particular program were brought out into the open in clear, definite and precise terms, quite contrary to what the situation will be, as I see it, if the proposals made by the government here are proceeded with.
The United Kingdom legislation contained precise terms under which an agency could function. The authority was vested in an existing department, and I call this fact to the attention of the minister. The department which was clothed with the responsibility was the board of trade which, of course, corresponds to our Department of Trade and Commerce. The president of the board of trade was the minister who was charged with carrying into effect the terms of the legislation and reporting to parliament. He was given guide lines, he was given directives, so that he and his officials knew precisely how they could operate. What is more important, the members of parliament and the public knew precisely what could be done.
The situation here, Mr. Chairman, I submit is entirely different. The economic council of Canada may formulate plans and study. As I said before, these studies will be conveyed to the commissioner or deputy commissioner of the area development agency. The deputy commissioner or commissioner will then have the responsibility, in the words of the Prime Minister, not for the implementation of the suggested plans but simply for co-ordination. As I understand it this is the nomenclature for trying to persuade other departments of government to
13, 1963	985
Establishment of Industry Department implement these studies or plans. I believe this is the difficulty. The commissioner will not participate to any extent in the formulation of the plans. He will not participate in the execution of these plans, and the members of this house will have no idea of the precise intention of the government in its attempts to render assistance to these areas of Canada which need assistance.
As I say, there are but one of two conclusions at which we can arrive in assessing the value of this legislation. It is either window dressing and of no value, no purpose except the political purpose of implementing a pre-election promise or else it is the vesting in several departments of government, operating without any guide line, of an opportunity to interfere in the industrial and economic life of this country. This interference will not take place under the terms of any statute which has been seen by the members of this house, which has been debated by the members of this house or approved by the members of this house. Unless there is an amendment to the resolution or unless there is something in the act which is entirely different from the concept in the resolution this will do nothing except create the commissioner and deputy commissioner of development areas whose functions and duties will be formulated by executive decision. This, I submit Mr. Chairman, is not the type of measure the people of this country desire for dealing with this problem.


Gordon Minto Churchill: Mr. Chairman, the importance of this resolution has now been brought to the attention of the house as a result of some very able speeches, two of which we have heard within the last few minutes. The hon. member for Bow River dealt with the subject of the increased emphasis on the development of bureaucracy and the hon. member for Peace River has shown that the resolution is faulty in its concept. I propose, Mr. Chairman, to deal with this resolution because I think it is the function of an opposition to examine with the greatest care the legislative measures which are placed before the House of Commons. My experience here indicates that if legislation has been carefully conceived and carefully presented, there is not much loss of time in getting legislative measures through the house.
On the other hand, if legislation is hastily brought forward, trouble occurs. This is the situation with regard to this resolution. When we first glanced at the resolution some time ago, it seemed to make some sense. It was obviously drafted to correspond with an election promise that was made during the campaign. There is widespread and proper interest in the development of industry in this country, and widespread and proper interest in the

Establishment of Industry Department second part of the resolution which has been dealt with so effectively by the hon. member for Peace River, namely the proposal for an area development agency.
However, the present government is showing signs of too great haste and not enough thought. This is apparent in the present resolution and, I presume, in the bill which they have been busily drafting. It is apparent in other items of legislation which are on the order paper, as we will point out in due course. The great haste of the present government is beginning to show now in careless preparation.
May I point out that everybody in the country has been aware of the first class work being done by the Glassco commission. The present government has been aware of the presentation of the final volume of the Glassco commission report. However, without an intensive study of the Glassco commission findings and recommendations, the government has rushed ahead, placing items on the order paper that run contrary to the recommendations of the Glassco commission. It may be that the government has already decided it is not prepared to accept some of the recommendations of the commission. This is sometimes the fate of royal commissions. However, it seems to me that the government's rush to place legislation on the order paper before the final report was presented indicates undue haste and careless indifference to a very efficient commission which has been examining the functions of the government of Canada for some considerable time and making suggestions for improvements.
We find in the report presented to us just this week, that the Glassco commission has suggested an entirely different role for the Department of Defence Production than the one which is envisaged in this resolution, On page 108 of the report, the commission suggests that the Department of Defence Production become a department of purchasing and supply and that its responsibilities be extended to include procurement for civilian departments and agencies.
It goes on to give other details of how a department of purchasing and supply would be more effective for government purposes but, without paying any attention whatsoever to that report, the government has brought in a resolution to establish a department of industry and amalgamate with it the present functions of the Department of Defence Production.
The second serious weakness was pointed out by the hon. member for Peace River. I have always had a serious objection to the combining of conflicting interests in a resolution or a bill. If the government fails to take

the advice which we are offering constructively, and brings in a bill based on this resolution, then on second reading of that bill, when hon. members deal with the principle of the bill, we must ask what the principle is? There is no one set, definite and specific principle involved here. Apparently two things are to be discussed and questioned. One, do we have a department of industry, and second, do we have an area development agency?
In the speeches made on the resolution stage, some hon. members have dealt with the department of industry proposal. Others have dealt with the area development agency; and when we come to second reading of the bill, unless it is redrawn the house will find itself in the position of questioning what it is voting on. Are you voting for a department of industry and an area development agency? If you are in favour of one and not in favour of the other, you are committed to support both or else vote against both, and this makes for very bad legislation.
My suggestion to the government is that there is still time to make a revision, still time to split this resolution into the two parts in which it should have been presented to us originally, and there is still time to bring in a separate bill for an area development agency. As the hon. member for Peace River has pointed out, other countries have had experience along that line.
As the Prime Minister pointed out in his address, the area development agency has a distinctly different role from that of the department of industry. It is supposed to deal with those areas-and I am quoting his words as found at page 803 of Hansard for June 7-
-in which unemployment is heavy and chronic in its nature, where special government action is therefore called for in order to encourage economic development or industrial adjustment.
In those areas the whole question of manpower adjustment is important, and so I do not question the value of this at all. I am simply suggesting there should be a separate bill covering this agency.
When we are dealing with legislation we are dealing with what we hope will be things of some permanency, not just here this year and gone the next. An area development agency might very well receive unanimous support, but there should be a separate bill for it and it should be considered in that light. With the great haste of this government it has fallen into the error of lack of thought and lack of preparation, and I seriously object to its failure to have recourse to the recommendations of the Glassco commission before putting legislation in front of the house.

I do not think anyone is in disagreement with the emphasis which has been placed on the importance of industry. We all realize that the industrial development of Canada is very vital to our growth. When we talk about industrial development, in this particular instance we are talking about the manufacturing industry. A review of manufacturing industry is given in chapter 14 of the Canada Year Book for 1962, and I would like to read one short paragraph on page 599 which is as follows:
Canada is no longer on the fringes of industrialization but ranks among the world's most important manufacturing countries. The rate of expansion throughout the years has been phenomenal but in the past generation alone Canada has changed from a country producing and exporting mainly primary products to one that is increasingly producing and exporting manufactured goods. Today, manufactures account for about 26 per cent of the value of all goods and services produced and employ a like percentage of the total labour force.
I would like to examine shortly the development of the manufacturing industry in Canada and point out some of the difficulties facing us in regard to it. The hon. member for Bow River has already indicated, in the course of his remarks, that no matter what we do in the way of developing or setting up another department of government we will still face the problem of a manufacturing industry dependant on a relatively small population.
Examining the records of the dominion bureau of statistics hon. members will see that although over the years there has been a considerable development in the number of industrial establishments in Canada, the employment of the labour force in those establishments, has not kept pace as one might have expected. I presume that is due to different methods of manufacturing, the increase in automation and changes in methods of production. So, although we would like to pin our faith on greatly increased employment with an increase in manufacturing, we must carefully consider at the same time the rapid technological advances which are being made and which slow down the increase one might expect in the number of people employed in manufacturing establishments.
May I call it five o'clock, Mr. Chairman?


The Deputy Chairman:: Order. So that the house may proceed to the consideration of private members' business, pursuant to section 3 of standing order 15, it is my duty to rise, report progress and request leave to sit again later this day or the next sitting of the house as the case may be.
Progress reported.
National Harbours Board Act


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



NATIONAL HARBOURS BOARD ACT


[Stage Direction]
On the order:
Second reading of Bill No. C-8, an act to amend the National Harbours Board Act (Tisdale grain terminal)-Mr. Rapp.
Mr. Speaker:: Before putting the motion for second reading of this bill, I desire to recall the statement I made at the beginning of the session when I issued a caveat respecting public bills introduced by private members. I said at that time that it was difficult if not impossible for the Chair to review the provisions of these bills to ensure that they conform to the practices and usages of this house and that the bills would be introduced with the understanding that each would be scrutinized before the time appointed for second readings and that any defects therein would be brought to the attention of the house.
The present measure, as stated in the explanatory notes, proposes that a public grain elevator be constructed at Tisdale, Saskatchewan, as a grain terminus for the national port facilities at Churchill, Manitoba.
According to subsection 2 of section 3 of the National Harbours Board Act the board is "for all purposes of this act, the agent of Her Majesty in right of Canada."
And further, according to subsection 2 of section 10 of the same act "all property acquired or held by the board is vested in Her Majesty in right of Canada."
The purpose of the bill is either to enlarge the powers of the board or to leave them as they are. In both cases, it is out of order.
I will deal first with the second alternative for, if the bill is useless, as I believe it to be, it should not be proceeded with.
The definition of a bill given at page 297 of May's 16th edition is as follows: "A bill is a draft of a legislative proposal."
In my view, according to our practice, a bill, to be acknowledged as such, or, rather as a draft of a legislative proposal, must or may do one or more of four things, namely:
(1)	Alter or amend an existing law or laws;
(2)	Repeal, in whole or in part, an existing law or laws;
(3)	Enact a new provision or provisions of law;
(4)	Consolidate, in whole or in part, an existing law or laws.

National Harbours Board Act
Bill C-8 is intituled: "An act to amend the National Harbours Board Act (Tisdale grain terminal)", and if it is to be considered as a legislative proposal it should alter the law which it purports to amend.
Does it do so?
In my opinion, it does not. This bill appears to be merely a statement that the national harbours board may deem necessary the construction, etc., of a public terminal elevator, and it accomplishes nothing whatsoever in a legislative way. It seems to me there is little doubt that this matter should be the subject of a notice of motion and not of a bill.
In the explanatory notes accompanying the bill, it is said that "this bill proposes that a public grain elevator be constructed at Tisdale, Saskatchewan", etc. In my view, this bill does not propose that a public grain elevator be constructed at Tisdale but it states that the board may deem it necessary to construct such a grain elevator, and the word "proposes" in the explanatory notes cannot, in my opinion, be considered as a legislative proposal.
Now for the second point. If this bill really proposes to instruct the board to construct a grain elevator at Tisdale-which I do not believe it does-it is also clearly out of order, as would be a bill ordering the construction of branch lines by the Canadian National Railways, a bill instructing the federal district commission to acquire real estate or a bill directing expenditures by the national centennial administration or the Canadian Broadcasting Corporation, to refer but to a few agency or crown corporations.
In a decision rendered by Mr. Speaker Edgar on March 10 and 11, 1898, he stated, inter alia:
While it is competent for a private individual, without the recommendation of the crown to propose an abstract resolution with reference to grants of money, I think this is not an abstract but a very concrete resolution providing and authorizing the government to incur a specific expenditure.
If this were an authorization to an agent of Her Majesty to construct a certain public grain elevator, which, however, as I have stated, I do not believe it is, such an expenditure of money would have to be initiated by the government under the constitutional checks required by section 54 of the B.N.A. Act and the rules of the house.
On May 9, 1933, Mr. Speaker Black ruled that an amendment involving an expenditure which would be incurred by the Canadian National Railways, was out of order because the railway is owned by the government.
On March 9 and 13, 1871, Mr. Speaker Cockburn ruled a subamendment out of order when it asked the house to commit itself in

advance to an expenditure of money as such a proposition should have originated in committee of the house and should have been preceded by a message.
To summarize, I believe this bill simply refers to powers that the board already possesses and to my mind the matter under consideration would be more properly the subject of a notice of motion rather than that of a bill. This measure enacts a pious wish and it is useless to instruct the board to build an elevator as the board already has the right to either build or not to build it.
I regret that in the circumstances I am of the opinion that there is probably justification for ruling this bill out of order.


John Whitney Pickersgill: I wonder if I might be permitted to make a suggestion to the house. My suggestion is that the hon. member for Hum-boldt-Melfort-Tisdale (Mr. Rapp) might undertake, at the end of the debate today, to withdraw the bill, in which case the house could agree to debate this bill as though it were a notice of motion such as Your Honour has indicated it could perfectly well be. On this basis, the hon. member's wish to bring this matter to the attention of the house will be fulfilled, notwithstanding the technical defect in the way of doing it. The hon. member had the luck of the draw and got his bill near the top of the list and it seems somewhat harsh, now, to deprive him of the opportunity he gained in this way on the grounds of a technical defect such as he, or I, or some other of the less learned members of this house would be more apt to make than would one or two of the more learned among us.
I wonder whether there would be unanimous consent to such a course and whether the hon. member himself would be agreeable to the suggestion I have made.


Mr. Speaker:: Before we begin to discuss the bill I should like to know whether the house agrees to give unanimous consent to proceeding in the way suggested.


Some hon. Members:: Agreed.


Mr. Speaker:: The house having given unanimous consent to proceeding as suggested by the Secretary of State, I will put the motion, subject to its withdrawal at the end of the discussion or at six o'clock, whichever comes first.


Mr. Reynold Rapp (Humboldi-Melfori-Tisdale):: Of course, Mr. Speaker, I do not wish to transgress your ruling. I should like to express my thanks to the leader of the house (Mr. Pickersgill) for presenting my case to hon. members. I should also like to express my thanks to the house for giving me unanimous consent to have this subject debated.

First of all, I should say I was given to understand that this was just a declaratory bill. It is declaratory of one of the powers the board already possesses. It gives no new power to the board to expend money for new purposes. The board already has the power under section 10 of the relevant statute, as is spelled out in the explanatory note, to construct, maintain and operate terminal elevators in Tisdale.
Churchill is a national harbour under the jurisdiction of the board and the board has the administration, management and control of the work. All these proposals of the harbour board are subject to the approval or veto of the governor in council, so I did not consider this to be a private member's money bill.
However, I should like to say that this bill is of national importance, not only in regard to the building of a terminal to expedite shipment of grain to Churchill, but because we in the west are faced with another problem, the abandonment of railroads. In this regard the building of a terminal in Tisdale would to a certain extent alleviate the situation.
Mr. Speaker, I should like to bring to your attention the seriousness of the case. For instance, the railroads are presenting a brief to the board of transport commissioners in regard to this abandonment of which I have spoken, which will affect 13,500 farmers in Saskatchewan. These 13,500 Saskatchewan farmers will be deprived of 1,274 miles of railroad, and as a result many grain elevators will not be used any more. As a matter of fact, approximately 40 million bushels of grain, taken as an average over the last 10 years, have passed over these railroads. When I said that this is a question of national importance, I think it is the responsibility not only of the grain companies to provide additional space for storage, but it is also the responsibility of the government. We all remember the years of surplus grain and how we in the west were affected by quotas. In view of that I do not think we can leave it to the grain companies to provide this additional storage space. The government and we in this parliament must see that the farmers in the west will not be put in an impossible position.
As far as this terminal in Tisdale is concerned, another purpose would be served by its construction. Over the years we in the west have always thought that the route to Churchill for the shipment of grain had not been used to its full capacity. Farmers could save from 6 to 7 cents a bushel on freight, because this is the shortest route to Europe. Even our customer, Great Britain, would be
13, 1963
National Harbours Board Act able to save about three cents, because it is about 1,100 miles shorter to use the Hudson bay route instead of shipping grain through the lakehead. In other words, a total of about ten cents could be saved.
Another point I should like to stress is that during the years of surplus, although we had two terminals, one at Saskatoon and one at Edmonton, they were never used to full capacity; they were used only to half their capacity. The reason for that was that the grain companies found it much more economical to store their grain at the lakehead at their own elevators, thus receiving more handling charges and storing charges from the federal government, which amounted to as much as $45 million to $50 million a year. I submit that we should not only ship more grain through the port of Churchill, but that the government should see that if this question of rail abandonment is proceeded with the farmers should be provided with government elevators and terminals, not only at Saskatoon and Edmonton but at Tisdale, and thus the cost of storage will be much less than it is at the present time.
The reason I submit that Tisdale requires a terminal is this. A few years ago, Mr. Speaker, the government of the day sent out officials to investigate the possibility of constructing a grain terminal between the western provinces and Churchill, particularly in the northern section of the country, and Tisdale was named as one of the places which would be very suitably located. In fact it is only about 600 miles from the port of Churchill. The Prescott terminal and the Port Colborne terminal serve the same purpose, but grain shipments from there to Montreal, Quebec and Halifax have to cover a far greater distance than the 600 miles from Tisdale to Churchill.
I should also like to say that Tisdale is the centre of the grain growing area where most of the best grain is grown. A terminal at Tisdale would serve a good purpose, because many farmers are going into livestock production, and with grain being cleaned at the terminal it could be sold back to the farmers. At the present time all the grain going out to Churchill from the elevators is uncleaned. Livestock is developing into a large industry in Tisdale. Last year, for example, approximately $2 million worth of livestock was sold at auction, just through the stockyards. But what I am most concerned with is that if we in this country are again confronted with a surplus grain position we must have storage places. We cannot depend entirely on the grain companies to provide us with the storage; the government must take the responsibility. We cannot escape our responsibilities in this regard, because as I said at the outset

National Harbours Board Act if this 1,200 miles of railroad is taken out 13,500 farmers will be affected, which would mean that we would have to have a storage elevator and a terminal at Tisdale, from which we could ship our grain to Churchill. At the present time there is only an average of about 20 million bushels going out of Churchill, but people who know something about the situation say that this figure could be increased two or three times if our grain companies or the wheat board agree to put more grain through Churchill. If this were done our customers in Britain would benefit very much, as well as the Scandinavian countries.
In conclusion, Mr. Speaker, although this bill, as you have said, has to be withdrawn, I can assure you, even though it is withdrawn, that we cannot solve the problem just by so doing. Steps must be taken by the government, either now or later on. The problems of storage and abandonment must be solved before it is too late. I understand the railroads have already applied to the board of transport commissioners for permission to go ahead with this abandonment, and I should like to stress that serious consideration should be given the matter. Mr. Speaker, I had much more to say about this bill, but I know many hon. members are interested in the problem and I am sure the house would wish to hear their comments.
So before six o'clock I will withdraw the bill as you have suggested, Mr. Speaker.


Mitchell William Sharp: Mr. Speaker, rising to participate in this debate, as this is the first occasion upon which I have taken part in a debate in this house may I take this opportunity of congratulating you, sir, even if belatedly, on your election as Speaker. I am sure that you will be a most distinguished Speaker.


Some hon. Members:: Hear, hear.


Mitchell William Sharp: I am not very familiar with the history of this chamber, but it must be very rare indeed for a minister of the crown to make his maiden speech on a private member's bill and to make it on budget day when he has no chance whatever of getting any publicity. I do so, however, because this bill relates to the improvement of grain handling facilities on the prairies, a matter in which I have had a continuing interest throughout my career and of course in which, as Minister of Trade and Commerce, I have a very lively interest today.
It has been my good fortune to have had a wide experience both in business and in government, and ever since I was of the tender age of 14 years I have been connected in one way or another with the handling of western grain; the only exception was the


four years that I spent in the utility business. When I assumed my present office and the Canadian wheat board was retransferred to the jurisdiction of the Minister of Trade and Commerce I felt as if I were once again on familiar ground. It has been a source of great gratification to me, sir, to be able to work once again with my friends in the Canadian wheat pools and their grain handling organizations, with the united grain growers and with the private trade, all of whom have contributed to the development of the present facilities for handling and selling Canadian grain. May I say, sir, that since taking office I have been very much impressed by the evident desire of all these groups to play their part in improving the machinery for the marketing of Canadian grain. I am happy that this is so, because there is certainly much to be done and, if I may say so, sir, it cannot be done only by government or even only by the Canadian wheat board; we need the cooperation of all those in the country who are concerned with the efficient handling of Canadian grain.
This is not an occasion, sir, for my entering into an extended discussion on Canada's grain marketing situation, and I am sure you would stop me if I were to attempt to do this. But I hope I may be permitted in this, my first speech in this house, to make a brief reference to the grain marketing situation as it was when we assumed office a relatively short time ago. I do not intend to bore hon. members with a long statistical statement; instead, I would like to quote just three sentences from a document that will be familiar particularly to hon. members from agricultural areas in the west as well as in the east, namely the recent submission of the Canadian Federation of Agriculture to the present Minister of Agriculture (Mr. Hays) on May 8, just about two weeks after this government took office. The sentences I would like to quote are under the heading "Grain policy" and they read as follows:
The first requirement of western grain policy is of course to take all possible measures to maintain and increase exports of wheat.
I would like the house to mark the following words:
There has been a decline in exports in the present year, and the movement at opening of navigation has been disappointing. This situation gives cause for real concern and the most aggressive measures and constant attention to export possibilities are required.
Now, sir, from some of the comments made in this house by hon. members opposite one might have concluded that when they left office exports of grain were improving; that sales were high; that everything was in good shape. I put these words on record now in

my first speech to make it clear, not from what I say but from the authority of an organization for which I am sure everyone in this house has a very high regard, that at the time we took office the situation gave cause for real concern.
I would like to assure hon. members that the Canadian wheat board, which is the agency concerned with the marketing of Canadian grain, is being at least as aggressive as it was or as it has ever been in selling Canadian grain, and that it is getting at least as much support from this government as it did from this government's predecessors. I hope that with the support of all those concerned with the marketing of grain we shall be able to reverse the downward trend in grain exports that was well under way when we took office. With those few remarks, sir, I would like to turn to the substance of the-


James Ernest Pascoe: Mr. Speaker, could I ask the minister a question, please?


Mitchell William Sharp: Certainly.


James Ernest Pascoe: The minister said in his statement that exports are falling now. I recall that the former minister of agriculture said that it did not really matter what exports were like at the moment; what mattered was how they were at the end of the crop year. Could the minister indicate whether at the end of this crop year the marketings will be anywhere near the record of last year?


Mitchell William Sharp: Mr. Speaker, we will have had so little to do with the marketing of wheat in this crop year which, as the hon. member knows, ends on July 31, that in spite of the very best efforts we could make I doubt very much whether we could overcome the very serious problem that faced us when we took office. But we will be doing our best.
Now, sir, may I turn to the terms of the bill that is before us and make a few comments thereon. As the hon. member for Humboldt-Melfort-Tisdale (Mr. Rapp) explained to us, the purpose of this bill is to promote-if I may put it that way-the building of a public terminal elevator at Tisdale, Saskatchewan, with a minimum storage capacity of 5 million bushels. I feel that I cannot support this bill, for three main reasons. First, the building of a terminal elevator at Tisdale is not likely to increase exports of Canadian grain, as I shall explain in due course; second, the building of this elevator would probably have the result of increasing the cost of marketing Canadian grain; third, if one were to look at the grain situation in general I think he would come to the conclusion that there are
National Harbours Board Act other places in Canada where elevators could be constructed with greater advantage to the movement of Canadian grain.
May I speak now, sir, first to the point as to whether this elevator is likely to increase the exports of grain from Canada. As the hon. member has pointed out, the purpose of this elevator would be to increase the volume of exports through the port of Churchill because this elevator would be located at the end of the Hudson bay railway. As he has acknowledged and as is well known, the port of Churchill is really one of the great models of efficiency in our grain handling situation and, if I may be permited to say so, I think one of the reasons is that the elevator there was built by one of the greatest Canadians of all time, the late Right Hon. C. D. Howe. In a short period of approximately 10 weeks about 20 million bushels of grain have been exported recently from this port.
As the hon. member has said in his explanatory notes and as he has repeated again today, the reason for building an elevator at Tisdale would presumably be to clean wheat so that it could be moved through the port of Churchill with greater dispatch. This is one of the purposes. The theory is that this would mean a greater volume of wheat moving through the port. However, Mr. Speaker, this reasoning is based on the assumption that the volume of wheat moved through Churchill depends entirely on actions taken within Canada, that it is in Canada that the impediments, such as they are, exist.
As the hon. member is aware, export sales out of Churchill have been running at around 20 million bushels annually for the past several years. This is all shipped out during August, September and October, and this period immediately follows the harvest period in the United Kingdom and Europe where our present market for Churchill grain exists. As a result storage facilities in those countries are usually filled with their domestic grain at that time. There is, therefore, a definite limit to the volume of wheat that can be absorbed by the European market during the time that it is convenient to ship wheat from Churchill. The only exception would be if storage facilities were built in Europe to store Churchill grain, and this would be very expensive. According to the Canadian wheat board the volume of exports out of Churchill is at or near its maximum level until such time as new outlets can be found for Churchill wheat.
The second reason that I find myself doubtful about the wisdom of building this elevator at Tisdale at the present time is that I think, as I said before, that it would tend to increase the over-all cost of marketing Canadian wheat. During the busiest part of the

National Harbours Board Act Churchill season there are times when it is necessary to ship grain that has already been cleaned to speed up loading in the port. When this occurs the elevator at Saskatoon is used for this purpose, and last year the Canadian wheat board moved about 1,400,000 bushels of wheat-


Reynold Rapp: May I ask a question?


Mitchell William Sharp: Certainly.


Reynold Rapp: That is exactly what the trouble was over the years when we had surpluses. Instead of the wheat board filling government elevators, they filled the elevators of others who handled their own grain to the lakehead so that they could save money. At that time I think it was the fault of the government, and the two elevators in Edmonton and Saskatoon were never filled to capacity. That is the reason why only 600,000 bushels were exported through Saskatoon annually.


Mitchell William Sharp: May I say that the point that I was going to come to was that these 1,400,000 bushels of wheat that were cleaned in Saskatoon cost the Canadian wheat board 3i cents per bushel. This cost is made up of a stop-off charge by the railways of 3 cents per hundredweight or about 1.8 cents per bushel, an elevation charge of a cent and a half and an inspection and weighing charge of $4 a car or about two tenths of a cent per bushel. Naturally because of this added cost the board tries to minimize as far as possible the necessity of moving wheat from Saskatoon but in order to maximize the total Churchill movement it is necessary to make use of Saskatoon. The building of an elevator at Tisdale would thus be a duplication of an elevator already in existence, use of which adds to the cost of handling western Canadian wheat and the use of which is minimized to the maximum extent practicable.
The final reason for my doubts about the wisdom of this proposal is that if additional elevator space is to be built in Canada it seems to me it could be erected in a more favourable location. Hon. members know that one of the great changes that has taken place in the movement of grain has been the development of markets in the Far East.


Reynold Rapp: Mr. Speaker, I do not want to interrupt the minister but he referred to a more favourable location. This is the reason we in the northern part of Saskatchewan would like to see a terminal built there, because during the surplus years we never received the quotas that other parts of the prairies received. Up to the middle of June we were only able to deliver 2 bushels per acre while others were on an open quota. This is the reason we are entitled to a government elevator in northern Saskatchewan.


Mitchell William Sharp: I thank the hon. gentleman for reiterating his position. I was dealing with the problem from the point of view of the interests of grain handling generally, which I think must be a viewpoint that is shared by him as well as by other hon. members from western Canada. I may say to him that even the fact that his bill was on the order paper has prompted some requests from other parts of the prairies which feel that they have at least as good a case as he has.
However that may be, in my concluding few minutes I should like to make a few remarks as to why, granted that everybody would like to have a terminal elevator in their home town, I am sure there might be better places from the point of view of increasing sales of Canadian grain than Tisdale or some other places. I am not singling out Tisdale particularly. There are two movements, of course, that have developed enormously. One of them is the movement out of the west coast to our new markets in the Far East, and there is a case for increasing our grain handling facilities on the west coast. Then, of course, there is the big market for feed grain which has developed recently in eastern Canada. There might be something to be said for increased storage facilities there, even though there has been a big increase already.
Finally, may I say a word about the other point made by the hon. member, and that is branch line abandonment rationalization. In the Tisdale area, there are, as the hon. member knows, several branch lines that could be subjects for abandonment and he has reason to be concerned about this possibility. It could be that if some of the low traffic density lines are closed down the country elevators along the lines that are abandoned would be closed. The implications of this, if I may say so to my hon. friend, are that a town such as Tisdale would likely be one of the places where storage capacity would be increased.
In Tisdale there are already four elevators with a total storage capacity of 344,000 bushels, and I am sure my hon. friend is very proud of this. If the logical pattern is followed I think Tisdale will do well. I am not making a prediction about this. I am just suggesting that it would be logical if there were greater concentration in Tisdale.
May I say a word about the trend that is now going on in western Canada with respect to elevators. I think all hon. members from prairie constituencies will agree that the modern trend is toward larger and well equipped country elevators. This permits greater over-all efficiency in handling, and because of this prospective railway line abandonment on the prairies represents both a problem and an opportunity. The problem,

of course, is how to increase the efficiency of the whole system with the least possible interference and damage to existing investment and institutions. I can assure hon. members that the government has had several useful conversations already with the grain handling organizations. My colleague, the Minister of Transport (Mr. Mcllraith) is engaged in consulting not only the grain handling organizations but all of those who are concerned with this very important problem. I feel quite confident, Mr. Speaker, that in these consultations the interests of Tisdale will not be neglected.


Douglas Mason Fisher: May I ask the minister a question? When he referred to branch line abandonment he used the words, "damage to investment". I think those were his words. May I take it from that that the problem which has been put before the government by the grain organizations and by the communities involved is that there should be some recompense for damage to investment, and is the government considering some kind of formula or trying to arrive at some basis on which this could be determined?


Mitchell William Sharp: Well, Mr. Speaker, I have not been the recipient of all these representations, so I am unable to satisfy my hon. friend's curiosity. They have been directed to the Minister of Transport, and he has not yet consulted with me. I am not really familiar, I am sorry to say, with the nature of the representations that have been made.


Eldon Mattison Woolliams: The
hon. member for Bonavista-Twillingate (Mr. Pickersgill) may wonder why I am so interested in a place called Tisdale, Saskatchewan. If I may just take a moment, I should like to explain to him that after the war I practised law in a place called Tisdale, Saskatchewan. I had two very fine legal partners, there, one by the name of Earl Van Blaricom and the other was D. H. H. Hamilton, the brother of the former minister of agriculture in one of the Liberal governments. Both of them were Liberals. After spending six or seven years in this area, I feel I should like to join with the hon. member for Humboldt-Melfort-Tisdale (Mr. Rapp) in support of this bill which has now turned into a motion.
I do not know whether or not the minister has had the experience of visiting what we call the Carrot river valley, which is one of the finest farming areas anywhere in western Canada. When I first went to Tisdale and met these two legal partners, both of whom came into the area about 1918 or 1919, the area of northeastern Saskatchewan was practically solid bush. This bush has been cleared away and there are now thousands of acres of the finest land anywhere in western Canada. In 28902-5-64
National Harbours Board. Act fact, this area has been called the garden of the prairies. It was in the Carrot river valley adjacent to Tisdale that a farmer by the name of Kermit Purdy brought rape-seed to western Canada for the first time. It is now used as an edible oil and for other industrial purposes. The rapeseed yield in this area runs to about 1,700 pounds per acre. During the war oil was a very important commodity for our defence projects and at that time rapeseed brought about six cents a pound. This very important farm area surrounds Tisdale, which is on the branch line to the city of Prince Albert. People in this house know where the city of Prince Albert is. The other point on that branch line is Hudson Bay Junction, which is now known as the town of Hudson Bay.
The branch line to which I am referring is the one that carries grain to the export market and is known as the Churchill line. There has been an association in that area for 20 or 25 years called the Hudson Bay association which has as its purpose the promotion of the greater use of this line for exporting grain through the port of Churchill to Liverpool, Great Britain. This is the shortest route from western Canada to Great Britain, our most important purchaser of western grain. I, therefore, join with the hon. member for Humboldt-Melfort-Tisdale in requesting the government to give this matter serious attention.
I cannot go along with the Minister of Trade and Commerce when he says that Tisdale would not be a good site for an elevator. Tisdale is really the centre of a big farming area. It is the gateway to that area which produces the cereals I have mentioned and would make an excellent place for storage.
Then, too, we are moving into a new era in western Canada in connection with grain handling. At one time there were grain elevators within a few miles of every farm, and the only way the grain got to market was through these local elevators. With the abandonment of railway branch lines in western Canada and the development of more efficient trucks we find that today trucks will take 500 bushels of grain from the farm to the elevator. It seems to me that we are moving into a period in western Canada which will mean the disappearance of the local elevator, at one time the landmark on the prairies. We will have the kind of elevators described by the hon. member for Humboldt-Melfort-Tisdale. In fact, he may be the first member from western Canada to put his finger on this new revolution which will take place in the marketing of grain. I am sure that farm organizations, the Saskatchewan wheat pool, the Alberta wheat pool

National Harbours Board Act and the united grain growers, would be the first to go along with my remarks.
I should like to make a personal reference to my association in this house with the hon. member for Humboldt-Melfort-Tisdale. I am sure that all hon. members who have been here since 1957 or 1958 share my belief that there is no member in the House of Commons -I say this without reservation-who works harder for his constituents than the hon. member for Humboldt-Melfort-Tisdale. I think it is well to recall too, his maiden speech in this House of Commons. At that time he said he belonged to a certain ethnic group. When he came to this country he never hoped he would achieve as much as he did. When he walked towards the House of Commons, as a new member he said that the statue of Sir Wilfrid Laurier seemed to look down at him and say, "You now have arrived". He has arrived. He has done an excellent job not only for his constituency but for western Canada.
In spite of the fact that this is the maiden speech by the Minister of Trade and Commerce, I want to take sharp issue with him in so far as the export of grain is concerned. If there is one subject about which I know something, it is this subject of grain, since I was raised in a wheat farming area known as Rosetown, Saskatchewan. I know the problems that the farmers have had over the years, and I know something about the problems of marketing grain. When the Liberal government was defeated in 1957 there were 700 million bushels of surplus wheat piled up on the farms, in old farmhouses and other old buildings, and at the lakehead. The quotas were as low as two or three bushels per acre. I do not believe the Minister of Trade and Commerce can make a case today for himself or for the Liberal government, because with a new Liberal government the farmers of western Canada can look again to the days when they will have surplus grain piled up on their farms. That is what he has promised them.
Not so long ago, after this government took office, I picked up a newspaper and noticed that the new Minister of Trade and Commerce had said that he was not going to take the same steps as the former minister of agriculture, the Hon. Alvin Hamilton. He said, "I am not going to China; I am not going to Hong Kong." He was going to leave it to the bureaucrats to look after this matter. I say to this new Minister of Trade and Commerce that he will have to be responsible to the farmers of western Canada for keeping the grain moving as it has moved for the last five or six years under a Conservative government.
[Mr. Woolliams.l


Mitchell William Sharp: May I ask the hon. gentleman a a question? Is he suggesting that the former minister of agriculture signed the agreement for the sale of wheat to China?


Eldon Mattison Woolliams: Well, Mr. Speaker, I was not a member of the cabinet. I do not know what was signed. I have not seen these documents.


Some hon. Members:: Oh, oh.


Eldon Mattison Woolliams: You may laugh now, some of you people from Toronto, but you will not laugh later. I know what Toronto thinks. They think that the public treasury pours out money to the farmers. Let me answer the question. I would say this to him. Does the Minister of Trade and Commerce deny that the figures for the export of wheat from Canada under the Conservative administration, over a five year average period, were greater than in any five year period since the institution of the Canadian wheat board? I have those figures in my possession, although I do not have them with me at the moment. I put them on the record the last time I spoke, and I can say that never did a Liberal administration, under the old regime of Jimmy Gardiner, export more wheat.
Then of course we had C. D. Howe who said to the farmers, "It is your job; you look after it." The farmers remember those words. They remember the great meeting in Winnipeg area when Mr. Howe forgot himself and told the president of the Liberal association, who was a farmer himself, to sit down and listen, that he, C. D. Howe, would tell them how to do it. Let's face it. The Liberal administration was never able to export more than 300 million bushels of wheat in any one year.


Mitchell William Sharp: Mr. Speaker, I think the hon. member is misinformed, and I suggest that he look up the figures.


Eldon Mattison Woolliams: I have not got the figures with me but I will put them on the record. I did not bring them with me because this debate came on at five o'clock and I did not want to interrupt the Minister of Trade and Commerce. But, I think he used this bill to pad the way for a new era in western Canada, an era of decline in the export of cereals from western Canada to world markets. When the figures are put on the record he will find that, with our home consumption and export markets, we were able to sell I believe 370 million bushels of wheat in one particular year. There is no question about that and today the farmers of western Canada have a degree of prosperity that

9S5
they have not had for many years, brought about by the Conservative government.
Now, I want to answer some of the hon. members from Toronto. They are the kind of boys who say that the money that comes from the Canadian wheat board to the farmers in western Canada comes from the treasury of Canada. I would point out to them that the Canadian wheat board operates a pooling arrangement, and the second and third payments are payments that arise because the wheat has been sold at a higher price than the initial price paid at the time the farmers delivered it to the elevators. There is no give-away program for the farmers. They are independent people, and they will agree with the remarks I made this afternoon earlier in another debate.
When the Secretary of State rose this afternoon and, with his usual graciousness, said as the bill was out of order we could now turn it into a notice of motion, I thought this was a new era. I said there was a man I could be most fond of. Then I realized he had a little agreement with the Minister of Trade and Commerce to use private members' hour to get the fact across that there was going to be a problem in marketing wheat.


Mr. Whelan:: Would the hon. member permit a question?


Eldon Mattison Woolliams: Certainly. Coming from you I would enjoy a question.


Eugene Whelan: Would the hon. member say if the government he supported is going to take credit for the drought in China too?


Eldon Mattison Woolliams: Mr. Speaker, there is a real intelligent member. He is talking about drought in China. We have had droughts in China and India before, but the thing is that the aggressive Conservative government went out to China and sold grain to feed the people-


Mitchell William Sharp: On a point of privilege___


Mr. Deputy Speaker:: Order.


Eldon Mattison Woolliams: I only have a few minutes left, Mr. Speaker.


Mitchell William Sharp: I rise only on a point of privilege, Mr. Speaker. I had every intention of participating in this debate, and had ever since the hon. member put his bill on the order paper. I felt there would have been disappointment if we had not an opportunity of debating it, but if anyone in the house had taken exception to this procedure I would not have had this opportunity.


Eldon Mattison Woolliams: I do not know if that is a point of privilege, Mr. Speaker, but I do know our government went out and found the markets. It was not like the previous 28902-5-64J
National Harbours Board Act administration which lost the grain markets, which allowed the wheat and other cereals to pile up on the farms. So far as the Minister of Trade and Commerce is concerned I do not know what he has to do with it. Probably he does not understand the problems of the western and eastern farmers.


Mr. Walker:: You are the only one.


Eldon Mattison Woolliams: In fact the Liberals have only one member from western Canada. He lives in the city of Calgary where he is the mayor. We have noticed he is often absent from the house, and he is probably not able to give this the interest that he might.


Mr. Deputy Speaker:: May I suggest to the hon. member that he attempt to limit his remarks to the subject matter that is now before the house.


An hon. Member:: That is very hard for him. Mr. Woolliams: I was just going to say this: with the absence of the Minister of Agriculture that is the reason no doubt they assessed the situation and the wheat board moved back under the Department of Trade and Commerce, and that is the reason I think the Minister of Trade and Commerce made his statement with reference to the fact that he was not going to go overseas and try to negotiate other deals in wheat. (Translation):


Mr. C. A. Gauthier (Roberval):: Mr. Speaker,
I think that the previous speaker has taken much time. I even thought that he would kill the bill of the hon. member for Humboldt-Melfort-Tisdale (Mr. Rapp).
Nevertheless, I congratulate the sponsor of Bill C-8 proposing that a public grain elevator be constructed at Tisdale. However, such an urgent need surprises me because the member's government has had all the opportunities to treat Saskatchewan well. Was the member so shy with his leader that he could not state his requirements? It is a farce, since the opposition has just been turned out of office, which seemed too heavy a load to carry.
The hon. member speaks about a possible reduction of export prices. We, of Quebec, agree with this, but we still wonder why the Conservative party did not take action along that line.


Mr. Speaker:: Order.
(Text):


Reynold Rapp: Mr. Speaker, on a point of order, pursuant to the agreement entered into with regard to my bill I ask leave of the house to withdraw it. I have done this very reluctantly, but this one hour debate was not a funeral for my bill. It was only the birth of a new baby that I will discuss much more in the hours to come.

The Budget-Mr. Gordon


Mr. Deputy Speaker:: Has the hon. member unanimous consent to withdraw the bill?


Some hon. Members:: Agreed.
Order discharged and bill withdrawn.


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


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.


Hon. Walter L. Gordon (Minister of Finance) moved:: That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
He said: Mr. Speaker, somebody was kind enough this afternoon to give me my horoscope for today, which reads: "Don't worry over money matters". I do not think that is an appropriate horoscope for tonight, because in delivering tonight the first budget of this new government I am aware that it is my duty to present the facts as we found them on taking office. It is also my duty to ask hon. members and the Canadian public to face up to these facts and, having done this, it is my further duty to indicate the kind of measures which are needed to put our national affairs in order once again.
This then will be a "face the facts" budget. If we face the facts, and if we conduct ourselves accordingly, we in Canada can look forward to an exciting and prosperous future. If we are afraid to face reality, if we are afraid to take the actions and the decisions that are called for, then the consequences cannot be long delayed.
I shall begin my remarks this evening with a few words about the importance of the annual budget presentation and then go on to discuss the condition of our national economy.
We on this side of the house take the budget very seriously. We look upon it as an annual occasion of great national importance. It is an occasion when the government is expected to give to parliament and to the people a clear appraisal of the nation's financial and economic condition. It is an occasion when the government must outline the short and long term economic and financial policies it proposes to pursue to overcome 

the problems and to convert the prospects into realities. Above all, it is an occasion initiating a grand scrutiny by parliament of the financial affairs of the nation. It is an occasion which should not and must not be avoided or delayed.
It is now almost exactly two years since there was a budget debate in this house. I remind hon. members that in the fiscal year which ended last March 31, the estimates for only six departments were called in this chamber, and even they were not approved. We have been financing for far too long a period on interim supply and Governor General's warrants. In a period of 14 months over $5 billion has been spent by the government of Canada with no parliamentary authorization other than warrants and interim supply votes.
In the last parliament, no one was more critical of this state of affairs than we who are now on this side of the house. We protested vigorously in that parliament, and when it was dissolved we took the question to the people. The results indicated their conviction that an accounting before parliament for the nation's financial and economic affairs was due, and indeed long overdue. It is that accounting which will be presented tonight.
The year 1962 was a remarkable one in Canada's economic history. It was marked by an exchange crisis which followed upon five years of economic stagnation. It was also marked by the adoption of a fixed rate of exchange for the Canadian dollar, an action which was taken three weeks after the government of the day had indicated that it was not its policy to do so.
Despite the exchange crisis, and perhaps partly as a result of the devaluation which had been resisted for so long, the year 1962 was for Canada an improvement over 1961. This was evident in the industrial part of our economy, while in agriculture, too, incomes were up and acreage under cultivation increased. Details are to be found in the budget papers tabled last Tuesday.
It is encouraging to record that the prospects for the current year are also favourable both in agriculture and in industry.


An hon. Member:: What about prices?


Walter Lockhart Gordon: I will come to that. But the
improvement we are now experiencing leaves no room for complacency. Our rate of growth over the past six years as a whole has been quite inadequate. We have had a falling rate of new investment. We have had chronic deficits in our international balance of payments. And most important, we have had chronic unemployment.

All of these problems are interrelated; if we can cure one, we shall relieve the others. For example, our international balance of payments deficit on current account has averaged almost $1.2 billion annually in the past six years. This has meant that we have been importing goods and services which we should have produced at home, and that we have failed to find export markets for goods which we should have sold abroad. If this situation had been corrected, the increased production in Canada might well have meant not less than 150,000 more jobs and our unemployment problem would have been reduced accordingly.
The added investment needed to provide this increased production and employment, and the increased production and employment itself, would all have produced higher government revenues. This would have been reflected in reduced budgetary deficits.
I could go on to describe our difficulties and what we propose to do about them strictly in terms of economics. But perhaps hon. members will forgive me if I speak in more human terms tonight, and about the human tragedies that inevitably result when economic conditions are unsatisfactory and our national affairs mismanaged.
The grim experiences of continuing unemployment are to be found in nearly every part of Canada, in nearly every constituency. Most members of this house know of men and women and of whole families whose lives have been warped and whose futures impaired by long periods when they were looking for non-existent jobs.
My own riding of Toronto-Davenport is a high unemployment area. Many of the people who live there came to Canada quite recently, and they are not fully familiar with either the language or the customs of their new community. They face frustrating disadvantages in their battle for a decent life. Similar conditions I suggest prevail in most other constituencies across the country.
The prevalence of unemployment is a wrong that must be righted. Any Canadian, young or old, who wants a job must be able to find one. Any Canadian must be able by his work and his savings to make his own direct contribution to the well-being of his family, his community and his country. This is a basic tenet of Liberal philosophy. It is an aim which we are dedicated to achieve.
It is the view of this government that unemployment is the most serious domestic problem facing Canada today. I shall review briefly the steps which we are taking to combat it.
A measure has been placed before the house providing for the creation of a department of industry. This new department will con-
The Budget-Mr. Gordon tribute to the long term solution of our national economic problems by actively promoting more employment opportunities in our manufacturing industries. Its aim will be to see that we produce more manufactured goods for export and for our own domestic needs, and that we process more of our natural resources in this country.
The minister-designate of the proposed department has already held preliminary discussions with officers of the automobile industry, both the car assemblers and the parts manufacturers. These discussions have been designed to ensure that we produce in Canada a larger volume of automobile parts and components for incorporation in Canadian cars or for export. The value of our net imports of automobile parts and components this year will probably exceed $400 million. The objective in the years ahead is to reduce very greatly these net imports. The government is counting on the full co-operation of the industry in realizing this objective.
These discussions with the automobile industry will be followed by discussions with the officers of other Canadian industries designed to achieve similar results. In the search for new employment and increased economic strength we shall not be satisfied with half measures. Wherever major changes in our industrial structure are found to be necessary, we shall energetically promote them.
It is important that the new employment we are seeking to achieve in the Canadian economy, and the new investment required to produce it, be directed wherever practicable to areas of slower growth and surplus manpower. To this end the special area development agency within the department of industry will seek to encourage new investment in areas where it will do the most good.
The Atlantic provinces are an area of slower growth which for many years has not shared adequately in our economic progress. The house will be asked to strengthen the Atlantic development board through the provision of a substantial capital fund. This fund will enable the board to promote capital investment on its own initiative.
The full effect on the economy of the important measures I have been discussing will not be felt for a few years. Loans made by the proposed municipal development and loan board are intended to have a more intermediate effect. Their impact should begin to make an impression within six months to a year from the time when parliament approves the legislation contemplated. These loans should result in a marked increase in social investment and in the employment it involves.
As a further means of combating unemployment, I shall propose later this evening a number of measures to promote new capital

The Budget-Mr. Gordon investment by providing special financial incentives in the private sector of the economy.
In addition to these long term and intermediate term measures, I should refer to the various proposals the government is making for providing more jobs this coming winter.
We have advanced a proposal to increase the percentage of winter works assistance in designated areas. This measure is also designed to reduce unemployment by promoting investment in social capital, and to do it in areas where and at times when unemployment is most severe.
Earlier this week my colleague the Minister of Labour announced that he would propose a program designed to reduce winter unemployment by-encouraging house construction in the months when activity in tha construction industry reaches its seasonal low. This program will apply to rural as well as to urban housing.
The minister also announced that he would propose the expansion of the existing program for retraining the unemployed in cooperation with the provinces. And he announced that a new program would be proposed to encourage basic training, increased apprenticeship training, and the retraining of those presently employed but whose jobs are threatened by industrial change.
There is one aspect of the unemployment problem that is of particular concern to the government. That is the persistent difficulties encountered by older workers in securing steady employment after they have been out of work for some time. An improvement in general employment levels and the correction of regional unemployment problems do not seem to be enough to overcome these difficulties. Something more is needed to look after the problem of this hard core of our unemployed.
The house will therefore be asked to provide by way of supplementary estimate for the payment of a special allowance to all employers, other than governments or municipalities, who increase the number of their employees this winter in a specified manner over a base level. The allowance will be paid on employment of workers aged 45 or older who have been out of work for six of the previous nine months and who are not in current receipt of unemployment insurance benefits or pensions. The allowance will be conditional on the employer providing the worker with a significant amount of approved training. It will be paid at the rate of 50 per cent of wages or $75 a month, whichever is less, for each month of employment and will continue for up to 12 months. It is

proposed that this program apply to workers hired between November 1 this year and January 31 next year.
Hon. members are only too well aware of the costs to this country of allowing people to remain unemployed, particularly for extended periods. These costs include substantial welfare payments. They also include far more important costs in terms of production forgone in our economy and in terms of misery and frustration for the individual concerned.
The proposal I have just advanced to deal with prolonged hard core unemployment is a novel one, and it is not without difficulties and risks. It will require careful administration, and adequate safeguards against its abuse- will be provided. It is directed specifically to assist that group of men and women in our society most in need of a chance to earn a living for themselves and their families. These people deserve their chance.
While our major domestic problem in Canada today is unemployment, we must not overlook the problems which accompany it. The most serious of these is the continuing deficit in our current balance of international payments. The budgetary deficits of the federal government are also a matter of concern.
In dealing with our balance of payments, let me summarize first our current international transactions for the past ten years.
During that period our imports of goods, including both capital goods and consumer goods, were $2 billion more than our exports of goods in the period. In the case of travel we spent $1.4 billion more abroad than visitors spent here. Steeply rising capital imports in the form of foreign direct and indirect investment led to interest and dividend payments abroad that were $4.2 billion greater than our receipts of this type. Other transactions further increased our deficit by $2.5 billion.
The result in the aggregate was that our sales of goods and services abroad and our foreign investment income were $10 billion less than our purchases and payments.
The implications of this deficit have been a matter of grave concern in Canada. They have been extensively discussed in the press, by economists, by businessmen and by the general public. There is a clearly recognized danger that if deficits continue at this rate, they will lead to a growing measure of control of our economy passing abroad. There is a danger that in allowing these deficits to continue we are sacrificing our birthright, the birthright which our forefathers laboured so hard to hand on to us.
An analysis of the problem shows clearly that if we are to overcome it we must centre

our attention on our merchandise trade. Historically we have had a continuous and substantial deficit balance in our trade with the United States, both in merchandise and in invisible items. This has been to a greater or less extent offset by a surplus in our trade with the rest of the world. In the past two years we have had small over-all trade surpluses.


Some hon. Members:: Hear, hear.


Walter Lockhart Gordon: I am not quite clear why hon. gentlemen opposite are so pleased about this; we should have had far greater trade surpluses.


Some hon. Members:: Hear, hear.


Walter Lockhart Gordon: Over-all trade surpluses must not only continue; they must be increased substantially by increasing exports and efficiently replacing imports. Such an increase will not only help to solve our balance of payments problem but will also help to solve the unemployment problem that goes with it.
We must now consider the growing series of budgetary deficits of the federal government. In nine of the 11 immediate post-war years there were annual budget surpluses, and the net debt of the federal government was reduced by $2.4 billion. In more recent years, however, under conditions of slowed economic growth and high unemployment, our revenues have been insufficient to meet expenditures. In the past six years there have been large deficits and our net debt has increased by $2.9 billion, almost $3 billion.
I do not propose, Mr. Speaker, to enter into a detailed discussion of the pros and cons of deficit financing. Government deficits can be justified in periods of depression or recession when the resources of the nation are underemployed, provided the expenditures and revenues are so designed as to stimulate the economy and provide more jobs. Unfortunately the budgetary deficits of recent years were not planned in this way. Because of this, and because it seemed as if the government of that day was unable to cope with our financial and economic problems, confidence in the Canadian economy was damaged both at home and abroad.
There has been a resurgence of confidence since the election.


Some hon. Members:: Hear, hear.


Some hon. Members:: Oh, oh.


William Heward Grafftey: He said it with a straight face too.


Walter Lockhart Gordon: But if this is to be justified and maintained it is important that we begin to put our national house in order: that we begin to move toward balancing our federal
The Budget

Mr. Gordon budget under conditions of high employment. We must take the first step in this direction now.
I have discussed in frank terms, Mr. Speaker, our unemployment problem, the problem of the deficits in our balance of international payments, and the problem of our federal budgetary deficits.
In seeking solutions to these problems our Salvation does not lie in isolationism; it does not lie in withdrawing unto ourselves and ignoring the currents of progress and change around us. Let us remember that we are a great trading nation dependant on our relationships with our friends throughout the world. We must not at the first storm signals of economic danger simply throw up a ramshackle tariff against imported goods and imported ideas and imported obligations and seek to bury our heads in the sand. That way lies stagnation.
The way of the future, the way of prosperity, the way of national pride, involves the fullest participation in the world around us in an economic sense as in every other sense. It involves expanding our trade in conjunction with our friends. It does not involve isolating ourselves from the trend toward international co-operation and freer interchange of goods and services. Rather it involves participating to the fullest in these new movements and moulding them to our best advantage.
These are the views, the broad economic philosophy if you will, of this Liberal government. It is our purpose to see these views are translated into action.
I shall have something to say in a few minutes about efficiency and economy in government.


An hon. Member:: We have not had any yet.


Walter Lockhart Gordon: Be patient. But the need for increasing efficiency and productivity is equally great in the private sector. To increase our employment and decrease our dependence on foreign capital we must compete successfully for markets, both at home and abroad. If markets are to be retained and captured, both business and government and labour must know where we are heading, not merely from month to month or from year to year, but over the years ahead. For this reason the proposed economic council of Canada will be of benefit not only to Canadian governments but also to Canadian labour and to Canadian business.
Following the review of our major problems which I have just concluded, I should like to state briefly what the policy of the government will be in a number of important fields. I shall begin with a word regarding monetary policy.

The Budget-Mr. Gordon
This government favours the kind of credit conditions which will encourage economic expansion. In saying this I am aware, of course, that our balance of payments situation must at all times be kept in mind. The governor of the Bank of Canada has made it clear in his public statements that he shares these views. Close and continuous consultation has been going on between the governor and myself since I became Minister of Finance. I am looking forward to a continuance of this consultation in the future.
I wish to say a further word about the relationship between the government and the Bank of Canada. In the last analysis it is the government that must take responsibility for monetary policy, as for all aspects on economic policy. There can be no misunderstanding on this score. At the same time the government recognizes that this does not relieve the bank of its own responsibilities in these matters.
I am in substantial accord with the views expressed on this subject by the present governor of the bank shortly after his appointment to that post. The royal commission on banking and finance will no doubt be considering whether the Bank of Canada Act should be amended to clarify these matters. The government will give careful consideration to any recommendations it may make. But for my part, I do not think any statutory arrangement will work satisfactorily unless there is close and continuous consultation between the government and the bank. I have already made it clear that such conditions exist at the present time.
Just over a year ago the government of the day decided on a fixed exchange rate for the Canadian dollar. I shall not discuss the causes of the exchange crisis which led to this decision, or rather I should say I shall not discuss them tonight. I do want to make it clear, however, that this government intends to maintain the fixed exchange rate at its present level.
I should now like to say a few words about federal-provincial fiscal relations. This is not a subject to be treated in detail at this time, since the Prime Minister has indicated the government's intention to propose a conference with the provinces in order that there may be a full review of it.
The summary of our financial position which I shall give shortly will make clear that the federal government is no less pressed for sources of revenue than are the provincial governments. This government assumes no rigid position on the sharing of joint tax fields. It is clear from the record of the past that readjustments of revenues and responsibilities are possible. But naturally no federal

government can ignore the problems of federal finance in seeking to lighten the burdens upon provincial treasuries.
There is a further consideration that has a bearing on this subject. The federal government has a special responsibility in the matter of ensuring adequate production and employment throughout our country. Fiscal policy is an important means of achieving this objective. Most people will agree, I am sure, that if the federal government were to give up a major part of its present revenue sources, even in exchange for compensating expenditure adjustments, its ability to exert an influence through fiscal policy over the level of economic activity in Canada would be weakened.
However, despite the inherent difficulties in federal-provincial fiscal relations I believe the present arrangements can be improved upon, but always within the letter and spirit of our constitution. We shall endeavour to bring about such improvement.
I should now like to discuss the question of non-resident ownership and control of Canadian industry. The latest figures prepared by the dominion bureau of statistics show that in 1959, 57 per cent of our manufacturing industry, 75 per cent of our petroleum and natural gas industry and 61 per cent of other mining and smelting in this country were controlled by non-residents. Anyone familiar with the financial pages of our newspapers can hardly be unaware of the extent to which these figures have undoubtedly increased since that date, that is, since 1959. The Canadian Oil, Atlas Steel, Royalite and Bailey Selburn takeovers in the last 12 months alone will have had a significant effect.
Canada derives material advantages from the associations of our industry abroad. Foreign direct investment in Canada has enabled us to achieve a relatively high standard of living much more quickly than we could otherwise have done. We must never forget this. But we must recognize that the extent of non-resident ownership and control which it has produced in Canada goes far beyond anything found in other countries is a comparable stage of industrial maturity.
In view of this situation we are entitled to take pride in the harmonious relations which have been maintained with the holders of foreign capital in Canada. These relations are based on fair treatment of those who have invested their capital here in good faith. These people must, and they will, continue to be treated fairly.
We shall continue to need substantial net inflows of foreign capital for quite a few years to come if we are to avoid further

exchange rate difficulties and if a reasonable increase in our standard of living is to be achieved. This is a fact of life in Canada. It would be the height of folly to ignore it. Having said that, I should add that nevertheless there has been considerable public discussion of, and public concern about, the increasing extent of foreign control of Canadian industry. Writing about Canadian-American relations in the Washington Post of May 16 this year, Walter Lippmann had this to say:
I have an Impression from talking to certain Americans with interests in Canada that they are beginning to realize how undesirable and potentially dangerous is the excessive United States control of Canadian industry. I hope nobody will fly off the handle at that remark. But the fact that more than half the capital of Canadian industry is controlled in the United States is a perpetual irritant.
The solution of the problem is not one for legislation or treaty but for voluntary action by the United States interests in co-operation with their Canadian associates. Canada is the kind of country in which this kind of problem can be handled unexcitedly in a spirit of mutually enlightened self-interest.
In these circumstances it may be useful for me to outline the views of this government as to how harmonious relations with foreign investors here can best be preserved.
We believe that industry in Canada, wherever it is controlled, should operate with due regard to the over-all interest of Canadians and the Canadian economy. This means that Canadian raw materials should be processed to the greatest possible extent in Canada, in order to provide employment to Canadians and contribute to prosperity in this country. It means that export markets should be sought actively wherever they may be found, and should not be limited out of regard for the interests of parent or associated companies abroad. It means that industry here should make a conscious effort to purchase its raw materials, components and supplies from Canadian sources whenever these sources are competitive.
It means that industry should employ Canadian service firms wherever possible. I am thinking of Canadian engineers, architects and other professional people, Canadian insurance and advertising firms, and Canadian consultants of all types.
It means that industry should exert itself to expand in Canada all the industrial functions which can efficiently be carried on here; and I am thinking particularly of increased basic industrial research and design. It means that industry should seek to provide the fullest opportunity for Canadian employees at all levels, including managerial, scientific and technical personnel.
Above all, I am convinced that a growing partnership between Canadians and investors abroad is the best way of strengthening the
The Budget-Mr. Gordon harmonious relations with foreign capital which it is our object to preserve. Foreign investors can further the growth of this partnership by selling minority interests in their enterprises to Canadians; and by electing a number of independent Canadian directors to represent these interests.
I suggest that a 25 per cent equity interest is in most cases appropriate to ensure that a Canadian point of view is always available when company policy decisions are arrived at. A smaller percentage would probably not be sufficient for this purpose. A larger percentage would be neither necessary nor in many cases practicable. In fact even a 25 per cent interest in most new or existing enterprises is not something that could be realized overnight. It is an objective to be worked toward over a period of years, although I hope this period can be a relatively short one.
And now we come to the heart of the budget, which I suspect some hon. gentlemen may not like quite so well. The heart of the budget is the condition of our expenditures and revenues. We shall first review the balance for the year just closed. Then we shall look at the outlook for the current year, with some regard to the following year, on the basis of the present tax structure and tax rates.
First, then, there is the balance for the fiscal year that ended last March 31. I shall only indicate the main items; detailed figures, still preliminary and subject to change, are to be found in the budget papers.
My predecessor, in his revised budget appraisal delivered last October, forecast a deficit of $570 million. This forecast was optimistic. Revenues turned out to be $54 million lower than estimated, and expenditures $85 million higher. It now appears that the actual deficit for last year was $709 million, which together with the deficit of $43 million in the old age security fund makes a grand total of $752 million.
I should point out that this large deficit was incurred after taking credit for some $75 million of non-recurring revenue from tariff surcharges, the legality of which has been challenged. I shall have more to say about this later.
There are a number of other items that should be mentioned in any recapitulation of the financial situation inherited by the new government. These include the condition of the old age security fund and the unemployment insurance fund, the railway subsidies, and the deficiencies in the superannuation accounts.
The old age security fund, which was solvent on April 1, 1962, incurred a deficit of $43 million during the last fiscal year and was forced to borrow from the consolidated

The Budget-Mr. Gordon revenue fund. On the basis of the present outlook and tax structure the old age security fund would incur a further deficit of $25 million this year, and would have to borrow this additional amount.
The unemployment insurance fund contained over $900 million in 1956. When this government took office last April the fund was bankrupt and in debt to the consolidated revenue fund.
To avert a freight rate increase or a railway strike resulting from a 1958 wage award, the previous government began the payment of special railway subsidies. The initial series of payments has continued since, and we have been forced to provide $20 million for this purpose in the present fiscal year.
In light of the continuing confusion in railway matters, the previous government appointed a royal commission on transportation in 1959. The reports of the commission were tabled in this house in April 1961 and January 1962, but no action was taken. Instead, a further $50 million annually has since been provided as an "interim" measure to forestall a new change in freight rates.
The failure of the previous government to deal effectively with the railway question thus means that we are faced with special railway subsidies this year aggregating $70 million.
The previous government throughout its six years in office failed to provide for any amortization of the mounting actuarial deficiency in the superannuation accounts. As of March 31, 1957 the unamortized deficiency in these accounts had been reduced to $139 million. In his 1957 budget speech the then minister of finance, Mr. Harris, undertook to reduce the deficiency still further, to $89 million. His successor refused to do this or to take any subsequent amortization action. Consequently, and as a result of pay increases in the interim, the deficiency in the superannuation accounts has now mounted to $880 million.
Other matters could also be mentioned. There is the shipbuilding subsidy, which was reduced, effective last April 1, in such a way as to lead to a sudden irrational surge of expenditure and activity in that industry which is unlikely to be sustained. This surge of activity places a substantial burden on this year's budget without producing any continuing benefit. And then there is the Dawson city festival fiasco mentioned by my colleague the minister of northern affairs the other day. The previous government made no

provision to meet its guarantees to the Dawson city festival foundation. The baby was left on the doorstep of the new administration.
The problems posed by the condition of the old age fund and the unemployment insurance fund, by the railway subsidies and the deficiencies in the superannuation accounts, can no longer be neglected. This government intends to deal with these matters and with any other skeletons that may still remain to be uncovered in our national financial closet. Nothing will be gained by delay or by trying to sweep these problems under some convenient rug. They must be faced up to and disposed of.


An hon. Member:: Another book.


Walter Lockhart Gordon: No, not another book. Unfortunately it is the Canadian taxpayer who will have to bear the cost of six years of mismanagement of our affairs.
I should now like to discuss the revenue and expenditure estimates for the current fiscal year. We have built our present estimates of revenues on the assumption that our gross national product will be about 5 per cent greater in 1963 than it was in the previous year. For this purpose we have assumed a normal crop, a relatively stable price levei from now on, and no external trouble. About one third of this 5 per cent represents price increases which have already taken place mainly as a result of last year's exchange devaluation and import surcharges. On this basis, and if there were no change in the tax structure, our revenues would amount to about $6,880 million including $730 million into the old age security fund. I should like, with consent, to insert a table in Hansard at this point showing our estimated revenues before tax changes and comparing them with revenues in 1962-63.
As there are one or two other tables to be presented, perhaps the house would give consent for leave to table them at the same time.


Mr. Speaker:: Does the house give consent?


Some hon. Members:: 
Walter Lockhart Gordon: It is more difficult to estimate the budgetary expenditures for this year than to estimate the revenues.
The main and supplementary estimates for 1963-64 tabled on May 29, plus the estimated disbursements of the old age security fund, total $7,300 million.
I indicated when I tabled these estimates that we have been forced to bring forward for this budget the expenditure estimates prepared by the previous government. We are not satisfied that these estimates reflect the most efficient and economical way in which our national affairs can be run. A thorough reappraisal of government expenditures has been initiated, in the course of which all existing spending programs will be reviewed, and some will be reduced or eliminated. While the initial results of this reappraisal will be apparent in the next budget, its full effect will take some time to make itself felt.
The government is also pressing forward with a review of the recommendations made by the Glassco commission. Those recommendations that may be expected to result in greater efficiency in the public service or in useful reductions in expenditure will be implemented as quickly as possible.
As in other years, there will be some further supplementary estimates before the end of the fiscal year. They will include among others the new programs this government will be introducing, programs that will add $70 million to government requirements this year and will add considerably more next year when they are in full operation. The cost of several of these programs should fall again a year or two later when they have run their course.
Hon. members will appreciate that there are too many imponderables involved for me to make an exact estimate of what the total expenditure for this year may amount to. Subject to these cautionary remarks and qualifications I am prepared to set the total 28902-5-65J
The Budget-Mr. Gordon figure at about $7,600 million, including $755 million for the old age security fund.
On the basis of the revenue estimates mentioned a few minutes ago this means, if there were no major tax changes, a deficit this year of some $720 million. The deficit next year might be even greater.
It would be irresponsible for us not to face up to this situation. As I said earlier, Canada is beginning to recover from the loss of confidence resulting from the financial and economic mismanagement of the previous administration.


Some hon. Members:: Hear, hear.


John George Diefenbaker: Tell a big lie often enough.


Mr. Lambert:: You are smiling now.


Walter Lockhart Gordon: No, I do not smile when I say that. I mean every word of it. And a restoration of confidence in ourselves and in our country, a restoration of confidence both at home and abroad, is a necessary prerequisite to business expansion and the creation of more jobs.
I would like to say to the hon. member opposite that confidence is not something one can count on or measure in any concrete way. It is a state of mind. It is psychological in character. And its recovery might well be shattered if we failed to take clear and positive steps toward some reduction in present budgetary deficits.
Hon. members will appreciate from the outline I have given of the problems that confront us and of the state of our finances that our opportunities for manoeuvre are severely limited. 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.
An examination of the tax structure shows clearly that taxes are already very high, but that the revenue they produce continues to fall short of necessary expenditures. It shows also that, as all of us know, our tax system is outdated, is too complex and has a disturbing number of loopholes.
A thorough review of it, which I am sure will be most valuable, is being made by the royal commission on taxation. The commission had not planned to submit its report to the government until some time in 1965. I have discussed this with the chairman, and in view of the pressing nature of the problem he has promised to revise the commission's schedule and to submit its report by the end of 1964. However, we cannot wait even that long before beginning to make changes in our tax system. I shall propose some of

The Budget-Mr. Gordon those changes tonight, and I hope to propose a good many others when the next budget is presented.
May I now proceed to summarize certain proposals which I shall put before the house tonight.
In order to encourage employment by reviving private capital expenditures, which have lagged so conspicuously for the past six years, I shall propose important new tax concessions. Effective on the date of enactment new manufacturing and processing enterprises located in designated areas of slower growth will be given an exemption from income taxes for three years from their inception. I shall also propose that such enterprises be entitled to write off new machinery and equipment which would otherwise fall "in class 8 in as little as two years thereafter. And I shall propose that any taxpayer be entitled also to write off the cost of new buildings located in designated areas of slower growth at the rate of 20 per cent per annum straight line, or in as little as five years. If these proposals do not stimulate very marked activity in the Atlantic provinces and in other areas of slowed economic progress I do not know what will. These are major incentives to new industry locating in those areas.
I am also proposing that, effective tonight, manufacturing and processing enterprises anywhere in Canada be allowed to deduct depreciation for tax purposes on new assets which would otherwise fall within class 8 at the rate of 50 per cent per annum on a straight line basis. To encourage Canadian participation, this privilege will be restricted to Canadian residents and to companies having a minimum of 25 per cent beneficial Canadian ownership. It means in effect, Mr. Speaker, that manufacturing and processing enterprises anywhere in Canada having a fair minimum Canadian participation will be able to write off new machinery and equipment for tax purposes in as little as two years.
It is intended that the measures I have mentioned so far should provide an immediate impetus to increased activity. Accordingly, new assets must be purchased and new businesses must be certified to have come into existence in the period of 24 months following the initial date of these measures if they are to qualify.
The incentives I have just described will supersede and replace three other tax incentives which have been adopted in the past two and a half years. They are contained in section 40A of the Income Tax Act pertaining to increased sales, about which there was quite a debate in the house last fall, and in

income tax regulations 1108 and 1109 concerning new products and re-equipment and modernization programs.
I shall propose that section 40A be repealed in so far as it applies to 1964 and subsequent taxation years. And the measures contained in the two regulations I have quoted, both of which expire by their terms within the next 12 months, will not be renewed.
I should now like to refer to further tax proposals of two types. One is designed to plug loopholes or otherwise improve the existing structure of taxes; the other is designed to eliminate certain anomalies.
First there are the measures designed to fill in gaps, plug loopholes and prevent avoidance of the intent of our tax law. There is a double purpose here. One is to increase our revenues and the other is to reduce the justifiable sense of inequity and frustration of those taxpayers who are unable or unwilling to engage in prolonged and often expensive efforts at tax avoidance.
We are particularly concerned about the way in which certain taxpayers seem to be able to eat, drink and entertain on a lavish scale on the basis of what is called a business expense but which is actually financed in large part at the expense of the public revenue. 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. We intend to give continuing support to this objective. I am sure that hon. members will agree that any excesses of expense account living are unfair to those who do not indulge in such practices. They should be stopped.
I shall propose one specific change in the Income Tax Act relative to a general tightening up of its administration in regard to business expenses. Hitherto a few taxpayers have been able to buy expensive cars and then recoup a large part of the cost out of the public revenue. I shall propose a measure to disallow in full capital cost allowances in respect of a passenger automobile acquired after tonight at a cost in excess of $5,000. I expect that this measure will produce some increased demand for less expensive cars, most of which are made in Canada and whose manufacture provides jobs for Canadian workmen.
Another type of tax avoidance about which the government is particularly concerned is the proliferation of methods of moving undistributed income from a corporation into the hands of its shareholders without the payment of tax. This abuse, and it is an expensive abuse to the public treasury, has become increasingly prevalent in recent years. It is time something was done about it.

I shall therefore propose that, effective tonight, the Income Tax Act be amended to give the Minister of National Revenue power to look through so-called dividend stripping transactions and to deem shareholders to have received dividends in these cases.
To eliminate another method of tax avoidance I shall also propose that effective tonight section 18 of the Income Tax Act be repealed. This section, dealing with lease option arrangements, has given rise to repeated abuses by allowing rental agreements to be cast in a grossly distorted form in order to avoid tax. Action in connection with this section has been urged by the joint committee of the Canadian Bar Association and the Canadian Institute of Chartered Accountants.
As a further measure to close loopholes, I shall propose an amendment to stop the device whereby a company that has experienced losses is purchased for the purpose of applying those losses against income from another business.
1 shall also propose that the practice concerning certain annuity contracts which are converted into cash, or have settlement options other than an annuity for life, be changed and that all the interest earned on the funds invested in such contracts made after tonight shall be subject to tax.
I want to make it clear that this will not be retroactive.
Turning to the elimination of anomalies and anachronisms, the government is putting forward a number of proposals.
The excise duty on exports of electrical energy should have disappeared long ago. We propose that it be abolished at the end of this month.
The base of the sales tax on gasoline is to be altered. Wholesalers have almost entirely disappeared from this field; therefore the wholesale discount of some 25 per cent which has existed for tax purposes for many years is no longer appropriate. Its elimination will bring increased revenues of perhaps $25 million in a full year, of which $7 million will accrue to the old age security fund and the balance to general revenue.
It is also proposed that a change be made in the taxation of rebuilt or remanufactured goods. Recently there has been a considerable increase in the production of goods using old parts or materials, with or without new components. These goods compete with similar goods manufactured from new materials, and they should be equally subject to sales tax. On behalf of my colleague the Minister of National Revenue I am therefore giving notice that his department proposes to examine carefully the operations of persons en-
The Budget-Mr. Gordon gaged in such work, and, where necessary, it will license them as manufacturers under the Excise Tax Act.
I am also proposing that companies whose business is the transmission of oil or gas through pipe lines be allowed to deduct from their income the expenses they incur in exploring or drilling for oil, gas or minerals. This concession will be a useful incentive to increased exploration activity in this essential industry and should increase Canadian participation in an industry now principally owned abroad.
I shall now propose a number of changes in the Customs Tariff. There are some increases and some decreases but on balance they represent a reduction.
I shall make several proposals relating to textiles, the two more important of which give effect to the recommendations of the tariff board in its last three reports on this subject. These proposals will involve both increases and decreases in duties, and will lead to a modernized and simplified tariff schedule in this area. They will therefore be of assistance to Canadian textile producers.
The proposals I have just referred to also include certain compensatory concessions on products other than textiles which have arisen from renegotiations under the general agreement on tariffs and trade.
I shall propose further a miscellaneous group of other tariff changes providing for reductions in rates or representing merely technical alterations. I shall also propose that the level of customs exemptions given to returning Canadian tourists which was introduced on an emergency basis last June be continued by statute.
Before leaving the tariff field, I have a further word to say about the surcharges imposed last June. As I stated in the house on May 21, the legality of the surcharge on imports order has been challenged, and the matter is before the courts. This poses a difficult problem. In many cases those who paid the surcharges, and who might now be entitled to claim refunds should the order be found to have been invalid, passed the amount of the surcharges on to their customers. These customers in turn may have passed the amount on to their customers, and so on. As I said in my statement, it would not be possible to unscramble a situation of this kind. Accordingly I shall propose legislation on the surcharge order whose principal effect will be to prevent any massive attempt at obtaining refund of moneys in fact paid by people who are not now identifiable.
I should now like to propose a number of measures connected with foreign investment in Canada.

The Budget-Mr. Gordon payable sooner after earnings are realized, will reflect changes in economic conditions more promptly in the future.
I should like to insert at this point a table summarizing the revenue changes I have proposed. Estimates are given of the net increase expected for the remaining portion of this fiscal year, and for the full fiscal year following it. These estimates show a net revenue increase of $155 million this year and $455 million in 1964-65.
Estimated Changes in Budgetary and Old Age Security Tax Revenues that would result from the proposed tax changes (millions)
1963-64	1964-65
fiscal year fiscal year
Increases:
Acceleration of corporate
tax payments	$	$165
Changes in withholding tax		
rates (net)	-	5Sales tax changes	185 185	385 555Decreases: Incentives for manufactur-	ing and processing	30	100Net Increase in Revenues:	$155	$455
I should also like to insert a table summarizing the revised revenues, expenditures and deficit for the current fiscal year after giving effect to all of my proposals.
It will be noted from the table that the revised deficit figure, which includes both budgetary and old age security fund figures, stands at $565 million compared with $752 million last year, a reduction of nearly $200 million. I am sure that hon. members will agree that this is a substantial move in the right direction. To do more this year would not be wise having regard to the present state of the economy. To do less would be irresponsible.
Estimated Surplus (Deficit) in Budgetary Accounts
and Old Age Security Fund 1963-64 fiscal year
(millions)			
Before	Tax	RevisedTax	In-	Esti-Budgetary Accounts:	Changes creases	matesExpenditures	$6,845	$6,845Revenues	6,150	$110	6,260Estimated (deficit) Old Age Security Fund	(695)	(585)Expenditures	755	755Revenues	730	45	775Estimated surplus	(deficit)	(25)	20Total estimated	(deficit)	$(720)	$(565)
Over and above the deficit of $565 million to which I have just referred, there are other cash requirements which must be provided for. These include cash outlays by way of loans, investments or advances to Central Mortgage and Housing Corporation to the Farm Credit Corporation, to the Export Credits Insurance Corporation, to the Canadian National Railways and Trans-Canada Air Lines for capital purposes, to the unemployment insurance fund and in connection with the proposed municipal development and loan board.
They also include cash advances to date to the exchange fund, slightly in excess of $100 million, but do not include any estimate of future changes in the exchange fund which are unpredictable.
There will, of course, be non-budgetary receipts offsetting in part the non-budgetary cash outlays. This year these receipts include one very large non-recurrent item of $109 million from the sale of its assets by Northern Ontario Pipeline Crown Corporation. Taking these receipts into account, our net nonbudgetary cash requirements for the current fiscal year are likely to amount to about $285 million. Our net cash requirements for 1963-64, both budgetary and non-budgetary, are thus estimated to be about $850 million.
Throughout this budget address, Mr. Speaker, I have referred repeatedly to unemployment as being the most serious domestic problem before us. Before I conclude I should like to mention again some of the measures which are designed to deal with this problem.
The most effective long term method of dealing with unemployment is to expand industry and industrial production in Canada. I have referred to the proposed department of industry with its associated area development agency. I have referred to the work this department will do in seeing that more goods are produced in Canada.
I have referred to the strengthening of the Atlantic development board and to the proposed municipal development and loan board. I have referred to a series of measures to encourage industrial expansion and growth by the provision of very substantial tax incentives. I have referred to the expansion of the municipal winter works program. I have referred to measures to stimulate employment in the building industry through reducing the down payment on N.H.A. housing and encouraging the construction of houses in the winter months. I have referred to the expansion of the program of vocational training, and to a new program for training those whose jobs are threatened by industrial change. And I have referred to a new plan

to encourage the employment and training of those over 45 who have not had jobs for some time.
I have no doubt that this manifold attack on the unemployment problem will be effective. As I said before, our economy is expanding and this expansion should continue into next year. The prospects look good for a substantial increase in business investment. This is due in part, as I have said, to an increase in confidence as a result of the election and to the prospect of decisive and far sighted government in Canada once again.
In conclusion may I say that I have not tried to minimize or conceal the various problems we are faced with. But in discussing them, I have been conscious of the strength of our country and of its great potential for the future. I have discussed our problems knowing that if we are to surmount them we must face them, and face them with boldness and resolution.
Our financial program has not been conceived in complacency. In bringing forward our financial proposals we have looked squarely at the realities before us. We have presented a fiscally responsible program designed to reduce unemployment and regain prosperity.
In the recent election campaign my colleagues and I undertook to give the public the facts. We said, and the Prime Minister in particular said repeatedly, that when we were faced with difficult and unpleasant decisions we would not be afraid to make them. Some of those decisions have been announced tonight. They have been made in confidence that the members of this house will support them. They have been made in confidence that the people of Canada will support them. And they have been made in confidence that all of us together, by facing the future with resolution and courage, can restore prosperity and security to ourselves, our children and our country.
I shall now table, Mr. Speaker, all the budget resolutions to which I have referred together with certain other proposals not mentioned specifically in this speech.



RESOLUTIONS


[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Income Tax Act and to provide among other things:
1.	That with respect to new depreciable property of a prescribed class acquired in the period of 24 months commencing June 14, 1963 capital cost allowances be computed on a straight line basis at a prescribed rate not exceeding 50 per cent per annum if the property has been acquired by a taxpayer in
The Budget-Resolutions a taxation year for a manufacturing or processing business in Canada and the said taxpayer is
(a)	an individual who was resident in Canada during a period of not less than 183 days in the year, or
(b)	a corporation that on the last day of the year was a corporation with a degree of Canadian ownership and control
and for the purposes of this paragraph;
(c)	a corporation has a degree of Canadian ownership and control at a particular time if the corporation throughout the 60 day period immediately preceding that time complied with the following conditions:
(i)	the corporation was resident in Canada,
(ii)	not less than 25 per cent of its voting shares were beneficially owned by one or more individuals resident in Canada, one or more corporations controlled in Canada or a combination thereof, and
(iii)	unless at least 51 per cent of its voting shares were beneficially owned by one or more individuals resident in Canada, one or more corporations controlled in Canada or a combination thereof, the number of directors of the corporation who were resident in Canada and not employed by the corporation otherwise than as directors, was not less than that proportion of the total number of directors on the board of the corporation that the aggregate number of voting shares of the corporation beneficially owned by individuals resident in Canada and corporations controlled in Canada is of the aggregate number of outstanding voting shares of the corporation; and
(d)	a corporation is controlled in Canada at a particular time if at that time it complies with the following conditions:
(i)	the corporation is resident in Canada, and
(ii)	not less than 51 per cent of its voting shares are beneficially owned by one or more individuals resident in Canada, one or more corporations controlled in Canada or a combination thereof.
2.	That a taxpayer whose business in a prescribed area of Canada has been certified to be a new manufacturing or processing business that commenced commercial operations in the period of 24 months commencing with the date on which any enactment based on this paragraph is assented to be exempt from tax on the income from that business for a period of 36 months from the date certified to be the date of commencement of operations, and that the rate of capital cost allowances for new depreciable property of a prescribed class acquired by the said taxpayer in the said 24 months period for such business
[Stage Direction]
The Budget-Resolutions be computed on a straight line basis at a prescribed rate not exceeding 50 per cent per annum.
3.	That with effect for 1964 and subsequent taxation years section 40A of the act, which provides for a deduction from the tax otherwise payable by a manufacturing and processing corporation, be repealed.
4.	That with respect to expenses incurred after April 10, 1962 a corporation whose principal business is operating a pipeline for the transmission of oil or natural gas be allowed to deduct in computing income the drilling and exploration expenses, including all general geological and geophysical expenses, incurred by it on or in respect of exploring for petroleum or natural gas in Canada and the prospecting, exploration and development expenses incurred by it in searching for minerals in Canada.
5.	That for the 1963 and subsequent taxation years a dividend received by a person resident in Canada from a corporation that throughout its taxation year in which the dividend is paid or credited
(a)	is taxable as a non-resident corporation carrying on business in Canada,
(b)	derives substantially all of its income from sources in Canada, and
(c)	has its shares listed on a recognized stock exchange in Canada
be deemed to be a dividend from sources in Canada paid or credited by a taxable corporation within the meaning of section 38 of the act.
6.	That the 15 per cent rate of tax payable by a non-resident person on dividends paid or credited to him by a person resident in Canada be reduced to 10 per cent with respect to dividends paid or credited after June 13, 1963 by a corporation that at the time the dividend is paid or credited has a degree of Canadian ownership or control within the meaning of paragraph 1.
7.	That the 15 per cent rate of tax payable by a non-resident person on dividends paid or credited to him by a person resident in Canada be increased to 20 per cent with respect to dividends paid or credited after December 31, 1964 by a corporation that at the time the dividend is paid or credited does not have a degree of Canadian ownership or control within the meaning of paragraph 1.
8.	That where a corporation resident in Canada that on June 13, 1963 was not a corporation that had a degree of Canadian ownership and control, within the meaning of paragraph 1, becomes a corporation that throughout a subsequent taxation year ending before January 1, 1967 has such a degree of Canadian ownership and control, a nonresident person shall be entitled to a refund equal to

(a)	5 per cent of any dividends paid or credited by the corporation to him after June
13,	1963 and before January 1, 1965, in respect of which he has paid a tax of 15 per cent to Canada, and
(b)	10 per cent of any dividends paid or credited by the corporation to him after December 31, 1964 and before January 1, 1967, in respect of which he has paid a tax of 20 per cent to Canada.
9.	That where a corporation (other than a non-resident-owned investment corporation)
(a)	during the period commencing on June
14,	1963 and ending on December 31, 1964 did not have a degree of Canadian ownership and control within the meaning of paragraph 1; and
(b)	in the period commencing on June 14, 1963 and ending on December 31, 1964 paid or credited dividends in an amount in excess of the amount of dividends paid or credited by the corporation in the period of 567 days that ended on June 13, 1963, the corporation shall, on or before January 31, 1965, pay a special tax equal to 5 per cent of the amount of the excess described in subparagraph (b).
10.	That with respect to income earned after December 31, 1964 the 15 per cent tax imposed by Part IIIA of the act on a nonresident corporation carrying on business in Canada be 20 per cent.
11.	That with respect to income of a nonresident-owned investment corporation earned after December 31, 1964 the present 15 per cent rate of tax be 20 per cent.
12.	That any amount paid or credited after June 13, 1963, by a person resident in Canada to a non-resident person, as or on account of a management or administration fee or charge, be subject to the 15 per cent tax on income from Canada of non-resident persons.
13.	That with respect to interest paid by a person resident in Canada to a non-resident person on any obligation issued after June 13, 1963, if the non-resident person
(a)	is exempt from income tax in the country in which that person is resident; and
(b)	has obtained a certificate of exemption from the minister,
the non-resident person be exempt from the 15 per cent rate of tax imposed in respect of such payment.
14.	That for the taxation years ending after November, 1965 a corporation shall during the 12 months period ending four months after the close of each taxation year, pay to the Receiver General of Canada
(a)	on or before the last day of each of the first 10 months in that period, an amount equal to one twelfth of the tax as estimated by it at the rate for the taxation year

(i)	on its estimated taxable income for the year, or
(ii)	on its taxable income for the immediately preceding year,
(b)	on or before the last day of the eleventh month in the period, an amount equal to one half of the remainder of the tax payable as estimated by it on its taxable income for the year at the rate for the year, and
(c)	on or before the last day of the period, the remainder of the tax
and that for the taxation years ending after November, 1963 and before December, 1964 a corporation shall, during the 11 months period ending 5 months after the close of its taxation year, pay to the Receiver General of Canada
(d)	on or before the last day of each of the first nine months in that period, an amount equal to one twelfth of the tax as estimated by it at the rate for the taxation year
(i)	on its estimated taxable income for the year, or
(ii)	on its taxable income for the immediately preceding year,
(e)	on or before the last day of the tenth month in the period, an amount equal to one half of the remainder of the tax payable as estimated by it on its taxable income for the year at the rate for the year, and
(f)	on or before the last day of the period, the remainder of the tax,
and that for taxation years ending after November, 1964 and before December, 1965 a corporation shall, during the 11 months period ending four months after the close of its taxation year, pay to the Receiver General of Canada
(g)	on or before the last day of each of the first nine months in that period, an amount equal to one eleventh of the tax as estimated by it at the rate for the taxation year
(i)	on its estimated taxable income for the year, or
(ii)	on its taxable income for the immediately preceding year,
(h)	on or before the last day of the tenth month in the period, an amount equal to one half of the remainder of the tax payable as estimated by it on its taxable income for the year at the rate for the year, and
(i)	on or before the last day of the period, the remainder of the tax.
15.	That the return of income for a taxation year that is to be filed with the minister in prescribed form and containing prescribed information by or on behalf of a corporation be filed
(a)	for taxation years ending after November, 1963 and before December, 1964 within five months from the end of the year, and
The Budget-Resolutions
(b)	for taxation years ending after November, 1964 within four months from the end of the year.
16.	That with respect to amounts received after June 13, 1963, where a taxpayer has received an amount in a taxation year,
(a)	as consideration for the sale or other disposition of any shares of a corporation or of any interest in such shares,
(b)	in consequence of a corporation having
(i)	redeemed or acquired any of its shares or reduced its capital stock, or
(ii)	converted any of its shares into shares of another class or into an obligation of the corporation, or
(c)	otherwise, as a payment that would, but for this provision, be exempt income, which amount, in the opinion of the minister, was received by the taxpayer as part of a transaction or series of transactions whenever effected or to be effected, one of the purposes of which was or is to effect a substantial reduction of, or disappearance of, the assets of a corporation in such a manner that the whole or any part of any tax that might otherwise have been or become payable under the Act in consequence of any distribution of income of a corporation has been or will be avoided, the amount so received by the taxpayer or such part thereof as may be specified by the minister shall, if the minister so directs,
(d)	be included in computing the income of the taxpayer for that taxation year, and
(e)	in the case of a taxpayer who is an individual, be deemed to have been received by him as a dividend from a taxable corporation within the meaning of section 38 of the act.
17.	That for the 1963 and subsequent taxation years where, in the case of two or more corporations, the minister is satisfied
(a)	that the separate existence of those corporations is not solely for the purpose of carrying out the business of those corporations in the most effective manner, and
(b)	that one of the main reasons for such separate existence is to reduce the amount of taxes that would otherwise be payable under the act
the two or more corporations shall, if the minister so directs, be deemed to be associated with each other.
18.	That for the 1963 and subsequent taxation years
(a)	a business loss incurred in a previous year by a corporation may not be deducted in a taxation year if
(i) the business in which the loss was sustained by the corporation was not carried on by it in the taxation year, and
[Stage Direction]
The Budget-Resolutions
(ii) in the period between the end of the year in which the loss was sustained and the end of the taxation year control of the corporation has changed hands, and
(b)	a business loss incurred by a corporation in a taxation year may not be deducted in computing the income of the corporation for that taxation year if the business in which the loss was sustained by the corporation was wound up or discontinued, and after such winding up or discontinuance control of the corporation passed to a person or persons who did not control the corporation in the year at any time when the business in which the loss was sustained was carried on;
but this paragraph is not applicable where the change of the control of the corporation occurred prior to June 14, 1963.
19.	That for the 1963 and subsequent taxation years section 18 of the act, which provides rules in the case of any lease option agreement, hire purchase agreement or other contract or arrangement for the leasing or hiring of property, be repealed, and appropriate transitional provisions be enacted in respect of any such contract or arrangement.
20.	That for the 1963 and subsequent taxation years the benefits received by an employee from his employer's contribution to a group life insurance plan that are at present excluded from income be excluded only if such contribution is in respect of group term life insurance.
21.	That, with respect to any annuity contract entered into after June 13, 1963, that part of the proceeds of the contract that consists of interest accumulated prior to the date on which the annuity commences be included in computing income of the recipient unless such proceeds are received as a life annuity or as a refund of premiums upon the death of the holder of the annuity contract.
22.	That for the 1962 and subsequent taxation years the manner of taxing a bankrupt corporation, a bankrupt individual and a trustee in bankruptcy be revised and in particular
(a)	that the trustee be deemed to be the agent of the bankrupt person for all purposes of the act;
(b)	that section 63 of the act not apply in the case of any income of the trustee from dealing in the property of the bankrupt person or from carrying on the business of the bankrupt person;
(c)	that the income of the bankrupt person be computed as if upon the occurrence of the bankruptcy the property of the bankrupt person did not pass to and vest in the trustee; and
[Stage Direction]

(d)	that the trustee be liable for payment of any tax payable by the bankrupt person to the extent of the property of the bankrupt person in the possession of the trustee.

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Excise Tax Act and to provide among other things:
1.	That the present exemption from sales tax for certain building materials be withdrawn by repealing the exemption for all goods mentioned under the heading "Building Materials" in Schedule III of the said act and by repealing the exemptions for
(a)	"Fire brick, plastic refractories, high temperature cement, fire clay and other refractory materials and materials to be used or consumed exclusively in the manufacture of such fire brick or refractory materials;"
(b)	"Creosote oil and other wood preservatives when for use exclusively in the treatment of timber, poles or lumber;"
(c)	"Seventy five per cent of the sale price if manufactured in Canada, or seventy five per cent of the duty-paid value if imported, of trailers for use as homes;"
(d)	"Railway ties;"
(e)	"Goods for use as part of sewerage and drainage systems, and articles and materials to be used exclusively in the manufacture thereof;".
2.	That any enactment based on paragraph 1 of this resolution provide that
(a)	goods for use as part of sewerage and drainage systems be exempt from sales tax when sold to or imported by a municipality for its own use and not for resale,
(b)	any transfer of a sewerage or drainage system to a municipality by any person within two years after the completion thereof, pursuant to a bylaw of or agreement with that municipality under which that person is required to instal such system and transfer it without charge to that municipality after the completion thereof be deemed, for the purpose of section 46 of the said act, to be a sale to the municipality for its own use and not for resale of goods for use as part of a sewerage or drainage system,
and that any agency operating a sewerage or drainage system for or on behalf of a municipality may be declared by the minister to be a municipality for the purposes of this paragraph.
3.	That any enactment based on paragraph 1 of this resolution provide that drain tile for agricultural purposes and materials to be used exclusively in the manufacture thereof be exempt from sales tax.

4.	That the present exemption for certain machinery and apparatus to be used in manufacture or production be withdrawn by repealing the exemption for all goods mentioned under the headings "Machinery and Apparatus to be Used in Manufacture or Production" and "Engines" in Schedule III of the said act and by repealing the exemptions for
(a)	"Seismic shot-hole casing and materials used in the manufacture thereof;"
(b)	"Materials (not including grease, lubricating oils or fuel for use in internal combustion engines) consumed or expended directly in the process of manufacture or production of goods."
(c)	"Diesel fuel oil when used in internal combustion engines used in logging operations and in the manufacture of rough lumber."
(d)	"Diesel fuel oil when used in internal combustion engines at mines to generate electricity for use in mining operations and other purposes connected therewith."
(e)	"Tires and tubes for use exclusively on the machinery enumerated in Customs Tariff item 411a."
(f)	Goods enumerated in Customs Tariff items 364, 399a, 399b, 399c, 411a, 417, 431h, 439c, 666, 667, 848, 848a and 848b.
5.	That any enactment based on paragraph 4 of this resolution provide that traction engines for farm purposes and accessories therefor (not including machines and tools for operation by such engines) and complete parts of all the foregoing, and materials to be used exclusively in the manufacture of the said engines, accessories or parts be exempt from sales tax.
6.	That any enactment based on paragraph 4 of this resolution provide that farm wagons, including four-wheeled farm wagons equipped to be tractor drawn and farm sleds, and materials to be used exclusively in the manufacture thereof be exempt from sales tax.
7.	That feeds for fish, supplements for addition to such feeds, and materials to be used exclusively in the manufacture of such feeds or supplements be exempt from sales tax,
8.	That the exemption from sales tax for materials for use in the equipment and repair of ships over ten tons net register tonnage be restricted to materials for use in the equipment and repair of ships to be used exclusively for commercial purposes.
9.	That the present exemption from sales tax for "Bakers' cakes and pies including biscuits, cookies or other similar articles;" be changed to read "Bakers' cakes and pies including biscuits, cookies and similar articles but not including simulated chocolate bars or candy bars;".
The Budget-Resolutions
10.	That the export duty of three one hundredths of one cent per kilowatt hour on electrical power exported from Canada be repealed.
11.	That the said act be further amended by adding thereto the following part:

[Stage Direction]
Securities Sales Tax
11. (1) In this part,
(a)	"designated corporation" means a corporation that was at the relevant time resident in Canada, any of the shares of which of any class were, within a period of two years immediately before that time, listed on a stock exchange;
(b)	"eligible purchaser" means any purchaser of shares of a designated corporation who was at the relevant time
(i)	an individual resident in Canada who had been resident in Canada for a period of not less than two years immediately before that time,
(ii)	a corporation resident in Canada having a share capital, in any case where the number of votes attaching to the shares of the corporation that were owned by one or more individuals or corporations described in any of subparagraphs (i), (iii), or (iv) or this subparagraph, exceeded 50 per cent of the total number of votes attaching to all of the shares of the corporation, and where, by reason of the beneficial ownership of any shares or other securities of the corporation or any agreement in writing, one or more individuals or corporations so described were in a position to or were entitled to elect or cause to be elected a majority of the directors of the corporation,
(iii)	a corporation resident in Canada having no share capital, a majority of the directors and of the other members of which were individuals described in subparagraph (i), or
(iv)	and individual or corporation wherever resident who purchased the shares of the designated corporation as a trustee under an employees' pension plan or under any trust constituted exclusively for charitable purposes, the right of appointment or removal of whom was exercisable by one or more individuals or corporations described in any of subparagraphs (i), (ii) or (iii);
(c)	"resident vendor" means a vendor of shares of a designated corporation who was at the relevant time resident in Canada;
(d)	"share" as applied to any corporation means a share of that corporation of any class, other than a share
(i)	the owner of which is entitled only to a fixed cumulative preferred dividend, and
(ii)	to which no vote is attached under any
[Stage Direction]
The Budget-Resolutions circumstances, or to which a vote is attached only in the event that any dividend described in subparagraph (i) is in arrears for a period of not less than two years; and
(e)	"stock exchange" means
(1)	the Canadian Stock Exchange,
(ii)	the Montreal Stock Exchange,
(iii)	the Toronto Stock Exchange,
(iv)	the Winnipeg Stock Exchange,
(v)	the Calgary Stock Exchange, and
(vi)	the Vancouver Stock Exchange;
and such other stock exchange or exchanges in Canada as may from time to time be designated by the governor in council for the purposes of this part.
(2)	For the purposes of this part, the votes attaching to any share of a corporation are the votes that under any voting rights annexed to that share may, either upon the happening of a particular event or otherwise, be exercised by the owner thereof.
(3)	A reference in this part to a person resident in Canada includes a person who was at the relevant time ordinarily resident in Canada, and in determining the residence of a person for the purposes of this part the provisions of the Income Tax Act applicable to any such determination for the purposes of that act apply mutatis mutandis.
12.	(1) There shall be imposed, levied and collected a securities sales tax of 30 per cent on the sale price of all shares of a designated corporation sold by a resident vendor to a person other than an eligible purchaser, payable by the vendor within 30 days of such sale.
(2)	No tax is payable under this part in respect of shares of a designated corporation sold by a resident vendor to a person other than an eligible purchaser through a stock exchange in any day where the total sale price of all shares of that corporation so sold by the vendor to all persons in that day does not exceed $50,000.
13.	The issue by a designated corporation to any person of any shares of that corporation pursuant to a warrant, option, right or conversion privilege entitling the owner or holder thereof to purchase or otherwise acquire those shares shall, except where the warrant, option, right or conversion privilege was outstanding on or before the 13th day of June, 1963, be deemed for the purposes of this part to be a sale by the corporation to that person of those shares, and in relation thereto the sale price of those shares shall be deemed to be the consideration paid or agreed to be paid for those shares plus the fair market value, immediately before the issue of the shares, of the warrant, option or right, or of the security carrying the conversion privilege, pursuant to which the shares were issued.
14.	A sale by a designated corporation to any person of all or substantially all of the property used by the corporation in carrying on its business in Canada shall, for the purposes of this part, be deemed to be a sale by the corporation to that person of shares of the corporation, and in relation to such shares the sale price thereof shall be deemed to be
(a)	the consideration paid or agreed to be paid for the property so sold, in any case where that property was sold to a person with whom the corporation was dealing at arm's length; and
(b)	the fair market value of the property so sold, in any other case.
15.	Where, by reason of the reorganization of, or the merger or amalgamation with another corporation of, a designated corporation (which reorganization, merger or amalgamation is hereinafter referred to as a "substitution" and which designated corporation is hereinafter referred to as the "old corporation"),
(a)	the total number of votes attaching immediately before the substitution to all shares of the old corporation owned by individuals or corporations described in any of subparagraphs (i) to (iv) of paragraph (b) of subsection (1) of section 11 (which individuals or corporations are hereinafter referred to as "eligible shareholders"), expressed as a percentage of the total number of votes attaching at that time to all of the shares of the old corporation,
is greater than
(b)	the total number of votes attaching immediately after the substitution to all shares of the reorganized corporation or of any corporation formed as a result of the merger or amalgamation (which reorganized corporation or corporation so formed is hereinafter referred to as the "new corporation") owned by eligible shareholders, expressed as a percentage of the total number of votes attaching at that time to all of the shares of the new corporation,
the substitution shall, for the purposes of this part, be deemed to be a sale to the new corporation of the shares of the old corporation by each of the persons who immediately before the substitution owned any shares thereof, and in relation to the shares thereof owned by any such person at that time, the sale price of those shares shall be deemed to be the fair market value at that time of shares of the old corporation, equal in number to
(c)	the number of shares of the old corporation owned at that time by such person, multiplied by
(d)	the quotient obtained by dividing
[Stage Direction]
(1)	the percentage number by which the percentage obtained under paragraph (a) exceeds the percentage obtained under paragraph (b)
by
(ii) the percentage number obtained under paragraph (a).
16.	(1) Subject to subsection (2), every person who, being a resident vendor, sells any shares of a designated corporation other than shares of a designated corporation in respect of which no tax is payable under this part by virtue of subsection (2) of section 12 shall, within one month of such sale, file a return with the minister stating, with respect to the sale,
(a)	the name of each of the parties to the sale;
(b)	the address of each of the parties to the sale including, in the case of a corporation, the address of the head office of the corporation and of its principal place of business, if any, in Canada; and
(c)	particulars of the sale including the date of the sale, the sale price of the shares of each class so sold and, where applicable, the number of shares of each class so sold; together with such further or other information or particulars as may be required by the regulations.
(2)	The return required by this section to be filed by the minister may, in the case of a sale of shares deemed by section
15	to have been made to any corporation referred to in that section as a new corporation, be filed with the minister by that corporation on behalf of each of the persons resident in Canada by whom the sale was deemed so to have been made, and where any return is so filed by that corporation no return is required by this section to be filed by such persons with respect thereto.
17.	There may be attached to any return filed with the minister as required by section
16	relating to the sale of any shares a certificate of identification as to the purchaser thereof,
(a)	signed,
(i)	where the purchaser thereof is an individual, by that individual, and
(ii)	where the purchaser thereof is a corporation, by a responsible officer of that corporation; and
(b)	stating that, at the time of the sale, such individual was, or to the best of such officer's knowledge, information and belief such corporation was, as the case may be, an eligible purchaser within the meaning of this part.
18.	Where, in any month the number of sales of shares of a particular designated corporation made by a resident vendor with
The Budget-Resolutions respect to which a return would otherwise be required by section 16 to be filed with the minister exceeds 50, the vendor may, in lieu of filing a return under section 16 with respect to each such sale made in that month, file with the minister, within 30 days after the end of that month, a return setting forth with respect to all such sales made in that month,
(a)	particulars as described in paragraphs (a) and (b) of subsection (1) of section 16 as to the vendor;
(b) the total number of shares of the corporation of each class so sold, for which the vendor holds certificates under section 17 indicating respectively that the purchaser or, in the case of a sale made to a number of purchasers jointly, that each such purchaser was an eligible purchaser within the meaning of this part, and the total sale price of those shares; and
(c) the total number of shares of the corporation of each class so sold, for which the vendor does not hold certificates as described in paragraph (b), and the total sale price of those shares;
together with such further or other information or particulars as may be required by the regulations.
(2) Subsection (1) does not apply in respect of any sale of shares in the case of which a return may be filed as provided in subsection (2) of section 16.
19.	Where,
(a)	in the case of any return filed with the minister as required by section 16, no certificate of identification under section 17 as to the purchaser of the shares to which the return relates is attached thereto or, in the case of a return under section 18 filed with the minister, no certificate of identification under section 17 as to the purchaser of any particular shares to which the return relates is held by the vendor, or
(b)	the certificate attached to the return or held by the vendor, as the case may be, does not indicate that the purchaser or, in the case of a sale made to a number of purchasers jointly, that each such purchaser was an eligible purchaser within the meaning of this part,
the purchaser or each such purchaser, as the case may be, shall, unless the contrary is established, be presumed to be a person other than an eligible purchaser.
20.	A document signed by an officer of the Department of National Revenue, stating that to the best of his knowledge information and belief after examining the appropriate records of the department a particular corporation was at any stated time a designated corporation, is admissible in evidence and in the
[Stage Direction]
The Budget-Resolutions absence of any evidence to the contrary is proof that such corporation was at that time a designated corporation.
21.	(1) Subsection (1) of section 43 does not apply in respect of this part.
(2)	Subsection (2) of section 54 applies in respect of a certificate attached to a return filed with the minister as required by section 16, or a certificate as to the purchaser of any particular shares to which a return under section 18 filed with the minister relates, as though such certificate were a return filed as required by this part.
(3)	Section 55 applies in respect of a person required by section 16 to file any return or by whom any return under section 18 is filed with the minister, as though such person were a person described in subsection (1) of section 55."
22.	That any enactment founded on paragraphs 1 to 9 of this resolution be deemed to have come into force on June 14, 1963, any enactment founded on paragraph 10 of this resolution be applicable in respect of electrical power exported from Canada after June, 1963, and any enactment founded on paragraph 11 of this resolution be deemed to have come into force on June 14, 1963 and to have been applicable in respect of any sales described therein made on or after that day.
23.	That the said measure further provide
(a) that where any tax under part VI of the said act has become payable by any person in respect of any goods for which exemption from tax under that part was withdrawn by any enactment founded on paragraphs 1 to 9 of this resolution, which goods were, before June 14, 1964, sold and delivered by that person, or applied by that person to a use resulting in the property in the goods passing from that person, pursuant to a bona fide contract in writing signed by the parties thereto before June 14, 1963 that provided for the sale of those goods or their application to that use for a fixed amount stated in the contract and that did not permit the adding of the tax to the amount payable to that person under the contract, a refund, or deduction from any of the taxes imposed
by the said act, of the tax or such part thereof as could not under the contract be added to the amount payable to that person thereunder may be granted to that person; and
(b) that where any goods for which exemption from tax under part VI of the said act was withdrawn by any enactment founded on paragraphs 1 to 9 of this resolution were, after June 13, 1963 and before June 14, 1964, sold and delivered by any person, or applied by any person to a use resulting in the property in the goods passing from that person, pursuant to a bona fide contract in writing signed by the parties thereto before June 14, 1963 that provided for the sale of those goods or their application to that use for a fixed amount stated in the contract and that did not permit the adding of any tax under that part that became payable after June 13, 1963 in respect of those goods to the amount payable to that person under the contract, an amount equal to the tax or such part thereof as could not under the contract be added to the amount payable to that person thereunder may, where application therefor is made to the Minister of National Revenue by that person before June 14, 1966 in such form as the minister prescribes and the minister is satisfied that such tax has been paid, be paid by the minister to that person.

[Stage Direction]
1. Resolved, that schedule A to the Customs Tariff be amended by striking out tariff items 24, 25, 179, 187c, 409f, 538h(l), 521(1), 521(3) (a), 521(3) (b), 522(6), 532g, 533, 536, 537, 537a, 537b, 537c, 537d, 537e, 538a, 538d, 538i(l), 538i(2), 540(a), 540(b), 540(c), 540(d), 541, 541a, 541b, 541c, 541d, 542, 542a, 543, 546, 546a, 547, 547a, 548, 548a, 548c, 549c, 549d, 549e, 549f, 569, 569a(l), 569a(2), 569a(3), 569a(4), 569a(5), 569a(6), 569b, 569c(l), 569c(2), 569d(l), 569d(2), 572a, 610, 798, 812, 812a and 812b, and the enumerations of goods and the rates of duty set opposite each of these items, and by inserting therein the following items, enumerations of goods and rates of duty:

M oat-
13 ritish	Favoured-
Tariff	

 Preferential	Nation
Item	Tariff	Tariff4	Chicory, raw or green	per pound Free5	Chicory, kiln dried, roasted or ground	per pound 2 cts.179 Labels for cigar boxes, fruits, vegetables, meats, fish, confectionery or other goods or w'ares; shipping, price or other tags, tickets or labels, and railroad or other tickets, whether lithographed or printed, or partly printed, n.o.p.; the foregoing not including tables of textile fibres or filaments	
17^ p.c.
Tickets issued by railway systems in the British Commonwealth (not including railway systems operating in Canada), shall be exempt from customs duty, when produced in countries entitled to the benefits of the British Preferential Tariff.
187c Photographic dry plates	 7\ p.c.
SI 2d Woven fabrics, wholly or in part of asbestos, for use in
the manufacture of clutch facings and brake linings.. 12-J p.c.
409/ Aluminum sluice-type devices for controlling water in irrigation ditches;
Animal clippers;
Automatic stock watering devices;
Barn hay forks, carriage, pulleys and track;
Barn litter carriers and track;
Combination excavating and transporting scraper units;
Egg cooling cabinets;
Elevators (other than storage elevators);
Grain crushers;
Grain or hay dryers;
Grain or hay grinders;
Grain loaders;
Gravity discharge farm wagon boxes;
Hay stack forms;
Heaters for orchards;
Hitches and couplings;
Hydraulic hoists for unloading vehicles;
Land levellers;
Free 2 cts.
22\ p.c.
12j p.c.
12£ p.c.
Rates in Effect Prior to
Rates Proposed in this Budget
General Tariff	British Preferential Tariff	Most- Favoured-N ation Tariff	General Tariff	3 cts.	2J cts.	21 cts.	3 cts.	5 cts.	3 cts.	3 cts.	5 cts.	35 p.c.	174 p.c.	221 P-c.	35 p.c.	1 2 n30 p.c.	10 p.c.	15 p.c.	30 p.c.	H-* u30 p.c.	12J P.c.	121 P.c.	30 p.c.	1963
The Budget-Customs Tariff
Rates in Effect Prior to
Rates Proposed in this Budget
Tariff	British Preferential	Most- Favoured- Nation	General	British Preferential	Most- Favoured-N ation	GeneralItem	Tariff	Tariff	Tariff	Tariff	Tariff	Tariff
m
(Con.)
438/i
Machines and tools for use on tractors, including blades, loaders, rippers, rakes and related operating and controlling gear;
Milk coolers;
Sodium metabisulphite;
Sprinkler irrigation systems;
Steel stanchions for confining livestock either in pens or individually, and complete equipment for milking parlours;
All the foregoing for use on the farm for farm purposes only;
Brooders;
Ensilage cutters;
Fodder or feed cutters;
Hay loaders;
Hay tedders;
Post hole diggers;
Potato diggers;
Potato planters;
Snaths;
Stumping' machines;
All other agricultural implements or agricultural machinery, n.o.p.;
Parts of all the foregoing	
(1) Motor cycles having an engine capacity of 250 c.c. or less, engines or side cars therefor; parts of the foregoing	
Yarns and rovings, including threads, cords and twines, wholly of cotton:
(1) Singles, n.o.p	
(*) Undyed and unbleached, for use in the manufacture
of cotton serving thread:
(a)	Singles	
(b)	Plied	
(3) For use in the manufacture of crochet, knitting,
darning or embroidery cottons to be packaged for
sale at retail for household use:
(a)	Singles	
(b)	Plied	
(fl) Mercerized yarns of count seventy five and finer.
Free	Free	Free	Free 15 p.c.	Free 22* p.c.	Free 30 p.c.Free	12* p.c.	30 p.c.	Free	17* p.c.	30 p.c.12* p.c.	17j p.c.	22* p.c.	12j p.c.	17* p.c.	22* p.c.Free	10 p.c.	15 p.c.	Free	10 p.c.	15 p.c.5 p.c.	10 p.c.	20 p.c.	5 p.c.	10 p.c.	20 p.c.Free	10 p.c.	15 p.c.	Free	10 p.c.	15 p.c.5 p.c.	10 p.c.	20 p.c.	5 p.c.	10 p.c.	20 p.c.Free	17* p.c.	30 p.c.	12* p.c.	17* p.c.	22* p.c.15 p.c.	20 p.c.	30 p.c.
cn
[Stage Direction]


"a
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o
s
£
o
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The Budget-Customs Tariff
532g Haircloth composed of horsehair in combination with
any vegetable fibre	 17$ p.c.
54.1a Yarns and rovings, including threads, cords and twines, wholly or in part of vegetable fibres, n.o.p., not containing silk, wool or hair, man-made fibres or filaments nor glass fibres or filaments;
(/) Linen thread for hand or machine sewing	 Free
(2) Linen yarns for weaving or braiding into fabrics.. Free (5) Singles, n.o.p	 12$ p.c.
(4) Other, n.o.p	 15 p.c.
541b Yarns and rovings, including threads, cords or twirus, wholly of jute;
(/) Singles	 10 p.c.
(£) Other	 15 p.c.
542a Woven fabrics, wholly or in part of vegetable fibres, and all such fabrics with cut pile, n.o.p., not containing silk, wool or hair, man-made fibres or filaments nor glass fibres or filaments	 17$ p.c.
542b Woven fabrics, wholly of jute	 Free
542c Woven fabrics, in the web, wholly of flax or hemp:
(/) Towelling and glass-cloth of crash or huck; tablecloth and napkin fabrics of crash	 17$ p.c.
(2) Other	 Free
543a (/) Clothing, wearing apparel and articles, made from woven fabrics, and all textile manufactures, wholly or partially manufactured, composed wholly or in part of vegetable fibres, n.o.p., when the textile component is not more than fifty per cent, by weight, of silk nor fifty per cent or more, by weight, of man-made fibres or filaments or glass fibres or filaments, not containing wool or hair	 25 p.c.
27| p.c.
17$ p.c. Free 17$ p.c.
20 p.c.
17$ p.c. 20 p.c.
22$ p.c.
5 cts. per 100 lineal yards
22$ p.c.
22$ p.c.
25 p.c.
30 p.o.	17* p.c.	27* p.c.	30 p.c.25 p.c.	Free	17* p.c.	25 p.c.25 p.c.	Free	Free	15 p.c.25 p.c.	12* p.c.	17* p.c.	25 p.c.Free	10 p.c.	15 p.c.25 p.c.	15 p.c.	20 p.c.	25 p.c.Various	Various	Various25 p.c.	Free	17* p.c.	25 p.c.Free	10 p.c.	15 p.c.25 p.c.	20 p.c.	25 p.c.	32* p.c.Free	10 p.c.	15 p.c.30 p.c.	17* p.c.	20 p.c.	30 p.c.20 p.c.	25 p.c.	40 p.c.Various	Various	Various15 p.c.	Free	5 cts. per 100 lineal yards	15 p.c.15 p.c.	22* p.c.	30 p.c.Various	Various	Various35 p.c.	15 p.c.	20 p.c.	35 p.c.and 3 cts.	and 3* cts.	and 4 cts.per pound	per pound	per poundFree	22* p.c. and 3 cts. per pound	35 p.c. and 4 cts. per pound35 p.c.	Free	22* p.c. and 3 cts. per pound	35 p.c. and 4 cts. per pound25 p.c.	25 p.c.	35 p.c. and 4 cts. per pound35 p.c.	25 p.c	25 p.c.	35 p.c. and 4 per pound22* p.c.	22* p.c.	35 p.c. and per poundVarious	Various	Various
The Budget-Customs Tariff
			Most- Favoured- Nation Tariff		Rates in Effect Prior to Rates Proposed in this Budget
Tariff Item	-	British Preferential Tariff		General Tariff	British Most-Preferential Favoured-Nation General Tariff Tariff Tariff
o48a (2) Towels and glass-cloths of crash or huck, table-(Con.)	cloths and napkins of crash, wholly or in part of flax
or hemp, not containing more than fifty per cent, by weight, of silk nor fifty per cent or more, by weight, of
man-made fibres or filaments or glass fibres or filaments nor wool or hair	17^ p.c.	22$ p.c.	35 p.c.	15 p.c. and 3 cts. per pound	20 p.c. and 3§ cts. per pound	35 p.c. and per pound51fib	Articles made from woven fabrics wholly of jute and all textile manufactures, wholly or partially manufactured, the textile component of which is wholly of jute, n.o.p.; jute fabric backed with paper	12| p.c.	22J p.c.	30 p.c.	12J p.c. 25 p.c.	22$ p.c. 25 p.c.	30 p.c. 35 p.c. and 4 cts. per poundSheets, pillow-cases, bed-spreads, dresser-scarves, doilies, tray-cloths, table-cloths, napkins, towels, glass-cloths and handkerchiefs, wholly of flax or hemp, but not to include towels or glass-cloths of crash or huck, nor table-cloths and napkins of crash	Free	22} p.c.	35 p.c.	Free	20 p.c. and 3 cts. per pound	35 p.c. and 4 cts. per poundHemming, hemstitching or embroidering with cotton thread of the foregoing articles, or the weaving of cotton thread in the borders of the handkerchiefs, will not remove such goods from this item.	S4Sil	Bags or sacks of jute, hemp, linen or sisal	12} p.c.	15 p.c.	20 p.c.	12} p.c. 17} p.c.	15 p.c. 17i p.c.	20 p.c. 35 p.c. and 4 cts. per pound559g	Batts, batting and wadding of wool, cotton or other textile fibre, n.o.p	10 p.c.	17J P-c.	25 p.c.	12} p.c.	20 p.c.	25 p.c.567	Sails for boats and ships; textile fabrics, in the web or with fused edges, for use in the manufacture of such sails	15 p.c.	221 p.c.	25 p.c.	15 p.c. Various	22j p.c. Various	25 p.c. Various569a	Hats, hoods and shapes of fur felt or of wool-and-fur felt	17i p.c.	221 P-c.	35 p.c.	p.c.	22} p.c.	35 p.c.
o
to
[Stage Direction]
3?
0)
to
£
a
[Stage Direction]
ca
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p
*«*[DOT]
[Stage Direction]
569b (/) Hoods and shapes,	caps,	bonnets	and berets, n.o.p..	22\ p.c.	30 p.c.(#) Hats, n.o.p	
20 p.c.	25 p.c.and, per	dozen	75 cts.	$1.00
669c Hoods and shapes, knitted, crocheted, plaited or woven, in a single piece; hoods and shapes of braid, not sewn;
all the foregoing for use in the manufacture of hats. Free	7$ p.c.
569d Hat sweats, cap peaks, stiffening bands for the inside of hats and caps, tips and sides when cut to shape, and materials for use in the manufacture of such articles; all the foregoing for use in the manufacture of hats and caps	
Free	Free669e Hat braids, of a class of kind not made in Canada, whether woven, knitted or plaited, not exceeding six inches in width, for use in the manufacture of hat bodies or shapes, but not for use in the ornamentation or trimming of such bodies or shapes	
Free	Free669f Materials, of a class or kind not made in Canada, for use in the manufacture of woven, knitted or plaited hat braids	
Free	Free572a	Carpets of sisal, palm straw or cane straw	
17$ p.c.	17£ p.c.674	Coated or impregnated fabrics, containing textile fabric, produced by any method, including lamination, if the weight of the textile fabric is less than two-thirds of the weight of the coated or impregnated fabric:(/) The textile fabric being wholly or in part of man-made fibres or filaments or of glass fibres or filaments.	21\ p.c.	32^ p.c.(.2) The textile fabric not being wholly or in part of manmade fibres or filaments or of glass fibres or filaments...	20 p .c.	25 p .c.574a Woven fabrics of vegetable fibres, coated or impregnated, imported for use as "brattice cloth" in underground mining operations	
Free	10 p.c.
45 p.c.
35 p.c. $1.50
22} p.c. Various
20 p.c. 75 cts.
27} p.c. Various
25 p.c.
[Stage Direction]
35 p.c. Various
35 p.c. $1.50
10 p.c.
Free
7i P-c.
10 p.c.
Free
Free
Free
Free
Free	Free	Free	Free	<-* Q i MFree	Free	Free	Free	M u40 p.c.	20 p.c.	20 p.c.	40 p.c.	CD cr>
CD50 p.c.	30 p.c.	35 p.c.	50 p.c.40 p.c.	20 p.c.	25 p.c.	35 p.c. and 4 cts. per pound25 p.c.	25 p.c.	35 p.c. and 4 cts. per poundVarious	Various	Various
12} p.c.
Free
10 p.c.
12} p.c.
to
The Budget-Customs Tariff
Es3
to
			Most- Favoured- Nation Tariff		Rates in Effect Prior to Rates Proposed in this Budget	
Tariff Item	-	British Preferential Tariff		General Tariff	British Most-Preferential Favoured-Nation Tariff Tariff	General Tariff
57Jfi Canvas in the web, wholly of flax or hemp, or both, plain woven, coloured or not, treated with weatherproofing or preservative materials, weighing more than six ounces per square yard, when the weight of the untreated fabric is two-thirds or more of the weight of the
treated fabric	174 p.c.	22* p.c.	40 p.c.	15 p.c. 25 p.c.	25 p.c. and 3^ cts. per pound 25 p.c.	35 p.c. and 4 cts. per pound 35 p.c. and 4 cts. per pound597a (5) Accordions	2* p.c.	2| p.c.	30 p.c.	5 p.c.	5 p.c.	30 p.c.610 Belting, n.o.p., not including single-ply belting wholly of textile fibres	7i p.c.	20 p.c.	27* p.c.	7* p.c.	20 p.c.	27£ p.c.
2. Resolved, that Schedule B to the Customs Tariff be amended by striking out item 1012, and the enumeration of goods and the rate of drawback of duty set opposite that item, and by inserting therein the following items, enumerations of goods and rates of drawback of duty:
C|
[Stage Direction]

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[Stage Direction]


o
2!
w
Item	Goods	When Subject to Drawback	Portion of Duty (not including Special Duty or Dumping
No.			Duty) Payable as Drawback
1008	Materials, woven, knitted, bonded, braided or felted, whether or not When used by manufacturers of hats in making bands for, or in
pleated, folded or sewn.	binding the edges of", men's hats	
99 p.c.1009	Woven fabrics in the web.	When used in the manufacture of linings for men's or boys'
hats or caps, or in the manufacture of buckram shapes
for women's or children's headgear	 99 p.c.
The Budget-Customs Tariff
3. Resolved, that Schedule A to the Customs Tariff be amended by striking out tariff items 535, 535a, 535e, 535(7, 538c, 539, 569c and 575, and the enumerations of goods and the rates of duty set opposite each of these items, and by inserting therein the following items, enumerations of goods and rates of duty:
Rates in Effect Prior to Rates Proposed in this Budget
Tariff 	
Item	British Preferential Tariff	Favoured- Nation Tariff	General Tariff	British Preferential Tariff	Most- F avoured-Nation Tariff	General Tariff61,0a	Grasses, seaweed, mosses and vegetable fibres other than cotton, not coloured, nor further manufactured than dried, cleaned, cut to size, ground and sifted; oakum of flax, hemp, or jute; coir and coir yarn	Free	Free	Free	Free	Free	Free640b	Grasses, seaweed, mosses and vegetable fibres other than cotton, n.o.p.; bagasse of sugar cane, whether or not dried, cleaned, cut to size, ground or sifted	Free	10 p.c.	17} p.c.	Free	10 p.c.	17| p.c.540c	Vegetable fibres, horse hair, and mixtures of vegetable fibres and horse hair, for use in the manufacture of brooms and brushes	Free	Free	7} p.c.	Free	Free	7} p.c.S40d	Piassava fibre, not coloured, nor further manufactured than dried, cleaned, cut to size, ground and sifted	Free	Free	Free	Free	Free	Free541c	Cordage, exceeding one inch in circumference, wholly of vegetable fibres, n.o.p	17} p.e.	22} p.c.	25 p.c.	17£ p.c.	22\ p.c.	25 p.c.541i	Cordage, exceeding one inch in circumference, n.o.p	20 p.c.	22} p.c.	25 p.c.	20 p.c.	22\ p.c.	25 p.c.568	(5) Knitted fabric wholly of cotton, in the web, for use in the manufacture of rubber boots and shoes	10 p.c.	20 p.c.	25 p.c.	10 p.c.	20 p.c.	25 p.c.569g	Firemen's helmets; safety helmets for industrial purposes; parts of such helmets	Free	Free	Free	Free	Free	Free4. Resolved, that Schedule A to the Customs Tariff be amended by striking out tariff items 180c, 180/, 188, 2066, 208z, 237a, 296(7, 399a, 431A, 440ml., 440nl., 462d, 462i, 469 , 478(2), 570a(2), 597d, 696(1) and 7036, and the enumerations of goods and the rates of duty set opposite each of these items, and by inserting therein the following items, enumerations of goods and rates of duty:	9i	Feeds for use exclusively in the feeding of trout	
On and after July 1, 1964	Free 15 p.c.	Free 20 p.c.	25 p.c. 25 p.c.	15 p.c.	20 p.c.	25 p.c.180e	Plans and drawings, related specifications, any substitute therefor, reproductions of the foregoing except reproductions of Canadian originals, for the manufacture, assembly, erection, installation, operation or maintenance of machines, test sets, engines, apparatus, appliances, plant equipment, and parts thereof	Free	Free	Free	Free 12} p.c.	Free 20 p.c.	Free 22} p.c.
o
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The Budget-Customs Tariff
Tariff
Item
Most-
British	Favoured-
Preferential	Nation	GeneralTariff	Tariff	Tariff
Rates in Effect Prior to
Rates Proposed in this Budget
British	Most-
Preferential	Favoured-Nation	GeneralTariff	Tariff	Tariff180} Plana and drawings, related specifications, any substitute therefor, reproductions of the foregoing, n.o.p.; maps and charts, n.o.p	188 Plain photographic base paper, prepared for and to be coated with a silver haloid emulsion, for use in the manufacture of photographic paper	
206!) Dextrose (glucose) solutions and levulosc (fructose) solutions, prepared for parenteral administration in therapeutic treatments; component materials and articles
208z Materials and parts, entering into the cost of cyanide of calcium, cyanide of potassium and cyanide of sodium, for use in the manufacture of cyanide of calcium,
220b Phenylalanine deficient dietary preparations specially corn-pounded for use in the treatment of phenylketonuria	
237a Deuterium oxide or heavy water; uranium in the form of
pigs, ingots, billets or bars	
On and after July X, 1964
296g Sodium calcium borate ore for use as a fire retardant...
12} p.c.	20 p.c.	27} p.c.	12} p.c.	20 p.c.	22} p.c.Free	Free	FreeFree	Free	25 p.c.	Free	Free	25 p.c.Free	Free	10 p.c.Free	Free	Free	Free	Free	Free17} p.c.	20 p.c.	04 p.c.Free	Free	Free	Free	Free	FreeFree	Free	25 p.c.	15 p.c.	20 p.c.	25 p.c.Free	Free	25 p.c.	Free	Free	25 p.c.Free	15 p.c.	25 p.c.	Free	15 p.c.	25 p.c.(On and after July 1, 1963)	Free	Free	25 p.c.	Free	Free	25 p.c.15 p.c.	20 p.c.	25 p.c.	15 p.c.	20 p.c.	25 p.c.(On and after July 1, 1963)	
399a
Pipes or tubes of iron or steel, commonly known as "oil-country goods", being casing or tubing, fittings, couplings, thread protectors and nipples therefor; sucker rods, pony rods, polished rods and couplings therefor; seismograph drilling bits, in sizes three and one-half inches to four and three-quarter inches inclusive; all of the foregoing for use in connection with natural gas or oil wells	[DOT][DOT][DOT][DOT]	5 p.c.
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o
o o S S o 21 cn
10 p.c.
20 p.c.
5 p.c. 10 p.c.
10 p.c. 22} p.c.
20 p.c. 35 p.c.
The Budget-Customs Tariff
4315
440 m
44 On
402d
Geophysical surveying precision instruments and equipment for use exclusively in prospecting for, or in the exploration and development of, petroleum, natural gas, water wells and minerals, or for geophysical studies for engineering projects, including the following: Magnetometers; gravity meters and other instruments designed to measure the elements, variations and distortions of the natural gravitational force; field potentiometers, meggers, non-polarizing electrodes, and electrical equipment for making measurements in drill boles; instruments and equipment for seismic prospecting; geiger muller counters and other instruments for radioactive methods of geophysical prospecting; electrical and electronic amplifying devices and electrical thermostats designed to be used with any of the foregoing; sodium iodide crystals, thallium activated, in rough cut blanks, when imported to be manufactured into parts for use in instruments for prospecting; all the foregoing of a class or kind not made in Canada, and parts, tripods and fitted carrying cases for any of the foregoing	 Free
Aircraft, not including engines, under such regulations as the Minister may prescribe:
1. When of types or sizes not made in Canada	 Free
On and after July 1, 1964 Free
Aircraft engines, when imported for use in the equipment of aircraft:
1. When of types or sizes not made in Canada	 Free
On and after July 1, 1964 Free
Locks for use in the manufacture of portfolios, luggage and tackle boxes; frames and fittings therefor, wholly of metal for use in the manufacture of gladstone bags 5 p.c.
Cinematograph and motion picture cameras and camera blimps for use by professional motion picture producers having studios in Canada equipped for motion picture production; parts of the foregoing	 Free
Free
Free 15 p.c.
Free 15 p.c.
5 p.c.
Free
30 p.c.
Free 10 p.c. 20 p.c.
Free 22* p.c. 20 p.c.
30 p.c. 35 p.c. 30 p.c.
27* p.c.	Free	Free	27* p.c.27* p.c.	Free	15 p.c.	27* p.c.
(On and after July 1, 1963)
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27* p.c.	Free	Free	27* p.c.27* p.c.	Free	15 p.c.	27* p.c.
(On and after July 1, 1963)
35 p.c.	5 p.c.
5 p.c.
35 p.c.
15 p.c.	Free
Free
15 p.c.
to
Cn
The Budget-Customs Tariff
Most-
British Favoured-
Tariff	

 Preferential	Nation
Item	Tariff	Tariff
462i Optical and magnetic sound equipment;
Dollies, or other mobile mounting units for motion picture cameras;
Booms, without wiring, for use with microphones;
Motion picture editing equipment, namely: film editing machines, film splicers, film synchronizers, film viewers, rewinds;
Parts of the foregoing;
All the foregoing when for use in the production of motion pictures by professional producers having studios in Canada equipped for motion picture production.... Free
469 Machine card clothing:
(/) For use on roller clearer cards	 10 p.c.
(2) Other	 Free
Free
20 p.c. 10 p.c.
478	(2) Aural, nasal, mastectomy and other medical or surgical prostheses; materials for use in reconstructive surgery; ileostomy, colostomy and urinary appliances designed to be worn by an individual; materials and articles required therewith for proper application and main-tenance	 Free	Free
570a (2) Carpeting, rugs, mats and matting of paper; stair
pads	 15 P-°-	22* P-c-
597d Musical instruments, namely:
Autoharps, clavichords, harpsichords, harps;
Bass viols, violas, violins, violoncellos;
Strings for the foregoing;
Recorders, xylophones;
Bassoons, clarinets, English horns, fifes, flutes, oboes, picolos, saxophones, practice chanters;
Parts of the foregoing	 Free	Free
Rates in Effect Prior to
Rates Proposed in this Budget
British	Most-
General	Preferential	Favoured-Nation	GeneralTariff	Tariff	Tariff	Tariff15 p.c.	Free	Free	15 p.c.	CO Mo25 p.c.	10 p.c.	20 p.c.	25 p.c.	Tl25 p.c.	lOp.c.	20 p.c.	25 p.c.	O og g o 5S COFree	Free	Free	Free	15 p.c.	20 p.c.	27$ p.c.	Various	Various	Various	30 p.c.	15 p.c.	22$ p.o.	25 p.c.	30 p.c.	Free	Free	30 p.c.15 p.c.	17$ p.c.	30 p.c.
The Budget-Customs Tariff
28902-5-66J
696	(1) Philosophical and scientific apparatus (and ancillary
equipment thereto), utensils, instruments, and preparations, including boxes and bottles containing the same; maps, charts, photographic reproductions and other pictorial illustrations; video tape recordings; stencils and cards, specially designed for the preparation of library index cards; casts as models; animals as research or experimental subjects; living plants, seeds, cuttings, buds, scions, tubers, bulbs and root-stock; mechanical equipment of a class or kind not made in Canada; parts of the foregoing. All articles in this item, when for the use and by order of any society or institution incorporated or established solely for religious, philosophical, educational, scientific or literary purposes, or for the encouragement of the fine arts, or for the use and by order of any public hospital, college, academy, school, or seminary of learning in Canada, and not for sale or for rental, under such regulations as the Minister may prescribe	 Free
7036 (1) Goods valued at not more than twenty-five dollars included in the baggage accompanying residents of Canada returning from abroad after an absence from Canada of not less than forty-eight hours and acquired by them for personal or household use or as souvenirs or gifts, but not bought on commission or as an accommodation for other persons or for sale, under such regulations as the Minister may prescribe	 Free
A resident of Canada shall not be entitled to the exemption herein granted within a period of four months from the date of the last exemption allowed, nor shall the exemption be allowed on alcoholic beverages in excess of one quart, or on tobacco in excess of fifty cigars, two hundred cigarettes and two pounds of manufactured tobacco.
(2) In addition to the exemption provided for in part (1) of this item, a resident of Canada returning from a point beyond the continental limits of North America after an absence from Canada of not less than fourteen days may elect to avail himself of the following special exemption;
Free
Free
Free	Free	Free	Free15 p.e.	20 p.c.	30 p.c.15 p.c.	22* p.c.	25 p.c.10 p.c.	22* p.c.	35 p.c.Free	Free	Free	Free
to
>4
The Budget-Customs Tariff
Rates in Effect Prior to
Rates Proposed in this Budget
Tariff
Item
Most-
British	Favoured-
Preferential	Nation
Tariff	Tariff
General
Tariff
British	Most-
Preferential	Favoured-Nation
Tariff	Tariff
General
Tariff
70Sb Goods valued at not more than seventy-five dollars (Cont.) (not including alcoholic beverages, cigars, cigarettes or manufactured tobacco), acquired in overseas countries by residents of Canada during an absence from Canada of not less than fourteen days and acquired by them for personal or household use or as souvenirs or gifts, but not bought on commission or as an accommodation for other persons or for sale, under Buch regulations as the Minister may prescribe	 Free
All goods admitted under the foregoing special exemption shall be declared by the resident at the time of his return to Canada, and any person who has availed himself of the special exemption is not entitled to any further exemption under item 703b within a period of twelve months from the date the last special exemption was allowed.
Free	Free
Free
Free
Goods entitled to entry under this tariff item shall be exempt from all imposts, notwithstanding the provisions of this Act or any other Act.
5 Resolved that Schedule B to the Customs Tariff be amended by striking out item 1004 and the enumeration of goods and the rate of drawback of duty set opposite that item, and by inserting therein the following item, enumeration of goods and rate of drawback of duty.	
Item Goods When Subject to Drawback	Portion of Duty (not including Special Duty or Dumping Duty) Payable as
No.	Drawback
1004 Steel When used in the manufacture of files			 99 p.e.
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w
ft Resolved that anv enactment founded upon the foregoing resolutions shall be deemed to have come into force on the fourteenth day of June, 1963, and to have applied to all goods mentioned in the said resolutions imported or taken out of warehouse for consumption on or after that day, and to have applied to goods previous y imported for which no entry for consumption was made before that day.
The Budget-Customs Tariff
Resolved that it is expedient to introduce a measure in the following terms:
1.	The Order of His Excellency the Governor in Council of the 24th day of June, 1962, expressed to be made pursuant to subsection (1) of section 4 of the Customs Tariff and pursuant to section 22 of the Financial Administration Act, shall be deemed for all purposes to have had the same force and effect as if it had been validly made on that day pursuant to an Act of the Parliament of Canada that authorized the making of that Order.
2.	All rates of Customs duties more favourable than those of the General Tariff, and the benefit of any tariff more favourable than the General Tariff, expressed to be withdrawn by the Order mentioned in section 1, shall be deemed to have been restored on the 1st day of April, 1963, and from and after the 1st day of April, 1963 the rates so restored and any tariff the benefit of which is so restored shall, subject to the provisions of the Customs Tariff, apply as they applied immediately before the 25th day of June, 1962.
[See also Budget Papers, pages 1033 to 1162]
<-<
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The Budget-Customs Tariff
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The Budget-^-Mr. Nowlan
Hon. George C. Nowlan (Digby-Annapolis-Kings):: Mr. Speaker, after the almost
funereal tones, the reverend tones, with which the hon. minister commenced his address, and remembering the sanctity of the budget, one would almost be prepared to take off one's shoes and bow in reverence. However, we have had the most miserable, petty, picayune, party address that has ever been given in parliament. It has been a combination, Mr. Speaker, of partisanship and platitudes, and I am not sure which was most prevalent.
We were told about mismanagement for six years.


Some hon. Members:: Hear, hear.


George Clyde Nowlan: I do not mind, Mr. Speaker,
I know that very often after a hollow budget speech the government supporters make more noise than usual. We have been told about six years of mismanagement. There has been the suggestion of the restoration of confidence following the election and that the economy was moving ahead. One needs to look at the white papers brought down by the minister the other day and study all the indices to which he referred. Look at every one of them, and what do you find? You find a tremendous expansion during this last year, expansion the year before, and expansion the year before that. Was that due to the mesmerism exercised by the Minister of Finance (Mr. Gordon) two years before he came to this house?
During that time, he was writing the book, "Troubled Canada", and now he is going to have to trouble himself with some of the things he put in it. Make no mistake about that. We were told we had to get the economy moving, the economy was on dead centre and nothing could be done about it unless we elected a Liberal government. As I said before, all one needs to do is to go through the indices one finds in the white papers in order to ascertain that there has been a tremendous improvement during the past year, and improvement during the year before that. As the minister said, undoubtedly this improvement is going to continue due to the foundations which were laid by this government.


Some hon. Members:: Oh, oh.


George Clyde Nowlan: I am not saying, Mr. Speaker, that we had any monopoly on political agility or political ability. I think sometimes we are rather politically inept. Indeed, there is a great monopoly on political ability over on the other side of the house, but I will say that what we did have in our government was administrative ability.


Some hon. Members:: Oh, oh.


George Clyde Nowlan: I notice that the loudest and most hollow laughter is coming from one

who was a member of the government that was defeated in 1957. I can tell him about a statement made by one of his former colleagues who is now in the other place. A few nights before the last election this person said that, forgetting the difference in the personalities of the two leaders, forgetting the political ability which the Liberal party always showed, when it came to ability in administration there was no question but that the government of which I was a member was definitely superior to the government of Mr. St. Laurent.


Some hon. Members:: Oh, oh.


An hon. Member:: That sounds like Mr. Grosart.


George Clyde Nowlan: I could tell you who he is, but I will not. He also said that, judging from the candidates selected, if the Liberal party did get elected, the government of which I was a member would be definitely superior. 1 would say now that undoubtedly he was a good prophet in every way, shape and form.
Then, in addition to the indices to which I have referred, the minister referred, in lowered tones, almost broke down and wept, about the balance of payments. He said how terrible this problem was. He referred to the almost $1,200 million or something of that kind with which the nation had been confronted, and the inference again was that it was the government of which I was a member which was responsible. This balance of payments problem runs back beyond 1950.


An hon. Member:: He said that.


George Clyde Nowlan: If he did, I did not hear him.


An hon. Member:: You were asleep.


George Clyde Nowlan: You better keep shouting, boys, because you know you are in the wrong.
The minister did not say that three years ago the deficit was $1,500 million, and we reduced it until this year it was less than $900 million. He did not say that. Every economist who is worth his salt would venture to prophesy that the deficit will be reduced by another $300 million or $400 million this year and will be brought down to a reasonable figure. I would not venture to prophesy myself because that is something for the minister to indulge in, and he has indulged in enough prophesies. Certainly, the record in so far as the balance of payments is concerned is one of the greatest tributes that has been paid to any government, and one which goes a long, long way towards solving the fundamental economic problems with which we have been confronted. I admit it went up, but one has to see how it ran before 1950.

It is now well on the road to being controlled and I do not believe we have to worry too much about it in the future.
There has been talk of the deficit, the huge deficit which we ran up during the years we were in power. It is true, Mr. Speaker, that we had deficits. We had substantial deficits. We took over the country from a government which was allowing our economy to go to the dogs, a government which hid the true facts from the people before the election of 1957 by hiding the record. It created an impossible situation so far as the economy was concerned. What they did to compensate for that, as you know, in their great generosity, was to pay for two cups of coffee a day for the aged people, in the hope that would rectify the situation.
I have the figures here on the deficits which we did incur. There is no question but that they ran into very substantial ones. The white papers introduced by the minister two or three days ago show the accumulated deficits, including the estimated one for this year. Incidentally, Mr. Speaker, I want to make it abundantly clear that I am not accepting necessarily the estimated deficit for the past fiscal year which appears in the white papers. The Minister of Finance says quite properly, that this is only an estimate. It is a matter which will be dealt with later on by definitive legislation fixing the amount, and when that time comes we will be able to discuss that matter more fully. I am not unconscious of the fact that with the political adroitness hon. gentlemen on the other side always show, it is a fairly easy matter to adjust figures and balances one way or the other.


Hédard-J. Robichaud: You did a good job of it.


George Clyde Nowlan: We did no job of it.


An hon. Member:: That is right; you made a mess of it.


George Clyde Nowlan: That is a plain statement of fact; we were politically inept. We are not as good politicians as you; we are not as crooked. I will give you an example. I refer to a colleague of the right hon. Prime Minister (Mr. Pearson) who is not here in the house now but who holds a very distinguished position and is still living in Ottawa. He was a minister of finance, and one of the most distinguished ministers of finance. He was bothered in a different way; he had surpluses. He budgeted for them. I recall one year when I was here when he budgeted for a surplus of $20 million, but he ended up with a surplus of almost $500 million. It was really a pathetic experience, but it was easy to see the little thing that was done. There were corporate assets which
The Budget-Mr. Nowlan had been written off. He activated the assets, then distributed them and took off about $50 millon or $60 million off his surplus, and he was trying that way to reduce his surplus.
Conversely, there is a very good way of reducing deficits. For instance, if you happened to be writing off the N.R.U. reactor during this year then possibly you would decrease that deficit to quite an extent. I remember another time when there were loans to the old age security fund which were inactive. They were brought back into an active asset and they were paid off out of the surplus. Those are just two or three little things which were done by very adept and politically astute-which I was not-ministers of finance from the Liberal party, hiding the surpluses which they had incurred and then trying to get rid of them.
I am not saying it is wrong, but we are not necessarily accepting the estimated budgetary deficit which appears in the white paper as it was brought down, and we will have a full opportunity to discuss that matter, I hope in the reasonably near future, when the accounts will be validated, and we can go into detail at that time.
I was referring to deficits. We had deficits of over $3,525 million. I am not giving the odd figures. No, I beg your pardon, Mr. Speaker, I have got the wrong column here.


An hon. Member:: And the wrong speech.


George Clyde Nowlan: As I said, I am not very politically adept. We paid additional moneys to the provinces of $3,525 million during the years we were in office, and during the same time our accumulated deficit was $2,862 million, so if our government, which was led by the right hon. Leader of the Opposition, had continued to pay to the provinces on the same generous scale at which my hon. friends opposite were paying, we would have had a surplus of over $662 million. I think it is well for the country to bear those figures in mind when we talk about the deficit, and the fact that we ran so many deficits.
We have heard talk about unemployment. There is unemployment, Mr. Speaker, and there is no question about that, but the degree of unemployment is less now than it was. I realize, and I am sure all hon. members of the house realize, that unemployment to a man or woman who is unemployed is a personal tragedy. Everyone feels that; everyone knows it, but I know of no government that did more to try to deal with the problem of unemployment than the government to which I belonged.
It is not a new problem. One would almost think, listening to the Liberal party, that it was something which grew up under our

The Budget-Mr. Nowlan regime, but this afternoon as a mental exercise I was looking back through some budget speeches and I found that R. B. Bennett in 1930 said the fundamental problem was unemployment.


Mr. Macdonald:: Did he fix it?


George Clyde Nowlan: Of course he inherited from the Liberals when he took office. I also noticed that our good friend, our mutual friend, Milton Gregg, when he was minister of labour, on the same day in February 1955 when either Mr. Abbott or Mr. Walter Harris, 1 forget which, brought in a budget, referred to the fact that there were 613,000 people unemployed then. Mind you, Mr. Speaker, the Tories were not in power then. Hon. gentlemen opposite were in power, and there were 613,000 people unemployed as of that day in February, 1955. I have the page in Hansard where that reference can be found. As I have said, it is not a new problem, and it is not one for which we are prepared to accept any more than our share of responsibility.
The Minister of Finance became very ecstatic a few moments ago about the $400 million municipal loan fund and about what could be done to correct unemployment with that. I hope he is correct; I hope he is right. Undoubtedly it can make some improvement on unemployment for the time being, but I would point out and remind the house that according to the figures produced a few days ago by my hon. friend, the former minister of labour, during the time we were in power, under the municipal works program over $900 million was spent to try to correct unemployment; yet we were told there was nothing done, it was not worth anything and was no help whatsoever. I would remind the Minister of Finance of that situation when he is looking forward so ecstatically to what will be done under the municipal loan fund.
I am not going to deal at length with any of the provisions which the Minister of Finance referred to tonight. Some doubtlessly have some merit in them, but they are of a nature that one would not want to speak casually or quickly about them. But I am quite sure of this, that if the tax exemption on building materials is withdrawn it is
going to cost a little bit more to build a house, and I do not think adjustments made under the National Housing Act will compensate for that.
Yesterday or the day before we heard the Minister of Labour talking about throwing five hundred dollar bills around during the winter to help build houses. I was reminded of the old contractor who had become very wealthy, who was a national character, who lived in Ottawa and who used to throw one hundred dollar bills and ten dollar bills around. So far as unemployment is concerned I am sure if that same gentleman returned to life today, climbed the peace tower and started throwing hundred dollar bills from it, he would do as much good as paying this $500 for the building of houses. Now having seen the withdrawal of the tax exemption on building materials I do not think this $500 subsidy is going to compensate for that.
All this will be considered when the debate is resumed again, and when it is resumed I hope we will be able to discuss it in a better mood than it has been tonight, and that there will be no platitudes and personalities interjected.
Mr. Speaker, I move the adjournment of the debate.
On motion of Mr. Nowlan the debate was adjourned.



BUSINESS OF THE HOUSE

Gordon Minto Churchill: Will the house leader inform us what is the business for tomorrow and when the budget debate will be resumed?


John Whitney Pickersgill: The business for tomorrow will be first the resolution preceding the bill to establish the department of industry, and when that is completed-I hope I am right in saying "when"-we will resume the debate on the resolution preceding the municipal development and loan board bill. I would prefer to confer with hon. gentlemen opposite before announcing when the budget debate will resume or what will be the program for next week.


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At ten o'clock the house adjourned, without question put, pursuant to standing order.

The Budget-Appendix

[Stage Direction]
presented by
the Honourable Walter L. Gordon, M.P., for the information of Parliament in connection with the Budget of 1963-1964
1034
[Stage Direction]
The Budget-Appendix

[Stage Direction]
The purpose of these Papers is twofold:
1.	to present a general economic review of 1962, bringing together in one place and in convenient form some of the more comprehensive indicators of economic conditions prepared by the Dominion Bureau of Statistics, the Bank of Canada and other Government Agencies, together with brief comments;
2.	to present a preliminary review of the Government Accounts for the fiscal year ending March 31, 1963.
[Stage Direction]
Page 5, Paragraph 5, last sentence should read:
As capital began to flow back, interest rates were reduced from their summer peak and by the end of the year were not much above the rates in January.
Page 29, Paragraph 3, last sentence should read:
Approximately three-quarters of the 1.2 per cent increase in consumer prices in 1962 took place in the latter half of the year.
Page 47, Paragraph 1, second sentence should read:
At about the same time downward pressure on the Canadian exchange rate intensified, and on May 2 the Government announced the introduction of a fixed rate of Can. $1.00=$0.925.
Page 48, Paragraph 1, line 10, "to bring up the offerings" should read
"to buy up the offerings."
Page 50, Paragraph 6, second sentence, delete "net new security issues in the capital market."

The Budget-Appendix
Part I

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Table of Contents
Page
1.	General	 1036
2.	National Accounts-
National Income and Product	 1036
National Expenditure	 1042
Personal Income and Its Disposition	 1045
Source and Disposition of Saving	 1047
Investment and Capital Expenditure	 1049
Revenue and Expenditure of all Governments	 1052
3.	Employment and Earnings	
10564.	Price Trends	
10605.	Balance of International Payments	
10656.	Financial Developments	
1077
The tables in this Budget Paper are based upon estimates provided by the Dominion Bureau of Statistics, the Bank of Canada and other Government Agencies. Some of the figures appear for the first time; others have been published elsewhere. All 1962 estimates are preliminary and subject to revision.
28902-5-67J
[Stage Direction]
The Budget-Appendix

[Stage Direction]
The normal cyclical recovery which had begun in the early months of 1961 slowed appreciably in the course of 1962. The western grain crop was better than average, in contrast to the 1961 crop which was not much more than half the recent average and this improvement helped to offset the effects of the slowdown in the non-agricultural sector. The Gross National Product in 1962 was about 8 per cent above that of 1961, but prices rose about 1.7 per cent and consequently the increase of G.N.P. in real terms was about 6.2 per cent on a year-to-year basis. From the fourth quarter of 1961 to the fourth quarter of 1962 (which covers the course of 1962), real non-agricultural output increased by about 4 per cent.
In the seven calendar quarters since the recovery began, and for which latest data are available, expenditures on goods and services both by persons and by provincial and municipal governments rose less rapidly than in comparable periods of the two preceding upswings. Investment, while stronger than in the rather weak recovery of 1958-1959, failed to provide the continuing stimulus to the economy which had characterized the 1954-1956 upswing. Two factors contributing to the current recovery were an improvement in the current account of the balance of payments and the already-noted increase in farm output, which was reflected in an accumulation of farm inventories.
Non-agricultural employment in both goods-producing and service industries increased until about mid-1962, and then showed no clear trend to the end of the year. For the year as a whole, non-agricultural employment was 3.5 per cent higher than in 1961. Agricultural employment continued to decline. The increases in employment took place throughout the various regions of the country, but were smallest (both in absolute and relative terms) in the Atlantic Provinces. For rather special reasons, the labour force grew at a much slower pace than in recent years. As a consequence, unemployment declined from over 7 per cent in 1960 and 1961 to just under 6 per cent in 1962.
Prices and costs rose slightly more in 1962 than they had in 1961. The decline in value of the Canadian dollar and the imposition of tariff surcharges at the time of the mid-year exchange crisis were contributing factors. At the same time prices and costs in other industrialized countries increased more rapidly than did Canadian prices and costs. As a result of this and the new exchange rate the Canadian competitive position improved.
The exchange crisis which developed during the spring of 1962 was accompanied by instability in financial markets. On June 24th drastic measures were taken to deal with the situation including the introduction of a fixed Bank Rate at 6 per cent, a major reduction in the money supply, and the imposition of tariff surcharges. Massive financial assistance was received from abroad. The flight of capital was halted and, after an interval, it was induced to return. As capital began to flow back, interest rates were reduced from their summer peak and by the end of the year were not much above the rates in January.
The following sections discuss the above developments in more detail.

[Stage Direction]
National Income and Product
The Gross National Product rose from the first quarter of 1961 through to the fourth quarter of 1962. The expansion during 1961 was fairly rapid, as is typical in the early months of a cyclical upswing. By the end of 1961 the expansion

[Stage Direction]
(Seasonally Adjusted at Annual Rates)
	1961				Preliminary 1962			
	IQ	2Q	3Q	4Q	IQ	2Q	3Q	4Q
				(Millions of dollars)				
1. Wages, salaries, and supplementary labour income	18,588	18,908	19,244	19,532	19,940	20,268	20,500	20,7282. Military pay and allowances	532	544	560	564	600	588	600	5563. Corporation profits before taxes and before dividends paid to non-residents.	2,972	3,424	3,612	3,832	3,720	3,836	3,772	3,9684. Deduct: Dividends paid to non-residents^	-736	-532	-548	-532	-576	-636	-512	-5565. Rent, interest, and miscellaneous investment income	2,560	2,512	2,728	2,712	2,692	2,732	2,720	2,9286. Accrued net income of farm operators from farm production^)	1,040	952	992	916	1,416	1,420	1,452	1,2767. Net income of non-farm unincorporated business	2,184	2,224	2,400	2,348	2,432	2,360	2,344	2,3848. Inventory valuation adjustments	56	-52	-144	-128	-108	-176	-196	-489. National Income (1+2+3+4+5+6+7+8)	27,196	27,986	28,844	29,244	30,116	30,392	30,680	31,23610. Indirect taxes less subsidies	4,596	4,656	4,592	5,020	5,152	5,192	5,424	5,27611. Capital consumption allowances and miscellaneous valuation adjustments..	4,492	4,472	4,564	4,628	4,660	4,704	4,756	4,90012. Residual error of estimate	-48	40	-296	-296	-380	-240	-104	-16013. Gross National Product at Market Prices (8+9+10+11+12)	36,236	37,148	37,704	38,596	39,548	40,048	40,756	41,25214. (Gross National Product at Market Prices excluding Accrued Net Income	of Farm Operators)	(35,196)	(36,196)	(36,712)	(37,680)	. (38,132)	(38,628)	(39,304)	(39,976)
(1>Includes withholding tax applicable to this item. Since the withholding tax is also part of National Product it is included again in rent, interest and miscellaneous income. Also includes some net profits of non-Canadian non-financial corporations.
(2>Includes accrued earnings arising out of the operations of the Canadian Wheat Board.
(3)See footnote 2, Table 2,
o
[Stage Direction]
The Budget-Appendix
[Stage Direction]
The Budget-Appendix

[Stage Direction]
BILLIONS OFOOLLARS	1949 1962	BILLIONS OF DOLLARS
began to moderate and throughout 1962 was less than during the preceding year. (See Table 1 and the accompanying chart.) In 1962, there was an improved agricultural output. As a result of drought conditions in the Prairies the grain crop in 1961 was far below normal, while in 1962 the western wheat crop amounted to 540 million bushels, about double that of the preceding year. Agricultural prices in 1962 were higher, and the combination of better crops and higher prices added about $400 million to the Gross National Product, which rose by 8 per cent. Prices were 1.7 per cent above 1961, while the volume of economic activity rose by 6.2 per cent. The accompanying chart and Table 5 show that since the beginning of 1961 the gains in the value and volume of output exceeded that of the immediately preceding upswing in 1958-1959 but were below those of 1954-1955. By the fourth quarter of 1962, the volume of non-farm real output was almost 10 per cent above the low point of activity in the first quarter of 1961 and had exceeded the previous cyclical peak by 9 per cent.
In 1962, output in the goods-producing industries was about 8 per cent above 1961. The increases in output during 1962 were considerably smaller than those which took place during the initial period of the upswing in 1961. Apart from agriculture, output in 1962 in other goods industries was between 6 and 7 per cent above 1961. This gain was distributed among all major industries. Manufacturing production rose by 8 per cent with durable goods production showing an increase of 11 per cent. Part of the explanation of this is the more volatile nature of durable goods production, with this group declining more rapidly in downswings and increasing more rapidly in upswings. Nevertheless, by the fourth quarter of 1962 output in durable goods industries was 12 per cent above the previous cyclical peak in the first quarter of 1960, while, as previously noted, non-agricultural output increased by 9 per cent during this thirty-three month period.

The Budget-Appendix

[Stage Direction]
(COMPARISON OF YEARS 1953-1957,(957-1960, 1960-1962 WITH PRECEDING PEAK OF ACTIVITY = 1001

[Stage Direction]
125 120 I 15 I 10 105 100 95
Output in the non-durable goods sector was about 5 per cent higher in 1962 than in 1961. There was almost no change in non-durable goods output in the course of 1962. In the year-over-year comparison, the largest gains were made in rubber products, clothing, textile, paper products, petroleum products and chemical industries. Other non-durable goods industries showed more moderate gains in the same comparison.
The forestry, fishing and trapping industries also showed year-over-year increases. The output and distribution of electric power and gas utilities rose by more than 6 per cent, or about in line with total real output, in the year-over-year comparison. In the construction industry, output was about 1§ per cent higher in 1962, due mainly to increased activity in housing.
Mining output in 1962 was 8 per cent above 1961. The gains were somewhat uneven. Production of metals did not increase as much as other sections of the industry: there was some gain in copper output, while nickel output was very much higher in the first half of 1962 than in 1961, but fell below year-earlier levels in the second half in the light of inventory adjustments. Output of nonmetallic minerals, especially asbestos, increased, as did output of fuels, notably natural gas and petroleum, where exports to the United States increased, along with domestic consumption. Iron ore output also increased, reflecting increasing foreign as well as domestic demand and the opening up of new facilities. Output of zinc showed some gain, while that of lead and uranium declined.
Output in the service industries rose by about 4 per cent in 1962, about in line with the average rate of increase in the past decade.
Turning to the flow of incomes in 1962, all major groups showed increases over 1961.
Corporation profits typically drop sharply during cyclical downturns and rise very sharply in the early stages of an upswing. Profits increased by 29 per cent from the first to the fourth quarter of 1961 and then maintained a fairly level rate of about $3.8 billion throughout 1962, which was 11 per cent above the average of 1961. In the fourth quarter of 1962 profits were close to $4 billion. The increases in profits may be attributed to expansion of output, relative stability of costs and the reduction in the exchange rate of the Canadian dollar.

[Stage Direction]
(Seasonally Adjusted at Annual Rates)
	1961				Preliminary 1962			
	IQ	2Q	3Q	4Q	IQ	2Q	3Q	4Q
				(Millions of dollars)				
1. Personal expenditure on consumer goods and services	23,920	24,372	24,732	24,920	25,540	25,592	25,696	26,1682. Government expenditure on goods and services	7,088	7,076	7,268	7,388	7,384	7,900	7,824	7,7763. Business gross fixed capital formation^	6,564	6,500	6,692	6,784	6,888	6,860	7,016	7,052New residential construction	1,412	1,448	1,496	1,476	1,536	1,564	1,616	1,592New non-residential construction	2,604	2,632	2,704	2,792	2,756	2,676	2,588	2,652New machinery and equipment	2,548	2,420	2,492	2,516	2,596	2,620	2,812	2,8084. Value of physical change in inventories-total<2>	-268	-56	-484	232	384	360	1,016	500Non-Iarm business inventories	-	372	-44	776	200	328	800	172Farm inventories and grain in commercial channels	-268	-428	-440	-544	184	32	216	3285. Exports of goods and services	7,264	7,492	7,856	7,912	7,940	8,272	8,248	8,4366. Imports of goods and services<3>	-8,380	-8,196	-8,660	-8,932	-8,972	-9,176	-9,144	-8,8407. Residual error of estimate	48	-40	300	292	384	240	100	1608. Gross National Expenditure at Market Prices (1+2+3+4+5+6+7)	36,236	37,148	37,704	38,596	39,548	40,048	40,756	41,252
<x>
to
£
a
§
a
«**.
(^Includes private businesses and institutions, and publicly owned business enterprises.
<2)The book value of inventories is deflated to remove the effect of price changes and the derived "physical" change is then valued at average prices of the current period to obtain the value of physical change. The difference between this value of physical change and the change in book value is called the inventory valuation adjustment (see line 8, Table 1).
<3>Minor adjustments have been made to the figures of current receipts and payments shown in Table 29 to achieve consistency with the other component series.

[Stage Direction]
(Seasonally Adjusted at Annual Rates)
		1961				Preliminary 1962		
IQ	2Q	3Q	4Q	IQ	2Q	3Q	4Q1. Personal expenditure on consumer goods and services	22,580	23,008	23,276	(Millions 23,416	of dollars) 23,912	23,828	23,784	24,1362. Government expenditure on goods and services	6,472	6,464	6,604	6,636	6,544	6,948	6,836	6,7163. Business gross fixed capital formation	6,072	6,012	6,176	6,228	6,268	6,192	6,284	6,284New residential construction	1,288	1,320	1,364	1,340	1,376	1,392	1,424	1,396New non-residential construction	2,424	2,444	2,520	2,584	2,532	2,440	2,352	2,396New machinery and equipment	2,360	2,248	2,292	2,304	2,360	2,360	2,508	2,4924. Value of physical changes in inventories-total	-292	-56	-480	256	416	396	960	424Non-farm business inventories	8	388	-52	744	204	316	760	156Farm inventories and grain in commercial channels	-300	-444	-428	-488	212	80	200	2685. Exports of goods and services	7,116	7,340	7,584	7,568	7,536	7,776	7,724	7,8806. Imports of goods and services	-8,084	-7,908	-8,148	-8,308	-8,248	-8,332	-8,288	-8,0087. Residual error of estimate	44	-36	280	272	356	220	92	1448. Gross National Expenditure in Constant (1957) Dollars (1+2+3+4+ 5+6+7)	33,908	34,824	35,292	30,068	36,784	37,028	37,392	37,576
The Budget-Appendix
[Stage Direction]
The Budget-Appendix
Labour income rose to an annual rate of 120.7 billion in the fourth quarter of 1962, almost 12 per cent above the first quarter of 1961. During this period, average hourly earnings in manufacturing rose by about 5§ per cent while the length of the work week increased by one per cent. The number of non-farm employees was 5.5 per cent higher in the fourth quarter of 1962 than in the first quarter of 1961.
Rent, interest and miscellaneous investment income and net income of nonfarm unincorporated business all increased in 1962.
Net farm income, which includes changes in farm inventories, showed a very large increase over 1961, due mainly to the big increase in the western grain crop. Net farm income averaged $1.4 billion, about 43 per cent above the low level of 1961. Farm cash income was maintained in 1961 by a substantial drawing down of farm stocks. In 1962 farm inventories increased moderately. Farm cash income in 1962 was 4.3 per cent above that of 1961.
National Expenditure
Since the beginning of the upswing in the early months of 1961, all of the major components of demand have shown some increase. Accompanying Tables 4 and 5 provide analytical detail of the components of Gross National Expenditure for the first seven quarters of upswing following the low points of activity in 1954, 1958 and 1961. These tables supplement and fill out the broad picture outlined in the chart on page 7. Table 4 shows how much the absolute change in the various G.N.E. components contributed to the total change in G.N.E. (and output). Table 5 shows the percentage change in the G.N.E. components for the relevant seven quarter periods.
As may be seen from Table 4, the most important contributors to the current upswing in demand have been consumer demand, exports, and outlays by provincial and municipal governments for goods and services (including large sums for capital outlays financed by the federal government). Business investment has played only a modest role so far, as the relative increase in non-farm business inventories has been smaller than in preceding upswings. Imports have supplied a much smaller amount of increase in total demand in the upswing so far, compared to earlier upswings, and domestic output has consequently been that much larger.

[Stage Direction]
1954-1956	1958-1959	1961-1962Personal expenditure on consumer goods and services	43.0	60.1	45.8Non-Durable goods	18.0	23.0	21.4Durable goods	7.5	5.3	9.6Services	17.5	St.8	14.8Government expenditures on goods and services	12.8	16.7	14.0Federal	1.9	-l.S	-0.4Provincial and Municipal	10.9	18.0	14.4New residential construction	8.2	2.6	3.7New non-residential construction	11.4	-6.7	1.0New machinery and equipment	7.6	3.5	5.3Non-farm business inventories	25.7	27.6	3.5Farm inventories and grain in commercial channels	7.3	2.3	12.2Exports of goods and services	20.8	20.3	23.9Imports of goods and services (-)	-36.8	-26.4	-9.4GNE (ex. error)	100.0	100.0	100.0
Trough periods are 2Q 1954, IQ 1958 and IQ 1961.

The Budget-Appendix
For the seven quarters since the upturn of early 1961, the increase in exports of goods and services has exceeded the increase in imports of goods and services. Because of this the economy has received a net stimulus from international trade since the beginning of the upturn. By contrast, in the first seven quarters of the two preceding upswings, the balance of international trade acted in the opposite direction.
Table 5 shows that the expansionary effect of the balance of payments in the current upswing has come about both from the export side as well as the import side. The increase in exports of goods and services currently has exceeded that of 1958-1959, although below that of 1954-1955. By contrast, imports of goods and services have risen less than exports in the current period, and by substantially less than imports in the two preceding periods. Some further analysis of this appears in the section on Balance of International Payments.

[Stage Direction]
(Seven Quarters after Trough)
1954-1956	1958-1959	1961-1962Per cent change 7 Quarters after 2Q 1954 trough	Per cent change 7 Quarters after IQ 1958 trough	Per cent change 7 Quarters after IQ 1958 troughPersonal expenditure on consumer goods and services	+13.7	+10.5	+9.4Non-Durable goods	+10.7	+7.8	+8.7Durable goods	+19.7	+7.9	+18.6Services	+ 16.1	+15.3	+7.8Government expenditure on goods and services	+14.6	+10.3	+9.7Federal	+3.9	-1.7	-0.7Provincial and Municipal	+27. S	+21.0	+16.8New residential construction	+36.0	+5.9	+12.7New non-residential construction	+35.4	-8.5	+ 1.8New machinery and equipment	+19.4	+5.2	+ 10.2Non-farm business inventories	(+$1308m.)	(+$1008m.)	(+*172m.)Farm inventories and grain in commercial channels	(+$372m.)	(+$84m.)	(+$596m.)Exports of goods and services	+20.7	+11.7	+ 16.1Imports of goods and services	+33.5	+13.2	+5.5Gross National Expenditure at Market Prices	+20.0	+11.0	+13.8Final Demand (ex. inventories)	+17.4	+8.8	+10.3GNE in Constant (1957) Dollars	+16.8	+6.3	+10.8Real Non-agricultural Gross Domestic Product	+16.0	+8.7	+9.7
The role of fixed investment has varied in the first seven quarters of the three business upswings. In the current period, the increases in both housing and business investment have been greater than in the 1958-1959 period. This partly reflects the fact that, in this earlier period, adjustments were taking place following the high levels reached in the investment boom of the mid-1950's. Compared to the 1954-1955 period, investment in the current upswing has been a less dynamic force. That is to say, investment has increased at somewhat less than the rate of total output, whereas in 1954-1955, the increase in investment was substantially above that of total output.
Government spending on goods and services increased somewhat less rapidly during the current expansion than in the two preceding. The entire increase has been accounted for by provincial and municipal governments (although it should be noted that a substantial part of the capital outlays by these governments has been financed by the federal government).
[Stage Direction]
The Budget-Appendix
The smaller relative increase in non-farm inventories in the current upswing has already been noted and is related, in part at least, to the ready availability of supplies, greater consciousness of costs of carrying excessive inventories, improved methods of inventory control and to the adaptation of business decisions to a non-inflationary environment. The larger increase in farm inventories during 1962 reflects the far below average grain crop in 1961 and the larger than average crop in 1962.
Consumer spending rose less rapidly in the current upswing than in the two preceding periods (Table 5) and accounted for a considerably smaller share of the total increase in G.N.E. than in 1958-1959 and about the same as in 19541956 (Table 4). In the seven quarters beginning early in 1961, consumer spending on both non-durable goods and, in particular, on durable goods (reflecting the latest upsurge in new car buying) increased more rapidly than in the 1958-1959 period, although less rapidly than in 1954-1955. In the current period increases in spending on consumer services were below those of the two preceding upswings. The slower rise in services is partly attributable to smaller price increases in the current period than in the preceding upswings.
Turning briefly to developments in 1962 alone, the same broad picture obtains as that described for the entire expansion begining early in 1961.
Consumer spending rose moderately throughout 1962, with some variation by components. Expenditures on non-durables and services increased generally throughout the year, and following an increase in the first half of the year there was a decline in durable goods spending in the third quarter, due to a shortage of new model cars. For the year 1962 as a whole, new passenger car sales rose about 15 per cent to an estimated 504,000 vehicles. Sales of North American models rose about 28 per cent, while sales of European models declined by about 26 per cent.
Government expenditure on goods and services increased in the first half of 1962 and then subsequently declined, due entirely to lower expenditures at the federal level, as provincial and municipal expenditures rose in the final half of the year.
Housing outlays were higher throughout 1962, at an annual rate of about $1,580 million, 8 per cent above the 1961 average. Housing starts rose in the first half of the year and then following some decline remained relatively stable. For 1962 as a whole, housing starts were about 130,000, compared with 126,000 in 1961. Housing completions moved irregularly within 1962, and totalled about 127,000, compared with 116,000 units in 1961. The number of single dwellings started in 1962 showed some decline within the year, while multi-unit dwellings (e.g., apartments) showed some increase. Further comments on housing are contained in the section on financial developments.
Quarterly data on business fixed investment indicate that new non-residential construction declined slightly to the third quarter and then rose to about the annual rate of $2.7 billion in the fourth quarter, approximately the same as the 1961 annual figure. Investment in new machinery and equipment increased steadily to a rate of $2.8 billion in the last half of the year and for 1962 as a whole it was about 9 per cent above the 1961 annual average.
Non-farm inventories showed a small accumulation in the first half of 1962 and then were built up rapidly at an annual rate of $800 million in the third quarter. The following table shows that the accumulation took place at the manufacturing and retail levels.

The Budget-Appendix

[Stage Direction]
CHANGES IN NON-FARM BUSINESS INVENTORIES (Seasonally Adjusted at Annual Rates)
	1962				
	IQ	2Q	3Q	4Q	Year
		(Millions of dollars)			
Manufacturing	128	-12	396	156	167Durables	-52	80	204	144	94Non-Durables	180	-92	192	12	73Wholesale	-48	-96	72	132	15Retail	-40	232	388	-16	141Other Industries	160	204	-56	-100	52Total	200	328	800	172	375
Some of the increase in inventory holdings, which affected a number of industries, took place against a rising level of production in manufacturing, although the ratio of stocks to shipments increased somewhat. However, the rate of increase was too rapid to be accounted for by production needs alone, and some of the increase was undoubtedly related to the effects of the exchange emergency, which might have resulted in some anticipatory buying. By the early months of the fourth quarter, the rapid increase in manufacturing inventories came to an end, and for the fourth quarter as a whole, non-farm business inventories were being accumulated at a more moderate rate.
Exports rose in the first half of 1962, were steady in the third quarter, then rose again in the fourth. Imports, on the other hand, rose in the first half, were steady in the third quarter, then declined in the fourth quarter. The result of these movements was that the current account deficit (on the National Accounts basis) declined throughout the year from an annual rate of $1.0 billion in the first quarter to $0.9 billion in the second and third quarters, and to $0.4 billion in the fourth. A more complete analysis of the balance of payments is given in a subsequent section.
Personal Income and its Disposition
Personal income for 1962 was 8.0 per cent above 1961, in line with the increase in Gross National Product. During the course of 1962, the expansion of personal income was slower than during the earlier part of the upswing in 1961. All of the major components showed year-to-year increases.

[Stage Direction]
1959	1960	1961	Prelim. 19621. Wages, salaries and supplementary labour income..	17,459	(Millions 18,251	:>{ dollars) 19,068	20,359Deduct: Employer and employee contributions to social insurance and government pension	funds	-652	-745	-787	-8162. Military pay and allowances	496	509	550	5863. Net income received by farm operators from farm	production	1,126	1,178	949	1,4024. Net income of non-farm unincorporated business....	2,210	2,213	2,289	2,3805. Interest, dividends and net rental income of persons.	2,599	2,836	2,985	3,1866. Transfer payments to persons-	(a) from government (excluding interest)	2,755	3,129	3,408	3,652(b) charitable contributions made by corpora-	tions	43	40	44	457. Personal Income (l+2+3+4-|-5-f6)	26,036	27,411	28,506	30,794
The Budget-Appendix
Among the components, wages, salaries and supplementary labour income rose throughout the year although at a diminishing rate. Farm income was very much higher in 1962 due mainly to a large grain crop following upon the small crop in the preceding year. Substantial payments by the Canadian Wheat Board raised farm income considerably in the second quarter of 1962. Income of unincorporated business in 1962 was 4.0 per cent above the 1961 annual average due to increases in net income from retail trade, construction, community services. Interest and dividend payments to persons fell slightly from the fourth quarter of 1961 to the first quarter of 1962 and then increased to the fourth quarter of the year. The increase during 1962 in transfer payments from government (excluding interest) reflected in part the increase in payments from the Old Age Security Fund, which more than offset the lower unemployment insurance benefit payments.

[Stage Direction]
-	1959	1960	1961	Prelim. 19621. Personal direct taxes-	1,744 130 214	(Millions 1,978 158 224	>f dollars) 2,131 144 236	2,311 166 237
2,088	2,360	2,511	2,714
2. Personal expenditure on goods and services- Goods-				
	11,373 2,678 8,540	11,785 2,669 9,058	12,257 2,697 9,532	12,877 2,913 9,959
				
				
				
	22,591	23,512	24,486	25,749
3. Personal saving-				
	1,357	1,539	1,509	2,331
				
	28,036	27,411	28,506	30,794
				
	23,948	25,051	25,995	28,080
				
Personal disposable income followed somewhat the same pattern as personal income during 1962 and was 8.0 per cent higher than in 1961. Personal direct taxes at all levels of government (including, in addition to personal income taxes, succession duties, and miscellaneous taxes) were about 8 per cent higher than in 1961, while personal income tax payments rose 8.3 per cent from the first to the fourth quarter. Personal saving, i.e., personal disposable income less personal spending, increased from the first to the second quarter, and then declined to the end of the year.

[Stage Direction]
-	1956	1957	1958	1959	1960	1961	1962Personal saving as per cent of personal disposable income.	6.5	5.7	7.1	5.7	6.1	5.8	8.3
The Budget-Appendix DISPOSITION OF PERSONAL INCOME1"
BILLIONS OF DOLLARS	1949-1962	BILLIONS OS DOLLARS
'	35
25
15
5
1949	1950	1951	1952 ' 1953 ' 1954	1955 ' 1956 ' 1957 ' 1958 ' 1959 ' I960 ' 1961 ' 1962 '
(I) SEASONALLY ADJUSTEO AND AT ANNUAL RATES
For 1962 as a whole, personal saving, which includes changes in farm inventories, averaged 8.3 per cent of personal disposable income. Excluding the change in farm inventories, personal saving in 1962 was 7.8 per cent of disposable income, compared with 6.9 per cent in 1961.
Source and Disposition of Saving
Total saving, which comprises the savings of the personal, business and government sectors of the economy, rose from $5.7 billion in 1961 to $6.9 billion in 1962. As noted in the previous section, personal saving rose by about $800 million, and a substantial part of this increase reflected the higher levels of personal income which, in turn, was affected by the sharp increase in farm net income arising out of the performance of agricultural output in the two years. The counterpart to this element in personal saving is included in the accumulation of inventories in the table on Disposition of Saving.

[Stage Direction]
Personal net saving.
Business gross saving-total	
(a)	Undistributed corporation profits.
(b)	Capital consumption allowances £ laneous valuation adjustments. ...
(c)	Adjustment on grain transactions..
Inventory valuation adjustment	
Government surplus (+) or deficit (-).
Residual error of estimate	
Total	
1959	1960	1961	Prelim. 1962
	(Millions of dollars)		
1,357	1,539	1,509	2,3315,185	5,338	5,343	5,723988	873	778	9794,204	4,459	4,539	4,755-5	6	26	-11-122	-80	-67	-132-556	-711	-905	-770-30	-99	-150	-2215,834	5,987	5,730	6,931
The Budget-Appendix
Another part of the increase in total saving in 1962 was accounted for by business gross saving in the form of larger undistributed corporation profits and capital consumption allowances. Table 12 shows the year-to-year change in corporation profits. As noted earlier, they showed a cyclical expansion, while dividend payments were moderately higher. As a result undistributed profits were higher. Business gross saving in 1962 rose 7.1 per cent over 1961. After pay-mants of dividends, undistributed profits increased by $201 million and capital consumption allowances increased by $216 million. The deficit on combined Government Account was lower by $135 million on a year-to-year basis.

[Stage Direction]
-	1959	1960	1961	19626,894 357 -1,448 31	(Millions 6,692 361 -1,164 98	>f dollars) 6,635 -144 -911 150	6,954 565 -809 221
Surplus (+) or deficit (-) in current account with				
Residual error					
	5,834	5,987	5,730	6,931
				
As between 1961 and 1962, the additional savings were matched by larger outlays for housing, business fixed investment and inventories, and by a smaller deficit on current international account. In 1961, as previously noted, the low value of the grain crop reduced both personal saving and farm inventories. In 1962, the accumulation of inventories, both farm and non-farm, provided the largest single increase in the disposition of saving. Most of the increase in non-farm business inventories occurred in the manufacturing and retail trade sectors. More detailed comments on fixed investment and the current international account appear in other sections of this White Paper.

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-	1959	1960	1961	1962
		(Millions of dollars)		
Corporation profits before taxes including dividends		3,359	3,460	3,824
paid to non-residents		3,504			
Deduct: Corporation income tax liabilities	1,581	1,562	1,612	1,750Excess of tax liabilities over tax collections.	156	-104	61	95Tax collections	1,425	1,666	1,551	1,655Corporation profits after taxes	1,923	1,797	1,848	2,074Deduct: Dividends paid out	937	924	1,070	1,095Undistributed corporation profits	986	873	778	979
The Budget-Appendix NATIONAL SAVING, BY QUARTERS, 1950-1962'°
BILLIONS OF DOLLABS	BILLIONS OF DOLLABS
Investment and Capital Expenditure
In the past few years, capital expenditures in Canada have amounted to about 22.0 per cent of Gross National Expenditure, a figure about in line with the earlier postwar years but below the levels and proportions of the period of the mid-1950's. The reasons for this changing level of capital expenditures are complex.
Canada entered the postwar era with an economy unimpaired by war damage, vastly extended in scope and depth, and capable of satisfying the needs arising from a conjuncture of factors, which led to high levels of investment. There were new industries and new skills to meet the accumulation of unsatisfied demand for consumer, social and industrial capital, as well as the needs of Europe and the rest of the world. The Korean War and the period immediately following brought with them new developments which gave additional emphasis to investment in Canada, particularly in resource areas. For example, world political developments, the increase in world commodity prices, the large scale stockpiling programmes and the high level of demand in the United States for industrial materials, all led to rapid increases in capital outlays and to the development of sources of raw materials in Canada.
The demands made on the Canadian economy led to sharp increases in imports of goods, services and know-how, and large numbers of trained immigrants entered the country to meet these greatly expanded manpower needs.
However, some investments by large scale enterprises, with strong financial positions, are often made with a very long time horizon and, because of this, some major classes of investment, over short periods of time, often tend to outstrip demand. In part this may be due to the over-optimism of some investors, at least in the short-run, and also to the excess capacity which results, from time to time, in a country growing up to its facilities. This has been the case in Canada over the past few years. Expectations have not been completely fulfilled as prices of primary products receded and alternative sources of supply
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The Budget-Appendix
were developed by other countries. Capacity was being added at a rate in excess of the current growth of markets, both domestic and foreign; as a result of all these factors, private business investment declined, both absolutely and as a proportion of G.N.E.
Adaptation to a different ratio of business investment in a country of vast spread and scattered resources requires a high degree of flexibility. The resources industries themselves were less affected, since they are by nature highly productive and, in any event, were favoured by strong market conditions. The manufacturing industries experienced greater difficulties. Their costs had risen as a result of the pull of wages and costs in the booming resource industries. Canadian manufacturing has always faced problems arising from the limited size of the domestic market. It can prosper only when it can capture larger markets by being competitive both at home and abroad. Rising costs compounded by a high exchange value for the Canadian dollar soon began to manifest themselves when the rest of the world restored its productive capacity.
Subsequent to 1957, business fixed investment declined, for reasons just described, about 15 per cent, and total investment moved downward to about 22 per cent of Gross National Expenditure. By 1962, the volume of total investment was still 7 per cent below that of 1957. On the other hand, investment in housing and social capital absorbed a fairly steady proportion of total Gross National Expenditure. (See Table 13.). Investment in housing and social capital represents between one-third and one-half of all capital expenditure and includes, in addition to housing, outlays by government departments, institutions (e.g. hospitals and schools) and municipal waterworks. Investment in housing and social capital responds to population growth and migration, urbanization, increases in educational standards, and new policies, among others.

[Stage Direction]
-	Total Private and Public Investment	Housing and Social Capital	Business Investment, Private and Public'1)1948	20.4	7.8	12.61949	21.7	8.7	13.01950	21.9	8.9	13.01951	22.4	8.6	13.81952	22.9	9.0	13.91953	23.9	9.4	14.51954	23.0	9.6	13.41955	23.0	9.8	13.21956	26.3	9.9	16.41957	27.3	9.6	17.71958	25.4	10.6	14.81959	24.1	10.4	13.71960	22.8	9.4	13.41961	21.8	9.1	12.71962	21.6	9.4	12.2
Includes housing, outlays by government departments, institutions and municipal waterworks. (l) Includes government business enterprises.

The Budget-Appendix
Turning to 1962, total private and public investment amounted to $8,738 million, 6.9 per cent above the level of 1961. Increased fixed investment in agriculture, manufacturing, institutions and government accounted for most of the increase. Capital expenditures by private business enterprises rose by 4.9 per cent in 1962.

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1949	1950	1951	1952	1953	195-1	1955	1956	1957	1958	1959	I960	1961	1962
Capital investment in agriculture increased 12.6 per cent, largely reflecting additional spending from higher farm incomes. In mining, an increase in demand for durable equipment more than accounted for increased investment in that sector of 6.5 per cent. In the manufacturing sector, increases in primary metals, metal fabricating, petroleum and coal products more than offset lower investment in food and beverages, wood, chemical and chemical products.
Capital expenditures in transportation, storage and communication declined in 1962, reflecting divergent movements. Investment by telephone utilities increased by $48 million while air transport, warehousing, oil and gas pipelines were down by approximately $135 million, due, in large part, to the completion of some major projects in 1961. Railroad investment also declined somewhat in 1962.
The increased investment in institutional services was entirely accounted for by larger capital investment in educational institutions which rose by $193 million compared with 1961. Outlays for technical and vocational schools accounted for a large part of this increase. Capital expenditures on housing were up 8.2 per cent in 1962 reflecting the completions during the year of housing starts that had been made in increased numbers in late 1961, and supplemented by an increase of 4.5 thousands of units of housing starts.
Capital expenditures in government departments rose 5.1 per cent in 1962. Increases in departmental outlays of provincial and municipal governments more than offset reduced investment outlays at the federal level.
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The Budget-Appendix

[Stage Direction]
-	1959	1960	1961	Prelim. 1962
		(Millions of dollars)		
Agriculture and fishing	539	550	576	648Forestry	48	54	50	53Mining, quarrying and oil wells	342	400	449	478Manufacturing	1,144	1,178	1,085	1,231Electric power, gas and water works	766	6S8	710	748Transportation, storage and communications	1,076	1,084	988	885Construction industry	145	130	136	143Trade, finance and commercial services	833	875	847	847Institutions	536	573	617	808Housing	1,752	1,456	1,467	1,587Government departments	1,236	1,274	1,247	1,310Total Capital Expenditure	8,417	8,262	8,172	8,738Total Capital Expenditure as a percentage of	Gross National Expenditure	24.1	22.8	21.8	21.6Index of total Capital Expenditure in Constant	Dollars (1957=100)	93.5	90.2	89.6	93.1
For reconciliation with Business Gross Fixed Capital Formation in housing, plant and equipment as per National Accounts, see below.
-	1959	1960	1961	Prelim. 1962Private and Public Capital Expenditure-Table 14....	8,417	8,262	8,172	8,738Deduct: New residential construction by governments....	-18	-13	-9	-10New non-residential construction by governments.	-1,368	-1,420	-1,368	-1,587New machinery and equipment outlays by governments	-137	-137	-160	-187Business Gross Fixed Capital Formation in Housing, Plant and Equipment-National Accounts Definition	4,894	6,692	6,635	6,954
Revenue and Expenditure of All Governments*
Computed on the basis of the National Accounts definitions, expenditures in 1962 by all levels of government rose 7.0 per cent over 1961. Since revenues increased by 8.6 per cent during the same period, the deficit for all levels of government declined from $905 million in 1961 to $770 million in 1962. In the third and fourth quarters of 1962, the total deficit was running at an annual rate of $694 million, consisting of a federal deficit of $250 million and a deficit at provincial and municipal levels of $444 million.
In analyzing developments in 1962, it is necessary to keep in mind the new federal-provincial tax collection arrangements, which affected the levels of revenue and expenditure of the Federal Government and the revenues of provincial governments. As a consequence of the introduction of the new tax collection arrangements in the first quarter of 1962 and the continuation in that quarter of transfer payments to the provinces under the former tax rental agreements, the federal deficit in that quarter was irregularly high and the position of provincial-municipal governments was correspondingly affected.
* The following section discusses those government transactions relevant to the National Accounts. As a result the Statistics differ from those shown in Public Accounts. Table 18 indicates the reconciliation between federal deficit or surplus for purposes of the National Accounts and the comparable figures appearing in the Public Accounts.

The Budget-Appendix

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REVENUE AND EXPENDITURE OF ALL GOVERNMENTS (National Accounts Basis)
-	1961			Preliminary 1962			
	Revenue ^ture^" Deficit			Revenue ^ture**" Deficit			
Federal	
Provincial-Municipal	
Total	6,668 5,586	7,121 6,038	(Millions of -453 -452	dollars) 6,907 6,397	7,381 6,693	-474 -29613,254	13,159	-905	13,304	14,074	-770
To compare on a national accounts basis government expenditure with Gross National Expenditure (which measures the expenditures on goods and services), it is necessary to limit the comparison to government outlays on goods and services (as distinct from outlays for transfer payments, etc.), since the former are the government outlays directly included in the Gross National Expenditure account. Transfer payments by government are reflected, of course, in the income of the personal sector.
In 1962, expenditures on goods and services by the three levels of government represented 19.1 per cent of the Gross National Expenditure, virtually unchanged from the proportion of 19.3 per cent in 1961, and slightly above the proportions of 18.6 per cent in 1960 and 1959. The slight increase since 1960 has been attributable to provincial and municipal governments. Since 1952, when the buildup in defence expenditures raised the proportion of government expenditures to Gross National Expenditure to approximately 18 per cent, the rise in government expenditures on goods and services has been very slightly in excess of the growth in Gross National Expenditure.

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_	1952	1960	1961	Prelim. 1962Expenditures by: Federal-Defence	7.5	4.3	4.3	4.1Non-defence	2.9	3.2	3.6	3.3Total Federal	(10.4)	(7.5)	(7.9)	(7.4)Provincial and Municipal	7.4	11.1	11.3	11.7All levels of Government	17.8	18.6	19.2	19.1
Within the total, expenditures on goods and services by the Federal Government in 1962 represented a smaller share of total expenditures than in 1961. Defence and non-defence expenditures of the Federal Government were fractionally reduced while the proportion at the combined provincial and municipal levels was somewhat higher.
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The Budget-Appendix

[Stage Direction]
-	Construction	Machinery and Equipment	Total <i>
% of Capital Outlays to Total Government Expenditures on Goods and Services
	(Millions of dollars)			
1960	1,433	137	1,570	23.21961	1,377	160	1,537	21.319620)	1,597	187	1,784	23.1
u>
These figures exclude investment expenditure by government business enterprises which is included in the National Accounts item for business capital formation. Outlays for defence equipment are also excluded from these figures.


Preliminary.
These expenditures on goods and services in the government sector of Gross National Expenditure include outlays by all levels of government on construction and capital equipment which, over the past several years, have represented a relative constant share, approaching one quarter of all government outlays on goods and services. In 1962 capital outlays by the provincial and municipal governments (partly financed by federal assistance) increased and accounted for some of the increase in total provincial and municipal expenditures on goods and services.

[Stage Direction]
1961	Prelim. 1962	Change
Government Revenue-	(Millions of dollars)		
			
Direct Taxes-Persons	2,511	2,714	+203Federal	2,132	2,088	-44Provincial and Municipal	379	626	+247Direct Taxes-Corporations	1,612	1,750	+138Income-	Federal	1,311	1,328	+17Provincial	301	422	+121Other Direct Taxes-	Withholding taxes-Federal	116	125	+9Indirect Taxes	4,970	5,552	+582Federal	2,190	2,400	+210Provincial and Municipal	2,780	3,152	+372Investment Income	1,130	1,211	+81Federal	409	448	+39Provincial and Municipal	721	763	+42Employer and Employee Contributions to Social Insur-	ance and Government Pension Funds	787	816	+29Federal	510	518	+8Provincial and Municipal	277	298	+21Transfers from Federal Government-	Provincial and Municipal	1,128	1,136	+8Total Revenue	12,254	13,304	+1,050Federal	6,668	6,907	+239Provincial and Municipal	5,586	6,397	+811
The Budget-Appendix
TABLE 18-Concluded

[Stage Direction]
1961	Prelim. 1962	Change
	(Millions of dollars)		
Government Expenditure-			
Goods and Services		7,205	7,721	+516
Federal-			
Defence	1,613	1,680	+ 67Non-defence	1,361	1,328	- 33Provincial and Municipal	4,231	4,713	+482Transfer Payments to Persons	3,408	3,052	+244Federal	2,015	2,122	+107Provincial and Municipal	1,393	1,530	+137Interest on Public Debt	1,164	1,274	+110Federal	783	855	+ 72Provincial and Municipal	381	419	+ 38Subsidies	254	291	+ 37Federal	221	260	+ 39Provincial and Municipal	33	31	- 2Transfer to Other Governments-	Federal	1,128	1,136	+ 8Total Expenditure	13,159	14,074	+915Federal	7,121	7,381	+260Provincial and Municipal	6,038	6,693	+655Deficit (-) or Surplus (+)	-905	-770	+135Federal 	-453	-474	- 21Provincial and Municipal	-452	-296	+156Total Expenditure minus deficit (or plus surplus)...	12,254	13,304	+1,050Federal	6,668	6,907	+239Provincial and Municipal	5,586	6,397	+811
<*>
Reconciliation with Public Accounts Surplus or Deficit shown below.
Prelim.
1961	1962
(Millions of dollars)
Federal Government calendar year surplus for national accounts
purposes	
-453	-474Difference between calendar and fiscal year	
+247	-158Difference between corporation tax accruals and government receipts.	- 24	- 13Revenue items omitted	
+22	+23Reserves, write-offs and similar items omitted from expenditure	
- 50	- 79Extra-budgetary funds for pensions and social insurance (net)	
- 56	- 96Other adjustments	
* - 26	+ 6Federal surplus for fiscal year as per public accounts	
-340	- 791
At the federal level, revenues increased during 1962, following a decline in the first quarter which reflected the new tax collection arrangements. Revenues from direct taxation on persons were generally up, in line with increases in labour income and other personal income. Tax accruals on corporations were generally level throughout 1962, in line with the movement in corporation profits following a first quarter decline which was again attributable to the tax collection arrangement. Withholding tax revenue was somewhat higher in 1962. Federal
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The Budget-Appendix
Government investment income moved irregularly during 1962, and was higher on a year-to-year comparison. Indirect taxes increased moderately in the first half of 1962 and then rose sharply in the third quarter, mainly due to increased custom duties, following the imposition of import surcharges on June 24, 1962, and subsequently levelled off in the fourth quarter.
Turning to federal expenditures in 1962, there was a decline in total outlays from the second to the fourth quarter. The decline was the result of a number of different movements. Outlays on goods and services increased from the first to the second quarter due to irregularly high defence outlays. In the third and fourth quarters federal outlays on goods and services declined, reflecting in part the reduction to more typical levels of defence spending and in part the reduction in budgetary expenditures, as part of the emergency measures announced in June.
Federal transfer payments to persons rose 5.3 per cent in 1962 mainly as a result of acreage payments to western grain producers, and an increased rate of Old Age Security payments.
Transfers to provincial and municipal governments declined from the first quarter to the second, then increased again in the third and fourth quarters. As previously noted, the last payments under the former tax rental agreements were made in the first quarter of 1962. In the third and fourth quarters, increases were related to payments under the Hospital Insurance and Diagnostic Services Act and the Technical Assistance and Vocational Training Act. (These latter transfer payments are reflected as outlays on goods and services by provincial and municipal governments.)
Turning to provincial and municipal government revenues, these increased in 1962. The new tax collection agreement resulted in higher direct taxes received by these governments. Revenues were also higher from retail sales taxes and real property taxes.
Provincial-municipal outlays on goods and services rose substantially from the first to the second quarter of 1962, and then more moderately in the third and fourth quarters. From the first quarter of 1961 to the fourth quarter of 1962, provincial-municipal outlays on goods and services increased by $708 million, about 17 per cent. As noted in Table 5, this rate of increase was below that of the two preceding upswings. In the current period, some of the increase in outlays has been in the form of outlays on technical and vocational schools, with federal financial assistance.
Transfers to persons by provincial-municipal governments rose throughout 1962, owing to larger payments to hospitals, educational institutions, as well as for social assistance.

[Stage Direction]
Developments in the labour market for 1962 followed a pattern somewhat similar to that of economic activity. Based on comparisons of yearly averages, there was an increase in employment in both goods- and service-producing industries. On a year-to-year basis, total employment increased by 168,000 persons, about 2.8 per cent. The increase during 1962 itself was much smaller and, as measured by the change between the fourth quarter of 1961 and the fourth quarter of 1962, amounted to 100,000 persons, about 1.6 per cent. This

The Budget-Appendix
slowdown in employment gains after mid-year is evident from the accompanying labour force chart. At the same time, the total civilian labour force grew at a much slower rate than in recent years as many would-be entrants remained out of the labour force. As a result of these developments the rate of unemployment in 1962 averaged below that of 1961, 5.9 per cent compared with 7.0 per cent. The unemployment rate moved between 5| and 6| per cent during 1962, and ended the year at about the annual average. This high rate of unemployment was considerably above that of the earlier postwar Canadian period, and well above that of most other industrialized countries.

[Stage Direction]
MILLIONS OF PERSONS	MILLIONS OF PERSONS
(I) SEASONALLY ADJUSTED ESTIMATES

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As in 1961, the year-to-year increase in employment was more than accounted for in the non-agricultural sectors and there was some further decline in agricultural employment. Ontario and Quebec accounted for more than half the total increase while employment in the Atlantic provinces, the Prairies and British Columbia also rose.
1058
[Stage Direction]
The Budget-Appendix

[Stage Direction]
I960	1961	19621959	1960	1961(T 100 14 19 52 17 -2	lousands of per 94 19 12 22 30 12	sons) 168 10 59 47 28 22
Note: Figures may not add due to rounding.
The Service industry and Manufacturing accounted for most of the increase in employment in the year-over-year comparison.

[Stage Direction]
1960	1961	19621959	1960	1961(Thousands of persons)	175	115	90-14	2	-23189	113	114100	94	168-17	- 1	-21117	95	18910	-24	- 5-24	45	52-24	-12	23- 3	-10	14- 2	4	535	2	1910	13	9115	78	74-38	9	70155	S7	121
Excluding agriculture.
Note: Figures may not add due to rounding.
The increase in employment in 1962 over 1961 was accounted for by 109,000 males and 59,000 females. The increase in male employment was associated with the manufacturing and construction industries, particularly the former where employment averaged 52,000 higher in 1962 than in 1961.
The increase in manufacturing employment brought employment in the goods-producing industries (excluding agriculture) back to the 1957 level. Average employment in the goods-producing industries, except agriculture, had declined between the peak year 1957 and 1960. Increases in manufacturing employment since 1960 have offset lower levels of employment in forestry and mining. By contrast, the service-producing industry has shown more consistent annual increases since 1957, though the rate has slowed in the past two years.

The Budget-Appendix
. , The growth of ,the Iabour force although still larger than in most other industrialized countries has slowed down during the past two years [from the rate m immediately preceding years. Two features predominate in this situation. First, the net gain from migration has been significantly smaller and second, there has been a marked increase in prolonged school attendance. From 1956 to 1960, the population of 14 to 19 years olds increased by 276,000, while the labour force in this age group rose by 61,000. In the two years ending December, 1962, when the population growth in this age bracket was 157,000, the labour force in this age group grew by only 14,000. As a result, the participation rate in the labour force (i.e. the percentage of an age group working or seeking work) for these younger people continued to decline. The drop was particularly noticeable in the participation rate for males which fell from 43.0 per cent in 1960 to 39.6 per cent in 1962. For the same reason there was a similar, though less pronounced, decline in the participation rate for males in the 20 to 24 year old group.
There was little change in the male participation rate in the group of prime working age, 25 to 64. The participation rate for females, however, continued to rise, though at a slower rate, with married women accounting for the increase.
To place developments in the labour market in proper perspective it is helpful to compare the current position with the period immediately prior to the business upswing, after removing seasonal influences. Between the first quarter of 1961 and the fourth quarter of 1962, 138,000 persons were added to the labour force, a smaller amount than in preceding periods. Non-farm employment increased by 267,000 persons, which exceeded the growth in total employment because of a decline in farm employment. Consequently, the rate of unemployment dropped from 7.7 per cent of the labour force to 5.9 per cent between these two periods.
Peak	Trough	Unemployment Rate	Comparable Periods after Peak and Trough	Unemployment Rate	Change from	Peak	Trough	Peak	TroughIQ 1960	IQ 1961	6.4	7.7	4Q 1962	5.9	-0.5	-1.8IQ 1957	IQ 1958	3.6	6.7	4Q 1959	5.9	+2.3	-0.8
The change in the unemployment rate in the last two years is in contrast with the experience of the preceding upswing. As the following table shows, unemployment h&s fallen more since the beginning of the current business upswing than it did in 1958. After seven quarters of expansion, rates of unemployment are below those at the preceding peak of business activity in the first quarter of 1960. By contrast, after a similar period of time in the preceding upswing rates of unemployment were above those of the previous peak. The difference in behaviour of unemployment is mainly attributable to the much smaller increase in the labour force in the current period. From the first quarter of 1958 to the fourth quarter of 1959, employment increased by 4.3 per cent, and in the current comparable period, it rose by 4.2 per cent. The labour force, on the other hand, grew by 3.4 per cent in the earlier period, but by only 2.1 per cent from early 1961 to the end of 1962. Comparisons with preceding peaks were affected by the slower growth in the labour force in the current period, as well as by a larger increase in employment. An analysis of unemployment behaviour based upon its own specific turning points yields roughly comparable results.
The 1962 rate of unemployment of 5.9 per cent is high compared both with the earlier Canadian postwar period and with other countries.
28902-5-68J
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3.4	1954	4.62.2	1955	4.42.3	3.42.9	1957	4.63.6	1958	7.12.4	1959	6.02.9	I960	7.03.0	1961	7.21902	5.9
It is difficult to make comparisons of unemployment figures between different countries, since the statistical measurements differ. For example, Canada and the United States take sample household surveys, which cover the entire population. Swedish statistics are based upon those relating to members of unemployment insurance funds, while British data are based almost entirely on a count of registrants at employment exchanges and youth employment offices. Accordingly, meaningful international comparisons have been haid to come by. However, since the publication of last year's White Paper, a United States Presidential Committee* has computed unemployment rates on a roughly comparable basis, according to the U.S. concept. For 1960, the year for which the calculations were made, the rate in Canada was much above that of other countries. The comparative figures before and after adjustment are as follows.
Country
Canada
1960 unemployment rate
Unadjusted
Adjusted
7.0
7.0
United States	
Italy	
Great Britain	
France	
Sweden (1961)	
Japan	 [DOT] [DOT] [DOT]
Germany (Federal Republic)
5.6	5.6
7.9	4.3
1.6	2.4
1.1	1.9
1.2	1.5
1.0	1.1
1.2	1.0
. Source "Measuring Employment and Unemployment", President's Committee to Appraise Employment and Unemployment Statistics 1962, p. 235.

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From the beginning of 1961 to the end of 1962 the price of foreign exchange in Canadian dollars rose by about 9 per cent. In this period, the consumer price index rose by 2.1 per cent, the general index of wholesale prices by 4.5 per cent and the implicit price index of Gross National Expenditure by 2.7 per cent.
As might be expected, the major impact of the price rise has been on goods and services with a high import content, but the domestic price of export commodities whose price is set in world markets has also risen, for example, wheat, nickel, copper, newsprint and petroleum. Apart from the decline in the exchange rate, prices after June, 1962 were affected by the imposition of the temporary surcharges. Approximately three-quarters of the 1.2 per cent increase in consumer prices in 1962 took place in the latter half of the year.
A report recently published by the Organization for Economic Cooperation and Development** shows that the increase in consumer prices in other Western industrialized countries over the past 10 years has generally been higher than m Canada. In the comparison found in Table 20, taken from the Report, Canada is shown amongst the countries having the smallest increase in the industrialized western world.
[DOT][DOT]"Policies for Price Stability".

The Budget-Appendix

[Stage Direction]
CHANGES IN CONSUMER PRICES OVER SELECTED PERIODS*1)
(Annual average percentage change)*2)
Country	1963-61	1953-58	1958-61	1961-62France	4.1	4.0	4.3	5.4Sweden	3.1	3.5	1.4<*	2.7<*United Kingdom	2.9	3.6	1.6	4.2*«Norway	2.7	3.4	1.7	5.4Denmark*3)	2.7	2.8	2.3	6.6Netherlands	2.6	3.3	1.7	3.6Austria	2.4	2.5	2.3	5.4Ireland*4)	2.3	3.2	1.1	4.4Italy	2.1	2.5	1.3	4.1Germany	1.8	1.8	1.7	4.3United States	1.4	1.6	1.2	1.2*0Canada	1.3	1.6	1.1	1.2<«Belgium	1.3	1.6	0.9	1.7Switzerland	1.2	1.4	0.9	4.5
Countries ranked by 1953-61 price rise.
(1) The periods have been selected to illustrate the broad characteristics of price movements in Europe and North America since 1953. Where the experience of an individual country differed from the general experience, the averages shown do not give a full picture of the price movements in that country.
*2) Annual averages of monthly figures for 1953-58, 1958-61 and 1953-61, and first seven months of 1961 to first seven months of 1962.
*3) Excluding rent. 1961-62: averages of January, April and July figures.
*4) 1961-62: average of figures for first two quarters.
*6) Excluding the effect of changes in indirect taxes. It has not been possible to make similar adjustments for the other countries.
*#) Annual averages of monthly figures for 1961 and 1962.
Source: "Policies for Price Stability", O.E.C.D., November 1962, table 1, page 12.
There has been an improvement in Canada's competitive position over the past decade. The Canadian experience, as indicated in the accompanying chart on manufacturing, has been one in which wage rate increases have been relatively modest while output per man hour has continued to rise about in line with the average rate of increase achieved in the postwar period in Canada. By contrast,

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Index 1949=100
Ratio Scale
ieo
140
100
Quarterly « Seasonally Adjusted
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The Budget-Appendix
wage rates in some of the Western European countries have recently been rising rapidly while productivity gains have slowed as operating rates have approached full capacity. Wage and other costs per unit of output have shown sharp advances in some of these overseas countries. Table 21 presents some of these findings. These statistics reflect only prices valued in domestic currencies. Recent exchange rate adjustments sharpen these trends.

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CHANGES IN INCOMES AND COSTS IN SELECTED COUNTRIES 1953/54-1960/61
(Annual average percentage change per unit of output)
France	Germany	Nether- lands	Sweden	United Kingdom	United States	CanadaWage and salary incomes	6.1	3.1	4.5	3.5	4.0	2.4	2.4Other incomes	4.1	2.7	2.4	1.5	2.2	1.5	1.3Net indirect taxes	5.2	1.8	-0.4	7.5	2.8	3.3	3.0GDP at market prices	5.0	2.7	2.9	3.2	3.2	2.2	2.0Import prices	
Effect of imports on general	(3.5)	(-0.7)	(0.2)	(0.2)	(0.4)	(0.1)	(1.5)price level	-0.2	-0.7	-1.1	-0.7	-0.6	0	0Total costs-overall price	level	4.8	2.0	1.8	2.5	2.6	2.2	2.0
Source: Policies for Price Stability. O.E.C.D.
The combined effects of domestic price movements and exchange rate adjustments over the past few years are shown in Table 22.

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INTERNATIONAL COMPARISON OF CHANGES IN PRICES, 1959-62<*
(Percentage change)
Country	Consumer price index	Wholesale price index
	4	0
	3	2
	- 7(2)	- 7(2)
	12	7
	13<«	9(«
	9	4
	16	6
	12(2)	3 <2>
11	7
	9	6
		
<*) Based on incomplete data for 1962.
(2) Adjusted for changes in exchange rates.
Sources: Organization for Economic Cooperation and Development, United Nations and U.S. Council of Economic Advisers, taken from Economic Report of the U.S. President, January 1963, table 17, page 105.
Generally speaking, prices in the current business upswing have so far risen less than they did in the comparable period of the upswing in 1958. The following table shows changes in the price levels from the low point in activity in the first quarter of 1961 and from the previous peak in the first quarter of 1960 to the fourth quarter of 1962. It makes similar comparisons with the preceding upswing in 1958. The table shows that, except for the wholesale index, prices have risen to a lesser extent than in the preceding period.

The Budget-Appendix

[Stage Direction]
7 quarters after trough	7 quarters after trough from previous peak	7 quarters after trough	7 quarters after trough from previous peak4Q 1959	4Q 1959	4Q 1962	4Q 1962IQ 1958	IQ 1957	IQ 1961	IQ 1960Consumer Price Index	3.5	6.4	2.1	3.6Commodities	1.8	4.2	1.8	2.9Services	5.1	9.4	2.7	4.3General Index of Wholesale Prices	1.0	0.6	4.5	5.2Gross National Expenditure Implicit Price Index	4.6	6.2	2.7	4.1
Table 24 shows that prices in the aggregate rose somewhat more in 1962 than in the preceding year. However, apart from those categories more directly affected by the lower exchange rate (imports and exports of goods and services and the index for new machinery and equipment where the import content is high), the increases were relatively small and of somewhat the same magnitude as those which have taken place in the past few years.

[Stage Direction]
(Implicit Price Indexes of GNE and Components)
-	1960 1959	1961 1960	1962 1961Personal Expenditure	1.1	0.9	1.5Non-Durable Goods	0.6	0.8	1.2Durable Goods	0.1	-2.0	-0.2Services	2.2	1.9	2.4Government expenditure	3.3	1.9	3.7Business gross fixed capital formation	2.2	0.9	2.5New Residential construction*1)	2.7	0.6	2.8New Non-residential construction*1)	2.4	0.4	2.0New machinery and equipment	1.9	1.6	2.9Exports of goods and services	0.7	1.3	3.2Imports of goods and services	1.0	3.3	4.4Gross National Expenditure	1.6	0.6	1.7
Price indexes of these sectors are measured mainly by elements entering into costs (materials and labour purchased) rather than final selling prices, and generally it has not been possible to allow for changes in productivity. Over short periods of time, these cost indexes are not likely to vary to any extent from indexes of actual selling prices. Over longer periods, it may be that these cost deflators overstate price increases.
The consumer price index for 1962 averaged 130.7 compared with 129.2 for 1961, an increase of 1.2 per cent. The index moved from 129.7 in January, 1962 to 131.9 in December, with the major portion of the increase occurring between March and August. As Table 25 shows, increases in the food and services indexes were the major factor in the rise of the total index. Like the total index, food prices showed the greatest increase between March and August. Part of this rise was seasonal, particularly in the third quarter, but the lower value of the Canadian dollar and import surcharges were also moderate contributing factors.
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Of more significance, however, were special circumstances affecting the price of beef, and to a lesser extent pork. Drought conditions in the western provinces in 1961 reduced the volume of feed which forced the premature sale of feeder cattle and a drop in hog production. At the same time a strong U.S. market for beef developed and, in 1962, a reduced supply and a strong demand forced meat prices up.

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The increase in the services index in 1962 was of the same magnitude as the increase last year and much smaller than the increases recorded prior to 1961. As in recent years, the largest increase took place in services other than housing. In turn, higher fees for medical, dental and optical care were important factors and raised the health and personal care index by 2 per cent.

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-	I960 1959	1961 1960	1962 1961Total Goods and Services	+1.2	+0.9	+1.2Commodities	+0.8	+0.5	+0.9Commodities excluding Food	+0.6	+0.1	+0.3Food	+0.9	+1.5	+1.8Durable Goods	-0.3	-1.8	-0.7Household Equipment	-0.5	-1.1	-0.1Transportation Equipment	+0.5	-2.3	-1.5Non-Durable Goods	+0.9	+1.0	+1.2Non-Durable Goods excluding Food	+0.9	+0.6	+0.7Textiles	+0.2	+1.3	+0.9Other Non-Durable Goods	+0.8	+0.2	+0.6Services	+2.2	+1.3	+1.4Services excluding Shelter	+3.0	+ 1.9	+2.1
The Budget-Appendix
The wholesale price index, which is heavily weighted with export and import goods, responded, as was to be expected, to the lower exchange value of the Canadian dollar. The general index in 1962 was 2.9 per cent higher than in 1961 and marks the largest year-to-year increase since 1956. The largest increases occurred in prices of raw and partly manufactured goods with the other selected groupings each rising by about 2 per cent. It appears that wholesale prices reached their peak in the third quarter of 1962 and have subsequently levelled out.
TABLE 26	.
PERCENTAGE CHANGES IN SELECTED WHOLESALE PRICES (1935-1939 = 100)
-	1960 1959	1961 1960	1962 1961Raw and partly manufactured goods	-0.6	1.4	5.3Fully and chiefly manufactured goods	0.2	0.9	1.8Industrial materials	0.1	1.2	2.0Iron and non-ferrous metals and products	0.9	1.1	1.9General Index of Wholesale Prices	0.1	1.0	2.9
BALANCE OF INTERNATIONAL PAYMENTS General
The year 1962 was one of varied and divergent movements in Canada's balance of international payments. The current account, in the first two quarters, showed deficits of much the same amounts and much the same pattern as in 1961, although, typically during a business upswing, rather larger deficits, particularly on trade account, might have been expected. In the third quarter the trade account was substantially worse than the year before reflecting, at least in part, exceptionally large orders for imports placed in the previous quarter in the expectation of renewed depreciation of the Canadian dollar. In the fourth quarter, the trade balance improved as sharply as it had deteriorated. By this time a lower exchange rate and emergency import surcharges were exercising their effects. The trade balance for the year as a whole was about the same as it had been in 1961.
The non-merchandise account in 1962 was chiefly influenced by a change in the pattern of travel expenditures, especially in the second half of the year. The lower exchange rate, reinforced by a sharp reduction at the time of the exchange crisis in the customs-exemption for returning Canadians, was no doubt the main cause of an improvement of some $110 million over 1961. Nevertheless, the total current account deficit for 1962, at $848 million, remained very large.
While these developments were taking place in the current account, there were shifts of very large and disturbing amounts in the capital account. In the first quarter of the year the substantial net capital inflow, which for many years had financed the large current deficits, dried up. Thus the current deficit for that quarter had to be paid for by drawing on reserves. In the second quarter a substantial net outflow of capital developed which, together with the current account deficit for that quarter, had to be paid for by further drawings on reserves. The downward pressure on the Canadian dollar in the exchange market, which had been heavy in January and February but had relaxed in March, was renewed in April after the announcement of a General Election. For the rest of that month the "floating" exchange rate continued to be defended at a level of approximately 95 cents (U.S.). On May 2 a new "par value" of 92.5 cents was declared with the
1066
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The Budget-Appendix
concurrence of the International Monetary Fund. Despite this, the downward pressure soon re-emerged and gathered strength, reaching a climax following the indecisive results of the Election on June 18. On June 24, the Government announced a series of drastic emergency measures.
Thereafter, net capital inflow started again and the reserves rose. However, in the third quarter the capital inflow was induced largely by the maintenance of stringent financial conditions which were out of keeping with the economic requirements of the country, and much of the capital came on a short-term basis. A renewed inflow of long-term capital began towards the end of the third quarter and was enlarged in the fourth so that, by the end of the year, the reserves (apart from borrowings of $300 million from the International Monetary Fund), were nearly $200 million higher than they had been at the beginning. Much of the long-term capital inflow took the form of borrowings, but a substantial part also took the form of "take-over" purchases of Canadian businesses by interests abroad.
Detailed comments on these developments follow.
Current Account
The existence of substantial current account deficits, and of appropriate net capital inflows to finance such deficits, is acceptable in a country like Canada at times when the economy is booming, when labour and plant are fully employed, and when substantial additions to the country's stock of productive capital equipment justify some recourse to outside sources to support the general expansion. But such deficits, and such net capital inflows, are clearly incompatible with a condition of high unemployment and lack of vigorous capital investment.
Table 27 shows the main structure of Canada's current account deficits from 1955 to 1962.

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-	Merchandise Trade	Non- Merchandise Trade	Current Account Balance1955	(i -211 -728 -594 -179 -422 -148 +173 +155	Vlillions of dollars -487 -638 -861 -952 -1,082 -1,095 -1,155 -1,003	) -698 -1,366 -1,455 -1,131 -1,504 -1,243 -982 -8481956	1957	1958	1959	1960	1961	1962 preliminary	
From the peak deficits of 1957 and 1959, of about $1.5 billion in each case, there has been a gradual improvement; but the improvement is not yet as large as the remaining deficit. Moreover the non-merchandise deficit, much of which is made up in any year of obligations arising from earlier capital imports, actually continued to deteriorate until 1962.
Turning from longer-term to cyclical patterns, it may be noted that the behaviour of the current account in the business expansion that took place between 1961 and 1962 has not been typical. Instead of deteriorating, the current account showed some improvement. Although most of this improvement was in the final

The Budget-Appendix
quarter of the year, it is nevertheless true to say that, through the year, the business situation was receiving more stimulus from the current account than would be considered normal at such a stage in the cycle.
The following table indicates the changing proportion of imports to Gross National Product in the years from 1949 to 1962. In addition to the cyclical pattern which it suggests it also shows that the proportion of our Gross National Expenditure which is associated with imports has been showing a gradual decline.

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Percent
1949		
1950		
1951		
1952		
1953		
1954		
1955		
1956		
1957		
1958		
1959		
1960		
1961		
1962	preliminary
16.5
17.4
19.4 16.0 16.8
15.7
16.7 18.2
17.2
15.4 16.0
15.3
15.3
15.4
In 1962 the price of imports rose substantially more than other items in the national expenditure because the devaluation affected the price of imports directly. Accordingly, the volume increases in imports in 1962 were less than the;'value increases. The accompanying chart shows the volume of imports of goods plotted against the index of industrial production, which covers a substantial part of the volume of real output in Canada. It can be seen that, apart

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3 MONTH MOVING AVERAGES-SEASONALLY ADJUSTED
28902-5-69^
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from cyclical movements which affect both industrial production and imports, the trend of production has been upward, while the volume of imports has not changed significantly for many years. Toward the end of 1962, industrial production was more than 20 per cent above 1956, while import volume was about unchanged. Among the categories of imports contributing to the relative decline, two of the most striking were fuels and lubricants and construction materials, steel and pipe.

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INTERNATIONAL PAYMENTS: CURRENT ACCOUNT
-	1959	1960	1961	Prelim. 1962
		(Millions	of dollars)	
Current Receipts-				
Merchandise exports (adjusted)	5,150	5,392	5,889	6,364Gold available for export	148	162	162	165Travel expenditures	391	420	482	560Interest and dividends	182	173	209	211Freight and shipping	420	442	486	498Inheritance and immigrants' funds	109	102	103	124Other current receipts	392	419	403	426Total Current Receipts	6,792	7,110	7,734	8,348Current Payments-	Merchandise imports (adjusted)	5,572	5,540	5,716	6,209Travel expenditures	598	627	642	610Interest and dividends	671	653	770	781Freight and shipping	525	533	568	588Inheritance and emigrants' funds	165	181	174	163Official contributions	72	61	56	32Other current payments	693	758	790	813Total Current Payments	8,296	8,353	8,716	9,196Balance on Merchandise Trade	-422	-148	+173	+155Balance on Other Transactions	-1,082	-1,095	-1,155	-1,003Current Account Balance	-1,564	-1,243	-982	-848
Merchandise exports have grown over the last six years by about the same percentage (32 per cent) as has G.N.P. The increase has been fairly well diversified, with exports of farm and forest products showing less increase than metals and minerals, chemicals and fertilizers. As the following table shows, a very substantial increase has been recorded in the category of "Manufactured and Miscellaneous" which includes machinery of all types, automotive items, aircraft, whiskey, textiles, etc.

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Farm and Fish Products	Forest Products	Metals and Minerals	Chemicals and Fertilizers	Manufactured and Miscellaneous	Re- exports	Total1956	1,121 1,264 +12.8	1,496 1,701 +13.7	(Mil 1,472 2,063 +40.1	ions of dol 183 248 +35.5	.ars) 489 902 +84.5	73 169 +131.5	4,834 6,348 +31.31962 Prelim	
Source: Bank of Canada Statistical Summary. Data are based on Trade of Canada definitions which vary slightly from those used for balance of payments purposes.

The Budget-Appendix
Turning to developments in 1962, there was an expansion in both exports and imports of merchandise. In 1962 exports of goods increased by 8.1 per cent in value above 1961. Nearly one-half of the increase in the value of exports was attributable to higher prices, a reflection of the change in the foreign exchange value of the Canadian dollar. About one-half of the gain was accounted for by increased shipments of iron ore, crude petroleum, aluminum, nickel, lumber and timber and woodpulp. Declines were registered by uranium ores and concentrates and wheat. Exports of manufactured goods also showed a significant increase. The gains were more than accounted for by shipments to the United States; shipments to other countries were below those of 1961 due to inventory adjustments and other factors.
Within 1962 merchandise exports (on a seasonally adjusted basis) rose sharply from the first to the second quarter, were steady in the third quarter, then again rose sharply in the fourth quarter. From the beginning of the business expansion in the first quarter of 1961 to the fourth quarter of 1962, merchandise exports increased by 17 per cent.


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-	uy	PORTS	sza	-	g|WlC	--	EXPORTS	-✓	-	--	'ill	111	111	1 1 !	1 I i	i i i	111	i i i	1 1 1	1 1 1	111	111	1 1 1	i i f1949	1950	1951	1952	1953	1954	1955	1956	1957	1958	1959	I960	1961	1962
(I) SEASONALLY ADJUSTED AND AT ANNUAL RATES
Merchandise imports in 1962 rose 8.6 per cent over 1961. On a quarterly basis, the 1962 annual level had almost been reached by the first quarter of the year, where it stayed throughout the year, except for a temporary increase in the third quarter. Some, at least, of the third quarter increase was related to deliveries of goods ordered, for anticipatory purposes, about the time of the unsettled exchange situation in mid-year. As in exports, nearly half of the increase in imports was ascribable to higher prices, resulting from the change in the exchange rate.
During 1962, imports of industrial materials, automobile parts, non-farm machinery and electrical apparatus were prominent among the commodities which were higher than in 1961. More than three-fourths of the increase in merchandise imports in 1962 came from the United States.
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There were significant changes in the geographical distribution of merchandise exports during 1962 compared with 1961. On a balance of payments basis, the very large trading deficit with the United States was reduced while the surplus with the United Kingdom increased somewhat and the surplus with other countries was reduced.

[Stage Direction]
-	Exports	Imports	Trade balance	Percentage change	1961	Prelim. 1962	1961	Prelim. 1962	1961	Prelim. 1962	1961/1962	United States	
United Kingdom	
Other Countries	
Total	3,213 924 1,752	3,742 924 1,698	(Millions 3,828 593 1,295	of dollars) 4,217 575 1,417	-615 +331 +457	-475 +349 +281	Exports +16.5 0 -3.1	Imports +10.2 -3.0 +9.45,889	6,364	5,716	6,209	+173	+155	+8.1	+8.6
Turning to the non-merchandise account in 1962, the most significant development was a smaller deficit, compared with the corresponding period in 1961. Changes in the balance on most major components were relatively small, but there was substantial improvement on travel account.

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The seasonally adjusted data for the non-merchandise account indicate a significant improvement in the third and fourth quarters of 1962. (The data are as defined in the National Accounts which differ slightly from Balance of Payments definitions.)

The Budget-Appendix

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NON-MERCHANDISE ACCOUNT (Seasonally Adjusted at Annual Rates)
Exports	Imports	BalanceIQ 1961	(M 1,676 1,764 1,752 1,776 1,788 1,868 1,872 1,912	illions of dolls 2,876 2,748 2,808 2,872 2,852 3,004 2.720 2.720	rs) -1,200 -984 -1,056 -1,096 -1,064 -1,136 -848 -8082Q 1961	3Q 1961	4Q 1961	
The third and fourth quarter 1962 reductions in non-merchandise payments were reflected in all categories. The sharpest reductions occurred in the outflow of interest and dividend payments which declined from an unusually high second quarter level, in payment for miscellaneous current services and in Canadian residents' travel expenditures abroad.
The improvement that took place in the travel account in the third and fourth quarters of 1962 was all with the United States. During 1962 there was a rise of $75 million in expenditures in Canada by visitors from the United States together with a reduction of $39 million in spending by Canadian travellers in the United States, following the further depreciation of the Canadian currency in May and the sharp reduction in June in the allowances for duty-free tourist purchases by Canadians.
The following table indicates the pattern of the deficit on travel account.

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DEFICIT ON TRAVEL ACCOUNT (Millions of dollars)
1954	-84	1959	1955	-121	1960	1956	-161	1961	1957	-162	1958	-193	
Capital Account
Table 34, which shows annual totals for capital movements, tends to mask some of the more extreme developments which occurred in the course of 1962, and largely cancelled themselves out. These developments which, in the first part of the year, involved net capital outflows and were reflected in the exchange crisis at mid-year, still show some of their effects in the twelve-month totals ending December 31, 1962: the outflow arising out of trade in outstanding Canadian stocks was the first since this series has been classified separately, while the capital outflow arising out of trade in foreign securities was'the'largest in the postwar period.
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INTERNATIONAL PAYMENTS: CAPITAL MOVEMENTS
-	1959	1960	1961	Prelim. 1962
		(Millions	of dollars)	
Direct investment in Canada	+550	+650	+515	+525Direct investment abroad	- 80	- 50	- 80	-100Canadian securities-	Trade in outstanding bonds and debentures	+ 91	+ 3	+ 63	+ 64Trade in outstanding common and preference	stocks	+110	+ 51	+ 40	-116+707	+447	-j-533	4-708Retirements	-258	-265	-297	-295Foreign securities	- 33	- 19	- 33	- 79- 1	- 7Repayments	+ 34	+ 32	+ 37	+129Subscriptions to IMF, IFC and IBRD in gold and	- 59	- 3	- 1Change in Canadian dollar holdings of foreigners	+ 13	+120	- 34	- 28+330Change in official holdings of gold and foreign exchange	(increase, -)	+ 70	+ 39	-229	-537Other capital movements	+360	+238	+467	+255Net capital movement	+1,504	+1,243	+982	+848
Developments are more readily discussed by an analysis of quarterly data. The following table gives the data in summary form, while a more detailed statement is contained in Table 36.

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1961				1962			
	IQ	2Q	3Q	1 4Q	IQ	2Q	3Q	1 4Q
			(Millions of dollars)					
Capital movements in long term								
forms		+186	+270	+200	+134	+ 25	- 14	+260	+447
Capital movements in short term								
forms	+256	+ 92	-200	+273	- 56	-217	+460	+150Balance on goods and services	-337	-311	- 62	-272	-333	-362	- 34	-119Total of above	+105	+ 51	-62	+135	-364	-593	+686	+478Special international financial as-	sistance	+707	-377Change in official holdings of gold	and foreign exchange^	-105	- 51	+ 62	-135	+364	-114	-686	-101
(^Increase (-)
The summary table shows that in the first quarter of 1962 the customary net capital inflow ceased and was replaced in the second quarter of the year by a substantial capital outflow. It was not until the third quarter of the year that a net capital inflow was resumed. The shift from the second to the third quarter amounted to almost one billion dollars, much of it representing a "swing" in short-term capital movements.

The Budget-Appendix

[Stage Direction]
1961				1962			
	IQ	2Q	3Q	4Q	IQ	2Q	3Q	4Q
			(Millions of dollars)					
Direct investment: in Canada	+140	+158	+117	+100	+110	+ 80	+145	+190abroad	- 29	- 21	- 12	- 18	- 30	- 30	- 15	- 25Canadian securities	Trade in outstanding bonds and	+ 31	+ 34	- 11	+ 9	3	4- 4	+ 39	+ 24Trade in outstanding common	and preference stocks	+ 13 +101	+ 32 +190	- 5	- 14 + 52	- 44 ("+200	- 26 + 87	- 32 +369+125	+117	Retirements	- 73	- 92	- 29	-103	- 70	- 68	- 48	-109Foreign securities	Trade in outstanding issues	+ 3 - 5	+ 2 - 7	- 10 - 7	- 32 2	- 37 4	- 9	5- 18 + 2	+ 2	+ 3	+ 2	+ 5	+ 5	+ 5	+ 5
Loans by Government of Canada								
Drawings								- 7	
	-f 3	+ 7		+ 27	+ 3	+ 7	+ 68	+ 51
Subscriptions in Gold and U.S.								
dollars to International Financial Agencies									- 1
Change in Canadian dollar holdings								
	- 5	- 72	- 1	+ 44	- 32	+ 34	- 54	+ 24
Special International financial as-								
sistance							+707		-377
Change in official holdings of gold								
and foreign exchange (increase, - )	-105 +261	- 51 +142	+ 62 -187	-135 +251	+364 - 18	-114 -378	-686 +540	-101 +111
								
Net Capital Movement		+337	+311	+ 62	+272	+333	+362	+ 34	+119
								
("Includes $125 million of new corporate borrowing which was applied to the refinancing of external liabilities in other forms.

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1962		
	IQ	2Q	3Q	1 4Q
		(Millions of dollars)		
Bonds and debentures				
Government of Canada	-14	-19	+38	+114Provincial government	+ 6	+ 3	+16	+114Municipal	+ 1	- 1	+24	+ 35Railways (not guaranteed by government)	
Other corporations	-	3 -	9	- 1 +154(*	+ 4	- 11 + 44Sub-total, bonds and debentures	-19	+1S6	+8S	+mCommon and preference stocks	-16	-44	-30	- 44Total	-35	+92	+52	+252
("Includes $125 million of new corporate borrowing which was applied to the refinancing of external liabilities in other forms.
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Throughout 1962, the flow of direct investment remained inward. In the past ten years direct investment in Canada has varied between about $400 million and $650 million, depending upon a variety of factors including the phasing of particular new capital formation, refinancing operations, or acquisition by foreigners of existing Canadian concerns or interests. These financial operations were considerably larger in 1962 than in 1961. Inflows from direct investment declined somewhat from the first to the second quarter, then rose substantially late in the third and in the fourth quarter to the highest levels in six quarters. Industrially, the largest inflows were to the petroleum and natural gas industry and iron ore projects.
Apart from special financing by a corporation in the second quarter amounting to $125 million, and a Government of Canada borrowing abroad in the fourth quarter, new security transactions in 1962 resulted in a net inflow of approximately $150 million with most of this inflow occurring in the fourth quarter. Trade in outstanding Canadian bonds and debentures yielded a net inflow, most of which occurred in the third and fourth quarters. Net sales were made up mainly of Government of Canada direct and guaranteed issues and were on balance entirely to the United States as there were repurchases from residents of overseas countries. It will be noted that the yield spread between Canadian and United States long-term government bonds was considerably wider in the third and fourth quarters, after the exchange crisis, than before it.
Transactions in outstanding Canadian stocks, on the other hand, led to capital outflows in each of the four quarters of 1962, amounting in total to $116 million. The sales of Canadian stocks were largely accounted for by overseas investors; there was only a modest capital outflow to the United States arising out of these transactions.
Proceeds from new issues of Canadian securities sold to non-residents in 1962 amounted to $708 million. As previously noted, this includes $125 million involved in the refinancing of external liabilities, which took place in the second quarter, and the Government of Canada 25-year external borrowing. Apart from this, proceeds from new issues sold to non-residents were, quarter by quarter, somewhat below the same period in 1961 until the fourth quarter of the year.
A capital outflow of $79 million took place in 1962 in the form of net purchases of foreign securities; all but $14 million of this occurred in the first half of the year. The bulk of the outflow was in United States securities.
Official transactions in 1962 (apart from special international financial assistance) yielded a net inflow of $122 million. Most of this represented advance repayments on outstanding intergovernmental loans of $67.6 million in July by France, and of $32.1 million by the Netherlands in October.
In the course of 1962 there were some very large and very sharp movements of short-term capital. In the first quarter of the year, there was a relatively small outflow, followed by a large outflow in the second, all of which was more than offset by a very large inflow in the third quarter and was followed by a smaller inflow in the fourth quarter of the year. The shift between the second and third quarters amounted to an extraordinary $677 million, of which about $500 million represented Canadian-owned bank balances and other short-term funds in foreign currencies.

The Budget-Appendix
Canadian dollar holdings of foreigners yielded capital outflows in the first and third quarters of the year, and capital inflows in the second and fourth quarters. They included a small increase in foreign holdings of Government of Canada Treasury Bills and a decline in deposits as the following table shows:

[Stage Direction]
-	Treasury Bills	Deposits etc.	TotalIQ 1961	(M +33 -75 -34 +18 +18 +50 - 3 -61	illions of dolla -38 + 3 +33 +26 -50 -16 -51 +85	rs) -	5 -72 -	1 +44 -32 +34 -54 +242Q 1961	3Q 1961	4Q 1961	IQ 1962	2Q 1962	*3Q 1962	4Q 1962	
Non-resident holdings of finance company and commercial paper increased in all four quarters of 1962, with inflows amounting to $28 million, $25 million, $35 million and $52 million in successive quarters.
Quarterly movements of Canadian-owned bank balances and other shortterm funds in foreign currencies in 1962 were respectively +$49 million, -$245 million, +$257 million and +$17 million (plus equals an inflow, minus equals an outflow). The second quarter outflow and the third quarter reversal were unprecedented in size.
On June 24, 1962, the Canadian authorities arranged for $1,050 million in credits in foreign currency, as part of a programme of emergency measures. Of this total, $400 million represented a stand-by credit with the Export-Import Bank of Washington. The remaining $650 million of foreign exchange (equivalent in value to $707 million Canadian) was in the form of a $300 million drawing from the International Monetary Fund, a reciprocal currency arrangement entered into between the Bank of Canada and the Federal Reserve Bank of New York for $250 million, and a similar arrangement with the Bank of England for $100 million. Subsequently, as the situation improved, these arrangements were reduced or eliminated. The stand-by credit with the Export-Import Bank was reduced by $250 million in September and eliminated entirely in December. The reciprocal currency arrangement with the Federal Reserve Bank of New York was reduced by $100 million on October 31, by a further $75 million on November 30, and eliminated on December 26; as each reduction took place a similar amount was placed on a stand-by basis. The arrangement with the Bank of England was also reduced in steps on these dates and eliminated on December 26.
Official holdings of gold and foreign exchange were subject to wide movements in 1962. During the period when the Canadian dollar was under heaviest pressure there were also substantial "forward" transactions.
As for the movements in the exchange rate, it will be recalled that, from the end of June, 1961 to September, 1961, the Canadian dollar settled at about a 3 per cent discount on the United States dollar. In October, however, an upward pressure on the Canadian dollar emerged. In resisting this pressure, the Exchange Fund accumulated $186 million of foreign exchange in October. By the end of that month, the Fund held $2,111 million.
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Toward the end of 1961 and in early 1962 pressures in the opposite'direction developed and the rate began to move downward, reaching a 5 per cent discount on the United States dollar in February where it was held through March and April. Some $32 million of exchange reserves were used up in November, $23 million in December, $134 million in January, $175 million in February, and $35 million in March. However, following the announcement of a General Election in April, heavy downward pressures re-emerged. The official reserves declined by $114.6 million in April, while the exchange rate was still held at a level of approximately 95 cents (U.S.).
On May 2, 1962, with the concurrence of the International Monetary Fund, the Government declared a "par value" for the Canadian dollar, fixing it at a rate of one Canadian dollar equal to 92.5 cents (U.S.), with the normal one per cent margin either way. A short lull in the market was followed by renewed downward pressure on the exchange rate which gathered force late in May and through June, reaching a climax following the indecisive results of the General Election. By June 24 the "spot" position of the official reserves had fallen to about $1,100 million and in addition there were outstanding substantial forward sale contracts.
On June 24, the Government announced its emergency measures, the exchange market settled and exchange reserves began to increase. At the end of June, official holdings totalled $1,809 million, including $650 million arising out of special international financial assistance. Between June 30 and year end, reserves rose to $2,539 million, despite repayment of $350 million of special international financial assistance.
The value of the Canadian dollar in U.S. funds averaged about 91.9 cents (U.S.) in June, and then subsequently strengthened in July to 92.7 cents (U.S.). It closed the year at 92.8 cents (U.S.).

The Budget-Appendix

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Monetary and Foreign Exchange Conditions
During the first few months of 1962 the continuing cyclical expansion in economic activity was financed without much change in general credit conditions. Yields on long-term government bonds drifted gradually lower during this period and by April, 1962 were under 5 per cent. The yield on three-month Treasury Bills rose around the end of 1961 from about per cent to 3 per cent but thereafter showed only minor fluctuations through to late April 1962. Interest rate differentials between Canada and the United States, which had narrowed considerably in mid-1961, declined somewhat further in the early months of 1962. The total volume of funds raised through net new issues of securities in this period was appreciably less than in recent years. However bank loans continued to expand. Early in 1962 the expansion began to be accompanied by a gradual decline in the banks' holdings of liquid assets.

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In late April and May the wave of selling on the New York stock market initiated similar movements in other markets, including Canadian. At about the same time downward pressure on the Canadian exchange rate intensified, and on May 2 the Government announced the introduction of a fixed rate of Can. $1.00 = U.S. $0,925. Early in May Treasury Bill yields in Canada began to rise fairly rapidly and by mid-May a general upward movement in interest rates was under way.
From early May to late July the Government Purchase Fund acquired $113 million in long-term bonds to cushion the fall in prices. In a period of little more than two weeks in June, when bond prices were declining rapidly, the Bank of Canada bought some $150 million of short-term bonds for cash.
Pressure on the Canadian exchange rate came to a climax in June and emergency measures were introduced to protect the value of the Canadian dollar. These measures included re-introduction of a fixed Bank Rate at the high level of 6 per cent. During the period of the crisis and for several weeks after there was a complete absence of new security offerings and short-term yields moved to levels higher than those on long-term securities. On July 3, the prime lending rate of the chartered banks was raised from 5| per cent to 6 per cent.

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During the summer the banks were faced by a situation in which the more-than-seasonal increase in the demand for loans which had been occurring in the spring was continuing, while their cash reserves were falling. At the same time there was a strong demand by the general public, including industrial and financial institutions, for securities that, at substantially reduced prices, were offering very attractive yields. The banks sold substantial amounts of securities, and their total assets, together with their deposits, shrank accordingly. The reduction in the public's holdings of deposits shrank less rapidly, however, because the Government was using funds, accumulated from earlier sales of foreign exchange, to buy up the offerings of' foreign exchange that were now being offered as "flight" capital returned to Canada.
As the emergency measures took effect, and the massive financial assistance from a,broad assured the defence of the Canadian dollar at its declared par value, financial markets began to recover, monetary policy eased and interest rates declined. Bank Rate was reduced to 5? per cent on September 7, to 5 per cent on October 12, and to 4 per cent on November 13. The total money supply declined to early September and then began to increase. Total liquid assets of the chartered banks also increased. The proportion of total bank assets held in the form of government securities, day-to-day loans, cash and other liquid assets, which declined from 37 per cent in early 1962 to about 29 per cent in September, rose subsequently to 34 per cent by early 1963 where it levelled out.

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The yield on 91-day Treasury Bills, which had reached 5J per cent earlier in the summer, fluctuated around 5 per cent from mid-August to early October, dropped sharply to about 4| per cent in mid-October and again to about 3f per cent in November. The yield spread on Treasury Bills between Canada and the United States declined to around £ of 1 per cent compared with 2J per cent in July. Yields on long-term Government of Canada bonds which were around 5J per cent in the summer declined slightly in September and more rapidly in October and November to a little over 5 per cent. The difference in yields on long-term government bonds between Canada and the United States declined to
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about 1.2 per cent, compared with 1.5 per cent in July and 0.9 per cent in late 1961 and early 1962. In mid-November the prime lending rate of the chartered banks was reduced from 6 per cent to 5f per cent.
The period since September 1962 has been characterized by the reappearance, on a significant scale, of Canadian security offerings in New York. In September it was announced that negotiations had been completed for the private sale to five life insurance companies of U.S. $250 million in Government of Canada 25-year External 5 per cent Bonds. The proceeds were received in two equal instalments on October 15, 1962, and January 3, 1963, and were used to reinforce Canada's official reserves of foreign exchange. The Government of Canada's external issue was followed by an appreciable volume of security offerings in the United States market by Canadian provinces, municipalities and corporations.
Total net new borrowing by Canadian individuals, firms, and governments through the banking system and the bond and stock markets amounted to an estimated $3.2 billion in 1962. This was only slightly higher than the amount raised in 1961. The demands for particular types of funds during the course of the year were affected by the disturbances in the financial and exchange markets. Some detail for each level of government and the private sectors is provided in Table 39.
New cash raised from banks and security issues by corporations and other private borrowers in 1962 appreciably exceeded the amounts raised in either of the preceding two years. Reflecting the upward swing in the business cycle, private borrowers had sharply increased their net borrowings from $380 million to $544 million from the first to the second half of 1961. During the first half of

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1 Half 1962
2 Half
(Millions of dollars)
Government of Canada					
Securities**)		669	1,110	787	-371	1,158
Provincial governments					
Securities	477	935	669	288	381Bank loans	89	-82	-17	-22	6Sub-total	666	853	653	266	387Municipal governments	Securities	283	20S	215	101	114Bank loans	-14	30	-3	45	-48Sub-total	269	238	212	146	65Private Canadian Borrowers	Corporate bonds	318	346	314	227	87Corporate stocks(2)	172	224	250	98	152Finance Co. notes	10	-67	70	43	27Bank loans<3>	392	422	888	666	222Sub-total	892	924	1,621	1,033	488Total	2,396	3,120	3,172	1,074	2,098
Source: Bank of Canada.
Government of Canada and C.N.R. securities held outside Government accounts.
WExcludes chartered bank stock issues.
(3>A11 other chartered bank loans in Canadian currency, including day-to-day and call loans to securities dealers and Mortgage Loans.
Note: Totals may not add due to rounding.

The Budget-Appendix
1962 there were special influences which caused their rate of borrowing to accelerate to a total of $1,033 million, practically all of which was concentrated in the second quarter. Private borrowing was about 25 per cent higher in this quarter than in any previous three-month period. Much of the private borrowing was in the form of bank loans.
The swollen level of bank loans during the summer was partly associated with the continued expansion in the economy. In addition there were other influences which probably contributed. In the period leading up to the exchange crisis, expectations of a further fall in the value of the Canadian dollar probably led to advance buying of imports and remittance of earnings abroad. Some corporations and governmental bodies postponed security issues because of unsettled conditions in the stock and bond markets and relied instead on bank loans. Some bank borrowers may have anticipated tighter money conditions, and engaged in precautionary borrowing.
The decline in private borrowing from $1,033 million in the first half of 1962 to $488 million in the latter half, probably reflected, in part, the reversal of the above temporary influences together with the effects of reduced business inventory accumulation towards the close of the year.
Overall borrowings by governments were sharply lower in 1962 than in 1961. The distribution of borrowings between the two halves of the year was opposite to that described above for the private sector. The uneven distribution of borrowings by the Federal Government accounts for most of the concentration of total government borrowings in the second half of the year.
The pattern of federal financing was sharply distorted by foreign exchange developments during 1962. In the first half of the year large scale liquidation of exchange reserves by the Federal Government provided it with funds to maintain unusually large cash balances at the chartered banks, and at the same time appreciably reduce the total amount of marketable government bonds outstanding. On June 24, one of the emergency measures announced was that the cash resulting from the sale of foreign exchange since the beginning of the 1962-63 fiscal year-about $600 million-would be earmarked for future purchases of foreign exchange by the Exchange Fund Account.
In the course of rebuilding the exchange reserves the Federal Government drew down its cash balances at the chartered banks from July to early November raising new cash from securities market again. In the second half of 1962 the Federal Government raised $1,158 net million from sales of Canada Savings Bonds and marketable securities to the public, and from net sales of securities held by Government accounts.
Following the mid-year financial instability the Federal Government's first public financing operation on August 1 took the form of a straight refunding. An issue maturing on June 15 had been paid off out of government cash balances, some of this issue having been handled previously by an advance refunding with the Bank of Canada. Included in the August 1 refunding was the sale of $120 million in 18-year bonds. This was the first long-term issue since the C.N.R. issue in late 1960.
In September the Federal Government raised net new money from the securities market for the first time since March. At each weekly auction of Treasury Bills from September 6 to November 1, it sold $15 million more than the amounts maturing, raising a total of $135 million in new cash. A further $82 million in new cash was raised from domestic debt operations on October 1. The debt management operations from December 1 to January 1 constituted, on a net basis, a refunding of existing government debt.
The average term to maturity of Government of Canada and C.N.R. market securities was steady at about eight years during the first seven months of 1962. It lengthened to eight years and two months in August, reflecting the
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issue of 18-year bonds and lengthened again in December to eight years five months, reflecting the fact that almost all the holders of the 5J per cent Government of Canada bonds due April 1, 1963 exercised their option to exchange them bv the end of 1962, into an equal par value of 51 per cent non-callable bonds due April 1, 1976.
The yield to maturity offered on the 1962 Series of Canada Savings Bonds, announced on September 14, was high, and sales were large. The bulk of the proceeds from the sale of Canada Savings Bonds became available to the government in November, and accounted, as in previous years, for a sharp increase in government cash balances in that month. The net sale of Canada Savings Bonds during 1962 provided the Government with $540 million in new cash compared to $486 million in 1961, $382 million in 1960 and $317 million in 1959. Individual purchase orders for the 1962 Series up to March 31 numbered almost 1,667,817 of which 674,894 were made under the Payroll Savings Plan at factories, offices and other places of work. The average amount of the 1962 Series bought by each person under the Payroll Savings Plan was $343.
Housing Finance
Housing starts totalled 130,000 in 1962, an increase of 3.6 per cent from those in 1961. Expenditures on residential construction rose 8 per cent to a total of $1.6 billion. This represented 3.9 per cent of Gross National Expenditure in 1962, the same as in 1961, but somewhat less than in previous years, reflecting in part the decline in net family formation.
There were important shifts during 1962 in the composition of housing starts, by type, and in the sources of financing for residential construction expenditures. Starts of rental dwellings increased noticeably while starts of dwellings for home-ownership declined slightly. The proportion of rental dwelling starts to total starts increased from about 37 per cent in 1961 to about 41 per cent in 1962. Partly associated with this trend was an increase in conventional mortgage lending and a shift away from financing under N.H.A. (See Table 40.)

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-	1960	1961	1962(Mi	Uions of dollarf	)CMHC direct loans and other public funds	308	300	224Institutional funds-NHA	Chartered banks	42	1	0Life Insurance Companies	112	227	227Loan and Trust Companies, etc	23	160	170Sub-total	177	S88	S97Institutional funds-Conventional	Life Insurance Companies	201	171	277Loan and Trust Companies, etc	93	79	133Sub-total	294	250	411Equities of owners in addition to the above Mortgages and	other funds(1>	692	547	576Total12)	1,472	1,485	1,608(1)	These include equities of owners or builders on dwellings being financed with mortgages from public funds or from institutional lenders. They also include equities on dwellings financed with mortgage loans from non-institutional lenders or by loans other than mortgages, or equities on dwellings fully financed by their owners.(2)	Differs slightly from public and private expenditures on housing in Table 14, which includes major alterations to buildings but not the cost of land. Table 40 includes the cost of land but not major alterations to buildings.
Note: Totals may not add due to rounding.

The Budget-Appendix
N.H.A. lending activity in 1962, including institutional and direct C.M.H.C. loans, was below the previous year. The decline was particularly marked from June to November and was associated with a temporary narrowing in the spread between the maximum N.H.A. interest rate of 65 per cent in 1962 and long-term bond yields.
In 1962 C.M.H.C. conducted further auctions of insured mortgages from its portfolio as part of its continuing actions to promote a secondary market in mortgages. Sales totalled $48 million compared to $40 million in 1961. On December 6, 1962, the Government announced the establishment of a $100 million re-discount facility as a further step in the development of a secondary market for N.H.A. mortgages. C.M.H.C. will make funds available as a lender of last resort to N.H.A. approved lenders. Total loans to any one company may not exceed three times its paid-up capital or $5 million, whichever is the smaller.
Consumer Credit
Personal expenditures on goods and services increased 5.2 per cent in 1962 compared to 4.1 per cent in 1961. Sales of new automobiles featured prominently in the increase. In 1962 consumer credit extended by banks, finance companies and retail stores rose by 8.7 per cent or $296 million compared to 6.0 per cent or $192 million in 1961.
During the year there were divergent trends among the main lenders. The sharp increase in chartered bank consumer credit levelled off after mid-year, after allowance for seasonal influences, then started to rise again at the close of the year. Instalment finance company loans stopped declining early in 1962, followed a level trend during most of the year, and then towards the end of the year started to pick up. The small loan companies accelerated the previously moderate rate of increase in their loans in late 1961 and continued in this trend throughout 1962. Credit extended by retail stores rose moderately in 1962.

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-	I960	1961	1962Consumer Credit	&	Millions of dolla	rs)Chartered bank personal loans secured by household	property etc.(1>	138	173	153Instalment finance companies	22	-72	15Small loan companies	65	45	95Department stores	50	33	26Other retail dealers	-5	13	7Total	270	192	296Other Loans	Chartered bank personal loans secured by bonds and stocks.. Chartered bank government-guaranteed home improvement	4	50	36loans	-4	10	4Life insurance Co. policy loans	21	14	13Quebec savings banks	1	3	10Credit unions	36	92	n.a.
"[DOT]Excludes personal loans fully secured by marketable bonds and stocks and home improvement loans.
n.a.=not available.

The Budget-Appendix
Part II

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Table of Contents
Page
1.	Introduction	 1086
2.	Highlights of governmental financial operations during 1962-63. 1086
3.	Budgetary accounts	
1090A.	Revenues	
1091B.	Expenditures	
10994.	Summary of assets and liabilities as at March 31, 1963	
1124A.	Changes in principal liability classifications during 1962-63	1124B.	Changes in principal asset classifications during 1962-63..	1132C.	Increase in net debt	
11425.	The cash position	
11426.	The public debt	
11467.	Supplementary detailed tables	
1153
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1. INTRODUCTION
This Part of the Budget Papers presents in a concise manner a review of the accounts of the Government of Canada for the fiscal year 1962-63. The figures used are preliminary and will vary to some extent from the final figures when they become available on the closing of the books. The government's fiscal year ended on March 31, but in accordance with section 35 of the Financial Administration Act the books must remain open for some time after that date to take into account all payments up to and including April 30, originating in and properly chargeable to the fiscal year 1962-63 and to record various adjusting entries.
When Parliament was dissolved on February 6, 1963 the Revised Estimates and Supplementary Estimates (A) and (B) for 1962-63 had not been passed by the House of Commons. At that time Appropriation Acts had been passed authorizing the expenditure of only ten-twelfths of the estimates, and the remainder of the payments for the fiscal year were made under the authority of Special Governor General's Warrants issued on February 8, 1963 and March 4, 1963 in accordance with section 28 of the Financial Administration Act. It is not expected that the books for the fiscal year will be closed until a Special Appropriation Act is passed by Parliament, covering the Special Governor General's Warrants and authorizing certain accounting adjustments that remain to be made.
2. HIGHLIGHTS OF GOVERNMENTAL FINANCIAL OPERATIONS

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This section outlines the budgetary and non-budgetary transactions, the operations of the old age security fund, and the debt transactions during 196263, and the cash position as at March 31, 1963.
The following table summarizes the budgetary and non-budgetary transactions for the fiscal year and indicates how the budgetary and non-budgetary transactions, including changes in unmatured debt, affected the government's cash balances. More detailed explanations of these transactions are given in subsequent sections of this Part.

The Budget-Appendix

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(in millions of dollars)
Summary or Budgetary and Non-Budgetahy Transactions and Changes in Cash Position
Fiscal year ended March 31
(preliminary)
Budgetary transactions-
Revenues-
Tax	
Non-tax	
Expenditures-
Defence	
Non-defence	
Deficit (-)	
Non-budgetary transactions-
Receipts and credits (excluding unmatured debt transactions)-
Repayment of temporary loans to old age security fund....
Repayment of advances to the exchange fund account	
Repayment of other loans, investments and working capital
advances	
Increase in non-interest-bearing notes payable on demand.
Net government annuities account receipts	
Net insurance and pension account receipts	
Other non-budgetary receipts	
Disbursements and charges (excluding unmatured debt transactions)-
Temporary loans to old age security fund	
Decrease in non-interest-bearing notes payable on demand..
Other loans, investments and working capital advanoes....
Advances to the exchange fund account	
Other non-budgetary disbursements	
Net amount available from or required for (-) non-budgetary transactions	
Overall cash requirements to be financed by increase in debt or
decrease in cash balances	
Net increase in unmatured debt outstanding in the hands of the public	
Net increase or decrease (-) in Receiver General bank balances___
-1,467
1,064
5,237	5,111
639	619
5,876	6,ISO
1,602	-1,650
4,983	-4,871
6,686	-6,611
-709	
	17
	231
162	120
385	
26	36
473	257
94	216
1,140	877
-41	
	-12
-614	-481
-943	
-300	-71
1,898	-664
313
895
Budgetary transactions
The revenues and expenditures as forecast in the budget speech of April 10, 1962 and revised on October 22, 1962 and the actual figures as now estimated are shown in the following table:

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(in millions of dollars)
Budgetary Transactions for Fiscal Year 1962-63	Budget forecast April 10, 1962	Revised forecast October 22, 1962	Actual (prelimi- nary)	Increase or decrease (-) compared with October 22, 1962 forecast	
				Amount	Per cent
Revenues		5,780.0 -6,525.0	5,930.0 -6,500.0	5,876.1 -6,585.1	-53.9 85.1	-0.91 1.31
Expenditures						
Surplus or deficit (-)						
	-745.0	-570.0	-709.0	139.0	
					
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Revenues
The budgetary revenues for the fiscal year ended March 31, 1963 amounted to $5,876 million. This is $54 million or almost one per cent less than the revised figure of $5,930 million forecast on October 22, 1962, and $146 million or 2% per cent more than the total of $5,730 million collected in the fiscal year 1961-62.
Tax revenues accounted for $126 million of the increase over the previous year. The yield from personal income tax was $48 million less than in 1961-62 due to the provincial tax collection agreements which came into effect on January 1, 1962, offset in part by a higher level of incomes during the year. The yield from corporation income tax was $19 million less than the 1961-62 collections also due to the provincial tax collection agreements offset in part by higher corporate profits in 1961. Receipts from the sales tax were $46 million more, from customs import duties $111 million more (due to special surcharges imposed by the government in order to bolster the foreign exchange reserves) and from excise duties $19 million more than the comparable amounts in 1961-62.
Non-tax revenues accounted for $21 million of the total increase in revenue. Post office revenue was $9 million higher, receipts from other non-tax revenue were $8 million higher and returns on investments were $4 million higher than the previous year.
Expenditures
Budgetary expenditures in the amount of $6,585 million in 1962-63 were $85 million or approximately 1.3 per cent higher than forecast on October 22, 1962 and $64 million or approximately one per cent more than total expenditures in 1961-62.
Expenditures for defence again constituted the largest item, amounting to $1,602 million or 24 per cent of the total expenditures, compared with $1,650 million or 25 per cent in 1961-62.
Civil or non-defence expenditures amounted to $4,983 million, an increase of $112 million over the corresponding total for the previous fiscal year. There were increases of $179 million in expenditures of the Department of Labour (including an increase of $171 million in technical and vocational training assistance) and $83 million in expenditures of the Department of National Health and Welfare (including an increase of $53 million in the government's contribution under the Hospital Insurance and Diagnostic Services Act) and decreases of $158 million in the expenditures of the Department of Finance (including a decrease of $266 million in fiscal, tax-sharing, subsidy and other payments to provinces due to the lapsing on December 31, 1961 of the 1957 tax-sharing agreements, offset in part by an increase of $79 million in public debt charges) and $53 million in expenditures of the Department of Agriculture (including decreases of $40 million in the prairie farm emergency fund deficit and $40 million in payments to western grain producers due to the fact that no provision had been made for such payments for the 1962-63 crop year, offset in part by an increase of $50 million in the net operating loss of the agricultural stabilization board).
More detailed explanations of budgetary revenues by source and expenditures by classification and department are given in section 3 of this Part.
Deficit
On the basis of these preliminary figures the deficit for the fiscal year was $709 million compared with the deficit of $570 million as forecast on October 22, 1962, and the deficit of $791 million in 1961-62.

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Non-budgetary transactions
A net amount of $758 million was required during the fiscal year to finance non-budgetary transactions (excluding unmatured debt transactions). Nonbudgetary disbursements and charges totalled $1,898 million and receipts and credits, $1,140 million. Requirements for disbursements and charges were: $943 million for advances to the exchange fund; $614 million for other loans and investments and working capital advances; $41 million for temporary loans to the old age security fund; and $300 million for other non-budgetary disbursements. Amounts available from various receipts and credits were: $385 million from non-interest-bearing notes payable on demand; $499 million from the net receipts from various annuity, insurance and pension accounts; $162 million from repayments of loans, investments and working capital advances; and $94 million from other non-budgetary sources.
Old age security fund
Pension payments from the old age security fund totalled $734 million in 1962-63 compared with $625 million in the previous fiscal year. The increase of $109 million was largely the effect of the increased rate of payment (from $55 to $65 per month) effective February 1, 1962. The full impact of the increased expenditure resulting from this increase was not reflected in the 1961-62 totals as they were in effect for only two months of that year whereas in 1962-63 they were in effect for twelve months. As there was a balance of $2 million in the fund at March 31, 1962, the excess of $43 million of pension payments over receipts was financed by temporary loans from the Minister of Finance in the amount of $41 million. These loans were outstanding at March 31, 1963.
The transactions in the account during 1962-63 compared with those for the previous fiscal year were as follows:
Fiscal year ended March 31
(preliminary)
(in millions of dollars)
Pension payments	
734	625Tax receipts	
691	644
Excess of receipts over payments applied in part to the repayment of temporary loans from the Minister of Finance, or excess of payments over receipts (-) covered in
part by temporary loans from the Minister	of Finance..	-43	19
Balance in fund	 2
Temporary loans outstanding at fiscal year end	 41
Debt transactions
During 1962-63 the gross public debt increased by $1,904 million to $24,812 million due to an increase of $1,016 million in unmatured debt and $888 million in other liabilities. The increase in unmatured debt was the result of the government issuing securities amounting to $4,385 million (excluding the refunding of treasury bills which mature weekly) plus an adjustment of $10 million due to revaluation of securities (issued in prior years) payable in London and New York, and redeeming or converting issues in the amount of $3,379 million. During the same period the government's net assets increased by $1,195 million to $10,875 million. As a result, the government's net debt was $13,937 million at March 31, 1963, the increase of $709 million being equivalent to the budgetary deficit for the fiscal year.
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Cash position
The government's cash position was $403 million lower at March 31, 1963 than it was at March 31, 1962. The budgetary deficit of $709 million plus the amount of $758 million required for non-budgetary transactions was financed by increasing unmatured debt outstanding in the hands of the public by $1,064 million and by drawing down Receiver General cash balances by $403 million.

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Fiscal Years Ended March 31 Billions of Dollars
500

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. Million! of Dollar* _
tr
500
1959 I960 1961 1962 1963*
1961
* f roBainory
3.	THE BUDGETARY ACCOUNTS
Total revenues were $5,876 million for 1962-63, $146 million more than the total for the previous year. Total expenditures were $6,585 million, an increase of $64 million over the total for 1961-62. The deficit for the fiscal year 1962-63 was $709 million compared with $791 million for the previous year.

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Budgetary Revenues, Expenditures and Deficit (in millions of dollars)
Fiscal year ended March 31	Budgetary revenues	Budgetary expenditures	Deficit (-)4,754.7	5,364.0	-609.3I960 	5,289.8	5,702.9	-413.15,617.7	5,958.1	-340.45,729.6	6,520.6	-791.05,876.1	6,585.1	-709.0
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BUDGETARY REVENUES	BUDGETARY EXPENDITURES
BY MAJOR SOURCE	BY MAJOR FUNCTION
For Fiscal Year Ended March 31, 1963
1.	Dost net include payments out of old ego security fund.
2.	Does not include those payments made to provincial and municipal governments for specific purposes.
A. Revenues
Budgetary revenues were $5,876 million for 1962-63 compared with $5,730 million in 1961-62, an increase of $146 million or approximately 3 per cent. Tax revenues of $5,237 million accounted for 89 per cent of the total and nontax revenues of $639 million accounted for 11 per cent.

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TOTAL REVENUES FROM TAXES 99% CUSTOMS IMPORT DUTIES

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1959	I960
^Preliminary

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Fiscal Years Ended March 31 Billions of Dollars
28902-5-70^
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The Budget-Appendix

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Budgetary Revenues by Major Sources (in millions of dollars)
	Fiscal year ended March 31				Increase or decrease (-)	
Source	1963 (preliminary)	1962	Amount	Per cent	Amount	Per cent	Amount	Per centTax revenues- Income tax- Personal (')	1,745.0	29.7	1,792.7	31.3	-47.7	-2.7Corporation (>)	1,183.0	20.1	1,202.0	21.0	-19.0	-1.6On dividends, interest, etc., going-abroad 	129.0	2.2	112.3	2.0	16.7	14.9Excise taxes-	Sales (i)	806.0	13.7	759.7	13.2	46.3	6.1Other...	260.0	4.4	262.5	4.6	-2.5	-1.0Customs import duties	645.0	11.0	534.5	9.3	110.5	20.7Eicise duties	382.0	6.5	362.8	6.3	19.2	5.3Estate tax (')	87.0	1.5	84.6	1.5	2.4	2.8Other taxes	0.1 5,*57.1	89.1	0.1 5,111.2	89.2	125.9	2.5Non-tax revenues-	Return on investments	311.0	5.3	307.5	5.4	3.5	1.1Post office revenue	193.0	3.3	183.7	3.2	9.3	5.1Other non-tax revenue	135.0	2.3	127.2	2.2	7.8	6.16S9.0	10.9	518.4	10.8	20.6	s.sTotal budgetary revenues	5,876.1	100.0	5,729.6	100.0	146.5	2.6
(preliminary) 1961-62
U) Excluding tax credited to the old age security fund-	273.6	259.0
	115.3	100.1
Sales tax		302.2	284.9
	691.1	644.0
(*) Includes duties levied under the Dominion Succession Duty Act.		
(1) TAX REVENUES
Federal-provincial tax-collection agreements
The receipts from personal and corporation income taxes and the payments to provinces were lower in 1962-63 than in the previous year due to the lapsing of the 1957 tax rental arrangements. Under the 1957 tax rental arrangements,

The Budget-Appendix the obligation on the renting provinces to abstain from the imposition of personal and corporation income taxes was to lapse on December 31, 1961. Under the new arrangements the former renting provinces have all imposed personal and corporation income taxes effective January 1, 1962. The Government of Canada, in place of the tax rental arrangements, offered to enter into tax collection agreements with the provinces whereby Canada would undertake to collect, without charge, the provincial personal and corporation income taxes at rates determined by the provinces, provided that the provincial personal income tax was expressed as a percentage of the federal personal income tax payable and the provincial corporation income tax employed a definition of corporate taxable income identical with the federal definition. To facilitate the imposition of the provincial income taxes, the Income Tax Act was amended in the 1961 session of Parliament (1) to reduce the federal income tax payable by individuals resident in the provinces by 16 per cent in 1962 and by a further one per cent in each subsequent year until the deduction amounts to 20 per cent in 1966, and (2) to reduce the federal tax rate on the taxable income of corporations earned in the provinces by 9 percentage points. Canada has entered into agreements to collect the personal income tax, with all the provinces with the exception of the Province of Quebec, and to collect the corporation income tax, with all the provinces with the exception of the Provinces of Ontario and Quebec. With the exception of Saskatchewan and Manitoba, the provinces which have entered into tax-collection agreements have imposed personal and corporation income taxes equivalent to the federal withdrawal. The Provinces of Manitoba and Saskatchewan have imposed personal income taxes at 22 per cent rather than 16 per cent of the federal tax payable and 10 per cent rather than 9 per cent of the taxable income of corporations.
Under these agreements payments are made monthly to the provinces based on estimated receipts. When the actual amounts of the returns are established, usually in the month of December following the fiscal year-end, adjustments are to be made with the provinces.
Tax on personal incomes
The personal income tax was again in 1962-63 the largest source of government revenue. The yield (excluding the old age security tax) was $1,745 million or 30 per cent of all budgetary revenue, $48 million or 3 per cent less than the 1961-62 collections. However, in addition to the federal revenue of $1,745 million, $252 million was collected on behalf of the provinces under the new federal-provincial tax collection agreements. This compares with the situation in 1961-62 when all income taxes (with the exception of $37 million which had been collected for the provinces) were credited to federal revenue and payments were made to the provinces and charged to budgetary expenditure. Therefore, although the government's books reflect lower receipts of personal income taxes in 1962-63 when compared with 1961-62, there was actually an increase of $204 million in personal income taxes collected due to higher levels of employment and incomes during 1962.
The tax on personal incomes levied under the Old Age Security Act and credited to the old age security fund amounted to $274 million.
Corporation income tax
On January 1, 1962 the system, whereby the federal government made tax rental payments to certain provinces and charged these to expenditures, was changed so that the provinces' share of corporation income taxes is collected by the federal government and is remitted directly to the provinces without being included in federal revenue or expenditure. In addition to the federal revenue of $1,183 million (excluding the old age security tax), $65 million was
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The Budget-Appendix collected on behalf of the provinces. Although the government's accounts show lower collections of corporation income taxes of $19 million or 2 per cent when compared with those of 1961-62 there was actually an increase of $46 million in collections. The increase was due to higher corporate profits for the calendar year 1961 on which collections of corporation income taxes in 1962-63 were largely based.
Provincial corporation income taxes collected by the federal government are remitted to the provinces in accordance with agreements between the federal government and the provincial governments. A more detailed explanation will be found at the beginning of this section on tax revenues.
In addition to the above, the tax on incomes of corporations levied under the Old Age Security Act in the amount of $115 million was credited to the old age security fund.
Taxes on dividends, interest, etc., going abroad
Revenue in this category is derived from taxes -withheld on payments of dividends, interest, rents, royalties, alimony and income from estates and trusts paid to non-residents. Collections for 1962-63 were $129 million, an increase of $17 million over the comparable total for 1961-62 reflecting higher dividend payments in 1962.
Excise taxes
Revenue under this heading includes collections from the general sales tax and other special excise taxes.
From a revenue standpoint the sales tax was the most important tax levied under the Excise Tax Act. Receipts therefrom (excluding the old age security tax) were $806 million, $46 million or about 6 per cent higher than in the previous fiscal year.
The tax on sales, levied under the Old Age Security Act, in the amount of $302 million was credited to the old age security fund.
Excise taxes levied under the Excise Tax Act, other than the general sales tax, were $260 million, a decrease of $3 million from the 1961-62 total of $263 million. The main changes were an increase of $9 million in the excise taxes on tobacco products and a decrease of $14 million in net revenue from the excise tax on passenger automobiles. In 1961-62 the excise tax on passenger automobiles amounted to $25 million and refunds due to the repeal of the tax effective June 21, 1961 totalled $11 million resulting in net receipts of $14 million.
Customs import duties
Customs import duties were $645 million for 1962-63, an increase of $111 million over the comparable figures for 1961-62. This increase was due in large part to the surcharges which were in effect in 1962-63.
Excise duties
Excise duties are levied on alcoholic beverages and tobacco products. (Additional taxes on tobacco products are levied under the Excise Tax Act.) Net receipts in 1962-63 were $382 million compared with $363 million in 1961-62. Gross receipts of $221 million from taxes on alcoholic beverages and $166 million from taxes on tobacco products were partly offset by refunds and drawbacks totalling $5 million. Comparable amounts in 1961-62 were $207 million, $160 million and $4 million respectively.

The Budget-Appendix

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Fiscal Years Ended March 31 Millions of Dollars
*Pnlfmniary
Estate tax
Revenue from this source was $87 million for 1962-63, an increase of approximately $2 million over the total for the previous year.
Other taxes
Revenue under this heading was $100 thousand, slightly higher than for 1961-62.
(2) NON-TAX EEVENUES
Non-tax revenues totalled $639 million for 1962-63, an increase of $21 million or approximately 3 per cent over the comparable total in 1961-62.

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(in millions of dollars)
Non-Tax Revenues	Fiscal year ended March 31	Increase or decrease (-)	1963 (preliminary)	1962	Amount	Per centReturn on investments	311.0	307.5	3.5	1.1Post office revenue	193.0	183.7	9.3	5.1Refunds of previous years' expenditure	22.4	18.1	4.3	23.8Services and service fees	45.8	42.4	3.4	8.0Proceeds from sales	25.9	25.9	Privileges, licences and permits	24.9	23.3	1.6	6.9Bullion and coinage	8.8	8.0	0.8	10.0Premium, discount and exchange	1.8	-1.8	-100.0Other	7.2	7.7	-0.5	-6.5639.0	618.4	20.6	3.3
The Budget-Appendix
Return on investments
Receipts in this category amounted to $311 million for 1962-63, about $4 million more than the total in 1961-62.

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(in millions of dollars)
Return on Investments	Fiscal year ended March 31	Increase1963 (preliminary)	1962	decrease (-)Loans to, and investments in, Crown corporations-	Bank of Canada-profits	96.7	107.7	-11.0Canadian National Railways	3.8	1.4	2.4Canadian National (West Indies) Steamships Limited..	1.2	-1.2Canadian Overseas Telecommunication Corporation....	2.0	1.5	0.5Central Mortgage and Housing Corporation	79.9	71.8	8.1Eldorado Mining and Refining Limited	3.0	5.0	-2.0Farm Credit Corporation	8.5	6.0	2.5National Capital Commission	1.8	1.5	0.3National Harbours Board	3.5	3.9	-0.4Northern Canada Power Commission	1.7	0.9	0.8Northern Ontario Pipe Line Crown Corporation	4.1	4.3	-0.2Polymer Corporation Limited	1.5	3.0	-1.5Miscellaneous	0.5	0.3	0.2*07.0	208.5	-1.5Other loans and investments-	United Kingdom	21.5	21.8	-0.3Other national governments	7.8	9.0	-1.2Provincial governments	0.7	1.7	-1.0Soldier and general land settlement loans and veterans land act advances	6.3	6.0	0.3Exchange fund account	35.2	32.6	2.6Purchase fund account	10.3	9.3	1.0Securities investment account	2.0	5.7	-3.7Sinking fund and other investments held for retirement of unmatured debt	1.1	0.7	0.4Interest-bearing deposits with chartered banks	14.4	6.4	8.0Unemployment Insurance Commission	3.0	-3.0Miscellaneous	4.7	2.8	1.9104.0	99.0	5.0311.0	307.5	3.5
Receipts from Crown corporations were $207 million in 1962-63, a decrease of $2 million from the total in the previous fiscal year. The main changes were a decrease of $11 million in the Bank of Canada profits and an increase of $8 million in receipts from the Central Mortgage and Housing Corporation.
Other loans and investments yielded $104 million in 1962-63 compared with $99 million in 1961-62. The increase of $5 million was due mainly to increases of $8 million in interest on Receiver General deposits with the chartered banks, $3 million in the earnings of the exchange fund account and $1 million in receipts from the purchase fund account that was established during 1961-62 to assist in the management of the public debt, partly offset by decreases of $4 million in receipts from the securities investment account and $3 million in interest on loans to the Unemployment Insurance Commission.

The Budget-Appendix
Post office revenue
Gross post office receipts totalled $223 million but authorized disbursements from revenue for salaries and rent allowances at semi-staff and revenue offices, commissions at sub-offices, transit charges on Canadian mail forwarded through and delivered in foreign countries, etc., in the amount of $30 million, brought net revenue to $193 million. In 1961-62 gross receipts were $214 million, authorized disbursements were $30 million and net revenue was $184 million.
As costs of operating the Post Office Department during 1962-63 (excluding the $30 million charged to revenue) were $189 million, net revenue exceeded net expenditure by $4 million. However, in making this comparison, it is to be noted that the total shown for post office revenue does not reflect any payment for the franking privilege covering parliamentary and departmental mail or for certain miscellaneous services provided for other government departments and agencies, nor does the total shown for operating expenses reflect any charges for premises occupied by the Post Office Department or for certain accounting and miscellaneous services provided by other departments.

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(in millions of dollars)
Post Office Revenue	Fiscal year ended March 31		Increase or decrease (-)
	1963 (preliminary)	1962	
Postage-			
In Canada	207.3	198.6	8.7From foreign countries	4.5	3.8	0.7Commission on money orders	7.7	7.7	Rental of post office boxes	2.1	2.0	0.11 4	1.4 213.5	228.0	9.5LjC88-	Salaries and allowances at semi-staff and revenue offices.	-25.2	-25.2	Charges on parcels for delivery in foreign countries	-1.5	-1.9	0.4Transit charges on foreign correspondence	-1.3	-1.5	0.2Other	-2.0	-1.2	-0.8-S0.0	-29.8	-0.2193.0	183.7	9.3
Refunds of previous years' expenditures
Refunds in 1962-63 of expenditures made in prior years were $22 million, an increase of $4 million over the comparable total for 1961-62.
The Department of National Defence received $9 million, of which $1 million was refunds on defence contracts resulting from cost audits and $2 million in respect of contracts with the United States Government for the supply of defence equipment under an arrangement that when Canada places contracts with the Government of the United States, payments of estimated costs are made to the United States Treasury. If these estimated costs are revised or, if there are reductions in the contracts, the United States Government refunds the excess
1098
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The Budget-Appendix
payments. The Department of Finance received $6 million mainly due to a refund from the Province of Ontario in connection with succession duty payments under the tax rental agreements. The Department of Trade and Commerce received $1 million due to a refund from the Eldorado Mining and Refining Limited of expenditures in 1961-62 under a contract between Eldorado Mining and Refining Limited on behalf of Her Majesty and Macassa Gold Mines Limited for the purchase by Her Majesty of uranium concentrates.
Services and service fees
Revenues of $46 million were received during 1962-63, an increase of $3 million over the previous fiscal year.
Approximately 83 per cent of these fees was collected by the following four departments: $15 million received by the Department of Transport, including aircraft landing fees of $6 million and marine steamers earnings of $4 million; $13 million by the Royal Canadian Mounted Police, mainly for police services to provinces and municipalities; $6 million by the Department of Agriculture, of which $4 million was for services in connection with the inspection, weighing, storage and elevation of grain and $1 million for race track supervision; and $4 million by the Department of National Health and Welfare, due mainly to reimbursement of $3 million by the provinces for treatment of Indians in federal government hospitals.
Proceeds from sales
Receipts from this source totalled $26 million for 1962-63, approximately the same as the total for 1961-62.
Included in this category were receipts of: $10 million by the Department of Defence Production, of which $8 million represents amounts from the sale of surplus Crown assets (after deducting certain agency fees and transfers) and $2 million under agreements of sale of Crown assets; $5 million by the Department of Public Works representing the proceeds of the sales of properties by Central Mortgage and Housing Corporation; and $5 million by the Department of National Defence, mainly from sales of materials and supplies and from sales of meals.
Privileges, licences and permits
Revenues in this category were $25 million for 1962-63 compared with the 1961-62 total of $23 million.
Included in this revenue were $10 million received by the Department of Transport, mainly for rentals, concessions and radio licence fees; $4 million by the Department of Northern Affairs and National Resources; $2 million by the Department of the Secretary of State, mainly for patent fees; $2 million by the Department of Public Works for rental of public buildings and sites; and $2 million by the Department of National Defence, of which $1 million was for rental of quarters to armed forces personnel.

The Budget-Appendix
Bullion and coinage
Revenues in this category of $9 million were derived from the operations of the Royal Canadian Mint and consisted mainly of a net gain on coinage. Small amounts were also obtained from gold refining charges, handling charges and gain on gold refining.
Premium, discount and exchange
Premium, discount and exchange transactions for 1962-63 resulted in a net expenditure of $10 million, compared with a net revenue of $2 million in 1961-62.
The change from a revenue to an expenditure item was due to the change in accounting policy of revaluing securities payable in New York and London at the official parity rate rather than recording the loans in the government's books of account at $1 U.S. = $1 Can. and £1 = $2.80 Can. The official parity rate at March 31, 1963 was $1 U.S. = $1.08108 Can. and £1 = $3,027 Can.
Other non-tax revenues
Other non-tax revenues amounted to $7 million for 1962-63, approximately the same as for the previous fiscal year.
B. Expenditures
Budgetary expenditures for 1962-63 amounted to $6,585 million, an increase of $64 million over the 1961-62 total of $6,521 million.

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Fiscal Years Ended March 31 Billions of Dollars


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1.	Do«t	not	include	those payments made	to	provincial and municipal governments for specified purposes-7.	Does	not	include	pension payment, out	of	the old age security fund not charged to budgetary e.penditures	in the year in which
they were paid.
^Preliminary
28902-5-71i
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The Budget-Appendix

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Statement of Budgetary Expenditures by Departments and Major Classifications
(in millions of dollars)
	Fiscal year ended March 31				Increase	
-	1963 (preliminary)	1962	decrease (-)	Amount	Per cent	Amount	Per cent	Amount	Per centDefence expenditures-	National Defence	1,572.9	23.9	1,626.1	24.9	-53.2	-3.3Defence Production	29.5	0.4	23.9	0.4	5.6	23.41,602.4	24.S	1,650.0	25.3	-47.6	-2.9Non-defence expenditures-	Agriculture	234.2	3.6	286.7	4.4	-52.5	-18.3Atomic Energy	63.2	0.9	34.7	0.5	28.5	82.1Canadian Broadcasting Corporation...	80.8	1.2	78.2	1.2	2.6	3.3Citizenship and Immigration	66.2	1.0	65.0	1.0	1.2	1.8External Affairs	84.6	1.3	95.6	1.5	-11.0	-11.5Finance-	Public debt charges	918.0	13.9	839.0	12.9	79.0	9.4Fiscal, tax-sharing, subsidy and	other payments to provinces	275.5	4.2	541.2	8.3	-265.7	-49.1Government's contribution to the public service superannuation	account	51.1	0.8	46.9	0.7	4.2	9.0Other	109.4	1.7	84.9	1.3	24.5	28.91,354.0	20.6	1,512.0	23.2	-158.0	-10.4Fisheries	23.2	0.3	23.1	0.4	0.1	0.4Forestry	16.3	0.2	14.7	0.2	1.6	10.9Justice	10.0	0.1	9.5	0.1	0.5	5.3Office of the Commissioner of	Penitentiaries	24.0	0.4	23.1	0.4	0.9	3.934-0	0.5	32.6	0.5	1-4	4-3Labour	35.7	0.5	31.7	0.4	4.0	12 6Technical and vocational training	assistance	207.0	3.2	35.7	0.6	171.3	479.8Unemployment Insurance Act administration and government's	contribution	105.5	1.6	101.5	1.6	4.0	3.9348.2	5.3	168.9	2.6	179.3	106.2Mines and Technical Surveys	71.2	1.1	67.6	1.0	3.6	5 3National Health and Welfare-	Family allowances	531.6	8.1	520.8	8.0	10.8	2.1Government's contributions under the Hospital Insurance and	Diagnostic Services Act	336.8	5.1	283.9	4.4	52.9	18.6Other	254.8	3.9	235.6	3.6	19.2	8.11,123.2	17.1	1,040.3	16.0	82.9	8.0National Research Council, including	the Medical Research Council	41.3	0.6	38.8	0.6	2.5	6.4National Revenue	78.6	1.2	75.3	1.1	3.3	4.4Northern Affairs and National	Resources	90.3	1.4	82.3	1.3	8.0	9.7Post Office	189.3	2.9	185.0	2.8	4.3	2.3Public Works	175.0	2.7	188.8	2.9	-13.8	-7.3Royal Canadian Mounted Police	65.5	1.0	60.5	0.9	5.0	8.3Trade and Commerce	27.0	0.4	39.5	0.6	-12.5	-31.6Transport	430.4	6.5	410.4	6.3	20.0	4.9Veterans Affairs	336.4	5.1	333.2	5.1	3.2	1.0Other Departments	49.8	0.8	37 A	0.6	12.4	33.24,982.7	75.7	4,870.6	74-7	112.1	2.3Total budgetary expenditures	6,585.1	100.0	6,520.6	100.0	64.5	1.0
The Budget-Appendix

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Fiscal Years Ended March 31
2. Doai not include those poyments made to provincial and municipal governments for specific purposes. 4 Preliminary
(1) DEFENCE EXPENDITURES
Defence expenditures which consist of expenditures of the Departments of National Defence and Defence Production were again the largest category of government budgetary expenditures. The total of $1,602 million for 1962-63 was approximately 24 per cent of the aggregate budgetary expenditures of the government for the year and was $48 million less than the total of $1,650 million for 1961-62, when outlays for defence were 25 per cent of total expenditures.

[Stage Direction]
(in millions of dollars)
Defence Expenditures	Fiscal year ended March 31		Increase or decrease (-)
	1963 (preliminary)	1962	
Department of National Defence-			
Naval services	268.8	272.0	-3.2Army services	442.3	442.4	-0.1Air services	712.3	781.4	-69.11,423.4	1,495.8	-72.4Government's contribution to the Canadian forces super-	annuation account	58.1	56.0	2.1Defence research and development	
Mutual aid to NATO countries including contributions	41.7	40.4	1.3towards military costs of NATO	25.0	11.1	13.9Administration and general	24.7	22.8	1.91,572.9	1,626.1	-53.2Department of Defence Production-	Technological capability	8.0	4.4	3.6Production capacity and capital assistance	1.9	1.9	Administration and general	19.6	17.6	2.029.5	23.9	5.81,602.4	1,650.0	-47.6
The Budget-Appendix National Defence
Expenditures of the Department of National Defence were $1,573 million in 1962-63 compared with $1,626 million in 1961-62.
Expenditures for naval, army and air services at $1,423 million were $72 million less than the 1961-62 total. There were decreases of $3 million for naval services and $69 million for air services.
Direct charges to mutual aid during 1962-63 were $25 million compared with $11 million in 1961-62 and consisted of procurement of equipment for mutual aid and Canada's share of NATO military budgets and infrastructure costs.
Expenditures for defence research and development in the amount of $42 million were $1 million higher than in 1961-62.
The government's contribution to the Canadian forces superannuation account of an amount equal to If times the contributions of permanent services personnel was $58 million, an increase of $2 million over the total for the previous year.
Administration and general costs were $25 million compared with $23 million in 1961-62.
Defence Production
The expenditure of $29 million in 1962-63 for the Department of Defence Production (including expenditures in respect of Defence Construction (1951) Limited and Canadian Arsenals Limited) was $6 million more than in 1961-62.
Outlays of $8 million in connection with the government program instituted in 1959-60 of supporting selected defence development programs to sustain technological capability in Canadian industry were $4 million more than in 1961-62. Expenditures of $2 million in respect of the procurement of capital equipment and works by Canadian Arsenals Limited and the programs under which assistance for the establishment of production capacity and capital assistance is given to private contractors, Crown plants operated on a management-fee basis and Crown corporations undertaking contracts essential to the defence program were approximately the same as the corresponding expenditures in the previous fiscal year.
Administration and general costs were $19 million in 1962-63, $2 million more than in 1961-62.
Cash outlays for defence
In addition to these budgetary expenditures for defence, there are certain other cash outlays which must be considered in assessing the full effect of the defence program on the economy of Canada.
Section 11 of the National Defence Act provides that materiel, not immediately required for the use of the Canadian defence forces or the Defence Research Board, may be sold to such countries and upon such terms as the Governor in Council may determine. The proceeds of such sales in 1962-63, amounting to $1 million, were credited to a special account to be used for the procurement of replacement materiel. Cash outlays from this account during the fiscal year were also $1 million. Consequently the balance in the account remained at $1 million at March 31, 1963.
The Department of Defence Production also makes cash disbursements for the procurement of materials for use in the manufacture of defence equipment which are not recorded as budgetary expenditures. For purposes of accounting and control, these amounts are charged to the defence production revolving fund and are treated as assets on the books of the government until they are billed to the Department of National Defence or sold to defence contractors

The Budget-Appendix
for use in the manufacture of defence equipment. During the year 1962-63 purchases of $43 million exceeded proceeds from sales of $30 million by $13 million and the assets of the fund increased by an equivalent amount, resulting in a balance of $41 million in the account as at March 31, 1963.
The following table summarizes the cash outlays for defence for the past two fiscal years.

[Stage Direction]
(in millions of dollars)
Cash Outlays for Defence	Fiscal year ended March 31		Increase or decrease (-)
	1963 (preliminary)	1962	
Budgetary expenditures-	29.5 1,572.9 1,602.4 13.4 0.2 IS. 6	23.9 1,626.1 1,650.0 11.6 3.2 14.8	5.6 -53.2 -47.6 1.8 -3.0 -l.S
			
Disbursements for, or receipts from (-)-			
Replacement of materiel account-sec. 11, National			
			
	1,616.0	1,664.8	-48.8
			
(2) NON-DEFENCE EXPENDITURES
Agriculture
Expenditures of the Department of Agriculture were $234 million for 1962-63 compared with $287 million for 1961-62.
TABLE 11 (in millions of dollars)
Agriculture	Fiscal year ended March 31		Increase or decrease (-)
	1963 (preliminary)	1962	
Agricultural stabilization board-net operating loss		72.0	22.0	50.0
Production and marketing branch-			
Freight assistance on western feed grains	14.4	17.5	-3.1Health of animals division	13.8	14.2	-0.4Payments to western grain producers	0.1	40.1	-40.0Premium on hog and lamb carcasses	5.9	7.6	-1.7Other	18.7	19.7	-1.062.9	99.1	-46.2Assistance re storage costs on grain	35.3	48.8	-13.5Rehabilitation and reclamation projects	28.4	26.1	2.3Research branch	26.7	26.8	-0.1Board of Grain Commissioners (Canada Grain Act)	6.2	6.5	-0.3Prairie farm emergency fund-deficit	7.3	47.7	-40.4Agricultural products board-net operating loss	0.6	4.9	-4.3Administration and general	4.8	4.8	234.2	286.7	-52.5
The increase of $50 million in the net operating loss of the agricultural stabilization board was more than offset by decreases of $40 million in the deficit of the prairie farm emergency fund and $40 million in payments to western grain producers.
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The 1962-63 net operating loss of the agricultural stabilization board was $72 million compared with $22 million in 1961-62. The increase was due mainly to a payment of $42 million for the stabilization of the price of butter for which there was no comparable payment in 1961-62.
The decrease of $40 million in payments to western grain producers was due to the fact that no provision had been made for such payments for the 1962-63 crop year. The expenditure of $100 thousand in 1962-63 was for completion of payments required for the 1961-62 crop year.
The Prairie Farm Assistance Act, c. 213, R.S., as amended, provides for a levy of one per cent to be deducted by all licensed purchasers of grain, the amount so deducted to be transferred to the Board of Grain Commissioners for deposit to the credit of the prairie farm emergency fund. Awards are made under the provisions of the Act to farmers in the spring wheat area in accordance with crop failure conditions provided for in the Act and are payable from this fund. Advances by the Minister of Finance to the prairie farm emergency fund to cover the years deficit, in the amount of $7 million, were charged to budgetary expenditures. The comparable amount in 1961-62 was $48 million.
Atomic Energy
Budgetary expenditures in respect of Atomic Energy of Canada Limited and the Atomic Energy Control Board totalled $63 million in 1962-63 compared with expenditures of $35 million in 1961-62, an increase of $28 million.
TABLE 12 (in millions of dollars)
Atomic Energy	Fiscal year ended March 31		Increase or decrease (-)
	1963 (preliminary)	1962	
Atomic Energy Control Board- Grants for research	0.8	0.7	0.1Administration	0.1	0.1	0.9	0.8	o.tAtomic Energy of Canada Limited- Research program- Current operations and maintenance	28.7	25.7	3.0Construction or acquisition of buildings, works, land and equipment	8.4	8.2	0.257./	55.9	s.iWrite-off of the undepreciated capital cost of the NRU reactor	25.2	25.263.2	34.7	28.5
During the year under review $37 million was paid to Atomic Energy of Canada Limited for its research program, $3 million more than in the previous fiscal year. Of this total, $29 million was for current operations and maintenance and $8 million for the construction or acquisition of buildings, works, land and equipment.
In addition, the undepreciated capital cost of the NRU reactor will be charged to budgetary expenditure upon parliamentary approval and loans to Atomic Energy of Canada Limited were reduced by the same amount. As loans amounting to $13 million were made to Atomic Energy of Canada Limited during the year, this brought the total of advances covered by obligations or shares of the company to $53 million at March 31, 1963.

The Budget-Appendix
Administration expenses of the Atomic Energy Control Board and grants for research and investigation with respect to atomic energy were $1 million, approximately the same as for the previous fiscal year.
Canadian Broadcasting Corporation
Payments of $81 million were made by the government to the Canadian Broadcasting Corporation during 1962-63, an increase of $3 million over the total for 1961-62.

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(in millions of dollars)
Canadian Broadcasting Corporation	Fiscal year ended March 31		Increase or decrease (-)
	1963 (preliminary)	1962	
Grants in respect of radio and television services- Net operating requirements	72.5	70.3	2.2Capital requirements	6.5	6.2	0.379.0	76.6	2.5International broadcasting service	1.8	1.7	0.180.8	78.2	2.6
Grants for capital requirements including the replacement of existing capital assets of the radio and television services were $7 million, slightly higher than in 1961-62. Grants in respect of the net operating requirements of the radio and television services totalled $72 million, $2 million higher than in the previous fiscal year.
Outlays of $2 million for the international broadcasting service were approximately the same as in 1961-62.
Citizenship and Immigration
Expenditures of the Department of Citizenship and Immigration were $66 million for 1962-63, an increase of $1 million over the total for 1961-62.

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(in millions of dollars)
Citizenship and Immigration	Fiscal year ended March 31		Increase or decrease (-)
	1963 (preliminary)	1962	
Citizenship and citizenship registration	1.7	1.5	0.2Immigration	12.5	12.0	0.5Indian affairs	50.9	50.4	0.5Administration and general	1.1	1.1	66.2	65.0	1.2
Outlays for the Indian affairs branch were slightly higher during 1962-63 due principally to Indian welfare and Indian economic development.
Expenditures of the immigration branch were also slightly higher than in the previous fiscal year whereas outlays for the citizenship and citizenship registration branches were approximately the same.
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The Budget-Appendix External Affairs
Expenditures of the Department of External Affairs amounted to $85 million for 1962-63, a decrease of $11 million from the total of $96 million spent in the previous fiscal year.
TABLE 15 (in millions of dollars)
External Affaibs	Fiscal year ended March 31	Increase1963 (preliminary)	1962	decrease (-)External aid office- Colombo plan	41.5	50.0	-8.5Assistance to other countries	4.5	3.4	1.1Administration and general	0.3	0.5	-0.246.5	6S.9	-7.fiRepresentation abroad	15.1	12.8	2.3Contributions to international organizations	8.2	14.5	-6.3Canada's assessment for membership in international (including commonwealth) organizations	6.4	6.1	0.3Administration and general	8.6	8.3	0.384.6	95.6	-11.0
The principal changes in expenditure as compared with 1961-62 were decreases of $8 million in the grant to the Colombo plan fund and $6 million in contributions to international organizations, and increases of $2 million for representation abroad and $1 million for assistance to other countries.
The decrease in contributions to international organizations was due to the fact that expenditures in 1961-62 included an amount of $6 million for the United Nations Congo Ad Hoc account for which there was no comparable expenditure in 1962-63.
Finance
Expenditures of the Department of Finance totalled $1,354 million in 1962-63, a decrease of $158 million from the 1961-62 total of $1,512 million.

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(in millions of dollars)
Finance	Fiscal year ended March 31	Increase1963 (preliminary)	1962	decrease (-)Public debt charges	918.0	839.0	79.0Fiscal, tax-sharing, subsidy and other payments to provinces. Government's contribution to the public service superannua-	275.2	541.2	-266.0tion account	51.1	46.9	4.2Grants to municipalities in lieu of taxes on federal property.. Grants to universities-	29.0	24.7	4.3Payments to the Canadian Universities Foundation.... Office of the Comptroller of the Treasury-administration	26.3	19.4	6.9expenses	22.7	21.3	1.4Premium, discount and exchange	9.8	9.8Government's share of medical-surgical insurance premiums Government's contribution as an employer to the unemploy-	8.3	7.6	0.7ment insurance fund	1.1	1.1	Administration and general	12.5	10.8	1.71,354.0	1,512.0	-158.0
The Budget-Appendix
The main changes were a decrease of $266 million in fiscal, tax-sharing, subsidy and other payments to provinces and increases of $79 million in public debt charges, $10 million in premium, discount and exchange and $7 million in grants to universities.
Public debt charges
In 1962-63 public debt charges were again the second largest item of budgetary expenditure. These charges, which consist of interest on the public debt, the annual amortization of bond discounts and commissions, the cost of issuing new loans and other costs incurred in servicing the public debt, were $918 million or 14 per cent of all budgetary expenditure compared with $839 million or 13 per cent in 1961-62.
TABLE 17 (in milliona of dollars)
Interest and Other Public Debt Charges	Fiscal year ended March 31	Increase1963 (preliminary)	1962	decrease (-)Interest on public debt- Unmatured debt including treasury bills- Payable in Canada	705.3	638.8	66.5Payable in London	1.0	1.0	Payable in New York	2.7	2.7	709.0	642.6	66.6Other liabilities-	Annuity, insurance and pension accounts	169.8	157.3	12.5Deposit and trust accounts	3.2	3.1	0.1173.0	160.4	12.6Total interest on public debt	882.0	802.9	79.1Other public debt charges- Annual amortization of bond discounts and commissions	32.7	33.7	-1.0Cost of issuing new loans	1.7	1.6	0.1Servicing of public debt	1.6	0.8	0.8S6.0	S6.1	-0.1918.0	839.0	79.0
Interest on public debt in 1962-63 in the amount of $882 million was $79 million more than the 1961-62 total of $803 million. Interest of $709 million on unmatured debt was $66 million higher than in 1961-62 reflecting the increase in unmatured debt and in interest rates. Interest of $173 million on other liabilities was $13 million higher due mainly to increases of $6 million in respect of the public service superannuation account and $5 million in respect of the Canadian forces superannuation account.
Other public debt charges at $36 million were approximately the same as in the previous fiscal year.
When considering the magnitude of these public debt charges and the burden they place upon the public treasury, it must be borne in mind that a substantial portion of the debt is attributable to, or is invested in, productive or earning assets. Therefore, in calculating the net burden of the government's annual interest charges, the income derived from loans, investments and other productive assets must be taken into account. For 1962-63 this income amounted to $311 million as shown in the non-tax revenue section under the heading "Return on investments". This amount deducted from the gross total of $882 million for interest as shown in the above table leaves a net amount of $571 million compared
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The Budget-Appendix
with a net of $495 million in 1961-62. Measured as a percentage of the net debt the burden of the net annual interest charges was 4.10 per cent in 1962-63 compared with 3.75 per cent in 1961-62.
TABLE 18 (in millions of dollars)
Net Burden of Annual Interest Charges	Fiscal year ended March 31		Increase or decrease (-)
	1963 (preliminary)	1962	
	882.0 -311.0	802.9 -307.5	79.1 -3.5
			
			
	571.0	495.4	75.6
			
	4.10	3.75	
			
Fiscal, tax-sharing, subsidy and other payments to provinces
Payments to the provinces during 1962-63 for statutory subsidies, payments under the federal-provincial fiscal arrangements and tax-sharing arrangements, and the transfer of a portion of income tax receipts from certain public utility companies were $275 million compared with $541 million in 1961-62.
Charges to budgetary expenditures in 1962-63 in respect of the above payments were $266 million less than in 1961-62 due to a decrease of $480 million in payments under federal-provincial tax-sharing arrangements offset in part by payments of $218 million under new federal-provincial fiscal arrangements.
Under the 1957 tax rental agreements, the obligation on the renting provinces to abstain from the imposition of personal and corporation income taxes was to lapse on December 31, 1961. As the Government of Canada did not offer to renew tax rental agreements, the former renting provinces have all imposed personal and corporation income taxes effective January 1, 1962. The Government of Canada, in place of the tax rental agreements, offered to enter into tax collection agreements with the provinces whereby Canada would undertake to collect, without charge, the provincial personal and corporation income taxes at rates determined by the provinces, provided that the provincial personal income tax was expressed as a percentage of the federal personal income tax payable and the provincial corporation income tax employed a definition of corporate taxable income identical with the federal definition. To facilitate the imposition of the provincial income taxes, the Income Tax Act was amended in the 1961 session of Parliament (1) to reduce the federal income tax payable by individuals resident in the provinces by 16 per cent in 1962 and by a further one per cent in each subsequent year until the deduction amounts to 20 per cent in 1966, and (2) to reduce the federal tax rate on the taxable income of corporations earned in the provinces by 9 percentage points. Canada has entered into agreements to collect the personal income tax, with all the provinces with the exception of the Province of Quebec, and to collect the corporation income tax, with all the provinces with the exception of the Provinces of Ontario and Quebec. With the exception of Saskatchewan and Manitoba, the provinces which have entered into tax collection agreements have imposed personal and corporation income taxes equivalent to the federal withdrawal. The Provinces of Manitoba and Saskatchewan have imposed personal income taxes at 22 per cent rather than 16 per cent of the federal tax payable and 10 per cent rather than 9 per cent of the taxable income of corporations.

The Budget-Appendix
Under these agreements payments are made monthly to the provinces on the basis of estimated receipts. When the actual amount of the returns are established, usually in the month of December following the fiscal year-end, adjustments are to be made with the provinces.
The additional grant to Newfoundland, which in previous years was paid under the Newfoundland Additional Grants Act, is now included in the payment under the Federal-Provincial Fiscal Arrangements Act.
Statutory subsidies at §24 million were unchanged from the previous year.

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(in millions of dollars)
Fiscal, Tax-Sharing, Subsidy and Other Payments to Provinces	Fiscal year ended March 31		Increase or decrease (-)
	1963 (preliminary)	1962	
Payments under Federal-Provincial Fiscal Arrangements Act	218.2	218.2Payments under Federal-Provincial Tax-Sharing Arrangements Act, c. 29, Statutes of 1956, as amended	23.5	503.3	-479.8Statutory subsidies	23.5	23.5	Transfer of certain public utility tax receipts	10.0	6.4	3.6Additional grant to Newfoundland	8.0	-8.0275.2	541.2	-266.0
A summary of payments, by provinces, during 1962-63 is given in the following table:

[Stage Direction]
(in millions of dollars)
Fiscal, Tax-Sharing, Subsidy and Other Payments to Provinces	Fiscal year ended March 31, 1963 (preliminary)				
Payments under fiscal arrangements	Payments under tax- sharing arrange- ments	Statutory subsidies	Transfer of certain public utility tax receipts	TotalNewfoundland	32.1	0.3	1.7	0.2	34.3Nova Scotia	31.0	2.8	2.1	0.5	36.4Prince Edward Island	6.5	0.2	0.7	0.1	7.5New Brunswick	26.7	0.7	1.7	(1)	29.1Quebec	66.4	11.4	4.0	4.5	86.3Ontario	-0.2	4.6	1.0	5.4Manitoba	14.7	4.0	2.1	(1)	20.8Saskatchewan	24.2	4.2	2.1	(I)	30.5Alberta	9.3	4.9	2.8	2.6	19.6British Columbia	7.3	-4.8	1.7	1.1	5.3218.2	23.5	23.5	10.0	275.2
WLess than $50,000.
The amount of public utility tax receipts for transfer to provinces in 196263 was $10 million, an increase of $4 million over the 1961-62 total. The 1962-63 payments represent the transferable portion of the income tax received from corporations whose main business was the distribution to, or the generation for distribution to, the public of electrical energy, gas or steam for the taxation year 1960.
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The Budget-Appendix
Government's contribution to the public service superannuation account
In 1962-63 the government's contribution to the public service superannuation account (equal to the estimated current and prior service payments of individuals in 1961-62) was $51 million compared with $47 million in 1961-62.
Premium, discount and exchange
Premium, discount and exchange transactions during 1962-63 resulted in a net expenditure of $10 million, compared with a net revenue of $2 million in
1961-	62.
This net expenditure was due primarily to the charge resulting from the revaluing of the government's outstanding debt payable in New York and London at the official parity rates rather than at the former rates of $1 U.S. = $1 Can. and £1 = $2.80 Can. The official parity rate at March 31, 1963 was $1 U.S. = $1.08108 Can. and £1 = $3,027 Can.
Fisheries
Expenditures of the Department of Fisheries amounted to $23 million for
1962-	63, approximately the same as in 1961-62.

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(in millions of dollars)
Fisheries	Fiscal year ended March 31		Increase or decrease (-)
	1963 (preliminary)	1962	
Field services	11.3	11.8	-0.5Fisheries Research Board of Canada	7.1	6.3	0.8Canadian share of the expenses of international commissions..	1.2	1.1	0.1Administration and general	3.6	3.9	-0.323.2	23.1	0.1
An increase of $1 million in expenditures of the Fisheries Research Board of Canada was offset by a decrease in outlays for field services.
Forestry
Expenditures of the Department of Forestry totalled $16 million for 196263, an increase of $2 million over the 1961-62 total.

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(in millions of dollars)
Forestry	Fiscal year ended March 31	Increase1963 (preliminary)	1962	decrease (-)Forest research	7.4	7.0	0.4Contributions to the provinces- Assistance in forest inventory, reforestation, forest fire protection and forest stand improvement	3.9	2.2	1.7Forest access roads and trails	3.5	3.9	-0.47 .i	6.1	t.sAdministration and general	1.5	1.6	-0.116.3	14.7	1.6
The Budget-Appendix
Contributions to the provinces for assistance in forest inventory, reforestation, forest fire protection and forest stand improvement were $2 million higher than expenditures in the previous fiscal year and contributions to the provinces for assistance in establishing forest access roads and trails were slightly less than comparable expenditures in 1961-62.
Justice
Expenditures of the Department of Justice amounted to $34 million for 1962-63, compared with $33 million for the previous fiscal year.

[Stage Direction]
(in millions of dollars)
Justice	Fiscal year ended March 31		Increase or decrease (-)
	1963 (preliminary)	1962	
Judges' salaries and travelling allowances	5.2	5.0	0.2Administration and general	4.8	4.5	0.310.0	9.6	0.6Office of the Commissioner of Penitentiaries-	Operation and maintenance of penitentiaries	18.0	17.3	0.7Construction, improvements and equipment	5.3	5.1	0.2Administration	0.7	0.7	H.o	ts.i	0.934.0	32.6	1.4
Expenditures of the Office of the Commissioner of Penitentiaries for operation and maintenance of penitentiaries accounted for most of the increase.
Labour
Expenditures of the Department of Labour totalled $348 million for 196263, an increase of $179 million over the total for 1961-62.

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(in millions of dollars)
Labour	Fiscal year ended March 31	Increase1963 (preliminary)	1962	decrease (-)Payments to provinces authorized by the Technical and Vocational Training Assistance Act	207.0	35.7	171.3Municipal winter works incentive program	27.3	24.4	2.9Administration and general	8.4	7.3	i.i*4*. 7	67.4	175.3Unemployment Insurance Commission-	Government's contribution to the fund	57.4	55.5	1 9Administration and general	48.1	46.0	2.1106.6	101.6	4-0348.2	168.9	179.3
The Budget-Appendix
Payments to the provinces under the Technical and Vocational Training Assistance Act were $207 million for 1962-63, $171 million more than comparable expenditures in 1961-62. This Act, which received Royal Assent on December 20, 1960, superseded the Vocational Training Co-ordination Act. The purpose of the act is to provide financial assistance to vocational and technical schools, and in connection with youth training projects.
Payments to provinces and in respect of Indian bands by the Government of Canada, of amounts not exceeding one-half of the cost of labour engaged on approved winter works projects, were $27 million, $3 million more than in the previous fiscal year.
Administration and general costs were $1 million higher than expenditures of $7 million in 1961-62.
Unemployment Insurance Act administration and government's contribution
Budgetary expenditures in 1962-63 (excluding the government's payment as an employer which is included in the expenditures of the Department of Finance) totalled $105 million compared with $102 million in 1961-62.
Unemployment insurance benefit payments are not charged to budgetary expenditures but are paid from the unemployment insurance fund which is financed by equal contributions from employees and employers, by interest earned on investments, and by the government's contribution of an amount equal to one-fifth of the combined employee-employer contributions. Further information in regard to the unemployment insurance fund is given under the liability category "Annuity, insurance and pension accounts".
The government's contribution to the fund for 1962-63 was $57 million and administrative costs $48 million; the corresponding amounts for 1961-62 were $56 million and $46 million respectively.
Fiscal year ended March 31 1963	1Q62
(preliminary)
Disbursements-
Benefit payments	
Interest on loans	
Receipts-
Employee and employer contributions
Government's contribution	
Interest from investments	
Deficit in fund for fiscal year	
(in millions of dollars)
403	455
	3
403	458
287	278
57	56
4	6
348	340
55	118
Mines and Technical Surveys
Expenditures of the Department of Mines and Technical Surveys amounted to $71 million in 1962-63, an increase of $4 million over the total for 1961-62.

The Budget-Appendix
TABLE 25 (in millions of dollars)
Mines and Technical Surveys	Fiscal year ended March 31		Increase or decrease (-)
	1963 (preliminary)	1962	
Dominion Coal Board	20.5	19.9	0.6Emergency gold mining assistance	15.2	12.4	2.8Marine sciences branch	11.0	10.9	0.1Surveys and mapping	8.0	9.1	-1.1Geological survey of Canada	6.4	5.5	0.9Mines branch	5.1	4.8	0.3Administration and general	5.0	5.0	71.2	67.6	3.6
Outlays for emergency gold mining assistance were $3 million higher, and expenditures of the geological survey of Canada were $1 million more, than in
1961-62.
National Health and Welfare
Expenditures of the Department of National Health and Welfare for 1962-63 were $1,123 million, $83 million more than the total of $1,040 million in 1961-62.

[Stage Direction]
(in millions of dollars)
National Health and Welfare	Fiscal year ended March 31	Increase1963 (preliminary)	1962	decrease (-)National health branch- Government's contributions under the Hospital Insurance and Diagnostic Services Act	336.8	283.9	52.9General health grants to provinces	31.0	30.0	1.0Indian and northern health services	24.7	24.0	0.7Hospital construction grants	20.0	19.0	1.0Other	10.7	10.3	0.4415. t	567.5	66.0Welfare branch-	Family allowances	531.6	520.8	10.8Unemployment assistance	96.0	92.0	4.0Old age assistance	38.3	30.8	7.5Disabled persons allowances	19.6	16.4	3.2Blind persons allowances	4.9	4.2	0.7Other	3.4	3.3	0.1695.8	667.6	56.5Administration and general	6.2	5.6	0.61,123.2	1,040.3	82.9
Outlays for the national health branch at $423 million for 1962-63 reflect an increase of $56 million over the previous year's total. The increase was due primarily to an increase of $53 million in the government's contributions under the Hospital Insurance and Diagnostic Services Act.
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The Budget-Appendix
During 1962-63 expenditures of the welfare branch in the amount of $694 million were $26 million higher than in the previous year, due mainly to increases of $11 million for family allowances, $8 million for old age assistance, $4 million for unemployment assistance and $3 million for disabled persons allowances.
Government's contributions under the Hospital Insurance and Diagnostic Services Act
The Hospital Insurance and Diagnostic Services Act, Statutes of 1957, authorized contributions by Canada in respect of programs administered by the provinces, providing hospital insurance and laboratory and other services in aid of diagnosis. In 1962-63 payments were $337 million compared with $284 million in 1961-62. The increase of $53 million was due to an increase in the cost of insured services to hospitals and the gradual increase in the number of insured persons.
The effective date of each agreement is as follows:-July 1, 1958 for Newfoundland, Manitoba, Saskatchewan, Alberta and British Columbia; January 1, 1959 for Nova Scotia and Ontario; July 1, 1959 for New Brunswick; October 1, 1959 for Prince Edward Island; April 1, 1960 for the Northwest Territories; July 1, 1960 for the Yukon Territory; and January 1, 1961 for Quebec.

[Stage Direction]
(in millions of dollars)
Government's Contributions under the Hospital Insurance and Diagnostic Services Act	Fiscal year ended March 31		Increase
	1963 (preliminary)	1962	
7.5	6.3	1.213.5	11.9	1.61.7	1.4	0.310.9	9.5	1.488.7	73.0	15.7122.1	104.5	17.617.3	15.2	2.118.3	16.0	2.325.9	19.7	6.230.1	25.7	4.40.8	0.7	0.1
336.8	283.9	52.9
General health grants and hospital construction grants to provinces
Grants to provinces during 1962-63 for general health services and the control of diseases amounted to $31 million and for assistance in hospital construction to $20 million. Comparable amounts for the previous fiscal year were $30 million and $19 million respectively.

The Budget-Appendix

[Stage Direction]
(in millions of dollars)
General Health Grants and Hospital Construction Grants	Fiscal year ended March 31, 1963 (preliminary)		
General health grants	Hospital construction grants	TotalNewfoundland	0.9	0.6	1.5Nova Scotia	1.4	1.3	2.7Prince Edward Island	0.3	0.1	0.4New Brunswick	1.2	0.7	1.98.6	5.8	14.4Ontario	9.4	6.6	16.0Manitoba	1.9	0.8	2.7Saskatchewan	1.7	0.9	2.6Alberta	2.6	1.7	4.3British Columbia	2.9	1.5	4.4Northwest and Yukon Territories	0.1	0)	0.131.0	20.0	51.0
([DOT]'Under *50,000.
Family allowances
Family allowances are payable in respect of all children under sixteen years of age, resident in Canada, with minor exceptions such as in the case of children of immigrants who must reside in Canada one year before an allowance is payable. The monthly allowance is $6 if the child is under 10 years and $8 in the age group 10 to 15. Children of immigrants receive family assistance at the same rate during their first year of residence in Canada from appropriations of the Department of Citizenship and Immigration if during that period they are under sixteen years of age.
Family allowance payments for 1962-63 in the amount of $532 million represented 8 per cent of total expenditures. The increase of $11 million over the previous year reflected the increase in the number of children in the eligible age groups.

[Stage Direction]
(in millions of dollars)
Family Allowance Payments	Fiscal year ended March 31		Increase
	1963 (preliminary)	1962	
Newfoundland	16.6	16.4	0.2Nova Scotia	21.8	21.6	0.2Prince Edward Island	3.3	3.2	0.1New Brunswick	19.4	19.2	0.2160.3	157.7	2.6Ontario	172.7	168.4	4.3Manitoba	25.5	25.1	0.4Saskatchewan	26.5	26.3	0.2Alberta	40.3	38.9	1.4British Columbia	43.8	42.7	1.1Northwest and Yukon Territories	1.4	1.3	0.1531.6	520.8	10.8
The Budget-Appendix
Old age assistance, disabled persons allowances, blind persons allowances and unemployment assistance
Under the Old Age Assistance Act, the federal government reimburses the provinces by paying 50 per cent of the lesser of $65 monthly or the amount of assistance given by the provinces in the form of monthly pensions to eligible persons in need who are in the age group 65 to 69. (Under the Old Age Security Act, all persons 70 years and over who satisfy the residence requirements of the act may receive a pension of $65 per month from the federal government out of the old age security fund.) Similarly, the federal government reimburses the provinces under the Blind Persons Act for allowances of not more than $65 per month to blind persons in need 18 years of age or over by paying 75 per cent of the total payments, and under the Disabled Persons Act by paying 50 per cent of not more than $65 per month for allowances to disabled persons in need 18 years of age or over. Payments in 1962-63 were $38 million for old age assistance, $20 million in respect of disabled persons allowances, $5 million for blind persons allowances and $96 million for unemployment assistance. Comparable figures in 1961-62 were, respectively, $31 million, $16 million, $4 million and $92 million.
The increases in old age assistance, disabled persons allowances and blind persons allowances were due mainly to amendments to the Old Age Assistance Act, the Blind Persons Act and the Disabled Persons Act which raised the maximum pension towards which the federal government would contribute from $55 to $65 per month effective February 1, 1962.
Under the Unemployment Assistance Act the federal government contributes up to 50 per cent of the cost of unemployment assistance paid by the provinces, subject to certain deductions as set out in the act. All provinces have signed agreements with the federal government. There was an increase of $4 million in contributions for 1962-63 over those for the previous year.
The following table presents a distribution of these payments to provinces for 1962-63:
TABLE 30 (in millions of dollars)
Federal Share of Old Aqe Assistance, Disabled Persons Allowances, Blind Persons Allowances and Unemployment Assistance	Fiscal year ended March 31, 1963 (preliminary)			
Old age assistance	Disabled persons allowances	Blind persons allowances	Unem- ployment assistance2.0	0.5	0.3	4.32.0	1.1	0.5	1.60.4	0.3	(i)	0.22.1	0.8	0.4	1.613.8	8.6	1.7	33.18.5	5.5	1.0	23.42.0	0.6	0.2	4.72.2	0.6	0.2	4.92.5	0.7	0.3	6.22.7	0.9	0.3	15.90.1	(i)	(1)	0.1
38.3	19.6	4.9	96.0
<*>Less than $50,000.

The Budget-Appendix
National Research Council, including the Medical Research Council
Expenditures of the National Research Council, including the Medical Research Council, amounted to $41 million for 1962-63 compared with $39 million for 1961-62.
TABLE 31 (in millions of dollars)
National Research Council, including the Medical Research Council	Fiscal year ended March 31	Increase1963 (preliminary)	1962	decrease (-)Scholarships and grants in aid of research	14.4	12.0	2.4Construction or acquisition of buildings, works, land and equipment	3.8	5.4	-1.6Administration and general	23.1	21.4	1.741.3	38.8	2.5
In 1962-63 outlays for scholarships and grants in aid of research increased by $2 million. Administration and general costs also increased by $2 million and with a reduction of $2 million in expenditures for construction or acquisition of buildings, works, land and equipment, there was a net increase of $2 million over the previous year's total.
National Revenue
Expenditures of the Department of National Revenue totalled $79 million for 1962-63, $3 million more than in 1961-62, due mainly to increased costs of $2 million for district offices of the taxation division and $1 million for the customs and excise divisions.
TABLE 32 (in millions of dollars)
National Revenue	Fiscal year ended March 31		Increase or decrease (-)
	1963 (preliminary)	1962	
Customs and excise divisions	40.6	39.7	0.9Taxation division	37.8	35.4	2.4Income tax appeal board	0.2	0.2	78.6	75.3	3.3
The Budget-Appendix
Northern Affairs and National Resources
Expenditures of the Department of Northern Affairs and National Resources were $90 million for the fiscal year 1962-63, an increase of $8 million over the comparable total for 1961-62.
TABLE 33 (in milliona of dollars)
Northern Affairs and National Resources	Fiscal year ended March 31		Increase or decrease (-)
	1963 (preliminary)	1962	
Northern administration branch	40.5	32.0	8.5National parks branch	
Contributions to the provinces to assist in the development	27.6	29.1	-1.5of roads leading to resources	9.2	12.0	-2.8Water resources branch	5.9	2.4	3.5Canadian government travel bureau	3.3	3.0	0.3Administration and general	3.8	3.8	90.3	82.3	8.0
The main changes were increases of $9 million in outlays of the northern administration branch and $4 million in expenditures of the water resources branch and decreases of $2 million in expenditures of the national parks branch and $3 million in contributions to the provinces to assist in the development of roads leading to resources.
Post Office
Gross expenditures of the Post Office Department for 1962-63 totalled $219 million, an increase of $4 million over the 1961-62 outlays of $215 million.
TABLE 34 (in millions of dollars)
Post Office	Fiscal year ended March 31		Increase or decrease (-)
	1963 (preliminary)	1962	
Charged to budgetary expenditure- Operations-salaries and other expenses of staff post offices, district offices and railway mail services; and supplies and equipment and other items for revenue post offices	120.1	117.0	3.1Transportation-movement of mail by land, air and water	63.8	62.7	1.1Financial services	3.3	3.2	0.1Administration and general	2.1	2.1	189. S	185.0	4-SCharged to revenue- Operations-salaries of postmasters and staffs at revenue and semi-staff offices, commissions paid at suboffices, and other disbursements	30.0	29.8	0.2219.3	214.8	4.5
Remuneration of postmasters and staffs at revenue and semi-staff offices and certain other authorized disbursements are paid from revenue. These payments, included in the total of $219 million were $30 million for 1962-63, approximately the same as for 1961-62.

The Budget-Appendix
Public Works
Expenditures of the Department of Public Works for 1962-63 amounted to $175 million, a decrease of $14 million from the 1961-62 total of $189 million.
TABLE 35 (in millions ol dollars)
Public Works	Fiscal year ended March 31		Increase or decrease (-)
	1963 (preliminary)	1962	
Public buildings-construction and services-			
Maintenance and operation		43.4	45.9	-2.5
Acquisition, construction and improvements of public buildings-			
Ottawa	9.0	11.3	-2.3Other centres in Canada	12.6	15.4	-2.8Outside Canada	0.4	-0.4Improvements generally	0.5	0.2	0.3Furniture and furnishings	2.3	2.8	-0.5Fire prevention	0.2	0.2	68.0	76.3	-8.3Development engineering services- Trans-Canada highway division- Contributions to the provinces under the terms of	the Trans-Canada Highway Act	32.0	36.5	-4.5Construction through national parks	3.9	5.1	-1.2General	2.3	5.2	-2.938. 3	46.8	-8.6Harbours and rivers engineering services- Acquisition, construction and improvements of harbours	and river works	24.6	29.6	-5.0Dredging	3.9	5.4	-1.5Graving docks, locks and dams	0.7	0.8	-0.139.3	35.8	-6.6National Capital Commission	13.8	8.7	5.1Housing	10.2	5.8	4.4Administration and general	15.6	15.5	0.1175.0	188.8	-13.8
Decreases in expenditures of $9 million in development engineering services, $7 million in harbours and rivers engineering services and $8 million in outlays for public buildings-construction and services, were partly offset by increases of $5 million in payments to the National Capital Commission and $4 million for housing.
The decrease of $9 million in expenditures for development engineering services was due mainly to a decrease of $5 million in contributions to the provinces under the terms of the Trans-Canada Highway Act and a reduction of $3 million in general outlays.
The decrease of $7 million in expenditures of the harbours and rivers engineering services was due mainly to a decrease of $5 million in outlays for acquisition, construction and improvements of harbours and river works and $2 million in costs of dredging.
Expenditures for public buildings-construction and services were $8 million less than the comparable figure for the previous fiscal year, due to decreases of $6 million in costs of acquisition, construction and improvements of public buildings and $2 million in costs of maintenance and operation.
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The Budget-Appendix Royal Canadian Mounted Police
Expenditures of the Royal Canadian Mounted Police amounted to $66 million for 1962-63, an increase of $5 million over the 1961-62 total of $61 million.
TABLE 36 (in millions of dollars)
Royal Canadian Mounted Police	Fiscal year ended March 31	Increase1963 (preliminary)	1962	decrease (-)Land, air and training divisions	49.2	45.5	3.7Headquarters administration and national police services...	8.2	7.5	0.7Pensions and other benefits	3.7	3.5	0.2Government's contribution to Royal Canadian Mounted Police superannuation account	2.6	2.3	0.3Marine services	1.8	1.7	0.165.5	60.5	5.0
Payments as shown in the table represent gross expenditures; payments received from the provinces and municipalities for police services at $12 million were credited to revenue.
The main changes in expenditures were increases of $4 million for the land, air and training divisions and $1 million in higher outlays for headquarters administration and national police services.
Trade and Commerce
Expenditures of the Department of Trade and Commerce were $27 million for 1962-63, compared with the 1961-62 total of $40 million. The decrease of $13 million was due almost entirely to a reduction in the expenditures of the Dominion Bureau of Statistics.

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(in millions of dollars)
Trade and Commerce	Fiscal year ended March 31	Increase1963 (preliminary)	1962	decrease (-)12.0	24.6	-12.65.6	5.2	0.42.9	2.7	0.20.5	0.5	6.0	6.5	-0.5
27.0	39.5	-12.5
The decrease of $13 million in expenditures of the Dominion Bureau of Statistics was due to: (1) the 1961-62 expenditures included $12 million in respect of the 1961 Decennial Census of Canada whereas the 1962-63 expenditures for this purpose were only $1 million; and (2) a decrease of $2 million in operating expenses.

The Budget-Appendix
Transport
Expenditures of the Department of Transport totalled $430 million for 1962-63, an increase of $20 million over the 1961-62 total.

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(in millions of dollars)
Transport	Fiscal year ended March 31	Increase1963 (preliminary)	1962	decrease (-)Air services- Civil aviation branch	82.9 30 7	Telecommunications and electronics branch...	36.6 18.1	-5.9Meteorological branch	17.4 5 3	Administration	1S6.S	150.0	-IS. 7Railway and steamship services- Maritime Freight Rates Act- Difference between tariffs and normal tolls.	12.9	12.2	0.7Railway to Great Slave Lake	12.2 3.1 48.9 8.2 3.3 0.2	Auto-ferries, docks and terminals	4.7 67.3 7.3 3.0	-1.6Deficits- Canadian National Railways	Newfoundland ferry and terminals	0.9 0.3 0.1Prince Edward Island car ferry and terminals. .. Yarmouth, N.S.-Bar Harbour, Maine, U.S.A., ferry service	Other	89. S	95.9	-6.6Board of Transport Commissioners for Canada- Interim payments related to the recommendations of the Royal Commission on Railway Problems..	50.0	50.0 19.0 7.0 10.0 1.3 87. S	Freight Rates Reduction Act	36.7 7.0 5.7 1.3 100.7	Maintenance of trackage	Contribution to the railway grade crossing fund...	-4.3Administration and general	IS. 4Marine services- Canadian marine services	30.9 10.6 4.2 4.1	Aids to navigation	Ship channel services-St. Lawrence and Saguenay rivers Marine regulations	6.3	-2.1Canals	Administration and general	1.4 55.0	48^6	6.4Canadian Maritime Commission	31.0 5 2	10.2 4.9 6.5 2.6	Non-active advances-National Harbours Board..	0.3Trans-Canada Air Lines-deficit...	3 5	Operating deficit of canals entrusted to the St. Lawrence Seaway Authority	3.1 6.3	Administration and general	1.9
430.4	410.4	20.0
Outlays for air services reflected a decrease of $14 million from the previous fiscal year due mainly to decreases of $7 million in expenditures by the civil aviation branch and $6 million by the telecommunications and electronics branch.
Expenditures for railway and steamship services, including charges to expenditures in respect of deficits of certain government-owned enterprises, were $89 million, a decrease of $7 million from expenditures of $96 million in the previous fiscal year.
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The Budget-Appendix
The 1962 deficit of $49 million of the Canadian National Railways charged to budgetary expenditures was $18 million less than the comparable figure in
1961-	62 and expenditures in respect of the construction of the railway to Great Slave Lake were $11 million more than in the previous year.
Expenditures of the Board of Transport Commissioners for Canada increased by $13 million, due mainly to an increase of $18 million in payments under the Freight Rates Reduction Act offset in part by a decrease of $4 million in the government's contribution to the railway grade crossing fund.
Marine services expenditures were $55 million, an increase of $6 million over the previous fiscal year. An increase of $8 million in expenditures for the Canadian marine services was partly offset by a decrease of $2 million in expenditures for the ship channel services-St. Lawrence and Saguenay rivers.
Outlays of the Canadian Maritime Commission at $31 million were $21 million more than in the previous fiscal year. The change was due mainly to increased payments of capital subsidies for construction of commercial and fishing vessels.
Deficits of government-owned enterprises charged to expenditure (other than the Canadian National Railways) were $8 million for the Newfoundland ferry and terminals, $4 million for Trans-Canada Air Lines, $3 million for the Prince Edward Island car ferry and terminals and $3 million for canals entrusted to The St. Lawrence Seaway Authority compared with $7 million, $7 million, $3 million and $3 million respectively in the previous year.
Non-active advances to the National Harbours Board totalled $5 million for
1962-	63, approximately the same as in 1961-62.
Veterans Affairs
Expenditures of the Department of Veterans Affairs amounted to $336 million for 1962-63, an increase of $3 million over the 1961-62 total.

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(in millions of dollars)
Veterans Affairs	Fiscal year ended March 31		Increase or decrease (-)
	1963 (preliminary)	1962	
175.9	177.9	-2.088.7	81.8	6.956.1	56.8	-0.7Soldier Settlement and Veterans Land Acts- Provision for reserve for conditional benefits, Veterans	3.2	3.3	-0.14.6	4.6	1.1	2.0	-0.9Administration and general	6.8	6.8	336.4	333.2	3.2
The net increase of $3 million was due mainly to an increase of $7 million for war veterans allowances, offset in part by decreases of $2 million in pensions for disability or death, $1 million in war service gratuities and re-establishment credits and $1 million in treatment and welfare services.

The Budget-Appendix
All Other Departments
Expenditures of the departments not dealt with individually totalled $50 million, an increase of $12 million over the total for 1961-62.

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(in millions of dollars)
All Other Departments	Fiscal year ended March 31	Increase1963 (preliminary)	1962	decrease (-)Auditor General's Office	1.2 0.4 11.8 4.8 0.5	0.1Board of Broadcast Governors	0.3 0.4	Office of the Chief Electoral Officer...	Civil Service Commission	Governor General and Lieutenant-Governors.	0.5	Insurance	Legislation	National Film Board	5.6 l n	National Gallery of Canada	1.0	Privy Council	5.0 1.0 4.0	Public Archives and National Library	1.0 4.0	Public Printing and Stationery...	Secretary of State	
49.8	37.4	12.4
The most significant change in expenditures for 1962-63 was an increase of $11 million by the Office of the Chief Electoral Officer for expenses of the federal election in June 1962.
28902-5-72i
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The Budget-Appendix
4.	SUMMARY OF ASSETS AND LIABILITIES OF CANADA AS AT MARCH 31, 1963
The assets and liabilities of the Government of Canada at March 31, 1963, the comparable balances at March 31, 1962 and the changes in each category during 1962-63, are shown in condensed form in the following table:

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Summary of Assets and Liabilities of Canada (in millions of dollars)
Balance at March 31
(preliminary)
Increase
or
decrease (-)
Liabilities
Current and demand liabilities	
Deposit and trust accounts	
Annuity, insurance and pension accounts	
Undisbursed balances of appropriations to special accounts...
Deferred credits	
Suspense accounts	
Unmatured debt	
Total liabilities	
1,643.6
222.9
4,741.9
126.5
107.8
7.4
17,961.8
24,811.9
1,234.1
266.6
4,246.0
115.1
95.0
5.3
16,945.7
22,907.8
409.5
-43.7
495.9
11.4
12.8
2.1
1,016.1
1,904.1
Assets
Current assets	
Advances to the exchange fund account	
Sinking fund and other investments held for retirement of unmatured debt	
Loans to, and investments in, Crown corporations	
Loans to national governments	
Other loans and investments	
Securities held in trust	
Deferred charges-
Unamortized portions of actuarial deficiencies-
Canadian forces superannuation account	
Public service superannuation account	
Royal Canadian Mounted Police superannuation
account	
Unamortized loan flotation costs	
Suspense accounts	
Capital assets	
Inactive loans and investments	
824.7
2.736.0
22.0
4.465.1 1,210.7 1,105.4
25.6
524.8
276.7
3.5
131.6
936.6
0.2
(0
94.9
1.246.0
1.793.0
19.4
3,985.3
1,339.8
993.9
25.8
326.3
276.7
3.5
121.3
737.8
0.2
(i)
94.9
-421.3
943.0
2.6
479.8
-129.1
111.5
-0.2
198.5
10.3
108.8
Total assets	
Leas reserve for losses on realization of assets
11,421.2
-546.4
Net assets	
Net debt, represented by excess
10,874.8
of liabilities over net assets.
13,937.1
10,226.1
-546.4
9,679.7
13,228.1
1,195.1
1,195.1
709.0
01 Shown at nominal value of $1.
A. Changes in Principal Liability Classifications during 1962-63
The gross liabilities of the government increased by $1,904 million during the fiscal year. Increases of $1,016 million in unmatured debt, $496 million in annuity, insurance and pension accounts, $410 million in current and demand liabilities and $13 million in deferred credits were partly offset by a decrease of $44 million in deposit and trust accounts.

The Budget-Appendix
1% OTHER LIABILITIES
1% DEPOSIT AND TRUST ACCOUNTS


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Fiscal Years Ended March 31 Billions of Dollars
1959

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1963 *
Preliminary
Current and demand liabilities
This category consists of obligations of the government payable currently or on demand.
TABLE 42 (in millions of dollars)
Current and Demand Liabilities	Balance at March 31	Increase1963 (preliminary)	1962	or decrease (-)Outstanding treasury cheques	267.6	265.7	1.9Accounts payable	267.0	280.7	-13.7Non-interest-bearing notes payable to-	The international development association	19.3	14.0	5.3The international monetary fund-	Canada's subscription	370.0	358.0	12.0Special loan	368.0	368.0Matured debt outstanding	757. S	S72.0	S85.S32.4	36.4	-4.0Interest due and outstanding	80.7	73.9	6.8Interest accrued	200.6	174.6	26.0Post office-outstanding money orders	32.8	25.4	7.4Outstanding letter of credit cheques	4.6	4.7	-0.1Other current liabilities	0.6	0.7	-0.11,643.6	1,234.1	409.5
The net increase during the year was $410 million. The main changes were increases of $385 million in non-interest-bearing notes, $26 million in interest accrued, $7 million in outstanding post office money orders and $7 million in interest due and outstanding and a decrease of $4 million in matured debt outstanding.
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The Budget-Appendix
The increase of $385 million in non-negotiable non-interest-bearing notes includes $380 million in respect of the international monetary fund.
Of this increase, notes in the amount of $12 million were issued due to revaluation of Canadian dollar balances in the international monetary fund and notes in the amount of $368 million were issued to replace Canadian dollars remitted to the Receiver General by the international monetary fund in accordance- with the standing arrangements regarding the international monetary fund account No. 1 namely, that the holdings of the account in excess of one per cent of Canada's quota in the fund will be exchanged for non-negotiable non-interestbearing demand notes from time to time as circumstances permit. This $368 million reflected two types of transaction (1) the Canadian borrowing from the fund (note issue of $325 million) and (2) the United Kingdom repayment of Canadian dollars to the fund (note issue of $43 million).
Deposit and trust accounts
' Sundry funds deposited with, or held in trust by, the Receiver General of Canada for various purposes are recorded in these accounts.

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(in millions of dollars)
________________________________________________________________
	Balance at March 31		Increase
Deposit and Tkdst Accounts	1963 (preliminary)	1962	or decrease (-)Provincial tax collection agreements	38.0	-38.0Indian trust funds	28.9	28.5	0.4Post office savings bank	25.4	27.4	-2.0Crown corporations deposits	30.0	24.2	5.8Contractors securities-sundry departments- Bonds	8.2	9.5	-1.3Cash	4.3	7.0	-2.7Certified cheques	1.2	1.5	-0.3IS.7	18.0	-4.sContractors holdbacks	17.3	17.S	-0.5Korean operations pool	16.1	16.1	-0.5Instalment purchase of bonds, public service	11.9	12.4	United States of America	5.9	12.2	-6.3Canadian Arsenals Limited pension fund	1.5	12.1	-10.6Canadian Pension Commission-administration trust fund...	13.0	12.1	0.9Guarantee deposits- National Revenue	4.4	4.5	-0.1Northern Affairs and National Resources	8.4	5.9	2.5IS.8	10.4	S.4National Harbours Board-special accounts	7.1	7.6	-0.5Army benvolent fund	6.0	6.3	-0.3Soldier settlement and veterans land acts trust account- general	3.2	2.7	0.5Permanent services deferred pay	3.2	2.8	0.4Common school funds-Ontario and Quebec	2.7	2.7	Veterans care trust fund	2.4	2.3	0.1National Research Council-special fund	2.1	2.0	0.1Emergencv gold mining assistance-holdbacks	1.5	1.2	0.3Canadian National Railways	7.6	7.610.6	9.8	o.s222.9	266.6	-43.7
There was a decrease during the year of $44 million due principally to the provincial tax collection agreements under which as at March 31, 1962 the federal government had collected $38 million, while at March 31, 1963 the provinces had received advance payments of $10 million in accordance with the federal-provincial tax collection agreements. This amount is recorded in the asset

The Budget-Appendix
category "Other loans and investments". There were also decreases of $11 million in Canadian Arsenals Limited pension fund, $6 million in the United States of America deposit account and $4 million in contractors' securities. Partly offsetting these decreases were increases of $8 million in the Canadian National Railways account (representing that part of the 1962 income deficit paid from company funds and which will be repaid to the company when parliamentary authorization is received), $6 million in Crown corporations deposits and $2 million in guarantee deposits.
Provincial tax collection agreements went into effect from January 1, 1962 and further details will be found under the category "Other loans and investments".
Annuity, insurances and pension accounts
In this category are recorded the amounts to the credit of the various annuity, insurance and pension accounts.
TABLE 44 (in millions of dollars)
Annuity, Insurance and Pension Accounts	Balance at March 31		Increase or decrease ( -)
	1963 (preliminary)	1962	
23.4	78.2	-54.8-11.8	-63.6	51.8
11.6	14.6	-3.0 26.4
	1.261.7 1.723.7 1,605.9 139.0	1,235.3 1,586.9 1,279.2 130.0	
			136.8 326.7 9.0
			
			
			
	4,741.9	4,246.0	495.9
Unemployment insurance fund
During the year receipts amounted to $348 million and included employees and employers contributions of $287 million, the government's contribution of $57 million and $4 million in interest from investments. As benefit payments amounted to $403 million there was a deficit for the year in the fund of $55 million compared with $118 million in the previous fiscal year.
The balance in the fund at March 31, 1962 of $78 million was reduced to $23 million at March 31, 1963 by the deficit in the fund for the year of $55 million.
As the commission's investment in bonds and accrued interest amounted to $12 million, the funds on deposit with the government were $12 million at March 31, 1963 compared with $15 million at March 31, 1962.
Government annuities account
The government annuities account increased by $26 million during 1962-63 representing the amount by which premium receipts of $34 million and interest of $47 million credited to the account by the government exceeded payments of $55 million to annuitants and beneficiaries.
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The Budget-Appendix Public service superannuation account
The increase of $137 million in the public service superannuation account was due mainly to the government's contribution of $51 million (equal to the estimated current and prior service payments of individuals in 1961-62) and interest of $66 million credited to the account. The remainder of the increase was due to the excess of employees' current and prior service contributions and miscellaneous receipts over benefit payments.
Canadian forces superannuation account
The Canadian forces superannuation account increased by $327 million during 1962-63. The increase included the government's contribution of $58 million which was made at the rate of one and two-thirds times the current and prior service contributions, payment of interest by the government of $53 million credited to the account and the amount of $17 million by which contributions by permanent services personnel for current and prior years' service exceeded benefit payments from the account. There was also a credit of $199 million to this account in 1962-63 to bring the balance in the account into line with an actuarial evaluation as at December 31, 1960 as calculated by the Department of Insurance. A contra entry was made to the asset account "Deferred charges-unamortized portion of actuarial deficiency in the Canadian forces superannuation account".
Old age security fund
Under the Old Age Security Act pensions at the rate of $65 per month are paid, without a means test, from the old age security fund to all eligible persons seventy years of age or over. Receipts of $691 million, consisting of $302 million from the 3 per cent sales tax, $274 million from the 3 per cent tax on personal incomes (maximum tax $90) and $115 million from the 3 per cent tax on corporation profits, were $43 million less than payments of $734 million from the fund. As the balance in the fund at the end of the fiscal year 1961-62 was $2 million, temporary loans of $41 million were made by the Minister of Finance to cover the deficit in the fund.
TABLE 45 (in millions of dollars)
Old Age Security Fund	Fiscal year ended March 31				
	1959	1960	1961	1962	1963 (prelimi- nary)
Tax receipts-					
Sales tax	173.6	270.0	270.2	284.9	302.2Personal income tax	146.4	185.6	229.4	259.0	273.6Corporation income tax	55.3	91.3	103.5	100.1	115.3Total tax receipts	375.3	546.9	603.1	644.0	691.1Pension payments	-559.3	-574.9	-592.4	-625.1	-733.7Excess of receipts over payments	-184.0	-28.0	10.7	18.9	-42.6Temporary loans brought forward	-28.0	-17.3	Balance in fund brought forward	1.6Appropriation by Parliament-	Charged to budgetary expenditures	184.0	Temporary loans from the Minister of Finance to	cover deficit in fund	28.0	17.3	41.0Balance in fund	1.6	
The Budget-Appendix
A distribution by provinces of pension payments from the old age security fund for the last two years is shown in the following table:
TABLE 46 (in millions of dollars)
Old Age Security Payments	Fiscal year ended March 31		
1963 (preliminary)	1962	Increase14.0	11.9	2.133.8	28.9	4.96.0	5.2	0.824.9	21.3	3.6155.1	131.7	23.4265.3	226.1	39.244.6	38.1	6.546.3	39.6	6.749.8	42.3	7.593.4	79.6	13.80.5	0.4	0.1
733.7	625.1	108.6
Undisbursed balances of appropriations to special accounts
This category records the undisbursed balances of appropriations to special accounts for which moneys have been appropriated by Parliament and from which disbursements may be made for authorized purposes in periods subsequent to that in which the appropriation was made. There was a net increase of $11 million during the current fiscal year bringing the balance as at March 31, 1963 to $126 million.
TABLE 47 (in millions of dollars)
Undibbursed Balances of Appropriations to Special Accounts	Balance at March 31	Increase1963 (preliminary)	1962	or decrease (-)91.7 26.6	77.6	14.1 -7.233.8	8.1	3.6	4.50.1	0.1	
126.5	115.1	11.4
The increase of $14 million in the Colombo plan fund represented the amount by which the $42 million credited to the fund for assistance to countries in south and south-east Asia (and charged to budgetary expenditures) exceeded disbursements from the fund of $28 million.
The railway grade crossing fund decreased by $7 million during the year, representing disbursements of $13 million from the fund less an amount of $6 million voted by Parliament for this purpose which was credited to the fund and charged to budgetary expenditures.
The increase of $4 million in the national capital fund represented the amount by which the $9 million credited to the fund and charged to budgetary expenditures exceeded disbursements of $5 million.
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The Budget-Appendix Deferred credits
This category records amounts due the government in respect of which payment has been deferred. These are contra accounts to corresponding items under the following asset categories: "Loans to, and investments in, Crown corporations", "Loans to national governments" and "Other loans and investments". The balance at March 31, 1963 was $108 million, an increase of $13 million during the year.
TABLE 48 (in millions of dollars)
Deferred Credits	Balance at March 31	Increase1963 (preliminary)	1962	or decrease (-)Deferred interest- United Kingdom Financial Agreement Act, 1946	44.2	44.2	The St. Lawrence Seaway Authority	49.4	33.7	15.795.6	77.9	15.7Capitalized interest- Northern Canada Power Commission	1.5	1.1	0.4Agreements of sale of Crown assets	6.8	8.8	-2.0Crown Assets Disposal Corporation	5.9	7.2	-1.3107.8	95.0	12.8
There was no change during the year in deferred interest of $44 million on loans made under the United Kingdom Financial Agreement Act, 1946. This is a contra account to a corresponding item under "Loans to national governments".
Deferred interest in respect of The St. Lawrence Seaway Authority, which is a contra account to a corresponding item in "Loans to, and investments in, Crown corporations", increased by $16 million during the year to $49 million at March 31, 1963 and included $19 million capitalized at March 31, 1959. In accordance with Order in Council P.C. 1961-1863 dated December 29, 1961, interest payable on December 31, 1961 by The St. Lawrence Seaway Authority, as well as interest payable on December 31, 1962, has been deferred until December 31, 1963. On December 31, 1963 the total amount of interest so deferred, together with interest due on that date, will be computed as a single sum and is to be repaid in equal annual instalments calculated by amortizing the said sum, including interest at rates determined by the Minister of Finance, over a period of forty-six years.
There was a small increase in the capitalized interest on loans made to Northern Canada Power Commission. Advances are made to the Commission for various projects in the Yukon Territory and Northwest Territories and advances are also made pursuant to the Atlantic Provinces Power Development Act to the Provinces of Nova Scotia and New Brunswick. Upon completion of a project accrued interest due is computed from, but not including, the date of each advance to the date of completion of the project and is set up as capitalized interest and added to the original amount of the advance to be repayable in thirty or forty (as the case may be) equal annual instalments.
Balances receivable under agreements of sale of Crown assets are set up as contra accounts to corresponding items under "Other loans and investments". Receipts of $2 million were in respect of outstanding agreements.
The government's equity in the agency account of Crown Assets Disposal Corporation is a contra account to a corresponding item under "Other loans and investments". This equity decreased by $1 million during the year.

The Budget-Appendix
Suspense accounts
These consist of balances where some uncertainty as to disposition exists.
TABLE 49 (in millions of dollars)
Suspense Accounts	Balance at March 31	Increase1963 (preliminary)	1952	or decrease(-)Replacement of materiel, sec. 11, National Defence Act....	1.2 1.4	1.4 1.4	-0.24.8	2.5	2.3
7.4	5.3	2.1
The replacement of materiel account, established by section 11 of the National Defence Act, is credited with amounts realized from the sale of materiel that has not been declared surplus to requirements but has been authorized by the Governor in Council to be sold to other countries. The account is debited with disbursements representing amounts paid for the procurement of replacement materiel. The balance in the account at March 31, 1963 was $1 million, approximately the same as at the previous fiscal year-end.
The unclaimed cheques account is credited with the amount of treasury cheques (except those drawn on asset and liability accounts) which remain undelivered for certain specified periods subsequent to date of issue, pending claims therefor.
Unmatured debt
The unmatured debt of Canada at the close of the 1962-63 fiscal year amounted to $17,962 million, an increase of $1,016 million over the previous fiscal year-end total of $16,946 million.
TABLE 50 (in millions of dollars)
Unmatured Debt	Balance at March 31		Increase or decrease (-)
	1963 (preliminary)	1962	
Payable in Canada-	10,792.2 4,582.2 11.5 15,885.9 2,165.0	10,812.8 4,055.2 62.5 14,980.5 1,885.0	-20.6 527.0 -51.0 455.4 280.0
Non-marketable bonds-			
			
			
			
	17,550.9 34.5 376.4	16,815.5 32.0 98.2	735.4 2.5 278.2
			
			
	17,961.8	16,945.7	1,016.1
Marketable bonds.
28902-5-73£
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The Budget-Appendix
The details of the various loan issues, maturities, redemptions, cancellations and conversions resulting in the net increase are described more fully in the section "The Public Debt".
Unmatured debt obligations payable in London and in New York are stated in Canadian dollars converted at the rate of $3,027 for the pound sterling and $1.08108 for the U.S. dollar respectively.
B. Changes in Principal Asset Classifications during 1962-63
Total assets amounted to $11,421 million at March 31, 1963, an increase of $1,195 million during the fiscal year. As there was no change in the reserve of $546 million for losses on realization of assets, net assets were $10,875 million at the close of the fiscal year.
The principal changes were increases of $943 million in advances to the exchange fund account, $480 million in loans to, and investments in, Crown corporations, $209 million in deferred charges and $112 million in other loans and investments, and decreases of $421 million in current assets and $129 million in loans to national governments.

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Fiscal Years Ended March 31 Billions of Dollars
10
Current assets
Total current assets amounted to $825 million at the end of the fiscal year 1962-63, a decrease of $421 million from the 1961-62 total of $1,246 million.
The main items responsible for the decrease of $421 million during the year were decreases of $403 million in cash in current and special deposits and $61 million in the securities investment account and an increase of $30 million in departmental working capital advances and revolving funds (of which $13 million was in the defence production revolving fund).

The Budget-Appendix
TABLE 51 (in millions of dollars)
Current Assets	Balance at March 31	Increase1903 (preliminary)	1962	or decrease (-)Cash in current and special deposits*1*	374.0	777.5	-403.5Cash in hands of collectors and in transit	132.6	117.8	14.8Departmental working capital advances and revolving funds- Agricultural commodities stabilization account	136.8	132.8	4.0Defence production revolving fund	40.7	27.3	13.4Miscellaneous departmental imprest and advance accounts	23.1	23.1	Other	53.1	40.2	12.9Securities investment account	26 S. 7	22S.lt	SO.S33.5	94.6	-61.1Moneys received after March 31 but applicable to the current year	14.9	17.9	-3.0Post Office-cash on hand and in transit	16.0	14.8	1.2824.7	1,246.0	-421.3
Receiver General year-end balances in London, New York, Paris and Bonn are at the Canadian dollar equivalent of exchange rates at March 31.
Advances to the exchange fund account
Advances during the year to the exchange fund account to finance the purchase of gold and foreign exchange amounted to $1,991 million, and repayments were $1,048 million increasing outstanding advances to $2,736 million at March 31, 1963. During 1961-62 advances were $397 million, repayments were $628 million and outstanding advances were $1,793 million at March 31, 1962.
Sinking fund and other investments held for retirement of unmatured debt
The balance of $22 million in this category at March 31, 1963 was approximately $3 million more than at the end of the previous fiscal year.
It should be noted that the purchase fund account which was established to assist in the orderly retirement of the public debt showed a nil balance at March 31, 1963. During the year government securities totalling $113 million were purchased and subsequently cancelled before the fiscal year-end. Full particulars of the securities purchased and cancelled may be found in section 6 "The Public Debt" further on in this report.
TABLE 52 (in millions of dollars)
Sinking Fund and Other Investments Held for Retirement of Unmatured Debt	Balance at March 31	Increase1963 (preliminary)	1962	or decrease (-)Sinking fund invested in-	Newfoundland guaranteed stock, 1933-63, 3 per cent	16.6	12.8	3.8United Kingdom conversion stock, 1963, 4£ per cent	3.9	5.3	-1.4Other investments-	20.5	18.1	2.ItNewfoundland guaranteed stock, 1933-63, 3 per cent	1.5	1.3	0.222.0	19.4	2.6
Note: Converted at the official parity rate of £1 = $3,027 Canadian.
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Appendix
Loans to, and investments in, Crown corporations
An increase of $480 million in these loans and investments during 1962-63 brought the balance at March 31, 1963 to $4,465 million.
TABLE 53 (in millions of dollars)
Loans to, and Investments in, Crown Corporations	Balance at March 31	Increase1963 (preliminary)	1962	decrease (-)53.3	65.8	-12.55.9	5.9	7.5	7.5	3.0	3.0	9.5	10.0	-0.51,434.7 4.6	1,160.0 5.0	274.7-0.4Canadian National (West Indies) Steamships Limited	1,439.3 0.3 50.2	1,165.0 0.9 37.9	274. S -0.6 12.31,797.5 8.2	1,701.0 8.2	96.535.3	15.3	20.0269.0	210.0	59.040.9	31.5	9.4192.7	178.8	13.919.0	26.2	-7.2111.5	119.0	-7.530.0	30.0	The St. Lawrence Seaway Authority-	341.5	334.5	7.049.4	33.7	15.7S90.9 1.1	S68.S 1.1	it. 7
4,465.1	3,985.3	479.8
Canadian National Railways (including Trans-Canada Air Lines)
Advances to the Canadian National Railways amounted to $1,439 million as at March 31, 1963, an increase of $274 million over the previous fiscal year-end balance of $1,165 million.
TABLE 54 (in millions of dollars)
Advances to the Canadian National Railways	Balance at March 31	Increase1963 (preliminary)	1962	decrease (-)Capital Revision Act, 1952-	970.7	951.8	18.9100.0	100.0	63.2	57.4	5.8283.8	33.8	250.017.0	17,0	4.6	5.0	-0.4
1,439.3	1,165.0	274.3

The Budget-Appendix
During the fiscal year ended March 31, 1963 the government made available to the Canadian National Railways $322 million and received repayments of $48 million. The amount of advances to the company outstanding at March 31, 1963 was therefore increased by $274 million.
TABLE 55 (in millions of dollars)
Advances to, and Repayments by, the Canadian National Railways during the Fiscal Year 1962-63	Fiscal year ending March 31	Increase1963 (preliminary)	1962	decrease (-)Advances-	For the refunding of debt	250.0	37.1	212.9For capital expenditures	5.8	27.6	-21.8For purchase fund	2.9	-2.9For interim financing of income deficits-	Canadian National Railways	41.3	63.8	-22.5Trans-Canada Air Lines	5.9	7.2	-1.3Total advances	303.0	138.6	164.4Purchase of 4 per cent preferred stock (C.N.R. Capital	Revision Act, 1952)	18.9	21.4	-2.5Sit. 9	160.0	161.9Repayments-	Advances for capital and refunding purposes	-14.8	14.8Advances for interim financing of income deficits-	Canadian National Railways	-41.3	-65.8	24.5Trans-Canada Air Lines	-6.3	-7.0	0.7-47.6	-87.6	40.0Net increase during the fiscal year	274.3	72.4	201.9
In 1962-63 the government advanced to the company $250 million for the retirement of debt in the hands of the public and $6 million for capital purposes.
In addition, to assist the Canadian National Railways to finance further capital expenditure during the year, the government purchased $19 million of 4 per cent preferred stock of the company. This stock is issued under the authority of the Canadian National Railways Capital Revision Act, 1952, in an amount equal to 3 per cent of the gross revenue of the company.
The government also provided the company with temporary loans of $41 million in respect of its 1962 income deficit. It should be noted that the 1962 income deficit of the Canadian National Railways was $49 million (of which $41 million was covered by temporary loans and $8 million paid from company funds) and on parliamentary authority will be charged to 1962-63 budgetary expenditures.
At March 31, 1962 temporary loans of $5 million were outstanding to the Trans-Canada Air Lines in respect of its 1962 income deficit. During 1962-63 further advances of $1 million were made bringing the total advances for this purpose to $6 million. Of these advances $3 million was repaid by the Air Lines and the balance of $3 million representing the 1962 income deficit will be charged to 1962-63 budgetary expenditures upon parliamentary approval. The government also advanced $5 million on account of the Air Lines 1963 income deficit which was outstanding at March 31, 1963.
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Central Mortgage and Housing Corporation
Loans during the fiscal year were $249 million of which $198 million was for direct lending and limited dividend housing and $51 million for federal-provincial projects. Repayments were $153 million, of which $141 million was in respect of direct lending, $8 million in respect of federal-provincial projects and $4 million in respect of housing. The balance at March 31, 1963 was $1,798 million compared with $1,701 million at March 31, 1962.
TABLE 56 (in millions of dollars)
Advances to, and Repayments by, Central Mortgage and Housing Corporation	Fiscal year ended March 31	Increase1963 (preliminary)	1962	or decrease (-)Advances-	Direct lending and limited dividend housing	198.2	223.8	-25.6Federal-provincial projects- Housing	10.0	9.5	0.5Municipal sewage treatment	26.5	5.5	21.0University housing	14.5	3.5	11.0S1.0	18.5	82.5249.2	242.3	6.9Repayments-	Direct lending and limited dividend housing	-140.5	-46.4	-94.1Federal-provincial projects- Housing	-5.8	-3.0	-2.8Municipal sewage treatment	-2.0	-2.0University housing	(1) -7.8	-8.0	-4.8Housing	-4.4	-2.6	-1.8-152.7	-52.0	-100.796.5	190.3	-93.8
d) Less than $50,000.
Farm Credit Corporation
Loans to the Farm Credit Corporation amounted to $60 million and investments in the capital of the corporation to $2 million during the year. Repayments of $3 million brought the balance at March 31, 1963 to $269 million, $59 million more than at the previous fiscal year-end.
The St. Lawrence Seaway Authority
Advances to The St. Lawrence Seaway Authority were $7 million during the year resulting in a balance of $342 million at March 31, 1963. Deferred interest on these loans increased by $16 million during the year to $49 million and included $19 million capitalized as at March 31, 1959.
In accordance with Order in Council P.C. 1961-1863 dated December 29, 1961, interest of $14 million payable on December 31, 1961 by The St. Lawrence Seaway Authority, as well as interest payable on December 31, 1962, has been deferred until December 31, 1963. On December 31, 1963 the total amount so deferred, together with the interest due on that date, will be computed as a

The Budget-Appendix
single sum and is to be repaid in equal annual instalments calculated by amortizing the said sum, including interest at rates determined by the Minister of Finance, over a period of forty-six years. This single sum and the principal sum of the loans made to the Authority now outstanding, together with the deferred interest capitalized as at December 31, 1959, shall be repaid in equal annual instalments commencing December 31, 1964 over a period of forty-six years except that on December 31, 1984 the balance of the said single sum and interest thereon then owing and the principal sum, together with deferred interest and any unpaid interest thereon, shall be paid in cash or by the delivery of an obligation or obligations of the Authority bearing such rate of interest and subject to such other terms and conditions as the Governor in Council may approve.
Other Crown Corporations
Loans to the Export Credits Insurance Corporation increased by $20 million during the fiscal year, loans to the National Harbours Board by $14 million, loans to the Canadian Overseas Telecommunication Corporation by $12 million and loans to the National Capital Commission by $9 million. Loans to the Northern Ontario Pipe Line Crown Corporation decreased by $8 million, advances to Northern Canada Power Commission decreased by $7 million and advances to Atomic Energy of Canada Limited decreased by $13 million.
Loans to national governments
These loans totalled $1,211 million at March 31, 1963, a decrease of $129 million from the previous fiscal year-end balance.
TABLE 57 (in millions of dollars)
Loans to National Governments	Balance at March 31	Increase1963 (preliminary)	1962	or decrease (-)Loans to United Kingdom-	The United Kingdom Financial Agreement Act, 1946....	1,012.9	1,030.3	-17.4Deferred interest	44.2	44.2	Loans under the Export Credits Insurance Act, Part II-	1,057.1	1,074.5	-17.4Belgium	32.3	34.6	-2.3France	67.0	133.9	-66.9The Netherlands	32.1	68.8	-36.71S1.4	SS7.S	-105.9Special loans to Colombo plan countries to finance the purchase of wheat and flour from Canada-	Ceylon	1.4	1.7	-0.3India	20.0	24.8	-4.8SI.4	SS.5	-5.1Miscellaneous loans and advances-	France-interim credit-consolidated interest	0.6	1.3	-0.7Other	0.2	0.2	0.8	1.5	-0.71,210.7	1,339.8	-129.1
The United Kingdom repaid $17 million of the $1,185 million loan made under the $1,250 million credit authorized by the United Kingdom Financial Agreement Act, 1946, reducing the principal to $1,013 million at March 31, 1963.
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The Budget-Appendix
In 1957, the Government of the United Kingdom deferred the payment due December 31, 1957 of principal and interest on the above loan. The deferment was by an agreement between the Governments of Canada and the United Kingdom that was approved by a 1957 Act to amend the United Kingdom Financial Agreement Act, 1946. The agreement, which became effective April 29, 1957, permits the United Kingdom in lieu of any right of waiver hitherto existing to defer after December 31, 1956 seven instalments of principal and interest under certain conditions. Principal and interest due December 31, 1957 was so deferred. The first of any such deferred instalments is payable on December 31, 2001, and the others annually thereafter, in order. In addition, it permitted the instalment of interest in respect of the year 1956 to be deferred and provided that this instalment of interest so deferred shall be paid on December 31 of the year immediately following the year in which the last of all other instalments, including those deferred, is due. Interest at 2 per cent is payable on deferred instalments of both principal and interest.
Advances under Part II of the Export Credits Insurance Act to Belgium, France and The Netherlands to assist them in the purchasing of goods in Canada were reduced by repayments of $106 million during the fiscal year. The balance at March 31, 1963 was $131 million. In June 1962, France made an advance payment of $67 million covering eight annual instalments payable December 31, 1962 to December 31, 1969 inclusive and The Netherlands made a payment of $37 million in July 1962 covering eight instalments payable April 30, 1963 to April 30, 1970 inclusive.
Special loans to Colombo plan countries to finance the purchase of wheat and flour by them from Canada amounted to $21 million at March 31, 1963, $5 million less than at March 31, 1962.
Other loans and investments
The balance in this category was $1,105 million at March 31, 1963, an increase of $111 million during the fiscal year 1962-63.
Canada's subscriptions to the capital of international organizations increased by $34 million during the fiscal year due to further subscriptions of $8 million to the international development association, $7 million to the international bank for reconstruction and development and $6 million in working capital advances and loans to international organizations. The revaluation adjustments in the Canadian dollar balance in the international monetary fund accounted for an increase of $13 million.
Loans to provincial governments increased by $2 million during the fiscal year. This was caused by an overpayment of $5 million to the Province of British Columbia under the 1957 tax-sharing agreements due to the revisions of population figures as a result of the 1961 census. Repayment will be made by the Province of British Columbia at the rate of $175,000 per month.
As at March 31, 1963, under the federal-provincial tax collection agreements, payments in advance to the provinces exceeded the amount estimated as having been collected on behalf of the provinces by $10 million. As at March 31, 1962 the federal government had collected on behalf of the provinces $38 million which was recorded in that fiscal year as a liability in the deposit and trust category.

The Budget-Appendix
TABLE 58 (in millions of dollars)
Other Loans and Investments	Balance at March 31	Increase1963 (preliminary)	1962	or decrease (-)Subscriptions to capital of, working capital advances and loans to, international organizations- Canada's subscription to capital of- International bank for reconstruction and development	80.5	73.7	6.8International development association	24.9	16.4	8.5International finance corporation	3.5	3.5	International monetary fund	577.3	564.7	12.6Working capital advances and loans to international organizations	7.8	1.6	6.2694.0	659.9	64.1Loans to provincial governments- Alberta	7.2	7.6	-0.4British Columbia	18.4	14.7	3.7Manitoba	12.4	13.0	-0.6New Brunswick	31.1	28.9	2.2Newfoundland	0.5	0.5Nova Scotia	7.3	8.0	-0.7Saskatchewan	23.1	25.7	-2.6100.0	97.9	6.1Provincial tax collection agreements account-advances	10.3	10.3Veterans Land Act advances	224.4	208.0	16.4Leas reserve for conditional benefits-Veterans Land Act, 1942	-28.8	-30.6	1.8195.6	177.4	18.6Miscellaneous- Assisted passage scheme (section 69, Immigration Act, R.S.1952)	2.2	2.6	-0.4Balances receivable under agreements of sale of Crown assets	8.3	10.6	-2.3City of Montreal- Atwater tunnel	2.0	2.0	St. Remi tunnel	1.1	1.2	-0.1Construction of dock and rail facilities for Steep Rock Iron Mines Limited	1.5	1.7	-0.2Crown Assets Disposal Corporation-government equity in agency account	5.9	7.2	-1.3Dominion Coal Company Limited	5.9	5.7	0.2Hamilton Harbour Commissioners	1.2	1.2	Housing projects for Canadian forces	12.6	6.4	6.2Land development of the Cornwall Navigation System	1.7	1.7	Municipal Improvements Assistance Act, 1938	1.3	1.5	-0.2New Westminster Harbour Commission	2.2	2.3	-0.1Northwest Territories	2.5	1.3	1.2Old age security fund-temporary loans	41.0	41.0Town of Oromocto, New Brunswick	3.9	4.0	-0.1Town of Oromocto Development Corporation	1.2	1.2	Yukon Territory	5.5	2.7	2.8Other	5.5	5.4	0.1105.5	58.7	46.81,105.4	993.9	111.5
Under the 1957 tax-sharing agreements, the obligation on the renting provinces to abstain from the imposition of personal and corporation income taxes was to lapse on December 31, 1961. As the Government of Canada did not offer to renew tax rental agreements, the former renting provinces have all imposed personal and corporation income taxes effective January 1, 1962. The Government of Canada, in place of the tax rental agreements, offered to enter into tax collection agreements with the provinces whereby Canada would undertake to collect without charge the provincial personal and corporation income taxes at rates determined by the provinces provided that the provincial personal income tax was expressed as a percentage of the federal personal income tax payable and the provincial corporation income tax employed a definition of corporate taxable
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income identical with the federal definition. To make room for the imposition of provincial income taxes, the Income Tax Act was amended in the 1961 session of Parliament (1) to reduce the federal income tax payable by individuals resident in the provinces by 16 per cent in 1962 and by a further one per cent in each subsequent year until the deduction amounts to 20 percent in 1966, and (2) to reduce the federal tax rate on the taxable income of corporations earned in the provinces by 9 percentage points. Canada collects the personal income tax for nine provinces (Quebec excepted) and the corporation income tax for eight provinces (Quebec and Ontario excepted). With the exception of Saskatchewan and Manitoba, the provinces which have entered into tax collection agreements have imposed personal and corporation income taxes equivalent to the federal withdrawal. These two provinces have imposed personal income taxes at 22 per cent rather than 16 per cent of the federal tax payable and 10 per cent rather than 9 per cent of the taxable income of corporations.
In accordance with the provisions of the Federal-Provincial Fiscal Arrangements Act an agreement has been entered into with each of the provinces (Quebec excepted) pursuant to which Canada will collect provincial income taxes on behalf of the province and will make payments to the province in respect of the taxes so collected in accordance with terms and conditions as the agreement prescribes.
At the beginning of each fiscal year the Minister of Finance will estimate (subject to revision at any time) the amount of the payment that in his opinion is due to the province in respect of the year ending in that fiscal year and will make payments to the province, on the basis of this estimate, in equal monthly instalments. Any adjustment will be made not later than December 31 following the end of that year.
The agreements became effective on January 1, 1962 and the first monthly payment was made in April 1962.
Under the Veterans Land Act advances are made by the government for the acquisition of properties, buildings, materials, livestock, farm equipment and commercial fishing equipment for sale to qualified veterans of world war 2 and Korea under sale agreements which carry specified conditional benefits if the terms of such agreements are adhered to by the veteran. Advances during the year less the reserve for conditional benefits increased by $18 million.
Miscellaneous loans and investments were $47 million higher at March 31, 1963, mainly on account of temporary loans of $41 million to the old age security fund by the Minister of Finance.
Securities held in trust
This category records the security holdings of various deposit and trust, and annuity, insurance and pension accounts. Bonds and certified cheques held in connection with contractors' securities, included in the deposit and trust category, are also recorded under this heading. The balance at March 31, 1963 was $26 million, approximately the same as for the previous fiscal year.
Deferred charges
This category consists of the unamortized portions of actuarial deficiencies in the Canadian forces superannuation account, the public service superannuation account, the Royal Canadian Mounted Police superannuation account, and the outstanding balance of unamortized loan flotation costs. There was an increase of $209 million in this category during the year, bringing the balance at March 31, 1963 to $937 million.

The Budget-Appendix
Unamortized portions of actuarial deficiencies
These accounts record the unamortized portions of the actuarial deficiencies in the public service, the Canadian forces, and the Royal Canadian Mounted Police superannuation accounts which have been set up as deferred charges to be written off to budgetary expenditure upon parliamentary approval. These deficiencies are based on actuarial valuations made as at December 31, 1957, December 31, 1960 and December 31, 1961, respectively.
The increase of $199 million in the unamortized portion of the actuarial deficiency in the Canadian forces superannuation account is a contra item to a similar amount credited to the Canadian forces superannuation account. This was due to an actuarial revaluation of the account as at December 31, 1960 and brought the balance of the contra account to $525 million.
Unamortized loan flotation costs
This account records the residual balances of discounts, commissions, redemption bonuses and conversion premiums on loan flotations that have not been charged to budgetary expenditure. The balance as at March 31, 1963 was $131 million, an increase of $10 million over the previous fiscal year.
TABLE 59 (in millions of dollars)
Unamortized Loan Flotation Costs
Balance of account at beginning of fiscal year	
New flotation costs to be amortized-
3J% loan May 1, 1962-Oct. 1, 1967	
55% loan Aug. 1, 1962-Oct. 1, 1969	
55% loan Aug. 1, 1962-Aug. 1. 1980	
45% loan Oct. 1, 1962-Apr. 1, 1965	
5)% loan Oct. 1, 1962-Apr. 1, 1969	
35% loan Dec. 15, 1962-Feb. 1, 1965	
3(% loan Feb. 1, 1963-Feb. 1, 1964	
35% loan Feb. 1, 1963-Feb. 1, 1966	
5% loan Oct. 15, 1962-Oct. 15, 1987<l>
Adjustments*2)	
Treasury bills discount	
Canada savings bonds-adjustment of previous issues	
Canada savings bonds-new issue	
3% loan May 1, 1961-May 1, 1962	
3% loan Aug. 1, 1961-Aug. 1, 1962	
4% loan Aug. 1, 1961-Dec. 1, 1964	
45% loan Sept. 15, 1961-Dec. 15, 1966	
2f% loan Dec. 1, 1901- June 1, 1963	
3 J% loan Dec. 1, 1961-Oct. 1, 1964	
4J% loan Dec. 1. 1961-June 1, 1967	
25% loan Jan. 15, 1962-Apr. 1, 1963	
45% loan Jan. 15, 1962-Jan. 15, 1968	
Less-
Amortization applicable to fiscal year-
Canada savings bonds and general loan	
Discount on treasury bills charged to interest on public debt Adjustments*2)	
Increase or decrease (-) during the year	
Balance of account at end of fiscal year	
Fiscal year ended March 31
(preliminary)
121.3
1.7
1.1
3.1
1.6
0.8
4.9
1.0
6.6
0.4
2.3
14.9
0.9
14.6
53.9
-32.7 -10.0 -0.9 -43.6
10.3
131.6
130.7
10.0
0.6
9.3 1.6 1.2 2.8
1.4
2.0
3.4 0.5 3.0 0.5

[Stage Direction]
*'>Loan issued in New York.
<2>
Adjustments due to cancellations, exchanges, conversions and additional issues of existing loans.
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The Budget-Appendix
Cost of new loans issued during 1962-63 and charged to the account was $54 million, of which $15 million was in respect of treasury bill discounts to be charged to interest on public debt in 1963-64. Credits to the account were $44 million, of which $33 million was a charge to the budgetary expenditure item "Annual amortization costs", and $10 million, representing discount on treasury bills sold in 1961-62, was a charge to the budgetary item "Interest on public debt", and $1 million was an adjustment due to cancellations, exchanges, conversions and additional issues of existing loans.
Suspense accounts
The only item in this category is the cheque adjustment suspense account which reflects unadjusted balances in prior years resulting from the reconciliation of payments for redemption of paid cheques with the amount of those cheques as subsequently determined in adjustment of the outstanding cheque account.
Capital assets
Assets of the government such as land, buildings, works and equipment, etc., that are charged to budgetary expenditure at the time of acquisition or construction, are included in this category and are shown on the statement of assets and liabilities at a nominal value of $1.
Inactive loans and investments
Loans and investments which are not currently revenue-producing or realizable are recorded in this category. Included are the loans of $49 million to China under the Export Credits Insurance Act, $24 million and $7 million made to Roumania and Greece in 1919-20 and 1920-21 and advances of $15 million in respect of the implementation of guarantees (Ming Sung Industrial Company Limited).
Reserve for losses on realization of assets
There was no change in this reserve during the year, the balance of $546 million as at March 31, 1963 being the same as at the previous fiscal year-end.
C. Increase in Net Debt
The deficit of $709 million for the current fiscal year resulted in a corresponding increase in the net debt of Canada which amounted to $13,937 million at March 31, 1963.
5.	THE CASH POSITION
The government's cash position is affected not only by the budgetary transactions but also by changes in the government's outstanding unmatured debt and other non-budgetary transactions. In 1962-63 there was a decrease of $403 million in the government's bank balances. This decrease was the result of the budgetary deficit of $709 million and net disbursements of $758 million for non-budgetary transactions offset in part by an increase of $1,064 million in unmatured debt outstanding in the hands of the public (after taking into account transactions in the securities investment account and the sinking fund and other investments account).
Non-budgetary receipts and disbursements relate to transactions which result in increases or decreases in the government's assets and liabilities and do not appear in what might be called the government's income account for the fiscal year nor do they enter into the calculation of the annual budgetary surplus or deficit. However, in considering the full scope of the government's financial operations and in measuring their effect on the government's cash position and their impact on the economy, non-budgetary as well as budgetary transactions must be taken into account.

The Budget-Appendix
The increases or decreases in the government's assets and liabilities have been described in detail in the section entitled "Summary of Assets and Liabilities of Canada". On the assets side the non-budgetary transactions consist, for the most part, of loans and advances to, and repayments by, Crown corporations and other government agencies and funds (including the old age security fund), national, provincial and municipal governments, international organizations, veterans and other borrowers. On the liabilities side they relate mainly to receipts and payments in connection with the many deposit and trust accounts, and annuity, insurance and pension funds held or administered by the government.
TABLE 60 (in millions of dollars)
Changes in Cash Position	Fiscal year ended March 31	
	1963 (preliminary)	1962
Budgetary transactions- Revenues		5,876.1 -6,585.1	5,729.6 -6,520.6
Expenditures			
Budgetary deficit			
	-709.0 1,139.9 -1,898.4	-791.0 461.1 -147.7
Non-budgetary transactions (excluding unmatured debt transactions) (net)- Receipts and credits			
Disbursements and charges			
Net amount received from or disbursed for (-) non-budgetary transactions (excluding unmatured debt transactions)	 Overall cash requirement to be financed by increase in debt or decrease in cash balances			
	-758.5	313.4
	-1,407.5 736.1 280.0 <*50.5 -2.6	-477.6 927.8 -50.0 <*19.1 -2.4
Net increase in unmatured debt outstanding in the hands of the public- Unmatured debt- Bonds			
Treasury bills			
Securities investment account			
Sinking fund and other investments				
Net increase or decrease (-) in Receiver General bank balances		
	1,064.0	894.5
	-403.5	416.9
(1)Excluding securities other than government issues.
The preceding table summarizes both the budgetary and non-budgetary transactions for 1962-63 and indicates how they affected the government's cash position. For purposes of comparison the corresponding figures for 1961-62 are also shown.
As the table shows, non-budgetary receipts and credits for 1962-63 (excluding unmatured debt transactions) totalled $1,140 million while non-budgetary disbursements and charges (also excluding unmatured debt transactions) were $1,898 million, resulting in a net disbursement of $758 million. As the budgetary deficit was $709 million, $1,467 million required financing by an increase in unmatured debt or a decrease in cash balances. In 1961-62 there was a net receipt of $313 million from non-budgetary transactions and a budgetary deficit of $791 million resulting in $478 million having to be financed by an increase in unmatured debt or a decrease in cash balances.
Non-budgetary receipts and credits
Non-budgetary receipts and credits, as already indicated, amounted to $1,140 million in 1962-63 as shown in the following table:
[Stage Direction]
The Budget-Appendix
TABLE 61 (in millions of dollars)
Non-bodgetary Receipts and Credits
Fiscal year ended March 31
(preliminary)
Repayments of loans, investments and working capital advances (net)-
Agricultural products board account	
Atomic Energy of Canada Limited	
Canadian Commercial Corporation	
Northern Canada Power Commission	
Northern Ontario Pipe Line Crown Corporation	
United Kingdom (1946 loan)	
Special loans to India and Ceylon (Re purchase of wheat from
Canada)	
Other national governments (Export Credits Insurance Act)..
Unemployment insurance fund	
Other	
12.5
0.5
7.2
7.5
17.4
5.1 105.9
6.2
4.9
-4.9
-3.0
0.3
4.7
17.1
5.0
15.3
67.0
8.4
162.3
114.8
Net government annuities account receipts-
Premium receipts less payments to beneficiaries. Interest paid by government	
Net insurance and pension accounts receipts-
Employee contributions less payments to beneficiaries	
Government contributions	
Actuarial deficiency in the Canadian forces superannuation account. Actuarial deficiency in the Royal Canadian Mounted Police superannuation account	
Interest paid by government	
Old age security fund	
-20.9
47.3
38.4
114.7
198.5
122.5
-1.6
26 4
-9.8
46.0
32.5
108.3
472.5
36.2
257.3
Net increase in current and demand liabilities-
Outstanding treasury cheques	
Interest due and outstanding	
Accrued interest	
Non-interest-bearing notes payable to the international development
association	
Non-interest-bearing notes payable to the international monetary
fund	
Other	
1.9
6.8
26.0
5.3
380.0
3.0
13.9
7.1
20.6
7.4
423.0
-19.0
7.3
37.3
Net increase in sundry liabilities-.
Deposit and trust accounts-miscellaneous.. Undisbursed balances of appropriations-
Colombo plan fund	
National Capital Commission	
Deferred credits-
The St. Lawrence Seaway Authority-
Deferred interest	
Northern Canada Power Commission-
Capitalized interest	
Suspense accounts	
4.9
14.1
4.5
15.7
0.4
2.3
1.2
10.1
0.8
41.9
14.3
1.1
-0.1
27.4
Net decrease in sundry asset accounts-
Moneys received after March 31 but applicable to the current year. Securities investment account-Canadian Arsenals Limited pension
fund	
Securities held in trust	
3.0
10.6
0.2
-3.9
13.8
-12.2
4.2
-11.9
1,139.9
461.1

The Budget-Appendix
Non-budgetary disbursements and charges
Non-budgetary disbursements and charges totalled $1,898 million in 1962-63 as shown in the following table:
TABLE 62 (in millions of dollars)
Non-budgetary Disbursements and Charges
Fiscal year ended March 31
(preliminary)
Loans, investments and working capital advances (net)-
Agricultural commodities stabilization account	
Canadian National Railways (including Trans-Canada Air Lines)..
Canadian Overseas Telecommunication Corporation	
Central Mortgage and Housing Corporation	
Defence production revolving fund	
Exchange fund account	
Export Credits Insurance Act (sec. 21A)	
Farm Credit Corporation	
Housing projects for Canadian forces	
International organizations (subscriptions to capital)	
National Capital Commission	
National Harbours Board	
Old age security fund	
Provincial governments	
Provincial tax collection agreements	
Royal Canadian Mint	
The St. Lawrence Seaway Authority	
Veterans Land Act advances	
Governments of Yukon and Northwest Territories	
Other	
Net disbursements from sundry liability accounts-
Current and demand liabilities-
International monetary fund-revaluation of Canadian dollar
balance	
Accounts payable	
Deposit and trust accounts-
Canadian Arsenals Limited pension fund	
Liability to United States of America	
Provincial tax collection agreements	
Annuity, insurance and pension accounts-
Unemployment insurance fund-
Uninvested funds on deposit with the government....
Undisbursed balances of appropriations-
Railway grade crossing fund	
Deferred credits-
Agreements of sale of Crown assets	
Crown Assets Disposal Corporation	
Other	
Suspense accounts-
Replacement of materiel, sec. 11, National Defence Act.
Net increases in sundry asset accounts-
Cash in hands of collectors and in transit	
Post office-cash on hand and in transit	
Unamortized portion of actuarial deficiency in the Canadian forces
superannuation account	
Unamortized portion of actuarial deficiency in the Royal Canadian
Mounted Police superannuation account	
Unamortized loan flotation costs	
Net increase in other accounts	
4.0 274.3
12.3 96.5
13.4 943.0
20.0
59.0
6.2
34.1
9.4 13.9 41.0
2.1
10.3
6.4 22.7
18.2 4.0 6.8
1,597.6
13.7
10.6
38.0
3.0
7.2
2.0
1.3
0.2
76.0
14.8
1.2
198.5
10.3
224.8
42.6 72.4
6.2
190.3
11.6
-231.0
5.3
54.2 1.9
28.8
6.2
6.0
-17.3
-0.5
6.7
28.3
11.3 1.0 3.0
10.1
-59.3
-12.2
24.5
-38.0
3.0
0.3
1.2
-2.3
0.5
3.2
227.0
-69.0
-8.3
3.8
3.5
-9.4
-10.4
0.1
1,898.4
147.7
[Stage Direction]
The Budget-Appendix Summary
In summary, as budgetary and non-budgetary transactions required financing in the amount of $1,467 million, and unmatured debt outstanding in the hands of the public (after taking into account transactions in the securities investment account and sinking fund and other investments account) increased by $1,064 million, cash balances on deposit with the banks decreased by $403 million.
6.	THE PUBLIC DEBT
Gross and net debt
The gross debt of Canada was $24,812 million as at March 31, 1963. Unmatured debt (including treasury bills) in the amount of $17,962 million accounted for approximately 72 per cent of the total. The remaining liabilities, consisting of current and demand liabilities, deposit and trust accounts, annuity, insurance and pension accounts, undisbursed balances of appropriations to special accounts, deferred credits and sundry suspense accounts, aggregated $6,850 million or approximately 28 per cent of the total debt.
The net debt of Canada was $13,937 million as at March 31, 1963, an increase of $709 million over the net debt at March 31, 1962. Total liabilities increased by $1,904 million to $24,812 million and net assets by $1,195 million to $10,875 million at March 31, 1963.

[Stage Direction]
Fiscal Years Ended March 31

[Stage Direction]
Billions of Dollars
1959	60	61	62

The Budget-Appendix

[Stage Direction]
Statement of Public Debt, Unmatured Debt, Recorded Net Assets and Net Debt of Canada
(in millions of dollars)
As at March 31	Gross Public Debt	Less recorded net assets	Net debt	Increase in net debt during fiscal yearUn matured debt	Other liabilities	Total	1959	15,574.1	4,675.8	20,249.9	8,571.5	11,678.4	632.11960	15,890.1	5,096.3	20,986.4	8,897.2	12,089.2	410.81961	16,067.9	5,534.9	21,602.8	9,165.7	12,437.1	347.91962	16,945.7	5,962.1	22,907.8	9,679.7	13,228.1	791.01963 (preliminary)	17,961.8	6,850.1	24,811.9	10,874.8	13,937.1	709.0
Unmatured debt
The total unmatured debt of Canada at March 31, 1963 was $17,962 million, $1,016 million more than at the end of the previous fiscal year. The government's holdings of its own securities were $54 million, comprised of $32 million in the securities investment account and $22 million in the sinking fund and other investments account. This was a decrease of $47 million from the comparable figure at March 31, 1962 when holdings were $82 million in the securities investment account and $19 million in the sinking fund and other investments account.
The decrease in the securities investment account was due mainly to the maturing of treasury bills held in the account.
Securities in the amount of $113 million were acquired for the purchase fund, which was established in 1961 to assist in the management of the public debt. Purchases during the year were as follows:
$20 million \\% bonds due September 1, 1972 $37 million 5^% bonds due October 1, 1975 $ 4 million 3J% bonds due June 1, 1976 $ 8 million 3f% bonds due January 15, 1978 $ 8 million 3|% bonds due October 1, 1979 $35 million 4J% bonds due September 1, 1983 $ 1 million 3f% bonds due March 15, 1998
These securities were cancelled prior to the year-end and unmatured debt was reduced by a similar amount.
Of the total unmatured debt, $17,551 million or approximately 98 per cent is payable in Canada, $376 million in New York and $35 million in London. Securities payable in New York and London have been valued at the official parity rates of $1 U.S. = $1.08108 Can. and £1 = $3,027 Can., respectively.
Summary of security issues and maturities, redemptions, conversions or cancellations During the year ended March 31, 1963, the government issued securities in the principal amount of $4,385 million of which $4,115 million was payable in Canada (excluding the refunding of treasury bills which mature weekly) and $270 million was payable in New York. Securities issued in prior years payable in London and New York were valued at the official parity rates which resulted in an increase of $10 million when stated in Canadian dollars.
Securities payable in Canada amounting to $3,379 million were redeemed, converted or cancelled during the year.
[Stage Direction]
The Budget-Appendix
TABLE 64 (in millions of dollars)
Unmatched Debt Transactions	Fiscal year en 1963 (preliminary)	ded March 31 1962Balance at beginning of year	16,946	16,068New issues-	For cash-	Canada savings bonds series 15	65Canada savings bonds series 16	78	973Canada savings bonds series 17	1,634	Marketable bonds	1,347	1,350Non-marketable bonds (Unemployment Insurance Commission)	86	161Treasury bills (net)	280	S.42S	!,549By renewals and conversions-	Marketable bonds	960	907Total new issues	4,385	3,456Adjustments due to valuation of securities payable in London and New	York at the official parity rates (,)	10	4,395	3,456Less-	Matured marketable bonds	-984	-498Redeemed non-marketable bonds (Unemployment Insurance Com-	-137	-99-960	-907Canada savings bonds redeemed or matured	-1,185	-538Treasury bills (net)	-50-S.S66	-S,092Unmatured marketable bonds (purchased and cancelled)	-113	-486-3,379	-2,578Increase in unmatured debt	1,016	878Balance at end of year	17,962	16,946
(1>
Official parity rates at March 31, 1963 were £1 =$3,027 Can and $1 U.S. = $1.08108 Can.
Net sales of Canada savings bonds 1962, series 17, were $1,634 million during 1962-63 and additional sales during the year of Canada savings bonds series 16 were $78 million. Canada savings bonds series 6 outstanding in the amount of $23 million matured on August 1, 1962 and redemptions prior to maturity of series 6 to 16 during the year amounted to $1,162 million. The net increase during the year for all series was $527 million; the amount outstanding and unmatured for all series at March 31, 1963 was $4,582 million.
Treasury bills outstanding at March 31, 1963 amounted to $2,165 million, consisting of $1,310 million in three-month bills, $740 million in six-month bills, $85 million in 366-day bills and $30 million in special bills of varying short term maturities held by the Bank of Canada.

The Budget-Appendix

[Stage Direction]
Debt Matured, Redeemed, Converted or Cancelled During the Fiscal Year Ended March 31, 1963 (preliminary)
-	Matured	Redeemed	Converted	Cancelled prior to maturity	Total$	*	$	$	%3% 1961-62	75,000,000	<* 25,000,000	100,000,0003% 1960-62	140,000,000	<«>
50,000,000	190,000,0003% 1961-62	285,000,000	<* 50,000,000	335,000,00051% 1959-62	67,516,000	<*>200,981,000	268,497,00041% 1960-62	140,000,000	140,000,00031% 1961-02	176,503,000	<*>198,497,000	375,000,0004% 1959-63	100,000,000	100,000,00051% 1900-63	
435,018,000	435,018,00041% 1958-72	20,025,000	20,025,00051% 1959-75	36,575,000	36,575,00031%, 1954-76	3,788,000	3,788,00031% 1953/54-78	8,447,000	8,447,00031%, 1954-79	8,025,000	8,025,00041%, 1958-83	35,250,000	35,250,00031%, 1956-98	1,085,000	1,085,000Canada savings bonds S.G	23,624,950	23,624,950Canada savings bonds S.6-1G..	1,161,795,150	1,161,795,150Unemployment Insurance	Commission (non-mar-	ketable bonds)-	31%	62,500,000	62,500,0004%	62,000,000	62,000,00051%	12,500,000	12,500,0001,007,643,950	1,298,795,150	959,496,000	113,195,000	3,379,130,100
<*>
Exchanged for 2\% loan due June 1, 1963.
<*>
Exchanged for 3}% loan due Oct. 1, 1967.
<3>
Exchanged for a\% loan due Oct. 1, 1975.
<4>
188,497,000 exchanged for 41% loan due Jan. 15, 1968 and $110,000,000 exchanged for 3§% loan due Feb. 1, 1965.
<'>
Exchanged for 51% loan due April 1, 1976.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
New Securities Issued During Year Ended March 31, 1963 (preliminary)
Description	Price to government	Yield at price to government	Total amount issued	Renewals or conversions included in amount issued	Amount issued for cash$	per cent	$	$	$Marketable bonds-	Loan due June 1, 1963, 2f -	99.15	3.56	100,000,000	<* 25,000,000	75,000,000Loan due Jan. 15, 1968, 4£%.	99.25	4.42	150,000,000	«>
88,497,000	61,503,000Loan due Oct. 1, 1975, 5£%..	200,981,000	(3)200,981,000	Loan due April 1, 1976, 5i%.	435,018,000	<«435,018,000	Loan due Feb. 1,1964, 3}%...	99.25	4.02	125,000,000	125,000,000Loan due Feb. 1,1965, 3$%..	98.75	4.12	350,000,000	WHO, 000,000	240,000,000Loan due April 1,1965,4£%..	97.00	5.55	50,000,000	50,000,000Loan due Feb. 1,1966, 3j%..	97.25	4.49	225,000,000	225,000,000Loan due Oct. 1, 1967, 3J%..	98.25	4.11	100,000,000	W100.000.000	Loan due April 1,1969, 5i%..	99.50	5.59	100,000,000	100,000,000Loan due Oct. 1,1969,5i%...	99.00	5.67	80,000,000	80,000,000Loan due Aug. 1,1980, 5%%...	98.00	5.68	120,000,000	120,000,000New York loan due Oct. 15,	1987, 5%	100.00	5.00	270,270,000	270,270,000Non-marketable bonds-	Unemployment Insurance	Commission, 4%	100.00	4.00	62,000,000	62,000,000Unemployment Insurance	Commission, 5$%	100.00	5.12	24,000,000	24,000,000Canada savings bonds-	Nov. 1,1961-Nov. 1,1971,	41-5%, S. 16	100.00	4.60	78,598,800	78,598,800Nov. 1,1962-Nov. 1,1976,	4J-5§%, S. 17	100.00	5.11	1,633,808,950	1,633,808,950Treasury bills (net)	280,000,000	280,000,0004,384,676,750	959,496,000	3,425,180,750
Win exchange for 3% loan due May 1, 1962.
Win exchange for 3i% loan due Dec. 15, 1962.
(3>ln exchange for 5i% loan due Oct. 1, 1962.
Win exchange for 5i% loan due April 1, 1963.
Win exchange for 3j% loan due Dec. 15, 1962.
W$50,000,000 in exchange for 3% loan due Aug. 1, 1962 and $50,000,000 in exchange for 3% loan due June 15, 1962.
Interest rates
The average interest rate on the government's unmatured debt at March 31, 1963 was 4.15 per cent compared with 3.94 per cent at the end of the previous fiscal year.
The yield on three-month treasury bills at tender on March 29, 1962 was 3.12 per cent. It dropped to 3.04 per cent on April 12, 1962, rose to a high of 5.51 per cent on July 19, 1962 and then declined to 3.62 per cent on March 28, 1963.
The yield on six-month treasury bills at tender on March 29, 1962 was 3.29 per cent. It dropped to 3.19 per cent on April 26, 1962, rose to a high of 5.74 per cent on July 19, 1962 and then declined to 3.74 per cent on March 28, 1963.
The following table shows the high and low yields together with the yield on the latest issue of three-month bills for the fiscal years 1958-59 to 1962-63 inclusive, and for six-month bills for the fiscal years 1959-60 to 1962-63 inclusive.

The Budget-Appendix

[Stage Direction]
Treasury Bill Yield at Tender
Fiscal year ended March 31	High	Low	Last issueper cent	per cent	per centThree-month bills-	1959	4.30	0.87	4.301960	G. 16	3.01	3.011961	3.95	1.68	3.211962	3.34	2.26	3.121963	5.51	3.04	<*>3.62Six-month bills-	I960	6.87	3.23	3.231961	4.07	1.99	3.371962	3 49	2.53	3 291963	5.74	3.19	<*3.74
<*>At tender on March 28, 1963.

[Stage Direction]
As At March 31 Per Cent
Indirect debt or contingent liabilities
In addition to the direct debt set out in the statement of assets and liabilities, the government has assumed certain indirect or contingent obligations. These consist of securities of the Canadian National Railways, guaranteed as to principal and interest, and a number of miscellaneous guarantees, the chief of which are the guarantee of insured loans made by chartered banks and other approved lending institutions under the National Housing Act, 1954, deposits maintained by the chartered banks in the Bank of Canada, bank advances to the Canadian Wheat Board, advances under the Export Credits Insurance Act and bank loans under the Farm Improvement Loans Act.
The government's liability under its guarantee of loans under the National Housing Act, 1954 was $4,136 million at December 31, 1962 compared with $3,651 million at December 31, 1961.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
Summary of Indirect Debt or Contingent Liabilities as at March 31, 1963
Amount of
Amount
guarantee outstanding authorized March 31, 1963
$	S
Railway securities guaranteed as to principal and interest-
1.	Canadian National b\% due December 15, 1964	
2.	Canadian National 3% due January 3, 1966	
3.	Canadian National 2\% due January 2, 1967	
4.	Canadian National 4$% due April 1, 1967	
5.	Canadian National 5% due May 15, 1968	
6.	Canadian National 2\% due September 15, 1969	
7.	Canadian National 2J% due January 16, 1971	
8.	Canadian National 5|% due December 15, 1971	
9.	Canadian National 3?% due February 1, 1974	
10.	Canadian National 2f% due June 15, 1975, U.S. $6,000,000
11.	Canadian National 5% due May 15, 1977	
12.	Canadian National 4% due February 1, 1981	
13.	Canadian National 5|% due January 1, 1985	
14.	Canadian National 5% due October 1, 1987	
Other outstanding guarantees and contingent liabilities-
15.	Deposits maintained by the chartered banks in the Bank of
Canada	
16.	Loans made by lenders under Part IV of the National Housing
Act, 1954, for home extensions and improvements	
17.	Insured loans made by approved lenders under the National
Housing Act, 1954	
18.	Insurance guarantees and long-term financing contracted or
approved under section 21 and 21A of the Export Credits Insurance Act	
19.	Loans made by chartered banks under the Farm Improvement
Loans Act	
20.	Loans made by chartered banks under the Veterans' Business
and Professional Loans Act	
21.	Loans made by chartered banks and credit unions under the
Fisheries Improvement Loans Act	
22.	Loans made by chartered banks under the Prairie Grain Pro
ducers' Interim Financing Act, 1956	
23.	Loans made by chartered banks under the Prairie Grain Loans
Act	;	
24.	Loans made by chartered banks under the Small Businesses
Loans Act	
25. Loans made by chartered banks to the Canadian Wheat Board
26. Loans made by chartered banks to the Canadian Wheat Board
pursuant to the. Prairie Grain Provisional Payments Act...
27.	Loans made by chartered banks under the Prairie Grain Advance Payments Act	
28.	Loans maintained by approved lending institutions under National Housing Acts prior to 1954 Act	
29.	Guarantees to owners of returns from moderate rental housing
projects (3)	
199,576,000 35.000.	000 50.000.	000 75.000.	000 60.000.	000 70.000.	000 40.000.	000 424,000 200,000,000 6,486,480 90.000.	000 300.000.	000 100.000.	000 175,000,000	198.576.000 35.000.	000 50.000.	000 72.300.000 55.800.000 70.000.	000 40.000.	000 424,000 200,000,000 6,486,480 84.600.000 300,000,000 99.500.000 168.675.000	
1,401,486,480	1,381,361,480	
Unstated		741,869,671
25,000,000	(1)	12,976,0006,000,000,000	(2)	4,123,000,000700,000,000	333,645,786Indeterminate	(1)	47,966,702Indeterminate	(1)	71,952Indeterminate	(1)	154,275Indeterminate	14,214Indeterminate	1,77330,000,000	(t)	5,564,559180,000,000	80,331,172Unstated	3,396Unstated	7,245,1275,352,844,627	Unstated	Indeterminate	Unstated	Indeterminate	
(1) As at December 31, 1962.
(,) As reported (in accordance with Sec. 45, National Housing Regulations) by approved lenders at December 31, 1962.
l8) Funds totalling $3,872,193 are held by Central Mortgage and Housing Corporation for the purpose of settling claims. In 1962 rental guarantee contracts totalled $15,006,000.

The Budget-Appendix
7. SUPPLEMENTARY DETAILED TABLES Revenues Expenditures
Annual Changes in Loans and Investments Unmatured Debt

The Budget-Appendix
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS (in millions of dollars)
-	1958-59	1959-60	1960-61	1961-62	1962-63 (prelimi- nary)$	$	$	%	$Tax Revenues Income tax-	Personal <0	1,353.5	1,566.6	1,711.2	1,792.7	1,745.0Corporation O)	1,020.6	1,142.9	1,276.6	1,202.0	L183.0On dividends, interest, etc., going	abroad	61.2	73.4	88.2	112.3	129.02,486.3	2,782.9	8,076.0	8,107.0	8,067.0Excise taxes-	Sales tax*1) <2)	694.5	732.7	720.6	759.7	806.0Other excise taxes-	Automobiles	59.3	64.3	59.6	25.3	(3)Cigarettes, tobacco and cigars....	148.0	185.5	193.7	207.6	216.6Electric power export	1.2	1.3	1.6	1.0	0.5Jewellery, watches, ornaments, etc.	5.6	5.6	5.9	5.6	6.1Matches and lighters	0.9	0.8	0.8	1.1	1.1Television sets, radios, tubes and	phonographs	17.8	17.8	15.9	18.4	20.2Toilet preparations	6.8	7.7	8.4	9.4	10.2Wines	3.1	3.0	3.2	3.3	3.7Sundry commodities	1.2	1.2	1.1	1.1	1.5Interest and penalties	0.5	0.6	0.8	0.7	0.5Less refunds	-2.6	-0.4	-0.3	-11.0	-0.4241.8	287.4	290.7	262.6	260.0Customs import duties	486.5	525.7	498.7	534.5	645.0Excise duties-	Spirits	96.5	102.4	108.5	114.1	122.0Beer	83.1	90.7	91.0	92.7	98.6Cigarettes, tobacco and cigars	141.2	146.2	149.6	160.5	165.7Licences	(3)	(8)	(8)	(*)	(8)Less refunds	-4.1	-4.1	-4.2	-4.5	-4.3816.7	835.2	244.9	$62.8	882.0Estate tax<'>	72.6	88.4	84.9	84.6	87 nMiscellaneous tax revenues	(8)	(8)	(3)	0.1	0.1Total tax revenues	4,247.4	4,752.3	5,015.8	5,111.2	5,237.1Non-Tax Revenues	Return on investments	221.2	239.7	283.8	307.5	311.0Post office-net postal revenue	157.5	167.6	173.6	183.7	193.0Other	128.6	130.2	144.5	127,2	135.0Total non-tax revenues	507.3	537.5	601.9	618.4	639.0Total revenues	4,754.7	5,289.8	5,617.7	5,729.6	5,876.1
<*>Excluding tax credited to the old age security fund-
1958-59 1959-60 1960-61 1961-62 (preliminary)
Personal income tax	
146.4	185.6	229.4	259.0	273 6Corporation income tax	
55.3	91.3	103.5	100.1	115 3Sales tax	
173.6	270.0	270.2	284.9	302.2
<«Net after deduction of refunds and drawbacks as well as transfers to the old age security fund
<*>Less than $50,000.
(<)Includes duties levied under the Dominion Succession Duty Act.
28902-5-74J
[Stage Direction]
The Budget-Appendix

[Stage Direction]
(,in millions of dollars)
Agriculture-
Administration and general- .. Agricultural commodities stabilization account-net operating loss.
net operating loss	
Assistance re storage costs of grain....
Board of Grain Commissioners	
Prairie farm emergency fund-deficit. Production and marketing branch .
ewan and vested crops..
Manitoba-unhar
grams.
ects	
Research branch.
Atomic Energy	
Auditor General's Office....
Board of Broadcast governors.
Canadian Broadcasting Corporationvision services	 International service.
and equipment.
Office of the Chief Electoral Officer ..
Citizenship and Immigration-
Administration and general
[Stage Direction]
Immigration branch	
Indian affairs branch	
Civil Service Commission.
Defence Production- Administration and general.
ance to defence industry.
External Affairs- Administration and general.
External aid	
Representation abroad	
1958-59	1959-60	1960-61	1961-62t	$	i	$3.6	3.6	4.4	4.815.0	57.7	53.4	22.04.938.4	42.3	48.2	48.86.1	6.1	6.3	6.517.0	12.5	9.2	47.723.2	25.4	29.3	33.94.7	1.4	41.3	40.5	40.120.0	23.8	19.2	17.56.9	8.2	6.6	7.013.5	17.6	20.2	26.123.6	25.6	26.2	26.8808.6	887.6	864-9	886.726.1	30.1	38.9	34.70.8	0.9	0.9	1.10.1	0.2	0.3	0.350.3	61.9	64.9	76.51.9 s	2.0	1.9	1.79.8	68.0	68.9	66.8	78.8. 3.2	0.3	0.6	0.4. 2.1	2.1	2.4	2.614.4	11.7	12.3	12.036.4	41.1	46.4	50.468.9	64-9	61.1	65.0. 3.5	3.7	4.2	4.7. 12.1	15.0	18.6	22.01.8	2.6	1.8	1.918.9	17.6	80.4	88.9. 30.7	36.5	35.6	28.9. 35.5	50.6	55.8	53.99.6	10.1	11.6	12.875.8	97.8	108.0	95.6
(preliminary)
4.8
72.0
0.6
35.3
6.2
7.3
32.5
0.1
14.4 6.9
28.4 26.7
884.8
63.2
1.2
0.4
79.0
1.8
80. 8 11.8
2.8
12.5
50.9
66.8
4.8
27.6
1.9
89.6
23.2
46.3 15.1 84.6

The Budget-Appendix

[Stage Direction]
FOR THE LAST FIVE FISCAL YEARS-Continued
(in millions of dollars)
-	1958-59	1959-60	1960-61	1961-62	1962-63 (prelimi- nary)$	$	%	$	$Finance-	Administration and general	10.2	10.8	19.9	19.5	21.6Office of the Comptroller of the Treas-	urv	17.9	18.2	19.8	21.3	22.7Grants to municipalities in lieu of taxes	on federal property	21.9	22.5	24.5	24.7	29.0Grants to universities	25.5	26.1	19.0	19.4	26.3Government's contribution with re-	spect to the public service super-	annuation account	37.7	40.0	41.4	46.9	51.1Payments to provinces-	Statutory subsidies	20.6	20.8	20.7	23.5	23.5Tax-sharing arrangements, 1956 act..	423.1	485.4	504.9	503.3	23.8Fiscal arrangements, 1961 act	218.2Transfer of certain public utility tax	receipts	8.7	4.8	4.2	6.4	10.0Transitional grant to Newfoundland.	1.0	0.7	0.3	Additional grants to Newfoundland.	13.6	7.3	7.7	8.0	Premium, discount and exchange	0.2	9.8Public debt charges-	Interest on public debt	606.6	735.6	756.7	802.9	882.0Cost of issuing new loans and annual	amortization of bond discounts and	commissions	40.8	47.3	40.2	35.3	34.4Servicing of public debt	0.6	0.5	0.7	0.8	1.61,838.2	1,420.2	1,460.0	1,512.0	1,354.0Fisheries	17.5	19.9	19.2	23.1	23.2Forestry	9.8	9.9	10.1	14.7	16.3Governor General and Lieutenant-	Governors	0.4	0.4	0.4	0.5	0.5Insurance	1.2	1.2	1.3	1.4	1.4Justice-	Administration and general	7.6	8.1	8.6	9.5	10.0Office of the Commissioner of Peni-	tentiaries	16.7	19.7	19.1	23.1	24.021,. S	27.8	27.7	32.6	34-0Labour-	Administration and general	6.5	12.9	15.6	31.6	35.7Government annuities-amount re-	quired to maintain reserve	0.2	0.2	Technical and vocational training as-	sistance payments to provinces	7.7	8.2	8.5	35.7	207 0Unemployment Insurance Commis-	sion-	Administration and general	35.3	35.9	42.1	46.0	48.1Government's contribution	37.1	45.7	55.1	55.6	57.486.8	102.9	121.3	168.9	348.2Legislation-	House of Commons	5.6	5.6	6.3	6.2	6 2Library of Parliament	0.3	0.3	0.3	0.3	0.3Senate	1.7	1.8	1.9	1.9	1.87.6	7.7	8.5	8.4	8.3Mines and Technical Surveys-	Administration and general	22.7	23.7	27.7	35.3	35.5Dominion Coal Board	11.3	17.6	19.3	19.9	20.5Emergency gold mining assistance	9.8	13.1	12.1	12.4	15.243.8	54-4	59.1	67.6	71.2
The Budget-Appendix
STATEMENT OF EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS-Continued (in millions of dollars)
-	1958-59	1959-60	1960-61	1961-62	1962-63 (prelimi- nary)National Defence- Defence forces, army, naval and air	$	$	$	$	t1,222.7	1,397.1	1,406.0	1,502.8	1,430.8Defence research and development	
Government's contributions with respect to Canadian forces superannua-	74.4	39.2	41.9	40.4	41.7tion account	49.5	51.8	40.5	56.0	58.1Mutual aid to NATO countries	
Pensions-payments under Defence	70.7	18.4	14.6	ii.i	25.0Services Pension Act	6.0	6.3	6.7	7.3	7.6Other	2.4	3.8	7.8	8.5	9.71,425-7	1,516.6	1,517.5	1,626.1	1,572.9National Film Board	4.3	4.6	4.9	5.1	5.6National Gallery of Canada	0.6	0.7	0.9	1.0	1.0National Health and Welfare-	5.1	5.6	6.2Administration and general	
National health branch- General health grants and hospital	4.6	4.5	construction grants	
Government's contributions under the Hospital Insurance and Diag-	45.9	46.0	48.0	49.0	51.0nostic Services Act	54.7	150.6	189.4	283.9	336.8Indian and northern health services.	22.1	21.5	23.0	24.0	24.7Other	
Welfare branch-	9.1	9.1	9.4	10.1	10.7Family allowances	
Fitness and amateur sport payments Old age assistance, blind persons and	474.8	491.2	506.2	520.8 0.2	531.6 1.0disabled persons allowances	
Old age security fund-deficit	49.7 184.0	50.6	51.3	51.4	62.8Unemployment assistance	23.9	40.2	51.5	92.0	96.0Other	3.1	3.0	3.3	3.3	2.4871.9	816.7	887.2	l,040.s	1,128.2National Research Council, including	34.4	38.8	41.3the Medical Research Council	25.4	31.5	National Revenue	68.8	68.7	73.3	75.3	78.6Northern Affairs and National Re-	82.3	90.3SOURCES	58.0	74.3	74.3	Post Office	157.8	165.8	178.4	185.0	189.3Privy Council, including Prime Min-	1.9	4.5	5.0ister's Office	1.1	1.4	Public Archives and National Library	0.7	0.7	0.8	1.0	1.0Public Printing and Stationery	3.5	3.5	3.5	4.0	4.0Public Works-	138.5	125.3Administration and general	170.1	158.5	145.9	National Capital Commission	4.9	6.2	6.3	8.7	13.8Trans-Canada highway contributions..	51.1	53.2	48.7	41.6	35.9228.1	217.9	200.9	188.8	175.0Royal Canadian Mounted Police	51.7	52.4	56.0	60.5	65.5Secretary of State	4.4	4.7	4.9	5.0	4.8Trade and Commercb-	21.4	39.0	26.5Administration and general	19.9	17.7	National Energy Board	0.2	0.4	0.5	0.519.9	17.9	21.8	89.5	27.0
The Budget-Appendix

[Stage Direction]
FOR THE LAST FIVE FISCAL YEARS-Concluded
(in millions of dollars)
-	1958-59	1959-60	1960-61	1961-62	1962-63 (prelimi- nary)$	S	t	S	STransport-	Administration and general	4.0	4.6	5.0	8.4	10.7Air services	115.4	124.1	133.9	150.0	136.3Canadian Maritime Commission	5.9	6.7	6.9	10.2	31.0Marine services	61.5	59.1	49.1	48.6	55.0Non-active assets-	National Harbours Board	4.3	2.0	0.6	4.9	5.2Railway and steamship services	1.8	3.7	6.2	5.9	15.8Deficits-	Canadian National Railways	51.6	43.6	67.5	67.3	48.9Canadian National (West Indies)	Steamships Ltd	1.2	North Sydney-Port aux Basques	ferry and terminals	5.8	5.8	5.4	7.3	8.2Prince Edward Island car ferry	and terminals	2.0	2.6	2.6	3.0	3.3Yarmouth-Bar Harbour ferry	service	0.2	0.2	0.1	0.1	0.2Freight Rates Reduction Act	7.8	20.4	19.0	36.7Interim payments related to the rec-	ommendations of the Royal Com-	mission on Railway Problems	50.0	50.0Maintenance of trackage 	7.0	7.0	7.0	7.0	7.0Maritime Freight Rates Act	13.1	14.3	14.1	12.2	12.9Contribution to the railway grade	crossing fund	15.0	15.0	15.0	10.0	5.7Trans-Canada Air Lines-deficit	2.6	6.5	3.5288.8	298.8	886.4	410.4	480.4Veterans Affairs-	Administration and general	6.3	6.4	6.7	6.8	6.8Hospital accommodation, additions,	alterations and improvements	3.3	4.5	6.1	4.9	2.2Pensions	150.7	149.7	150.7	177.9	175.9Provision for reserve for conditional	benefits	4.4	3.8	3.4	3.3	3.2Soldier settlement and veterans land	acts	5.4	5.2	5.2	4.6	4.6Treatment and welfare services	56.1	52.6	52.6	52.0	53.9Veterans allowances, treatment allow-	ances and other benefits	60.4	63.2	64.7	81.7	88.7War service gratuities and re-estab-	lishment credits	2.2	2.9	2.9	2.0	1.1288.8	288.8	292.8	883.2	386.4Total Expenditures	5,364.0	5,702.9	5,958.1	6,520.6	6,585.1
The Budget-Appendix

[Stage Direction]
FISCAL YEARS (in millions oi dollars)
-	1958-59	1959-60	1960-61	1961-62	1962-63 (prelimi- nary)$	$	$	$	$Loans to, and investment in, Crown cor-	porations-	Atomic Energy of Canada Limited -	2.7	0.6	1.5	4.9	-12.5Canadian Broadcasting Corporation...	-27.0	3.0	Canadian Commercial Corporation -	2.0	1.0	3.0	-0.5Canadian National Railways	199.5	-261.4	-116.5	72.3	274.7Canadian National (West Indies)	Steamships Limited	-0.3	-0.2	-1.0	-0.7	-0.6Canadian Overseas Telecommunica-	tion Corporation	0.3	9.6	9.1	6.2	12.3Central Mortgage and Housing Corpo-	ration	335.6	315.1	192.0	190.3	96.5Export Credits Insurance Corporation.	5.2	20.0Farm Credit Corporation	22.0	28.5	40.1	54.2	59.0National Capital Commission	5.0	10.7	7.4	6.2	9.4National Harbours Board	20.2	15.8	11.4	6.0	13.9Northern Canada Power Commission.	6.2	5.0	0.9	-0.3	-7.2Northern Ontario Pipe Line Crown	Corporation	42.8	8.0	2.2	-4.7	-7.5The St. Lawrence Seaway Authority..	<*106.1	<>>33.1	24.0	<*28.3	<*22.7Trans-Canada Air Lines	2.5	1.0	1.3	0.2	-0.4Other	-0.1	0.1	7 IS. 6	167.7	176.5	371.1	479.8Loans to national governments-	United Kingdom-	The War Appropriation (U.K. hi-	nancing) Act, 1942	-22.5	The United Kingdom Financial	Agreement Act, 1946	-16.1	-16.4	-16.7	-17.1	-17.4Export Credits Insurance Act	-17.9	-17.9	-15.2	-15.3	-105.9Special loans to Colombo plan countries	to finance the purchase of wheat and	flour from Canada	18.3	0.5	-3.5	-5.0	-5.1Other	-0.8	-0.6	-0.9	-1.0	-0.7- 39.0	-34-4	-36.3	-38.4	-1S9.1Other loans and investments-	Subscriptions to capital of, working	capital advances and loans to.	international organizations-	Canada's subscription to capital of-	International monetary fund	-2.6	235.4	15.0	21.0	12.6International bank for reconstruc-	tion and development	2.8	6.8International development asso-	ciation	8.5	7.9	8.5Working capital advances and loans	to international organizations	-0.1	-0.3	-0.1	6.2Loans to provincial governments^....	<*>26.6	1.9	-1.1	-0.5	2.1Provincial tax collection agreements-	advances	10.3Balances receivable under agreements	of sale of Crown assets	-2.9	-3.1	-3.9	-1.5	-2.3Old age security fund	28.0	-10.7	-17.3	41.0Unemployment Insurance Commission	67.0	-67.0	Veterans land act advances	-3.0	0.6	14.5	11.3	18.2Other	3.4	-3.4	0.4	4.4	8.1SI.5	S59.3	9S.X	-41-8	111.5Net total of changes in loans and in-	vestments	698.1	392.6	232.4	290.9	462.2
<* Includes deferred interest.
<*>
Includes advances to Nova Scotia and New Brunswick pursuant to the Atlantic Provinces Power Development Act.
<*>
Loan of $29.5 million to New Brunswick in respect of the Beechwood Power Project offset in part by repayments of $4 million on other loans.

The Budget-Appendix

[Stage Direction]
-
[Stage Direction]
Date of maturity
[Stage Direction]
Rate per cent
[Stage Direction]
Amount of loan
[Stage Direction]
Annual interest
[Stage Direction]
Payable in Canada-
[Stage Direction]
$
[Stage Direction]
$
[Stage Direction]
Loan of 1960
[Stage Direction]
T.
[Stage Direction]
37
[Stage Direction]
1963
[Stage Direction]
Apr.
[Stage Direction]
i
[Stage Direction]
5i
[Stage Direction]
12,802,000
[Stage Direction]
704,110
[Stage Direction]
Loan of 1961 and 1962
[Stage Direction]
AT
[Stage Direction]
.10
[Stage Direction]
Apr.
[Stage Direction]
i
[Stage Direction]
2f
[Stage Direction]
300,000,000
[Stage Direction]
8,250,000
[Stage Direction]
Loan of 1961
[Stage Direction]
AT
[Stage Direction]
. 7
[Stage Direction]
June
[Stage Direction]
i
[Stage Direction]
2f
[Stage Direction]
275,000,000
[Stage Direction]
7,562,500
[Stage Direction]
Canada savings bonds 1952
[Stage Direction]
S.
[Stage Direction]
7
[Stage Direction]
Aug.
[Stage Direction]
i
[Stage Direction]
3f
[Stage Direction]
<>>19,203,050
[Stage Direction]
720,114
[Stage Direction]
Eighth victory loan
[Stage Direction]
P.
[Stage Direction]
5
[Stage Direction]
Oct.
[Stage Direction]
i
[Stage Direction]
3
[Stage Direction]
223,020,200
[Stage Direction]
6,690,606
[Stage Direction]
Loan of 1960
[Stage Direction]
T.
[Stage Direction]
42
[Stage Direction]
Dec.
[Stage Direction]
15
[Stage Direction]
4
[Stage Direction]
300,000,000
[Stage Direction]
12,000,000
[Stage Direction]
Loan of 1963
[Stage Direction]
AT
[Stage Direction]
.18
[Stage Direction]
1964
[Stage Direction]
Feb.
[Stage Direction]
1
[Stage Direction]
3*
[Stage Direction]
125,000,000
[Stage Direction]
4,062,500
[Stage Direction]
Loan of 1961
[Stage Direction]
AT
[Stage Direction]
. 1
[Stage Direction]
May
[Stage Direction]
1
[Stage Direction]
4
[Stage Direction]
360,000,000
[Stage Direction]
14,400,000
[Stage Direction]
Loan of 1961
[Stage Direction]
AT
[Stage Direction]
. 8
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
3*
[Stage Direction]
250,000,000
[Stage Direction]
8,125,000
[Stage Direction]
Loan of 1961
[Stage Direction]
AT
[Stage Direction]
. 5
[Stage Direction]
Dec.
[Stage Direction]
1
[Stage Direction]
4
[Stage Direction]
240,000,000
[Stage Direction]
9,600,000
[Stage Direction]
Loan of 1962
[Stage Direction]
AT
[Stage Direction]
.17
[Stage Direction]
1965
[Stage Direction]
Feb.
[Stage Direction]
1
[Stage Direction]
3i
[Stage Direction]
350,000,000
[Stage Direction]
12,250,000
[Stage Direction]
Loan of 1962
[Stage Direction]
AT
[Stage Direction]
.15
[Stage Direction]
Apr.
[Stage Direction]
1
[Stage Direction]
4i
[Stage Direction]
50,000,000
[Stage Direction]
2,125,000
[Stage Direction]
Conversion loan 1958
[Stage Direction]
T.
[Stage Direction]
27
[Stage Direction]
Sept.
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
1,265,890,600
[Stage Direction]
47,470,898
[Stage Direction]
Canada savings bonds 1953
[Stage Direction]
S.
[Stage Direction]
8
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
3!
[Stage Direction]
<>>64,399,400
[Stage Direction]
2,414,978
[Stage Direction]
Loan of 1963
[Stage Direction]
A'i
[Stage Direction]
.19
[Stage Direction]
1966
[Stage Direction]
Feb.
[Stage Direction]
1
[Stage Direction]
3i
[Stage Direction]
225,000,000
[Stage Direction]
7,875,000
[Stage Direction]
Ninth victory loan
[Stage Direction]
P.
[Stage Direction]
7
[Stage Direction]
Sept.
[Stage Direction]
1
[Stage Direction]
3
[Stage Direction]
245,202,200
[Stage Direction]
7,356,066
[Stage Direction]
Canada savings bonds 1954
[Stage Direction]
S.
[Stage Direction]
9
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
3*
[Stage Direction]
<>>39,400,150
[Stage Direction]
1,280,505
[Stage Direction]
Loan of 1961
[Stage Direction]
AT
[Stage Direction]
. 6
[Stage Direction]
Dec.
[Stage Direction]
15
[Stage Direction]
4§
[Stage Direction]
175,000,000
[Stage Direction]
7,875,000
[Stage Direction]
Loan of 1961
[Stage Direction]
AT
[Stage Direction]
. 9
[Stage Direction]
1967
[Stage Direction]
June
[Stage Direction]
1
[Stage Direction]
4i
[Stage Direction]
100,000,000
[Stage Direction]
4,250,000
[Stage Direction]
Loan of 1962
[Stage Direction]
AT
[Stage Direction]
.12
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
3f
[Stage Direction]
100,000,000
[Stage Direction]
3,750,000
[Stage Direction]
Canada savings bonds 1955
[Stage Direction]
S.
[Stage Direction]
10
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
3*
[Stage Direction]
<>>37,963,800
[Stage Direction]
1,233,824
[Stage Direction]
Loan of 1961
[Stage Direction]
AT
[Stage Direction]
.11
[Stage Direction]
1968
[Stage Direction]
Jan.
[Stage Direction]
15
[Stage Direction]
41
[Stage Direction]
250,000,000
[Stage Direction]
10,625,000
[Stage Direction]
Refunding loan 1950
[Stage Direction]
P.
[Stage Direction]
9
[Stage Direction]
June
[Stage Direction]
15
[Stage Direction]
2f
[Stage Direction]
308,581,000
[Stage Direction]
8,485,978
[Stage Direction]
Canada savings bonds 1959
[Stage Direction]
S.
[Stage Direction]
14
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
5
[Stage Direction]
0)1,028,554,750
[Stage Direction]
51,427,738
[Stage Direction]
Loan of 1962
[Stage Direction]
AT
[Stage Direction]
.16
[Stage Direction]
1969
[Stage Direction]
Apr.
[Stage Direction]
1
[Stage Direction]
5J
[Stage Direction]
100,000,000
[Stage Direction]
5,500,000
[Stage Direction]
Loan of 1960
[Stage Direction]
T.
[Stage Direction]
39
[Stage Direction]
Apr.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
80,000,000
[Stage Direction]
4,400,000
[Stage Direction]
Canada savings bonds 1956
[Stage Direction]
S.
[Stage Direction]
11
[Stage Direction]
May
[Stage Direction]
1
[Stage Direction]
4
[Stage Direction]
66,215,950
[Stage Direction]
2,648,638
[Stage Direction]
Loan of 1962
[Stage Direction]
AT
[Stage Direction]
.13
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
80,000,000
[Stage Direction]
4,400,000
[Stage Direction]
Loan of 1958
[Stage Direction]
T.
[Stage Direction]
24
[Stage Direction]
1970
[Stage Direction]
May
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
200,000,000
[Stage Direction]
7,000,000
[Stage Direction]
Canada savings bonds 1957
[Stage Direction]
S.
[Stage Direction]
12
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
4f
[Stage Direction]
<*>503,900,350
[Stage Direction]
23,935,267
[Stage Direction]
Canada savings bonds 1960
[Stage Direction]
s.
[Stage Direction]
15
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
<*513,630,100
[Stage Direction]
23,113,355
[Stage Direction]
Canada savings bonds 1961
[Stage Direction]
s.
[Stage Direction]
16
[Stage Direction]
1971
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
<'>514,276,500
[Stage Direction]
23,142,443
[Stage Direction]
Conversion loan of 1958
[Stage Direction]
T.
[Stage Direction]
28
[Stage Direction]
1972
[Stage Direction]
Sept.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
1,267,203,100
[Stage Direction]
53,856,132
[Stage Direction]
Canada savings bonds 1958
[Stage Direction]
s.
[Stage Direction]
13
[Stage Direction]
1973
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
<1)100,807,200
[Stage Direction]
6,834,306
[Stage Direction]
Loan of 1959
[Stage Direction]
T.
[Stage Direction]
36
[Stage Direction]
1975
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
310,361,000
[Stage Direction]
17,069,855
[Stage Direction]
Loan of 1960
[Stage Direction]
T.
[Stage Direction]
38
[Stage Direction]
1976
[Stage Direction]
Apr.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
436,198,000
[Stage Direction]
23,990,890
[Stage Direction]
Loan of 1954
[Stage Direction]
T.
[Stage Direction]
11
[Stage Direction]
June
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
247,046,500
[Stage Direction]
8,029,011
[Stage Direction]
Canada savings bonds 1962
[Stage Direction]
S.
[Stage Direction]
17
[Stage Direction]
Nov.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
<01,633,808,950
[Stage Direction]
73,521,403
[Stage Direction]
Loan of 1953 and 1958
[Stage Direction]
T.
[Stage Direction]
5
[Stage Direction]
1978
[Stage Direction]
Jan.
[Stage Direction]
15
[Stage Direction]
31
[Stage Direction]
207,911,500
[Stage Direction]
7,796,681
[Stage Direction]
Loan of 1954
[Stage Direction]
T.
[Stage Direction]
13
[Stage Direction]
1979
[Stage Direction]
Oct.
[Stage Direction]
1
[Stage Direction]
31
[Stage Direction]
343,246,500
[Stage Direction]
11,155,511
[Stage Direction]
Loan of 1962
[Stage Direction]
AT
[Stage Direction]
.14
[Stage Direction]
1980
[Stage Direction]
Aug.
[Stage Direction]
1
[Stage Direction]
51
[Stage Direction]
120,000,000
[Stage Direction]
6,600,000
[Stage Direction]
Conversion loan 1958
[Stage Direction]
T.
[Stage Direction]
29
[Stage Direction]
1983
[Stage Direction]
Sept.
[Stage Direction]
1
[Stage Direction]
41
[Stage Direction]
1,992,679,450
[Stage Direction]
89,670,575
[Stage Direction]
Conversion loan 1956
[Stage Direction]
T.
[Stage Direction]
15
[Stage Direction]
1998
[Stage Direction]
Mar.
[Stage Direction]
15
[Stage Direction]
31
[Stage Direction]
197,045,000
[Stage Direction]
7,389,188
[Stage Direction]
Loan of 1936
[Stage Direction]
P.
[Stage Direction]
1
[Stage Direction]
Perpetual
[Stage Direction]
3
[Stage Direction]
55,000,000
[Stage Direction]
1,650,000
[Stage Direction]
Three-month treasury bills
[Stage Direction]
0)3.62
[Stage Direction]
1,310,000,000
[Stage Direction]
48,710,000
[Stage Direction]
Various (123 to 158 days) treasury bills..
[Stage Direction]
3.71
[Stage Direction]
30,000,000
[Stage Direction]
1,113,000
[Stage Direction]
Six-month treasury bills
[Stage Direction]
«)3.74
[Stage Direction]
740,000,000
[Stage Direction]
29,790,500
[Stage Direction]
366-day treasury bills
[Stage Direction]
5.69
[Stage Direction]
85,000,000
[Stage Direction]
4,836,500
[Stage Direction]
Special non-marketable bonds (U.I.C.).
[Stage Direction]
51
[Stage Direction]
11,500,000
[Stage Direction]
589,375
[Stage Direction]
Payable in London- Loan of 1933 and 1934
[Stage Direction]
Loan of 1938
[Stage Direction]
Payable in New York- Loan of 1949
[Stage Direction]
Loan of 1950
[Stage Direction]
Loan of 1962
[Stage Direction]
1963 1974 1975 1987
[Stage Direction]
July 1 July 1 Sept. 1 Sept. 15 Oct. 15
[Stage Direction]
3 31 21 21 5
[Stage Direction]
17,550,847,250
[Stage Direction]
727,277,447
[Stage Direction]
<>>32,445,301 <>>2,138,751
[Stage Direction]
973,359 69,509
[Stage Direction]
34,584,052
[Stage Direction]
1,042,868
[Stage Direction]
<*>65,087,502 <*>41,047,527 <*>270,270,000
[Stage Direction]
1,789,906 1,128,807 13,513,500
[Stage Direction]
376,405,029
[Stage Direction]
16,432,213
[Stage Direction]
17,961,836,331
[Stage Direction]
744,752,528
[Stage Direction]
Note: Where various rates of interest are applicable during the term of a loan the interest rate in effect at March 31, 1963 has been used.
<*>
Preliminary.
<* Rate of discount at tender on March 28, 1963.
<* Conversion rate $3,027 = £1.
<*>
Conversion rate $1.08108 Can=$l U.S.
[Stage Direction]

﻿11 S3
[Stage Direction]
Friday, June 14, 1963