1963-06-07

Mr. Speaker:: At the opening of yesterday's sitting the hon. member for Peace River raised a question of privilege based upon the report of Wednesday's proceedings recorded at page 73 of Votes and Proceedings with regard to the motion for the production of papers in the name of the hon. member for Winnipeg North Centre. Hon. members will recall that I reserved my decision at that time.
As was suggested by the Minister of Labour and by the hon. member for Winnipeg North Centre during the discussion which followed, it would seem there are two points involved in the question raised by the hon. member for Peace River. In the first instance there is a point of order in regard to the regularity of the proceedings on Wednesday last, and in the second place an alleged question of privilege.
Allow me to deal first with the reference made to the purported irregularity in procedure in the case under review. Paragraph 1, citation 70 of Beauchesne's fourth edition, reads in part as follows:
Points of order are questions raised with the view of calling attention to any departure from the standing orders or the customary modes of proceeding in debate or in the conduct of legislative business, . . .
Paragraph 4 of the same citation reads as follows:
A point of order against procedure must be raised promptly and before the question has passed to a stage at which the objection would be out of place.
It is my view that it would be inappropriate for me to discuss at this time the regularity or otherwise of the procedure followed in this case last Wednesday since, as was stated by the hon. member for Winnipeg North Centre, "What happened yesterday, happened; we cannot turn the clock back.".
Perhaps I might make a further comment with regard to this point before leaving it. Standing order 35 reads in part as follows:
No member may reflect upon any vote of the house, except for the purpose of moving that such vote be rescinded.	[DOT]
28902-5-49i
Now, a vote was taken and duly recorded in Votes and Proceedings of Wednesday last on this question. It seems to me that the last part of the discussion which took place yesterday was in contravention of the provisions of this standing order 35.
We come now to the second point which the hon. member for Peace River designated as a question of privilege based upon the report of Wednesday's proceedings as recorded at page 73 of Votes and Proceedings for Wednesday last. The hon. gentleman referred to a ruling or a statement by one of my very worthy predecessors in 1961 concerning the practice of this house in regard to the acceptance of motions for papers under certain reservations. The hon. member referred also to a motion which had been proposed on Wednesday last by the hon. member for Burnaby-Coquitlam and which was accepted by the Minister without Portfolio subject to certain reservations, but which was recorded in Votes and Proceedings as adopted by the house without conditions or reservations attached thereto.
The hon. member for Winnipeg North Centre also drew attention to three other motions which also were adopted on Wednesday last under certain reservations, but which also were not so recorded in Votes and Proceedings for that day. There is, I suggest, a notable distinction to be made between the question under review and the other precedents referred to.
1.	In the four cases referred to the member proposing the motion accepted the reservation expressed in each case by a minister.
2.	I think this is the significant point, that the house concurred in the arrangement or agreement without dissenting voice.
3.	In effect one must presume that arrangements were made, by unanimous consent, in all four cases.
4.	In these procedures there was no division of opinion in the house and, consequently, no division of opinion should or could have been recorded in Votes and Proceedings.
Let us now return to the proceedings under review, and I must say at this stage that so far as I have been able to determine in the time at my disposal, we had a unprecedented procedure on Wednesday. In this case we had a division of opinion. The

Question of Privilege
procedure was challenged and put to a vote. May I briefly review the procedure followed on that occasion.
1.	When the motion standing in the name of the hon. member for Winnipeg North Centre was called, the Secretary of State for External Affairs intervened and expressed the government's reservations with regard to the production of certain papers.
2.	After a number of interventions by several hon. members the proposer of the motion, the hon. gentleman from Winnipeg North Centre, concluded as reported at page 689 of Hansard by saying:
I understood that the minister was prepared to let the motion pass subject to his reservation. Those are the words the minister used, and I am prepared to accept the reservations he has now made. Obviously if the return that is brought down is not satisfactory I can ask further questions, but it seems to me that as the mover of the motion I have the right to suggest that I am prepared to accept the passing of it subject to the reservations the minister has now made.
3.	Thereupon the Chair put the motion in the following words:
Is it the pleasure of the house to adopt the said motion subject to the reservations or remarks of the minister?
Hansard reports what immediately followed, as follows:


Some hon. Members:: No.


Mr. Diefenbaker:: Not expurgated editions. Produce the record and that is fine.


Mr. Speaker:: All those in favour of the motion will please say yea.


Some hon. Members:: Yea.


Mr. Speaker:: All those opposed will please say nay.


Some hon. Members:: Nay.


Mr. Speaker:: In my opinion the yeas have it.
And more than five members having risen, a vote was taken.
4.	After hon. members were called in, Hansard records the procedure as follows:


Mr. Speaker:: Order. The question is as follows. Mr. Knowles, seconded by Mr. Douglas, moves:
That an humble address be presented to His Excellency praying that he will cause to be laid before this house a copy of any documents, communications, correspondence or other papers, dated since June 10, 1957, containing any commitments by the Government of Canada to accept or acquire nuclear weapons for Canadian forces, -subject to the reservations of the Secretary of State for External Affairs. Those in favour of the motion, please rise.


John George Diefenbaker: Mr. Speaker, if I might rise, I suggest that the reservations be included in the motion. It is very important those reservations be there because we are asking for the complete record not the expurgated record.


Mr. Speaker:: The suggestion of the Leader of the Opposition is interesting, but I do think the record speaks for itself and I think the minister should take his own responsibilities and not the Speaker.

Therefore unless there is serious objection I propose to put the motion as I have read it. Those in favour of the motion will please rise.
To decide whether there is before the house a bona fide point of privilege, and this is the only question which is before me at this time, we must ask ourselves if the entry in Votes and Proceedings reflects the proceeding which took place in the house at that time. The entry at page 73 of Votes and Proceedings for Wednesday, June 5, 1963 reads in part as follows:
And the question being put, the said motion, subject to the reservations expressed by the honourable the Secretary of State for External Affairs, was agreed to on the following division:
I submit after a careful scrutiny of the record, as reported in Hansard, it is my humble opinion that the entry in Votes and Proceedings accurately reflects the procedure on the motion proposed by the hon. member for Winnipeg North Centre. That being so, I am regretfully unable to accept the submission of the hon. member for Peace River (Mr. Baldwin) as a bona fide question of privilege.
In terminating my remarks may I offer a suggestion to hon. members of this house. As several hon. members pointed out during yesterday's discussion, it has been a practice for some years past not to record in Votes and Proceedings any reservations expressed by ministers in regard to such motions. However, in the light of the altered circumstances that developed on Wednesday and again yesterday, the house may now be of the opinion that reservations by ministers should be recorded in Votes and Proceedings in every case. It may be that the proposed committee on procedure would like to review the question and recommend a course of procedure for the consideration of the house.



MR. PRITTIE-INFORMATION GIVEN TO PRESS BEFORE BEING GIVEN TO MEMBERS

Mr. R. W. Pritiie (Burnaby-Richmond):: Mr. Speaker, on a question of privilege, on Tuesday of this week the hon. member for Comox-Alberni (Mr. Barnett) asked this question of the Minister of Fisheries as reported at page 625 of Hansard:
Mr. Speaker, would the minister be kind enough to complete the record by giving us the names of the members of the advisory commission?
This referred to the advisory commission to the Canadian fisheries delegation going to Washington. On Wednesday last, as reported at page 693 of Hansard, I reminded the minister that he had said he would give the names and asked if he was ready to do so. The minister replied:

Mr. Speaker, I do not have with me the information concerning the six members of the advisory committee, but I will have it on Friday when I get back from Washington.
Apparently a member of the press gallery, Mr. Murphy of radio station CKNW, New Westminster, obtained this information from the minister's office yesterday and broadcast it in the lower mainland of British Columbia. I should like to know the explanation for this, since this information has not yet been given to the house.


Hon. H. J. Robichaud (Minister of Fisheries):: Mr. Speaker, there is certainly no question of privilege in the matter that has been raised by the hon. member. I stated on Wednesday, when I was asked to supply the names of the members of the advisory committee to the north Pacific fisheries commission, that I did not at the time have the information with me in the house and that if the hon. member was interested I would give him the names on Friday.
There is no breach of privilege. The names were available. They had been made public in Vancouver, when the meeting was held last week, by representatives of the department with members of the north Pacific fisheries commission.



MR. CHURCHILL    OMISSION FROM &quot;VOTES AND PROCEEDINGS&quot; OF YESTERDAY

Hon. Gordon Churchill (Winnipeg South Cenlre):: Mr. Speaker, I have to raise a small, non-controversial but important point of order dealing with an omission from Votes and Proceedings for today. Yesterday, dealing with private members' bills, Hansard records on page 749 the following words with regard to Bill No. C-5:


Mr. Deputy Speaker:: Shall the bill be read a second time?


Some hon. Members:: On division.
Votes and Proceedings for Thursday June 6 on page 78 has the following record:
After debate thereon, the question being put on the said motion, it was agreed to.
I submit that the words "on division" should be recorded in that sentence just as was done when we were dealing with the address following the speech from the throne, of which it was reported on page 52, the fourth paragraph from the bottom:
And the question being put on the said motion, it was agreed to, on division.


Mr. Speaker:: I am advised that what the hon. member has said is correct. The omission will be corrected in today's Votes and Proceedings.
Inquiries of the Ministry ROYAL CANADIAN AIR FORCE



INVITATION TO HON. MEMBERS TO ATTEND AIR FORCE DAY

Hon. Paul Hellyer (Minister of National Defence):: Mr. Speaker, a number of hon. gentlemen have inquired about air force day, which is being held on Saturday. May I say that a number of special invitations will be available in my office this afternoon for hon. members who would like to go to the display. [Later:]
On the orders of the day:


Mr. J. E. Pascoe (Moose Jaw-Lake Centre):: Mr. Speaker, I wish to address what I consider a very agreeable and timely question to the Minister of National Defence arising out of a statement he made this morning. Has the minister been informed of the flight of Harvard training planes from the R.C.A.F. station at Moose Jaw, Saskatchewan, to stage an exhibition of formation flying and aerobatics at Rockcliffe for national air force day tomorrow, and will he be able to attend the air show personally to see a demonstration of the fine training at the Moose Jaw R.C.A.F. station which is soon to be changed to pilot training in CF-41 jets as a result of a decision by the previous government?


Hon. Lucien Cardin (Associate Minister of National Defence):: Mr. Speaker, I want to thank the hon. member for having given us notice of his intention to ask this question. However, I have serious doubts as to whether it is appropriate and advisable to ask this type of question on orders of the day. I can say we are aware that 11 Harvard training aircraft will be participating in the air display at Rockcliffe this Sunday.
As hon. members know, these aircraft are being phased out of service after 20 years of training operations, and are being replaced by Tutor jet trainers. Consequently this will be the last opportunity for the general public to see these aircraft flying in formation. They have come, as the hon. gentleman has pointed out, from the R.C.A.F. training station at Moose Jaw, which is the closest training station to Ottawa, and I have no hesitation in endorsing the view of the hon. member as to the high calibre of the men who fly these aircraft and the excellent training given to them in Moose Jaw.



DEFENCE PRODUCTION


Hon. C. M. Drury (Minister of Defence Production):: Mr. Speaker, realizing the interest of hon. members of the house in the

Inquiries of the Ministry continuation Of our satisfactory relationship with the United States in matters of industrial production for defence purposes and co-operation therein, I should like to make a brief report on a meeting I had yesterday in Washington with the secretary of defence of the United States. Our meeting was held in a spirit of great cordiality and reaffirmed positively the intention of both our countries to continue to support a defence production sharing program. Assurances were given that the difficulties experienced by both countries in respect of balance of payments problems should not be allowed to interfere with the continuation and enlargement of this program.
It was recognized that both countries have balance of payments problems. However, it was agreed that such problems must not interfere with our joint production sharing objectives. The maintenance of a general balance in our reciprocal cross-border procurement of equipment seems the best answer to concern at the drain on foreign exchange reserves through such procurement. To this end it was agreed that production sharing will not be limited by the so-called balance of payments directives issued by the secretary of defence of the United States, and that full consideration will be given to all qualified Canadian sources.
The house will appreciate that the trend of increasing costs and complexity for military equipment emphasizes the necessity for joint research, development and production In line with the agreed NATO concept of interdependence for our common defence.
For the future, as in the past, Canada expects to procure from United States defence industry those items which it does not make economic sense to try to produce in Canada. In return we look to continuing opportunities for Canadian industry to supply United States defence requirements where Canadian companies can compete on the basis of price, quality and delivery.
(Translation):



VALUE OF U.S. ORDERS PLACED IN CANADA

[Stage Direction]
On the orders of the day:
Hon. Paul Mariineau (Poniiac-Temisca-mingue):: Mr. Speaker, I should like to ask the Minister of Defence Production a question prompted by the statement he has just made.
Following the discussions he had in Washington with defence secretary, Mr. McNamara, could the minister tell the house whether he expects that defence orders placed
IMr. Drury.]
by the United States in Canada will exceed the record amount of $250 million reached last year?
(Text):


Charles Mills (Bud) Drury: Mr. Speaker, I think an assumption has been made in the question asked, namely that last year there were expenditures in an unprecedented amount exceeding $250 million. Substantial orders were placed by the United States in Canada last year, but the expenditures resulting from those orders will be spread over some number of years.
I would agree that last year was the largest in quantum of orders placed by the United States in Canada under the defence sharing program. I would, however, hope that in future years this sum would be exceeded. (Translation):



REPORTED CANCELLATION OF TENDER CALLS

[Stage Direction]
On the orders of the day:
Mr. Georges Valade (Si. Mary):: Mr. Speaker,
I should like to direct a question to the Minister of Defence Production.
Can the minister inform the house whether he cancelled the calls for public tenders that were in circulation in his department at the time he officially took over that department? This is very urgent.
(Text):
I asked a question. Does the minister not intend to say whether he refuses to answer or whether he will answer?


Mr. Pickersgill:: Mr. Speaker, the hon. member is an old and experienced member of the house. He knows quite well that the question did not come within the category of urgency recognized on the orders of the day. It was really a speech.


Georges-J. Valade: Can I put a question?


Paul Raymond Martineau: I do not think it is up to the Secretary of State to rule on the urgency or legality of a question. That is for Your Honour. Your Honour allowed the question and when a question is allowed, the minister must give an answer.


Some hon. Members:: Oh, oh.


Mr. Chevrier:: You have been out of the house for a long time.


Mr. Speaker:: The hon. member will realize that I cannot rule on a question until I have heard it. Perhaps I may refer to the fourth edition of Beauchesne, paragraph 181, where it is stated:
A minister may decline to answer a question without stating the reason for his refusal, and insistence on an answer is out of order, no debate being allowed.


Paul Raymond Martineau: Mr. Speaker-


Mr. Speaker:: I am sorry. There is no purpose in continuing this debate.


Georges-J. Valade: On a question of privilege, with respect, Your Honour, I think that if Beauchesne is interpreted rightly it is provided that the minister should say he refuses to reply; he should not let the question go without saying he refuses to answer.


Mr. Speaker:: There is no question of privilege. The fact that the minister did not rise to his feet is sufficient refusal to answer.



TABLING OF VOLUNTARY QUOTAS ON EXPORTS

Hon. Walter L. Gordon (Minister of Finance):: With the permission of the house I should like to table copies of a letter dated June 7 which I have received from the ambassador of Japan informing me of the voluntary restraints which the Japanese government have decided to apply on exports of certain products to Canada in 1963. These decisions have been taken by the Japanese government following consultations which began in the fall of 1962 between the Japanese and the Canadian governments.
The levels of restraint which Japan will maintain in 1963 provide generally for orderly increases over the 1962 levels. These are in the order of between 3 to 5 per cent with one or two exceptions, which in all cases is less than the expected increase in the market for the product in question.
If I am correct in assuming that the house would wish to have the ambassador's letter printed as an appendix to Hansard, I should like to table it. I wish to say at the same time that the whole question of low cost imports is now under review.


Mr. Speaker:: Does the house give permission to the Minister of Finance to have the letter referred to printed?


Some hon. Members:: Agreed.
[Editor's note: For text of letter above referred to, see appendix.']


Hon. George C. Nowlan (Digby-Annapolis-Kings):: I am sure the house has listened with attention to the statement just made by the minister. As the hon. gentleman noted, these negotiations were instituted some considerable time ago. I am quite conversant with them, and I am glad to know that they now appear to have been brought to a fruitful conclusion.
I am sure the house would like to have the letter on record in Hansard, because we would then be able to study the figures
Proposed Legislation
which, the minister says, range within a reasonable level. I noticed that the hon. gentleman placed particular emphasis on the phrase "voluntary restraint". I can remember times when the emphasis he put on the word "voluntary" was somewhat different from the interpretation he put on it today. However, I am glad to see that like Saul of Tarsus he has now been converted.



RAILWAY ACT


Mr. R. R. Southam (Moose Mountain) moved: for leave to introduce Bill No. C-70, to amend the Railway Act (abandonment moratorium).


Some hon. Members:: Explain.


Richard Russell Southam: Mr. Speaker, the magnitude of the problem of railway abandonment is becoming apparent from the large mass of applications being directed to the board of transport commissioners based on recommendations of the McPherson royal commission on transportation. These abandonments are estimated to affect between 4,300 and 8,600 miles of branch lines. About 4,000 to 5,000 miles of this total is in the three prairie provinces, and 2,000 miles is in Saskatchewan.
The purpose of this bill is to declare a moratorium of five years on all applications respecting rail abandonment accepted and granted by the board of transport commissioners so that private persons, rural and urban municipalities, primary producers, industries, businesses, elevator companies, wheat pools, labour organizations, the motor transport and pipe line industries and all others which may be adversely affected may plan well in advance before the abandonment actually takes place, in this way alleviating as far as possible the social and economic upheaval that may occur in many communities, especially those in rural areas. I hope this bill will receive widespread support from all parties in the house.
Motion agreed to and bill read the first time.



INDIAN AFFAIRS


Mr. Frank Howard (Skeena) moved: for leave to introduce Bill No. C-71, respecting Indians.


Mr. Speaker:: At this time I should like to make the following remark. May I be permitted to say that this bill is voluminous, and I have had no opportunity to take a

Inquiries of the Ministry casual look at its contents. I will have an opportunity, of course, to study its provisions before second reading is considered, at which time I will be in a position to express my view with regard to any possible irregularities affecting the said bill. Is it the pleasure of the house that the hon. member shall have leave to introduce the said bill?


Some hon. Members:: Explain.


Frank Howard: Mr. Speaker, perhaps I could do no better in explaining the bill than to use the same words that I used last fall when I introduced this particular measure. I said then, and I say again, that this bill has the purpose of consolidating the Indian Act and its various amendments into one statute so that it will be more compact and more easily readable by those interested in these matters. An ancillary effect upon its introduction and first reading will be that the Minister of Justice will be required by the bill of rights to review this particular bill to see whether it is inconsistent with the bill of rights and to report any such inconsistencies to the house, in which event such amendments as are necessary can be made in the committee stage.
Motion agreed to and bill read the first time.



FISHERIES


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, I should like to direct a question to the Minister of Fisheries and ask him whether, at the meeting at Washington yesterday, the Japanese authorities demanded that the north Pacific fisheries convention be scrapped entirely. In other words, they demanded the complete abolition of voluntary restrictions on Japanese fishing for salmon and herring in the north Pacific. If this is so, what was his reaction thereto and what was the interim determination arrived at in consequence of deliberations?


Hédard-J. Robichaud: Mr. Speaker, in reply to the Leader of the Opposition I wish to advise the house that the Japanese delegates, at the meeting which was initiated yesterday in Washington to discuss the north Pacific treaty convention, are just as anxious as Canada to retain the north Pacific treaty. I expect to make a full statement on this matter Monday.


John George Diefenbaker: Mr. Speaker, I ask the minister whether it is a fact, as reported in the press, that he stated that the Japanese attitude was very stiff.


Hédard-J. Robichaud: Yes, Mr. Speaker, the
Japanese attitude is very stiff and so will be the attitude of the Canadian delegates in order to protect the fisheries of Canada in the north Pacific.


Mr. Barry Mather (New Westminster):: supplementary question, Mr. Speaker. In view of the extreme stand taken in Washington by the Japanese relating to fishing in the Pacific area, will consideration be given by the Department of Fisheries to recalling our delegation from Washington until such time as the whole policy on a matter affecting our rights in Pacific waters can be considered by the standing committee of this house on marine and fisheries?


Hon. Paul Martin (Secretary of Slate for External Affairs):: Mr. Speaker, the hon. gentleman gave me notice of his intention to ask this question, and although he has addressed it now to the Minister of Fisheries perhaps he will permit me to say that it is not the intention of the government to withdraw its delegation, which was so ably led by the Minister of Fisheries.


Barry Mather: Mr. Speaker, I have a question for the Minister of Fisheries. I wonder whether he would be good enough to do now what he suggested he would do earlier, that is, give the house the names of the Canadian members of the advisory committee to the north Pacific fisheries commission.


Hédard-J. Robichaud: Mr. Speaker, the names of the delegates to the Washington conference were given on Wednesday last. However, following a question by the hon. member for Burnaby-Richmond I promised the house that I would give today the names of the persons nominated to the advisory committee to the north Pacific fisheries commission. They are as follows: Francis Millerd of the fisheries association of British Columbia; Homer Stevens of the united fishermen and allied workers union; R. H. Stanton of the Pacific trawlers association; Carl Giske of the Prince Rupert fishermen co-operative association; Charles Clarke of the fishing vessels owners' association of British Columbia, and Guy Williams of the native brotherhood of British Columbia.
I think the hon. member will now understand why I could not give all those names on Wednesday; I did not have the list in front of me at the time.
While I am on my feet, Mr. Speaker, may I reply to a question which was asked yesterday by the hon. member for New Westminster which was taken as notice by the

Secretary of State for External Affairs. The question reads as follows:
In view of the preliminary nature of the fishing treaty talks getting under way in Washington, would the government indicate that no official or formal announcements relative to a firm agreement will be issued by the Canadian delegation before this house, or the standing committee on marine and fisheries, is first informed of the matters concerned?
I dealt with this matter in reply to a question addressed to me by the hon. member for Vancouver-Burrard, which is reported at page 624 of Hansard. I may add at this time that the delegates of the three nations attending the conference have a press release committee of their own, and certain announcements concerning the proceedings of the meeting may be made from day to day. But as to any acceptance commitment or decision by this government respecting any change in the present treaty, this matter would be referred to the house and the standing committee on marine and fisheries before any such decision or acceptance is made.


Mr. G. L. Chaiierlon (Esquimalt-Saanich):: I wish to direct a question to the Minister of Fisheries. Can the hon. gentleman say why one member of the advisory committee he mentioned this morning attended the Washington talks while the other five were not allowed to go?


Hédard-J. Robichaud: It was not the intention of the government to invite every member of the committee and pay their expenses to the Washington conference. It was decided that two delegates would be selected from any of these associations, or representing any group of fishermen. They would go to Washington, not as representatives of such groups but as participating, active fishermen.



COLUMBIA RIVER


[Stage Direction]
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. In view of the minister's cool, coy and coch-leate answers to questions relating to the discussions between the representatives of the government of Canada and the government of British Columbia on the Columbia river treaty, and in view of an article in today's Gazette entitled "Columbia Pact Plan Changed" under the by-line of Arthur Blakely, a highly respected and most reliable member of the fourth estate, reported to have 28902-5-50
Inquiries of the Ministry had a long and close association with the present establishment, is the minister now in a position to give the house more detailed information with respect to the terms of the draft agreement mentioned in the press?


Paul Joseph James Martin: Mr. Speaker, even the direct and indirect compliments of the hon. member addressed to me are not going to induce me to alter what I am sure the hon. gentleman knows should be the nature of my reply. This matter is under consideration by the government and I could not be expected to comment on a speculative story, no matter how authoritative that story may seem in the opinion of the hon. gentleman.


Mr. Baldwin:: Not even with reservations?


George Louis Chatterton: I should like to ask a supplementary question. Can the minister say whether the negotiations with the United States government on the price they are to pay are being carried on by appointees of the federal government or by appointees of the provincial government?


Paul Joseph James Martin: Mr. Speaker, these are matters involved in the negotiations; I can add nothing to what I have already said to the hon. member who asked me the first question.
(Translation):



PUBLIC SERVICE


[Stage Direction]
On the orders of the day:
Mr. L. J. Pigeon (Jolielie-L'Assompiion-Monlcalm):: Mr. Speaker, I should like to put a question to the Prime Minister.
Since the royal inquiry on biculturalism will extend over several years and its recommendations will not bind the government, does the Prime Minister intend to give effect during the present session to the recomendations contained in the minority report of Mr. Therrien?
(Text):


Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, this question has been asked before and my reply is the same as the one I gave previously.



RED CHINA


[Stage Direction]
On the orders of the day:
Mr. H. A. Olson (Medicine Hat):: Mr. Speaker, I should like to address a question to the Minister of Trade and Commerce. Could he give us an interim or progress

Inquiries of the Ministry report on the negotiations in which the Canadian wheat board delegation is engaged in Hong Kong, in view of the report that "China gets tough in wheat deals"?


Hon. Mitchell Sharp (Minister of Trade and Commerce):: Mr. Speaker, our delegation
arrived on Monday, as I reported to the house. So far as I know discussions are proceeding. We expect that we shall have to bargain hard in these negotiations, and what the outcome will be I am not certain; but I can assure hon. members that we shall be doing everything possible to maintain and increase our sales of wheat to China. I have no direct report yet on the results of the negotiations.


Mr. Reynold Rapp (Humboldl-Melfori-Tis-dale):: Mr. Speaker, I would like to direct a question to the Minister of Trade and Commerce. Indications in the west this year are that there will be a substantial increase in rapeseed acreages. Since there is a potential market in China for this grain, would the minister take this matter into consideration and see that the commission makes some arrangements to sell this grain to China?


Mitchell William Sharp: Mr. Speaker, that is one of the purposes of the mission that is in Hong Kong and, like the hon. member, I hope it succeeds.


Mr. K. H. More (Regina City):: My question is really supplementary to the one put by the hon. member for Humboldt-Melfort-Tisdale.
Can the Minister of Trade and Commerce tell the house if the continuing absence of our western Minister of Agriculture indicates that he is on the mission to Hong Kong to look after the sale of our grain?


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Mr. Lloyd R. Crouse (Queens-Lunenburg):: Mr. Speaker, I should like to direct a question to the Minister of Fisheries. In view of the announcement over the radio that the minister stated yesterday in Washington that United States fishing rights will not be affected by the 12 mile limit, will he now tell the house what this implies and give us the names of the nations to which the 12 mile limit will be applicable?


Hédard-J. Robichaud: Mr. Speaker, in reply to the hon. member 1 wish to advise that the details with regard to the nations affected by the application of the
[Mr. Olson.l
12 mile limit will be worked out when negotiations take place on this matter with the nations concerned.


Lloyd Roseville Crouse: A supplementary question. Will the minister tell the house whether Canadian fishing trawlers will still maintain a 12 mile limit as a conservation measure while United States trawlers are fishing up to three miles off our coast?


Hédard-J. Robichaud: In reply to the hon. member I wish to advise him and the house that this matter is at present under consideration. We are consulting the provinces concerned because we are working on a joint fishery extension program and very soon an announcement will be made regarding the application of the present regulations.


Hon. J. A. MacLean (Queens):: Mr. Speaker,
I should like to address a question to the Prime Minister in connection with the statement he made on Tuesday with regard to the law of the sea. Will the Prime Minister say whether it is the intention of the government to assert that certain bodies of water, chiefly the strait of Belle Isle, the gulf of St. Lawrence, the bay of Fundy, Dixon entrance, Hecate strait and Queen Charlotte sound, are national waters and will be for the exclusive use of Canadian fishermen with the exception of any treaty rights that may be held by France and the United States?


Lester Bowles Pearson: Mr. Speaker, the application of the 12 mile zone is now under consideration. It was stated by me the other day, and I am glad to repeat it, that in that application this government, as indicated by the previous government, will adopt the baseline theory as established from headline to headline-


An hon. Member:: Headland to headland.


Lester Bowles Pearson: Headland to headland-and the 12 mile zone will be measured from that base line. The effect of the application of that headland to headland theory will not be known until we have had a chance to go into it in detail and see how it applies to the bodies of water referred to by my hon. friend.


John Angus MacLean: A supplementary question, Mr. Speaker. Is the Prime Minister not aware that as far as large bodies of water which are not considered national waters by other nations are concerned, these nations have access to them under international law, the right of innocent passage? I think I am correct in saying that under the present state of affairs any extension of

territorial waters would not necessarily exclude such bodies of water if they are not declared to be national waters.


Lester Bowles Pearson: Mr. Speaker, these matters are under consideration. The particular waters to which my hon. friend has referred were not considered as national waters by his government when they were in office. I hope that most of them will be considered as national waters by this government.


John Angus MacLean: Is the Prime Minister not aware that during the tenure of office of the last government Canada did assert jurisdiction-


Some hon. Members:: Order.


John Angus MacLean: I started my question by asking if the Prime Minister is not aware. Is he not aware that Canada did assert its authority over the bay of Fundy in particular when Canadian fishing rights were impinged upon by certain foreign trawlers, namely those of Russia?


Lester Bowles Pearson: I am aware that the previous government did not take national action to establish a 12 mile limit through the establishment of national waters on the base line to base line theory.


Some hon. Members:: Oh, oh.


George Clyde Nowlan: We had more intelligence.


John George Diefenbaker: Mr. Speaker, I should like to direct a question to the Minister of Fisheries. Did he yesterday in a press conference in Washington tell the Americans that as far as their fishermen were concerned they would have nothing to worry about from the application of this 12 mile rule?


Hédard-J. Robichaud: Mr. Speaker, in reply to the Leader of the Opposition I wish to advise the house that I stated in Washington yesterday that historic rights and treaties with the United States would be protected in so far as U.S. fishermen were concerned.


John George Diefenbaker: That is not an answer to the question.


Some hon. Members:: Oh, oh.


Lionel Chevrier: Order.


John George Diefenbaker: So far as historic rights and the like are concerned, they are maintained. I am asking the minister if he said to the American fishermen, "You have nothing to fear by the application of the 12 mile limit".
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Inquiries of the Ministry


Hédard-J. Robichaud: In reply I wish to say that at no time have I said the American fishermen had nothing to fear.


Mr. Colin Cameron (Nanaimo-Cowichan-The Islands):: May I ask a supplementary question related to the previous answers given by the minister. Can he tell this house whether the fishing rights enjoyed by United States fishermen in Hecate strait, Queen Charlotte sound and Dixon entrance are rights under a treaty with the United States?


Lester Bowles Pearson: I cannot answer that question categorically. The historic treaty fishing rights enjoyed by the United States will be protected under the new arrangements.


Mr. Speaker:: May I point out to hon. members that this is the question period and questions should be direct, short and very timely. It seems to me that this is developing into a second class debate or perhaps a first class debate.


Mr. Pugh:: Second class answers.


Mr. Speaker:: It seems to me we have had considerable discussion on this matter, and I wonder if we could not proceed to other questions.



HOUSING


[Stage Direction]
On the orders of the day:
Hon. Michael Starr (Ontario):: Since the Minister of National Revenue has so far been neglected I should like to direct my question to him as the minister responsible for Central Mortgage and Housing Corporation. In view of his continued advocacy for lower interest rates on mortgages, when is he planning to make an announcement of a reduction in the interest rates on home loans?


Hon. J. R. Garland (Minister of National Revenue):: Mr. Speaker, I should like to thank the hon. member for his reference to being neglected. I am enjoying being neglected. I can tell him that the subject matter of his question is one that is under constant review, and naturally any decision is one for the government to announce at the appropriate time.


Frank Howard: May I ask a
supplementary question of the Minister of National Revenue. May I ask him to explain to the house the difference between the policy enunciated in the statement just made and that which was enunciated so often by his predecessor in office, the Conservative?
776	HOUSE OF
Inquiries of the Ministry


Mr. Speaker:: That is not a legal question; it is a straight argument.



WORLD FAIR


[Stage Direction]
On the orders of the day:
Mr. D. M. Fisher (Port Arthur):: This is a legal question, I am sure. I should like to ask the Minister of Public Works a question stemming from the critical nature of some of the national publicity that is now extant regarding the proposed world fair in Montreal. I should like to ask the minister if he will give us a detailed statement now or very soon on his actions in this matter.
Hon. J. P. Deschalelels (Minister of Public
Works): I will make a statement some time next week, Mr. Speaker.
(Translation) :



INQUIRY AS TO OFFICIAL APPROVAL OF SITE

[Stage Direction]
On the orders of the day:
Paul Raymond Martineau: Mr. Speaker, I should like to ask the Minister of Public Works, as minister responsible for the Montreal world's fair, a question arising out of an article published this morning in Le Devoir.
Could the minister tell us whether St. Helen's island has now been officially recognized as the site for the fair?


Hon. J. P. Deschateleis (Minister of Public Works):: I have already answered that question, Mr. Speaker, and I have nothing to add.


Paul Raymond Martineau: Mr. Speaker, I should like to ask a supplementary question.
(Text):


Mr. Speaker:: I do not like to refuse a supplementary question, but when a first question is out of order I do not believe a supplementary follows.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. Gene Rheaume (Northwest Territories):: My question is addressed to the right hon. Prime Minister. In view of the close relationship between taxation measures and the continued healthy development of the Canadian north, will the Prime Minister advise the house if he will bring to the attention of the Slater royal commission the importance


of holding at least one sitting in each of the Yukon and Northwest Territories to facilitate and encourage the presentation of submissions by people who have chosen to live in that 55 per cent of Canada which lies north of the 60th parallel?


Lester Bowles Pearson: Mr. Speaker, I believe the hon. member was referring to the royal commission on taxation of which Mr. Carter is chairman. I am sure the suggestion made by the hon. member is already very much in Mr. Carter's mind, but if not I will be glad to bring it to his attention.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a question to the Secretary of State in his capacity as house leader. Can he now say when it is the intention to establish the standing committees of this house?


John Whitney Pickersgill: Well, Mr. Speaker, as hon. members are aware there have been some discussions amongst representatives of the parties in the hope of reducing the size of some of these larger committees to make them more manageable and workable. Until this week, and in fact until Wednesday, I believe very good progress was being made. I understand that the suggestions were acceptable to the government and two of the three parties in the house. The latest information I have is that they are not acceptable to all parties. If that should prove to be the case, it seems to me the sooner we have the striking committee meet and determine what membership to recommend to the house, the better. But I do hope there might be some possibility yet of having accepted by all what I think is a very reasonable idea, and which I believe carries the support of the majority in the house.


Stanley Howard Knowles: May I ask a supplementary question. Would the minister consider calling another meeting of the house leaders before the striking committee is called to see if a compromise agreement cannot be reached, in view of the fact that three of the four parties in the house had reached an understanding?


John Whitney Pickersgill: I would be happy to consider doing that, particularly as I would hope to have a meeting for other purposes as well.



DISPOSITION OF PORTRAITS OF FORMER PRIME MINISTERS

[Stage Direction]
On the orders of the day:
Mr. Heath Macquarrie (Queens):: I have a friendly question for a friendly minister, the Minister of Public Works. I note that the portraits of former prime ministers are still missing from the west foyer. Can he report whether he has any clues as to their disappearance, which I reported to him on May 23?


Jean-Paul Deschatelets: I believe the hon. member asked this question a week or two ago. These portraits are being repaired and cleaned, and they will be replaced at the same spot very soon. I might inquire and let the hon. member know as soon as possible.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Robert William Prittie: Mr. Speaker I have a question for the Minister of Justice which refers to the suspected F.L.Q. members now being held in Montreal. According to press reports they have been receiving brutal treatment from the police and are being detained without trial. I realize that the administration of justice belongs to the provinces, but could the minister not ask the authorities in Quebec to respect the law, namely habeas corpus and the bill of rights?


Lionel Chevrier: I understand from reading the press yesterday that counsel appearing on behalf of certain individuals seem to be satisfied that they are able to see their clients. It would appear to me, therefore, at this moment that there is nothing involved in so far as the federal government is concerned. In any event, should there be any application of the bill of rights, it is a matter for counsel themselves to determine rather than the Minister of Justice.



FORESTRY


[Stage Direction]
On the orders of the day:
Hon. H. J. Flemming (Vicloria-Carleion):: I should like to direct a question to the Minister of Forestry. Is the minister able to confirm the formation of a U.S.-Canadian lumber advisory committee, as reported by Senator
Inquiries of the Ministry Wayne Morris in Washington and contained in a news item in the Montreal Gazette of yesterday morning? If so, can the minister say when the names of the Canadian personnel will be announced?


Hon. J. R. Nicholson (Minister of Forestry):: I thank the hon. member for having given me notice of his question. I might say that no committee such as the one suggested in the newspaper article has been established. There have been discussions at the official level in Washington and also within the trade in Canada and the United States, but no formal proposals have yet been put forward. I might say, however, that we have been led to believe that the United States authorities will be initiating proposals at an early date and, as a consequence, no special action has been taken to establish a committee until the proposals have been received and considered.



FEDERAL AID IN PROTECTION AGAINST FIRE AND PESTS

[Stage Direction]
On the orders of the day:
Mr. Harold E. Winch (Vancouver Easl):: Mr. Speaker, I would like to address a question to the Minister of Forestry. I regret not having given him direct notice of it but I did, in a conversation some two days ago, advise him I would ask this question.
Can the minister advise the house as to any special consideration now being given for aid to the provinces or the forest industry in the protection of the forest resources of Canada in general, and of British Columbia in particular, against the hazards of fire and pests?


John Robert (Jack) Nicholson: Mr. Speaker, I thank the hon. gentleman for having mentioned this matter to me, but I might say the question involves some detail. I will take it as notice and answer it on Monday.



ARTS, LETTERS AND SCIENCES REQUEST FOR INCREASED GRANTS TO UNIVERSITIES

[Stage Direction]
On the orders of the day:
Mr. Arnold Webster (Vancouver-Kingsway):: Mr. Speaker, I have a question for the right hon. Prime Minister. In view of the urgent need of capital assistance to universities and colleges across Canada in order to meet the expected influx of students in the next few years, and in view of the representations made to the government last week by the Canadian universities foundation on this problem, which is described in their brief as a "national emergency," will the Prime Minister please indicate the attitude of his government on this vital subject?

Inquiries of the Ministry


Lester Bowles Pearson: Mr. Speaker, the attitude of the government is to do whatever is possible and within federal jurisdiction to help university education in Canada. Perhaps, this being a matter of fiscal policy, my hon. friend should wait until next Thursday.



PUBLIC WORKS


[Stage Direction]
On the orders of the day:
Mr. Lawrence Watson (Assiniboia):: Mr. Speaker, I would like to direct a question to the Minister of Public Works. Has the minister received a letter from the city of Weyburn, Saskatchewan, with regard to why bricks made by Saskatchewan Clay Products of Este-van are not. specified as acceptable for use in federal building construction? If so, will the minister inform the house why these bricks are not acceptable?


Mr. Speaker:: Order. I want to be generous this morning, particularly to the hon. member as I believe this is his first question, but it is the type of question which should be placed on the order paper.
(Translation) :



MONTREAL-PRESENCE OF MINISTER AT OPENING OF TENDERS

[Stage Direction]
On the orders of the day:
Louis-Joseph Pigeon: Mr. Speaker, I wish to put a question to the Minister of Public Works.
After the opening of tenders in Montreal by the minister in respect to repairs to be made at the St. Vincent de Paul penitentiary, is it true that the minister contacted directly the firm Argo Construction to tell them the news?


Jean-Paul Deschatelets: No, Mr. Speaker. I am very pleased to answer that question. It is not correct, but my deputy minister contacted that corporation immediately after the opening of tenders because of the urgency of the work. We wanted to know if the firm was ready to start immediately.


Louis-Joseph Pigeon: A supplementary question, Mr. Speaker. Was the minister present at the opening of tenders in Montreal? If so-
[Mr. Webster.!


Jean-Paul Deschatelets: Mr. Speaker, I was present at the opening of tenders in the public works department offices in Montreal. I must say that it was the last thing I did in answer to the Minister of Justice's request urging us to proceed forthwith with urgent repairs and construction work at St. Vincent de Paul penitentiary, for the efficient administration of the institution and the protection of the guards. I wanted to be present from beginning to end in order that all would be done properly.


Louis-Joseph Pigeon: I should like to direct a last supplementary question to the minister, Mr. Speaker-
(Text):


Mr. Speaker:: Order. I do think the hon. member has posed his question not once but twice.



INQUIRY AS TO QUOTAS

[Stage Direction]
On the orders of the day:
Mr. George Muir (Lisgar):: Mr. Speaker, I should like to address a question to the Minister of Trade and Commerce. In view of his recent statement that an open quota on wheat would not be reached this crop year, could he inform the house how large a quota can be expected, and will it be equalized across western Canada?


Mitchell William Sharp: Mr. Speaker, I will take that question as notice.



INFLUENCE OF PRICE INCREASES ON COST OF LIVING INDEX

[Stage Direction]
On the orders of the day:
Hon. Miichell Sharp (Minisler of Trade and
Commerce): Mr. Speaker, while I am on my feet I should like to reply to two other questions. On May 30 the hon. member for Okanagan Boundary asked me a question about the effect of the price of sugar on the cost of living index. Retail prices of sugar have been rising since July, 1962. The price increase from July, 1962 to April, 1963, the latest month for which the consumer price index has been published, was 50 per cent.
The relative importance of sugar in the index is 0.4 per cent. Therefore the direct effect of the rise in sugar prices to April of this year was to increase the consumer price index by 0.2 per cent. Further increases since April have raised the current retail prices of sugar to a level about double that of July last year. The effect of such a 100 per cent increase would be to raise the consumer price
[Stage Direction]
index by about 0.4 per cent since July last year. I am not in a position to estimate the indirect effects of the rise in the price of sugar.


[Stage Direction]
On the orders of the day:
Hon. Mitchell Sharp (Minister of Trade and
Commerce): Mr. Speaker, yesterday the hon. member for Pictou asked me about reports of imports of railway axles for rolling stock and the effect of this on employment in the Forge Axle plant at Trenton. It appears that the report concerning imports is substantially correct, but I understand it is the policy of the two major railway companies to obtain all or a substantial part of their axle requirements from the plant at Trenton, and these purchases from Britain do not represent any change of policy.
[Stage Direction]
On the orders of the day:
Mr. H. Russell MacEwan (Piclou):: Mr. Speaker, may I refer briefly to the answer given by the Minister of Trade and Commerce to the question I asked him yesterday.
I wonder whether the minister is now able to advise the house-or perhaps he will take this question as notice-of the names of the companies which are importing these railway axles and the number of axles which have been imported so far this year.


Mr. Speaker:: Order. I think the hon. member should put that question on the order paper.



AIR TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. Reid Scott (Danforth):: Mr. Speaker,
I have a question which I would like to address to the Prime Minister, arising out of an article in yesterday's Toronto Star headed "Now we get tough on air lines." In view of public reports that the Prime Minister has been requested to have the government stop United States charter flights into Canada at the border, is the Prime Minister in a position to make a statement on this important subject, or can he tell the house his response to such a request?


Lester Bowles Pearson: No, Mr. Speaker, I am not in a position to make a statement at this time.
7, 1S63	779
Inquiries of the Ministry NORTHERN AFFAIRS



DAWSON CITY FESTIVAL


[Stage Direction]
On the orders of the day:
Robert William Prittie: Mr. Speaker, I wish to address a question to the minister of northern affairs, and I have given him notice of it. In view of his earlier statements this week, has he any additional statement to make concerning the Dawson festival, and in particular any statement concerning claimants against the government?


Hon. Arthur Laing (Minister of Northern Affairs and National Resources):: Mr. Speaker, I do appreciate the fact that the hon. member warned me this question was coming. So far as the government of Canada is concerned, the cost of rebuilding and refurbishing the Palace Grand theatre and the old steamship Keno amounted to $464,000. The government made an outright grant of $50,000 to the Dawson city festival foundation and has guaranteed loans made to the foundation in the sum of $137,500 and interest. Including interest, the total government liability will amount to something of the order of $660,000.
As for the Dawson city festival foundation, I am informed that this private organization, incorporated under the Yukon Territory ordinances, is in a difficult financial situation. When the government of Canada pays its guarantees of $137,500 and interest later this year there will remain outstanding claims against the foundation of about $115,000. Trade accounts have claims of $28,000; the sum of $14,000 is outstanding on a private loan; the producers of "Foxy" claim $24,000, which is secured by an interest in the Broadway production of this show, and Canadian Theatre Exchange Limited, Mr. T. M. Patterson of Stratford, has unverified claims against the foundation amounting to about $48,000.
Because the previous administration had made no provision in the 1963-64 estimates to meet its guarantee to the foundation, the present government is faced with this commitment. We are actively studying the whole enterprise to see whether any steps can be taken which would convert this liability into an asset for Canada and the people of the Yukon Territory.


John Whitney Pickersgill: No wonder we have a deficit.



CONSIDERATION OF PROPOSAL TO DIVIDE NORTHWEST TERRITORIES

[Stage Direction]
On the orders of the day:
Eugène (Gene) Rhéaume: Mr. Speaker, my question is addressed to the

Inquiries of the Ministry Minister of Northern Affairs and National Resources. It is an urgent one regarding the government resolution on the order paper to divide the Northwest Territories into two separate territories.
In view of the far reaching implications of this measure to the people of the north, will the minister assure me, and through me the people of the north, that he and his colleagues will consider the establishment of a special house committee to examine this proposal, in consultation with the people of the north, who after all are the ones most affected by the measure?


Arthur Laing: Mr. Speaker, as the hon. member well knows, this matter has been discussed with the people of the Northwest Territories. I do not know how much more we could do at this time to gauge public opinion. Conferences were held, and action was taken by the council.
I think that with regard to any possible change in the present policy of presenting bills to the house I will have to take the question as notice and make a further study. I may be doing that in a few days.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. Robert Simpson (Churchill):: Mr. Speaker, I should like to ask the Secretary of State for External Affairs whether he is now in a position to answer the question which I directed to him on June 3, as reported at page 580 of Hansard.


Paul Joseph James Martin: Mr. Speaker, this matter will be replied to by the Minister of National Defence next week.



INQUIRY OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Douglas Mason Fisher: Mr. Speaker, my question is addressed to the Minister of Transport, who has left the chamber, but I can put it on the record. It is a serious question, not a frivolous one, although the wording may make it seem that way.
Has the minister received any requests for advice or assistance from Mr. Donald Gordon, the president of the C.N.R., in face of the demands falling upon the C.N.R. from the Gregoire commission?
[Mr. Eheaume.l



ROYAL CANADIAN MOUNTED POLICE


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, may I direct a question either to the Prime Minister or to the Minister of Justice. It relates to a personal history form which was the subject of an answer by the Prime Minister to a question of mine on June 3, and also the subject of an answer by the former prime minister to a question of mine on October 15, 1962.
Will the government ascertain whether the Royal Canadian Mounted Police is requiring of the Bell Telephone Company and the various provincial telephone systems in this country that their employees complete this form in order that the R.C.M.P. files on these employees may be complete?


Lionel Chevrier: Mr. Speaker, I am not aware that this is the case but I will communicate with the commissioner to ascertain what is the position.



NATIONAL DEFENCE


[Stage Direction]
The house resumed from Thursday, June 6, consideration of the motion of Mr. Pearson:
That a special committee be appointed to consider matters relating to defence and to report from time to time its observations and opinions thereon; that the committee have power to send for persons, papers and records and to examine witnesses; that it be empowered to adjourn from place to place; that standing order 67 be suspended in relation to the committee; and that the committee consist of 24 members to be designated by the house at a later date.
Lester Bowles Pearson: Mr. Speaker, we are debating a simple resolution to set up a defence committee. We are not, within the terms of that resolution, debating defence or foreign policy. I recall, Mr. Speaker as no doubt you and other members of the house recall, that in the past, when the previous government was in office, whenever resolutions to set up committees were before the house, every time we on the opposition side attempted to discuss anything which could have been considered as of substance, the hon. member who represented Eglinton in those days was on his feet in an instant to insist that the debate should be restricted to the exact terms of the resoluion to set up the committee. On this occasion very wide latitude has been allowed, and I am not complaining about that at all. The whole subject of defence has come under review by members of the opposition together with various aspects of foreign policy which have nothing whatever to do with the subject matter of this resolution.

It has been suggested by speakers opposite, including the Leader of the Opposition that somehow or other this government has been limiting or preventing the discussion in this house not only of decisions before they have been made by the government-which would not be the normal constitutional practice, anyway

but has been limiting and even preventing the discussion of defence policy generally. In this connection it is interesting to note that we are now on the seventh day of defence discussions in this session of parliament which has not yet lasted one month; that there has been a subamendment to the address in reply to the speech from the throne which dealt directly with this matter and on which a decision was reached with regard to one aspect of defence, namely the acceptance of nuclear arms, and that since then, during the discussion of this resolution, there has been ample opportunity for members to express their views on any aspect of defence.
This is the seventh day of the discussion of defence matters in this short session. It is also interesting to recall that in the previous years 1960-61, 1961-62 and 1962-63, there were only in the aggregate eight days in the House of Commons devoted to defence. Eight days in three years. We have had seven days in less than one month. I say deliberately that any charge-and such a charge has been made-* that we are trying to limit discussion and push these matters under the rug cannot be sustained.
During these last three days, which are quite a contrast to the situation in the previous parliament, we have discussed various aspects of the defence policy of this country. In respect of the suggestion made that this government has somehow or other been limiting the right of members of the House of Commons to discuss such matters and the charge that we have been making decisions- and I will deal with this later-without parliament knowing about them, I would recall, Mr. Speaker, that some very important decisions were made by the previous government in this field of defence, not only without this parliament having a chance at the time to discuss them before the decisions were made, but in some cases parliament only learned of them months or even years after they were made.
In 1957 a decision was taken at the NATO council, participated in and supported by the Canadian delegation of that day, for NATO to take on a nuclear role in collective defence. That decision was made in December, 1957 by the NATO council, and it was referred to only many months later. I am thinking now of the hearings before the defence committee on June 17, 1960, when the minister of defence of that day said that the use of
7,	1963
Appointment of Defence Committee atomic weapons in the event of attack has been recognized by the NATO council. Parliament was not consulted about that. Parliament was not even informed of that before the decision was taken, or indeed immediately afterwards. He-that is, Mr. Pearkes-also said at the same hearing on July 7 that the possibility of having to use nuclear weapons has been part of accepted NATO policy, and Canada participated in that decision at that time.
Then in 1959 a decision was made, and it was a decision, from which this whole much debated question of commitments arises, taken by the government of the day, in consultation with its NATO allies in Paris, and before this parliament was informed, to convert the Royal Canadian Air Force interceptor air division into an air division which would be given the role of strike reconnaissance. That is when it all began, in 1959.
Later, when on the estimates of the department of defence there was an opportunity to discuss this question, this party, in opposition at the time, made its position perfectly clear in regard to that role. It will be recalled by any hon. member who was in the house at the time, or if he does not recall it he can read Hansard, that one of the criticisms of that role by us at that time was that it would impose on our air division a role which could only be discharged by the use of nuclear weapons, including-and this was the expression we used-"baby bombs". There was no denial at that time from the government of that day that this was indeed the new role to be undertaken by the Royal Canadian Air Force abroad with NATO.
Then at the end of 1962 there was a NATO council meeting in Athens, I think it was, when there was laid down what we later learned from the press-again there was no discussion of it in parliament at that time

what has been called since that time the "guide lines" for the use and control of nuclear weapons inside NATO. Those were important decisions, decisions which bear on what we now call the commitments undertaken by the previous government. Those decisions were made and were not discussed in this House of Commons either before or immediately after they were made. So, Mr. Speaker, that surely disposes of the argument, if you can call it an argument, that we are not permitting sufficient discussion of these matters in the House of Commons and that we have made decisions before we have referred them to the House of Commons.
So far as the attitude of the parties in the house is concerned toward the setting up of this defence committee, it is quite clear from the debate which is now being wound up that

Appointment of Defence Committee the Social Credit and New Democratic parties approve of the establishment of a defence committee of this kind. The Conservative party, as far as one can gather, do not approve of it. Indeed, some members have definitely opposed it.


John George Diefenbaker: Mr. Speaker, I stated yesterday that we were supporting the setting up of this committee.


Mr. Winkler:: Read Hansard.


Lester Bowles Pearson: Well, Mr. Speaker, I am delighted to learn that the Leader of the Opposition now supports the setting up of a defence policy committee, something which, when he had the responsibility of government, he rejected as invalid, unconstitutional, improper, and quite contrary to all our parliamentary practices.


John George Diefenbaker: That is what the Prime Minister always said.


Lester Bowles Pearson: I am delighted that the right hon. gentleman has now seen the light of opposition-


John George Diefenbaker: And the Prime Minister has seen the light of government.


Lester Bowles Pearson: -and I am sure that he and his party will make a useful contribution to the committee which in turn I hope will make a useful contribution toward clarifying policies and questions of defence. I hope that for the membership of this committee there will be an opportunity, as I know there will be, to get the kind of information that is available in regard to defence matters. There will be a disposition, I am sure, on the part of the committee, as there will be on the part of the government, not to sweep anything under the rug. If this committee is to be effective it must have all the information which can be given to it.
The only reservation, a reservation we must make, though some hon. gentlemen opposite have quarrelled with it, particularly the hon. member for Oxford (Mr. Nesbitt) last evening, is that of national security and classified information which bears upon national security. I am quite sure that any hon. member of this house who has the interests of his country at heart would accept that kind of reservation, which is accepted in consideration given to defence matters by any free parliament.
Mr. Speaker, I hope it will be possible to put on this committee those members of the house who have had experience of, and shown interest in, defence matters. Certainly the hon. member for Calgary North (Mr. Harkness) will be able to make a most
[Mr. Pearson.)
useful contribution, and I have no doubt that he will be nominated by his party.


Gordon Minto Churchill: What type of experience in defence matters?


Lester Bowles Pearson: Some worry was expressed by the hon. member for Winnipeg South Centre (Mr. Churchill) that perhaps we would not allow this committee to deal with policy; that we were somehow concealing the possibility of the committee dealing with policy matters. When I asked him, in order to clear this matter up, if he would move an amendment so as to make it clear beyond any possible shadow of doubt and include the words "including defence policy", he said that he would take that suggestion under advisement. No such amendment has been moved, and indeed no such amendment, Mr. Speaker, is necessary.


Howard Russell MacEwan: Then why move it?


Lester Bowles Pearson: "Why move it" is a good question. It would never have occurred to anybody to move it if doubts had not been raised by the hon. member to whom I referred, who alleged that we said we would not permit the committee to deal with defence policy. Then when I challenged him to make that amendment if he had any doubts, he abdicated that position.


Mr. Lambert:: You made the commitment.


Lester Bowles Pearson: The leader of the Social Credit party made some interesting suggestions as to matters that could be submitted and I hope will be submitted to and discussed by the committee. He made the point, as have other members opposite, which is certainly valid, that if the discussion in this committee is going to be effective it must go beyond the limit of defence in the narrow military sense. That point was also made last night by one or two speakers on the other side and, of course, it is quite impossible to understand all the implications of defence policy and have a committee of this kind do the job we hope it will do unless the relationship is recognized between defence policy and foreign policy.
At times it is impossible to disentangle the two aspects of defence. The hon. member for Red Deer (Mr. Thompson) said that a committee of this kind should discuss the nature and magnitude of the threat to peace and security. That is an aspect of foreign policy as it is an aspect of defence policy, and I have no doubt the committee may wish to go into that. He suggested also, as have other members, that questions of specialization and standardization of. defence equipment and defence matters within the alliance should be
7S3

considered. He also said, and this was reiterated last night by the hon. member for Oxford, that we should examine how foreign policy and trade policy, economic policy, economic relationships, bear on defence policy. This is a matter of very great importance, of course, and NATO itself recognizes that interrelationship.
The leader of the New Democratic party made the point that in a committee of this kind the consideration of defence must be broad in that defence is, to quote his words, "much broader than nuclear arms". This is something we are apt to forget in the immediate controversies over nuclear arms. After all, nuclear weapons and nuclear defence are only one aspect of military defence.
It is hoped, Mr. Speaker, notwithstanding the suspicions and doubts that have been thrown on this, that this committee will be able to operate on as non-partisan a basis as is possible in dealing with a matter which does arouse controversy, which does arouse differences and tends to arouse passion.
The Leader of the Opposition raised a good many points in his statement yesterday. Some of these points were raised by other members, and I propose to try to deal with them during the remainder of my remarks. Perhaps before I do that I should mention specifically one subject which has been referred to by more than one speaker and notably by the leader of the New Democratic party, when he talked about the danger of our Atlantic coalition relying too much on the strategic nuclear deterrent as the protection of the peace, because that is all it can be expected to do. If the strategic nuclear force is ever called into action it will have failed in its purpose, and nothing then will be able to save us from the devastation, tragedy and catastrophe which will follow no matter what may be the nuclear strength on our side of the conflict.
The danger of relying too much on the strategic nuclear deterrent is, of course, profoundly true. This is the very reason the North Atlantic Treaty Organization agreed in 1957 to build up its own tactical nuclear deterrent as a supplement to and a backing for that deterrent which can be supplied by conventional forces alone. In the face of overwhelming conventional strength on the other side of the iron curtain, and in the face of the inability of the NATO members at that time and their continuing inability to build up enough conventional divisions to give them the kind of security which they desired and to provide the kind of tactical conventional deterrent that would be useful, the alliance decided to build up a tactical nuclear deterrent to avoid the awful results of having to
Appointment of Defence Committee use the strategic deterrent as the reply to every attack that might be made against Europe or against the alliance.
If the only reply to an assault against western Europe, which might not be general in character and might not even be nuclear in character but which would be overwhelming against smaller armies defending against the attack, was to bring the United States and to a lesser extent the United Kingdom strategic nuclear deterrent into action, that would mean that every assault, however limited it might have been at the beginning, would become the first and last world nuclear war.
This is the justification for the north Atlantic alliance building up a tactical defensive nuclear deterrent. But I would go further than that, and I think the leader of the New Democratic party mentioned this too. It would be even better if NATO had a conventional shield, a conventional deterrent on which it could rely without having to use any kind of nuclear weapons in case of certain types of limited attack; a conventional deterrent, a conventional shield which would be strong enough to hold the line until it became clear whether an all-out assault was under way and the NATO council would have a chance to decide what kind of reply was then needed to meet this attack as it unfolded.
In other words the ideal strategy, of course, for NATO-and Canada takes part in the determination of this strategy-is a conventional shield, a tactical deterrent behind that conventional shield, and then only as a last resort-and it would be a resort which would be an admission of the tragedy of world nuclear war

reliance on the strategic nuclear deterrent which should be limited to those countries that now possess it, the United States of America and to a smaller extent the United Kingdom. That is why that at the recent NATO council meeting and indeed before then NATO has been and is now preoccupied in trying to establish a satisfactory balance between the nuclear and conventional capabilities of the alliance. That is why we in this government, as in other governments in NATO, are particularly concerned at this time when we have so much nuclear strategic power to build up the conventional strength of the alliance. The prime minister seemed to get very excited indeed yesterday-


Some hon. Members:: Oh, oh.


Lester Bowles Pearson: The ex-prime minister. He got very excited indeed over the reply I made to a question yesterday, and I am unable to determine the reason for his excitement. What I said, and I am glad to repeat it and put it on the record again, was that

Appointment of Defence Committee our position-this is the position that was referred to in the NATO communique and agreed upon by all members of the NATO council-is to emphasize the importance of the conventional defences of NATO. There is nothing very surprising about that. It remains the policy of the government to emphasize the importance of the conventional defences of NATO. It is a policy which does not conflict in any way, as I hope to point out, with the carrying out of the obligations, undertakings, pledges, commitments which were made by the previous government. It will be very simple indeed to prove that these commitments were made, and I will come to that a little later. In a speech which I made in January at Scarborough and to which a good deal of attention has been given, because it has often been quoted, I had this to say:
The government should re-examine at once the whole basis of Canadian defence policy. In particular, it should discuss with the United States and with NATO a role for Canada in continental and collective defence which would be more realistic and effective for Canada than the present one. This examination would be concerned, among other things, with the necessity of building up NATO's conventional forces and the part Canada could play in this. However, until the present role is changed-
And this is the role undertaken for Canada by the previous government and bequeathed to us, and it is a nuclear role with certain responsibilities.
-a new Liberal government would put Canada's armed services in the position to discharge fully commitments undertaken for Canada by its predecessor. This would be the only honourable course for any government representing the Canadian people. We would not betray our trust, or weaken Canada's reputation for living up to its word.
The Leader of the Opposition, Mr. Speaker, saw fit to make certain statements about the work of the recent NATO council meeting which in my view completely misrepresented both the purposes and the results of that meeting. I am sorry, indeed, that a man who only recently was the head of this government would make some of the remarks he made about the NATO council meeting and about the decisions taken as he saw them at that meeting.
I am sorry also, Mr. Speaker, that he did not see fit to take advantage of the opportunity yesterday when he was speaking-and his remarks roamed far and wide but nobody complained about that-to apologize for the use in this house by one of his colleagues, and a member of the privy council, of a document which is forged; which insulted the United States ambassador to Canada, a document which was designed obviously to poison the relationships between our two countries. It was given additional circulation
IMr. Pearson.]

by the fact that it was produced and cited in this house by my hon. friend, a former minister of the crown. It was unfortunate the Leader of the Opposition could not have cleared up that matter at that time.
Now, Mr. Speaker, in order to support the position he took concerning the council meeting and the alleged Canadian position on defence as established at that meeting, the prime minister relied almost entirely on two sources.


Some hon. Members:: Oh, oh.


Lester Bowles Pearson: -I mean the ex-prime minister relied on two sources of information. The first one was the president of the exchequer court, Mr. Justice Thorson, and the other was the Toronto Star. These are two very unusual sources of information for my right hon. friend to rely upon, but they were the ones upon which he relied almost exclusively. He even went so far as to refer to Mr. Justice Thorson as being close to the Liberal party, and that therefore it was possible for this house to accept the statement made by Mr. Justice Thorson as representing the views of the Liberal party on defence matters. Nothing could be further removed from the views of this government than the views on defence matters contained in some of the statements made by Mr. Justice Thorson in the speech from which the right hon. gentleman quoted with such great approval and which he used as the basis for his case to such a large extent. I should like to point out that this gentleman had a right to say these things, although there has been some questioning of the propriety in view of the position he holds.
I should like to ask the right hon. gentleman whether he supports this statement in the speech that he quoted with such great approval:
Certainly, the Canadian people did not give the Liberal government a clear mandate to acquire nuclear warheads for our Bomarcs, nuclear missiles for our Voodoo interceptors, nuclear warheads for our Honest John rockets and hydrogen bombs-[DOT]
That is what they were called by the right hon. gentleman, hydrogen bombs. I will have something to say concerning that a little later.
-for our Starfighters or to join the United States-[DOT]
This is the part to which I take strong exception. I hope the right hon. gentleman does not support this.
-or to join the United States in the madness of the nuclear arms race which it started-
The United States started.
-soon after it dropped its atom bombs on Hiroshima and Nagasaki early in August of 1945 and killed approximately 150,000 defenceless Japanese civilians and injured as many more.


An hon. Member:: It is true.


Lester Bowles Pearson: Some hon. gentlemen opposite say that is true, the United States started the nuclear race. Nothing could be said that would .give greater aid and comfort to those whom we consider to be the main threat to peace in the world than a statement of that kind. It is demonstrably false. I remember very well, because I was in Washington at the time and because I took part in the discussions and negotiations later at the United Nations, that the United States government of that day, which was the sole possessor of atomic power for military purposes-nobody else had it- was willing to give up that power and bring it under international control by an arrangement at the United Nations known as the Baruch plan. At the time the United States made this offer to give up this power, to bring it under international control, nobody else had it. This proposal was turned down by the communist bloc, by the Soviet union. I regret very much that a prominent Canadian would make a statement that the United States started the madness of the nuclear arms race. I regret very much indeed that hon. gentlemen opposite have supported that statement.
Since that time all governments that believe in peace and freedom, all governments, have been attempting to bring about an international agreement which would end this nuclear arms race. No government and no country has worked harder in that regard than Canada. I pay my tribute to what the previous government attempted to do in connection with this matter, especially through the work of the former secretary of state for external affairs. The necessity for this kind of international agreement would not have existed if the United States offer in 1945 had been accepted when the United States then had nuclear power. It is regrettable indeed that this kind of talk should be given circulation in Canada.
I want to come now to a question that the Leader of the Opposition dwelt upon at some length and with some vigour. What was the role undertaken by the previous Canadian government in the field of defence? What were the commitments? What were the undertakings? What were the pledges given to our allies as to what we would do in the alliance? It has been suggested by the hon. member for Winnipeg South Centre, and repeated by the Leader of the Opposition last night, that somehow or other at the NATO council meeting a few weeks ago our role was changed and we became a nuclear power by a decision made before that council meeting was held, a decision which was ratified at the council meeting. There is not a word of truth in any such suggestion, Mr. Speaker.
Appointment of Defence Committee
A great deal was said by the right hon. gentleman last night about the nuclear force that was set up at the NATO council meeting. He wanted to know whether Canada was taking part in this, and he also wanted to know whether Canada was going to take part in the other proposed multilateral nuclear force. I hope to satisfy his legitimate curiosity on these matters.
He also criticized us because he said we should never have taken a decision as a government, or indeed as a party before we became a government, in regard to these matters, because it was clear the NATO council meeting in Ottawa would make decisions that would affect Canada's role; and the reason his government held off taking any decision was that it knew the NATO council was going to meet here and it was waiting to see what would be decided at that meeting.
Of course it was perfectly clear to anybody who knew anything about how the NATO council operates-and my own views on this matter have been confirmed by what I have found out since taking office-that nothing would be discussed, let alone decided, at the council meeting here in Ottawa that would affect in any way the role of Canadian forces in NATO, the role undertaken for them by the previous government. To use the NATO council meeting as a smokescreen for the purpose of avoiding the necessity to make any decision, and especially to do this during an election campaign, was just nonsense.
This was just to help the right hon. gentleman avoid the issue. There was no basis of realism about it at all because, as we have learned from what happened at the NATO council meeting, the only things discussed there apart from the decision to re-examine the whole basis of NATO strategy-which will take a long time, and I hope will go hand in hand with our re-examining Canada's strategy in the committee we are talking about-apart from this and the exchange of views on foreign affairs which takes place at every council meeting, the only matters brought up were the possibility of collecting the nuclear forces which had been already committed to NATO-and the Canadian air division was considered as being included in those by all the people who took part in the council discussions, including the secretary general-under a separate NATO command rather than letting them remain under the existing SACEUR command. The question of whether any other forces should be assigned to the new NATO nuclear command if it were set up was also considered.
That has nothing to do with the role undertaken by the Canadian government back in

Appointment of Defence Committee 1959 lor our air division, a role which was undertaken with the knowledge of our allies, a role which was undertaken by the cabinet of that day, a role which could not be carried out without the use of nuclear warheads for the weapons systems which were to be secured, a role which required our aircraft to carry nuclear ammunition, and which the government of the day knew required them to carry that ammunition.


John George Diefenbaker: May I ask the Prime Minister this: If there was such a commitment, why did he and those associated with him forever say we should not have entered into such an arrangement and should try to get out of it?


Lester Bowles Pearson: Mr. Speaker, the right hon. gentleman is now contradicting himself.


John George Diefenbaker: No, I am not contradicting myself. The Prime Minister is contradicting himself.


Lester Bowles Pearson: "If we entered into such a commitment why did the hon. gentleman and his friends not try to get out of it in time"? That is exactly what we tried to do, to advise the government before it was too late not to spend a billion dollars of the taxpayers' money on these weapons systems which were inactive without nuclear warheads.


John George Diefenbaker: Is the Prime Minister saying if there was a commitment he was a party to asking us to break that commitment?


Lester Bowles Pearson: Indeed I was a party at the time to that when the commitment was under discussion; and before the equipment was secured I was a party to advising the government to negotiate themselves out of this role and get a better one for Canada. But they refused even to listen to our arguments.


John George Diefenbaker: Mr. Speaker, now-


Lester Bowles Pearson: Of course the right hon. gentleman-


John George Diefenbaker: I hate to interrupt.


Some hon. Members:: Sit down.


John George Diefenbaker: Now, as the right hon. gentleman is becoming so confidential, will he tell why he turned that somersault on January 12?


Lester Bowles Pearson: I will be glad to do that. The right hon. gentleman spoke for about an hour and a quarter last night telling how I turned a somersault. The house is very well informed by him on this matter, but the right hon. gentleman now says there was no commitment, no undertaking, no pledge; I hope my hon. friend from Winnipeg North Centre, who says somebody must be deceiving somebody on this matter, will soon be satisfied.


The truth on this matter is very simple to find, and it was stated in very simple terms by the then minister of national defence, Mr. Pearkes, in 1960. If anybody wants to know about the undertakings made by the Canadian government, the pledges that were given, the commitments that were accepted and the role that was undertaken, they can read what was said by the minister of defence of that time and the minister of defence in the previous government who took his place. I propose to quote from both of them to prove that we were right and accurate in the statements we have made in regard to the undertakings, the pledges given and the commitments accepted by the previous government.
Let me quote first from the then minister of national defence on June 3, 1960, as he spoke during the committee hearings of that day, as recorded at page 230 of the defence expenditures committee proceedings:
At NATO's request-
Not at the request of the parliament of Canada.
At NATO's request the government has recently decided to re-equip the eight squadrons now armed with F-86 Sabre aircraft with an aircraft capable of carrying out a strike reconnaissance role. The aircraft selected for this is the CF-104 ... This aircraft could be armed with a tactical nuclear weapon.
-a weapon referred to as a baby bomb.


John George Diefenbaker: Who referred to it as a baby bomb?


Lester Bowles Pearson: It was referred to as a baby bomb, and the government accepted that reference.


John George Diefenbaker: Who referred to it as that?


Lester Bowles Pearson: The hon. member for Trinity.


John George Diefenbaker: Oh, the baby minister.


Lester Bowles Pearson: And my right hon. friend, four years later, last night called it a baby bomb. Later on during the committee proceedings Mr. Pearkes said this, talking about the new strike reconnaissance role and the aircraft for that role:
It is well known then that the CF-104 would have weapons which would have or could have a nuclear capability.
Mr. Hellyer then said:
The minister said it is well known. Can he state any evidence prior to his announcement of the matter that the CF-104 would be used in a bomb carrying role?
Mr. Pearkes replied:
You were well aware of it.
Mr. Speaker, even we were supposed to be well aware of it, but now the former government says it was not aware of it.
At one o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 2.30 p.m.
Lester Bowles Pearson: Mr. Speaker, at the luncheon recess I was dealing with the point made by the right hon. Leader of the Opposition yesterday that somehow, in some way, the Canadian government undertook at the recent NATO council meeting a new nuclear role for Canadian forces in NATO, particularly for the Canadian air division in Europe. He made some reference to that new role, which I will quote later. But I showed, from the evidence of the minister of national defence himself as far back as 1960, that this particular strike reconnaissance role was undertaken by the Canadian government of that day and that the Canadian forces were committed to that role. I showed from that evidence that this role could not be performed except by the acquisition of nuclear ammunition for the weapons systems which were to be acquired for it, and that this was understood by the government of the day and indeed by the allies with whom we worked in NATO, for whom, as well as for ourselves, this role was accepted. Indeed, at that time before the committee on July 11, 1960, the hon. member for Trinity (Mr. Hellyer) asked the minister of national defence:
Will the Canadian government have a say as to whether atomic weapons carried by the CF-104 can be used or will this be a power and authority held in the control of others?
The then minister of national defence, Mr. Pearkes, said:
They would be used if and when they are required.
Then he went on to say:
Those details in connection with the use or storage of these weapons in Europe depend upon a note which has not yet been completed.
Indeed, it was not completed by the time the Conservative government went out of office, but there was no doubt in anybody's mind as to the role undertaken and the only way in which that role could be discharged. When the right hon. the Leader of the Opposition talks about some nuclear offensive or aggressive role having been undertaken by this government, for example, he must have known that the role to be performed by the R.C.A.F. air division in Europe is the same role that was undertaken for it by the previous government. Mr. Pearkes, his minister of national defence, described in detail at the time what that role was and what was involved in it. There is the undertaking, the pledge and the commitment.
I quote from page 502 of the report of the special committee on defence expenditures
Appointment of Defence Committee on July 11, 1960 when Mr. Pearkes, the minister, was asked what this role would be. He was asked the specific question by the hon. member for Vancouver East (Mr. Winch) and his reply was:
To intercept enemy bombers; while the CF-104 is, as I have said, a strike reconnaissance aircraft, one which is to be used for reconnaissance purposes, and one which is to be used against ground targets. It is not an air defence weapon, with the idea of attacking enemy bombers, and it would not come into use until the enemy was actually on the move.
Nothing could state more clearly the role of the air division as it was undertaken at that time. That, again I repeat, was the commitment which was accepted. As reported at page 327 of this committee report Mr. Pearkes had something to say about this on June 22:
I do not see how I can go any further than the statement made by the Prime Minister on January 18 when he said that eventually the Canadian forces will require certain nuclear weapons, if the Canadian forces are to be kept effective. This will be done by placing the nuclear warheads in the Bomarcs, into the aircraft missiles.
What could be clearer than that in regard to a commitment undertaken by the Canadian government:
This will be done by placing the nuclear warheads in the Bomarcs, into the aircraft missiles. To be effective eventually the Canadian forces will have to be equipped with nuclear warheads.
To try to slip out of this undertaking, this commitment, by arguing that there was no formal treaty, no formal arrangement, nothing signed, is merely playing with words; playing with the word "commitment" if you like. If there ever was an undertaking by a Canadian government and accepted as such by our allies, who transferred this particular role to the Canadian forces-and if they had not taken it on, one of our allies would have had to take it on-this is it. But the fact is that the government, having taken on that role, refused to take on the means to discharge the role. To say now that it would have been possible in an emergency, in the awful emergency of war, to have followed through at that time and accepted the ammunition to go with the warheads, is an affront to anyone's intelligence. To say that the Canadian air division, having accepted a role which required a certain type of ammunition for its weapons systems, which ammunition could only be acquired after a political agreement made with the country, the United States, which manufactured the ammunition, and to say that this agreement could have been reached and the ammunition supplied after the emergency developed, after the war began, is childish in the extreme. Yet that is the position taken by hon. gentlemen opposite. It is not the position taken

Appointment of Defence Committee by the two hon. gentlemen who were ministers of national defence in that government. Indeed, it is not the position taken by hon. gentlemen who left that government because they could not accept the defence policy of the right hon. Leader of the Opposition. If any ministers must have known what was going on and the extent of the obligations we undertook, surely it would be the ministers of national defence. I have already quoted what the minister of national defence, Mr. Pearkes, said in 1960. The minister of national defence who took his place, the hon. member for Calgary North (Mr. Harkness) was quite specific about this the other night when speaking in this house. I quote from page 643 of Hansard, where the hon. member had this to say:
At the present time, the Liberals have adopted this policy-
That is, the policy of the government when he was minister of national defence:
-in its entirety, so far as one can see. I believe that they should be honest and say that they have adopted the Conservative defence policies of the last five years instead of trying to pin their position to the narrow ground of merely living up to commitments made by the previous government.
But this is exactly the position which the Leader of the Opposition flatly refuses to accept. These may be the policies, in the mind of the then minister of national defence -and, indeed, they are the correct policies- but they are absolutely denied by his own leader and are contrary to the statements made by his leader. So we might well ask ourselves, where is the truth in this matter? The Minister of National Defence (Mr. Hellyer then asked the hon. member:
In his opinion

That is, in the opinion of the hon. gentleman:
-was the previous government committed to the acquisition of nuclear warheads for use in some *of the weapons systems it had acquired?
The hon. member for Calgary North answered:
Well, Mr. Speaker, I think that the acquisition of these four weapons systems indicated an intention on the part of the government to supply them the ammunition which would make them effective.
How can anyone believe that a government would spend nearly a billion dollars on weapons systems and then refuse to accept the ammunition which alone would make the weapons systems effective? The hon. member for Calgary North (Mr. Harkness), according to the Winnipeg Free Press of yesterday-and I quote from it-had an interview with the correspondent of that paper in Ottawa, dated Ottawa, June 6, and here is the report of that interview. This is from yesterday's Winnipeg Free Press, by Vic Mackie:

The Hon. Douglas Harkness, former minister of defence, told the Free Press today that "documents exist setting out Canada's obligations" to acquire nuclear weapons for Canadian forces.
And if anyone should know, the former minister should know-and the former minister will be given an opportunity, when he is a member of this committee, to bring forward all the information which he appropriately can in connection with this matter. The hon. gentleman went on to say in this interview-I shall continue to read the report:
"The obligations are there." He acknowledged that some people termed them "commitments" and added that it all depended upon how you interpreted the word "commitments".
He then went on to say:
"But there is no question in my mind that the documents do exist and can be produced. They contain certain obligations or commitments."
This is the former minister of national defence. They contain, he said, certain obligations or commitments-


Harold Edward Winch: May I ask the Prime Minister if he will produce those documents?


Lester Bowles Pearson: If those documents contain classified information, and if their production will be prejudicial to the security of this country, they will be refused. If they are not, they will not be refused.
The former minister of defence went on to say:
Whether they should be produced is another question. He stressed, in an exclusive interview in his west block office, that the documents are "classified" and cannot be tabled in the house for security reasons.
Again, this is the former minister speaking.
I submit, Mr. Speaker, that this throws quite enough light, and from a source not on this side of the house but on the other side of the house, to enable us to see whether there was an obligation, or an undertaking, or a pledge in this respect. Surely it shows beyond possibility of doubt that the role which was undertaken in 1959-60 for the air division is the role which the division is being asked to perform at this time, in June, 1963; and for the Leader of the Opposition, basing his authority on a statement of a justice of the Exchequer Court of Canada, to give the impression that the NATO council is, somehow, imposing on the Canadian air division a new role, is deceitful nonsense.
Here is what the right hon. gentleman had to say about this new role, as he termed it, undertaken by Canadian forces. I quote from yesterday's Hansard. Having referred to Mr. Justice Thorson and quoted with approval from his speech, the right hon. gentleman went on to say:

Then, even before the NATO meetings, the Canadian government had capitulated to the extent that these tactical forces in Europe were being equipped with offensive weapons.
The right hon. gentleman made an accusation yesterday, in those words, that the Canadian air division in NATO is now being equipped with offensive weapons. Mr. Speaker, they are being equipped with the weapons secured for them by the right hon. gentleman.


John George Diefenbaker: Nothing of the kind.


Lester Bowles Pearson: Then he went on to say this, as will be found quoted on page 751:
These are things we would like to know. Canada has become involved first of all in providing this tremendous power to NATO through our air force Starfighters, actually an aggressive nuclear force far and beyond what is contemplated by the expression "defensive weapons''.
The former prime minister of this country has termed the course to which our air division is committed under NATO, a defensive alliance, as being an aggressive nuclear force.


John George Diefenbaker: Does the Prime Minister say that a million ton explosive bomb is a defensive instrument? It is nothing of the kind.


Lester Bowles Pearson: If that force is used to defend us against an attack or defend us after an attack-and that is the only way in which Canadian forces would ever be used under NATO-then it is a defensive weapon. I think it is shameful for the Leader of the Opposition to refer to a Canadian element of the NATO defensive forces as an aggressive nuclear force.
Then the right hon. gentleman asked me some questions about another allied nuclear force which he claims to have been set up by the NATO council and of which he argues the Canadian air division is now part. He also wished to get some information about the other collective force, the multilateral nuclear force. The Leader of the Opposition has read the NATO communique and he must know that no such inter-allied nuclear force was set up by the NATO council. There was discussion of the possibility of an inter-allied nuclear force, and this is referred to in the communique, in paragraph 8, as follows:
The ministers discussed NATO defence policy and approved the steps taken to organize the nuclear forces assigned or to be assigned to the supreme allied commander, Europe.
This means that if we have an air division in Europe which has been assigned a role by the previous government in agreement with NATO, a role which cannot be discharged without these particular weapons, it seems to me to be entirely a problem of organization whether that force should be under a separate NATO command or under
7, 1963
Appointment of Defence Committee the supreme commander, Europe. That is the only thing involved in these discussions and no decision was made at the time in respect to it. The matter is still under consideration.
I must say, too, that as long as we are undertaking this role-and we shall be reexamining this role ourselves in the next few months-let us discharge it as efficiently as we can.
The right hon. gentleman had some satirical observations to make about the multilateral nuclear force. I do not know whether he considers this to be an aggressive nuclear force. He had suspicions about Mr. Livingston Merchant, a former United States ambassador to Ottawa who was admired as an ambassador by most Canadians who knew him. He asked me to tell him, in the house, all about the multilateral nuclear force. He even asked me what changes the United States government plans to make to the McMahon act in order to help to bring this force into being,


John George Diefenbaker: Would that not be a subject of discussion?


Lester Bowles Pearson: Of course it would, but the right hon. gentleman asked me to stand up and say in this House of Commons what changes the United States government intends' to make through congress. If and when it is-set up, this would be an organizational development under NATO to which might be added United Kingdom bomber force and, perhaps, United States submarines. But it would be under NATO organizational command.
The multilateral nuclear force is something else. It is a mixed force of surface ships with nuclear weapons, and those ships would be manned by representatives of more than one nation under a multilateral command. That is the proposal which is being discussed. The right hon. gentleman asked me to give details of these matters. The details will have to be worked out if and when the countries of NATO decide to go ahead with this multilateral nuclear force. The Leader of the Opposition expressed impatience about not knowing much about it, yet he told us last night this proposal was put forward in Nassau in the Bahamas. And when he came back from Nassau he did not tell us anything about it at all.


John George Diefenbaker: Mr. Speaker, may I say to the hon. gentleman that apparently he does not agree that there was a communique issued which set out that fact? Of course, I realize he did not read it.


Lester Bowles Pearson: I read the communique, Mr. Speaker, and if the right hon. gentleman is satisfied that all the information this House

Appointment of Defence Committee of Commons requires is in this communique then he absolves me from any responsibility of saying anything more.


John George Diefenbaker: That communique was not written before the meeting.


Lester Bowles Pearson: I think I should tell the house a little more than appeared in the Nassau communique. The purpose of this multilateral nuclear force-this is well known; I am not betraying secrets of other governments when I say this-is to build up a collective control and a collective custody of nuclear weapons which would become a nuclear deterrent force at the disposition of the Atlantic alliance. The purpose of this is to discourage, and if possible to prevent, the development of national nuclear forces. It is no secret that when we talk about the discouragement of the development of national nuclear forces we have very much in mind in the Atlantic alliance the discouragement of the development of a German national nuclear force. Therefore it was thought by those who put this proposal forward that a multilateral international force which is under international control and with weapons in international custody might be a development away from the possibility of national nuclear forces, and there is something no doubt to be said for that.
Mr. Speaker, I can assure the house, although I do not need to, that Canada has no intention whatever of developing national nuclear forces or of manufacturing national nuclear weapons. While we will give this proposal consideration, as indeed we are bound and are anxious to give consideration to any proposal made to us by any of our NATO allies-and we do not exclude the United States from that group-I do not think that it will be likely that we would wish to add to our existing responsibilities and commitments by participating in this kind of multilateral nuclear force. But this is a matter which will be given the consideration it deserves.
The right hon. gentleman asked me categorically to tell him whether negotiations were going on now about the supply of U.S. warheads for Canadian forces and the supply of nuclear warheads for United States defensive squadrons already established on Canadian soil as a result of an agreement between the two countries, in this case an agreement going back to the leased bases agreement of many years ago. I can tell the right hon. gentleman, as has already been mentioned, that we are reopening negotiations which were begun by my right hon. friend and his government with a view to making the political agreement without which there cannot be a technical arrangement to make possible the acquisition of the ammunition for these weapons systems. So far as negotiations concerning the U.S.

air bases in Canada are concerned, these negotiations began long ago, and were begun by my right hon. friend and his government.


John George Diefenbaker: Are they continuing?


Lester Bowles Pearson: If my right hon. friend would bother to look at the proceedings of the special committee on defence expenditures for June 22 and subsequent days he will get all the information about these negotiations-what was proposed, what was hoped for, what was intended. The minister of defence at that time said there was an exchange of notes going on covering that matter. For some reasons those negotiations were broken off suddenly by the previous government and they have not been resumed by the present government.
Mr. Speaker, I think I have dealt with, if not all, at least a good many points raised in this discussion on this resolution to set up a defence committee. I hope the defence committee can be set up without delay. I feel sure it can perform a very useful function in clarifying defence problems and in getting information for members on defence matters. I hope there will be called before that committee defence experts, and I hope as a result of the work of a committee of this kind the government of the day will be assisted in the re-examination which it is giving to our whole defence policy, so that we may be sure, so far as it is possible to be sure in a changing world, that in the future we will accept the right commitments for Canada in the field of defence, and that when we accept them we will be able to discharge them.


Mr. Nugent:: Mr. Speaker, would the Prime Minister accept a question?


Lester Bowles Pearson: Yes.


Terence James (Terry) Nugent: The Prime Minister, like the Minister of National Defence (Mr. Hellyer) in his speech, laid very much stress on the so-called commitments, or series of commitments, and went into it at such length that it is obvious that he wanted to lay at the door of the Conservative party the blame for the policy-


Mr. Deputy Speaker:: Order. The hon.
gentleman has leave to ask a question. I submit it should be put right now.


Terence James (Terry) Nugent: Yes, Mr. Speaker, in two seconds.


Mr. Deputy Speaker:: No, not two seconds, now.


Terence James (Terry) Nugent: Will the Prime Minister tell me this. Is his government now ashamed of its decision to acquire nuclear weapons?


Lester Bowles Pearson: Mr. Speaker, we think that the government of that day made a mistake. There is nothing to be ashamed about in making a mistake if it is made in good faith. The government of the day took on certain obligations to acquire the use of defensive nuclear weapons. I do not think there is anything to be ashamed of about that; I think it was a mistake at the time. I would hope that in a re-examination of defence policy we will be able to find a more effective form of defence in coalition than that which has been undertaken by the previous government. Meanwhile-because this will take some time-nothing could be more stupid than to accept defensive weapons systems and to assure that they would not be effective by refusing to take the ammunition that makes them effective.


Terence James (Terry) Nugent: A supplementary question. Did not the Minister of National Defence say in his speech that it was necessary that another agreement be signed before we acquired them? Does that not leave room to get out if we do not think it is wise?


Lester Bowles Pearson: That is perfectly true and it took the previous government four years to make up its mind whether or not to accept that agreement. Meanwhile we spent a billion dollars on this equipment.


Harold Edward Winch: Mr. Speaker, I wonder whether the Prime Minister would answer a question. I should like to ask the Prime Minister a very direct question. Will the Prime Minister stand in his place-I put it in this way, sir-and on his honour tell the house if I am correct-


Some hon. Members:: Oh, oh.


Harold Edward Winch: May I say that is the right way to put it-that our air force now stationed in Europe is only going to be equipped with nuclear warheads in order to play its part in a tactical nuclear defensive operation and will not be equipped in any way to take part in a strategic offensive?


Lester Bowles Pearson: Mr. Speaker, I am sure that our air force in NATO, as indeed all other forces in NATO, will never be used for any purpose except defence against attack.


Stanley Howard Knowles: Mr. Speaker, may I ask the Prime Minister a question supplementary to the exchange a moment ago between him and the hon. member for Edmonton-Strath-cona? Does the present government still feel that the decision of the previous government to acquire nuclear weapons was a mistake?


Lester Bowles Pearson: Yes, Mr. Speaker, at the time it was made it was a mistake. There was a better role for Canada to perform at that
Economic Council of Canada time and there may be a better role for Canada to perform in the future.


Some hon. Members:: Oh, oh.


Gordon Minto Churchill: Why the delay then?


Mr. Deputy Speaker:: Order.


[Stage Direction]
Motion agreed to.


Lester Bowles Pearson: that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure to provide for the establishment of an economic council of Canada and to define the duties thereof, to provide for the appointment of the chairman, directors and other members of the council and for the payment of the remuneration of the chairman and directors and of certain other expenses of administration of the council, to provide further that the council may engage the services of such advisers and staff as may be necessary to enable it to carry out its duties and to provide further for other related and incidental matters.
Motion agreed to and the house went into committee, Mr. Lamoureux in the chair.


Lester Bowles Pearson: Mr. Chairman, the resolution you have just read states that it is expedient to introduce a measure to provide for the establishment of an economic council of Canada and to define the duties thereof, and it goes on to give certain other details in connection with the work of the council. My purpose in the brief remarks I am making today on the resolution is to outline in broad terms and clearly, I hope, the government's purpose in the legislation which it asks leave to introduce into the house. Obviously a more detailed discussion of the structure and the operation which we propose for the economic council of Canada cannot take place until the bill itself is before the house. This resolution, I hope, will clear the way for that purpose. Our intention, if the house agrees, is to proceed promptly to the further and more detailed stage of parliamentary discussion with a bill before the house.
The idea embodied in the resolution is one to which I believe all parties in the house agree in principle, or agreed in principle at least in the last parliament. So far as this government is concerned, the resolution embodies an idea that goes back for us more than five years to the policies which the Liberal party adopted and put forward at the beginning of 1958 in regard to economic planning, which policies, Mr. Chairman, when they were put forward as they were in the house in the form of resolutions, were summarily rejected by the government of that day.

Economic Council of Canada
Our proposals at that time were prompted by an awareness that the economic problems and the economic needs of Canada were changing with changing circumstances. Indeed, the likelihood of such a change had been anticipated some years earlier by the government of that day when it established a royal commission on Canada's economic prospects under the chairmanship of my colleague, the present Minister of Finance.
In 1958 we were aware also and have become more aware since that other countries, particularly the European countries which faced such appalling problems of reconstruction and economic development after the war, had created and were creating new instruments to help in economic policy planning and economic policy making. The economic progress since achieved in western Europe has brought these developments very widely to the public attention and they are often summed up in the one word, planning.
Though the planning that was introduced into the western European countries after world war II varied, of course, in different countries, within the past few years planning has become almost a fashionable word even in some quarters where traditionally there has been a good deal of reserve about any extension of the role of government in our economy. I remember from reading my history that away back in the late 1880's, I think it was, in Great Britain Sir William Harcourt, who was then chancellor of the exchequer, I believe, in commenting on the growth of popular education and referring specifically to the last of the great education bills of that particular century, as well as commenting on the fact that the very first sort of rudimentary stages of social security legislation had been introduced into the British House of Commons toward the end of the century, said "we are all socialists now" on the strength of that development.
Perhaps, Mr. Chairman, it is a little more accurate to say, in respect of what has been happening in recent years, that we are all planners now, though the concept of planning is not the same in all cases. I, myself, think that planning, far from being a word to arouse suspicion, is a very good word indeed. However, it has to be used with a certain amount of caution; that is to say, it is a good word, provided that when we use it we know what we mean by it. We must not fall into the trap, in my view, of thinking that something called planning is, itself, a magic key to economic progress. It is merely a means to an end.
In Europe, there is no simple correlation between the extent of planning in the various countries and the different rates of economic

growth that those countries have achieved since world war II. In fact, within Europe itself there is a broad range of planning techniques adapted to different economic situations, different constitutional and different political conditions. The French concept of planning, as embodied in their legislation, is really very all-embracing, and the organization of plans in Paris really overshadows most of the government departments in its actions, in its extent and in its complexity. The one country in Europe which has had, perhaps, the most exciting economic progress since the destruction and dislocation of world war II, the federal republic of West Germany, has itself indulged in a minimum of economic planning. It is impossible, therefore, to talk about planning in a generic way because planning itself differs in various European countries who have benefited from it, and other countries have benefited without very much planning at all.
Some of the techniques used in Europe would be alien to our federal constitution in Canada and our kind of economy, yet anyone who read the report of the commission of the productivity council that went to Europe about a year and a half ago could hardly help but be impressed by what has been accomplished in most European countries by the implementation of economic planning,, especially by the emphasis laid in that planning on the use of planning techniques as a method of co-operation between capital, labour and government. There are, and I have mentioned some of them, important reservations. Yet, with these reservations, it is still true that there is much we can usefully learn from the experience of European countries.
The basic thing I believe, Mr. Chairman, the experience that is common in the various countries, is that all the countries where the planning has been instituted have all succeeded in establishing by consultation between government and the public in its varying manifestation of public activity, a broad consensus about the objectives and methods of economic policy and broad agreement on the targets and goals which should be achieved by economic activity. The government's hope, Mr. Chairman, is that we can establish an economic council of Canada which will be an effective instrument for creating in Canada this kind of economic consensus, the kind of economic understanding that we need if we are to make the most of our resources, achieve and maintain high levels of employment, make our economic growth adequate for that purpose and compete successfully, as we must, in the new trading world.

The essential purpose of the council, as we see it, will be objectively to appraise economic trends, to assess economic problems, and so on. This appraisal must not, of course, be made in vacuo, if I may use that phrase, but must be made to serve as a basis for sound policy decisions by government, by business, by labour and by other economic groups. In other words, if planning in government or planning between government and private organizations or agencies outside government is to be effective, it has got to be more than merely an academic exercise.
When the economy has been studied as a whole, when its prospects and its potential have been assessed, the need which has been recognized in most of the free economies of the world is to relate these general prospects, and these general needs, to the particular plans of individual industries and of government agencies at all levels, and bring these together so that each will know what the other is proposing and hopes to do. Our great corporations, our provincial governments, our public agencies-they already plan. Where major investment projects costing tens of millions of dollars are involved, such planning is done many years ahead. But at present, all this partial planning within our economy is not related; it is not co-ordinated. Much of it is done without knowledge of what is intended by other corporations, other agencies or by government agencies. This is one thing that a central planning agency, a central planning council of the kind that is referred to in this resolution will be able to do. It will be able to co-ordinate all the planning that goes on in our economy. It might even be able to avoid the proliferation of planning.
The great value, as we see it, of the economic council will lie in bringing together the thinking of government and the thinking of our great industries, our trade unions, our farm organizations, so that they can together take an understanding and far-sighted view of the policy needs that exist in the private sphere, just as much as in the public sphere of our national life. A vital part of the work visualized in this kind of council, this kind of planning, is to develop and deepen cooperation between management and labour, in so far as government has their responsibility in that field.
Now, all this cannot be done by vague talk about planning or by dealing in vague generalities. It means that the proposed council, and the representatives of the major sectors of our economy, labour, capital and government, must be able to sit down together and freely discuss, with representatives of their own choice, how they see the prospects and
Economic Council of Canada the needs of each sector of the economy, and how the needs of one sector apply to the needs of the other. The government's bill is intended to provide for that sort of planning.
In doing so, it will meet the deficiencies to which spokesmen for the Liberal party drew attention in the bill that was before the last parliament. It will also, I think, meet some of the criticisms levelled at the previous government's bill on behalf of the New Democratic party. At the same time, I want to make it clear to the New Democratic party that when we talk about planning, on this side, we are not joining the people who talk about setting up a planned economy in the sense of an all-embracing, far reaching, rigid government regulation over business and labour, which involves controls, quotas and prohibitions which are designed to replace the ordinary operation of our business system. In wartime, of course, we have had to have that kind of planned economy, but anyone who thinks that Canada could be run that way in peacetime is, 1 believe, simply dreaming and is not in accord with the realities of our situation.
I would ask the New Democratic party, whatever theoretical preferences they may have, whether a planned economy of that kind could possibly work in Canada? Could it win the acceptance-without which, of course it could not work-and the co-operation of ordinary people that all efficient government policies have to have in order to make them work? Could it do that except in time of great national emergency or the greatest national emergency of all, which is the condition of war? I believe it could not.
Mr. Chairman, the concern of the government is with what is possible and urgently desirable and not with what is perhaps theoretically attractive, but which results in ordering people around unnecessarily. What is possible, and needed, is more care, more consultation and more foresight in making decisions, public and private. A modem government has enormous influence on the circumstances that shape private decisions, and it should use that influence to the advantage of the nation and the welfare of its people. A modern government needs to know where the thinking of business, labour and other groups is pointing. Planning, as we mean it, means consultation in order to replace haphazard influence by conscious guidance. It means both government policies and private policies will be more broad-based and long-sighted than at present.
I think I may claim the purposes of an economic council, as we intend them in this proposed legislation, were set out some time ago in a leaflet published by the Liberal party early in 1962. A passage from this

Economic Council of Canada leaflet was quoted by one of my colleagues in the last parliament, but I think it is appropriate that I quote it again at the beginning of our discussions on this resolution and on the bill which will follow it.
Our party committed itself in that pamphlet as follows:
Nations and governments now face economic problems, both at home and abroad, even more complex than those of the early years after the war.
The economic advisory council-
-which we are proposing now should be called the economic council of Canada-
-will be the means to bring foresight consistently and systematically to bear on our national problems.
The council's members will have a wide variety of experience in business, in labour matters, in farming, in government and in public enterprises. They must be assisted by expert staff.
The council's function will be to know, by direct contact, what is going on and what is planned in all types of industry and all regions of Canada. It will investigate economic trends, promote research, study such major problems as the impact of automation on industry and on the individual. It will bring information and study into focus for the guidance not only of government but also of all private organizations.
The council will publish outlook reports. It will suggest practical economic targets, so that the federal government, the municipalities and private organizations can together take a reasoned view of our economic needs and the policies required to meet those needs.
Government will then know where the thinking of business and labour and other groups is pointing. They, in turn, will better know the direction of the government policies that so much influence business conditions. They will know what Ottawa is aiming at, and can make their own plans with foresight. Both government policies and private policies will be based on clearer knowledge of what is going on, on better understanding and a longer view.
Some hon. members opposite have voiced what is to me a somewhat strange apprehension that this government may abdicate responsibility by setting up a variety of boards and councils to govern for it. I do not think I really need to say that they should have no such fears. Neither this council nor any other agency which we may be setting up will replace the responsibility of government in a democratic and representative parliament. No government could, I believe, have made it clearer, and we will continue to make it clear, that this government accepts wholeheartedly full responsibility to parliament for decisions on national economic policy.
Where we perhaps differ from our predecessors is that we are determined to make these decisions on full information and with the assistance of modern machinery to help us in policy making. That is the purpose of our legislation. It is the purpose of a government determined to do its job to the best of its ability; not more than the job

which is the proper responsibility of the federal government, but all of that job.


John George Diefenbaker: Mr. Chairman, I have followed with care the remarks of the Prime Minister. I was very much interested in the document from which he read, dealing with the duties of government and the aversion of himself, and those associated with him, to accepting the principle that boards and the like should take the place of government. If he meant what he said it certainly shows that time does educate for he, and many of those seated around him, were the people who in the days of war, when it was excusable, and then after the war until 1957, believed in the principle that it was perfectly proper to push people around. That was their attitude. That was a major part of their activities, and I am more than pleased to hear the Prime Minister say that attitude will no longer be followed by him and those associated with him.
I could not help but smile when he hearkened back to the days of Sir William Har-court, and quoted that eminent British statesman as having stated "We are all socialists now." We remember the former prime minister, Mr. St. Laurent, brought that epigram of 1891 or 1892 up to date when he stated that after all there was not any reason for the existence of the C.C.F., now the N.D.P., because, as he said, "There is very little difference between us. The only major difference is this, that the socialists are Liberals in a hurry."


John Whitney Pickersgill: That is not exactly a direct quotation.


John George Diefenbaker: What is this?


John Whitney Pickersgill: I was just pointing out to the right hon. gentleman that did not happen to be a very exact quotation. I can look it up for him.


John George Diefenbaker: I bow with deference to the hon. gentleman because I am informed he used to write some of Mr. St. Laurent's speeches and no doubt his memory of what he said is more in accord with what he wrote at that time. However, I was also impressed by the fact that the Prime Minister said that the principles of this legislation were agreed to in the last parliament. I recall very well the introduction of the legislation by the then minister of finance. He introduced the economic council of Canada bill and the Liberal party spokesman at that time was in the person of the now Secretary of State for External Affairs who said "With the principle of the bill we are in full accord. On this account we will of course support the resolution."
Then, for some reason or another following what we introduced as being necessary for

the economic expansion of Canada the Liberal party, pretending that they were not obstructive, spent two days on the resolution, five days on second reading, and in committee of the whole and prevented the legislation from being brought into effect. We do not intend to follow that system.


George Clyde Nowlan: We got to clause 2 (1) in committee.


John George Diefenbaker: The hon. member for
Digby-Annapolis-Kings says we got as far as clause 2, so that whenever hon. gentlemen opposite speak of obstruction I refer them with great deference to what took place following the introduction of that bill, which the Prime Minister says represented a consensus or agreement in principle in the last parliament. They went on for days and days. While they said they agreed from day to day, they disagreed with its principles and with the various sections. I am somewhat surprised that it was the Prime Minister who introduced this measure. I am simply following now because of the fact that the Prime Minister introduced it. I say I am surprised that he introduced it because I know there is a vast diversity of opinion in the cabinet in regard to the question of planning. To borrow the words of the present Minister of Finance (Mr. Gordon):
The government today in economic matters suffers from cabinet schizophrenia.
Then there are the planners, the men who in the days of the war and afterwards pushed Canada around; the men who believed that there should be no right to appeal against autocratic orders, that the individual should not be able to go to the courts. I need not identify those who belong to that school. On the other hand there were those such as the Minister of Finance, whose economic philosophy is quite different. I can understand that when the question of the paternity of this bill arose the Prime Minister would have to speak for those who held divergent views, those on the far right in the person of the Minister of Trade and Commerce (Mr. Sharp) and those left of centre in the person of the Minister of Finance. Then, of course, their divergent views have to be brought in line with Lamontagne's fables and, in addition to that, Kent's incantations.
We are going to listen with interest to the debate in this regard. It is quite impossible for us to say anything at this time excepting that the resolution is a prototype of the legislation which was introduced by the hon. member for Digby-Annapolis-Kings (Mr. Nowlan), with one exception and that is the addition of the words providing that directors will be appointed.


George Clyde Nowlan: And paid.
Economic Council of Canada


John George Diefenbaker: And paid. Well, when you are pushing people around you do not mind paying somebody for doing it; that is their view. But what is the meaning of "directors"? We will have to wait and see. All we have to say is that the general principle, if after careful examination it is in effect a prototype of the legislation which we introduced, will receive our support. But if the addition of the words with regard to the appointment of directors means the acceptance of directive planning, then we shall certainly have to give the fullest consideration to the course we will take. Certainly the distinction drawn by the Prime Minister is appropriate. Today planing is done, and must be done, in every field of endeavour. But government cannot go beyond the ambit of indicative planning. That is our stand and we are very definite in that regard.
We await the introduction of the bill, because if these directors are to have the powers that directors normally have, then we want to say to the government that we in this party are opposed to any agency or device which will provide bureaucratic control over the business life of Canada. I think the Prime Minister had some of these ideas in mind because he rather laboured when he tried to explain that this was just a board similar to the one that was accepted in principle last November, December and January. On the other hand, in every part of this country today businessmen are beginning to worry. Business has a right to be required to consider the welfare of the state at all times. We will never build up the kind of economic growth in Canada that each of us hopes for, ever expanding, on the basis of control whereby one, two, three or four theoretical economists, knowing in their own minds what is good for everyone, will be placed in a position to enforce their theories.
I would point out in this connection that the president of the Royal Bank of Canada spoke the other day on this question. He is very much concerned with the question of economic planning. He said:
Planning once begun tends to feed on itself. The dislocations which inevitably occur become the excuse for further plans on an ever more grandiose scale.
As I said a moment ago, we intend to support this resolution because we want to see the bill. We intend to examine it carefully, but we do not intend to follow the course that hon. gentlemen opposite followed last fall and January, when they gave vocal support to legislation which they believed was necessary and which was acceptable to them, while at the same time doing everything they could to prevent that beneficial legislation being brought into effect.

Economic Council of Canada
So far as directional planning is concerned, no doubt we will be able to get some information on this once we see the bill itself. Under this directional planning will it be the objective that Canada's percentage of growth in 1963 shall exceed that of 1962? You will remember, sir, that during the election campaign and even before those opposite said that Canada's economy was failing, that it was deteriorating, that all was economic ruin in this nation. Yet when at the conclusion of the year objective statistics were secured, it was seen that Canada had the largest percentage of economic growth of any country in the world. It amounted to some 8 per cent. Making allowance for the difference in inflationary trends, it represented an increase in volume of not very much less than 8 per cent. I repeat, it was the largest percentage of economic growth of any major country in the world. We shall be glad to hear what the government has in mind in this regard. Nothing has been said about this since hon. gentlemen took their seats on the other side of the chamber. Are they going to increase this year the rate of growth which took place in the last year of our party's administration? I think, Mr. Chairman, that the reason they have said nothing about it is that they realize it is going to be next to impossible to equal the economic progress which was made by the Conservative government during the period of its administration.
In the second place, we have not heard very much about unemployment. Strangely, it is a word which is not used around here any more. Over and over again, day in and day out for the last several years, we have heard about unemployment. When we succeeded in reducing that unemployment rate there was chagrin in the hearts and minds of those who sit opposite. We believe that as a result of the policies which we initiated, and which were ridiculed, the pegging of the dollar, and the other measures which we took to bring about incentives for production, the number of those unemployed by this summer would be relatively small and that we would be able to hold down the unemployment percentage which has existed in the last couple of years-no higher in Canada by comparison than in the United States, having regard to different climatic conditions. But we have not heard anything about that.
I should like to know from those who bring this matter before the house what are the economic objectives for unemployment for 1963 and 1964. Oh, these 60 days of decision, in the light of experience of the last few weeks have become 60 days of mirage. I remember the mirage so well in the old days :in western Canada. A traveller would see in

the distance castles in the air, only to find later that they were non-existent. That mirage which was brought before the eyes of the Canadian people a few short months ago, the promise of the tremendous expansion which would take place under this new government, will prove no more substantial.
I would ask members opposite to let us know what they have in mind as a suitable increase in the gross national product for this year and next year and, on the basis of their experience since they have taken office, what they have in mind with regard to the reduction of unemployment during 1963 and 1964. These mirages have been brought before us over and over again. What will happen? We are near the three quarter mark in the 60 days of decision and we have heard nothing about those two problems yet.
Reference has been made to planning boards in other parts of the world-in France and in Britain. All of this can be discussed properly when we see the bill. Except for the fact, as I said a moment ago, that the word "directors" occupies such a large place in this resolution, the measure is, in effect, a facsimile of that which we introduced and to which members opposite gave their vocal support-a support which did not extend to bringing about the enactment of the legislation. That is not going to be our attitude. Our attitude will be to support those things which we believe are likely to prove beneficial. If we are given some idea of what this planning will involve-and we can only determine that when we see the bill-and if we find it to be indicative of benefit we shall give it our support. But when the Prime Minister said the last government did not have the benefit of the views of outstanding Canadians with regard to the measures we introduced, he was not paying high tribute to the civil service of this country which gave to us at all times, in the highest echelons, the best advice of which it was capable.


Mr.   Paiierson@: I rise at this time to indicate the support of those in this party for the resolution which is now before the committee.
We would much prefer to have had the opportunity to discuss the resolution with regard to the setting up of the municipal development and loan board, because we are convinced that this measure is one of the most important which will be brought before the house in this coming session. The measure now before us takes what might be called a long term view of economic conditions in Canada; it is an attempt to find solutions to the major problems which face us over an extended period. We are convinced that the other measure to which I have referred is

one which could bring immediate benefits to the economy and help to solve many of the problems which face us at the present time.
Be this as it may, we now have before us a resolution preceding the bill to set up an economic council for Canada. We all remember that in the course of the last parliament there was considerable debate on a measure which was very similar to this. I suppose if we were to look back and consider what was said during those debates in the light of what may be said in the course of the present debate, we would find there would probably be considerable repetition. It may be that the two main parties need only to interchange speeches. Nevertheless, we still face the responsibility of considering this resolution.
I was interested to hear the Prime Minister speak at great length when he introduced this resolution of the importance of economic planning. He said the word "planning" had now become almost fashionable in some areas where, previously, it had been frowned upon. He suggested it might now be a good word and was at pains to justify his frequent references to economic planning and the place it should occupy in the thoughts of the Canadian people at the present time. With respect to this, I should like to refer to the words spoken by the leader of our party in the last parliament when he said:
Planning is good. But planning which reaches down from the top defeats the very purpose of a democratic society. Planning that permits people collectively to work together and plan from the grass roots up, is good.
I think that places on record our views with respect to the type of planning which would be acceptable to us at present.
Referring to the position of the New Democratic party, the Prime Minister asked the question whether the type of planning they had in mind could be carried out in time of peace. His thought apparently is, is it possible rather than is it desirable. Perhaps he could clarify that the next time he participates in the discussion. It would be interesting to find out whether in his mind the planning suggested by the socialists is or is not desirable in his thinking.
Reference has been made to the proliferation of planning agencies, and I think this is something we have to keep in mind because we have so many planning agencies and bodies and organizations now, right from the municipal and school board level up through the various levels of the government, the various organizations concerned about the economic conditions of the country. We have so many of these organizations which have given considerable thought and attention to the matter of the economic conditions of and 28902-5-51
Economic Council of Canada economic prospects for, the Canadian nation. I think the suggestion of the Prime Minister is met when he referred to the fact that this would be more in the nature of a co-ordinating body with representatives of various groups interested in this matter, working in co-operation and consultation with a view to establishing the very best program possible for the future development of our country. I believe, Mr. Chairman, that we are agreed that we in Canada have not reached that degree of development and expansion that is possible or desirable. There is no question that we have made headway and progress, but when we consider the matter in the light of the possibilities I suggest we have fallen far short of what we could have attained had this matter been taken in hand carefully, and with determination and vision, with a view to giving guidance and encouragement under the various sectors of our economy.
I suggest we ought to look at the matter of unemployment. This has been referred to in the course of the debate, but I would suggest that it is a paradox in a nation such as ours, with our tremendous resources, productive capacities, with our manpower and skills, that at such a time as this the rate of unemployment could stand as it does. Surely there should be some way of applying the skills and the manpower to the natural resources in order to produce the goods which people require and can use. Therefore I do not think we have anything to be proud about when we consider the level of employment at the present time. I suggest that this is a matter which should receive immediate consideration, and after all the picture has been assessed and the factors considered then perhaps we will go ahead and do something about our unemployment problem. I insist that this is of immediate urgency, because when there are so many of our people unable to find gainful and productive employment it not only works a hardship on them but is a disgrace to the society of which we are a part.
We have also heard references to the rate of economic growth. We have heard suggestions in days gone by about the increase in the gross national product in an attempt to indicate that Canada is moving ahead rapidly and satisfactorily. I suggest, Mr. Chairman, that when we consider all the related facts we have not too much to be proud about even on this score. Because if you consider the value of the dollar and the increase in the cost of living, and you also take into consideration the increased population, then we would find that instead of attaining a considerably increased percentage in our gross national product there is very little to give encouragement in this connection. We have also considered the matter of the taxation structure in


Colin Cameron: Mr. Chairman, as the Prime Minister pointed out when he introduced the resolution the opportunity for full discussion will come more rationally when the bill is before the house-although for my part I do not think there is very much doubt as to what kind of bill it is going to be, because I recall that last year when the former government introduced a bill along this line they were accused of having stolen the pants off the Liberal party. Presumably, therefore, the Liberal government, now that it is back, will bring in somewhat the same sort of bill. In fact, I rather gathered that from the Prime Minister's warning, shall we say, to members of this party that the bill would not meet our requirements.
In that connection, sir, I would hope that the Prime Minister knows better than his analysis of this party's policy because if he does not it will fill me with dismay to think that the Prime Minister of Canada is so ignorant of political and economic theory as really to hold those views of the policies of this party. He mentioned in the course of his speech how much opposed his government was to the whole concept of governments pushing people around. So are we, but we are also concerned with something else. We are very much concerned with the problem of certain groups of people pushing governments around as they have been pushed around throughout the lifetime of Canada. To my mind in this present age that is the real problem we are facing.
While we do not have the bill before us and cannot discuss what may be expected from it, I think it is worth while at this time to spend a few minutes in outlining what we in this party consider to be some of the major problems that are going to face the government and this economic planning council. First among them I would put the problem of foreign ownership. I know that this problem is one that has concerned at least some members of the government party. I recall that the present Minister of Finance had this to say on October 4, 1962, as found on page 185 of Hansard of that year:
28902-5-5IJ
Economic Council of Canada
I believe we can stop this sell-out of our natural resources and our Canadian companies. We can buy back in the years to come many of the resources and many of the Canadian companies that are now in foreign hands.
Then he repeated that sentiment later on the 22nd and suggested that there should be steps taken to see that Canadians participate in the development of the industries in question, such as chemicals and petrochemicals. On the other hand, Mr. Chairman, only the other day, on May 28 to be precise, I noted that the Minister of Finance in answer to a question in this chamber said that the government welcomes an increased inflow of foreign capital into the country, which seems a rather extraordinary attitude for him to take when only a few months ago he was warning us of the dangers of increased foreign ownership and control of Canadian industries and resources. It may be, of course, a case of the old adage of when the devil was sick the devil a monk would be, but when the devil was well the devil of a monk was he. In this case, of course, health or ill health is to be connected with political success or failure. Possibly we have a transmutation of ideas of the Minister of Finance since he was elevated to that high position.
In this connection I should like to quote from a very interesting speech made by the president of the Montreal and Canadian stock exchange yesterday in the city of Quebec in which he had this to say, as found in today's Globe and Mail:
The United States gets a remarkably large return in foreign exchange from relatively small amounts of capital invested by its corporations in foreign countries, including Canada. In the case of Canada, U.s. corporations have no intention of selling part of the equity of their Canadian subsidiaries to this country's investing public.
Mr. Kierans said the major source of direct investment flowing into manufacturing is the United States and that 45 per cent of all of this capital has been absorbed by manufacturing industries-
Among the documents he included to illustrate his point was a statement to a U.S. congressional hearing by Eldridge Haynes, president of Business International of New York, on the performance of 32 overseas trading corporations of 21 U.S. manufacturers in 1959-60.
The $10,548,000 total of equity investments from the United States since incorporation produced an inflow of $277,251,000 in the two year period being surveyed. The original capital outlay also generated sufficient funds overseas to permit the investment of $24,008,000 in underdeveloped and developed countries-
Mr. Kierans referred to current talk about the reorganization of industry and planning by investment corporations to buy Canada back. An illuminating document on this was an appendix to the speech dealing with the Montreal stock exchange's two year program designed to encourage U.S. parent companies to sell part of the equity of their Canadian subsidiaries to Canadians. "The response was completely negative," said an introduction to excerpts of letters from U.S. parent corporations.

Economic Council of Canada This I submit, Mr. Chairman, is the measure of the problem that this government and this economic planning commissioner are going to have to face. The way Canada's economy is flowing now, it is nothing short of a running hemorrhage. The dominion bureau of statistics tells us that in 1958 the net outflow from Canada was $444 million; in 1959 it had risen to $491 million; in 1961 it had risen to $561 million, and in 1962 to $570 million. Nor is this the whole story, Mr. Chairman, because in addition to these enormous sums that are draining from the Canadian economy to the United States, there are vast reinforcements of surplus earnings in this country by these foreign corporations to expand their already enormous assets in this country.
I suggest to you, Mr. Chairman, that no planning commission, no government, is going to be able to deal with our economic problems unless it is prepared to face up to this major circumstance regarding Canada. It is not too much to say, sir, that the Canadian economy has now become a joke and a fraud; that it is a hollow shell. We have built around it, or rather have allowed to develop within that shell, industries, resource exploitation entirely in foreign hands. We surround this shell with national institutions such as this parliament, provincial legislatures, even our police forces, and all the other amenities of national life. Actually, they are enclosing an almost completely foreign body at this date.
I suggest to you that this is the major point of attack that this government is going to have to make with its economic planning commission. It will not achieve that purpose by anything in the nature of indicative planning. It is not much use telling people that they ought, really, to relinquish these things to the nationals of the country in which they operate; that would be the nice thing to do. What they are interested in is what would be the profitable thing to do. Any planning commission that is going to have the slightest effect on economic development in Canada is going to need to exercise coercive power, and this is one of the points at which its coercive powers will have to be exercised if Canada is not to become a political as well as an economic and military satellite of the neighbouring republic.


Lester Bowles Pearson: Mr. Chairman, there is very little I need to say in winding up the discussion on the resolution. As hon. members have pointed out, the main debate will take place on the bill. I was interested in the remarks of the right hon. Leader of the Opposition. He was very satisfied with economic conditions. It is the purpose of this
[Mr. Cameron (Nanaimo-Cowlchan-The Islands) .1

legislation, we hope, to improve the situation. We are not satisfied. We hope that the economic council for Canada will improve conditions, especially in the field of employment. If a planning body is to be effective in this country, then we have to achieve full employment.
The Leader of the Opposition was very satisfied because things were all right during the last year of his regime. The gross national product increased 6.2 per cent. This is true and we can all take satisfaction out of that. I would point out, just to modify our satisfaction that we had a good year last year, that in the six years of Conservative administration the gross national product went up 18 per cent. In the six years previous under Liberal administration, it went up 36 per cent and the 6.2 per cent figure reached last year was exceeded in four of those years under Liberal administration.
However, I do not believe there is any call for complacency in the fact we had this rate of growth-


Paul Raymond Martineau: Would the Prime Minister permit a question? He just made certain comparisons between the last six years and the previous six years. Would he tell the house if, in his opinion, world conditions during the last six years were comparable with those that existed under the previous administration?


Lester Bowles Pearson: No, they certainly were not. Immediately after the war, Europe had been practically destroyed. She could not pay for imports; there were controls, quotas, and it was very difficult indeed. By the same token, when these financial conditions were difficult, there were great needs to be filled in Europe. Those needs were filled by exports from countries that were more fortunate in that respect, and Canada was able to take advantage of this position. One reason Canada was able to take advantage of this condition was that we lent European countries in those years hundreds of millions of dollars which enabled them to buy our products. Therefore, while it was easier from one point of view in the first six years about which I was talking, and there were difficulties in the second six years, it can be seen that there were difficulties and advantages in both periods.


George Clyde Nowlan: I am sure the right hon. gentleman will agree that there was more development of national resources, of iron ore and the rest of it in the first period.


Lester Bowles Pearson: Yes, I said I agreed that there were advantages and disadvantages in both periods. However, there is no cause for smug complacency because we had a good year

last year. Let us hope that the good years continue and we are able to maintain a growth which will provide full employment, because that is the purpose-economic growth. The major purpose of any economic planning body, I take it, is to help produce economic growth and produce full employment.
While we had a good year last year in regard to our gross national product, we will have a huge deficit. We will be having our budget next week and we will learn about these things. We have a huge unfavourable balance of payments. We have too high a figure on unemployment.
It is our hope, if legislation of this kind is put into operation, that the economic council will help maintain economic growth as a means to an end-to the end of full employment and national development. I think, Mr. Chairman, there is nothing that I can add to what I have said. We will bring the bill down at the earliest possible date. We will have to assess this type of bill, and I am sure my hon. friends opposite will find there are some very interesting and useful changes in the bill in comparison with the one which was introduced last session.


George Clyde Nowlan: I understand the government is not bringing the bill down for first reading today.


John Whitney Pickersgill: Oh, yes.


Mr. Gregoire:: First, I should like to congratulate the Prime Minister upon the introduction of this measure which will help economic growth. However, he is talking mostly about one part of our economy, namely production. I should like to know, is it the intention of the Prime Minister to include all parts of the economy and economic problems, namely, the problem of exchange or the monetary problem? Can the economic council be effective in this field?


Lester Bowles Pearson: It would have to take into consideration not only production but the means of exchange of production.


Gilles Grégoire: May I ask a supplementary question? The Prime Minister has put on the record the fact that this resolution fulfills one of the Liberal promises. Is it the intention of the Prime Minister to include, along with this economic council, another part of the Liberal party program which was to the effect that a Liberal government would take full responsibility for the monetary mass?


Lester Bowles Pearson: I think my hon. friend had better wait and have a look at the bill. I do not believe I can go any farther than I have on this matter.
Resolution reported and concurred in.
7.	1963
Establishment of Industry Department
Mr. Pearson thereupon moved for leave to introduce Bill No. C-72, for the establishment of an economic council of Canada.
Motion agreed to and bill read the first time.



INDUSTRY


Lester Bowles Pearson: that the house go into committee to consider the following resolution:
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.
Motion agreed to and the house went into committee, Mr. Batten in the chair.


Lester Bowles Pearson: Mr. Chairman, we have just passed a resolution which makes possible the introduction of a bill dealing with an economic council for Canada, and we have just given first reading to the bill that would establish that council. The test of the value of the economic council's work will be whether it succeeds in identifying what I might refer to as the emerging points of expansion in our economy and to help keep our economy expanding to a point where it will be able to' provide for full employment. Its task will also be to guide the public and the government, and give advice on what are the sectors of our economy from which we can expect strong: expansion, and what are the things that a growing Canada can produce in greater quantity and for the nation's benefit.
What can we do now that will help us to make the most of our resources and our talents, and how can we adopt our economy to changing conditions? Those are the problems and the work of an economic council and, as I said earlier this afternoon, the point of all this is to help government and all the various sectors of the economy to work together.
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. We have a Department of Agriculture responsible for the action that government can take to help farmers. We have a Department of Fisheries which performs
802	HOUSE OF
Establishment of Industry Department the same function for fishermen. For the mining industry we have the Department of Mines and Technical Surveys. However, Mr. Chairman, there is no department of industry, no department of government especially concerned with the needs and the opportunities of manufacturing industry, and the main purpose of the resolution before us now is to remedy that fact. The bill that we seek leave to introduce is one to create a department which will be for manufacturing industry what the Department of Agriculture is for farmers.
Specifically, the functions of the new department will be to maintain close, practical contact with industry, to make sure that industry gets service from government. It will be a department to which manufacturers can come to find out what is going on, to get advice and help in their problems. New and expanding enterprises in particular will look to it to see that government policies make their paths as smooth as possible. It will be concerned with translating into specifics the more general ideas about our economic growth that we hope will be generated in the economic council.
It will review, industry by industry, what can be done to increase Canadian production and how government can help in this regard. It will do this against the background provided by the longer term prospects assessed and analysed by the economic council, but in its own operations as a department it will be concerned with the building rather than the blueprints of an expanding economy.
In proposing to set up such a department we are not, of course, writing on a clean slate. We will not be introducing a whole new range of government activity. Much of the machinery that the new department will use is already in existence in one form or another. It exists particularly in various sections of the Department of Trade and Commerce and in the Department of Defence Production, which would be absorbed by the new department of industry if that department is set up.
In introducing this measure the government has no intention of setting up a great new bureaucratic machine, duplicating work already being done and some of which would be continued. Whenever possible existing organizations, existing services and existing people will be used. This does not mean, naturally, that nothing will be added. In some measure, indeed in relatively small measure, this must be and will be done. That is why the resolution provides for temporary appointment to the department of people who are not civil servants but who have special knowledge of manufacturing industries. It is hoped such appointments will bridge the


transition stage until the department can be fully staffed by the standard methods of recruitment. Full staffing, however, will not mean heavy staffing. The work for which this new department is designed is not work that should require a lot more people in Ottawa.
What is at present lacking in government organization is not activity connected with industry so much as a focus point that will give clarity and direction to government action to encourage industry, and in asking the house to consider this legislation we are asking it to provide such a focus.
I can hardly overemphasize the importance which we in the government attach to the creation of this new department. What-and this bears on the work of the new department very directly, and on its responsibilities- what are to be the sources of the new wealth and employment which Canada needs? Where are we going to provide the jobs for the 250,000 young people by which our labour force is going to increase in each of the next few years? That, I may add, does not take into consideration the amount of immigration which we would like to see coming to Canada.
Where will we find, in addition, the new jobs that are needed to keep pace with automation and other technological changes- changes which mean that our existing level of production will require fewer workers in existing industries? What will be the sources of increased exports we must make in order to pay for necessary imports and at the same time strengthen our payments balance with other countries which at present and for some years has been in dangerous imbalance?
There is no doubt about the answer, in general terms, to these questions. It is clear, however, that in trying to find specific answers we have to accept the fact that manufacturing industry, secondary industry, is the source from which the new wealth and the new employment must largely come. The development of Canada in the past has been built largely on our farms and our great raw material producing industries. They are not going to shrink, even though the number of men required to operate them may shrink, as it has over the years. But they themselves, in their production of wealth, are not going to shrink. Our soil, forests and mineral resources will continue, of course, to contribute very importantly to our development, but for the future expansion that we need if we are to take care of our work force we must now look especially to the manufacturing industries.
In the past government encouragement of manufacturing industry in Canada has been closely linked, in many people's minds-and

there is some evidence to support the linking -with policies of protectionism. The main way to help our industries often seemed to be to build a tariff wall around our relatively small domestic market. But whatever the historical justification for that attitude-and it is not difficult to find some historical justification for it-there is now, I think, widespread recognition that it does not fit the industrial needs of the 1960's. Our aim today cannot be simply to build up industry, any kind of industry in a general way, by general action. Canada's need is for industries that will thrive in the modern world, industries that will fit into the new patterns of international trade which are now emerging and to which we will have to adapt ourselves. There are signs that industry is adapting itself to these changes. We must strengthen our international payments balance, but we cannot expect to do so by cutting down imports of some of the simpler kinds of manufactured goods which more and more countries are now able to produce for themselves and sell economically. Our special need in this country-and this applies to other highly developed industrial countries-is to create and expand the more sophisticated, the more complicated, if you like, kinds of industry producing goods which we both need ourselves and which we can sell to other countries. Such export markets will need to include, increasingly, the developing countries, the new countries of Asia, Africa and Latin America, which should be the fastest growing markets for the most advanced kinds of industrial products that we in this country are increasingly able to produce efficiently and economically. We will not make this kind of progress, this increase, by industrial protectionism. So the aim of the department we propose will not be to shelter or shoreup weak, protected enterprises but to encourage and build up economic industries and to help industries adapt themselves and, in certain cases, adjust themselves to changes which are being made.
The debate on this resolution is, of course, not the occasion for me to go into more detail about the organization of the proposed department. That can only be done when the bill is before us. But there are two points which I think it is appropriate for me to mention in connection with this resolution before I sit down. We all recognize, I am sure, the deep and intimate concern with the welfare of industry that is felt by the governments of the provinces. That is their constitutional responsibility as well as their natural duty. The establishment of a federal department of industry will in no way lessen or interfere with provincial responsibilities. The new federal department will not in any way
7,	1SG3
Establishment of Industry Department create new federal responsibilities. Its concern will be simply and solely to discharge more efficiently and effectively the responsibilities which already fall on federal authorities. By providing a purpose for federal action, I believe the new department will make it easier for provincial departments of industry to do their work. Therefore, far from being hampered or interfered with, provincial action in support of industry will be, we hope, assisted by this development. Opportunities for fruitful federal-provincial co-operation will be improved.
In this respect, Mr. Chairman, I would mention particularly the area development agency which is proposed as an important part of the new department. The areas we are concerned with are those 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. Various departments of the federal government can be helpful in different ways to such areas. The purpose of the proposed area development agency is to assist in making sure that this will be done. 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. In this way it will not interfere with provincial action to the same end. Quite the contrary. If the coordination and effectiveness of federal action are improved, action by the provinces in their areas of responsibility will become easier to take and will be made more fruitful.
In proposing this measure, Mr. Chairman, the government is by no means blind to the difficulties and problems which will arise and which the new department, if it is set up, will have to face. But the need, it seems to us, for a department of this kind has mounted rapidly with the changing nature of the Canadian economy and the growing relative importance of manufacturing industry in that economy as a provider, especially of jobs. The time has come when some of the difficulties in the way of expansion and employment must be surmounted. I believe that a department of this kind can help in that regard. There are now before our economy both challenges and opportunities which, I suggest, the creation of a department of industry can assist in solving and exploiting.

Establishment of Industry Department I think this will be a forward step and one which it is important to take now. I hope the house will agree to deal in that spirit with the resolution which I now have the honour to propose.


George Clyde Nowlan: Mr. Chairman, I am sure the committee has listened with interest and its usual attention to the words of the Prime Minister in bringing forward this resolution to create a new department of government. There are various attitudes one could take in connection with this, but time does not permit me this afternoon to deal thoroughly with the various aspects which I am sure impress each and every one of us, the possibilities, perhaps advantages and problems in connection with this resolution. At least we have seen today an example of co-operation among the various opposition parties and the government in moving ahead very rapidly with one resolution this afternoon. Perhaps I can therefore be pardoned for not coming too quickly to definitive statements with respect to this resolution in the next 18 minutes which still lie ahead of me on the clock. We have in the resolution we have already dealt with-the one setting up the economic council-I am not going to interpret the actions which may have prompted the government and the Prime Minister in bringing forward that resolution, but as I read in the speech from the throne, the control of that council is going to lie in the hands of another minister, the president of the privy council. I think there is a real problem in the relationship of the departments of government. I think

I am speaking now not of immediate past history, and certainly not of contemporary events, but I think anyone who has read the political history of this country and, where the same factors apply, in others, will find, not conflicts, but pressures arising between different departments as to which one is going to have control of the economy, particularly over fiscal and financial matters necessary for the solution of those problems.
It may be fair to say that on this question too-and, again, I am not speaking, as I said, of the contemporary scene or of the immediate past, of which I have had some experience -there may have been conflicts-pressures, rather, not conflicts-between, let us say, the Department of Finance and the Department of Trade and Commerce. When you have departments headed by strong ministers-and they have been headed by strong ministers in the past, we all know that these ministers, together with their departmental officials do, quite properly, suggest that the solution of the nation's problems lies in their department handling the affairs immediately before the nation. Whether that is the reason why, in


connection with the economic council, the Prime Minister took it upon himself to move the resolution rather than allow one of the other ministers to do it is a matter, of course, the secrets of which I am not conversant with in any way. I do not know.
I, perhaps have had a little experience in a minor way of similar pressures. I know this presents a real problem. But at least here we have had a solution arrived at, apparently, which, if I read the speech from the throne correctly, gives us the worst of all worlds. We are to have this council controlled by another minister, the President of the Privy Council, rather than by, say the Minister of Finance who, one might well think is best suited, for a number of reasons, for this position. After all, the Minister of Finance, must take a certain responsibility for financial and fiscal matters; otherwise, he cannot carry out the duties which rest on him. But in this case the proposed department will come neither under his jurisdiction nor under that of the Minister of Trade and Commerce. It is the President of the Privy Council who is to administer this branch of the government. We have been told this afternoon-and I believe we are all thankful to know this- that it is only to be an advisory council, not one with any managerial capacity or power of direction. Perhaps the same problem arises again in connection with this department the resolution concerning whose establishment the Prime Minister introduced to-this committee a few minutes ago.
It could be argued in various ways. I have had some little experience with this. I remember that in days gone by pressure was brought to bear, not pressure, but suggestions in briefs, by various delegations, not least among them by the Canadian Manufacturers' Association, which wanted a separate department of trade and industry. As I recall it latterly, or in the last two or three years during which I have had some experience in the matter, the suggestion was not that we should have a separate department of trade or industry but that we should change the name to that of trade and industry. With that suggestion, I am sure, we were all in full accord. With all due respect to the department, which has accomplished a great deal and which has been well managed and well run throughout the years, perhaps the name "trade and commerce" was something of a misnomer. It led those associated with manufacturing to feel they were being ignored. The suggestion was, apparently, of selling and buying rather than of manufacture. That did suggest that the name of the department should be changed and that it should be called the department of trade and industry. I think that is a proposition.

the logic of which would appeal to everyone. To move from that, from a change of name, to the creation of two departments, a department of trade and a department of industry, is something to which this committee should, I think, pay very careful attention and be satisfied only after very strong arguments before it accepts the principle which, no doubt, will be put forward in detail in the bill.
I can see trade and I can see industry. I think they go hand in hand. If you manufacture apple sauce you are in industry. If you manufacture a can you are in industry. If you put that apple sauce into the can you are on the verge of industry and trade. And when you start to sell it you are in trade or industry, I presume, and the sauce may go sour in the meantime. I think there is a real problem here to decide where industry stops and where trade begins. I think we have had very strong and able men running the Department of Trade and Commerce going back at least over my experience in this House of Commons, which I entered on the same day as the right hon. Prime Minister. We are among the seniors in this house at the moment.


An hon. Member:: Just young fellows.


George Clyde Nowlan: Thank you very much. We had the late Right Hon. C. D. Howe as minister of trade and commerce, and the department has, I think, been well run and well managed. It has contributed a great deal to the welfare of the Canadian economy, at least during the years I have been here and undoubtedly many years before that. I wonder just what benefit would accrue to the Canadian economy, to Canadian efficiency and to departmental efficiency if we were now to have a bifocal department with a minister of trade on one side and a minister of industry on the other. I am not expressing any views at the moment. I am simply raising problems which I think are being raised by this measure. Certainly, to some extent we are emasculating the Department of Trade and Commerce; we are splitting it up. I am willing to hear arguments and I am sure we shall hear them when the government, later, sees fit to bring this bill forward for a second reading. I am sure we shall hear arguments as to why this should be done. I can assure the Prime Minister and the committee that as far as I am concerned I would want to hear very logical and cogent arguments advanced before I would welcome-though we may have to accept-the provision which is apparently envisaged in the resolution which is before us this afternoon.
As to the overlapping of the departments, the Prime Minister, speaking on this a few
7. 1983
Establishment of Industry Department minutes ago, referred and, possibly, he was ranging over the whole field as I, perhaps, am doing at the moment, to the problem of protection. He said this department should not foster protection in every way possible in a free economy, and so on, as we all do. Well, of course, the subject of protection and tariffs has been debated in this house ever since the original peace tower was built .-perhaps not so far back as that, because it was built in 1865; but ever since the first parliament met here in 1867-and, undoubtedly, it has been discussed ever since. As one wag said, there was a great disagreement between the parties. The Liberal party did not want tariffs to go any higher, and the Conservative party did not want them to go any lower, and on that they had a common ground on which they could agree. Anyway, this has been the cause of bitter argument and criticism in debate in days gone by. But as to the subject of protection, I think, with all due respect that you get advice from your colleagues in the cabinet as a whole. But in the end-perhaps I have an affinity with that department-I think the Minister of Finance has to be largely responsible for recommending to his colleagues fiscal and financial policy, and with all due respect to whoever may be the minister of this newborn fledgling which is to be brought forth, the parentage of which is a little uncertain at the moment, I should hate to think he would be responsible for dealing with fiscal and financial matters.
Mr. Chairman, one could go into many things in discussing this question, but as I said, at the moment I am simply pointing out the difficulties which lie before the committee, the government and the house before we are all in agreement on the acceptance of this principle. We have a very highly trained staff in the Department of Trade and Commerce. The government with which I had the honour of working created a small business section with special assistance given to the development of trade and industry. I would suggest with all due respect to the Prime Minister-and I would be surprised if the civil servants who were associated with the present Minister of Trade and Commerce (Mr. Sharp) did not agree-that there was tremendous progress made in the development of industry in this country in the last two, three or four years, not only the last year to which reference has been made. The Prime Minister admitted development in the gross national product, but the foundation for that, at any rate, was laid before the last year. There had been a constant but perhaps not as sensational a development as there was last year, and that came, not under
806	HOUSE OF
Establishment of Industry Department the aegis of the government as a whole but the Department of Trade and Commerce, perhaps misnamed as it was.
Personally, Mr. Chairman, I cannot accept the argument that in order to get a development of industry in this country we now have to have a bifocal approach, that we have to split the two departments. The Prime Minister was careful to say that we are not going to have many officials. We are going to borrow, we are going to ask for assistance, and we are not going to create a further bureaucracy in this country. But with all due respect, in spite of the administrative genius of the minister who it is suggested will head this department as, if and when this parliament creates it, and the administrative abilities of the present Minister of Trade and Commerce, I suggest that Parkinson's law is inexorable and inevitable, and whether you borrow them, beg them or steal them you will have an increase of bureaucracy every time in any event. You have it every day, Mr. Chairman, and you are going to have it to a greater extent than ever before with the creation of other departments.
There are other matters of legislation on the order paper in this connection which are not germane to this debate at the moment-[DOT] further creation of departments or bifocal departments. The whole tendency is in the further creation and extension of a bureaucracy which I do not think is at all in keeping with the stated desire of the government to improve its efficiency, to reduce its costs, and all the rest of it. As I said, there has been a tremendous development taking place in the last few years.
The Prime Minister referred a few moments ago to the balance of payments and his hope that we could reduce the deficit still further. He stated, quite properly, that we could not do it by narrow, insular protectionism but by an increase in our exports and an increase in our economy generally. There again, Mr. Chairman, the record shows that during the last year, in reducing the deficit in the balance of payments we made a greater advance than has occurred since some time in the early 1950's. That was done by the concerted effort of all branches of the government, and it was done to a substantial extent under the aegis and the leadership of the then ministers of trade and commerce, in association with their colleagues in the cabinet. So, as I say, I cannot accept this principle. I need further evidence than I have had today if we are to accept this government policy.
We are not going to filibuster a matter such as this. We are going to study these measures
[Mr. Nowlan.l

as they come forward. We are going to criticize them, try to improve them and amend them as our experience and advice would suggest. The responsibility ultimately rests on the government, but I for my part cannot see the necessity for one moment for splitting the department of trade and the department of industry. There were verbal, token arguments suggested by the Prime Minister a few moments ago, but I think he has to go much further than that before he and his colleagues can convince this committee, this house and the country that this further excursion into bureaucracy is not an expense and a duplication of effort, and is I suggest inefficiency rather than efficiency.
Mr. Chairman, I have not time at this moment to refer to the other department or branch mentioned in this resolution which is before us to provide under the direction of the minister for an area development agency. That is a very worthy purpose, Mr. Chairman. We have heard of area developments throughout the years. I suggest that the record of the immediately preceding government in dealing with these matters and in dealing with, shall we say, tax incentives to encourage the location of industry-and various other measures have also been implemented by the provincial governments-is commendable. I read in the paper today of another example where in the province of Nova Scotia, which of course is one of the provinces which has given the lead to Canadian development, since January of this year there have been eight or nine new industries brought into the province by the agency of the provincial government, the Industrial Estates Limited. I think, Mr. Chairman, that an agency such as that can be more effective in dealing with area development in certain areas than undertaking it on a national basis.
However, as I said, this resolution is one which I think has great importance and is worthy of the most careful consideration and study by this committee and the house. I should now like to call it five o'clock.


The Deputy Chairman:: It being five o'clock, 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 at the next sitting of the house, as the case may be.
Progress reported.


Mr. Speaker:: 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.



FINANCE


Reid Scott: the second reading of Bill No. C-6, to provide for the control of consumer credit.
He said: Mr. Speaker, in introducing this bill for consideration on second reading I should like to deal with it in four phases: first, the purpose of the bill; second, the need for regulation of this kind in the field of consumer credit; third, the degree of interest in this whole subject that has been displayed by members in all parts of the house and, fourth, what appears to be a very genuine need for an examination of the whole field of finance companies and consumer credit and other forms of lending in Canada as a whole. The explanatory note sets out the main purposes of the bill. First, it is intended that persons, institutions and companies engaged in the lending of money shall be compelled to disclose to the borrower the actual amount of interest being charged and at the time of making of the loan a statement shall be furnished to the prospective borrower setting out in detail the total amount of the unpaid balance on which interest is being charged, the total amount of interest payable under the agreement, whatever the agreement may be, and the actual relationship between the principal and the total amount of interest that is being paid.
All of -us who have had any dealings with contracts and agreements involving the payment of interest are well aware of the fact that there are, of course, many reputable companies engaged in this field of activity who quite accurately set forth the amount of interest they are charging their customers, but there are also a large number of companies who manage to conceal very carefully in their agreements the actual amount of interest to be paid with the consequent result that many of the borrowers have no idea whatsoever as to the true amount of interest which they are being charged. Under these agreements interest can vary anywhere from 6 to 26 per cent.
The bill seeks further to broaden the definition of an agreement to include deeds, assignments, mortgages, agreements for sale, conditional sales agreements, chattel mortgages and any instrument or contract involving the levying of interest on money being lent. Section 4 of the bill seeks to impose an upper limit of 10 per cent interest which may be charged. Section 5 of the bill states that in any case where the lender fails to give an accurate statement to the borrower the agreement shall be void with respect to the payment of interest. Section 28902-5-52i
Control of Consumer Credit 6 states that whenever the rate of interest charged exceeds 10 per cent the contract will be void in that regard.
As I said, Mr. Speaker, the main purpose of the bill is an attempt to let borrowers of money know precisely and accurately what they are being charged and to impose upon lenders of money the duty of making the interest rate perfectly clear and simple to the borrower at the time the loan is made. The need for some detailed regulation in this line of activity is only too evident. A recent issue of the Globe and Mail on March 3 of this year discusses a speech made by Dr. Jacob Ziegel, professor of law at the University of Saskatchewan. In his remarks Dr. Ziegel outlined to his audience that at the end of 1962 there was $4 billion outstanding in Canada on consumer credit loans of one kind or another. He went on to say that this amounts to approximately $210 for every man, woman and child in Canada at the present time.
So, Mr. Speaker, the field of consumer credit is an enormous one and embraces activities from coast to coast in Canada. For example, the dominion bureau of statistics estimates that as of March 31 there was $3,664 million outstanding in various forms of consumer credit. This is broken down into various categories. For example, conditional sales agreements total $771 million, small loans $658 million, home improvement loans $67 million and personal bank loans $1,206 million. It goes through all the statistics and points out very conclusively the tremendous market that exists in Canada in the field of consumer lending, the consequent need that follows for a very careful examination of the rules and regulations governing this field, and in particular the degree to which borrowers of money are protected and made aware of the circumstances and the rates at which they are doing the borrowing.
To refer back to Dr. Ziegel, he registers the complaint that credit can be obtained too easily and says that advertisers should be made to give all the details of credit buying plans in their advertisements. I do not think there is any doubt that there is a great deal of activity in Canada in this particular field of lending and it is one in which the rules and regulations governing it are somewhat nebulous and dispersed.
With respect to the degree of interest in this whole field, if we examine the order paper before us today it is evident that this particular field of activity has been given considerable attention by members on all sides of the house. We have on the order paper order No. 4 in the name of the hon. member for Winnipeg North (Mr. Orlikow) amending the Small Loans Act, order No. 5 in the name

Control of Consumer Credit of the same member to amend the Interest Act, order No. 9 in the name of the same member to amend the Small Loans Act, order No. 18 in the name of the hon. member for Roverval (Mr. Gauthier) to amend the Small Loans Act, order No. 26 in the name of the hon. member for Rosthem (Mr. Nasserden) to amend the Interest Act, order No. 50 in the name of the hon. member for Gatineau (Mr. Leduc) to amend the Interest Act and order No. 57 in the name of the hon. member for Greenwood (Mr. Brewin) respecting relief against unconscionable transactions.
It is obvious, therefore, that this is a field in which members of the house in all parties have taken a great deal of interest and no doubt many more bills would have been placed on the order paper by other members had it not been that these bills probably cover the areas in which they are interested. I merely point that out in passing to say that what I should like to initiate today is not so much a discussion on the specific proposals of this bill, which I must admit is somewhat limited, but rather to initiate a general discussion in the house in the coming weeks on the whole broad field of consumer credit and the institutions and organizations that handle this type of financing in Canada.
It may well be that it is not sufficient merely to designate that lending companies must make clear to prospective borrowers the actual interest rate they are being charged, nor will it be sufficient to pass legislation protecting purchasers from unconscionable transactions. Both these aims are very laudatory and necessary but it seems to me that one thing we have to do is to go one step further and decide if it is not about time that we had in Canada legislation governing these small loans companies and making certain that they make full disclosure to the public not just of the amount of interest they are charging but actual information as to the principles behind these companies and the degree of soundness of these organizations. It may well be that laws and regulations will have to be passed to set up controls over these lending institutions.
Various organizations in Canada are already requesting such action. In the Financial Post of February 16 last an article appears entitled "10%ers Under Squeeze". This article is devoted to the problem created in Canada by the new lending institutions that have been set up which are not subject either to provincial or federal regulation because they lend money on notes running for less than 365 days. The trust companies and the various banking institutions have called for effective legislation at the federal and provincial levels that will provide protection for the public where none now exists. The article goes on,


of course, to outline the constitutional problems involved in that under the British North America Act the federal government has power over interests and banking but the provinces have legislative power over matters of property and points out that there seems to be an area here where some co-operation is going to be required.
The particular article in question states that the public have no need at the present time of distinguishing between the type of institution which is subject to government inspection and audit, and those that are not so regulated. This particular article actually suggest the creation of a federal financial institution's act covering all of these types of lending institutions and regulating their profits and their method of operation in the Canadian economy.
An article in the Financial Post of March 16 discusses a particular firm of this character and recites how it makes no disclosures at all as to its financial worth, as to earnings or the make-up of its organization. Yet, this firm advertises widely throughout the province of Ontario, borrowing money and guaranteeing to pay it back. The borrower has no idea as to the nature of the institution or whether it, in fact, has assets of substance with which to carry out its obligations.
There are many such articles, as I have said. It is interesting to note, for example, that in the United Kingdom, the House of Commons has actually passed and is awaiting third reading, a bill called the protection of depositors bill. This bill is designed to give protection to those people who place deposits with these types of financial institutions I have just mentioned. An article in the Financial Post of March 2, outlines in great detail the limitations that are placed on these various institutions.
As I have said, Mr. Speaker, there are many articles of this kind suggesting that institutions in Canada that are engaged in the small loans business-many of them of course are quite reputable-are fleecing the public. They do not make disclosures of the actual amounts of interest they are charging, nor do they tell the public the nature of their own assets and liabilities so that one can judge whether they are sound enough to risk one's money.
I do not want to speak at length on this subject, Mr. Speaker, except to suggest, after looking through the order paper, there seems to be very considerable interest shown by all members in the house in this particular field of consumer credit and small loans, the financing of appliances and other matters of that sort. It seems to me that rather than have these bills come up continually during the session to be debated for one hour, it

might be possible to devise some method of referring all the bills, holus-bolus, to the standing committee. If this could be done, all these matters could be considered at one time. Witnesses could be heard, the presidents of these various loan companies could have the pleasure of appearing before us, speaking themselves and being cross-examined, the various local officers of the crown could give us their opinions as to the necessity for legislation covering these institutions. Perhaps the law officers could guide us concerning the appropriate type of legislation to introduce. I have mentioned to some of my friends across the way that in the one hour we have for private bills we obviously cannot debate in any great detail the necessity or desirability of entering into this whole field.
However, it does seem to me that there is a great need for action in this regard. There is a vacuum in our legislation at the present time. There is a widespread opinion among private members in the house that this field should be investigated. I think instead of talking each bill out as it comes up, some method could be found by which to refer this whole matter of consumer credit and financing to a committee of the house, where all members could discuss it. Perhaps a composite bill could be drafted which would embrace the ideas of all private members' bills now before the house. Then, at some later time we could bring back to the house a composite bill which would protect consumers in the purchases they make, a bill that would allow the people of Canada to know where they stand with these companies, a bill that would force these companies to lay all their cards before the committee. I feel that if we could do this at this or some future session, we would be rendering a service to the people of Canada as a whole.


Mr. John R. Matheson (Leeds):: In rising to join in this debate, I wish to commend the hon. member for Danforth (Mr. Scott) for introducing this bill. It is timely. As he has indicated, interest in this subject is fashionable. When one looks at the order paper, he finds an extraordinary percentage of private members' bills concerning this general subject. I have noticed the following bills: Bills Nos. C-6; C-9; C-10; C-12; C-14; C-23; C-31; C-33; C-43; C-45; C-55, and C-62. These private members' bills come from all corners of the house and the sponsors of them represent the four political parties here, as well as all parts of Canada.
Most of these bills have much in common. I do not believe this is an easy subject with which to deal. The hon. member for Danforth has referred to a very difficult subject, a
Control of Consumer Credit subject we have to consider in conjunction with a good deal of other legislation within federal jurisdiction. For example, when I was looking through the index I noticed the Interest Act, chapter 156; the Small Loans Act, chapter 251; the Loan Companies Act, chapter 170; the Bank Act, chapter 12 of the revised statutes of 1952. Then, there is the Co-operative Credit Association Act, 1952-53, chapter 28, and the Bills of Exchange Act, chapter 15 of the Revised Statutes of Canada, 1952. All these measures have a bearing on this subject. I am reminded of the contribution that was made to the debate last night by the hon. member for Edmonton West (Mr. Lambert) when he spoke on another private bill. The hon. member, speaking not only from experience on the treasury benches but from experience in business and law, indicated the broad ramifications that there are to some of these bills directed to other legislation.
Of course, these private bills would not be here if the Canadian public was not concerned about consumer credit and its ramifications. I think the subject is even more timely from the standpoint of the province of Ontario because of a case of historic interest in connection with the unconscionable transactions relief act. The case is that of Re Sampson and Barfried Enterprises Ltd. The decision is a decision of the court of appeal and the court was composed of Chief Justice Porter, and Justices MacKay, Schroeder, Kelly and McLennan. The hearing was on October 15, 1962, and I think the decision may have a bearing on this whole subject. I should like just to read the headnote:
"Interest" as a class of subject within exclusive federal competence under Section 91(19) of the B.N.A. Act is a precise and unambiguous term, and in the absence of any contrary indication should be expounded in its natural and ordinary sense. It is not restricted to compensation determinable by application of a rate per centum to the principal amount of a loan, but covers compensation for the use of money by way of a fixed sum whether denominated a bonus, discount or premium, provided it is referable to principal money or to an obligation to pay money.
Any member who is interested in this particular aspect of the law should refer to it. What it does indicate is that the Ontario act upon which we have relied for some years, the unconscionable transactions relief act, revised statutes of Ontario, 1960, chapter 410, is ultra vires.
That means therefore we are compelled to address ourselves to the problem, not only because of current business and financial conditions in the country, but certainly in Ontario because the remedies upon which we have been accustomed to rely are no longer there. I think some of us are somewhat surprised as to the breadth of that decision, because in

Control of Consumer Credit law school we were of the view that too large federal dependence on the interest power might not be constitutional. We tended to think that property and service rights were the exclusive property of the province. This case is not in dispute because apparently this decision did not go to the Supreme Court of Canada. Unfortunately we are without a supreme decision on this matter, but we must take into account the likelihood that the federal parliament is responsible in this area more than we had thought.
As the hon. member for Danforth (Mr. Scott) has indicated, consumer credit legislation is of interest not only to Canada but throughout the world. In fact, Mr. Speaker, I was interested to read the history of this kind of legislation in the United States, where there has been developed a large body of experience in small loans and sales on a credit basis. It would appear there are essentially two basic philosophies with respect to control of credit sales.
One philosophy is that the most important thing is to compel full disclosure of essential facts concerning an instalment credit transaction, it being felt that the consumer, being able to recognize the difference in cost and services and relying on the competitive processes of supply and demand, will be able to act wisely; but there is another view which seems to come into a great deal of proposed legislation in different places, the view that statutory limitations on financial charges should be imposed, and in this bill the hon. member has proposed both. I personally would feel that the second is somewhat less commendable than the first.
I know that the hon. member who proposed this bill is a graduate in honour economics, and I think he would agree with me that legislation cannot increase a volume of money supply to be borrowed, and we can only accomplish so much by setting statutory limits. What really do we accomplish by setting an arbitrary limit of 10 per cent beyond which rates will not be pushed? Certainly it does not create any more money available for credit. Perhaps the philosophy behind this is that there should not be anything lent above that figure. I do not care to express any particular view on this matter, but when I looked at the private members' bills filed, I noticed that in many of the bills proposed here there is concentration on the disclosure aspect, but not generally the same emphasis as in this bill on the establishment of a rate.
Only recently an important bill was introduced in the other place by Senator David Croll, which attracted considerable public attention. That bill, which of course is familiar to my hon. friend from Danforth, Bill S-6, is an act to make provision for the disclosure

of information with respect to finance charges. It was read the first time on Wednesday, May 22, 1963, and it pretty much follows models suggested in a number of foreign jurisdictions.
In the United States congressional committees have been concerned about this problem. Actually there, this is congressional concern which goes back to N.R.A. days under Roosevelt, and only recently President Kennedy has placed a great deal of emphasis on it again. As we know, the champion of this legislation in the United States has been Senator Paul Douglas and he has done a great deal to acquaint not only Americans but Canadians as well with the problem of credit legislation.
We find that with the introduction of this kind of legislation there are, of course, lobbies against it. This is something we would expect. One of the objections raised is that the mechanics of setting out rates is not nearly as easy as would appear in the simple language of the bill presently before us, which asks that the interest charge would be indicated. I have looked up an article in the Canadian Chartered Accountant of July 1962 which compares the accounting techniques for finance charges by several sales or finance companies. This is an article by an expert in the field, L. O. Morley, a chartered accountant, and he indicates some of the mathematics involved in various computations.
I think this is a pretty important question that should be considered by the appropriate committee of the house, and perhaps the suggestion made by the hon. member might be studied in the light of the experience of the American congressional committees. Certainly when we determine the methods by which financial charges are estimated we find there are a great many techniques-the cash method, the straight line method, the sum of the digits method, the average interest method and the use of arbitrary percentage. In fact as this article points out:
Such companies use none of the recognized methods but calculate the unearned balance of the finance charges by applying an arbitrary percentage to the total of instalment notes receivable at the balance sheet date.
Anybody who has been practising law knows how terribly difficult it is for an ordinary person to calculate what kind of charges there are, and of course this greatly adds to the complexity of good legislation on the subject.
I would just like to indicate that a bill which will be considered in due course, Bill C-31, introduced by the hon. member for Rosthern (Mr. Nasserden) is exactly the same as the bill before us, except that it adds a criminal penalty, whereas the bill introduced by the hon. member for Danforth (Mr. Scott)

provides a civil penalty in the sense that there will result a loss of the finance charges to the lender who fails to comply with the conditions set out in the bill.
Bill C-62, introduced by the hon. member for Greenwood (Mr. Brewin) purports to fill a gap which is created by the Ontario decision to which I have referred which declared ultra vires the unconscionable transactions relief act of Ontario; so in a sense that hon. member is trying to do almost the same thing. The hon. member for Timiskaming (Mr. Peters), who is an experienced member of the house proposes in Bill C-33 to amend the Bills of Exchange Act by limiting the negotiability of a bill of exchange given on an instalment purchase contract, and the hon. member for Gatineau (Mr. Leduc) in Bill C-55 would appear to be limiting the interest, defined broadly, to 12 per cent. The hon. member for Roberval (Mr. Gauthier) in Bill C-23 is trying to reduce the rate of interest or cost of a small loan from 2 per cent to 1 per cent per month.
Therefore I think the hon. member for Danforth (Mr. Scott) is quite correct when he indicates there is a wide interest in this and a resulting variety of attempts to do what would appear to be the same thing namely protect the consumer, particularly the unsophisticated consumer who cannot really know what he is paying. As we examine Bill C-10 we find this is a case of really doing something of the same, in this case limiting the interest charges to 12 per cent; and a number of other bills, Bill C-12 for example, which relates to bankruptcy, intends to incorporate some of the provisions of the Ontario unconscionable transactions relief act which, as I have indicated, has been ruled recently to be ultra vires.
So, we have this strange hodgepodge, of similar legislation coming within the purview of the federal parliament-the Small Loans Act, the Interest Act, the Loan Companies Act, the Bank Act, the Co-operative Credit Associations Act and the Bills of Exchange Act and I ask you, Mr. Speaker, is it possible for any hon. member in this maze -and particularly in this confusion created by the recent Ontario case which purports to enlarge the real authority of the federal parliament-is it possible for any private member to solve this whole messy problem by one bill?
The bill proposed by Senator Croll attracted a great deal of interest, as I am sure that the bill which is now being discussed will attract further interest. Surely it is only on the basis of the gathering together of a great many reactions with regard to what is being done in this house, in the other place, in the United States or
Control of Consumer Credit Great Britain, where they have gone through very much this same problem since the end of world war II, that we can obtain the kind of information which is necessary in order to provide some sensible solution to the whole problem.
I feel, frankly, Mr. Speaker, that there ought to be an attempted consolidation in respect of a number of these interrelated acts. I do not understand how a lawyer today can give good advice when there are so many bills in the federal library and the provincial libraries which he has to consider. How can he possibly look up all the acts that relate to these important subjects?
The reactions to the Croll bill, which are fairly recent, show that there was almost universal support for the general principles of the bill. The house may recall that the Croll bill did not limit the percentage rate-I think he was perhaps wise in that-but it compelled disclosure. A number of economic studies that have been conducted in the United States seem to indicate that one of the advantages of compelling a clearcut statement of rate of interest charged is that it permits better competition to prevail. It does not limit moneys; it seems to increase moneys. One of the factors that tends to break down competition, I am told by some of these studies, is evidenced when the consumer was not in a position to shop around and make comparisons. I think that is perhaps the most valuable part of the hon. member's bill, the fact that there would be disclosure of the interest rate. How it should be done, I am sure I am not clever enough to suggest. As I have said, I have read these articles by chartered accountants who have made lifetime studies of this subject, and I know it is a very sophisticated subject and one which is going to call for the best ability that we have in our public service and among the hon. members of this house.
I agree with my hon. friend that this is the kind of legislation that could usefully be brought before our banking and commerce committee. I do not think this is a case of a witch hunt. I am quite sure there are many finance companies that are simply in business in a competitive way and are doing the best they can to give good service. At the same time I am satisfied that there are many sales of appliances where people do not know what is happening and are shocked when they ultimately learn what they have paid for a product. The Croll bill brought reactions from some people who had paid considerably more in interest than they had for the original appliances. This situation has became more serious over many years. Surely we must recognize that this situation prevails. Our hon. friends in the Social Credit party talk

Control of Consumer Credit about the dead hand of debt and the heavy-anchor of debt upon people in our economy. We agree on this important fact, that debt can be a terrible drag; it can be a drag which makes consumers in Canada feel unable to go out and purchase those things which they need now because they are still paying for something which they used up several years before.
Of course, Mr. Speaker, we recognize that we cannot just cure this condition by passing a bill, but I think the hon. member is right in saying that a good bill at this time is one which will ensure more orderly consumer financing. But it has to be tied in, as the hon. member for Edmonton West (Mr. Lambert) suggested last night, with other legislation and business practice generally. This is important. Looking generally over the whole list of private members' bills, it seems to me that in broad terms there are two great focuses of interest and attention. The most important is-
The Aciing Speaker (Mr. Batten): Order. I apologize for interrupting the hon. member but I have to advise him that the time allotted to him has expired.


Horace Andrew (Bud) Olson: Mr. Speaker, I think the provisions of the bill now before us describe, as has already been said, a situation that has been concerning a great many hon. members of this house and of the other place for a number of years. I do not completely agree with all the provisions of this bill. However, I think it is well that it was introduced at this time so we may have a discussion respecting the whole matter of consumer credit, and so on. The hon. member mentioned that there has been a tremendous expansion in the amount of consumer credit during the past four years. I think the mover of the bill suggested that a recent survey showed there was something like $4 billion outstanding in consumer credit.
I think all hon. members will agree that if one looks around the country today he sees that there has been a tremendous proliferation, if I may call it that, of finance companies. Of course, when any phase or aspect of business expands rapidly it is usually because it is lucrative. I do suggest, however, that unless we re-examine some of the reasons which have led us into this situation, even the passing of this bill and perhaps several others which would offer some form of protection to the consumer would not solve the problem. It may, in fact, create more problems than it solves.
The Right Hon. Mackenzie King, one time leader of the party that is in power today, once said that usury, once in control, will

wreck any nation. I am wondering, because of the tremendous expansion of consumer credit and the concern expressed by so many hon. members by reason of there being so many bills of this type before us this session, whether we are not rapidly coming to the situation when we should take these words of wisdom into account and try to do something about it. There are dozens of cases known to each hon. member of this house where consumer credit and instalment buying of one kind and another have reached a point of diminishing return, a point of diminishing advantage, and in many cases individuals are in real difficulty because of the expansion of consumer credit.
Therefore I think the importance of having this debate this afternoon is that we can go back and make a brief examination of the factors leading up to the situation which we find today. I would suggest that we go back perhaps as far as 1939 or 1940 when the war started. This period was right at the end of what was then called a depression. They refer to these things as recessions now, but at least from that date up until the present time we have seen perhaps both ends of the spectrum of recession, depression, buoyancy, and so on. I think it is fair and safe to say that during the war there was a shortage of consumer goods and in fact there was a greater amount of purchasing power being distributed, through wages and profits, to the people of Canada than there were consumer goods available for purchase. Because of this there was a build up of savings-compulsory savings in some cases, but neverthless, savings, and more purchasing power going out than there were goods to be purchased. From 1946 to 1949 I suggest this consumer credit problem did not intrude itself and there was general prosperity throughout the country because those savings which had been accumulated during the war years were becoming active due to a greater supply of goods and services.
In 1949 there was another minor or major war effort, certainly not on the same scale as the 1939-1945 crisis, but again a large part of Canadian industry was put to work to produce war equipment. Wages and so on were being poured out and distributed into the economy for the production of something which never reached the consumer market. Here we had another expansion of purchasing power in respect of the production of goods which never did get on to the market. Along with this, from 1946 to 1955, there was also a tremendous expansion of industry all over Canada. Again, as long as this was going on, wages and earnings of one kind or another were being distributed to the people which, in turn, became purchasing power for something they were not bound to repay

immediately. It follows, of course, that the prices of goods would eventually contain a portion of the capital which had been necessary to bring about this industrial expansion in the first place. But as long as there was more money going out than was recovered in the prices of the goods being produced there was enough purchasing power, without the expansion of the consumer credit, to get the nation moving in reasonable prosperity, free from some of the problems we are now facing.
In 1955, or perhaps it was a few months before that, another phase began. Instalment buying and consumer credit began on a scale much greater than ever before. I think that by far the greatest proportion of those $4 billions which my hon. friend suggested just now as being outstanding as credit has arisen since 1955 or thereabouts. I believe it is also fair to suggest that this expansion in consumer credit is mortgaging our future income in order to pay for things which we as a nation have already produced. I think we can add to those $4 billion in consumer credit a large part of the expansion under C.M.H.C. and other agencies which do not show up as a consumer credit. This emphasizes the need to take a long, hard look at our financial and monetary system to see whether we cannot make some modification which would distribute fresh purchasing power through the Canadian people so that we, as a people, could collectively buy back those goods and services which we have produced without mortgaging our income for 20 years into the future. To implement the provisions of this bill, for example, to limit the amount of interest to 10 per cent, will not be effective unless we can find some way of seeing that purchasing power is distributed so that we can buy the things that industry produces.
I agree with those clauses of the bill which call for full disclosure of interest and other charges. I approve, also of some of the penalties provided for failing to make such disclosure. I feel, however, that if we were to accept this figure of 10 per cent per annum as the maximum rate of interest which could be charged-and even that is too high-the result might be the closing down of some of the consumer credit facilities which have been built up. This, in turn, could seriously affect purchases and slow down our industries still further. Thus, a very difficult problem has been raised by the sponsor of this bill, and 1 do not think the proposals made in this legislation are the solution. However, I do think that we as a parliament should seriously consider some modification in our monetary system to ensure that we do not arrive at our present situation again, and so
Control of Consumer Credit that we may rectify the situation in which we find ourselves at the present time.


Mr. D. G. Hahn (Broadview):: I do not
intend, Mr. Speaker, to dwell at great length on this bill but I would like to say a few words about it.
First of all, I think there is no doubt that there is a great need for a serious study of this question. The fact that there are so many bills on the order paper on the subject, and the fact that so many people outside this house are concerned about consumer credit indicates clearly that there is need for something to be done in this field. In the second place, as the hon. member for Leeds (Mr. Matheson) has indicated, the existing legislation in this field is overlapping.
As a layman trying to read through these books, I find the situation confusing. This is the second area of need-to straighten out and simplify the legislation which is already on the statute books. We have the Small Loans Act, the Interest Act, the Bank Act, a Loan Companies Act and an act involving unconscionable transactions. Where do these things fit together? It is difficult for the average person, the average consumer, to sort them all out. The fact is that there is great interest being shown on the subject on the one hand and confusion in the legislation on the other, which means that something must be done. I should like to confine my brief remarks to suggesting what might be done.
I do not want to look at the legislation. I want to think for a moment about what we are trying to achieve by this legislation, because we must do that, first of all, before we attempt to draft words. It is obvious that one basic problem exists, namely that the ordinary consumer in this country when he enters into a contract involving some form of interest payment does not know what he is buying. He has no idea what the interest rates are.. In some instances, consumers pay too much. They have no means of comparing one rate against another. Thus, I think it is clear that the first, the fundamental thing you must do, is arrive at legislation which will provide the consumer with facts, so that he may evaluate a contract and know what he is paying.
Having listened to the hon. member for Leeds (Mr. Matheson) I realize it is very difficult to state in concise terms just what the interest is. You can take a specific contract involving certain payments and get several accountants to look at it, and eventually come up with calculations which show the interest rate which applies to that contract.
This is a difficulty we will somehow have to resolve. Somehow we have to provide legislation so that first and foremost people

Control of Consumer Credit
know what they are buying and what the interest rates are. Then after that we have to look very carefully at whether or not we want to go beyond that step, whether or not we want to limit the interest chargeable. Again, I think we have reached the point that some people are unsophisticated in these matters, look at the interest, see what they are buying, and perhaps compare one contract against another which has the interest clearly stated. It still may not mean a great deal to them; and perhaps there is a point up to which we should provide protection by giving a statutory limitation to the interest to be charged. This is now done to some degree in the Small Loans Act with small loans.
Beyond that point, for business in general to try and restrict or limit the amount of interest which can be charged is wrong. I think there are people in business in this country who may need money for a special purpose for a relatively short term, perhaps under conditions of pretty high risk, and who are quite prepared to pay what to us is an abnormally high interest rate for the use of money. Should we legislate against their ability to do that? I do not think we should. I think if they know what they are doing and are prepared to do it, then in a free enterprise society we must allow an individual the right to make that sort of decision. When that point is reached we assume that the person entering into the contract knows what he is doing. At this point he has to fend for himself and make up his own mind, oased on the facts and his need as he sees it. Below this point we must provide some sort of protection. I think this is an area which requires a lot of thought, care and study before we rush through paper legislation which may be restrictive in areas in which it should not.
In winding up my remarks I should like to say that a need exists here. A study must be made. I hope this problem will be studied properly so that all the legislation is looked at. I hope it will be studied from the point of view of trying to put on paper some legislation which meets the kind of case I have tried to set out. I think those hon. members who have put this type of bill on the order paper have done us all a service by bringing this problem to the surface and letting it be discussed, and as a result of this I hope we will start to get some serious study started on the matter.


Mr. Bert Leboe (Cariboo):: Mr. Speaker, I just want to mention one or two matters in connection with this bill. I agree with what the preceding speakers have said with regard to the need for some definite research
[Mr. Hahn.)
into this matter. What I should like to bring to the attention of the house is the relationship between the banking institutions we have today and the lending institutions. In this regard it has come to light that a line of credit established by lending institutions, such as finance companies, might be very large, and they may not be using that line of credit. An individual may go to a bank, ask for credit, and be turned down on the basis of a tight money policy. The very money that this individual should get from his banker is not available to him because of that tight money policy. Yet the lending institution or finance corporation may, through its very extensive line of credit, borrow the money from the bank and lend it to the individual. In this way, whereas the individual would have got his money at 6 per cent interest he is forced to pay finance company rates up to 24 per cent. Mr. Speaker, that is all I want to say because I do not want to talk the bill out.


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


Mr. J. J. Greene (Renfrew South):: Mr. Speaker, I have been designated to talk from 5.40 to 6 o'clock on Friday afternoons. I am afraid that after my death my epitaph will read: He did little in the house, but at 5.40 on Friday afternoons he was always there.
Yesterday, Mr. Speaker, a bill amending the Bankruptcy Act was studied here. It was the first time in several years that a public bill from a private member was passed in the hour reserved for public bills.
This morning when I bought a newspaper I thought that on the front page I would find a piece of news in respect to this bill being passed in the house, but instead of that there was a story about an affair in the private life of a member of the British parliament.
Mr. Speaker, I am very ambitious. If I were concerned with private bills instead of public bills, I would probably be better known in this house and newspapers would pay a great deal of attention to the work I would be doing here.
On the other hand, I feel that newspapers ought to show greater interest in the activities of the Canadian parliament than in what is going on in the British parliament. Then an ambitious member as I am might be inclined to do more for the people.
Mr. Speaker, I wish to say that if that bill were adopted, hon. Senator Croll's bill- (Text):


The Acting Speaker (Mr. Batten):: Order. It being six o'clock I have to advise the house that the hour for the consideration of private members' business has expired.


Harold Edward Winch: One more hatchet job to your [DOT]discredit.



BUSINESS OF THE HOUSE

Gordon Minto Churchill: I should like to ask the house leader two questions: first, would he let us know what the proposed order of business is for next week, if possible; second, can he tell us whether the budget debate will follow throughout the week after next?


John Whitney Pickersgill: Mr. Speaker, to deal with the second question first I hope to have a very few minutes conversation with the hon. gentleman and the other hon. gentlemen concerned with arranging the business of the house about that very subject, and if the hon. gentleman would be agreeable I would rather postpone an answer to that question until Monday, till we have had a chance to confer.
As to the first question, I would hope it might be possible to get the names from the whips in time to take the motion for the composition of the committee on defence which was agreed to today. If it could be generally agreed that it could be put through right away on motions on Monday without any discussion, as is usual in these cases, we should like to do that so that the committee could organize itself and start work right away.
The first item of government business would be the continuation of the debate which was begun before five o'clock today on the resolution preceding the department of industry bill, and if we have the same co-operation as we had today on the economic council resolution that should not take too long.
The next resolution we would call would be the resolution preceding the amendment to the Department of Agriculture Act. In the event that is agreed to by the house and that bill given first reading, we would then begin debate on the economic council. But regardless of what progress has been made on Monday the government would like on Tuesday, unless there is really strong objection to it, to begin debate on the resolution preceding the municipal development and loan fund bill. This is a measure that we are very anxious to get through as quickly as possible because of its employment creating implications and the government would have called it earlier if the Minister of Finance had not been preoccupied with the budget. However,
7, 1963	815
Business of the House he believes he can give some time to it on Tuesday and we would like to go ahead with it on that day, regardless of what progress has been made elsewhere, until the resolution stage has been completed, and then go on after one day's interval with the bill if it comes at an opportune time during the course of the week.
We would also like to make progress on the other two bills respecting a department of industry and the Department of Agriculture during the course of the week and, of course, the economic council bill. All these bills and resolutions will be ready and we will try to arrange them as conveniently as possible right up until the budget comes on Thursday evening. I would prefer not to say what will be done on Friday until I have the private discussions I mentioned earlier.
If it should be possible at some stage during the week to get agreement to set up the committee on procedure and if hon. members thought this could be done without having any debate, we would be very happy, as soon as we got the names, to have the motion put through any day. But if it is going to require a debate I think it is our view that would have to be deferred until some of the urgent government measures have been dealt with.


Stanley Howard Knowles: Mr. Speaker, a few days ago when the minister was indicating possible legislation he included in the list the amending legislation respecting the Atlantic development board. I am sure he has not forgotten it. Is this not included in this general economic legislation?


John Whitney Pickersgill: I had not forgotten it, and as I am pretty sure the minister who is sponsoring the bill will be in the house I will be very glad to bring on the legislation at the earliest possible moment. It is not possible to do this on Monday because the hon. gentleman opposite who particularly wants to speak to it has to be away for very good reasons on that day. It is not desirable on Tuesday because we are very anxious to get on with the municipal loan legislation, but I do not exclude it from the possibilities later in the week, if we make really good progress. I can assure the hon. gentleman that we are very anxious to get on with it.


[Stage Direction]
It being five minutes after six o'clock the house adjourned, without question put, pursuant to standing order.


[Stage Direction]
Embassy of Japan,
Room 1005, Fuller Building, 75 Albert Street,
Ottawa 4, Ontario.
June 7, 1963.
The Honourable Walter L. Gordon,
Minister of Finance,
Confederation Building,
Ottawa, Ontario.
Dear Sir:
I wish to refer to the annual consultation between the Canadian government and this embassy on voluntary controls to be applied by Japan on the export of certain products to Canada in respect of the year 1963.
I wish to inform you that, as a result of the consultations, my government has decided to apply in respect of the 1963 calendar year voluntary export quotas as set forth in the annex to this letter.
Where quotas are allocated to Japanese exporters, the allocations will be arranged so that shipments will be spread as evenly as possible over the year.
I wish to take this opportunity to reiterate that these voluntary restraints are undertaken by the Japanese government of its own accord in order to conform with its established policy to effect gradual increases of Japanese exports on an orderly basis with a view to avoiding undue injury to the domestic industries of importing countries.
Furthermore, I should like to remind you that the Japanese government attaches the utmost importance to avoiding a situation where third countries are able to expand their sales to Canada of the products placed under Japanese export control by virtue of the fact that Japan has undertaken to limit her shipments. Should it transpire that such diversion of trade is taking place, I would hope your government would be willing to enter into consultation with my government at any time my government believes that developments warrant it in order to protect Japan's legitimate interests.
In communicating this information to you, I assume that in respect of the products listed in the annex, for which firm quantities are specified, Canada will not, during the year 1963, invoke the provisions of article XIX of
the GATT or those of the exchange of letters annexed to the agreement on commerce of 1954 between Canada and Japan.
I take this opportunity to renew my firm belief that by applying these self-restraining measures we help to pave the way for further expansion of two way trade on an orderly basis, to the mutual benefit of both countries.
Yours sincerely, (signed)
Nobuhiko Ushiba Ambassador
[Stage Direction]
Voluntary quotas on certain Japanese exports to Canada for the year 1963
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Item
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Fibre
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Quantity dozen
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Blouses
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Cotton
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193,000
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Spun rayon
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124,000
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Synthetic
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15,000 332,000
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Note: The cotton and spun rayon subquotas may individually be increased by not more than 10 per cent, and the synthetic sub-quotas by not more than 25 per cent, by transfer among the three sub-quotas. However, total shipments under the three subquotas will not exceed 332,000 dozen.
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Item
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Fibre
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Quantity
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Shirts (except
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Cotton (Sport
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dozen
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cotton dress
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shirts only)
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216,000
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and work
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Spun rayon (all
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shirts)
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types of shirts)
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177,000
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Synthetic (all types of shirts)
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38,000
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431,000
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Note: The cotton and spun rayon subquotas may individually be increased by not more than 10 per cent, and the synthetic sub-quota by not more than 25 per cent, by transfer among the three sub-quotas. However, total shipments under the three sub-quotas will not exceed 431,000 dozen.
[Stage Direction]
Item	Fibre	Quantity
dozen
Dress shirts and
work shirts Cotton	96,000
Trousers and
outer shorts	Cotton	90,000
Spun rayon	131,000
Synthetic	11,000
232,000
Note: The cotton and spun rayon subquotas may individually be increased by not more than 10 per cent, and the synthetic sub-quota by not more than 25 per cent, by transfer among the three sub-quotas. However, total shipments under the three subquotas will not exceed 232,000 dozen.
Item	Fibre	Quantity
dozen
7, 1963		817
Item	Fibre	Quantity
		dozen
T-shirts and		
other	Cotton	285,000
knitted	Spun rayon and	
shirts	synthetic	129,000
		414,000
Note: Either of the two sub-quotas may be increased by not more than 10 per cent by transfer from the other sub-quota. Total shipments will not exceed 414,000 dozen.
Item	Fibre	Quantity
		dozen
Other	Cotton	100,000
knitted	Spun rayon and	
wear	synthetic	108,000
		208,000
Other garments in the coats and slacks
group:	Cotton	209,000
outer wear
(includes
suits, coats,
raincoats,
jackets,
jumpers,	Spun rayon and
skirts, etc.) synthetic	85,000
294,000
Note: Either of the two sub-quotas may be increased by not more than 10 per cent by transfer from the other sub-quota. Total shipments will not exceed 294,000 dozen.
[Stage Direction]
Item Other garments in the coats and slacks
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Fibre
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Quantity dozen
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group: inner wear (includes nightwear,
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Cotton
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56,000
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woven
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Spun rayon
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underwear,
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and
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etc.)
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synthetic
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21,000 77,000
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Note: Either of the two sub-quotas may be increased by not more than 10 per cent by transfer from the other sub-quota. Total shipments will not exceed 77,000 dozen.
Note: Either of the two sub-quotas may be increased by not more than 10 per cent by transfer from the other sub-quota. Total shipments will not exceed 208,000 dozen.
Elastic braid, all textile fibres, 400,000 pounds; elastic webbing, woven, all textile fibres, 433,800 pounds; pillow cases, cotton,
193,000	dozen; fabrics, cotton, 28,200,000 square yards.
Note: 1. Within the over-all quota for cotton fabrics dyed corduroy will be limited to 1,740,000 square yards.
2.	The Japanese government will use its best endeavours with Japanese producers and exporters so that within the quota the proportion of fabric in the grey, gingham and velveteen will not be less than in the previous two years.
Sheets, cotton, 686,000 pieces; bedspreads, all textile fibres, 630,000 pieces; dish towels, all textile fibres, 400,000 dozen; ladies' dress gloves, sewn, all textile fibres, 322,000 dozen.
Ribbons of the following types:
Faille; lingerie-grosgrain: woven-edge satin; corded ribbons; seam-binding, spun rayon and synthetic, 145,000 pounds.
Note: Corded ribbon of all types is to be subject to control within this quota figure, and it is to be noted that the following type of corded ribbon, which has been used by Canadian distillers, is specifically included: "Corded ribbon, approximately J" wide, made of man-made fibres, with black edges and gold centre, whether shipped in various cut lengths or in continuous rolls."
Fabrics, nylon, 2,680,000 square yards.
[Stage Direction]
Explanatory Notes
1.	All of the above quotas apply to total exports in the twelve month period ending December 31, 1963.
2.	In the above table "synthetic" includes rayon filament and all other man-made fibres except spun rayon. See also note 4 relating to mixtures of fibres.
3.	In connection with the 10 per cent swing provision, and also more generally, the Japanese government will use its best endeavour
to urge Japanese producers and exporters so-that there will be no undue concentration on any item within the quota categories.
4.	The following is a table of criteria used by the government of Japan to distinguish the quota categories of made-up textiles which are a mixture of various fibre components. The basic principle for the criteria is chief value, converted into percentage of fibre content by weight, so that the percentages vary extensively.
Defined as
Cotton
Spun rayon
Rayon filament Synthetic fibre
Fibre Composition
Cotton and silk Cotton and wool Cotton and rayon filament Cotton and spun rayon Cotton and synthetic fibre
Spun rayon and wool
Spun rayon and silk
Spun rayon and jute, flax
Spun rayon and synthetic fibre
Spun rayon and cotton
Spun rayon and rayon filament
Rayon filament and cotton Rayon filament and synthetic fibre
Synthetic fibre and rayon filament Synthetic fibre, jute, flax Synthetic fibre and cotton Synthetic fibre and spun rayon
Percentage of Fibre Content (By Weight)
88% and over cotton 67 % and over cotton 40% and over cotton 30% and over cotton 51% and over cotton
91% and over spun rayon 91% and over spun rayon 71 % and over spun rayon 71% and over spun rayon 71 % and over spun rayon Regardless of percentage fibre content
61% and over rayon filament 51% and over rayon filament
50% and over synthetic fibre 50% and over synthetic fibre 50% and over synthetic fibre 30% and over synthetic fibre
Other Secondary Textile Products on which Voluntary Controls are Maintained
1.	Woollen sweaters, pullovers and cardigans
2.	Woollen knitted gloves and mittens
3.	Paper caps, paper hats and hat bodies
4.	Silk and silk rayon mixed scarves and mufflers
5.	Rayon gloves and mittens, excluding ladies' dress gloves, sewn
6.	Bed sheets other than cotton
7.	Pillow cases other than cotton
8.	Woollen coats and slacks
e.g. Suits, trousers, skirts, dresses, coats, etc.
Note: In respect of these items it is the intention of the Japanese government to establish export quotas for the year 1963 which will provide for moderate and orderly increases on the basis of actual shipments during the four preceding years.
Rubber Footwear
The quotas for the twelve month period ending December 31, 1963, are as follows:
Waterproof footwear, 1,960,000 pairs; canvas footwear, 2,550,000 pairs.
Note: 1. Waterproof footwear means waterproof vulcanized rubber footwear including footwear either of rubber sole or rubber-like sole with cloth upper, lined or unlined, and also one piece moulded plastic footwear, lined or unlined.
2. Canvas footwear means shoes with rubber soles or rubber-like soles, and with outer uppers of fabrics made of natural or man made fibres or outer uppers simulating such materials, excluding slippers and sandals.
Plywood
The quota for the twelve month period ending December 31, 1963, is 56.1 million square feet.
Transistor Radios
The quota for the twelve month period ending December 31, 1963, for radios with

3 or more transistors, including all types and combinations of such radios, is 420,000 sets.
Receiving Tubes for Radio and Television
The quota for the twelve month period ending December 31, 1963, is 2,835,000 units. The Canadian government has given the Japanese government a list of tube types in respect of which Canada relies upon imports rather than upon Canadian production. The types of tubes on this list will be free of quota control.
Polyester Buttons
The quota for the twelve month period ending December 31, 1963, is 1,250,000 gross. The quota applies to all sizes and types of polyester buttons.
Stainless Steel Table Flatware The quota for the twelve month period ending December 31, 1963, is 760,000 dozen pieces. The quota applies to stainless steel table knives, forks and spoons of which the length is under 26 centimetres and of which the handles are made of metal.
[Stage Direction]
Monday, June 10, 1963