1963-07-25

[Stage Direction]
A message from His Excellency the Deputy Governor General transmitting supplementary estimates B for the financial year ending March 31, 1964, was presented by Hon. Walter L. Gordon (Minister of Finance), read by Mr. Speaker to the house, and referred to the committee of supply.
(Translation):


Mr. Gilbert Rondeau (Shefford):: Mr. Speaker, on July 17 last, while I was away from this house on account of illness, the hon. member for Argenteuil-Deux-Montagnes (Mr. Drouin) took advantage of that fact to behave childishly and indulge in silly remarks about me, besides insulting me.
As can be seen on page 2292 of Hansard, besides holding me responsible for a misprint in the Canadian Parliamentary Guide, he even accused me of trying to give myself out as a Liberal.
The insult is too great and my dignity as Social Credit member for Shefford riding demands a reparation.
As regards the misprint in the Parliamentary Guide, I should point out to the hon. member that as early as May 17, I sent a letter to Mr. Pierre G. Normandin, to make him aware of the misprint that had slipped into the French version of my biography.
I have here an acknowledgment of that letter from Mr. Normandin, who gives me the assurance that the error will be rectified in the guide supplement. I have that supplement in my hand and it can be seen on page 21 that the editor carried out my request and rectified the awkward error which had crept in.
The hon. member for Argenteuil-Deux-Montagnes lacked judgment when he thought that I could be responsible for an error committed by a printer. Therefore, Mr. Speaker, I ask him to withdraw his remarks.
(Text):


EXTERNAL AFFAIRS
Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, I am sure all hon. members of the house will welcome the agreement which was initialled today in Moscow for the cessation of nuclear tests in the atmosphere, in outer space and under water. This achievement, when it comes into force after signature, will be of the greatest importance not only in removing a major source of harmful radiation but because of the prospect it holds out for further improvement in east-west relations. The participants in the Moscow negotiations are deserving of our deep gratitude and our warm congratulations.
Despite the optimism which has justifiably been generated by the agreement concluded in Moscow, it would be unrealistic to ignore the fact that it is no more than a first step in the direction of the much more basic accord which will be needed to ensure world peace and security. We have still to remove the difficulties which stand in the way of a more comprehensive test ban, including underground tests. It is imperative, moreover, to ensure that any such agreement will command world wide support. Indeed, it will require universal acceptance if it is to be truly effective.
Moreover, even in agreeing to a comprehensive test ban binding on all states, we shall have dealt only with one small segment of the problems involved in working out a program of general disarmament and effective methods for the peaceful settlement of disputes. To accomplish this complex task will require prolonged and patient effort. We must not allow the present atmosphere of success to mislead us into thinking that it will be easily or quickly achieved.
At the same time we should in no way underestimate the importance of this unprecedented first step. It not only provides the momentum for further advances, but demonstrates that they are feasible and can be achieved through the realization of a common interest and by a concerted and determined effort. Significant changes in the thinking of the Soviet leaders, of which there are signs, could hold out still greater prospects for a far reaching east-west settlement.
A balanced appraisal of the present international situation should not for a momer'

Nuclear Test Ban Agreement suggest that all barriers to a genuine detente are down. It would be naive and even dangerous to have any such illusions. But what has happened does make plain that no one can afford to ignore any opportunity to press forward with negotiations aimed at a broader international understanding. So far as this government is concerned, and indeed I think it would be true of any Canadian government, we shall use to the utmost whatever influence and power we can bring to bear in assisting the speediest possible realization of this objective.
I understand that the present treaty will be open to all states, and it is to be hoped that the original signatories will make every effort to encourage the widest possible participation. I wish to assure the house that for its part the Canadian government is ready now to become a party to the agreement.


Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, there will be general agreement in this house with the announcement made by the Prime Minister. My one regret on this occasion is that the former member on this side of the house who contributed so much in his courageous efforts on behalf of disarmament, Hon. Howard Green, is not here to speak on behalf of the party.
The Prime Minister has pointed out that this is a great forward step. It does not, of course, include underground testing, but even in that regard there are arguments pro and con as to whether the inclusion of underground testing is entirely necessary to assure international and national security. This is the beginning, I hope, of wider negotiations. Certainly the events of the last few weeks have brought about, among all of us in the western world, a hope that we are entering a new era. The signing of this test ban agreement, limited as it is, is a significant step which may presage a new spirit of negotiation.
It has been interesting to follow the statements of Chairman Khrushchev in recent days. About ten days ago he stated that he would permit foreign inspectors to take up stations at Soviet air fields, railway stations, highways and ports to prevent secret concentrations of troops for surprise attack. This offer and his further request for consideration being given to a European non-aggression padt are matters that deserve to be carefully examined. One of the major steps forward yet to be taken toward international disarmament is the control of outer space; agreement among the nations that this infinite area shall not be used for military purposes.
The Prime Minister said in the course of his statement that the present treaty will be
[Mr. Pearson.!

open to all states, and that it is to be hoped there will be the widest possible participation. With that view I entirely concur. I think Canada, because of the closeness of its relationship with France, should be able to do something to bring about an agreement to include France within the purview of this treaty. Certainly the Secretary of State for External Affairs is one who I feel could do a great deal in this connection, to bring about agreement on the part of France through discussions held with General de Gaulle.
Then I think there is a further matter that deserves consideration at this time. That is the question of communist China, a country of 700 million people. By pretending to ignore its existence we do not in fact ignore the tremendous threat that becomes more apparent day by day. Only in the last few days relations between the U.S.S.R. and communist China have indicated a strong division as between those two countries in their thinking. Chairman Khrushchev contends that there is no need to bring about war in order to advance communism; communist China takes the view that revolutionary war is the sole basis for expanding communism. This presents dangerous possibilities. Within a year or two communist China will have nuclear weapons, it is expected.
I think a major challenge is presented to the nations of the western world today. Canada, the United States and other nations will have to take another look at our policy regarding communist China. We will have to review our thinking. We will have to consider the problem, and it is a tremendous one, in the perspective of changing events, and particularly in view of this agreement; because unless it includes communist China-and I do not want to mention France in the same paragraph-and we are able to secure the adherence of communist China, the threat of nuclear war will hang over us to a degree that we can only anticipate with foreboding, horror and overwhelming fear.
I think that the conclusion of this agreement, as the Prime Minister has said, represents what can be achieved by those who are prepared courageously to follow a course of action. Whatever the fears, whatever the setbacks, the word "never" is no longer in the vocabulary of our relations as between east and west; that has been shown by the signing of this test ban. I hope, and I know the house does, that all of us will be able to make our contribution to assure the removal of the threat, which is overshadowing all mankind, of the thermonuclear destruction not only of our country and the free world but of mankind itself.


Mr. R. N. Thompson (Red Deer):: Mr. Speaker, I am sure all hon. members in this

house join with the Prime Minister in expressing their satisfaction, and the renewed hope for world peace which have been raised in their minds as the result of the announcement which we have just heard and the news which has been coming to us in the last couple of days of the test ban negotiations which have been carried on in Moscow. I am sure that all Canadians, peace loving as we are, look forward with much expectation to this significant step toward bringing about a realization of what we hope for, not only for our country but also for the whole world.
I note with satisfaction, however, that the Prime Minister has been careful to caution us about any degree of overoptimism. Certainly no successful test ban arrangements and no successful disarmament treaty can mean anything unless all aspects are taken care of. While we agree that this is a tremendous step forward and that there is obviously general agreement about the arrangements for a ban on nuclear testing in the three areas which have been mentioned, the fact remains that modern instrumentation has made possible the detection of any such type of testing in any part of the world from any other part of the world. What is being covered now is nothing more nor less than what can be covered by other means as far as the opposing elements of this test ban agreement are concerned.
Therefore, while we do observe this hopeful note, it is imperative that we heed these words of caution, particularly in view of the fact that any agreement of this type must be multilateral; it cannot be unilateral in any of its aspects. I think we all hope within ourselves that this first step might be the beginning of a greater degree of agreement amongst the nations of the world, particularly between the eastern and western elements, toward the objectives of world peace and total disarmament.
I think it is well for us to remember that the problem involved is not just one of nuclear armaments, nor is it just one of general disarmament. The cold war is rapidly taking on new aspects. We must take note of the fact that the Chinese brand of communism and the Soviet brand of communism are at odds with each other. The differences run very deep, perhaps deeper than we realize. Yet there is no evidence that the objective of world communism, whether it is sought through the militaristic attitude of China or through the ideas of co-existence which, apparently, we find in the Soviet union, does not differ in any way. The basic objective in both cases remains the destruction of capitalism and the free way of life which we enjoy in our country, as well as those individual rights which we regard as sacred.
28902-5-166
Nuclear Test Ban Agreement
Another aspect of this question which is important is this, and, we are not concerned here with military strength alone. Bound up with the military aspect of this situation are the foreign policies of all the various governments concerned, as well as their economic policies. I am concerned that the economic side of these relationships is rapidly becoming even more important than the military aspect. It has been said that the world is dividing itself into three basic blocs, the communistic states of the east, the free democratic countries of the west and the emerging nations. The attention of each of these groups will be increasingly related to the success of the efforts which are being made to raise economic standards and to improve the standard of living of the individuals composing them. Success in this direction will be the basic element involved if we are to meet the threat posed by communism to our free way of life.
We must, moreover, take careful note that we cannot separate our trade policies, our foreign policies and our defence policies. They must go together. Fragmentation of the over-all picture would merely add to the weakness we have exhibited many times in the past. Thus, while we are pleased with the progress which has been made, we must at all times be cautious to keep the basic issues in correct perspective.
We are grateful to the Prime Minister for bringing this statement to the attention of the house, and we completely agree that Canada should take immediate action to be one of the signatory powers. And if the time should come when there is a break in the wall which tends to divide the people of the world today, we should be there to play our part and do whatever is our responsibility to do.


Mr. T. C. Douglas (Burnaby-Coquiflam):: Mr. Speaker, the initialling of the test ban agreement by the representatives of the governments of the United States, the United Kingdom and the Soviet union represents an important milestone in man's march toward peace on earth and the rule of law. Now that the ice jam has been broken it may be possible to move toward greater achievements in establishing peace throughout the world. Undoubtedly the logical next step would be to work for nuclear disarmament among the nuclear powers.
However, before this is possible' the proposal of Premier Khrushchev will have to be considered, namely a non-aggression pact between the NATO nations and the Warsaw pact powers. I hope that Canada as a member of NATO will exercise all its influence toward that end. I think we have reached the stage where we can no longer continue to

House of Commons
posture in rigid, fixed positions. I hope that Canada will use its influence to see that a non-aggression pact between NATO and the Warsaw pact countries is not held up merely in order to preserve the myth that East Germany does not exist.
I was glad to hear the Prime Minister say that Canada would subscribe to this agreement. I hope, however, that we will do much more. At the present time the warm winds of understanding and tolerance are beginning to blow across the cold war. This is the time for nations to take the initiative and to remove the clouds of suspicion that have covered the eyes of the nations. Canada could do much by taking the initiative in this regard.
I think Canada ought to reconsider its position with reference to the recognition of red China and the admission of red China into the United Nations provided, of course, she is prepared to become a law abiding member of the world community. As I have said repeatedly in the house, I think this is an excellent opportunity for the Canadian government to say that in the interests of stopping the spread of nuclear arms in the world, Canada is prepared to reconsider its position with reference to the acquisition of nuclear arms. I am sure that if in the course of the next few days or weeks the Prime Minister was prepared to make an announcement that Canada was reconsidering its position in the light of the improved international situation and was prepared as its contribution to forgo the acquisition of nuclear arms, this would do much toward promoting the kind of understanding and good will which are basically essential to any further progress on the road to peace.



THE MINISTRY


Lester Bowles Pearson: Mr. Speaker, I have a statement to make on government organization and one to make on house business. Perhaps I may be permitted to combine them. The first one is very short. I wish to announce that The Department of Industry Act was proclaimed yesterday, that Hon. C. M. Drury, Minister of Defence Production, was sworn in today as Minister of Industry and that David A. Golden is to be deputy minister.
Ministerial responsibility for the department of public printing and stationery was transferred today from the Secretary of State to the Minister of Industry in accordance with a recommendation of the Glassco commission report and, I may add, with the approval of the Secretary of State.
Yesterday the Leader of the Opposition asked me about the general plan of the government for the remainder of this portion

of the session, and also asked when the government expected that parliament would reconvene. I undertook to make a statement today, and I now propose to do so. The house leader, the Secretary of State, has been in regular consultation with representatives of the parties opposite in arranging the business of the house and has, I understand, given them a general indication of what the government hopes to accomplish before we adjourn for what is left of the summer. I believe I can summarize this very briefly.
Today we are going on with the one remaining budget resolution, to be followed by the excise tax bill. The government also wishes to complete consideration of the bill respecting the surcharge order and the committee stage and third reading of the bill respecting the economic council. As for the municipal development and loan board bill and the resolution respecting the Canada pension plan, these, as hon. members know, are to be the subject of consultation with the premiers of the provinces tomorrow and Saturday. I believe it will be a courtesy to the provinces to reserve any statement regarding the government's plans with respect to these two matters until Monday, when a statement can be made in the light of this conference.
The government will also ask for interim supply for the months of August and September. In this connection, Mr. Speaker, we plan to bring in a supplementary estimate which will be largely concerned with the maintenance of employment, and which it would be the hope of the government that the committee of supply would adopt so that this item could be included in the interim supply bill. The government has not yet completed its consideration of the Norris report, and it is possible that we may be in a position next week to ask the house to consider a measure arising out of the recommendations of that report.
I know of no other business that the government feels it should be necessary to have completed before the adjournment, except for two items which we would like the house to be able to deal with in this part of the session. Subject to further consultation between the house leader and hon. gentlemen opposite with regard to procedure, the government is ready to take the responsibility tomorrow of proposing certain changes in the remuneration and pensions of members of parliament, and we would like at the same time to deal with certain amendments to the Judges Act which, in the opinion of the government, should be made before the adjournment if possible.

It would be the hope of the government that with the co-operation of all hon. members we might complete the business of this part of the session by the middle or latter part of next week, and in that case it might be possible to adjourn until Monday, September 30.


John George Diefenbaker: Mr. Speaker, I thank the Prime Minister for his outline. While I am in entire agreement with the date fixed for adjournment, if the program to which he has referred is to receive the proper attention that parliament must give to it then it would seem that, as has happened so often in the past, prime ministers are often too optimistic in setting dates for the termination of sessions.
In so far as the house business is concerned, I feel that any action to be taken should be in accordance with the usual method and should follow the rules. There was a suggestion that tomorrow, provided there was consent, certain matters could be proceeded with. Now that we are in the middle of the budget discussion I believe we should continue with that and that the government in the regular course should place on the order paper whatever motion it desires to place thereon. Certainly there will be no great delay.
I am sure we would be subject to a great deal of criticism if the house were to decide by agreement that the rules are to be set aside in respect of a matter particularly affecting the house. People across the country would say "You delay other matters because of the necessity of compliance with the rules, but on matters affecting each and every member of the house and the Senate you have no qualms in asking for consent consideration immediately". In my view a motion could be made returnable on Monday in the regular course of events, in which case that argument could not be used because the regular processes of parliament would have been followed.
I suggest to the Prime Minister in all sincerity that the course suggested by him could only lead to people believing that when we deal with matters affecting ourselves the rules are brushed aside. One extra day's consideration through a motion being properly placed before the house will meet any such general criticism.


Hon. J. W. Pickersgill (Secretary of State):: I wonder if I might be permitted to say a word. Of course in view of what the Leader of the Opposition has said there would be no thought whatever of proceeding tomorrow with these matters. However, I should remind the right hon. gentleman and the house that 28902-5-1661
Inquiries of the Ministry because of the conference it will not be possible to proceed with budget matters tomorrow and they will have to be set over unless, as I fervently hope, they are completed today, and as I have good reason to believe they will be.
Under the circumstances perhaps I should give hon. members as much warning as possible that the government's wish would be, subject to anything other hon. members might wish, to take the supplementary estimate which was tabled today. If there were agreement to take that we would like to have the whole amount passed, since it is entirely for employment. Then we could include it in interim supply. If there were an understanding that we should do that, then we would go on with the estimates of the Department of Transport in the hope that we might complete that department tomorrow. Perhaps I should add, sir, that if there is any disposition on the part of representatives of parties opposite to suggest some other alternative course that might make greater progress, I would be happy to consider it.
There is one further caveat I am obliged to enter. My hon. friend the President of the Privy Council also has to be at the premiers' meeting, otherwise we would like to take the economic council measure.


John George Diefenbaker: We realize the need for the Prime Minister, the president of the council and other ministers to be present. In our desire to co-operate we will do nothing that would prejudice them during their absence.



ESTABLISHMENT OF ELECTORAL BOUNDARIES COMMISSION

[Stage Direction]
On the orders of the day:
Thomas Clement (Tommy) Douglas: May I direct a question to the Prime Minister. Is it still the government's intention to set up a commission to look into the redistribution of federal constituencies? If so, does the Prime Minister intend to bring down legislation in that regard soon after the house reconvenes at the end of September?


Lester Bowles Pearson: Yes, Mr. Speaker, it is indeed our intention to do that. We had hoped it might have been possible in the first part of the session. Certainly we will be bringing down legislation for that purpose in the resumed session in the autumn.



PROTECTIVE STAFF


[Stage Direction]
On the orders of the day:
Mr. Eric A. Winkler (Grey-Bruce):: Mr. Speaker, my question might not be of great
2606	HOUSE OF
Inquiries of the Ministry national significance, but I am sure it will be locally important. I should like to direct my question to the Secretary of State. I am wondering if the minister could take up with the proper officials the possibility of securing light weight uniforms for the protective staffs of both houses of this parliament.


John Whitney Pickersgill: I am sure Your Honour, although you cannot be questioned directly, will nevertheless give the matter consideration, especially bearing in mind the temperature today.
(Translation):



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Mr. Guy Marcoux (Quebec-Montmorency):: Mr. Speaker, I should like to ask the Minister of Justice a question of which I have unfortunately been unable to give him notice.
Yesterday, it was stated in reply to a question of mine, that the case of Mr. Leopold Dion is being considered by a coroner in the course of an investigation. Now, according to the newspaper L'Evenement, of Quebec city, and the Gazette of this morning, Mr. Dion is held criminally responsible.
I should like to ask the minister whether he intends to carry out an investigation within the national parole board to reassure the families concerned which live in various ridings, namely Quebec-Montmorency, Quebec East, Portneuf and all the counties of the Lake St. John district.


Hon. Lionel Chevrier (Minister of Justice):: Mr. Speaker, I feel that the question just asked by the hon. member for Quebec-Montmorency is of the utmost importance, especially after what happened during the coroner's investigation.
When my parliamentary secretary (Mr. Macdonald) rose to reply to the question yesterday, he said that the government was not considering the holding of an investigation within the national parole board.
However, I feel that we must take into consideration the fact that the prisoner has made a confession. The board did make a thorough examination of the Dion case but in such circumstances, when a prisoner is mentally unstable, it is always dangerous to free him on parole. In this instance, a minute examination was made before the prisoner was set free. However, as I just said, since a confession has been made and in view of the circumstances surrounding this horrible crime, which I consider as extremely serious, I am asking a lawyer and a psychiatrist to examine the file immediately and to advise me as to whether too great a risk was taken in this case, in their opinion.


(Text):



FINANCE


[Stage Direction]
On the orders of the day:
Hon. Paul Mariineau (Ponliac-Temiscamingue):: I should like to ask the Prime Minister a question further to the statement he made to the house earlier this week. Will he continue to press for full exemption from the proposed United States tax upon the purchases of Canadian securities by United States residents, and will he advise the house whether any progress has been made in that direction to date?


Lester Bowles Pearson: The hon. gentleman may have noted that the secretary of the treasury has expressed the hope to congress that such full exemption will be achieved. I think this is some progress.


Paul Raymond Martineau: How does the Prime Minister reconcile the answer he has just given with the statement-


Mr. Speaker:: Order. Will the hon. member please put his question? He is entering into an argument.


Paul Raymond Martineau: I should like the Prime Minister to inform the house whether he has any comment to make upon the statement made by the under secretary of the treasury of the United States, Mr. Robert V. Roosa, to the effect he has made it quite clear there would be no further exemptions?


Lester Bowles Pearson: No, Mr. Speaker, I have no comment to make on that.
[Later:)


Mr. G. H. Aiken (Parry Sound-Muskoka):: Mr. Speaker, I have a question for the Minister of Finance. Has the minister received a copy of the President's revised draft legislation to the United States congress relating to the securities tax?


Hon. Waller L. Gordon (Minisler of Finance):: No, Mr. Speaker, I have not received it myself.


Gordon Harvey Aiken: A supplementary question, Mr. Speaker. In view of the statement by Mr. Dillon, secretary of the United States treasury, that Japan could apply for an exemption in the same manner as Canada, can the minister now verify the fact that the exemptions do not apply solely to Canada?


Walter Lockhart Gordon: Mr. Speaker, I am not quite clear whether or not this is a hypothetical question.


Gordon Harvey Aiken: No.


Walter Lockhart Gordon: The hon. member says no, but it is based on whether or not there is legislation before congress. To my knowledge the legislation is not yet before congress.


Paul Raymond Martineau: Can the Minister of Finance inform the house whether, in the course of the discussion on finance which took place in Washington during the week end, the possibility of unpegging the Canadian dollar was raised?


Walter Lockhart Gordon: I shall be delighted to answer that question, but I should like to place the answer in the proper context.
In the week end discussions in Washington there was a full and frank discussion between Canadian and United States representatives of all aspects of the payments position of the two countries. This naturally included a discussion of the capital movements between the two countries and of the various factors affecting them. As members of the house are aware, one of these factors-by no means the only one, but an important one-is the relative level of interest rates in the two countries.
The Canadian representatives explained, as I had informed the house on the evening of June 13, that the monetary policy of the government and, of course, of the Bank of Canada was directed to achieving the kind of credit conditions which would favour economic expansion in Canada while keeping the needs of the balance of payments situation in mind. They pointed out that there had been a progressive reduction for some time in the level of interest rates in Canada and in the spread between interest rates in Canada and the United States, and said that in the present economic circumstances of large unemployment and substantial unutilized capacity it would continue to be the aim of Canadian policy to encourage credit conditions which were at once stimulating to the Canadian economy and compatible with exchange stability and balance in our international accounts.
The United States representatives were naturally interested primarily in the effects of the policies followed on their short term liabilities to Canada in the form of Canada's holdings of United States dollars which together with our gold holdings, constitute our exchange reserves. The Canadian representatives pointed out that during the latter part of 1962 it had been necessary to encourage a volume of borrowing abroad sufficient not only to cover our current account but also build up our depleted exchange reserves, and that this had led temporarily to abnormally large borrowings in the United States; that once the reserves had been rebuilt to more satisfactory levels, the policy had been, in the prevailing circumstances, to achieve a capital inflow no more than sufficient to cover the reduced current account deficit, and the success of this policy was reflected in the fact
Inquiries of the Ministry that during the first half of 1963 Canada's exchange reserves had remained very stable if one excludes the receipt in January, 1963, of the second half of the $250 million United States loan arranged in September, 1962. The Canadian representatives were accordingly authorized to provide the assurance, which is reflected in the communique, that it was not the desire or intention of Canada to take advantage of unlimited exemption from the proposed United States tax to increase her foreign exchange reserves through the proceeds of borrowing in the United States. This has, in any case, not been recent Canadian policy.
Exemption from the United States tax will undoubtedly enable Canada to maintain a lower level of interest rates than would have been possible if the tax were applied to us, and the general level of interest rates in Canada will be lower than it would have to be if we were aiming at increasing our exchange reserves by encouraging a volume of borrowing which, when taken in conjunction with the net of all other capital movements, was more than sufficient to cover our current account deficit. But members will, I am sure, realize that no one can forecast with certainty what the precise level of interest rates in Canada will be, since this depends on a variety of factors which cannot now be foreseen, including the trend of interest rates in the United States and elsewhere. Consequently it would not have been possible for any undertaking to have been given regarding the future of interest rates in Canada.
Now, to answer the hon. member's question about the exchange rate, there has been some question as to whether the possibility of Canada abandoning the fixed rate of the Canadian dollar was raised in the Washington discussions. The answer is in the negative. I have stated in the house that it is the policy of the government to maintain and defend the fixed exchange rate for the Canadian dollar at its present level, and this policy was not called into question by United States representatives in the Washington discussions. The last sentence of the communique issued after the talks records that active discussions will continue to strengthen the close economic relations between the two countries and, at the same time, facilitate measures for making the maximum practicable contributions to economic expansion in both countries and the strength and stability of both currencies.



SUGGESTED CANADIAN TAX ON FOREIGN INVESTMENTS

[Stage Direction]
On the orders of the day:
Mr. Barry Mather (New Westminster):: Mr. Speaker, I wish to direct a question to the Minister of Finance. In view of the announced

Inquiries of the Ministry intention of President Kennedy to impose a 15 per cent tax on new United States investments abroad, will the minister take under consideration the possibility of imposing a similar new tax on Canadian investments abroad in order to encourage Canadian investment in Canada?


Walter Lockhart Gordon: Mr. Speaker, I think the hon. member may have misunderstood the purpose of President Kennedy's proposed tax.



COMMITTEE CONSIDERATION OF INTEREST CHARGES ON SMALL LOANS

[Stage Direction]
On the orders of the day:
Mr. H. A. Olson (Medicine Hal):: Mr. Speaker, I would like to address a question to the Solicitor General concerning the business of the house and ask the minister whether he would attempt to speed up the proposal, I think it will have to be called, of a committee that was going to consider all the bills dealing with interest charges on small loans and related matters, because of the allegation made before the Ontario committee the day before yesterday and yesterday that there were some exorbitant interest rates being charged; and further, that the chartered banks are circumventing the statutory limit of 6 per cent interest on loans, which is of course a federal act.


Hon. J. Watson MacNaughl (Solicitor General):: Mr. Speaker, that resolution will be brought forward as soon as more pressing business in the house has been disposed of.


Horace Andrew (Bud) Olson: I have a supplementary question, Mr. Speaker. I would like to ask the minister whether he thinks the evidence would justify him initiating an investigation to ascertain whether this statutory limit of 6 per cent has been violated.


John Watson MacNaught: Mr. Speaker, I do not think it would be appropriate for a minister of this government to comment on revelations, shocking though they may be, made before a committee of another legislative body.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Hon. Alvin Hamilton (Qu'Appelle):: I should like to direct a question to the Minister of Agriculture. Has the minister received a letter of resignation from the acting assistant deputy minister, Dr. Kristjansson?


Hon. Harry W. Hays (Minister of Agriculture):: Not to my knowledge.
[Mr. Mather.)


Francis Alvin George Hamilton: May I ask a supplementary question. If the minister has not received the letter himself, personally, will he give assurance to the house that the commitments made in solemn meeting between the federal government and the ten provincial governments that nothing in ARDA would contravene the principles of the resources for tomorrow conference will be maintained?


Harry William Hays: In reply to the hon. member, I may say I will take note of what he has said and we will keep it in mind.


Mr. D. M. Fisher (Pori Arihur):: May I ask
a supplementary question. I should like to place the matter more directly before the minister. Is it his intention to change or alter drastically the ARDA program? If so, does he intend to introduce legislation this session to bring such changes into effect?


Harry William Hays: If there are any changes they will be a matter of government policy and will be introduced to the house at the proper time.


Douglas Mason Fisher: As a further supplementary question, in view of that answer I would like first to direct the minister's attention to the kind of stories that caused the question of the former minister of agriculture, and ask if the minister can confirm that a number of resignations are in hand from people in the ARDA program because of their feeling that the government was intending to blot that program?


Harry William Hays: Mr. Speaker, I know of no intention on the part of anyone to resign. Everyone seems very, very happy.


Francis Alvin George Hamilton: In view of the importance of this matter, I wonder if the minister would give me a commitment today that if there is a letter of resignation he will make it available to the house?



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. A. D. Hales (Wellington South):: Mr. Speaker, I would like to address a question to the Minister of Labour. Would the minister care to advise the house of his recent meeting with officials of the Canadian Labour Congress, and whether there are any new developments regarding the release of the Canadian ship at Chicago?


Hon. A. J. MacEachen (Minister of Labour):: Mr. Speaker, yesterday I had discussions with the executive officers of the Canadian Labour

Congress. These discussions were confidential and it is not possible for me to advise the house as to their nature.
I have nothing further to report today in connection with the Howard L. Shaw.



THREATENED STRIKE ON U.S. RAILROADS

[Stage Direction]
On the orders of the day:
Mr. Raymond Langlois (Meganlic):: Mr. Speaker, I should like to direct a question to the Minister of Transport. I did not send him notice of the question in view of the fact that I asked this question yesterday and the day before and was told that it would be taken as notice. Is the government considering action regarding the possible rail strike in the United States, and considering the position on our own railroads in the United States at the moment?


Hon. G. J. Mcllraiih (Minister of Transport):: Mr. Speaker, the question is hypothetical, but I would point out that some of the railways in the United States are owned by Canadian National Railways, and I assume that the hon. member is referring to this. While the question as worded by him deals with action to be taken in the event of a strike, I would point out that if a strike does take place it will affect certain railroad operations in Canada. But beyond that, the question of a strike in the United States affecting railways being operated in the United States by United States employees is a matter over which we do not have jurisdiction.



SASKATCHEWAN


[Stage Direction]
On the orders of the day:
Mr. Reg Cantelon (Kindersley):: Mr. Speaker, I wish to direct a question to the Minister of Trade and Commerce. Today I received the following wire from Fairmount, Saskatchewan:
Point congested. Approximately 30,000 bushels to be delivered on present 12 bushel quota. This point on restricted list-


Mr. Speaker:: Order please. I regret having to interrupt the hon. member but he should not read telegrams of that nature. He should state his question, and this is quite clearly set forth in the rules.


Reginald (Reg) Cantelon: Since order No. 1,000 applies to this point among others, and some farmers are unable to deliver their quotas because the elevators are plugged, would the minister instruct the wheat board to review its policy on order No. 1,000, and remove it where deliveries are impossible because all elevators are filled?
Inquiries of the Ministry


Hon. Mitchell Sharp (Minister of Trade and Commerce):: Mr. Speaker, I have been in touch with the wheat board from time to time in recent days about the delivery situation, and they have assured me they are doing everything possible to maintain equity between producers consistent with their overriding responsibility to put grain into position to meet market demands. I shall bring this complaint to the board's attention.



PRIVILEGE


[Stage Direction]
On the orders of the day:
Mr. Jack Roxburgh (Norfolk):: Mr. Speaker, I have a question of privilege to raise with regard to a statement made by the hon. member for Oxford (Mr. Nesbitt), reported at page 2598 of yesterday's Hansard as follows:
I was not, like the hon. member opposite, trying to cut off loans to farmers under the Farm Credit Corporation.
That is an untrue statement. This is what I said in my speech regarding the tobacco situation, as reported at page 1416 of Hansard for June 20:
I think one of the most important factors is to stop further expansion of tobacco growing. I should like to repeat that tobacco farmers in Ontario produce 99.9 per cent of the tobacco Canada uses. If all these facts that the medical profession claim are true, and I am not denying them, then why should this or any other government-


Mr. Churchill:: On a point of order-


John Maxwell Roxburgh: -allow the Farm Credit Corporation-


Some hon. Members:: Order.


John Maxwell Roxburgh: -and other corporations to lend money to people to grow more tobacco.
That was to advance it to the farmers. In my first speech I spoke of the Farm Credit Corporation and-


Mr. Speaker:: Order.


John Maxwell Roxburgh: -all they have to do is read it.


Mr. Speaker:: Order. I understand the hon, member has finished with his point of privilege, if there was one.


Mr. W. B. Nesbift (Oxford):: Mr. Speaker, a point of privilege was raised a few moments ago by the hon. member for Norfolk. The hon. member was explaining some misunderstanding on a previous occasion and was reading a paragraph from his own remarks of

Inquiries of the Ministry a prior date. Unfortunately, Your Honour, he did not get an opportunity to finish the paragraph, and in fairness to the hon. member I was wondering whether on his behalf I might complete the sentence that was not read.


Some hon. Members:: Order.


Mr. Speaker:: Order, please.


Wallace Bickford (Wally) Nesbitt: Your Honour-


Mr. Speaker:: Order. I think the hon. member for Norfolk must take his own responsibility.


Wallace Bickford (Wally) Nesbitt: I quite agree with that, Your Honour, but the hon. member for Norfolk made the statement in this house that a remark I made was not true; then he proceeded to read part of what he had said and did not get a chance to read the cogent sentence, and I would like to put that on the record. The sentence reads:
-why should this or any other government allow the Farm Credit Corporation and other corporations to lend money to people to grow more tobacco?
It is just that simple, Your Honour; that is the end of the quotation.


John Maxwell Roxburgh: Mr. Speaker-


An hon. Member:: It is not funny, is it?


John Maxwell Roxburgh: No, not when it is not true. On a question of personal privilege, Mr. Speaker, this is exactly what the hon. member for Oxford said-


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order, please. I suggest to both hon. members that they keep their family squabbles out of this house.


Mr. T. S. Barnett (Comox-Alberni):: I rise on a question of privilege, Mr. Speaker, to inform the house that the family squabble on tobacco between the hon. member for Norfolk and the hon. member for Oxford has been settled with the result that there will be a modest increase in the funds of the Canadian Cancer Society.



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
John George Diefenbaker: I would like to ask a question of the Minister of Labour. In view of the urgency which is apparent in the findings of Mr. Justice Norris, is it not the intention of the government to bring before the house,


prior to the closing of this part of the session, some measures to meet the terrible situation inherent in the findings of that commission?


Allan Joseph MacEachen: Mr. Speaker, as the Prime Minister indicated in his earlier statement, the government presently has the Norris report under consideration and, as the Prime Minister also stated, the consideration of that report is not yet completed. When the consideration is completed it will be possible for the government to reach decisions, and it will only be possible at that time to determine whether any proposed measures can be brought to the house within the time limit suggested.


John George Diefenbaker: As a supplementary
question, in view of the continued disorder that prevails on the great lakes, is it not possible to accelerate the deliberations of this committee? Because, if we are going to wait until fall, very serious results may follow inaction now.


Allan Joseph MacEachen: First of all, Mr. Speaker, I would like to tell the right hon. gentleman that this matter has been treated, both by the interdepartmental committee and by the government, as a very urgent matter, and I am sure it would be the wish of the government to bring forward any measures as quickly as possible. I shall add that the government is fully aware of the implications of any delays in this matter.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. Eldon M. Woolliams (Bow River):: Mr. Speaker, I would like to direct a question to the Minister of National Defence. In view of the statement made by the right hon. Prime Minister in reference to test banning, I wish to ask whether nuclear weapons have been acquired by Canada for use in Canada or outside the country?


Hon. Paul Hellyer (Minister of National Defence):: Not yet, Mr. Speaker.



COLUMBIA RIVER


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I wish to direct a question to the Secretary of State for External Affairs. In view of the general interest in the question, could the minister inform the house when further meetings between representatives of

Canada and the United States will take place with respect to the renegotiation-I am using the Prime Minister's words-of the Columbia river treaty?


Hon. Paul Martin (Secretary of State for External Affairs):: If my hon. friend will allow me I shall tell him something of interest. We have just concluded another satisfactory meeting with the representatives of the government of British Columbia and, as a result, we hope to be meeting with our opposite numbers in the negotiations with the United States, perhaps about the middle of next week.


Herbert Wilfred Herridge: A supplementary question, Mr. Speaker. Does this mean that Premier Bennett has his five mills and his money?


Paul Joseph James Martin: It means, Mr. Speaker, that the negotiations that have been carried on in a co-operative way between the government of Canada and the government of British Columbia are bearing results. (Translation):



TRADE AND COMMERCE


[Stage Direction]
On the orders of the day:
Hon. Theogene Ricard (Si. Hyacinihe-Eagol):: Mr. Speaker, as I wish to promote bilingualism in Canada, I should like to put a question to the Minister of Trade and Commerce. Could he tell the house whether it is his intention to have published in French in the near future the magazine entitled Circle Tour from Trans-Canada Highway, recently put out by the tourist bureau of the Canadian government?
(Text):


Mitchell William Sharp: Mr. Speaker, I hope the hon. gentleman will allow me to take this question as notice.
(Translation):



BROADCASTING


[Stage Direction]
On the orders of the day:
Mr. L. J. Pigeon (Joliefie-L'Assompiion-Monlcalm):: Mr. Speaker, I should like to direct a question to the Secretary of State, who is the minister responsible for the Canadian Broadcasting Corporation. Does the government intend to establish a special committee to examine every aspect of the Canadian Broadcasting Corporation activities, or to set up a royal commission?
(Text):


John Whitney Pickersgill: Mr. Speaker, the hon. member for Burnaby-
Inquiries of the Ministry Coquitlam addressed a similar question to the Prime Minister some time ago and the Prime Minister's reply, if I remember it correctly, was that the matter was under consideration. I would hope that before the government felt it necessary to bring in any motions to set up any more special committees, we might make a little progress with those that are now on the order paper.


Thomas Clement (Tommy) Douglas: supplementary question, Mr. Speaker. That would not apply, however, to the setting up of a royal commission. Has the government given some thought to the possibility of setting up a royal commission on broadcasting?


John Whitney Pickersgill: Mr. Speaker, I did make a statement about that before the house met, at a meeting in Toronto at a time when I invited three gentlemen to look into this matter. I think it would be premature to attempt to reach any conclusion on that subject until I had some indication from those gentlemen as to answers to the questions I put to them, because I think the answers to those questions would undoubtedly have some influence on the terms of reference of any royal commission that might be considered.


Thomas Clement (Tommy) Douglas: Mr. Speaker, could I ask the Secretary of State how soon he expects to get a report from the three gentlemen in question.


John Whitney Pickersgill: I have not been in communication with them very recently, but I would hope it would be some time in September.



ROYAL CANADIAN AIR FORCE


[Stage Direction]
On the orders of the day:
Hon. D. S. Harkness (Calgary North):: Mr. Speaker, I should like to address a question to the Minister of National Defence. Could the minister tell us what was the type of jet aircraft which was unfortunately lost, together with the life of the pilot, at Deci-momannu in Sardinia, and if the cause of this accident has been determined.


Paul Theodore Hellyer: Mr. Speaker, I understand it was a CF-104. The cause of the tragic accident has not yet been determined. An investigation has been commenced.


Douglas Scott Harkness: A supplementary question, Mr. Speaker. What was the F-104 doing at Decimomannu?


Paul Theodore Hellyer: It was engaged in practice operations, Mr. Speaker.


Douglas Scott Harkness: I wonder whether I might ask, what kind of practice operations?

Inquiries of the Ministry


Paul Theodore Hellyer: Profile bombing practice operations.



INDUSTRY


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a question to the Minister of Industry. Since this question will give the minister an opportunity to make his maiden speech in his new role, perhaps I might be permitted to offer him my warm congratulations. As a matter of fact my congratulations are double barrelled; I congratulate him on being the Minister of Industry and I also congratulate him on having responsibility for that most important function so far as parliament is concerned, namely the printing bureau.
My question to the minister is this. Could he tell the house how soon he expects to be in a position to recommend the appointment of a commissioner for area development, so that this phase of the work of his department might get under way?


Hon. C. M. Drury (Minister of Industry):: Mr. Speaker, a search is already under way for a suitable appointee as commissioner for area development, and I hope shortly to be able to make an announcement in this regard.



FORESTRY


[Stage Direction]
On the orders of the day:
Mr. Fred T. Armstrong (Shelburne-Yar-moulh-Clare):: Mr. Speaker, may I direct a question to the Minister of Forestry. Would the minister advise the house if any progress is being made in discussions with the government of Nova Scotia related to the forest stand improvement program in the Cape Breton area of that province?


Hon. J. R. Nicholson (Minister of Forestry):: Mr. Speaker, I am pleased to be able to inform the house that the government has approved the extension for another year of the agreement with the province of Nova Scotia covering the forest stand improvement program for Cape Breton. Under the new agreement the federal government undertakes to pay 80 per cent of the miners' salaries and wages, and 50 per cent of all other expenditures in respect of stand improvement projects up to a total of $210,000. The remaining costs will be assumed by the province of Nova Scotia. Displaced miners seeking employment will be hired from the national employment service.


EXTERNAL AFFAIRS
[Stage Direction]
On the orders of the day:
Mr. W. H. Jorgenson (Provencher):: Mr. Speaker, I should like to direct a question to the Minister of Trade and Commerce in relation to the statement made yesterday concerning Canada's increased contribution to the world food program. Has he consulted with Dr. Sem, director general of F.A.O., or Dr. Burmah, director of the world food program, in relation to this matter?


Mitchell William Sharp: No, Mr. Speaker, I personally did not have any talks with them on this particular subject. The officials of the government are, of course, in constant touch with the officials of the food and agriculture organization.


Warner Herbert Jorgenson: A supplementary question. Would the minister give an assurance to the house that the commitment as to the ratio between food and cash assistance by the previous minister of agriculture will be maintained?


Mitchell William Sharp: I suggest that that question be put on the order paper so that it can be put precisely. It must be related to some particular program.


Warner Herbert Jorgenson: A further supplementary question. Were there consultations between President Kennedy or Secretary of Agriculture Orville Freeman with regard to the impact of Canada's enlargement of giveaway programs, and their pledge not to extend United States giveaway programs following the vote on the referendum which was held in the United States?


Mitchell William Sharp: No. As I said yesterday our program of expanded aid, which will take the form of further shipments of wheat and flour to needy countries, will be expanded in consultation with other countries, including the United States, and it will be done in such a way as to give ample protection to the markets of those countries as well as ours.


[Stage Direction]
On the orders of the day:
Mr. Andrew Brewin (Greenwood):: Mr. Speaker, my question is addressed to the Secretary of State for External Affairs. In the light of the encouraging and momentous statement made today by the Prime Minister, is it the intention of the government to express to its allies in NATO the belief that a non-aggression treaty between NATO and

the Warsaw pact powers might make a useful contribution to the easing of tensions between these two blocs?


Paul Joseph James Martin: Mr. Speaker, the conference to which the Prime Minister directed our attention earlier today has concluded. The negotiators are returning to their respective governments. In the communique which has been issued, they have indicated that they will report afterwards to the members of the NATO council, and the Soviet union will report to the members of the Warsaw pact.
When those reports take place Canada will be fully informed. The government has already indicated that subject to obligations and positions taken with regard to the problem of a divided Germany, we see advantage, all things considered, in a reaffirmation by the nations that they will not commit aggression. Before a final position can be taken, my hon. friend will understand that we will have to await the report to the NATO council and the attitude taken by other member states of NATO.


Thomas Clement (Tommy) Douglas: supplementary question. Might I ask the minister what commitments Canada has with reference to a divided Germany?


Paul Joseph James Martin: Mr. Speaker, Canada has no commitments. Canada has stated her views in this house, as it did through the previous government. We will have to give these views consideration before a final position can be taken. I would not want what I have said to be interpreted as meaning that it would not be possible to make a declaration on the part of members of NATO and members of the Warsaw pact which would take into account the considerations I mentioned a moment ago.



NORTHERN AFFAIRS


[Stage Direction]
On the orders of the day:
Hon. W. G. Dinsdale (Brandon-Souris):: Mr. Speaker, I should like to direct a question to the minister of northern affairs and ask him whether he can confirm the report, notwithstanding the answer given in the house last Monday, that the Northwest Territories council, before it adjourned, did in fact provide a sum of $4,600 for the university training program for students in the Northwest Territories?


Hon. Arthur Laing (Minister of Northern Affairs and National Resources):: Mr. Speaker, I am unable to confirm that. This matter was up some time ago. I think the hon. member
Inquiries of the Ministry raised it on July 22, and the opinion given at that time was that the authority to set these moneys aside for purposes outside the territories was beyond the capacity of the territorial council. I think the answer was also given that it would depend on the furtherance of the legislative program now before this house. I will make inquiries to see whether they have in fact set this money aside with the intention that it be used for this purpose, and I would think if it is within the bounds of legality the government would assist them in so doing.
(Translation):



ARTS. LETTERS AND SCIENCES REPORTED STATEMENTS MADE BY MEMBERS OF COMMISSION

[Stage Direction]
On the orders of the day:
Paul Raymond Martineau: Mr. Speaker, I should like to direct a question to the Prime Minister.
Following the question which I asked him yesterday, can the Prime Minister tell us whether he is now aware of the various statements made by the appointed members of the commission on biculturalism, and has he any comments to make on that matter? (Text):
Righl Hon. L. B. Pearson (Prime Minister):
No, Mr. Speaker, I have no comment to make on that.
(Translation):


Louis-Joseph Pigeon: Mr. Speaker, I should like to put a supplementary question to the Prime Minister.
Does he find it normal that Mr. Andre Laurendeau, co-chairman of that commission, has made the following statement: "This inquiry will make of us more earnest separatists"?



HIGHWAYS


[Stage Direction]
On the orders of the day:
Louis-Joseph Pigeon: Mr. Speaker, I should like to direct a question to the Minister of Public Works.
Can the minister tell the house whether, following his meeting with the Montreal authorities and the provincial minister for highways, important projects will be carried out concerning access roads to Montreal, which will be paid in part by the federal government?
Hon. J. P. Deschateleis (Minister of Public
Works): Mr. Speaker, there were discussions today with the provincial minister of high-
2614	HOUSE OF
Inquiries of the Ministry ways, the Hon. Mr. Pinard, and the chairman of the executive committee of Montreal, Mr. Paul Saulnier. Following these discussions which were very friendly, we decided on another meeting with our respective federal, provincial and municipal officials. When we have all the technical information, we shall be able to come to a decision as to the request made by the province of Quebec for a change in the lay-out of the highway which will pass through Montreal to reach the Boucherville bridge.


Paul Raymond Martineau: Mr. Speaker, I should like to ask a supplementary question. Following Mr. Pinard's statement to the effect that he had not yet received any invitation, will the minister take advantage of his meeting with this gentleman to invite him to attend the discussions which will take place with regard to a national highway project?


Mr. Deschaielels:: Mr. Speaker, I am very happy that the hon. member has raised this question, because it enables me to inform him that the government has adopted no course of action with regard to a national highway policy.
First of all, we asked our officials to meet with those of all provinces, in order to inform themselves. Later on, the highway ministers of the various provinces as well as the federal Minister of Public Works will meet and exchange their views, without, however, a specific order of the day being prepared.
However, I should tell the hon. member that no province has as yet been invited to that conference, the date of which has not yet been set. But, when the time comes for such a meeting, all provinces will be invited at the same time.
(Text):



ROYAL CANADIAN NAVY


[Stage Direction]
On the orders of the day:
Paul Theodore Hellyer: Some time ago the hon. member for Winnipeg North asked if I had received a report of the review of the circumstances relating to the termination of Mr. Eric Petersen's service in the Royal Canadian Navy. As the hon. member knows, the occurrence took place in 1961, but I can now give the house the following information.
Non-commissioned officers and men enlist for a fixed period of years, and when that period expires it is at the option of the
[Mr. Deschatelets.l

service involved and of the man whether reengagement is offered or accepted. In the case of Mr. Petersen, re-engagement was not offered and he was given an honourable discharge without any qualifications that might prejudice either his future employment elsewhere or his standing in whatever community in which he might choose to reside. Having looked into the matter thoroughly, I do not intend to alter the decision taken by the Royal Canadian Navy at that time.


Thomas Clement (Tommy) Douglas: Was it because this man was considered to be a security risk that an offer of continued service in the navy was not made to him?


Paul Theodore Hellyer: I do not think it would be in the interest of Mr. Petersen or in the public interest to add anything to what I have said.


Thomas Clement (Tommy) Douglas: Does the minister condone this practice of gathering security files on a man in the service and then allowing a cloud of suspicion to hang over him without there being an opportunity to clear it up?


Mr. Speaker:: Order. I do not think that question is in order.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Raymond Langlois: I should like to direct a question to the Minister of Industry, and at the same time to congratulate him on his appointment to this new position.
My question is this. I have inquired of the hon. member for Winnipeg North Centre, who has much more experience in this house than myself, when the standing committee on debates last sat. I think it was approximately 10 years ago. I was wondering whether it could not meet once in 1963. I am not suggesting that it meet during this part of the session but rather after the adjournment, and possibly the minister could say whether the standing committee on debates could meet then.


Mr. Harold E. Winch (Vancouver East):: Mr. Speaker, I should like to direct a question to the Secretary of State as house leader. Can he explain why so many of the standing committees of the house have not yet been called into session, even for organization purposes?
I refer in particular to the estimates committee and the public accounts committee, whose responsibilities are such that they require not only weeks but months to fulfil their obligations.


John Whitney Pickersgill: Mr. Speaker, I am very thankful that my responsibilities are in and to the house and

not for the conduct of committees. I am afraid I do not know the answer to the hon. gentleman's question.


Harold Edward Winch: A supplementary question to the Prime Minister. Who has the basic responsibility for calling the first meetings of the standing committees of the House of Commons?


Lester Bowles Pearson: Mr. Speaker, I am not sure I can give an accurate answer to that question. I will be glad to do some research, but I would suppose that any member of a committee can call a meeting, and that there is a special responsibility on the chairman.


Harold Edward Winch: There is no chairman until the committee is called, and the chairman almost always comes from the government side.


Lester Bowles Pearson: Mr. Speaker, that is why I thought I would have to do some research.



WAYS AND MEANS

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

[Stage Direction]
Resolved,-That it is expedient to introduce a measure to amend the Excise Tax Act and to provide among other things:
1.	That the present exemption from sales tax for certain building materials be withdrawn by repealing the exemption for all goods mentioned under the heading "Building Materials" in Schedule III of the said act and by repealing the exemptions for
(a)	"Creosote oil and other wood preservatives when for use exclusively in the treatment of timber, poles or lumber;"
(b)	"Railway ties;"
(c) "Goods for use as part of sewerage and drainage systems, and articles and materials to be used exclusively in the manufacture thereof;"
2.	That any enactment based on paragraph 1 of this resolution provide that
(a)	goods for use as part of sewerage and drainage systems be exempt from sales tax when sold to or imported by a municipality for its own use and not for resale,
(b)	any transfer of a sewerage or drainage system to a municipality by any person within two years after the completion thereof, pursuant to a bylaw of or agreement with that municipality under which that person is required to instal such system and transfer it without charge to that municipality after the completion thereof be deemed, for the purpose of section 46 of the said act, to be a sale to the municipality for its own use and not for resale of goods for use as part of a sewerage or drainage system.
and that any agency operating a sewerage or drainage system for or on behalf of a municipality may be declared by the minister to be a municipality for the purpose of this paragraph.
3.	That any enactment based on paragraph 1 of this resolution provide that drain tile for agricultural purposes and materials to be used exclusively in the manufacture thereof be exempt from sales tax.
Excise Tax Act
4.	That any enactment founded on paragraph 1 of this resolution provide that where materials have been purchased by or on behalf of a school, university or other similar educational institution for use exclusively in the construction of a building for that institution and the tax imposed by Part VI of the said act has been paid in respect of those materials, the Minister of National Revenue may upon application by the institution in such form as the minister prescribes made to the minister within two years from the time the materials were purchased, pay to the institution an amount equal to that tax.
5.	That any enactment founded on paragraph 1 of this resolution provide that a person who
(a)	manufactures or produces a building or other structure otherwise than at the site of construction or erection thereof, in competition with persons who construct or erect similar buildings or structures not so manufactured or produced,
(b)	manufactures or produces otherwise than at the site of construction or erection of a building or other structure, structural building sections for incorporation into such building or structure, in competition with persons who construct or erect buildings or other structures that incorporate similar sections not so manufactured or produced, or
(c)	manufactures or produces concrete or cinder building blocks, be deemed for the purposes of the said act not to be, in relation to any such building, structure, building sections or building blocks so manufactured or produced by him the manufacturer or producer thereof.
6.	That the present exemption from sales tax for "Seventy five per cent of the sale price if manufactured in Canada, or seventy five per cent of the duty paid value if imported, of trailers for use as homes" be changed to read "Twenty five per cent of the sale price if manufactured in Canada, or twenty five per cent of the duty-paid value if imported, of trailers for use as homes".
7.	That the present exemption for certain machinery and apparatus to be used in manufacture or production be withdrawn by repealing the exemption for all goods mentioned under the headings "Machinery and Apparatus to be used in Manufacture or Production" and "Engines" in Schedule III of the said act and by repealing the exemptions for
(a)	"Seismic shot-hole casing and materials used in the manufacture thereof;"
(b)	"Tires and tubes for use exclusively on the machinery enumerated in Customs Tariff Item 411a."
(c)	Goods enumerated in customs tariff items 399a, 399b, 399c, 411a, 417, 431h, 439c, 848, 848a, and 848b.
8.	That any enactment founded on paragraph 7 of this resolution provide that traction engines for farm purposes and accessories therefor (not including machines and tools for operation by such engines) and complete parts of all the foregoing, and materials to be used exclusively in the manufacture of the said engines, accessories or parts be exempt from sales tax.
9.	That any enactment founded on paragraph 7 of this resolution provide that farm wagons, including four-wheeled farm wagons equipped to be tractor drawn and farm sleds, and materials to be used exclusively in the manufacture thereof be exempt from sales tax.
10.	That the present exemption from sales tax for "Photographs, paintings, pastels, drawing and other art work and illustrations of all kinds, whether originals, copies or proofs, and printing plates made to reproduce the same, for use exclusively as non-advertising news pictures or for illustrating non-advertising articles or stories in periodical publications enjoying second-class mailing privileges.
[Stage Direction]
Excise Tax Act
the pages of which are regularly bound, wired, stitched or otherwise fastened together;" be changed to read "Typesetting and composition, metal plates, cylinders, matrices, film, art work, designs, photographs, rubber material, plastic material and paper material, when impressed with or displaying or carrying an image for reproduction by printing, made or imported by or sold to a manufacturer or producer for use exclusively in the manufacture or production of printed matter."
11.	That feeds for fish, supplements for addition to such feeds, and materials to be used exclusively in the manufacture of such feeds or supplements be exempt from sales tax.
12.	That the exemption from sales tax for materials for use in the equipment and repair of ships over ten tons net register tonnage be restricted to materials for use in the equipment and repair of ships to be used exclusively for commercial purposes.
13.	That the present exemption from sales tax for "Bakers' cakes and pies including biscuits, cookies or other similar articles;" be changed to read "Bakers' cakes and pies including biscuits, cookies and similar articles but not including simulated chocolate bars or candy bars;"
14.	That the export duty of three one hundredths of one cent per kilowatt hour on electrical power exported from Canada be repealed.
15.	That any enactment founded on paragraphs 1 to 13 of this resolution be deemed to have come into force on June 14, 1963, and any enactment founded on paragraph 14 of this resolution be applicable in respect of electrical power exported after June, 1963.
16.	That with respect to the period commencing June 14, 1963 and ending March 31, 1964, the rate of tax payable under Part VI of the said act in respect of any goods for which exemption from tax was withdrawn by any enactment founded on paragraphs 1 and 7 of this resolution be four per cent instead of eight per cent, and that with respect to the period commencing June 14, 1963 and ending December 31, 1964 the rate of tax payable under subsection (1) of section 10 of the Old Age Security Act in respect of any such goods be nil.
17.	That the said measure further provide that
(a)	where any tax under Part VI of the said act has become payable by any person in respect of any goods for which exemption for tax under that part was withdrawn by any enactment founded on paragraphs 1 and 7 of this resolution, which goods were, not later than December 31, 1964, sold and delivered by that person, or applied by that person to a use resulting in the property in the goods passing from that person, pursuant to a bona fide contract in writing
(i)	that provided for the sale of those goods or their application to that use for a fixed amount stated in the contract and that did not permit the adding of the tax to the amount payable to that person under the contract, and
(ii)	that was signed by the parties thereto
(A)	on or before June 13, 1963, or
(B)	after June 13,	1963, if the contract was
entered into in accordance with the terms of a tender in writing submitted by that person on or before that day whereby that person undertook to enter into such a contract and in default of so doing to incur or cause to be incurred a pecuniary penalty whether by forfeiture of a security deposit a refund, or deduction from any of the taxes imposed by the said act, of the tax or such part thereof as could not under the contract be added to the amount payable to that person thereunder may be granted to that person; and
(b)	where any goods for which exemption from tax under Part VI of the said act was withdrawn by any enactment founded on paragraphs 1 and 7 of this resolution were, after June 13, 1963 and not

later than December 31, 1964, sold and delivered by any person, or applied by any person to a use resulting in the property in the goods passing from that person, pursuant to a bona fide contract in writing
(i)	that provided for the sale of those goods or their application to that use for a fixed amount stated in the contract and that did not permit the adding of any tax under that part that became payable after June 13, 1963 in respect of those goods to the amount payable to that person under the contract, and
(ii)	that was signed by the parties thereto
(A)	on or before June 13, 1963, or
(B)	after June 13,	1963, if the contract was
entered into in accordance with the terms of a tender in writing submitted by that person on or before that day whereby that person undertook to enter into such a contract and in default of so doing to incur or cause to be incurred a pecuniary penalty whether by forfeiture of a security deposit or otherwise,
an amount equal to the tax or such part thereof as could not under the contract be added to the amount payable to that person thereunder may, where application therefor is made to the Minister of National Revenue by that person in such form as the minister prescribes within two years from the time the goods were delivered by that person or applied by him to that use, and the minister is satisfied that the tax has been paid, be paid by the minister to that person.
John George Diefenbaker: Excise Tax Act
removal of the Minister of Finance, because I do not know what we would do if we did not have him to blame for the mistakes that are being made for the government. He is not responsible directly for many of them, but he is now the involuntary recipient of criticism in every part of Canada.
What is our stand? Number one, we say the budget should be withdrawn. We realize that the government having backed up, receded and retreated will not be able to go that far. They will not be able to do that. But I still think they should give consideration, if they want the economy of Canada to expand, to the withdrawing of this tax on building materials and production machinery. If they do not do so, the events of the last few weeks indicate that a body blow was struck by the budget to economic expansion, the purpose for which the budget was established.
In so far as this budget is concerned, the longer it is being considered the more it is being criticized. It is a self emasculating instrument, detrimental to the Canadian economy. The purpose was to build, and the effect is to diminish. I ask, Mr. Chairman, who, in a desire to expand capital investment, ever taxed the investment itself? I am not going to go back on that in detail. This tax against capital investment is wrong in principle. The fact that it was wrong in principle was shown by the retreat. Does it become right because it is being applied in instalments?
Surely the statistics of the last few weeks should cause this government, even now, to stop to consider. They cannot hurt their reputation for retreats. It is impossible to do that. This would be an act of courage, for there is no courage in stubbornly adhering to a policy which in every part of Canada is recognized as deleterious to the expansion of our country. The sales tax, under the instalment plan, is not as severe at it was originally. However, the graduation of the tax compounds its inequality, to use an expression of the financial critic of the Montreal Gazette. It is a tax on jobs in every part of Canada.
What has been the effect on industry? In the month of June there was a falling off in building contract awards of almost 20 per cent, according to the statistics that are available. The government says it wants to make industry competitive in a world in which the challenge from other parts of the world becomes greater and greater. Do you make industry competitive by adding an extra cost on industry by taxation on machinery of about $100 million? The position of the opposition-and I summarize since I am not going into detail because the subject has been covered in detail by various members who have spoken-is that the objective is denied

by the imposition of this tax. They used to speak about how bad things were in Canada. They shouted "Get the economy rolling." They have now got it on the way downhill; that is the easiest direction.
I repeat only in one particular what I said the other day. When we had an addition of 8 per cent to the gross national product last year, they said the economy should be set rolling. They spoke about indecision and inaction, but this year they predict an increase of only 5 per cent. They said we should expand construction expenditures across Canada. Last year they increased 5.2 per cent, but before the tax was imposed the estimate for this year was reduced to 4.5 per cent.
They said business capital expansion would be right around the corner if they got into office. It was 7 per cent last year, and according to the estimate it will be 5.5 per cent this year. They said "Let us expand exports." We found markets for our exports, but they said we were not expanding fast enough. The increase in exports last year was 7.8 per cent over the previous year, but this year the estimate is that it will be 5 per cent.
There were some corporations in the larger cities across Canada who said they could not give us support because they were not doing as well as they should. However, their corporation profits last year amounted to 11 per cent. This year the estimate is 6 per cent to 7 per cent, not because prices have gone up or down, but simply because of the fact that the economy is not rolling except in the one direction. That is why we ask the government to give leadership in this regard. That is why we suggest action be taken now before it is too late. It is all very well to have an objective, but when you see the objective is not being met it is the height of dangerous obstinacy to follow a course which the experience of only a few weeks has shown to be wrong.
When I take that stand, Mr. Chairman, remember that is the stand this party took from the beginning. On the night the budget was introduced I issued a statement and said it was a retrogressive budget and would interfere with expansion. When it came to a vote, the Conservative party voted solidly against the budget. They did not have any uncertainty about it; they knew it was bad. The Social Credit party talked eloquently against it but then swallowed their beliefs by voting for the budget which they now criticize.


Mr. Leboe:: Let's be honest, John.


John George Diefenbaker: Let me say to my hon. friends that their conduct in the last few weeks has shown they have become a dilapidated annex of the Liberal party.


An hon. Member:: Rubbish.


John George Diefenbaker: I know it is difficult. I know how you feel because you did not vote as you said.


Some hon. Members:: Oh, oh.


John George Diefenbaker: Oh, yes, you did. If they voted as they said, then I do not understand the kind of arithmetic that causes a party to say it does not believe in these things and then vote for them. That is beyond me.


John Whitney Pickersgill: On a point of order, Mr. Chairman, is there not a rule about reflecting on votes of the house, a rule of the house that the right hon. gentleman in his passion seems to have transgressed?


The Chairman:: Order. I am sure that the right hon. Leader of the Opposition realizes the importance of abiding by that rule.


John George Diefenbaker: I was not commenting on a vote of the house in a way that transgresses the rule. So far as the hon. gentleman opposite is concerned, he is up all the time. The first time you are here you are impressed, as the cuckoo is heard in June but not regarded in July. Why is there this tremendous interest on his part in bringing before the house the impossible position in which the Social Credit party is? So far as the N.D.P. are concerned, they have strong views. They did not vote at all.


Mr. Chapdelaine:: We voted with you last year.


John George Diefenbaker: I can only let them explain the reason for that peculiar, unusual and rather unexpected course.


Gérard Chapdelaine: We did not agree with you, but we voted with you last year.


John George Diefenbaker: The hon. gentleman says "We did not agree with you last year but we supported you." Does not that indicate a concept regarding the serious responsibility of individual members of parliament? I am glad to have that admission, and I welcome any further interruptions of the kind.


Gérard Chapdelaine: You liked it last year.


Lucien Lamoureux: Order. May I suggest that we should have order in the committee.


John George Diefenbaker: I could not better like interruptions such as the hon. gentleman's contributions. I welcome them at any time, because he lets the cat out of the bag. He is just showing how consistent they are. Last year they did not like us and they voted for us; this year they did not like the budget and they voted for it. How can anyone call that inconsistency?
To return to my speech after this interesting interlude, I want to ask the government what is being done in connection
Excise Tax Act
with the very important matter of those refunds. On July 9 the Minister of National Revenue said:
When refunds are made to the manufacturers, importers or others who have remitted the tax to the department, or where they have made deductions from the tax they would have had to pay and thus achieved the same result, it will, of course, be expected that they will pass on these benefits to those to whom they sold goods during this period.
It is natural that when one is in public life, one gets letters criticizing things, and businessmen across Canada are asking what is going to be done about this. It is the government that made the mistake. It imposed an 11 per cent tax and told business people, "Start collecting it tonight." The people of Canada relied on the government. The 11 per cent tax was collected, but what attitude did the government take then? As reported at page 1974 of Hansard of July 9, the hon. member for Wellington South asked this question:
Mr. Speaker, I should like to direct my question to the Minister of National Revenue following the announcement just made by the Minister of Finance. Would the Minister of National Revenue advise the house as to the procedure an individual would follow to obtain a refund in excess of the 4 per cent rate, as announced last night?


An hon. Member:: Hire a lawyer.
The advice is good. You and I could not disagree with that, Mr. Chairman, but that is not very fair to the person who has been taken as a result of the changed attitude on the part of the government. Then the Minister of National Revenue said:
Mr. Speaker, I am sure the hon. member who has asked the question will appreciate that as a federal government we cannot enter into the relationship between the vendor and the purchaser, but I did rather anticipate that a question along this line might be asked today and I would be happy to tell him this, if I have permission.
I had better read it all, because I do not want to delete any part of it. The minister went on to say:
Last evening the Minister of Finance indicated that refunds would be made to those who during the period from June 14 to July 9 have actually remitted sales tax at the full rate on goods they had sold or imported that were previously exempt. When refunds are made to the manufacturers, importers or others who have remitted the tax to the department, or where they have made deductions from the tax they would have had to pay and thus achieved the same result, it will, of course, be expected that they will pass on these benefits to those to whom they sold goods during this period. In fact it is expected that these benefits will be passed along to the final purchaser. The extent to which this will happen will depend to a considerable degree on the legal and even the good will relations between the vendor and the purchaser.

Excise Tax Act
That is quite inexcusable. There is no cooperation at all in that. They say, "You should be getting it". What happens to the man who bought lumber from the lumber yard in those days?


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


John George Diefenbaker: Yes.


John Richard Garland: To what part of my reply does he object?


Mr. Monteiih:: You pulled a boner.


John George Diefenbaker: I object to the utter effrontery of saying to the people of Canada who paid 11 per cent, "Try and get it back in the best way you can. We will not give you any assistance whatever, because this is a vendor and purchaser relationship, with which we cannot become involved". That is what I say. I know the difficulties, but I know how reasonable the minister is at all times and I ask him to see whether he cannot bring about some plan of regulations which will enable the original purchaser, the intermediary and finally the retailer, to receive the amount of the rebate, for unless there is assistance on the part of the federal government millions of dollars are going to be in the hands of those who collected them and there will be no place to hand them back.


John Richard Garland: Mr. Chairman, I know the former prime minister wants to be fair in this. Does he not fully appreciate the fact that the tax collected for the dates he has referred to is not even due until the end of this month?


John George Diefenbaker: Oh, now; it was collected day by day after the 13th day of June in every part of this country. They were directed to do so. I say, what is going to be done on the part of the federal government to help the various levels of purchasers to recover the amount of, I do not know how many millions but it certainly must be $7 million or $8 million on the basis of there being a reasonable degree of equality of purchase throughout the year.
I impress upon the minister to come down from that throne on which he seated himself in those remarks in the house and do something to bring about a fair degree of distribution of the excess that was extorted from the Canadian people, not because of any wrongdoing on the part of any of the wholesalers or the retailers but because of the ineptitude of this government, which acted before it thought.


Some hon. Members:: Hear, hear.


John George Diefenbaker: The hon. gentleman says, "Why, we do not have to worry about that until the end of this month". Let me read to him the representations of the Canadian construction association.


John Richard Garland: Mr. Chairman, as the Leader of the Opposition must know, I did not say that at all.


John George Diefenbaker: Well, Mr. Chairman, if I misunderstood the hon. gentleman, I would like to know what he did say. I give him an opportunity of clarification.


John Richard Garland: I will be delighted to explain it again. I said that the tax collected to which the right hon. gentleman is referring and which he says many of his fellow Canadians are misusing and making a windfall of-he has said this on other occasions also-actually is not payable by the parties concerned, to the federal government, until the end of this month.


John George Diefenbaker: Mr. Chairman, I say at once that I never did say they were going to be crooked about it. I said there was no assistance on the part of the federal government to arrange for the compensation in the appropriate manner of those who paid that tax; who because of the change that took place now find themselves having overpaid a matter of 7 per cent. Let that be clear.


John Whitney Pickersgill: Mr. Chairman, would the right hon. gentleman permit a question? Could he explain to us how his government did it with respect to the surcharges?


Some hon. Members:: Hear, hear.


John George Diefenbaker: Mr. Chairman, there is nothing as helpful as a beneficial interruption. The surcharges were imposed-


Some hon. Members:: Oh, oh.


John George Diefenbaker: -applied, according to law-


John Whitney Pickersgill: Applied by order in council.


John George Diefenbaker: -with the power given to the government to act. We acted accordingly. Now you are going to try and play a game of pretending that we illegally extorted it, in order to prove the one thing you said during the campaign about which you know nothing and the criticism of which was completely unjustified. You gave us the power long before we came into office, and we exercised that power. You had to find some excuse, and you are going to introduce some formal legislation to legalize what was legal, in order to justify the partisan way in which you conducted your criticism.


Some hon. Members:: Hear, hear.


John Whitney Pickersgill: Perhaps the right hon. gentleman, having dodged my question, will now come back and answer it. It was, how did you arrange for the refunds in those cases?


John George Diefenbaker: That has no application at all.


Some hon. Members:: Oh, oh.


John George Diefenbaker: Mr. Chairman, I venture the opinion that the puppet chorus over there never even read the order in council or knows anything about it. I simply say that the question has no application at all and it is quite in keeping with some of the questions the hon. gentleman raises from time to time.


Some hon. Members:: Answer the question.


John George Diefenbaker: They will do anything to get away from facing a situation. The answer given by the minister was, "It is not collectible by us until the end of the month".


Some hon. Members:: Answer the question.


John George Diefenbaker: Let me read what the Canadian construction association says. This brief was written on July 18 and is headed, "Re: Revised budget resolutions". This has not anything to do with the original resolutions; this applies to the revised version. We are wondering whether it is going to be the authorized one too; whether it is going to be final. The Canadian construction association says:
Whereas the imposition of the tax by stages announced by you on July 8 ... a most welcome development, the fact remains that the Department of National Revenue has been unable to issue sufficient rulings as to the application or administration of the 4 per cent sales tax or to establish practicable refund procedures so that the construction industry has any degree of firm guidance on current projects or those now out to tender.
In other words, the Department of National Revenue, the minister, has failed; that is what they say. He joins the Minister of Finance in the failure. He just brings up the rear, as it were; he takes whatever is left over. But the fact remains that it is he who is criticized. Then it says:
This is not meant to be an adverse criticism of federal taxation officials; they are literally so swamped with questions and requests for rulings and the problems of setting up the new procedures that the new sales tax policy necessitates that it will inevitably be months before the present turmoil, confusion and inability to get decisions being experienced within our industry can reasonably be expected to be overcome.
Listen to these words. I could not possibly equal the strength of the attack of the construction industry in these words, "confusion, turmoil, inability to get decisions". These be
Excise Tax Act
the magic workers who, a few short months ago, told us to just sit there and watch things go. Then it goes on:
These words-
They are the words "turmoil, confusion and inability to get decisions being experienced within our industries"-
-describing conditions in the industry were not selected lightly. A good many tender calls and contract awards are being held up.
What I rise to ask for, in connection with that, is that the government let us know what is going to be done. Let them raise the curtain of secrecy in connection with the regulations. What has been done towards drafting them? What are the general conditions to be followed? I made it perfectly clear when I raised the matter in question form some weeks ago, that there was leadership needed on the part of the government to protect Canadians from the mistakes of the government, from its lack of decision, from its vacillating stands, and from the regular alteration of various sections of the budget.
I go on, Mr. Chairman, to deal with the lumber industry. I mention the lumber industry because it has been seriously affected, and I refer to the Canadian Weekly highlights in which the following appeared with regard to British Columbia. It deals first of all with the expansion of foreign trade and says:
Total foreign trade in the first five months of 1963 reached a new high of $5.1 billion. These results are very encouraging and the Canadian dollar discount has been a most favourable factor. Further improvement appears in prospect over the balance of the year.
Lumber shipments: British Columbia saw mills
shipped 1,968 million board foot of lumber in the first four months of 1963, an increase of 7.1 per cent over ... the like 1962 period ...
The gain to date is impressive but is not expected to continue at this rate in view of the new tax on building materials, recently reduced from 11 per cent to 4 per cent.
That is British Columbia.
With regard to the maritimes, the maritime lumber bureau said this as of July 17:
Marketing of lumber, in comparison to other materials, is recognized as a highly specialized operation. Because of its versatility in use, it is marketed in different sizes-
And so on. And it goes on to say this:
In the Atlantic provinces, particularly, there are a thousand saw mills alone, besides dressing mills and woodworking shops in almost every village.
As the tax is set up, with all its complicated applications and exemptions at each level of lumber's manufacture and processing, it becomes quite evident to the lumber industry that it is impracticable and unworkable-
That is the considered opinion of the maritime lumber bureau, a completely non-partisan body, and it must soon be apparent to

Excise Tax Act
the department that net returns to the government will not warrant the expense of administration. This report goes on:
We believe that lumber associations across Canada will have to continue to move against this tax for sheer survival.
That is how serious is the situation, but the only answer I get from the other side of the chamber is jeers when I suggest that even yet the sales tax on building materials should not only be abrogated but abolished. The report concludes:
Certainly the maritime lumber bureau in the interests of the Atlantic provinces must continue the battle until this most injurious and unacceptable load on the industry is removed.
Then it sets out the great difficulties in a previous report dated July 12, which I will not read because the minister has a copy.
He mentioned yesterday that he had received a host-I take it of favourable letters, but I should like him to lay them on the table of the house because they will earn a distinction which no other letter has. Favourable comment has not been our experience on this side of the house, and it has not been the experience of Liberal private members. Those representations are before the government, and I do no more than reiterate them. If they place this $100 million tax on the machinery of production, what happens to the competitive power and the ability of Canadian industry which, in order to improve its position, makes the necessary changes in the machinery it has? I sometimes wonder who it was who concocted all this. Certainly from June 13 to the present day I have never seen in the country the same resentment and attitude of mind without regard for party considerations. In every walk of life it is felt that what is being done strikes at the heart blood of this nation, industrially. We also have a responsibility from the point of view of trade and expansion strongly to oppose this tax. We intend not only to talk against it but to vote against it. We also intend to move certain amendments so far as this tax is concerned. When we have the opportunity on third reading we are going to give those members supporting the government an opportunity to vote in favour of legislation which will have a tremendous effect, as it already has, on Canada's economy. It is recognized that they have already monkeyed with the tax, reducing it from 11 per cent to 4 per cent, restoring the other 7 per cent in instalments. In the interests of Canada, in the interests of industry, and in the interests of keeping the economy rolling as well as it was under the government to which I belonged, I again ask the government to take one further look at this tax and remove it from the list of resolutions.


Walter Lockhart Gordon: Mr. Chairman, the right hon. Leader of the Opposition, in his quiet and tolerant speech, demonstrated once again it seems-at any rate it seems to me-that his well known talents for histrionics are greater than his understanding of statistics and economics.
I do not propose to make a long speech because I have already discussed the purposes of this resolution when presenting it to the committee. However, there were one or two things the Leader of the Opposition said which, it seems to me, were inaccurate. I am sure he did not mean to be inaccurate, but it seems to me they should be corrected. The first thing that needs to be corrected is his suggestion-I am not sure whether I have taken down his words exactly, but this is the general sense of what he said- that fear is spreading all across this country because of the course this government has taken and because, he said, there was some increase in unemployment last month. With the greatest respect to the right hon. gentleman I would suggest that that is a greatly exaggerated statement. I might add that after last week end quite a lot of relief is spreading across this country because of something which was avoided in certain discussions.
The Leader of the Opposition at another point made the suggestion that millions of dollars had been collected between June 13 and July 8 in taxes which should never have been collected. This is another point at which I suggest correction is desirable so that everyone may know what the actual facts are. As my colleague, the Minister of National Revenue, has pointed out, taxes under the Excise Tax Act for the month of June do not become payable until the end of July, so I cannot see where all these millions of dollars could have come from.


Gordon Minto Churchill: Extra charges to the purchaser.


Walter Lockhart Gordon: The hon. member for Winnipeg South Centre-I sometimes mix him up with another hon. member for Winnipeg and I apologize to them both for doing so- says he is talking about charges to the purchaser. I do not know if it is fully realized that most lumber dealers sell their products on the basis of a 2 per cent discount for 30 days and I doubt very much if many of them changed their prices in the meantime. But if they did-and some of them did- I would expect that most of them have done their very best to refund the difference. I might recall, too, that it was only about a year ago that a surcharge order was introduced. No provision was made for refunds at that time and, believe me, everybody in this country got stuck for that one.

Not only that, when the surcharge order was taken off in the course of the election campaign-


John George Diefenbaker: The last day of the fiscal year.


Walter Lockhart Gordon: I do not recall any refund being offered on that occasion.


Eric Alfred Winkler: Why would there be?


An hon. Member:: It was an illegal tax.


Gordon Minto Churchill: You will never get this resolution through.


Walter Lockhart Gordon: Who started this?


Gordon Minto Churchill: The Secretary of State started it.


Walter Lockhart Gordon: I just want to make one other point. I am only replying to one or two of the statements which were made by the Leader of the Opposition. I am sure that if they are not completely accurate he would wish them to be corrected.


Mr. Starr:: By whom?


Walter Lockhart Gordon: Preferably by himself.


Michael Starr: You are doing it, or trying to, and you should be the last to correct anybody.


John George Diefenbaker: There have not been any corrections so far.


Walter Lockhart Gordon: Some reference was made to a statement that building contracts had fallen off by 20 per cent since the budget. I suspect this had some reference to an article which appeared in a Montreal newspaper on July 17. It refers to Maclean's building reports which said construction contract awards were down by 21.2 per cent in June, 1963, as compared with June, 1962. It should be pointed out that contract awards in May, 1963, were up by 30 per cent over the figures for May, 1962. This was due to the inclusion of one or two large items in that month.


An hon. Member:: Before your budget.


Walter Lockhart Gordon: That is right. I hope the hon. member will bear with me. This underlines the wide swings which can take place in construction contract awards over a short period and emphasizes that a comparison on a monthly basis can be misleading as an indication of the basic trends in the construction industry.
I would also point out that the Maclean's building report for June covers the period from mid-May until mid-June. It does not cover the month of June. It is for the period from the middle of one month until the middle of the next.
Private Bills


John George Diefenbaker: That is not what John Meyer says.


Walter Lockhart Gordon: Perhaps it is not what John Meyer, or whoever the hon. gentleman mentioned, says, but it happens to be a fact. I would like to point out that this period from mid-May to mid-June contains only one or two days of the period after the budget was introduced so I think the inference that the budget may have had something to do with this particular fluctuation in this particular series of statistics could be misleading, if it were not explained in just this way.


John George Diefenbaker: Does the hon. gentleman not think that the financial editor of the Gazette had available to him the information upon which his statement was made on July 17?


Walter Lockhart Gordon: Well, I was a little surprised to read the article in question, and when I had read it I went to the source. The source, it seems to me, was the one I have given.


John George Diefenbaker: Did the writer mention the source in his article?


Walter Lockhart Gordon: If he did not do so, perhaps he should have. I do not know. There are no other figures covering the calendar month of June so I presume these are the only figures which were available. I simply say it is my information that there are no other statistics relating to construction starts, so I assume he was referring to those referred to.


An hon. Member:: Five o'clock.


Lucien Lamoureux: It being five o'clock it is my duty to leave the chair so that the house may proceed to the consideration of private members' business.


Mr. Depuiy Speaker:: Order. It being five o'clock the house will now proceed to the consideration of private members' business as listed on today's order paper, pursuant to special order made July 10, namely, private bills, public bills.


PRIVATE BILLS
Mr. Depuiy Speaker:: As there are two private bills for consideration in committee of the whole, is it agreed that in accordance with section 1 of standing order 54 they be referred to committee of the whole in one motion?


Some hon. Members:: Agreed.


CONSIDERED IN COMMITTEE
[Stage Direction]
Bill S-25, respecting the board of trade of metropolitan Toronto.-Mr. Wahn.
Bill S-27, to incorporate Kinross Mortgage Corporation.-Mr. Francis.
[Stage Direction]
Private Bills

Mrs. Margaret Konaniz (Winnipeg South) moved: the second reading ol Bill No. S-29, respecting the Sovereign Lite Assurance Company of Canada.
She said: Mr. Speaker, this bill was passed in the Senate on July 11. It is a very simple bill in that its purpose is to add a French version to the name of the Sovereign Life Assurance Company of Canada. This is a medium-size life insurance company whose headquarters are in Winnipeg. It does business throughout Canada except in the maritimes, with a substantial amount in Quebec. Of the 9,331 shareholders, 8,319 are Canadians holding four fifths of the company's stock. There are 813 American shareholders and 199 other foreign shareholders. I should like to think that hon. members will accept second reading of this bill and allow it to go to the committee on banking and commerce where counsel for the company will be able to answer any questions on its business transactions.


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

[Stage Direction]
On the order:
Private bills-Consideration of Bill S-15. an act to incorporate the Good News Broadcasting Association of Canada.-Mr. Enns.
Gordon Harvey Aiken: Mr. Speaker, in connection with this bill I am asking on behalf of the sponsor, and with the agreement of those opposite, that this item stand on the order paper until after the summer adjournment. This is with the consent of the government.


Mr. Deputy Speaker:: Is it agreed?


Some hon. Members:: Agreed.
Order stands.


MARGARET CATHERINE SMITH
[Stage Direction]
On the order:
Private bills-Second reading of Bill SD-1, an act for the relief of Margaret Catherine Smith.- Mr. Wahn.
Gordon Harvey Aiken: Mr. Speaker, on behalf of the sponsor of Bills SD-1 to SD-50 and as vice-chairman of the committee of which he is chairman I would ask for an order that Bills SD-1 to SD-50 be considered together.


Mr. Deputy Speaker:: Is it agreed?


Some hon. Members:: Agreed.


SECOND READINGS-SENATE BILLS
[Stage Direction]
Bill SD-1, for the relief of Margaret Catherine Smith.-Mr. Wahn.
Bill SD-2, for the relief of Gladys Noreen Monette.-Mr. Wahn.
Bill SD-3, for the relief of Joseph Leo Gerard Bougie.-Mr. Wahn.
Bill SD-4, for the relief of Nicholas Cimbru Chambers.-Mr. Wahn.
Bill SD-5, for the relief of Madeleine Francoise Hankowski.-Mr. Wahn.
Bill SD-6, for the relief of Suzanne Chasse.-Mr. Wahn.
Bill SD-7, for the relief of Esther Wertheimer.-Mr. Wahn.
Bill SD-8, for the relief of Lygery Varveri-kos.-Mr. Wahn.
Bill SD-9, for the relief of Frank Hamilton Mingie, junior.-Mr. Wahn.
Bill SD-10, for the relief of Rosemary Beatrice Clare.-Mr. Wahn.
Bill SD-11, for the relief of Marie-Paule Jacqueline Lorette Champagne.-Mr. Wahn.
Bill SD-12, for the relief of Klara Brody.- Mr. Wahn.
Bill SD-13, for the relief of Bernice Bor-densky.-Mr. Wahn.
Bill SD-14, for the relief of Jacqueline Belanger.-Mr. Wahn.
Bill SD-15, for the relief of Christina Aube.-Mr. Wahn.
Bill SD-16, for the relief of Brigitte Dophide.-Mr. Wahn.
Bill SD-17, for the relief of Anita Margaret d'Esterre.-Mr. Wahn.
Bill SD-18, for the relief of Gladys Jean Desjardins.-Mr. Wahn.
Bill SD-19, for the relief of Sylvia Dank-ner.-Mr. Wahn.
Bill	SD-20, for	the	relief	of	Florence
Patricia Da Silva.-Mr. Wahn.
Bill SD-21, for the relief of Judith MacBeth Cuggy.-Mr. Wahn.
Bill SD-22, for the relief of Guiseppe de Cristoforo.-Mr. Wahn.
Bill SD-23, for the relief of Beverley Hayden Crerar.-Mr. Wahn.
Bill SD-24, for the relief of Paulyne Leblanc.-Mr. Wahn.
Bill	SD-25, for	the	relief	of	Gabriela
Kiwitt.-Mr. Wahn.
Bill SD-26, for the relief of Dorothea Margaret Kay.-Mr. Wahn.
Bill SD-27, for the relief of Wilma Karls.- Mr. Wahn.
Bill SD-28, for the relief of Felix Hol-linger.-Mr. Wahn.

Bill SD-29, for the relief of Abie Hersco-vitch, otherwise known as Allan Hersco-vitch.-Mr. Wahn.
Bill SD-30, for the relief of Doris Sibyl Jane Hassall.-Mr. Wahn.
Bill SD-31, for the relief of Ezreh Harry Herscovitch.-Mr. Wahn.
Bill SD-32, for the relief of Robert Fleischer. -Mr. Wahn.
Bill SD-33, for the relief of William Rankin Edmondson.-Mr. Wahn.
Bill SD-34, for the relief of Leonard Emond. -Mr. Wahn.
Bill SD-35, for the relief of Dorothy Irene Marjorie Adams.-Mr. Wahn.
Bill SD-36, for the relief of Zbigniew Stanis-law Janicki.-Mr. Wahn.
Bill SD-37, for the relief of Harry Hyman. -Mr. Wahn.
Bill SD-38, for the relief of Nadia-Anne Hruszij.-Mr. Wahn.
Bill SD-39, for the relief of Christine Johnson.-Mr. Wahn.
Bill SD-40, for the relief of Arlene June Kaczur.-Mr. Wahn.
Bill SD-41, for the relief of Mary Teresa Hough.-Mr. Wahn.
Bill SD-42, for the relief of Bernard Hebert. -Mr. Wahn.
Bill SD-43, for the relief of Catherine Harper.-Mr. Wahn.
Bill SD-44, for the relief of Wilhelmina
Grundy.-Mr. Wahn.
Bill SD-45, for the relief of Edith Diane Greenberg.-Mr. Wahn.
Bill SD-46, for the relief of Catherine Mildred Gray.-Mr. Wahn.
Bill SD-47, for the relief of Nancy Ruth Grabina.-Mr. Wahn.
Bill SD-48, for the relief of Lucille Goresky. -Mr. Wahn.
Bill SD-49, for the relief of Constance Valerie Laurie.-Mr. Wahn.
Bill SD-50, for the relief of Ellen Chase McKellar.-Mr. Wahn.

[Stage Direction]
The house resumed from Thursday, July 18, consideration of the motion of Mr. Ryan for the second reading of Bill No. S-28, to incorporate Allstate Life Insurance Company of Canada.
(Translation):
Guy Marcoux: Mr. Speaker, last week when it was brought before the house, we heard this bill being opposed by some hon. members, including the hon. member for Lapointe (Mr. Gregoire).
Private Bills
The latter raised several objections which, I feel, should be questioned if we are to entertain good relations with the various countries which do business with Canada.
Surely, we are obliged to accept the fact that foreign capital, especially from the United States, should further Canada's economic development. It is to be regretted that the Social Credit doctrine is not yet in force, for that is why we have to use foreign capital if the affairs of our country are to run smoothly. However, the fact should have been emphasized, during the discussion of this bill, that Canadians should adopt a positive attitude, not a negative one, as regards those who wish to settle here in Canada. Canadians themselves should be proud to be Canadians and should encourage Canadian companies to make their investments work for Canada and not for foreign countries.
In my opinion, it is unthinkable that Canadians should adopt legislation to prevent other companies from settling in Canada, especially when we know very well that a foreign company can sell insurance in Canada without being incorporated. Of course, that makes things harder, but nothing prevents Canadian citizens from taking insurance policies with American companies, even if they do not have offices in Canada. That Simp-sons-Sears is affiliated with Sears-Roebuck, that it is to a large extent controlled by American citizens, those are facts that we must deplore as Canadians but, in my opinion, companies that have decided to invest in our country should not be penalized.
Counter insurance sale was mentioned. Well, that is an economical way to sell insurance and nothing prevents Canadians from doing the same.
Instead of always approaching the problem in a negative way, again I am of the opinion that we should stimulate the pride of the Canadian citizen and urge him to buy his insurance at home, from a Canadian company, which will enable him at the same time to invest in his own country.
The hon. member for Lapointe said last Thursday that insurance companies represent one of the largest pools of savings that can be used for the economic development of a nation. That is true and I think that the legislation could perhaps favour a little more the economic development of Canada if, for instance, the government decided to re-

Private Bills
quire of foreign companies that profits made in Canada should be re-invested in our country, in Canadian industries. That would be a much more positive action, more in favour of Canada than action directed against foreign countries or against foreigners who wish to invest in Canada.
Mr. Speaker, that is why I feel that we cannot oppose the passage of this legislation.
But since we are on second reading, we can express our views about the principle governing all those American corporations who come to do business in Canada.
And what is most amazing is the fact that one day we are complaining that there is too much American capital in Canada and the next we complain that the U.S. government wants to prevent American citizens from investing in our country. Therefore we are wondering whether we are not actually simply arguing negatively against all and any motion introduced. Despite all our qualms about incorporating the Allstate Company in Canada, I believe that in all fairness and sincerity, it is most difficult to oppose the measure, since the corporation must follow rules established by the Canadian government.
However, I hope that the Canadian government will in the future accept its responsibilities and insert both in the insurance companies act and the act regarding companies intending to invest in Canada a clause to prevent the management of foreign corporations investing in Canada to return home with the profits they have made on the premiums and interests paid by Canadian citizens.
Mr. Speaker, those were the few remarks that I wanted to make, even though several parts of the speech of the hon. member for Lapointe (Mr. Gregoire) could be taken up. Besides, I feel that we should always take positive action so as to favour Canadian citizens, instead of taking a negative position which would prevent people from other countries from investing money in Canada, especially when we realize that they have to comply with the regulations established by the Canadian government.
(Text):


Herbert Wilfred Herridge: Mr. Speaker, wonders never cease. In this end of the chamber, you are witnessing the early effects of the ferments of biculturalism, bi-

linguism and bipartisanship so far as this private bill is concerned. We witness it in our mutual position on this bill. At least we have found one point on which we can stand together so far as the members of this group are concerned, and the members of the Social Credit party. It is nice to know that we have at least agreed this one time because we differ in many other respects.
I was interested to note the almost apologetic approach of the sponsor of the bill when he was introducing it. He was embarassingly apologetic in pointing out to the members of the house the deficiencies in this legislation, which he readily admitted, and in the ownership of this company. We have, in principle, serious objection to the bill. I am very pleased to note that some of our good friends opposite are listening intently to what we have to say in this corner of the house.
First of all, I was struck with the admission of the sponsor that 87.5 per cent of the shares of this company are owned in the United States.
I would almost think it would make any Canadian member of parliament blush to introduce such a bill. This means complete control of the company in the United States; and to talk about the balance of the shares being owned in Canada is simply nonsense. It is just a token; it means nothing at all in reality. For all we know the percentage of shares owned in Canada may be signed over to people in the United States. This may be just a fagade or front, and I have seen this sort of thing happen before.
This is not a company that is being incorporated under the usual excuse for using United States capital. They are not going to build a plant to go into manufacturing and provide employment. There is some argument for using United States capital to develop our natural resources, because there are some side or beneficial effects to that sort of development. But this United States company will simply duplicate services that are presently provided to better advantage by numerous other companies in Canada.
This is simply to provide the opportunity to mobilize Canadian savings to the advantage of the company. There is a very big difference between an insurance company and a company interested in production.


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


Herbert Wilfred Herridge: Yes.


Sylvester Perry Ryan: Does the hon. member realize that the superintendent of insurance for Canada has recommended this bill?


Herbert Wilfred Herridge: Mr. Speaker, I am not one who, throughout the years, has accepted the decisions of the superintendent of insurance as always being for the welfare of the Canadian people. We are more inclined to accept the opinions of the Canadian people themselves on these questions, rather than the opinions of those who have to perform their duties according to laws which we are trying to change.
As I said before, the only function of this United States controlled insurance company is to mobilize Canadian savings as a result of selling insurance. This is a duplication of services being performed by other companies which have a much larger Canadian content in their ownership.
On this occasion members of both this party and the Social Credit party are in agreement that it is about time Canadians began to realize they can provide this type of service themselves. It is something that can be done by Canadians. We have the capital available. There is no lack of capital in Canada. There is something like $1,400 million in personal savings accounts in the banks, in addition to savings in other countries and reserves in various places, but there is no attempt being made by the government to mobilize these savings and direct their investment into socially desirable channels.
This would be a socially desirable channel in which Canadian funds could be invested.


Sylvester Perry Ryan: Would the hon. member permit another question?


Herbert Wilfred Herridge: Love it.


Sylvester Perry Ryan: Does the hon. member know that as much business is done in life insurance by Canadian companies outside Canada as is done in Canada by the British, American and all other foreign companies? They just about balance, and this gain of 12J per cent to the country would help the Canadian balance. I am not blushing or apologizing for anything.


Herbert Wilfred Herridge: This is not a valid argument. It is like those persons who say there is a larger content of Canadian investment in the United States than there is in Canada, in certain instances, but you have to take the relative populations before comparing these figures.


Sylvester Perry Ryan: Then we are ahead.


Herbert Wilfred Herridge: I am glad that for the first time in my 18 years in this house I have the co-operation of members of the Social Credit party, by promptings from the rear. I appreciate and welcome them.
28902-5-167
Private Bills
Insurance is simply the application of the law of averages for the benefit of many, as a result of co-operation, organization and so on. We believe this particular type of company provides a splendid opportunity for such co-operative action on the part of private investors in Canada. From our point of view it also provides a splendid opportunity for government action in respect to insurance, the lead having been taken so successfully in automobile insurance by the government of Saskatchewan.
It also provides a splendid opportunity for credit unions to invest their funds. I have often wondered why we did not mobilize some of their funds and use them for the development of Canada through an insurance company such as this. If that were done we would not have hon. members sponsoring bills like this with, I presume, certain reluctance, embarrassment and stifling of conscience.


Mr. M. J. Moreau (York-Scarborough):: Mr. Speaker, I would like to speak very briefly on this bill, and although I am in complete agreement with the remarks made by the hon. member for Kootenay West (Mr. Herridge) in his objection to the bill, I think he presented his views very much as a party argument. When this bill comes to a vote he will find there was no party unanimity on this side as to the desirability of having an 87 per cent foreign owned insurance company incorporated in Canada.


Herbert Wilfred Herridge: We welcome allies.


Maurice John Moreau: Speaking only for myself I feel some objection to the bill but I do not criticize the hon. member for Spadina (Mr. Ryan) for introducing it. This company, like any other, has a right to apply for a charter of incorporation, but I do not propose to vote for it.
I do not agree with the idea that the Saskatchewan plan is the end all of all plans.


Herbert Wilfred Herridge: It is the beginning of all plans, not the end.


Maurice John Moreau: We have a number of Canadian companies operating in this field at present and, by and large, they are doing a pretty good job. In fact the competition seems to be quite active, and sometimes I wonder if it is not a little severe, considering the number of insurance agents who call on us. On that account I propose to vote against the bill, and I would point out to hon. members opposite that we on this side do not all share the view that they have been crediting to us. I think there are some other hon. members on this side who do not agree with the bill, and will vote against it.

Private Bills
(Translation):


Mr. Marcel Lessard (Lake Si. John):: 
Sylvester Perry Ryan: Mr. Speaker, would the hon. member permit a question?


Mr. Lessard (Lake St. John):: Yes.


Sylvester Perry Ryan: I can understand the hon. member's concern when considering this matter and probably not knowing all the history or the facts about it, and I certainly cannot hope to give them all to hon. members. This bill was considered in the other place and in committee, and there is about a 10-page report on it. I may be giving the wrong impression but-


The Acting Speaker (Mr. Batten):: Order. The hon. gentleman is now making a second speech on second reading when he asked permission to ask a question. Will he come to his question.


Sylvester Perry Ryan: I am sorry, Mr. Speaker. Would the hon. gentleman consider letting this bill go to the standing committee of the house on banking and commerce, where witnesses can be cross-examined, the whole thing thrashed out and a proper determination made by the members of the committee who would have all the facts before them? It might still be thrown out or passed at that time.


Marcel Lessard: I am not a
member of the committee on banking and commerce. If I attended the committee I would not be allowed to ask any questions, so I think I might settle that matter right now. I would ask, what is this company going to consist of? Will it be a truly Canadian company and not just 12J per cent Canadian?
I can imagine these fellows who put their

Private Bills
names to their bill intend to move to obtain this result. If I may be allowed to speak a little longer, I will continue in French and explain why we object to the bill going to the committee on banking and commerce.
(Translation):
Mr. Speaker, when he asks us that this bill be referred to the banking and commerce committee, where officials of this company could be heard, I realize that the hon. member is only doing his duty. His request is a reasonable one. However, I have always noticed that when such measures are referred to the banking and commerce committee, only a few members have the opportunity to defend their views, and they are submerged in the group which is in favour of the measure under consideration. The same applies to similar bills. We shall certainly not win our cause. And even if the proposed amendments are rejected in this house-for they must be accepted by the house-this will not change anything since, in the last analysis, we intend to vote against the bill, especially as far as its principle is concerned.
If the hon. member can vouch that the company will have a Canadian content of at least 51 per cent-I should like to see it 100 per cent Canadian, but I am prepared to go half way-then, the bill can be redrawn, brought before the house once again, and we would probably let the bill pass because the legislation would be profitable for all Canadians.
There is another reason for us to object to the bill now before us and it is the principle behind it.
We notice that more and more private bills of that kind are put on the order paper of the house. We had a host of them last year and it is the same this year. We notice that those companies now wish to go French, that is they want a French name besides the English name they already have. We welcome this situation but actually, I say there is a little too much traffic. I think there is a little too much ground covered in that field.
To come back to what I was saying a while ago concerning the direction our country should take, I think that if we want to attain the objective aimed at by the group I belong to, we should see to it that such things do not happen.
In objecting to this bill, I think we are doing all Canadians a service. And the other companies waiting at the door to introduce similar proposals will have to think things over and change their attitude. They will have to con-

sider themselves as Canadians. And not only 12 per cent Canadian, because that is not enough. We want those companies to be more Canadian.
In the future, when similar bills are brought before the house, we will make sure that those companies and the individuals concerned will take the necessary steps to ensure that the project is Canadian and that in fact, the interests of Canada are safeguarded.
(Text):


Horace Andrew (Bud) Olson: Mr. Speaker, there are obviously very serious reservations on the part of all parties of the house with regard to this bill. There has been an expression of objection by members of all parties to certain aspects of the corporate structure and ownership of the company concerned. I think there would be some value in the suggestion that this bill be referred to the standing committee on banking and commerce. There are some rather interesting aspects with respect to the profit-sharing plans of this company with their employees, for example, about which I personally should like to have the opportunity to ask the officials of the company. However, I appreciate the position of hon. members of this house who are not on that committee and their concern with the explanation they have received thus far. The sponsor of this bill claimed that he could not give a detailed explanation about all these matters, and I can appreciate that. I think it would be a little better if we had the officers of the company before the committee where we could subject them to questions which would give us direct and detailed explanations about the corporate structure of this company. If upon examination we found that 87 J per cent of the stock or ownership is to be vested in the United States, and that as a result of that 87 J per cent of the earnings will be exported to the United States, we must certainly agree with the hon. member for Lake St. John (Mr. Lessard) when he expresses concern about this aspect.
I think there is some merit in having the officers of the company come before a committee of this house to make these explanations. On the other hand, if they are not prepared to make some major changes in the explanations which have been given thus far, I think it may be, as the hon. gentleman has just mentioned, a matter of adding more time to kill the bill, eventually, anyway.


Mr. J. J. Greene (Renfrew South):: Mr. Speaker, I would be far happier if our hon. friends opposite were talking this bill out for

some specific reason or concrete purpose, other than the fact that some considerable portion of this company is to be owned by citizens of the United States. There may be good reasons why hon. members opposite feel that this company should not be incorporated in Canada, but this business of "Yankee go home" is not necessarily a good thing. We on this side of the house know that it is government policy to encourage a greater Canadian participation in our corporate entities which do business in this country. I do not think this necessarily implies that we do not wish or need or want to encourage further foreign capital to enter this country so as to create jobs for our people.


Some hon. Members:: Oh, oh.


John James Greene: It is very peculiar that those people who cry the hardest against foreign capital coming into our country to create jobs do not say anything about the price we would pay by not having that foreign capital. It is clear that since the war the standard of living of our people would have been far lower if it had not been for the entry of foreign capital into this country.


Gérard Chapdelaine: Would the hon. member permit a question? Does he know that what is invested in these insurance companies is Canadian money which is then lent out to Canadians at interest for the benefit of the United States owners. This is money which formerly belonged to Canada.


John James Greene: I am not familiar with the investment policy of this particular company. I know of some companies which have put back every nickel they have earned in Canada so as to create more jobs here. I do not know whether the policy of this particular company is inclined in that direction. However, I think that to speak against a company for no other reason than that it is a United States company is wrong. There are many unemployed people in my riding and as far as I am concerned I would be happy to see anyone creating the plant which could provide them with work. I do not care who puts up the original capital. I would be happy, of course, if the profits were put back to create more jobs, but if some of those profits went to shareholders in the United States rather than to shareholders on Bay street I would still feel that it is better to encourage growth, wherever the investment comes from, as long as my people are working.
We on this side of the house are in favour of encouraging a greater participation by our own people in the financing of our corporate structures. Sometimes, good ideas come from the other side of the house. I heard a suggestion made on the other side of the house a
Private Bills
few nights ago to the effect that the insurance companies which today tie up so much of the wealth of the country should be obliged by law to put a great deal more into the development or growth of our nation than they presently do. I think there probably is far too large a percentage of the savings of our Canadian people tied up at the present time in the funds of insurance companies, chartered banks and trust companies which, by law, must invest in directions which are not particularly productive and which create very few new jobs-they can scarcely go into any risk area other than the building of plushy office blocks for the companies themselves. I think we should encourage these institutions to invest a greater proportion of these savings in direction which would create new jobs and contribute far more to the growth of our economy.
There may be a valid argument which could be used against individual foreign corporations investing capital in this country because of the way in which they operated, or disposed of their profits, but I think the tendency today should be toward one world; there should be encouragement of greater participation by one country in the affairs of another. I am not a subscriber to what I call the "Little Canada" theory-the theory that we do not want anybody else here. If we were honest we would have to admit that, were it not for foreign investment, the standard of living of our people would have to be cut. If we were willing to build up an iron curtain around Canada we could, probably, develop our own resources, but it would have to be done far more slowly than we are doing at the present time. I do not think we need a curtain of this kind. I think we should proceed gradually, increasing the control of our own economy by stages. I do not think we need any flag waving, or any "Yankee go home" attitude. We need to ensure that these funds are used to promote the continued and orderly growth of our economy for the benefit of our people, and I suggest that to a large degree the United States capital which has been invested in this country has served both these purposes.
I contend that the American, British and European capital which has come into this country has not bled our people or exploited our economy. I think most of our corporate citizens, irrespective of their national origin, have been good corporate citizens. It may get votes on the hustings to wave the flag and cry, "Yankee, go home" but I have yet to hear examples of foreign capital, or United States capital, exploiting our people or doing anything but good by coming here, building

Excise Tax Act
plants, and bringing in the know-how and the machinery to provide jobs for our people and help expand our economy.
It has been said, as was said on one occasion with regard to the Chrysler corporation, that too many of the exports of these companies go from the United States rather than from subsidiaries in this country. But surely we could legislate so as to assure ourselves of a better deal in this respect, without frightening away foreign capital which would help provide more jobs for our people.


Some hon. Members:: Six o'clock.


Sylvester Perry Ryan: On a question of privilege, I am afraid that in asking a question of him I may have given the impression to the hon. member for Kootenay West, and others, that the superintendent of insurance gave reasons for recommending the incorporation of this company as a life company. I may have been unfair in making that suggestion. I would have put it more properly had I implied by my question that he gave reasons for not opposing the incorporation of this company. Those reasons appear in the proceedings of the banking and commerce committee of the Senate for Wednesday, November 14, 1962.


The Acting Speaker (Mr. Batten):: Order. It being six o'clock, the hour appointed for the consideration of private members' business has expired and the house will revert to the business which was interrupted at five o'clock.



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

AFTER RECESS

The committee resumed at 7 p.m.
['I think it seems pretty evident that we have made a fair amount of progress and there does not seem to be much prospect of making any more, so I move that the committee rise, report progress and ask leave to sit again on another day.\nClause 6 stands.\nProgress reported.']
Mr. Fane:: Mr. Chairman, I am glad that at last I am able to take up the caveat I registered last night on some time in the debate today, and I hope to continue the address which was received with such great approval on both sides of the house last night. I hope that when I have finished my address it will receive the same approval, but I doubt it. It was a pleasure to give up my allotted time this afternoon to the leader of my party. It is a very difficult thing to follow perhaps the most able debater in Canada and what I will have to say will probably be somewhat of an anticlimax to his speech. However, I feel that at this time I should say something about the resolution, and particularly the budget.

I was, I must say, more than surprised by the budget when it was presented by the Minister of Finance. What surprises me more than anything is the stony silence that has prevailed throughout on the part of the front-bench members of the government. Not one of the old pros in the government has risen to speak on behalf of the Minister of Finance, although he has been found fault with and criticized by almost everybody in Canada.
The minister says that he has some telegrams and letters commending him for his budget, but that is not the kind of letters and telegrams I have received. The 11 per cent tax on building materials and industrial machinery has been watered down a bit, of course, but I presume that in the course of time it will reach the full 11 per cent again. The fact that the tax has been criticized by almost everybody in Canada and that it has caused so much unemployment that was not in evidence before, and for which there was really no reason, is very bad advertising for the new government, the Minister of Finance and, of course for Canada.
So far as the 30 per cent withholding tax is concerned, the minister withdrew that very quickly on the request of a few of his millionaire friends and it certainly did not take him very long to do that. However, it took over a month and perhaps half a million requests from people all over Canada to get him to change the effect of the 11 per cent sales tax on building materials, even to the extent that he has.
It is a very bad thing when everybody in Canada complains about a budget. It may be it was a good thing to impose a tax that affects almost everybody, but it is also a very bad thing in that it taxes one of the activities that the government was hoping would cause more employment in Canada and a great deal more activity. The fact is that in the result it has not helped to relieve unemployment at all.
Another thing I am very surprised at is that the revaluation of the dollar to 92J cents in relation to United States currency during the Conservative regime was left alone, in spite of all the complaints and criticisms that the Liberal party and the Minister of Finance himself, notwithstanding his attitude in his book, "Troubled Canada", had levelled at the former government. They complained about it and said it would ruin Canada's economy.
I trust you are not going to stop me talking about that, Mr. Chairman. That is one of the very bad results of the budget and of these taxes. I noticed you were getting to your feet, Mr. Chairman. I presume you do not like me talking about the whole budget, but everybody else has been doing so, so I do not see how you can stop me.

A budget is supposed to be the brainchild of the Minister of Finance and perhaps the Prime Minister, in any event, of the government. When this budget was brought in it was not the brainchild of the government. It was brought in by the Minister of Finance, but apparently neither the Prime Minister nor any of the other ministers had ever heard of it before it was presented, because members on this side could see the look of dismay on their faces. It was something to behold, believe me.
The Minister of Finance has admitted, and it has been proven, that the budget was prepared by four assistants who were not members of the civil service. This, in itself, is an insult to the civil service, which has given such great service to Canada, and especially to the deputy minister of finance who has since left the department. He may have been given a promotion or he may not. It may have been at his own request; who knows? In any event, this budget that was presented was definitely not a budget that represented the feelings of the government. If the Minister of Finance has to consult other people, he could have consulted some 90 members of the Liberal party who occupy the back benches. He would have obtained a great deal better advice than he did from the members of financial houses in Toronto. He would have had a budget that was representative and approved by the people of Canada. This is one of the things he has learned, and believe me there are a lot of other things he must learn.
Of course, I have referred to this budget as the illegitimate brainchild of the four members of the financial houses in Toronto, and it has occurred to me that perhaps we should now question also the parentage of the minister's book "Troubled Canada". Canada really now has more cause to be troubled than she ever did before because the Minister of Finance has not realized he was supposed to present a budget that would be acceptable to the people of Canada and that would really help the economy of this country. It seems that now we have a government by Gordon, ghostwriters and gimmicks instead of, as in former times, government by crystal ball.
As I have remarked before, all the fault does not lie with the minister. Some of it must lie with the other members on the front benchers, because they allowed the minister to bring down a budget like that and, therefore, they could not have known what was in it. This must be one of the things that is worrying them now because not one of them has stood up to defend the Minister of Finance. This is something about which the people of Canada are wondering. Of course, the Secretary of State has given the minister answers when he has been asked questions, but he has not got up to speak in defence
Excise Tax Act
of the Minister of Finance. Of course, you could not expect anything else. The old pros in the front ranks of the cabinet are the same old pros as were there in 1957 when the government was thrown out of office by the people of Canada. There are two missing. The former prime minister is not here to hold them together, and neither is that man who was the government of Canada. He has gone to his great reward. I am referring to the late Hon. C. D. Howe. He was, at that time, the government of Canada and he ruled the roost. There was not any question about that.
I do not propose to take much more of the time of the committee. However, I am wondering how in the name of heaven the Minister of Finance proposes to legislate the people of Canada into investing their money in Canada. The trend seems to be that people who have money to invest invest it in places outside of Canada. They do not support industries in Canada. Whenever an industry in Canada is for sale, it is the people from outside the country who buy it. One has only to look at the case of Cockshutt Plow Company, which was the only Canadian implement company left, to find they sold out to foreign buyers.
If today the Canadian National Railways were put up for sale you would not find a buyer anywhere that would pay a proper price for it. However, if the Polymer Corporation, which is another child of the government, were put up for sale you would find plenty of buyers from all over the world. I do not know whether you would find any people from Canada willing to buy it, but it is a going concern. It pays its way. Why is it that Canadian businessmen who have money to invest, will invest in stocks or shares from other countries rather than invest their money in Canada? Perhaps the shares pay a quarter of 1 per cent more interest or dividend. This is something that I have never been able to understand. Why do people in Canada who have money to invest not invest that money in Canada?
I suggest also to the minister that if he wanted to impose a new tax that would be quite unpopular, but which is really a tax that should be in effect, he should investigate the possibility of taxing capital gains. I know that would meet the approval of my friends to the far left, but it might not meet with the approval of too many people who have money to invest in Canada. This is a place where a tax could be imposed that would be a fair tax.
Now, having made these few remarks, I shall conclude. I do not intend to lengthen this debate and I do not want to be accused of delaying this measure.

Excise Tax Act
(Translation):


Mr. Beaule:: Mr. Chairman, in his speech this afternoon, the Leader of the Opposition (Mr. Diefenbaker) made a few insinuations about our attitude in the house. I will therefore take the liberty of asking him where his main lieutenants were, last Tuesday night, when there was a vote on the Speaker's decision. Only 54 Conservative members were here to cast their vote, although there were over 65 before the question was put. Were those members afraid to assume their responsibilities or were they prevented from voting freely?
What happened to the 208 seats they held in 1958? Where are the 50 members from the province of Quebec?
The Conservative party has lost the people's confidence because of the inaction and the indecision shown by its leader.
We are accused of voting for measures that go against our principles. Mr. Chairman, during the last session-


Mr. Paul:: Mr. Chairman, on a point of order. I would like to remind the hon. member that the remarks he intends to make to the house must be confined to the resolution under consideration. I think the hon. member will not want to go against the rules of the house.


Jean Robert Beaulé: Mr. Chairman, I shall- (Text):


John Whitney Pickersgill: On the point of order which has been raised, since the right hon. gentleman was allowed to make an attack on hon. gentlemen opposite, I am astonished at the intervention made by the hon. member. It seems to me that all hon. members of the house should be treated in the same manner and the hon. gentleman should not be interfered with.


Paul Raymond Martineau: In reply to the Secretary of State, if any attack was made on hon. gentlemen it should have been raised at the time by way of privilege, and should not enter into the orbit of the debate on the budget resolution. I think the Secretary of State will admit that.


John Whitney Pickersgill: No, I will not admit anything of the kind. I did raise a point of order, and notwithstanding the point of order I raised the right hon. gentleman was allowed to proceed. I insist, sir, that we should treat ordinary hon. members of the house in the same way as the right hon. gentleman, because all of us are elected and all of us in this house are equal.
(Translation):


Rémi Paul: Mr. Chairman, after listening to the remarks of the Secretary of State (Mr. Pickersgill), one is led to believe that this afternoon the chairman of the committee may have

transgressed the rules of this house, but if a mistake was made this afternoon, would we be justified to tolerate a second one tonight?


Lucien Lamoureux: Order. I do not believe it would be advantageous to go any further along this line.
I admit that this afternoon the Secretary of State raised a point of order. There is no doubt that standing order 35 to the effect that no member may criticize a vote of the house did apply. When the hon. member raised the matter this afternoon I therefore confirmed his point of order in what may have been a diplomatic way, by inviting the right hon. Leader of the Opposition to abide by the rules and I believe that after this call to order he heeded the ruling of the Chair and did not try to continue the remarks he had started to make along those lines.
I believe that, in order for the debate to be continued in an orderly manner, it would be advantageous if the hon. member for Quebec East would abstain from pursuing the remarks he had started to make in reply, I grant, to what the Leader of the Opposition had to say this afternoon.


Jean Robert Beaulé: Thank you, Mr. Chairman, but the Leader of the Opposition still had time to make his remarks.
I simply want to say that if we were unable to vote on a budget last year it was because none was submitted to us. In short there was no vote because it was an election year and they were afraid to take their responsibilities.
Today, if the government in office has imposed taxes it is to pay for the blunders of the previous administration.
Mr. Chairman, the matter before us, namely an amendment to the Excise Tax Act has caused lots of articles to be written.
On June 13 last, the Minister of Finance (Mr. Gordon) submitted a budget to the house. In that budget was a resolution to impose a 30 per cent tax on foreign takeovers; but he had to withdraw that resolution from his budget due to the pressures of one Mr. Kierans who is the agent of big financial interests in the United States.
Afterwards, the minister specified that he had withdrawn this budget resolution due to administrative problems and hardly a week ago, we noted that the administrative problems were in fact the imposition by the United States government of a 15 per cent tax on American investments abroad.

Well, if you like, I will tell you about a case where the most influential financiers of the twenties failed.
In 1923, an important meeting was held in the Edgewater Hotel in Chicago. There were present 10 of the greatest financiers in the world.
The group included:
1.	The president of the largest steel-works of the United States.
2.	The president of the National City Bank.
3.	The president of the largest public utility company.
4.	The president of the largest gas company.
5.	The greatest speculator on wheat.
6.	The president of the New York stock exchange.
7.	A member of the presidential cabinet.
8.	The director of the most powerful monopoly in the world.
9.	The most famous bear of Wall street.
10.	The president of the international exchange bank.
It must be admitted that this meeting grouped the most highly rated men in the world, at least men who knew how to make a lot of money.
Twenty five years later, an investigation was made to see where success had led those men.
The president of the largest steel-works of the United States, Charles Schwab, had died in poverty and lived from borrowed money the last five years of his life.
The president of the largest public utility company, Samuel Insull, had died in a foreign country after fleeing from the law of his country.
The president of the largest gas company, Howard Hopsom, was declared insane.
The largest speculator on wheat, Arthur Cotton, died debt-ridden outside the country.
The president of the New York stock exchange, Richard Whitney, was just out of Sing Sing.
A member of the presidential cabinet, Albert Fall, died at home shortly after having been released from jail on parole.
The most famous Wall street bear, Jesse Livermore, committed suicide.
The head of the most powerful monopoly in the world, Ivar Kreuger, shot himself through the head.
All those men had discovered the secret of how to make money but none of them had learned the art of living.
This interesting study was published in The Whizz, a monthly bulletin of the Rotary Club of Winnipeg.
Mr. Chairman, if their ideas were taken too seriously, where would they lead us?
Let us think for instance about the 11 per cent tax we are studying at present. Instead of levying it at one go, the government decided to proceed by easy stages. The minister probably thought that, when applied step by step, that measure would seem less painful than if the government went at once the whole hog while the net result would be the same.
I wonder if after having spoken to the president of the Canadian builders' association, the minister would have agreed to strike 28902-5-168
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out the new 11 per cent tax from the budget, as he did with the 30 per cent tax on foreign control?
Those who hold the purse strings and who control credit are granted preferential treatment, but the government certainly hits the bull's eye when it comes to taxing the average taxpayer. The 11 per cent tax on building materials has affected our construction workers, and the new tax will certainly slow down our building industry, the price of one family dwellings will go up at least $500, and the increase might reach $5,000 on apartment houses.
Such a slowing down in the building industry will cause greater unemployment in that field, from the manufacturer down to the worker.
We can understand that a family man with an average income who wished to have a house of his own, would have changed his mind since the imposition of this new 11 per cent tax.
And what about the firm that wanted to expand or to buy some equipment? It will have to wait before risking its capital on account of this 11 per cent tax.
On the other hand, had the government introduced a budget in accordance with the people's needs, which would have included resolutions providing an increase in the personal base income exemption, an increase and extension up to the age of 18 of family allowances, those resolutions would have enlarged the purchasing power and this country's economy would be much better off.
In addition, if the government had provided for the financing of the national debt, a vast program of public works, municipal loans, etc. through the Bank of Canada and on the basis of services and national product, the country would be in a much better position.
Mr. Chairman, if the government had worked through the Bank of Canada, as I have said, to set up a vast program of public works instead of establishing this 11 per cent tax, it would have solved to a great extent the problem of unemployment in Canada which will only be made worse by this new tax. This problem is of the utmost urgency because the situation is alarming.
If we consider that, in 1962, there was on the average 391,000 unemployed in Canada, it means that on the basis of 250 working days per year, we lost 97,750,000 man-days of

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work because of unemployment. Those are significant figures. That is why we must deal with unemployment immediately and it is not by imposing new taxes that we will improve the situation.
An extensive program of public works would be welcomed by all Canadians, and particularly those of Quebec city where unemployment is also present. The city of Quebec needs an incentive to develop its industrial and commercial activities. It needs the help of federal government, for instance, for the reclamation of St. Charles river, that has been for many years a political football of the old political parties.
It is inconceivable that, in 1963, in Quebec city, the cradle of American civilization, one of the greatest tourist centres, an agreement has not yet been reached to solve that problem, a thing that the people had been expecting for many years.
Mr. Chairman, what prevents the development of the commercial district of Quebec city at the present time is the problem created by the St. Charles river and the railroad crossings. When we consider the estimates of the Department of Transport, I will come back to that matter.
At this point I would like to congratulate the hon. member for Quebec South (Mr. Cantin) on his appointment as parliamentary secretary of the Minister of Transport. He is in the right place to intervene with the minister so that the work can be completed as quickly as possible because, as member for Quebec South, I think that part of his constituency is also affected by the railroad crossings and the St. Charles river. If I am not mistaken-


Lucien Lamoureux: I wonder if the hon. member for Quebec East could explain how his present remarks are related to the resolution under study?


Jean Robert Beaulé: I am coming to it, Mr. Chairman.
The hon. member for Quebec South spoke about restoring old Quebec, in a televised program during the last election campaign. I hope that in his plan for the restoration of the old Quebec, he will not forget to add the necessary amounts for the development of St. Charles river and the removal of railway crossings.
Mr. Chairman, if the government intends to alleviate unemployment, it is the moment to prove to the people its good intentions and

it is not with a levy of new taxes that things are going to improve. On the contrary, that 11 per cent tax interferes with construction and I hope that the government will find a way to balance its budget in making use of the Bank of Canada so as to eliminate, some day, that 11 per cent tax on building materials and equipment.
(Text):


Mr. Muir (Lisgar):: Mr. Chairman, there are a few aspects of this resolution that I wish to discuss this evening. However, I shall attempt to be brief in order to facilitate the work of the committee. It still remains a mystery to most Canadians why the exemptions applied to building materials should be withdrawn at this particular time. The fact that the building and allied trades constitute one of our best means of creating employment makes it even more mystifying. The reduction from 11 per cent to 4 per cent- a concession, I might say, that was wrung from the minister-while cushioning the immediate impact of the full tax on construction does not alter the fact that a good many people in this country who had intended to build or renovate property are having second thoughts in this regard.
The minister's explanation that this particular tax was necessary to help reduce the budget deficit, it seems to me, is certainly shortsighted, because a reduction in the construction program across the country will reduce, rather than add to, the taxes forthcoming from this particular industry. Surely there were other means of finding revenue that would not adversely affect employment and private and industrial development as much as this one. In addition the construction industry lost three vital weeks during the debacle that followed the introduction of the budget-a budget, I might say, that ran counter to the government's boast that they would increase employment and get the economy rolling. The removal of the tax exemption on building materials on an escalating scale starting at 4 per cent certainly does not give any encouragement for expansion in that industry.
The gimmick type of approach used in the budget leads one to believe that it was written up or put together by a group of inept merchandisers rather than fiscal experts. A case in point is the $500 prize offered for winter construction, a measure that has been rather effectively erased by the imposition of the tax on building materials. The gimmick approach seems to have set the theme for the whole affair and has now become the symbol of the Liberal party-gimmicks born of ineptitude out of expediency. I would like to quote what Mr. John Meyer, the financial

expert for some of the leading eastern newspapers, had to say recently in the financial column of the Ottawa Journal:
Whatever the explanation, the tax has to be withdrawn in all its new applications and as quickly as possible, whatever the cost in budget calculations and political embarrassment. Mr. Gordon shouldn't be allowed to wait until a round of price increases forces his hand as the stock market break forced his hand in the withdrawal of the takeover tax. Deferred or cancelled construction and equipment contracts could still be reinstated if the tax is quickly withdrawn. If Mr. Gordon is allowed to hold to it, through the tolerance of the government or division in the opposition, he will have the distinction of having braked a national economy to a standstill all by himself.
Tinkering with the former government's economic program in a desperate, but mistaken attempt to equal last year's gross national product, and at the same time find more money for their gimmicks by the tax on building materials and production machinery, may very well have set the wheels of progress in reverse. Of particular concern to people hoping to modernize their home and business places in areas other than incorporated towns-and I hope the minister is listening to this, because I think it is very important-or municipalities that are not affected, is the provision under paragraph 1(c) repealing the exemptions for goods used as part of sewerage and drainage systems. I would just like to read for the record what paragraph 1(c) provides:
1. That the present exemption from sales tax for certain building materials be withdrawn by repealing the exemption for all goods mentioned under the heading "Building materials'' in schedule III of the said act and by repealing the exemptions for
And this is what subparagraph (c) provides:
"Goods for use as part of sewerage and drainage systems, and articles and materials to be used exclusively in the manufacture thereof;"
This tax places an added burden on home and business owners located in rural areas and where municipal sewerage systems are not feasible. It will add to the capital costs of establishing motels in some of our tourist areas where the total cost of a sewerage system must be borne by the owner himself.
With these illustrations in mind, I think it is only just to say that this particular item is discriminatory in that it does not recognize the difference between those who have these services provided for them out of general taxes and those who have to pay for these services themselves, sincle clause 2 exempts municipalities from application of the tax.
We would be interested to hear the minister's views on this item and we are sure that a lot of people in the rural areas who have been looking forward to being able to 28902-5-1681
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afford a few of the amenities of life, of which a decent sewage system is one, would be interested too. We are certainly hoping that the minister will seriously consider the discrimination imposed on the rural people by paragraph 1(c) and have it withdrawn. As I have mentioned, the building and allied trades have proven to be an important factor in the creation of employment and economic expansion. Cognizance of this is reflected in the hundreds of telegrams received by hon. members on all sides of the house from across the nation, and many of our people close to the situation fear the consequences of the tax in terms of construction, employment and economic well-being. The result may well be that the government's boast to get the economy rolling may turn out to be as empty as the proverbial cupboard.
The facts, officially confirmed, show that 1962 was a year when all segments of the economy forged ahead to new plateaus under a government program designed to stimulate progress in both domestic and foreign trade. If this government is going to assist the economy in trying to maintain a healthy growth, they would be well advised to cancel the taxes they have imposed on building materials, including all of paragraph (1) of the amendment to the Excise Tax Act, and give the nation some practical leadership so sadly lacking in their so-called 60 days of decision.
There is another section of paragraph 1 of the resolution which I should like briefly to discuss, and that is that having to do with the treatment of timber poles and lumber. As I understand it, under paragraph 1(a) of the resolution, even fence posts when not in the raw state-that is to say, with the bark on them as the wood is taken from the tree- are subject to tax. That includes posts split, peeled, sharpened and creosoted. It seems to me that when the minister has to reach down to the lowly fence post to find extra taxes, it is time the government took a summer holiday, as suggested by the Prime Minister this afternoon, in order to clear the cobwebs from their collective thinking, drop this nefarious tax, and come back with new measures designed to assist rather than deter the economy of this great country of ours. (Translation):


Mr. Gauthier:: Mr. Chairman, we have been discussing for several hours the matter under study and we all seem to agree in opposing this 11 per cent tax on building materials.
After our public protest against that tax, the Minister of Finance (Mr. Gordon) seemed

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to retreat, but it was just a strategic move for a better sprint towards taxation, and besides all will admit that this is the method of the old-line parties. It is not by compelling us to go to the scaffold, step after step, that we will forget what is in store for us up there, and in some way the people will eventually have to pay that 11 per cent tax imposed by the budget.
However, what shocked me most at first was the way the minister yielded to the American financiers, when Mr. Kierans came and had him erase by a stroke of the pen the 30 per cent tax on Canadian stock sales to non-residents, and his rather disturbing stubbornness in maintaining the 11 per cent tax on building materials. If it displeases American finance, then everything must be sacrificed to prevent such a disaster, but if it means acting outrageously against those who sent us here, then it has no importance at all. The hundreds of representations coming from every part of Canada cannot move the Minister of Finance.
Is the minister aware that building timber is the main industry in my own riding of Roberval? More than 50 per cent of the mills have already closed up or cut down production, leaving hundreds of families apprehensive about the future. It is humanly impossible to foresee the coming of winter under these conditions. The minister has received representations from all public bodies and industrialists of my area. Is he oblivious of the fact that notwithstanding the needs for taxation, there are thousands of men, women and children hoping to receive a human answer from his government.
I hope that the Canadian people will finally understand the great truths that we, of the Social Credit, have been advocating for 20 years, namely that the worst enemies of economy are the old-line parties who listen much more readily to the financiers' whims than to human needs. The minister might say that it is precisely to help the people in their fight against unemployment that he levies this 11 per cent tax. The aim is surely commendable, but the means taken to attain that object are wrong. We can compare that situation to someone who says to a man who has no money to buy bread: "Give me $5 and I shall give you back $2 so that you can buy bread."
I am addressing myself to the present minister, as I would to any minister from the two old line parties, because their solutions, when they are in power, are always one and the same, that is, taxes.
They succeed each other in turn, and each blames those new taxes on the other.

Listen to what this government tells us. The Minister of Finance explains that he has to impose a sales tax of 11 per cent on building materials, to correct the mistakes of the Conservatives. The Conservatives certainly did make mistakes, and more particularly the failure to present a budget. In that respect, we waited patiently for one, two, three, five or six months, and we even still believed their seventh promise. And the play on words went on.
What was the reason which forced them to play at hide-and-seek? Did they find their last year in office so troublesome that they were unable to come through with a budget? Or, rather, were they somewhat embarrassed not to be able to lay the blame on the Liberals, an advantage which the Liberals are now exploiting to the hilt.
Mr. Chairman, one thing is certain, if ever a city council behaved like the former government, and never produced a budget, I would pity that mayor and those councillors when they had to face the people. Logically, we should have had no excuse for tolerating such behaviour on the part of the central government.
The parties which are guilty of such action should at least go and hide their shame and stop blaming those who actually prevented a social suicide.
Mr. Chairman, we are opposed to the 11 per cent sales tax. All our fellow citizens are also against it.


An hon. Member:: We would like to know about that.


Charles-Arthur Gauthier: Wait a minute, you will soon get the information. And I hope that I will not have to read again for the minister's benefit all those protests I forwarded to him. Besides, I would be unable to do it, because some government members are always raising a point of order when we dig up some evidence too conclusive looking. Therefore, I will avoid giving them that chance because this has become a sport with some members of the government.
The three opposition parties stated their opposition to the 11 per cent sales tax, but each in its own way.
And now I come to a most important point for the opposition because it is very well to say no, that we are against this or that, but what is more important, in my opinion, is to offer an alternative.
The fact, therefore, is well established, the Liberals have imposed an 11 per cent tax because they wanted to balance their budget and reduce unemployment.

Therefore, if we oppose this means of collecting future budgetary funds we must absolutely find an alternative way acceptable to our people. That is the problem.
Unless I am mistaken, the members of the New Democratic party oppose the 11 per cent sales tax and some of them even suggested an alternative: "We should accumulate increased deficits".
At first sight, that suggestion looks strange and even ludicrous. As a matter of fact, the New Democratic party seems to be suggesting: "You want to find the funds to balance your budget? You do not have to tax, there is only one way to do it: increase your indebtedness. You need money? Borrow some. You need more money? Borrow some more, do it until there is no money at all left to be borrowed."
Maybe they have found a magic formula which will enable a country indebted to the full extent of its national assets to start all over again from scratch? In that case, we should try to reach that maximum before everybody starves to death.
Nevertheless, that was a suggested solution. It was a doubtful one but still it was a worthy effort.
However, I admit that I was quite taken aback by the amendment they moved the other night, when they simply asked for the deletion of the paragraph on the 11 per cent sales tax, without any alternative suggestion. This does not look at all like N.D.P. policy.
The mover must have known that he was unable to move an amendment to do away with essential budget revenue without first suggesting an alternative to raise such revenue.
So, the chairman had to rule the amendment out of order.
The Conservatives have also in part stated their views on the 11 per cent tax. But as always, they opposed it just to be against something. They must do so because they are the official opposition. They do not ask themselves why and they have not thought about making a concrete proposal to replace the 11 per cent tax.


An hon. Member:: What is your proposal?


Charles-Arthur Gauthier: You will know it at the end of my remarks. Besides, I am quite sure that in the same circumstances, the Conservatives would have imposed the same taxes as the Liberals, because both do the bidding of the same vested interests. For the time being, their role is to be against and to play politics in order to dazzle the people. We had a good example of that from the Leader of the Opposition himself (Mr. Diefenbaker) this afternoon.
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In fact, the lamentable incident of this afternoon has done much to disillusion a young member. When you expect so much from the former leader of the country, and you see him go so low for the purpose of playing vulgar politics, I can tell you it is a heart-breaking spectacle.
And I say to the Leader of the Opposition that he should set an example for his supporters instead of making an exhibition of himself.
The House of Commons is not a show place and the Leader of the Opposition should be old enough to realize that.
As far as I am concerned, I always considered him as a real gentleman among parliamentarians until today, but I say sincerely that my opinion has changed very much since this afternoon.
I think that this afternoon we saw the true face of the Leader of the Opposition, I wish I had never seen it, to keep the image I had of him. I even wonder why the house tolerates such vulgarity? A reform is imperative. People do not speak the truth- but at the same time they pretend they are telling the truth-to try and hoodwink the people. Or they make statements which smell politics for miles, like the ones made by the hon. member for Acadia (Mr. Horner) on the evening of July 24-that is their job, all right-when he knew perfectly well that the question put was on the ruling of the chairman concerning the adherence to the standing order and an N.D.P. amendment which I myself considered as incomplete.
The hon. member for Acadia shouted in the house that the Social Crediters had voted for the 11 per cent tax. His leader confirmed that statement this afternoon. It is a shameless lie. You said the worst abominations during the election against our group because we did not have the American funds you had to defend ourselves.


Lucien Lamoureux: Order. May I point out to the hon. member that he seems to wander farther and farther from the resolution before the house. I would ask him to co-operate with his colleagues in this house and confine his remarks to the resolution.


Charles-Arthur Gauthier: Thank you, Mr. Chairman.


Louis-Joseph Pigeon: Mr. Chairman, may I say one word in reply to the remarks made by the hon. member for Roberval?


Lucien Lamoureux: I called the hon. member to order and I do not think there is a debate on that point.


Charles-Arthur Gauthier: Thank you, Mr. Chairman. I shall hurry up a little because some people

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want to know what suggestions I have to make to replace this 11 per cent tax.
But I wish to mention that I made those observations in self-defence. You gave full latitude to the Leader of the Opposition this afternoon, and I do not see why those who only take the floor once in a while should not have the right to defend themselves.
Therefore, to come back to the attacks of the hon. member for Acadia-you will notice that I have left the Leader of the Opposition and changed the subject to come back to those attacks-I say that if his shoes hurt his toes, he should stop yelling at his neighbour and find out what is wrong in his own bailiwick. Are your provincial wounds still burning?
1 have too much respect to ask you why some of your Conservative members did not vote that night. But, at least, do stop lying to the house by stating that the Social Credit members voted in favour of the 11 per cent tax.
Now I am getting to my subject matter.
You know very well that it is absolutely false, because we voted to support a decision rendered by Mr. Speaker on a point of order.
If those who are taking notes, looked up Hansard, they would see that six of my colleagues voted-I say six and therefore not all the Social Credit members-six of my fellow members voted to sustain Mr. Speaker's decision, while the others voted against it.


Louis-Joseph Pigeon: Mr. Chairman, may I ask the
hon. member a question?


Lucien Lamoureux: Order.


Charles-Arthur Gauthier: Later, when I have finished my remarks, because an hon. member asked me three times what my suggestion was, and I shall tell him.
Five others voted against the decision; they were entitled to do so, as we have no party dictatorship in our ranks. As far as I am concerned, I did not vote at all because I had not quite sized up the chairman's decision. I do not usually feel responsible for other people's houses, but when somebody comes and dirties my doorstep, I do not allow him to do so.
I say to the hon. member for Acadia that we are just now discussing the 11 per cent tax in the house. He did criticize it again at length yesterday, but what positive steps did his party take to remedy the situation? None at all. Hot air and words, that is the limit of your objectivity. We shall forgive you, but do not do it again.

We are also opposed to the 11 per cent tax, but we are suggesting to the government a substitute.


An hon. Member:: What for instance?


Charles-Arthur Gauthier: The solution might not be quite to the liking of a few petty millionaires, but it would bring us the necessary funds to balance our budget which must stop showing a deficit. We of the Social Credit party at least believe that when somebody has debts, he is not going to pay them off by piling up new ones.
The minister is asking for suggestions? At this stage, he does not necessarily need suggestions, but just some individual faith, assurance and national confidence.
As a people, we are mature, at least that is what we are told, and we should no longer believe the old tales of the wicked fairy.
I believe that our Minister of Finance is still beset by a primitive fear of the myth of the American financier. We should free ourselves from those traces of colonialism and apply ourselves to control our economy by our own means. Let us stop borrowing the neighbour's car when we can buy our own. Will we dare drive it at last?
This is what we expect of your government, Mr. Minister.
When you go back before the people, they will not ask you how many votes you carried in the house, but to what extent you enabled Canadians to control their own country.
It is not by depriving someone of his property that he is made to own it, but by exerting every legitimate effort to give him back what was taken away from him.
You know very well that by levying an 11 per cent tax on building materials, even though our economy is based on the construction industry, instead of creating jobs and alleviating unemployment, you will force many industries to close down and to increase the number of men laid off, thus undermining our last hope of seeing the economy get moving again.
It would be possible today to go through the Bank of Canada-that is the solution, sir-to create new credit needed for our economic recovery.
We will soon be considering an amendment to the Bank Act; that is a unique opportunity for your government to take over the very control of our economy.
I need not labour today the idea of monetary reform advocated by our group. You have heard about it more than once.

If I have still to convince you, at least read the writings of a former governor of the Bank of Canada, Mr. Towers. You will certainly get in that way an inkling of the reform needed if the Bank of Canada is to play its true part in the Canadian economy.
Thus, we may hope that one day we will no longer be at the mercy of some financiers who set the degree of our vitality. We will be able to live in freedom in our country, only when all the members of parliament understand the importance of that reform.
(Text):


Mr. Chaplin:: Mr. Chairman, in taking part in the debate on this resolution dealing with the excise tax, I should like to commence by extending my congratulations to the Minister of Finance on his appointment to this high office. I should like also to take this opportunity of wishing him well. Since I have just returned to the house, I have not been able to do that before. As I say, having been away for some time and judging from what I have read, the minister might be reasonably happy to have some good wishes extended to him, regardless of the quarter of the house from which they come.
The point has been reached, however, where the niceties and amenities that we observe and expect in this house clash headlong with the realities of the situation that has developed. I regret, very sincerely that I am unable to extend congratulations to the minister upon his budget or upon the manner in which it has been presented to this house. There are many people in this country who would like to forget the resolution with which we are now dealing, and I am sure there are a great many members opposite who would like to forget the whole budget. This budget is going to be remembered in this country for a long time to come. As long as it is remembered, the anniversary of the date of its introduction, June 13, will be recalled, I am sure, as amateur night in Canada.
I have a certain sympathy with the apparent objectives and aims of the minister. For example, I think I would have no quarrel with the long term objective of repatriating Canadian industry. However, I was greatly surprised at the method by which it was attempted, in that it was obviously punitive, discriminatory and largely directed against the United States. I had rather expected a system of incentives for Canadians. It was quite apparent that the takeover tax was
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doomed to failure from the very start, primarily because the ideas of the minister proved to be impractical and unenforceable.
When dealing with another section of the Income Tax Act, the minister put great stress on certain incentives that were contained in the budget and the beneficial effects they would have on expansion of Canadian industry. I feel the minister was overstressing the value of those incentives. In fact, I feel that he will be very disappointed in the results arising therefrom because, in my opinion, those incentives will be valueless unless the government itself creates a climate of confidence in this country. The businessmen, the manufacturers of this country will not use those incentives unless they have confidence in the future. This budget, and particularly this resolution, with its backing and filling, has created doubt and confusion. It has inspired distrust in the business community of this country and in a wide segment of industry throughout Canada. The backing and filling, the ineptitude with which this budget has been prepared, has created doubt and uncertainty, and the results are now becoming apparent to the people of Canada in the appalling lack of decision on the part of the government. That is underlined in this very resolution.
I have some letters here from various companies in my constituency with which I should like to deal, if I may take some time. The hon. member for Waterloo North dealt with a number of industries in his constituency the other evening, and I should like to mention one or two in mine to stress the points
I	have in mind. I am sure that I shall have the blessing of the hon. member for Kootenay East in that regard.


Mr. Byrne:: Don't be too sure.


Gordon Chaplin: In this respect, I should like to quote from a letter from Galt Metal Industries, one of the large companies in my constituency. This is what they have to say about this measure:
In the business in which our company is engaged, that of the manufacture of automotive parts, we are competing with manufacturers in other countries who import into Canada. In addition to the depressing effect that the sales tax added to production machinery and supply will have on other industries, our industry, and particularly our part of the automotive parts industry, will be severely affected when it comes to being required to add
II	per cent to the cost of our tooling. As you perhaps know, the cost of tooling is a very large part of the cost of producing automotive parts particularly in our low volume Canadian production.
Because of the action taken in November of 1962 which established the export credit program to offset duty on automotive automatic transmissions, our company has gained considerable export business into the U.S. It is highly doubtful that

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had we been required to add 11 per cent to the cost of tooling that we would have been able to obtain this business.
I should like to quote from another letter from Babcock-Wilcox and Goldie-McCulloch Limited.
The new sales tax on building material and equipment for the production of goods has a very serious effect on our company position and therefore, employment in South Waterloo.
The new sales tax has a twofold effect on our position. Firstly it results in an 11 per cent increase in price to almost all our customers; this has caused cancellation of purchases and will continue to restrict the demand for our products. Second, it has increased our own operating costs by the new tax of 11 per cent on plant machinery, repair parts and shop supplies.
The new tax can only have a serious detrimental effect on the community. You personally are aware that we are the major industry in Galt as far as male employees and family income is concerned.
Now, Mr. Chairman, I have many such letters. I have more than I could read, but I do not want to take up the time of the committee. I am only reading these to illustrate the points I have in mind. I am sure that the minister himself has had communications of this kind. It is true that these letters were written before the tax was reduced to 4 per cent and when we were still talking about an 11 per cent tax. However, the basic complaints and arguments that they make are still valid.
I realize that the minister can probably make a very good case for the elimination of all excise tax exemptions. As the hon. member for Leeds said last night, I believe, there is no reason for any one industry or segment of our economy, such as the building and construction industry or capital goods industry to have exemptions that do not apply to other industries. This may be true, Mr. Chairman, but I think that the timing of the removal of this exemption is most unfortunate. One of the great problems we face today, as the Minister of Finance has said on so many occasions in the past, and particularly during the last election campaign, is the elimination or attempt to minimize unemployment in this country. The exemption of the building industry from excise tax was originally designed to stimulate that industry and to stimulate employment. If that is true and it has worked out to advantage, as I believe it has, then it holds that the cancellation or elimination of this exemption will have the opposite effect. It will be restrictive and will reduce employment.
So far as the capital goods industry is concerned, we have an unusual situation. We have the Minister of Trade and Commerce telling secondary industries that they must increase their efficiency because we are going to reduce tariffs, and Canadian industry, to a greater extent than ever before, will have

to face competition not only in the markets of the world but in our own domestic markets. The government, which is piously urging manufacturers to reduce costs, is at the same time arbitrarily increasing them, and this cost increase will apply to exports as well as to domestic sales. That is a strange way to assist Canada's export drive.
How does the Minister of Finance propose that industry become more efficient? How does he propose that it meet the type of competition envisaged by the Minister of Trade and Commerce. We certainly cannot meet this kind of competition by cutting or decreasing our labour rates. In fact possibly the only way open to us is increased modernization and efficiency through the use of new capital equipment. This is the area to which we must turn to meet the specifications laid down by the Minister of Trade and Commerce, and this is the very area in which costs are so important that we should not be increasing them but should be striving in every way we can to lower costs on capital equipment.
We were led to believe, particularly during the last election campaign, that the government's policy would be expansionist. Instead of that it is restrictive, and in my opinion restrictive to a very dangerous degree.
Then we come to consumable products and processing materials used in the production of goods. As I understand it, the government has backed down in removing the exemption from such products, but this concession is not really as wide or comprehensive as manufacturers had been led to believe. I have received communications from factories and companies in my constituency asking for clarification as to what items are exempted from duty. They have also written to the Department of National Revenue and have received numerous answers that have been confusing in themselves. Why is this? It is not because of any inefficiency on the part of the officials of that department, but simply because they are just as confused as everybody else in the country.
My own impression is that the sales tax is now to be applied on a wide list of goods that were formerly exempted; but this ag^in is just another example of the utter confusion that seems to permeate the whole government. Actually there is an air of unreality about the whole budget. It is a Walter in Wonderland budget.
We all recognize the fact that the minister must find sources of revenue for the needs of his government. In this respect we are now discussing a further increase in taxes, and to the best of my knowledge there has never been any suggestion by the minister-I qualify that by saying there was a suggestion by

the Prime Minister today-outlining any possible economies in the operation of government itself. If there were a reduction in that direction shown by the government, then I think the people of the country would respond much more readily to the raising of these taxes. It also seems to me that the implementation at this time of certain recommendations of the Glassco commission would help to restore faith and confidence in the country and, incidentally, in the government itself.
Another feature of this resolution is the progressive nature of the sales tax and the manner in which it is being applied. I do not think the minister should be applying taxes to take effect two years hence. He has changed his position from the original budget. He has reduced the tax from 11 per cent to 4 per cent for the immediate future, and it progressively builds up to 11 per cent over the next two years. I submit he made these changes under pressure, and they have in effect been a face-saving device.
There is no assurance that the minister will be in that particular office a year hence, and it could well be that to impose future taxation of this kind would only embarrass his successor and inhibit his usefulness. When I look across at the benches opposite and see that hungry expression on the face of the Minister of Trade and Commerce, I would only suggest that there are perhaps only a few months of usefulness left to the hon. minister.


Mitchell William Sharp: I had a good dinner.


Gordon Chaplin: Oh, indeed; from here it is hard to see that. The Minister of Finance has pointed out that by applying this tax over a period of time it will soften its impact on industry. I agree with him in this. It may be so, but it brings to my mind another problem to which serious consideration should be given. Having fixed and specific dates on which this tax is to be increased could well be an invitation to excessive inventory speculation. This could be particularly so in building materials, and might readily have the effect of stimulating the economy until such time as the tax was increased. It could also have a very depressing effect, once the increases came into force.
If this does result in excessive inventory speculation it will be the big corporations that will benefit. It will be the big companies and big operators with cash available who will get the benefit of this, and again it will be the small businessman who will suffer in his inability to compete with the price advantages which the big companies get by meeting this tax.
In closing, one of the other areas of omission in the budget is that it seems there has
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been no provision or attempt to correct our trade balance with the United States. That unfavourable balance is a most serious problem for the government and the country. The Minister of Finance has not faced up to the situation; but now, with the restrictions that have been threatened by the Americans on the movement of capital to Canada, I hope the government will recognize the problem, will take cognizance of it and take some constructive action in this area, because I believe it is of the utmost seriousness to Canada.
(Translation) :


Guy Marcoux: Mr. Chairman, I promise not to waste the valuable time of the house. I only wish to do justice to those who have appealed to me to defend their opinions. I also wish to speak on behalf of the Quebec district in addition to the metropolitan area of Montreal who does not have the privilege of being represented by a member in the opposition who understands the views of the industrialists, manufacturers and people in the construction industry.
I neither wish to repeat nor hack all the arguments put forward by the members who have wasted much of our time. However, I must say, like everybody, that I have received many letters, telegrams and telephone calls.
Moreover, I would like to quote two prominent figures in the province of Quebec who have objected to that 11 per cent tax being applied all at once or gradually during a three-year period which amounts to the same thing. Those people talked about amounts of which they would be deprived for a period of five years each. I am thinking of Mr. Rene Levesque who stated that Quebec's hydro projects would have to be curtailed because of this tax, bringing about additional expenses amounting to approximately $10 million a year. In passing, I might mention to the hon. Minister of Finance that Quebec hydro is an agency which should be very familiar to him since his accounting firm is keeping books for them.
Let me also quote His Honour the Mayor of Montreal, Mr. Jean Drapeau, who said that this tax puts Montreal in an intolerable situation and will force the city to spend $30 million more in the next five years.
I would like to suggest to the minister that even without following the Social Credit theory, any increase in the building sector would bring about an increase in employment, and in the amounts paid to the workers

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which never escape the clutches of the Department of National Revenue; therefore the taxes which would be paid by the workers would make up for the amount lost through the repeal of that 11 per cent tax.
However, I shall not make lengthy remarks on the subject. I simply wanted to join all those who objected, to let the minister know that should he decide to withdraw that tax, he would find himself in good company since millions of Canadians are in favour of the withdrawal of that tax. He would not have to have any fear about the next election; nobody would ever criticize him for that.
(Text):


Lucien Lamoureux: Has the committee completed discussion on paragraph 1?


Mr. Rynard:: Mr. Chairman, in speaking to this resolution I have nothing but sympathy for the Minister of Finance. I think we all realize that he has an uncomfortable job. It is an uncomfortable job to have to raise the funds with which the government can carry on. But I think we must also keep in mind that many Canadians voted for members of the present government on the promises, even commitments, of its candidates to get the economy going, to increase employment and to balance the budget. I will not go any further into other promises or what the people expected of the party which formed the government. Perhaps people are now beginning to realize that they bought the Brooklyn bridge. In the first place, this government will finish out its fiscal year with the biggest deficit in the history of this country. My prediction is that because of the methods being used there will be more unemployment, and this budget has already gone down in history as the worst one ever brought in since confederation. To substantiate this, if it needs any substantiation, one needs only to read from a little booklet published by the Canadian Manufacturers' Association called "Industry". This article is entitled "Opportunity lost", and says:
From the manufacturing standpoint,-


An hon. Member:: Is there a doctor in the house?


Philip Bernard Rynard: They need several:
-however, the most dismaying and least forgivable feature of the budget is the extension of the 11 per cent sales tax to machinery and apparatus-
This, of course, was before it was reduced to 4 per cent:
-and processing materials used in the production of goods, and to building materials used in the construction of new factories and plant extensions.
Manufacturers already are required to pay the sales tax on the goods they produce; they are now to be made to pay it on the machinery used in the production of these same goods. In effect, they

will be paying the tax twice over. This isn't just; it isn't wise; and it certainly isn't expansionist.
The likely corporate reaction is all too predictable. In reviewing, as they will be bound to do, their capital spending intentions, some companies will reluctantly decide to defer the purchase of needed plant and equipment and to "make do" for a while longer. Still others with plans for expanding their capacity or building plants may well decide that the higher outlay compels them to hold off for now. There is evidence that these things are already happening.
In short, the effect of this extension of the sales tax can only be to slow down economic activity, hold down employment, inhibit competitiveness, retard productivity improvement and generally act as a depressant rather than a stimulant.
"Regressive and regrettable" was the budget night comment of H. Roy Crabtree, president of the Canadian Manufacturers' Association-
In my humble opinion the Minister of Finance would not be in the difficulties in which he now finds himself had he used the wisdom and experience of his own department. Surely there are few people with as much experience as the people in the finance department, who have years of experience behind them in preparing budgets. They are in possession of a wealth of experience and have unquestionably studied the economy at length. They would have charted a much safer course for the Minister of Finance. Instead he was led down the garden path into the briar patch by a group of amateurs. This is, of course, what one could really call the second budget because in this resolution the tax on building materials has been reduced from 11 per cent to 4 per cent. However, this is just not good enough; it should be eliminated completely for at least a year, because at the present time there is nothing but confusion in the minds of the people.
This tax is restrictive because it hits the manufacturing industry and the construction industry, two of the biggest employers of labour in this country; and let us not lose sight of the fact that the ordinary individual ultimately pays the shot. I would like to ask you, Mr. Chairman, how in the world can you stimulate-trade and provide employment when you put a deterrent in the market place? The construction industry employs well over 600,000 people in this country. Anything that will restrict this industry will certainly lead to more unemployment; and this was the very thing this government gave its pledge to the Canadian people to reduce. Let us take a classic example of a man who was going to build an "L" wing to his house. His family had increased in size and he was going to put two additional rooms in this wing, the construction of which would cost him about $5,000. When this tax was imposed he decided he was not going to build the "L" extension. While it is true that this tax amounts to only a few hundred dollars, to a man measuring his dollars and cents and raising a family it is

quite a sum. This is one tax that makes no exemption and bears the hardest on people with limited income. It so happens that this man is working in a factory which has recently been taken over and which is going to require a lot of new machinery. They will have to pay tax on these new machines, they will have to pay tax on the product they sell, and the fear of one of the men in that business is that when they are through with all this they may have a product priced out of the market, and will not be able to sell what they are producing. If that is the case, Mr. Chairman, then this man will even lose his job. That is the sort of thing which increases unemployment, in a vicious circle.
I do not want to be unjust to the Minister of Finance, Mr. Chairman. I believe he is an honourable gentleman. But we must remember that all the senior members of the cabinet, including the Prime Minister, saw this budget before it came into the house. While the Minister of Finance must bear the brunt of criticism, nevertheless he has my sympathy. Unquestionably he will have the biggest deficit in history, and I do not believe that deficits are worse than mass unemployment. In spite of the promises of the Liberal party in the last election that they would balance the budget, in this day and age where most people buy on finance plans I believe that it is not a bad plan to have deficit financing, if that deficit financing does not go beyond your gross national product and the growth of your country. I think if I were to choose between unemployment and a deficit budget, I would take the deficit budget.
I should like to deal with another feature of this resolution. I find myself asking the question, when a young couple buy a home and make their down payment, which has been decreased as has the interest rate also, if their down payment does not just cover the present tax. In other words, have they any real equity in this house or have they just paid the sales tax? The same thing occurs, in my opinion, in the attempt to stimulate employment by the building of a house in the winter months. I think you will agree with me that building in the winter months in this country raises the cost at least 10 per cent, depending on the area you build in. The government have the audacity to offer a fellow $500 to build a house in the winter time, knowing full well that if he is building a $20,000 house the house will cost him $2,000 more to build. In other words, in effect they are taking $2,000 out of one of his pockets and putting $500 into another.
I should like to touch on another problem which indicates to me a complete lack of
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understanding on the part of the present government. This tax will largely destroy the efforts of industry and labour to make themselves more competitive in the export markets. It is a tragedy, when industry and labour have worked so well together in the last few years to make themselves competitive-and Mr. Chairman, they were getting there

that the government in dealing with them now has not shown more leadership and common sense. As I have said before, I sympathize with the Minister of Finance. Money has to be raised, but surely it could be raised in fields which are not so restrictive to employment. For example, I note that the federal government in 1961 raised $110 million on their excise tax on spirits. I do not believe that it would do any particular harm, and certainly would not be restrictive, if they increased these taxes; and there are other fields they could have tapped, in the same way.
In conclusion, Mr. Chairman, I feel that the minister should completely eliminate his tax on building materials for another year at least, if not forever. If he has to go on with it at that time, however, people would have time to become informed and to realize the procedures involved. This would preclude the great uncertainty which now prevails as to this resolution and it would help temporarily to soothe the general revulsion of the man on the street, as well as the anxiety of the stock exchanges. The man on the street believed sincerely that he had voted for a party which would at least bring in sound fiscal and monetary policies.


John James Greene: Mr. Chairman, we have had such sorrowful sounds of melancholia from the other side of the house that I think it would not be amiss if I dropped a word of cheer to these sorrowful gentlemen, these new prophets of doom and gloom that we have sitting across on the other side. It would appear that now the Conservative party is on record as being the party of fiscal irresponsibility; that several large and evergrowing deficits when they were in office were a monument to that irresponsibility; and we now hear them advocating the removal of all taxes and hence, apparently, a larger deficit than even they were able to produce. It would appear that the new philosophy of the Conservative party is: Govern now and pay later. This is a peculiar philosophy indeed for that party which was once the party of orthodox finance. I feel so badly for these lachcrymose and melancholic gentlemen, and in particular for the right hon. Leader of the Opposition who was wailing so mournfully over there this afternoon, that

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I would just offer a word of cheer to the effect that they may have noticed that housing starts were up in the month of June.


Mr. Stenson:: Mr. Chairman, in speaking to this resolution I should like to express my views and make some reference to how my own area will be affected. Since June 13, when the budget was brought down, I have had many letters and briefs complaining about the taxes it contained. I have discussed the situation with different plant managers and I am at a loss to know why the Minister of Finance feels he is helping the economy of the country and promoting employment. This feeling is non-existent in my riding.
The Minister of Finance said on budget night that in order to encourage employment by reviving private capital expenditure, which he said had lagged so conspicuously for the past six years, he would propose important new tax concessions. Effective on the date of enactment, new manufacturing and processing enterprises located in designated areas of slower growth would be given exemption from income taxes for three years from their inception. He also proposed that such enterprises be entitled to write off new machinery and equipment. Another proposal was that any taxpayer be entitled to write off the cost of new buildings located in designated areas of slower growth at the rate of 20 per cent annum, or in as little as five years.
After these budget statements I would like to ask the Minister of Finance what areas he has designated as slow growth areas, when during the last election campaign most of the Liberal members claimed to have slow growth in their particular areas and, at times, even stagnation
Does the minister feel his area of Davenport is a slow growth area? He said, and I quote: "My own riding of Davenport is a high unemployment area". Just how will he designate these areas? Can he refuse these tax exemptions in his own riding? Can he refuse them in any metropolitan Toronto riding? I would like to know exactly where I stand in my own riding regarding new industry, and what is offered to establish a new manufacturer. In Peterborough we have found that the best expansion does not always come from new industries, but from industries which are already established. But there is no help for them. The hon. gentleman went on to say:
It is intended that the measures I have mentioned so far should provide an immediate impetus to increased activity. Accordingly, new assets must be purchased and new businesses must be certified to have come into existence in the period of 24 months following the initial date of these measures if they are to qualify.

Now, Mr. Chairman, with the restrictions the minister has placed on industry, the tax on machinery, and the tax on building material, how does the government expect any new industry to develop in this country in the next 24 months?
I would like to bring just one instance to the attention of the committee. A small industry in Peterborough employing approximately 75 people saw fit to expand their business, and erected another building last year. They have been disturbed since the budget was brought down because, although they are a Canadian firm with 100 per cent Canadian capital, they feel it would be better to carry out their operation in the United States since 80 per cent of their produce is exported, 65 per cent of it going to the United States. Here is a portion of a letter from them:
Our firm is one hundred per cent Canadian. We have developed the manufacture of machines and consumable items, and export the major part of our output to the United States and other countries, over tariff barriers ranging up to 45 per cent.
The cost of production equipment that we must purchase has always been much higher in Canada than it would be if we were located in the United States. With this, and other disadvantages, working against us in Canada, particularly when engaged in export, the budget proposal to tax the means of production another 11 per cent comes as a distinct shock.
The provisions in the budget for rapid depreciation, while welcome, are only beneficial to firms that are in a secure profit position. We feel that comparatively few small Canadian firms are in that position.
We wish to submit facts pertaining to our business which we feel, indicate the problems and possibilities for manufacturing in Canada. Adversity, if made too severe, will cancel the prospects. Twenty years have been required to develop our business to a profitable level.
The pressing need of our business is to acquire the best available equipment for efficient production and be able to retain sufficient earnings to pay for it, as well as to continue the development of our products.
Our considered view is that the recent turn of events poses a serious situation for us, as well as for many other Canadian manufacturers, and merits your urgent consideration.
This is just one instance, and I doubt very much if there is a single member sitting on the government side who does not have a similar situation in his own riding. How can hon. members opposite go back to the people and claim to support these budget measures when they know they are posing a serious threat to our industrial economy? Small manufacturers who have to purchase production equipment out of Canada have to pay as much as 30 per cent more than in the United States and we find they are exporting to the United States 65 per cent of their output. How can this government expect to expand industry by burdening such companies with an additional 11 per cent tax?' The government should realize that they are:

forcing this type of Canadian manufacturer into other countries to produce. I would like to take the Minister of Finance or his officials to my constituency to discuss the measures they have levied on these particular industries.
The Minister of Finance has admitted in his revised budget that the 11 per cent tax will have an immediate and sharp impact on some industries, and I agree with him. Industries in the export business competing against foreign manufacturers will also feel the 4 per cent tax and they have further increases hanging over their heads in the next 18 months.
All the other letters from Peterborough manufacturers find fault with the 11 per cent tax on building materials, machinery and equipment. I would like to read a few quotations from another letter.
The additional 11 per cent sales tax on building and processing materials and equipment will add great expense to our costs. We are in a competitive market with imported materials and this is not going to make our efforts any easier.
The new additional withholding tax will make it such that our parent company would be reluctant to invest further money in Canada.
As you know in recent years we have expanded greatly in the Peterborough area and we would like this to continue but it does not look possible.
As a Canadian I can quite appreciate the desire to have Canadians participate in the industrial expansion of Canada. However, this isn't practical in all cases and I feel that ours is one of them.
Now, Mr. Chairman, this particular company has contributed much to the economy in our area. In the last four years they have increased production, increased the number of employees, and expanded the company. This tax could be considered as a slap in the face to their efforts.
I have spoken to the manager of one of Canada's largest electrical manufacturers, located in Peterborough. This company is a substantial contributor to the employment and welfare, not only of our community, but of the Canadian economy as a whole. The company has, since its inception, devoted itself to integrating its own interests with the developing Canadian economy. They have carefully assessed and supported Canadian government policies developed in the interests of Canada's growth and employment, in the sincere belief that these were also in the interests of the company. Their policy of reinvestment of earnings in Canadian operations has resulted in an average of approximately 72 per cent of earnings being reinvested in Canadian operations over the past ten year period.
The company's total employee compensation last year of just over $87 million, and its expenditure for materials, supplies and other costs of $163 million, give some indication
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of the impact of the company's activities on the total Canadian economy. The money paid employees as well as the money paid to a vast multitude of suppliers throughout all communities of this country, has become an important factor in our industrial life.
The sales tax amendments in the budget are estimated to increase the company's cost as a purchaser by something over $1.5 million a year. In addition, the additional tax that must be collected and billed to customers will reach in the order of $8 million per year.
These budget revisions will add very materially to costs, and industry costs generally, without any improvement in output and will, therefore, reduce the efficiency of Canadian industry significantly at a time when improved efficiency is very much required. In keeping with the government's policies over recent years, they have on their own initiative gone into world markets and expanded their exports very significantly. While this has been done at extremely low margins, they have just managed to compete.
With the recent increase in costs resulting from budget changes they may find it puts them in a non-competitive position and their program would be in danger of failure. This is a paradoxical case in which the government is exhorting them to expand their exports and is at the same time proposing legislation which will inhibit their ability to carry out this policy. Those importing products into Canada will obtain an advantage, in so far as their costs are not increased in proportion to the increase in costs of Canadian manufactures due to these budget proposals.
I should like to emphasize that they recognize and appreciate the need for action to help balance the budget and the need for additional revenue. However, they feel that the additional revenue must come from growth and cannot come from hidden extra costs which are bound to inhibit and actually may seriously destroy the very growth that is needed. They sincerely believe that there is a real question whether increased revenue can actually result from the sales tax amendment in the budget.
With regard to the income tax amendments, they are concerned with the discriminatory nature of these amendments. Over the years reinvestment of a large portion of the earnings of their company has been a major part of their policy and has been a major factor in providing employment in this country and our community. The company has exerted itself to be a good Canadian corporate citizen through its reinvestment policy, through the employment of Canadians on its board of directors, through its expansion of export trade and support of Canadian government policies. They sincerely believe that growth

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and employment in our community and throughout this country will be seriously and adversely affected by the budget measures and would appreciate recognition of these views in connection with forthcoming government policies.
I should like to suggest the complete withdrawal of this tax so that industry in this country will again have confidence in the Canadian government and expand as it has in the past six years. This course of action will not only help our manufacturers but will be a boost to the economy of our country, which in turn will give more employment to those out of work. I feel that this is the most important objective that the government should strive for at the present time.


Mr. McIntosh:: Mr. Chairman, I had not intended to speak at this time but I was prompted to do so by the actions and the words of the last speaker on the government side. This budget reminds me of the poet Browning. Someone asked Browning what he meant by one of his poems and he looked at it and said: "When I wrote that, only God and I knew what I meant but right now only God knows what it means". I think that is the attitude of the Canadian people with regard to this confused budget. I believe it was said this afternoon that the best course that could be taken would be to withdraw the budget entirely or, failing that, to exempt all building materials and production machinery.
It has been intimated that the department is swamped with applications at the present time but when the truth is actually known they will not think they were swamped now because there are many other things that have not come to light yet. I have one case here that I want to bring to the minister's attention involving an order or contract which I think will stand up in court. An order was placed by a Canadian company with an American firm for the production of a piece of equipment known as a self-propelled oil well servicing and workover rig. This order was placed with the American company on May 13, 1963 and was confirmed by the American manufacturer on May 22, 1963. The machine went into production on that date and delivery was to be on June 28.
The total cost of this equipment was in the neighbourhood of $65,000. A deposit was paid making the transaction binding. The purchaser's cheque was deposited by the American firm in the National Bank of Tulsa, Oklahoma, on May 20, 1963. I have a letter here from the manufacturer which states that the order was accepted on May 13 and was secured by a cash down payment. They consider that the order contract was firm and binding on both parties. I also have the can-

celled cheque which was deposited in the American bank on May 20. In other words,
I believe that those with legal minds will say that the company concerned had a fixed price contract.
The Minister of National Revenue stated the following in his prepared statement as recorded on page 1472 of Hansard of June 24 last.


An hon. Member:: I thought you were not going to speak.


John (Jack) McIntosh: Haven't you fellows said enough tonight already?


An hon. Member:: We have heard enough.


John (Jack) McIntosh: You have not heard half of what you are going to hear. This is what the minister said:
In order to be of assistance to persons who believe they are entitled to relief because they are a party to a fixed price contract, as explained earlier, the department is willing to examine their contracts if they wish to forward them to the customs and excise division in Ottawa before they go to the work of preparing their refund claims.
In this case the minister's offer of assistance was accepted. The company concerned made representations to the department, through their member of parliament. The final reply from the minister on the subject reads in part as follows, and it is very surprising.


An hon. Member:: I thought you were not going to speak.


John (Jack) McIntosh: I said I was not going to speak unless I was prompted by you fellows.


An hon. Member:: You cannot say you were not prepared.


John (Jack) McIntosh: That is right. I am prepared to make you fellows sit still. This is what the minister said in part, in his letter:
The sales tax relieving section of the budget resolutions, presently before parliament, provides sales tax relief to a Canadian vendor selling under a fixed price contract entered into prior to June 14, 1963, signed by the parties thereto and which does not permit the vendor to add the extra tax to his sale price. However, this relief does not extend to persons who import goods for own use even though the importer may have a contract with the foreign supplier.
In other words, the department implies that the contract with the foreign supplier is firm and binding but adds this rider, which I imagine was added by the officials of the department:
-this relief does not extend to persons who import goods for own use-
This is a new angle. I wonder how many other angles are buried in this resolution that will not be unearthed until we start getting letters from our constituents. It will not be

just the opposition members who will be getting them. All you backbenchers on the government side will be getting them too. In so far as opposition members are concerned, all we can do is sympathize with our constituents, but you fellows have to make excuses for the members of the cabinet. I suggest that this is a discriminatory revision, and I do not believe the minister wants to put this type of legislation through.
For example, take the hypothetical case of two purchasers of a like piece of machinery or equipment. One orders through another party and the other orders direct from the manufacturer. Now, the one ordering direct for his own use is charged the additional sales tax, but the one ordering through the third party does not have to pay this tax. In the case to which I have referred, this order that I have here, the additional cost to the one firm that will have to pay, would be in the neighbourhood of $7,000.
I could not find any place in the minister's remarks a statement to the effect that importation for end use was not exempt. I am wondering if this is another bureaucratic decision or regulation. Perhaps I could explain just what I mean by a bureaucratic decision. I have had experience with this department on a number of occasions. I think a reference was made in this committee the other day to farm implements. I think the minister should be very careful of the words he uses in these acts. I have another complaint, Mr. Minister, concerning tuned hand bells, which come under tariff item 696. The answer I got was that it was not a philosophical or scientific apparatus or instrument. If you look at the dictionary, it is considered so there, but evidently not by your officials. I think, in these cases, your definitions should follow the dictionary meaning of these words which you are going to use.
I have said before that these regulations are stronger than the acts we pass in this House of Commons. I say again that the ministers are captives of their own departments in that the officials write these letters and then the ministers sign them. I come back as an example to the first dispute I had with the department concerning agricultural implements. I refer to this tariff item 409f, which is in two parts. There is one item shown thereunder, gravity discharge farm wagon boxes. I tried to get one of these into the country a short time ago, and the only difference was that ours was called a truck box. In the west, they do not use wagons any more. I understand that the French translation of wagon is lorry, but not speaking French I did not know that at the time. Is that not correct? They said it did not come under that item because "wagon"
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did not mean "truck". The reason we wanted to import it under this item was that all articles brought under this item had what they called an end user's certificate. However, this truck box could have been used for other purposes. We admit that. If the purchaser was forced to sign an end user's certificate, that would have been fine.
However, the officials would not even allow it under that. We go down a little further and there is another item which says, "all other agricultural implements or agricultural machinery, n.o.p.". I understand these letters mean, not otherwise provided for. It certainly should have come under that. I went to a lot of trouble to try to influence the department as to the definition of "farm implement".


Some hon. Members:: Question, question.


John (Jack) McIntosh: You will get the question. Now, looking at any dictionary I find that an implement is defined as a thing of necessary use in any trade. This might be an education to some of you people. The word "necessary" is defined as those things to the doing of a thing which are reasonably required. Then, I went to the law clerk of the House of Commons. I did not tell him what my problem was, but I asked him to give me a definition of an agricultural implement. He said that anything that is mainly used for agricultural purposes becomes an agricultural implement.
In Funk and Wagnall's ready reference dictionary, implement is defined as a means or agent for the accomplishment of a purpose. In McGoldricks hand book of the Canadian Customs Tariff and Excise Duties, recognized as an authority or guide by Canadian industry, starting on page 267, there is a general heading "Agricultural Implements". This same heading of implements is carried on for seven pages, listing hundreds of items considered as agricultural implements by legal authorities and industry.
Then, I went to the library of the House of Commons and I got all of the legal dictionaries I could find there. I took these definitions to the officials of the department and said, "These are all the definitions I could find." At that time, they did not say no, they are not right. They said, "Look, you go over to the Department of Finance; they are the ones who determine what will go into these tariff items." I went to the department and they said, it is in there. They pointed out these two items to which I have just referred, the steel grain wagon box or the other agricultural implement. I went back to the Department of National Revenue and I told them what the Department of Finance had told me, that it was covered by the tariff. They said, "No it is not." I said that finance thinks it is in here; they put it

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in. They said, "Yes, but we have the job of interpreting what finance puts in". I said that I had all these definitions which I had looked up-"Will you not accept one of these"? They said, no.
Do you want to say something, Mr. Minister? I will sit down if you do. Finally, I said to the departmental officials, "O.K., you have me beat; it does not come under any of these headings. I will have to write back and tell my constituents about this. But before I do, I should like you, as officials of the department to give me your interpretation of what these two headings mean. What is an agricultural implement?" They said, "We do not have to do that". In other words, they can just sit there and arbitrarily tell me that all these definitions I have found in these dictionaries do not define agricultural implements. Apparently they have that power and the minister will do nothing at all about it.
I may have a few more remarks to make on this item when the bill comes before the house. I think, however, before the bill comes before the house the minister should give some consideration to withdrawing the budget altogether. He would then stop all this confusion that has been obvious in the committee tonight and during the day. We know there is going to be more confusion after the bill is introduced and after our constituents are confronted with problems such as the ones I have outlined tonight. Just wait until your backbenchers start getting letters from your constituents. I hope you can explain things to them.
(Translation):


Mr. Lalulippe:: Mr. Chairman, the new Kennedy tax and the 11 per cent Gordon tax are uniting to hit Canadians directly. This leads us to believe that our politicians want for our people the same fate as the world boxing champion had in store for the challenger, that is to knock our people out in the first round.
First round here, first budget of the new Liberal administration, first series of taxes, general retreat under pressure brought to bear by outside forces, general loss of confidence, panic in some cases, rejoicing in others, in short, the ropes of the economical ring choke the contenders, goodwill alone is not enough, they begin to realize that what is physically possible must also be made financially possible.
Lack of money must not prevent progress any more, but how they hesitate before taking a decision, because they are afraid to do wrong to the signs cult. They are busy drawing dollars from everywhere they can

find them before considering making more, because they are afraid that dollars might become less rare, less valuable. If they increase the signs to make it possible to use things, they increase debts at the same time in order to keep the means of decreasing the signs, to prevent the individuals from freeing themselves.
The lift-pump operates in all corners, in all pockets: direct and indirect taxes, increased prices, the taxpayers, the consumers, emptied to the last drop, do not know what to do; government taxes at all levels, bank taxes, trust taxes.
The privileged financier does not even have the trouble of manoeuvering the debentures that cost him only a stroke of the pen and a few accounting operations and that assure him a primary right on the public income. The financier is beaming, he is the first to be served, and in the name of the law too, by the manager of a struggling society, the Minister of Finance.
Joe works, Banco does the business.
Joe pays, Banco picks up.
Joe is deprived, Banco enriched.
Is he not the one who made the required money come out of his ink-stand? When he is about quits with his government, Joe takes a look at his electricity bills, his waterfalls, his mines, his soil and his subsoil, and he wonders what imps have installed such a perfect pumping system, that he does not understand too well but whose existence he is well aware of and which his common sense tells him is undesirable.
Joe looks at his house, his industry, his business, his municipalities, his schools, his bridges, his roads, his universities, his sons who have to set up a family on terms and who have to look up to finance companies for a small measure of respite. Alas, they find only a father who works devoutly for a finance company and who is tied to the latter by a chain whose links he has forged himself. Banco empties the pockets through the respectable offices of the public treasury; and the trusts, which are the offsprings of the fertile banks, get rich because they are crafty, they share a part of their bounty with the big political parties to be sure of continued protection. With those funds, the political parties are able, during an election, to impress and comfort Joe with their eloquence.
This 11 per cent tax is the result of such a financial system. The Minister of Finance was firmly decided to give to the people what they can rightly expect from the government.
The local, provincial and federal governments are faced with problems which impede their action. This disastrous tax will lead to inflation, to an increase in the cost of living,

to the restriction of credit, not to speak of the numerous additional difficulties it will create for both the public and private sectors of production.
According to Hon. Rene Levesque, this tax is a straight punch on the nose; he said that the development of the entire province of Quebec will suffer from it. But some sectors, such as the building industry, are more adversely affected, as shown by the many telegrams we received on the matter. Personally, I got a few dozen telegrams, as many phone calls, as well as letters on the subject.
On the other hand, we can easily be misled by the latest statistics on unemployment. Figures released by the Department of Labour and the d.b.s. show that the rate of unemployment in Canada went down to 4.4 per cent of the labour force in June. It is said to be an increase of 43,000 jobs compared with the previous month. In the province of Quebec, there were 113,000 jobless in June, a gain of 17,000 over the previous month. But this gain does not really mean much when we consider that out of the 113,000 jobs created during that period, 79,000 were for students. This proves that the effects of that tax, as evidenced by the telegrams, are most harmful and make an alarming situation even more serious.
The steady increase of indebtedness at all levels of our economic society makes the picture even darker. According to tentative figures which were provided by the Department of Finance, Canada's public debt was as follows as of March 31, 1963: unmatured debt, $17,961.8 millions; gross liabilities, $24,811.9 millions; net debt, $13,937.1 millions. On the basis of the population figure for April 1963, the per capita distribution was as follows: unmatured debt, $953.08; gross liabilities, $1,316.56 and net national debt, $739.53. The following are only tentative figures concerning the interest paid on the debt in 196263: unmatured debt, $709 millions, and gross liabilities, $882 million. On the other hand, the total amount of money in circulation in Canada compared to the public debt, in March 1963, amounted to 86 per cent of the unmatured debt, 63 per cent of the gross liabilities and 111 per cent of the net debt.
The situation is anything but bright, judging by the statistics which I have just quoted. The increasing burden of taxes of all kinds as a result of which many homeowners lose their homes, farmers their farm, industrialists their industries, irrevocably crush all of us, except those who, on account of their
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unlimited power, are indirectly responsible for the levy of these taxes. In the province of Quebec alone in 1962, the apparent losses from bankruptcies, non-summary procedures, namely 543 bankruptcies, amounted approximately to $15,695,662 and losses from 915 summary procedures reached $5,779,801.
The financial incapability of extending social measures, according to genuine needs, and of maintaining them in relation to the increase of the cost of living also results from such a state of affairs. This tax will increase the financial needs of hospitals and educational institutions. Those are all financial problems and cannot be blamed on inadequate means of production. But if the sources of production are ample enough to fiU quickly all the orders, public and private, the source of payment facilities, on the other hand, is soon dried up. The total capacity to produce and the total capacity to pay do not balance, far from it, and that balance will always remain harder to achieve with those new taxes, be they direct or indirect.
So, even before the new taxes, there was a discrepancy between the physical possibilities, which are immense, and the available financial means, which are limited, and that is what brings about conflicts where every one wants his share of an insufficient whole.
If everything that is physically possible were made financially possible, the scarcity complex which sharpens conflicts would disappear, since the production system shows no signs of finding it difficult to meet the demand, wherever it comes from.
Nothing obliges a full-fledged organized community, to gear the use of its vast physical assets to its limited financial assets. Rather, the financial machinery should be geared to the possibilities of implementation.
A financial organization which would faithfully reflect its actual wealth, would provide the means of payment in accordance with the production of all sorts of goods and would withdraw those means of payment only in accordance with the consumption of all sorts of goods. The matter of financial problems would not likely come up any more and the only possible difficulties would concern production, but those do not seem to be a source of trouble today.
It is a crime today to regulate and ration money already in insufficient quantity compared to an affluent production, to let human beings suffer, in order to abide by heartless


Herman Maxwell Batten: Does this complete discussion on paragraph 1?


[Stage Direction]
Paragraph agreed to.
Paragraphs 2 to 15 inclusive agreed to.
['Does this complete discussion on paragraph 1?']
Herman Maxwell Batten: Paragraph 16?


Michael Starr: Mr. Chairman, in connection with paragraph 16 I would-


Walter Lockhart Gordon: Mr. Chairman, I wish to direct the attention of hon. members to the change in the method of calculating-


Herman Maxwell Batten: Order. Would the minister tell me what paragraph he is referring to, please.


Walter Lockhart Gordon: I am referring to what I hope will be paragraph 18, Mr. Chairman.


Michael Starr: I do not think we have reached paragraph 18 yet.


Herman Maxwell Batten: We are on paragraph 16.


Michael Starr: On paragraph 16, Mr. Chairman, I wish to ask the Minister of Finance whether he has given consideration to the suggestions of the Canadian Construction Association as to possible amendments in order to clarify many of the matters that have to do with this tax and the procedure in respect of paragraphs 16 and 17. I think the minister has received their suggestions; they were submitted to him.


Walter Lockhart Gordon: Mr. Chairman, we have received the suggestions and considered them carefully, but I do not think we are in a position to meet them.


[Stage Direction]
Paragraph agreed to.
Paragraph 17 agreed to.
['Mr. Chairman, we have received the suggestions and considered them carefully, but I do not think we are in a position to meet them.']
Walter Lockhart Gordon: Mr. Chairman, I wish to direct the attention of hon. members to the change in the method of calculating the sales tax on gasoline which was announced in the budget speech. The action proposed is to withdraw a discount heretofore granted for sales tax calculation purposes. Because this was an administrative change which would not require an amendment to the act, no paragraph relating to this measure was placed in the excise tax resolutions. I have come to the conclusion, however, that the implementation of this administrative change should be accompanied by a change in the application of the tax to imports of gasoline and related fuels.
It is considered advisable to license importers of gasoline, aviation fuel and diesel fuel and to require these importers, instead

of paying sales tax on the import price at the time of importation, to pay tax on their selling price at the time these products are sold by the importer or put to his own use. If this is to be done-and it is being done to put them on a comparable basis with domestic producers-the Excise Tax Act must be amended to place the importers of gasoline and related fuels in the same position as manufacturers or producers, for sales tax purposes. Although this is a part of the administrative change that was announced earlier, this step will necessitate a change in the act. It is customary to give notice of such amendments in the resolution, and therefore I wish to bring the matter to the attention of the committee and to ask that an appropriate paragraph be added to the resolution.


John Richard Garland: I move:
That the following paragraph be added to the excise tax resolution:
"18. That the said measure further provide that where a person has imported into Canada for sale or for his own use gasoline, aviation fuel or diesel oil and the aggregate duty paid value of the goods so imported by him in any period of twelve consecutive months commencing on or after August 1, 1963 exceeds three thousand dollars, he shall, for the purposes of Part VI of the said act, be deemed to be the manufacturer or producer in Canada of the goods so imported by him in that period, and not the importer thereof."


[Stage Direction]
Amendment agreed to.
Resolution agreed to.
Resolution reported and concurred in.

Walter Lockhart Gordon: for leave to introduce Bill No. C-90, to amend the Excise Tax Act.
Motion agreed to and bill read the first time.


The Acting Speaker (Mr. Batten):: When shall the said bill be read a second time?


Some hon. Members:: Now.


John Whitney Pickersgill: By leave.


Walter Lockhart Gordon: the second reading of the bill.


John Whitney Pickersgill: Mr. Speaker, I wonder if I could make a suggestion to the house, that we give second reading, go into committee, and there will be no exception taken to any reasonable speeches on the first clause in committee?


Gordon Minto Churchill: That would be agreeable, Mr. Speaker, if you would put the motion again.


The Acting Speaker (Mr. Batten):: Mr. Gordon moves that Bill No. C-90, to amend the Excise Tax Act, be now read a second time.
Excise Tax Act


Gordon Minto Churchill: On division.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Batten in the chair.
On clause 1.
John Whitney Pickersgill: Mr. Chairman, just before we proceed I wonder whether it would be agreeable to the committee to go on, say, till half past ten to see if we could make some progress?


Some hon. Members:: Agreed.


Herman Maxwell Batten: Is it agreed that the committee shall carry on till 10.30?


Some hon. Members:: Agreed.


Mr. Slogan:: Mr. Chairman, in rising to say a few words on this bill I might say that I would describe it as a G-string bill, trying to dress up the body of a budget which is now pretty nude. In discussing this first clause perhaps we could look toward the objectives outlined during the last campaign by the Minister of Finance and other spokesmen for the Liberal party. The present minister of external affairs said that the object would be to create a million jobs in the next five years, and that this object would be obtained. It seems to me that the provisions of this bill will do nothing of the sort but will tend to do exactly the opposite. Hon. members talked of increasing trade, of stimulating a stagnant economy and of balancing the budget. I think this bill which is before us will do nothing of the sort. Certainly some of the provisions are designed to stimulate the economy; but on the other hand the government has done so much to harm the economy that it is very doubtful that it will reach its objective. Indeed, I am reminded of the story a professor tells of a frog, where if you put a frog in a pan and you pour hot water on it, it will jump out; but if you put the same frog in a pan and you start with cool or lukewarm water and keep making the water hotter, it sits there and is roasted. Now that is exactly the position of the Canadian taxpayer. When this 11 per cent tax was placed on him all at once, he jumped out of the pan. Now the government is using a more scientific approach. It is starting at 4 per cent and it tends to make it hotter and hotter until the Canadian taxpayer is roasted.
It is hardly necessary to repeat all that has been said about the harm these measures are doing to the Canadian economy. When I listened to hon. members opposite speaking during the election campaign I was under the impression that they intended to get their increased revenue by expanding the gross national product, increasing the tax base

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and so on. I certainly never heard anything during the campaign about increasing taxes. Now it is almost an obsession with them that nothing can be done to expand the economy unless taxation is increased. There was the $500 incentive toward house building in the winter months. There was a lowering of the interest rate and a lowering of the down payment-all positive measures. At the same time, the government brings in measures such as this tax on building materials which will cancel out all the goods which those incentives might have produced.
The hon. member for Lisgar mentioned unorganized territories and I would appreciate it if the minister would take into consideration the exemption of local government districts in the same way as municipalities with regard to sewage and drainage systems. I think there is no reason why people who do not have many of the amenities provided by municipalities should be bearing a larger tax in this respect and for this reason I should like to add my word to the remarks of those who have urged the minister to make this exemption.
What has this budget actually accomplished? First, I think it has created a great deal of uneasiness in the country. It has increased the burden on the average taxpayer. It has done something to destroy incentive as far as housebuilders and others in the construction industry are concerned, and employment is higher than it was last year. Where are all these answers which the Liberal party had to the problems of our economy? They said the economy was stagnating, even though under the previous government there was an increase of 8 per cent in the gross national product last year. This year, despite all the answers the Liberals pretended to have, the gross national product is expected to be less-something like 5 per cent. The measures in this budget have undone a lot of the good which was done by the former government in trying to provide incentives. The national house builders association has told us that the tax will add to the price of a home almost twice the amount by which the industry has reduced the cost in recent years as a result of research into new methods and materials.
I do not think there is anything in this budget which is comforting to the taxpayers of Canada. It all boils down to the bumbling, as it has been called, of the minister-the fact that he did not consult those people who could have advised him properly but that, instead, he brought in these amateurs. I do not think the Prime Minister can escape responsibility for the actions of his colleague. I think responsibility must be placed directly

on his shoulders, along with those of the Minister of Finance and the Liberal party as a whole.
The actions of the minister have brought discredit on the government and his party. I think the people of Canada have lost confidence in the hon. gentleman. I believe that if he had taken the honourable course he would have resigned and made way for somebody who would have taken a new approach towards the problems which face us today. I think the Prime Minister must share some of the responsibility because he did not take the opportunity to shift the minister to a more pleasant post.
I do not intend to hold up this bill for very long. I could read a lot of letters which I have received from my constituents and others but I am sure the hon. member from Kootenay East would object. Besides, I do not think there is any necessity for me to do so because other speakers from this side have already done a very good job in bringing these points of view to the attention of the government and of the people of Canada. All I want to say is this: I hope the government will not compound mistake after mistake. I hope they will adopt some of the structive suggestions which have been put forward by some members of parliament, including, indeed, some which have undoubtedly been made by their own backbenchers. They have some able men over there and I think they should be taken into the confidence of the government and that consideration should be given to their views which, I believe, are not unlike our own on these matters, since they reflect public opinion.
This is a budget which has certainly been bungled, a budget such as we have probably never seen in Canadian history. If the party now forming the government cannot handle the affairs of the country in a much better way, the best thing it could do would be to resign and make way for a government which can. If they are so confident, perhaps they should take these measures before the people of Canada and let them reach a decision.


Bert Raymond Leboe: I rise to say a few words on the first clause. I am reminded that the hour is late and therefore I will perhaps be a little more brief than I would otherwise be. I do not think I will take any more than half an hour.


Some hon. Members:: Oh.


Bert Raymond Leboe: When I heard the tirade which came from the Leader of the Opposition this afternoon I was reminded that those who sit in minority parties in this house must have tough hides. With this statement I will pass

over the comments of some hon. members of the opposition. I will only say that we who sit in minority groups feel in many instances that it is a matter of the skunk saying: "I smell something". The charges and countercharges which are going back and forth across the house make us wonder what the ultimate goal of some of the people in parliament really is. With that, I will leave that part of the business and go on to deal with what I want to say to the Minister of Finance. He has been waiting for some time now for me to make a speech and I do not want to disappoint him too much. I believe the minister said there were three avenues open to him in the raising of revenue, an increase in the income tax, an increase in the sales tax across the board or an increase in the corporation tax. I should like to say to the minister that I do not believe it is necessary to increase taxation at all. I think that what we needed to do was not to increase taxation but to put the unemployed back to work, so that instead of these people being a drain on our economy they would be producers and taxpayers and thereby we would not need this increase in taxation.
I certainly believe that if we continue the concept that the minister has put forward, and I think he is sincere, we are going to pile tax on tax until finally we will find ourselves in a state of collapse, because we will not be able to carry on with increased unemployment and more people as a drain on the public treasury, which is actually the economy, and also be developing a situation where there will be fewer taxpayers. If we are going to solve this problem, surely we must have more taxpayers and fewer people out of work. This is the objective.
Having said that, I believe that a solution to the problem can be found. I think the problem can be met through a public works program that will put people to work. I do not say that all our unemployed people can be employed in this way, but certainly if a number of them can be employed in this way they will become markets, as I said before in another debate, for goods and services to which industry would respond. Therefore we would be getting taxes from these people who were on payrolls and we would also be getting taxes from industry that would be producing the goods to supply the needs of these people. Therefore I think we should be looking in this direction.
I am trying to hurry along. The question comes up: Where are we going to get the money? Where does the money come from? I am going to ask the minister to tell me when he gets up to speak on this matter where money comes from. I would ask him
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to explain to the committee in detail where money comes from, and it should not take him any more than about 15 words to do so. I am not telling him but I would hope that he would tell the committee.
I come from bush country and I have seen a lot of trees, but I have never seen money growing on them. If we need more money, I would certainly expect that the minister would be able to tell us where that money is going to come from. When we bring in outside capital, about which we hear so much, we are monetizing our resources. I used to explain this in a neat little hypothetical way, but it brings home the point. I used to draw a picture of a stump and I would ask the individual whether or not he knew what it was. He would say it was a stump. I would then draw a picture of a factory and I would say, "What is that?" He would say it was an industry of some kind. I would say that the stump is what the outside investor sits on while we in Canada build factories and industries with our own hands and our own resources, and after we have built them with our own labour and our own resources the fellow from outside our country sitting on the stump owns them.
This is the point. If we know where money comes from and it takes capital to put our people back to work, surely we do not have to depend on outside sources. Suppose Canada were the whole world. What would we do for money from the outside? There would not be any such money. Surely we must find out where the money is going to come from. I expect the minister is going to tell me where it comes from, but in case he needs a little help I should like to put on the record a few quotations. First of all, I should like to quote from the minister, because at this time I do not know anybody better to quote than the minister himself. This is what he had to say, as found on page 1000 of Hansard of June 13 last:
I wish to say a further word about the relationship between the government and the Bank of Canada. In the last analysis it is the government that must take responsibility for monetary policy ... There can be no misunderstanding on this score.
I was glad to hear the minister say that because it really did my heart good.
At the same time the government recognizes that this does not relieve the bank of its own responsibilities in these matters.
Those are good words. I should like to link them with words of a former governor of the Bank of Canada, Mr. Graham Towers. They are found in the proceedings of the committee on banking and commerce in 1939, and I refer to page 29 where Mr. Towers had this to say.

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It has been quoted before but I should like to do so again. He said:
A government can find money In three ways: by taxation-
That is what my friend over here is working on. Apparently that is as far as he got in reading Mr. Towers' remarks. He just got as far as the first method.
-or they might find it by borrowing the savings of the people-
I do not know whether he has any idea of dipping into them. He has not said so in this debate.
-or they might find it by action which is allied with an expansive monetary policy, that is, borrowing which creates additional money in the process.
We can get money here, it seems to me, but I would hope that the minister would not borrow from the chartered banks. I would hope he would borrow from the Bank of Canada which can do exactly the same thing as the chartered banks if he will only let the Bank of Canada do it. I should like to say here that I am only thinking of borrowing for public account, public capital, and not for industrial capital. I should like to make it clear that we believe we have one of the best banking systems in the world right here in Canada.
In addition, the industrial development bank as it is constituted today is an organization that we should seriously consider replacing with a municipal development bank. Let the banking system look after the needs of industry. Let us broaden our base, if necessary, and that will give industry a better chance to grow. It will give them a little bit of leeway so they can breathe better. I think this makes common sense and I believe that on reflection the minister will agree that this is so. As found on page 238 of the same committee proceedings Mr. Towers had this to say:
When a million dollars worth of bonds is presented-
By the government.
-to the bank a million dollars of new money or the equivalent is created.
So we find that there is a place to get money. Therefore if we can get money so these people can go to work they will become taxpayers and will broaden the tax base so that we will not have to have this tax about which the hon. gentleman is worried. I know he has been worrying about it because there have been a lot of people worrying him about it. I will not say anything more because he has had a hatful of worries. There is no doubt of that. I am not egotistical enough to think what I say tonight is going to make any impression compared with the presentations made to him so far.


An hon. Member:: Favourable letters too.


Bert Raymond Leboe: I do not think the favourable letters were very many. I am quite certain about that. Otherwise he would not have had the worried look he has had for the last few days. The little stroke of business that took place last week end has helped him somewhat, but that was only a sort of sidelight. We have found out where we can get the amount of money that is needed to put people to work. The amount of money that is needed can be actuarially determined. If, with our computers, we can make mathematical calculations to the extent that we know when the eclipses are going to occur and where they are going to cross the earth, surely we can calculate how much money is going to be needed to carry on our economy in a healthy condition.
This brings me to a consideration of the words "inflation" and "deflation". I believe that the only way to deal with the proposition of money at any time is to deal with it in the light of inflation or deflation. It has been said many times that as Social Crediters we want to get the printing presses going to run off money by the bushel. Well, that is just so much nonsense. No Social Crediter ever had that thought. If he said that he was a Social Crediter, he was only a disguised Liberal or Conservative. We know so well we have to have some balance in connection with the creation of new money. I do not believe the minister will deny the fact that when a chartered bank buys a bond, that is a government bond, it creates the money it uses to buy that bond. I do not believe he will deny that. I think if you transfer the position of the chartered banks to the Bank of Canada, then when the Bank of Canada buys the bond it will create money against the assets, the bond, thereby increasing the money supply.
This practice is the same in Canada as it is in the United States. I should like to put on the record something which has been put on the record before in this connection, but I believe it is worth repeating. Some people do not read the same parts of Hansard. As a matter of fact, I believe few people read it. Robert B. Anderson, secretary of the treasury, was speaking before the Associated Press of New York city on April 20, 1959, and this is what he said:
Now, suppose I wanted to write cheques for a hundred million dollars-
They speak of big money, these fellows.
-starting tomorrow morning, but the treasury was out of money. If I called up a bank and said, "Will you loan me one hundred million dollars at 3J per cent for six months if I send you over a note to that effect?" the banker would probably say, "Yes, I will."

You see, he is a good banker.
"Where would he get the one hundred million dollars with which to credit the account of the United States treasury? Would he take it from the account of someone else? No, certainly not. He would merely create that much money, subject to reserve requirements, by crediting our account in that sum and accepting the government's note as an asset."
So, you see, he created $100 million. He goes on to say this:
"When X had finished writing cheques for one hundred millions, the operation would have added that sum to the money supply. Now certainly that approaches the same degree of monetization as if I had called down to the bureau of engraving and printing and said, 'Please print me up 100 million dollars worth of greenbacks which I can pay out tomorrow'."
Then, we bring in the need for alertness, so far as inflation is concerned. Certainly, we must know that this creation of money will not be so great as to cause a rise in prices. We are under contract today which does not allow the free flow of prices up and down according to the money supply. I think the minister will agree with this. The paper companies on the west coast were accused of having a combine in connection with their prices. However, the investigation went right from the cutting of the log, and the transportation of the log to the putting of it through the pulp plant, and it was ascertained each pulp mill had the same costs all the way down the line. The end price was the same. All these items were under contract prices, so we have a basis of price control by the fact that the costs of these operations of these companies are controlled. We have, therefore, a measure of price control imposed upon us. There is no such thing as the free play of supply and demand.
Now, in so far as this business of writing cheques is concerned, I have handed the minister this piece of paper before. However, he was kind enough not to say anything to me, in case I took it up in this speech. Someone just handed me a note to the effect that the chartered banks have created $5,241 million from January 1, 1955 to July 3, 1963, an eight-year period.
The minister has stated, Mr. Chairman, that he would like to see the time when we could balance our budget. We know that this balancing of budgets is wrong; that is not going to bring prosperity. History tells us that. The United States, for instance, has a debt of $300 billion. Lots of people who call themselves economists will relate this to the gross national product. What they are saying, in effect, is this: If I go out and hew a thousand ties, I must owe somebody for the thousand ties. This is not common sense, but this is what they are trying to tell you. We must expand our money supply through a debt
Excise Tax Act
system, and it is all right to expand it according to the gross national product.
I say to the minister we do not need to go into debt at all for the public capital which is necessary to put these few people I am talking about to work, so that they will become taxpayers and we will be able to take them off the backs of the present taxpayer. We can talk about pensions, portable pensions and all this type of thing. I want to tell you a pension is no good unless there is somebody producing to meet the demands of that pension. We all know that. The fellow who was lost in northern British Columbia and had a lot of money and a lot of time to think, would take these thousand dollar bills out and count them one at a time. He was as hungry as all get out. It did not help him very muct.
We can talk about all kinds of pensions, but if we had inflation, it would rob our pensioners. The type of policy that is being followed here, Mr. Chairman, is one that eventually will rob our pensioners more and more. The cost of living is bound to rise under this structure of taxation. Let us get these people building schools, hospitals, roads, bridges, court houses, wharves, airports, airstrips, trails in the forest for the protection of our forests and so on. Let us do some of these things. Then, we will have an asset for the work they have done, and in return for that asset we will pay them from money that is raised in exactly the same way as we can raise it here. If we insist on increasing the national debt to have prosperity, instead of having it in the manner I have outlined, then I will go along with my friends to the left and say let us do it, and let us get prosperity.
However, let us get away from this taxing ourselves to death. If we carry on in this way we are going to find ourselves taxed to the point where our whole economy is going to collapse. We have to put our men to work. We have to make taxpayers out of them so that they can carry on in the normal way and live a decent life.
I should like to make just one short reference before I sit down, and that is a reference to British Columbia. The other day I whispered quietly to the minister that he should have Bennett over here to talk to him. I see that he has skipped out somewhere and will not be here for the conference. I had hoped he would be here so that we could get together and do something about this matter. I see that, according to the press, British Columbia has a budget surplus of $56 million for last year. Now, this is quite a sizeable budget surplus. I think the Minister of Finance could get some business along that line if he

Excise Tax Act
wanted to use the Bank of Canada. However, perhaps his hands are tied. I cannot see from here, but perhaps his hands are tied.
I shall just quote this and then sit down. We have heard that British Columbia has some sneaky ways of keeping its accounts. Well, Mr. Chairman, the Financial Times of August 7, 1959, had this to say in a first line editorial:
Perhaps the showmanship on the occasion of B.C.'s bond burning last week was extravagant but the achievement was real.
When Premier W. A. C. Bennett of British Columbia, in an elaborate ritualand it was elaborate, I saw it myself
-consigned some $70 million of cancelled bonds to the fire, thus wiping out the balance of the provinces direct debt which stood at $191 million seven years ago, he accomplished something which taxpayers all over Canada wish could be done in the name of their own provinces (and of Ottawa too).
But politics creates strange moods. There has been an extraordinary amount of carping; charges of trickery have been raised and fingers are pointed at the direct or contingent debt of the province. The critics have really made hay out of their disapproval of the Bennett claims, although they are on very poor ground indeed.
There is a difference, a very real difference, between direct and contingent debts; between debts the service of which is a direct charge on all government revenues on the one hand, and debts which are largely, or wholly, self-sustaining, occasionally even self-amortizing, such as the bonds issued by provincial power commissions, toll highway commissions and similar government agencies.
An indirect provincial debt is simply one the service of which is guaranteed by the province in the unlikely event that a power commission, etc., would default on its own obligations.
In times of generally rising government direct debts and the steady growth of interest requirements on such debts, one would have thought that B.C.'s achievement would be greeted with serious interest. However, the fact that it was done by a government that happens to label itself "Social Credit" was enough to bring out venom and ridicule.
It is said that substantial sales taxes were needed to retire the debt. But at least these taxes did have this result. We note very high sales taxes in other provinces (and in Ottawa) without any evidence that a similar result is even contemplated. This is one instance where emulation rather than carping is definitely in order.
Here we have an example of a good province, a real up-and-coming province, a province that is not afraid to tackle the Peace river dam at a cost of $600 million and the Columbia river dam at a cost of another $600 million. It is a province that has got drive and ambition.
In closing I would like to say that if we think we can kill unemployment in British Columbia by our expansion, we know very well we never will. That would be the craziest thought, because everybody wants to come to British Columbia.


Herman Maxwell Batten: Shall clause 1
carry?


Mr. Korchinski:: The point I want to raise, substantiating the argument raised by the hon. member for Lisgar a few moments ago, is in connection with the installation of sewerage and drainage systems in an area which is not an organized municipality. It seems to me that the provisions are somewhat discriminatory against those areas that at present cannot qualify for a government grant. I am thinking in terms of small villages, hamlets, and in particular farm installations.
In the province of Saskatchewan the present hon. member for Burnaby-Coquitlam made quite a big issue at one time of the fact that he was going to get rid of the old-fashioned outhouses. He got quite a reputation for that. However since he came to Ottawa he seemed to have lost his desire to get rid of them.
I would like the minister to comment on this particular point because these little villages need more improvements than perhaps some of the larger organized areas, and would be discriminated against if the present tax is left as it is.


Mr. Simpson:: I would like to add a few thoughts to what the hon. member for Mackenzie has said in respect to exemptions which apply to municipalities. I know it is unreasonable to assume the budget can be changed to suit everything, but when worthwhile suggestions are put forward we certainly hope the minister will give consideration to them.
At least three quarters of my constituency is composed of areas which are rapidly developing but which are not considered to be municipalities. Many of them are classed as local government districts, and according to the bill these areas will not have the same advantages as organized or recognized municipalities. I wonder would the minister tell us whether these areas, which are already set up under provincial status as local government districts, would be considered in the same light as municipalities in regard to certain exemptions, particularly those relating to sewerage and drainage systems.


Walter Lockhart Gordon: I will be glad to look into this, but I am afraid I cannot answer the question right at the moment.


[Stage Direction]
Clause agreed to.
Clauses 2 and 3 agreed to.
On clause 4-Refund, of tax paid on goods for use in sewerage or drainage systems.
Robert Simpson: This is the particular clause in which I am interested. It is difficult to allow it to pass unless we can be assured that some consideration is being given to the

pleas made. Many of the areas in northern Manitoba-and of course I realize in other parts of Canada as well-are not considered to be municipal bodies, but they are administered under provincial status as local government districts. The officers in charge, and in some cases the elected representatives, are carrying out the same duties as people elected in municipalities. However these areas are not municipal districts, but despite this fact they should be given the same consideration. I hope the minister will give an appropriate answer very shortly.
Some of these areas are fairly well developed. Others have plans for putting in sewerage systems, and it is going to be very difficult for them if they are to be taxable while adjacent municipalities are not.


Walter Lockhart Gordon: I think the hon. member will agree with me that this is a very complicated and complex question. It is difficult to know where to draw the line, but I would be glad to see that this matter is studied very carefully before the next budget is brought down.


Mr. Pugh:: I wonder if the minister, at the same time, could consult with the Minister of Public Works under which C.M.H.C. operates. The C.M.H.C loans are restricted as well.


John Whitney Pickersgill: National revenue.


David Vaughan Pugh: Thank you; national revenue. The reason for raising this question is that, for example, there are places in my constituency and others such as Churchill to which loans are not available for this purpose. It is most important from the point of view of early planning. If you can look ahead and feel that money can be raised at an early stage rather than later on, these areas, when they do become municipalities, will save a considerable amount of money.


Walter Lockhart Gordon: I will be glad to look into that question, Mr. Chairman.


Horace Andrew (Bud) Olson: Mr. Chairman, I will be just about 30 seconds. Perhaps it would be helpful if the minister would consult with the provinces and be prepared to accept the exemption for materials purchased in the name of the province, if they declared them for municipal purposes. I wonder whether the department would accept this declaration.


Stanley James Korchinski: I have just one more point, Mr. Chairman. In his considerations I hope the minister will remember that there are places such as one I can think of particularly in my area, which is along the roads to resources program where there is a new resort springing up. It will take quite a few years 28902-5-169
Excise Tax Act
before this becomes an organized area. Would the minister take that type of situation into consideration?


Walter Lockhart Gordon: I will be glad to do so.


Robert Simpson: Mr. Chairman, I would like the minister, when considering this matter, to realize that these places I am talking about are, as I mentioned, being developed rapidly. In northern Manitoba, for instance, there is the new townsite of Thompson, with a population of well over 8,000 now, I would say, which is not in a municipality; it is in a local government district. We have Snow Lake, Lynn Lake, the townsite of Churchill and others. These places are now being administered by a local government administrator appointed by the province of Manitoba. They are established towns; some of them are fairly heavily populated. I think they should therefore be given every consideration that a recognized municipality is given under this act.


Walter Lockhart Gordon: Mr. Chairman, I thank the hon. member for his suggestion.


Mr. Fairweather:: Mr. Chairman, I wonder whether the minister's advisers could answer this question. I wonder if there is not a point here as to the definition of "municipality". The definition of "municipality" may well be wide enough to include these unorganized areas. What is the definition of "municipality"?


Robert Norman Thompson: Mr. Chairman, a number of questions have been asked and I would like to hear an answer to some of them. The hon. member for Medicine Hat asked a question, as did other hon. members. Could not the minister answer the questions he has been asked?


Robert Gordon Lee Fairweather: What is the definition of "municipality"?


Walter Lockhart Gordon: If I may answer that question first, Mr. Chairman, there is not a definition of "municipality" under this act, because they are different in each province. That may be the reason. As far as I know, there has never been a definition in the act.


Stanley James Korchinski: For example, we could have in the province of Saskatchewan the situation where the province buys some material and an individual goes to the province to purchase whatever is necessary for the installation of a sewerage system. Would that person be exempt from this tax, or not?


Horace Andrew (Bud) Olson: Mr. Chairman, I suggested a few minutes ago that I think the minister can get around all these problems if he will accept the declaration of the province that these materials will be used for municipal

Excise Tax Act
purposes, even though they are used in a local improvement district, or in some provinces what they call a local government district, and so on. In Alberta they happen to be called local improvement districts, but they operate in the same way except they are administered by the different municipal districts rather than the local government.


Walter Lockhart Gordon: Mr. Chairman, the reason I am hesitant to accept all these suggestions at the moment is that this is really a rather complicated subject. I am grateful for the suggestions, but I would like to have an opportunity to study them carefully before reaching a conclusion. I think the suggestion of the hon. member is a good one to study, but I am just a little fearful that it may have some hooks in it or some complications, and I would like a chance to look into it.


Horace Andrew (Bud) Olson: I can appreciate that, Mr. Chairman, but I wonder whether the minister would undertake to answer the questions that have been raised on clause 4 at some stage before this bill is passed through committee and given third reading?


Walter Lockhart Gordon: I will be glad to do so on third reading, Mr. Chairman.


Robert Gordon Lee Fairweather: I think there is a point here, Mr. Chairman, that tomorrow it is our understanding that there is to be a conference between the federal and provincial people on the municipal loans fund. Here, surely, is a perfect opportunity for the ten provinces and the federal government to come to an agreement as to what is a municipality. Perhaps if we stood the clause until we have had the assistance of the provinces, we would make some progress.


Walter Lockhart Gordon: I doubt whether at this conference tomorrow the provinces will get down to this question, Mr. Chairman. If they do, I will be delighted.


Robert Gordon Lee Fairweather: I thought that was the point.


Walter Lockhart Gordon: It is just possible, though, that it will be a short conference, and there are two rather important subjects which have to be considered. If there is any possibility of raising the point the hon. gentleman has mentioned, I will be glad to do that. (Translation):


Paul Raymond Martineau: Mr. Chairman, I am of the opinion that my hon. friend from Royal (Mr. Fairweather) has raised a very important matter. In fact, if we passed that section as it stands now, we would give the minister the right to define what is a municipality and we would thus encroach once again on provincial jurisdiction, because everyone knows that the municipalities are the creatures of the provinces.

I am convinced that the Minister of Citizenship and Immigration (Mr. Favreau), who is listening now, agrees with me. That is why I hold that this important question should be submitted to the federal-provincial conference that will be held tomorrow. I submit that it deserves special consideration, even if we do not go as far as letting that article stand tonight.
(Text):


Herman Maxwell Batten: Shall clause 4 carry?


Robert Simpson: Mr. Chairman, there has been a suggestion that the minister should consider accepting the decision of the province as to whether these places that I have mentioned are to be given the same consideration as will be given to municipalities. I am quite sure that if we could obtain some assurance that a plan of this nature would be adopted, we would be quite willing to go along with it. But I think we would have to have some assurance that some such plan would be adopted for the protection of these various places which at the present time are not considered to be municipalities.


Walter Lockhart Gordon: Mr. Chairman, I have undertaken to study this matter. There will be a record in today's Hansard of all the suggestions that have been put forward. But I do not think I am in a position to give any undertakings. For instance, the hon. member mentioned Thompson as one of these areas. It may be that the International Nickel Company is building the sewerage systems there; I dare say it is, but I do not know. This is the sort of thing I should like to look into before reaching any conclusion.


Robert Simpson: Mr. Chairman, I can accept that reply to a degree, because to a certain extent this is being done under agreement. But I am quite sure we all realize that this will not continue indefinitely in Thompson. The population is 8,000 now, or somewhere near that figure, and it is expected to reach 20,000 or 25,000. If it remains a local government district, the people are going to have to pay for those additional installations. As I said, this also applies to Snow Lake, Lynn Lake, Churchill, and many of the areas in the Swan river valley which are not municipalities.


Thomas Speakman Barnett: It seems to me the subject matter which has been raised with regard to what are referred to as near municipal situations, which apparently in the province of Alberta as well as British Columbia are referred to as local improvement districts, is quite an important subject. My understanding is that certain arrangements covering these things have been worked out. There is an accumulation of experience in the field of municipal winter works programs, which have

also been arranged so that in some cases our Indian reserves have been able to qualify. It seems to me that a simple rearrangement of the drafting of this might make it possible under legal regulations that these matters could be included. As I recall it, it was agreed that we would sit till 10.30 and we have gone considerably past that time now. I think if we were to recess now we can proceed later with the remaining clauses. We certainly got past clause 1 very quickly and the minister should be able to bring in any minor modifications which might be required to meet any objections. Therefore I suggest that we should, to use a colloquial expression, call it a day. (Translation):


Rémi Paul: Mr. Chairman, I readily endorse the remarks made by the hon. member for Royal (Mr. Fairweather) and the hon. member for Pontiac-Temiscamingue (Mr. Martineau), and I wonder whether the minister would not consider the advisability of replacing the word "declared" which appears in the last line of section 4 by the word "recognized".
By complying with this suggestion, I do not believe that the minister would be making a municipality out of an agency, but on the contrary, he would recognize an agency already established by a province. Indeed, if we read the text as it is drafted, we find there is some danger that this interpretation would constitute an interference in the legislation pertaining to municipalities which comes under provincial jurisdiction, whereas if the minister would recognize the existence of a municipality, it would simply be a recognition in fact rather than the establishment of an agency by right.


Paul Raymond Martineau: Mr. Chairman, I agree with the views expressed by the hon. member for Berthier-Maskinonge-Delanaudiere (Mr. Paul) and I suggest the amendment he put forth be accepted.
I would suggest, however, that the words "for the purposes of this act" be added. In that way, the minister would not take the place of the provincial authority, for if he incorporated a municipality or declared an agency to be a municipality, in my humble opinion, he would be going beyond his powers.
(Text):


Robert Gordon Lee Fairweather: I know this problem is sticky-


Stanley Howard Knowles: Ten thirty.


Robert Gordon Lee Fairweather: Thank you.


Herman Maxwell Batten: Shall the clause cr.rry?


Robert Gordon Lee Fairweather: Could the minister not accept the definition of a municipality as one 28902-5-1691
Excise Tax Act
which is duly declared to be such by the minister of municipal affairs for the respective province? The municipalities are the creatures of the provinces. A conference is being held tomorrow to iron all this out, and I should like to see a little more leeway. The minister is being sticky on this and I should like to see some leeway.


Walter Lockhart Gordon: With the greatest respect I am not trying to be sticky. I think we are all feeling a little sticky in this kind of temperature. All I said was that this was a complicated subject, and I should like to take all the suggestions which have been made into account before arriving at a snap judgment.


John (Jack) McIntosh: We are asking for a definition of one word, and responsible ministers are concerned. Rather than take the definition of one of the officials or of the minister, why not consult a specified dictionary? The minister can take a choice and we will accept it. Because there are other words which have not been defined and about which we are going to argue. We have been caught on this before and do not want to be caught again.


Paul Raymond Martineau: Mr. Chairman, this is a complicated matter. Moreover, as someone has called it 10.30 perhaps the minister would consider it overnight and tomorrow come up with a suitable amendment, which would certainly be accepted by us on this side.


Horace Andrew (Bud) Olson: The last four lines of this clause have already provided for what we are asking, as far as I am concerned. This is a matter of definition. The last four lines read:
-and for the purposes of this subsection any agency operating a sewerage or drainage system for or on behalf of a municipality may be declared by the minister to be a municipality.
If a province declares a local improvement area, a local government area, or some other area to be a municipality for the operation of that area, I think the minister has made provision here; but we need to have some assurance that we will not run into this problem of definition.


John (Jack) McIntosh: You said "I think" at the end of the sentence.


Thomas Speakman Barnett: I agree in part with what the hon. member for Medicine Hat is driving at, but as I read that clause it appears to me that if the words "for or on behalf of a municipality" were deleted, the clause would then read:
-any agency operating a sewerage and drainage system may be declared by the minister to be a municipality.
That wording appeals to me as moving in the direction argued for by the hon. member for Medicine Hat.


Herman Maxwell Batten: Shall clause 4 carry?

Business of the House


Some hon. Members:: No.


Gordon Minto Churchill: May I make a suggestion here for consideration. I think an important point has been made by various members. If there is no controversy with regard to clauses 5, 6, 7, 8 and 9 we might pass those tonight and stand clause 4. Overnight let the drafters get busy and produce, as they always have in the past, a solution to this problem.


John Whitney Pickersgill: I think that is an admirable suggestion.


Douglas Mason Fisher: I have an amendment I want to move to clause 5. If you are going to stand clause 4 you might as well stand clause 5.


Herman Maxwell Batten: Is it agreed that the committee shall stand clauses 4 and 5?


Some hon. Members:: Agreed.
Clauses 4 and 5 stand.
On clause 6.


John (Jack) McIntosh: I should like to have a definition of a "farm wagon".


Mr. Nasserden:: Mr. Chairman, it is now ten minutes to eleven and a number of matters remain to be dealt with. I think we should call it 10.30 as agreed.


John Whitney Pickersgill: I think it seems pretty evident that we have made a fair amount of progress and there does not seem to be much prospect of making any more, so I move that the committee rise, report progress and ask leave to sit again on another day.
Clause 6 stands.
Progress reported.



BUSINESS OF THE HOUSE

Gordon Minto Churchill: Would the leader of the house outline the business for tomorrow?


John Whitney Pickersgill: Before doing that I should like to express genuine appreciation for the co-operation which hon. members have given on a day when, perhaps, co-operation was not as easy as it might have been on some other days when it was a little cooler.
Tomorrow, as I indicated earlier in the day, the government would like to take the supplementary estimate which was tabled today, unless there is any objection to doing so, with a view to adding it so that it might be included in the interim supply to be considered next week. Then we will go on with the estimates of the Department of Transport.
I am advised that there is agreement among all parties that I can make a motion
to refer the report of the chief electoral officer to the committee on privileges and elections at the beginning of proceedings tomorrow and that there would be no debate. If that understanding is correct, I appreciate it very much and will be glad to do this.


Gordon Minto Churchill: That is agreeable as far as we are concerned.


Robert Norman Thompson: That is agreeable to us.


Stanley Howard Knowles: The same with us.


John Whitney Pickersgill: Then, on Monday, I am advised there is general agreement on all sides of the house that if the government will put on the order paper the motion regarding the remuneration and pensions of members of parliament there would be no objection raised to going ahead with all stages except third reading on Monday. The third reading would be held over until the next day.


Some hon. Members:: Hear, hear.


John Whitney Pickersgill: If that correctly represents the sense of the house, and it can be so ordered, I will undertake that notice of the resolution will be given tomorrow evening so that it will appear in Votes and Proceedings. That provides the 48 hours' notice required by the rules. I have not sought unanimous consent for this, but I intend, also, to put in a notice respecting the Judges Act and I would hope it may receive similar treatment. I am not asking that this be done, but I would just hope it would be the case.
After those two matters have been dealt with on Monday, if there should be any time left, I know the Minister of Finance would like to complete this bill. We have made very good progress on it this evening. Then, perhaps, we could consider which of two other measures we might take, whether the surcharge legislation or the measure dealing with the economic council. I would consult with hon. gentlemen opposite if there were need for anything further to be added.
(Translation):


Guy Marcoux: Mr. Speaker, on a point of order. In the French version of the Votes and Proceedings of the house, there is an error in the second part of question No. 1,080. Instead of Minister of Transport, it should read Minister of National Revenue.
I would be happy if that correction were made when the question is put on the order paper.
(Text):
It being fifty five minutes after ten o'clock, the house adjourned, without question put, pursuant to standing order.

Friday, July 26, 1963