1963-06-14

[Stage Direction]
"VOTES AND proceedings" (Translation):
M. l'Orateur:: A l'ordre. Je dois informer la Chambre que les copies du compte rendu officiel ainsi que celles des Proces-verbaux relativement a la seance d'hier n'ont pu etre livrees A temps aux honorables deputes pour l'ouverture de la seance de ce matin. Ce retard est attribuable, en partie, au travail enorme suscite par l'impression, au cours de la nuit, de l'expose budgetaire. On m'a informe que Ton fait tout en son possible afln de distribuer ces copies le plus tot possible aux honorables deputes.
(Text):
I	must inform the house that copies of yesterday's Hansard and Votes and Proceedings are not available for distribution to hon. members at this time. The delay in delivery of these publications was caused in part by the additional budget material which had to be printed overnight.
Everything possible is being done to expedite delivery of the publications, and they will be distributed to hon. members as soon as possible.


Hon. Gordon Churchill (Winnipeg South Centre):: I think hon. members appreciate the fact that you are giving information to the house, Mr. Speaker, with regard to the failure of Hansard to be supplied to us at the opening of the sitting. As I understand it, the responsibility of the Speaker and his staff applies only to the distribution of Hansard when it is received. The responsibility for getting it printed rests with the Secretary of State, who answers for the printing bureau. This mismanagement should, I think, be drawn to his attention and to the attention of all hon. members.


Hon. J. W. Pickersgill (Secretary of Slate):: Mr. Speaker, I am sure both the house and the country will treat these observations with precisely the consideration they deserve.

On the orders of the day:


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I would like to direct 28902-5-'75J
a question to the Secretary of State. I do so because, being a printer, I am always a bit sensitive when printers are blamed for delays in printing. In view of the statement Your Honour made that the delay in our receiving documents today was due in part to the budget items, could the Secretary of State say whether there were any other particular reasons for this delay?


John Whitney Pickersgill: Mr. Speaker, I am informed that two hon. members-and I would prefer not to designate who they are-gave notice of something over 100 questions to be put on Votes and Proceedings last evening; that this necessitated the staff of the house working all night, and delayed the arrival at the printers of the material necessary for the printing to be done. I think all hon. members will realize that the printers do a wonderful job in producing for us, even though we sometimes sit after ten o'clock, the various papers that are necessary for the proper functioning of this parliament the next day.
I am afraid, sir, that if this practice of putting 100 questions at a time on the order paper is continued it is likely to make a mockery of parliament-


Mr. Bell:: You started it.


John Whitney Pickersgill: -and I would hope in the circumstances that there might be a possibility, if I can have some consultation later today with hon. gentlemen opposite who represent their parties, of reaching an understanding about the early setting up of the Speaker's committee on procedure, which seems more necessary than ever in view of this rather unexpected and, I think, unfortunate development.



PRIVILEGE


Hon. George C. Nowlan (Digby-Annapolis-Kings):: Mr. Speaker, I rise on a question of personal privilege, for the first time in 14 years. Last night during the course of some free wheeling remarks following the budget speech of the Minister of Finance I used the word, so I am told, "crook" or "crooked" or "crooks". Not having Hansard in front of me and not having seen my blues last night I am not certain which it was. In any event it was contrary to the rules, and I assure the house that it was entirely inadvertent. It

Inquiries of the Ministry had no personal application to any individual, group or party, and I wish to withdraw it completely at this time.



WORLD FAIR


Hon. J. P. Deschatelets (Minister of Public Works):: Mr. Speaker, some time last week the hon. member for Port Arthur asked me to make a statement on the world fair. I told him I would be ready to make a statement today but since the hon. member is not in his seat I think I will postpone it until Monday.



ROYAL CANADIAN AIR FORCE


[Stage Direction]
On the orders of the day:
Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, I should like to direct a question to the Minister of Defence Production. Is any consideration being given by the minister or by officials of his department in conjunction with officials of the Department of National Defence to diverting any or all overhaul work on R.C.A.F. aircraft from the strikebound plant of Northwest Industries at Edmonton, the possibility of which move is attributed to R.C.A.F. officials in today's press reports?


Hon. C. M. Drury (Minister of Defence Production):: Mr. Speaker, I regret to say I am not familiar with the details of this particular report. However, I will take the question as notice and provide an answer on Monday.



HOUSING


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I wish to address a question to the very sympathetic and humane Minister of National Revenue. In view of the fact that many persons resident in villages and unincorporated communities without sewage systems and with little possibility of any being built for years to come are denied the opportunity to build under the present National Housing Act regulations, would the minister give consideration to modification of the present regulations to provide for loans under the act to the many thousands at present denied this opportunity?


Hon. J. R. Garland (Minister of National Revenue):: Mr. Speaker, just before coming into the house I received notice of the hon. member's intention to ask this question at this
[Mr. Nowlan.l
time. I do not think I can accept his interpretation of the present regulations. C.M.H.C. is in fact lending in rural and remote areas on single family dwellings where septic tanks are installed, but we are not approving any loans for such subdivisions for the obvious reason of the danger of contamination.
WILL SALES TAX ON BUILDING MATERIALS EXCEED AMOUNT OF INCENTIVE BONUS?
On the orders of the day:


Mr. G. H. Aiken (Parry Sound-Muskoka):: I	have a question for the Minister of Labour which I believe is urgent in so far as the purchasers of homes are concerned. Will the
II	per cent sales tax on building materials imposed by the budget, and made effective immediately, exceed the sum of $500 which has been offered as an incentive, if one considers the average value of a home to be $13,000?


Hon. A. J. MacEachen (Minisier of Labour):: Since the announcement in the budget address last night I have not had an opportunity to make the precise calculation that would allow me to answer this question.



INQUIRY OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Mr. Heward Grafffey (Brome-Missisquoi):: Mr. Speaker, I should like to direct a question to the Minister of Finance. Is it the government's intention to announce a policy in this house before rising for the recess to the effect that it is turning away from the Lamontagne theory of centralization back to the spirit of confederation? I ask this question in view of the provinces' disquiet over the disheartening federal-provincial relations section of the budget last night.


Some hon. Members:: Order.


An hon. Member:: Kindergarten class.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Hon. Paul Martineau (Poniiac-Temisca-mingue):: Mr. Speaker, I have a question for the Minister of Labour. In view of the very strong protests voiced by the mayor of Ottawa and other municipal authorities that the recent decision to shorten the winter works incentive program is seriously disrupting the works programs of the municipalities, would the minister say whether the government is giving any consideration to re-extending the period.


Allan Joseph MacEachen: Mr. Speaker, I wish to tell the hon. member that I have not personally been made aware of the representations he has in mind. In direct answer to his question I may say that since the announcement on Monday no consideration has been given to changing the time period for this program.



MR. PEARSON    IDENTIFICATION OF ORDER IN COUNCIL REFFERED TO IN DEBATE

[Stage Direction]
On the orders of the day:
Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, the hon. member for Digby-Annapolis-Kings asked me on Wednesday if I could give him a reference to the order in council which I mentioned had not been passed until four months after the policy concerning it had been announced in the House of Commons.
I was referring to an amendment to the income tax regulations made on April 20, 1961, P.C. 1961-579, which was published in part II of the Canada Gazette dated May 10, page 638. It was the first of a series of designations of surplus manpower areas for the purpose of income tax. The announcement of the policy to be followed was made on December 20, precisely four months before the order was passed. The announcement appears in Hansard on page 1007, December 20, 1960.
I hope this information will save the hon. gentleman having to put his question on the order paper as I suggested at that time he might do.
(Translation):



BRIDGES


[Stage Direction]
On the orders of the day:
Mr. L. J. Pigeon (Jolietle-L'Assompiion-Montcalm):: Mr. Speaker, I should like to direct a question to the distinguished Minister of Public Works.
Has the minister received from the Quebec government a request of assistance for the construction of a bridge over the St. Lawrence, east of the Jacques Cartier bridge?


Jean-Paul Deschatelets: Mr. Speaker, before a province may proceed with the construction of a bridge over navigable waters, it must ask the federal parliament to pass legislation in that respect. Such a request has been received from the Quebec government, a bill has been prepared and is now under consideration in the Senate. As soon as it has been passed upon by
Inquiries of the Ministry the other place, it will be introduced in the house where hon. members will have the opportunity to examine it.
(Text):



REQUEST FOR ASSURANCE OF PAYMENT


[Stage Direction]
On the orders of the day:
Mr. J. H. Horner (Acadia):: As a result of the remarks made in the budget speech concerning the honest campaign carried out by the present government, can the Prime Minister assure western farmers that they will be receiving $2 per bushel for their wheat?


Lester Bowles Pearson: This is a matter of government policy, Mr. Speaker. Indeed, this particular aspect of government policy was strongly opposed by my hon. friend who has just spoken, and the policy on the matter will be announced in due course.


John (Jack) Henry Horner: Seven more days.



NORTHERN AFFAIRS


[Stage Direction]
On the orders of the day:
Hon. W. G. Dinsdale (Brandon-Souris):: In
response to an early question of mine the Minister of Northern Affairs and National Resources indicated that following June 10 he would have some further information concerning the setting-up of the resources ministers council. My question is, is the minister now in a position to give this information to the house?


Hon. Arthur Laing (Minister of Northern Affairs and National Resources):: I can give some additional information. As the former minister knows a decision had been taken, in order to develop something permanent out of the council, to establish a secretariat in the city of Montreal and to appoint a secretary general as soon as possible. On June 10 in Montreal I met with Hon. Mr. Levesque, minister of natural resources for Quebec and Hon. J. W. Spooner, who is the minister for Ontario. The three of us composed the executive of the resources council. We were informed that the committee we had appointed to make recommendations in respect of the appointment of a secretary general had reduced the number of applicants to four, one of whom we were privileged to meet during our visit. I understand that a definite appointment will be made by the committee one week from today.

Inquiries of the Ministry



CONSERVATION AND DEVELOPMENT OF NATURAL RESOURCES

[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: Mr. Speaker, I wish to direct a question to the Minister of Northern Affairs and National Resources in a somewhat more hopeful mood. In view of press reports that the present administration is supporting the germination of an idea that was part of the celebrated vision of the former prime minister, namely a national program for the conservation and development of natural resources, can the minister inform the house what action the government is taking to continue the program commenced by the former government?


Arthur Laing: Mr. Speaker, I just love to reply to my hon. friend from Kootenay West, but I think substantially the answer is contained in the answer I gave to the former minister. We shall be setting up, as soon as we can, a secretariat in the city of Montreal, and a general council will be held this fall when we hope to have an agenda of interest dealing with the permanent development and conservation of resources in Canada, a subject to which my hon. friend has made a great contribution in the past.
(Translation):



ADMINISTRATION OF EDUCATION FOR ESKIMOS

[Stage Direction]
On the orders of the day:
Louis-Joseph Pigeon: Mr. Speaker, I should like to put to the parliamentary secretary to the Minister of Northern Affairs and National Resources a question relating to the reply he gave me recently.
Could the parliamentary secretary tell the house whether the federal government, through its department, has decided to turn over the education of northern Quebec Eskimos to the Quebec provincial government, following the conversation he had with Mr. Rene Levesque during a banquet held recently in Montreal?


Mr. John N. Turner (Parliamentary Secretary fo Minister of Northern Affairs and National Resources):: Mr. Speaker, I believe I am authorized by the Minister of Northern Affairs and National Resources to answer this question which follows an earlier one put to me by the hon. member.
The hon. member is well aware that both governments are holding negotiations at the present time respecting the education of Eskimos, and that my minister, accompanied by the Minister of Citizenship and Immigration,


will meet shortly with Mr. Rene Levesque and one of his colleagues, to discuss the matter concerning northern Quebec.
(Text):



IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. Frank Howard (Skeena):: Mr. Speaker, on June 5 I asked the Minister of Citizenship and Immigration about the return of documents, such as passports and the like, to people of Chinese origin, which documents had been taken from them by the Royal Canadian Mounted Police. I asked the minister to look into that particular question and take steps to see the documents were returned to the people concerned. Has the minister anything to indicate to us at this stage?


Hon. Guy Favreau (Minister of Citizenship and Immigration):: I will be able to report on that matter on Monday, Mr. Speaker.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Mr. David Orlikow (Winnipeg North):: Mr. Speaker, I would like to direct a question to the Minister of Justice. Has the minister received a request for an interview from the Canadian association of university teachers to discuss the activities of the R.C.M.P. on university campuses? If so, has the minister agreed to meet that organization, and when will the meeting be held?


Hon. Lionel Chevrier (Minisier of Justice):: I answered that question yesterday, Mr. Speaker, but I will repeat the answer. I did receive an invitation and I suggested a date, but unfortunately an interview could not be arranged on that date because of circumstances over which neither I nor the association had any control. I hope it will be possible to arrange a satisfactory meeting at a later date.
(Translation):



COLUMBIA RIVER


[Stage Direction]
On the orders of the day:
Mr. Gerard Chapdelaine (Sherbrooke):: Mr. Speaker, I should like to ask the Secretary of State for External Affairs whether he can disclose to the house the changes agreed

upon by the government of British Columbia concerning the Columbia treaty, as was mentioned in the newspapers this morning?


Hon. Paul Martin (Secretary of State for External Affairs):: Mr. Speaker, I did not have time to look into that article but I shall do so and reply Monday.
(Text):




[Stage Direction]
On the orders of the day:
Mr. T. S. Barnett (Comox-Alberni):: Mr. Speaker, I have a question for the Secretary of State for External Affairs. In view of the published reports that the premier of British Columbia announced in Nelson that his government had accepted the terms of a proposed draft agreement between the government of British Columbia and the federal government, could the Secretary of State for External Affairs inform the house whether the federal government has accepted the terms of this draft agreement; and if so, could he tell us when he will be able to announce its details to the house?


Hon. Paul  Marlin@Secretary of Slate for External Affairs: Mr. Speaker, I cannot comment on the published reports to which my hon. friend has directed my attention. I have not seen them. I can say, however, that the federal government has been considering the subject of our discussions of a few days ago when the premier of British Columbia and his colleagues were in Ottawa. The point of view of the federal government will be relayed to the premier of British Columbia and we hope that satisfactory progress in this matter will be made.


Mr. T. C. Douglas (Burnaby-Coquitlam):: I have a supplementary question, Mr. Speaker. May I ask the Secretary of State for External Affairs whether the premier of British Columbia has indicated to the government of Canada the acceptance by his government of the draft proposals which he took back with him after the discussions of last week.


Paul Joseph James Martin: Negotiations are under way between the two governments. I think in the interests of the successful conclusion of those negotiations the hon. gentleman will agree that, while I should report the end result, it would not be desirable that I should give a running account which might interfere with the successful conclusion we all have in mind. I might say, for my hon. friend's benefit, that I hope to be talking on the telephone to the premier of British Columbia some time today.
14, 1963	1167
Inquiries of the Ministry
[Later:)


Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I have a question for the Minister of Public Works which is prompted by the questions already asked dealing with the agreement between the province of British Columbia and the government. Has the minister any knowledge of an official application made by the province of British Columbia or any agency or authority of that government under the Navigable Waters Protection Act for leave to proceed with the Peace river dam project?


Jean-Paul Deschatelets: Mr. Speaker, I will have to inquire and I will answer this question on Monday.


Gerald William Baldwin: Might I ask a supplementary question. If any such application is received, will the minister assure the house that despite any commitment which might have been made by his government there will be an ample opportunity for the many thousands of residents who live downstream from this proposed project to make representations to the government with respect to this scheme?


Jean-Paul Deschatelets: This supplementary question, Mr. Speaker, is hypothetical. I am going to inquire and on Monday I will answer both these questions.



REPORT ON STUDIES OF LONG DISTANCE TRANSMISSION

[Stage Direction]
On the orders of the day:
Arthur Laing: Mr. Speaker,
on Thursday of last week the hon. member for Qu'Appelle asked me if I would make a statement on the current studies with respect to long distance power transmission.
As the hon. member is aware, about a year ago a federal-provincial working committee recommended a two stage approach to the study of long distance transmission interconnections across Canada. The first stage would consist of an assessment of the problem and would indicate the lines along which solutions should be sought, the terms of reference for subsequent detailed studies, and a time schedule. The second stage would consist of the detailed analysis of all the technical and economic factors involved in a series of interconnections.
Accordingly, early this year an agreement was reached between the federal-provincial working committee and H. G. Acres and Company of Niagara Falls to undertake the preliminary studies envisaged in stage 1.
The federal-provincial working committee met in Ottawa on April 24, 1963, with the representatives of the company to receive a progress report and to discuss the scope and

Inquiries of the Ministry direction of further research work necessary for the completion of the stage 1 assessment.
I do not think that there is anything more I can usefully report at this time, Mr. Speaker, except to say that the consultants' report will be submitted to the committee by the end of August, and that the federal-provincial working committee is expected to meet some time in September to review this report and consider appropriate recommendations to submit to the full committee of federal and provincial ministers.



BROADCASTING


[Stage Direction]
On the orders of the day:
Mr. Gene Rheaume (Northwest Territories):: Mr. Speaker, I wish to direct a question to the Secretary of State. It relates to the recent decision of the Canadian Broadcasting Corporation to curtail local participation in Sunday religious broadcasts throughout the Yukon and the Northwest Territories.
In view of the fact that the north has no representative on either the C.B.C. or B.B.G., and in view of the complete monopoly of the broadcasting medium by the C.B.C. in northern Canada, will the Secretary of State consider reviewing this problem, as requested by every religious denomination in the north, with the support of the national religious advisory council of Canada?


John Whitney Pickersgill: Mr. Speaker, I do not think it would be appropriate for the Secretary of State to review this, but I would be very happy to draw the observations of the hon. gentleman to the attention of the C.B.C. and ask them if they would review it.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. Barry Maiher (New Westminster):: Mr. Speaker, I have a question I would like to direct to the Minister of Fisheries. In view of the widespread interest in the matter, particularly in British Columbia, I wonder whether the minister could give us a further interim report regarding the progress or lack of progress in the Washington talks which have been going on respecting the north Pacific fisheries.


Hon. H. J. Robichaud (Minister of Fisheries):: In reply to the hon. member, Mr. Speaker, I wish to state that while negotiations are under way in Washington, it would not be in the public interest to make any further statement now.
[Mr. Laing.l
(Translation):



REPORTED OFFERS OF SUPPLIES AT REDUCED PRICES

[Stage Direction]
On the orders of the day:
Mr. Maurice Cote (Chicoutimi):: Mr. Speaker, may I direct a question to the Minister of Trade and Commerce? Has not the minister received recently interesting offers from a certain number of friendly countries that are in a position to supply us with any amount of sugar at the price which was current before the unjustified increase in price of this commodity on the Canadian market?
(Text):


Hon. Mitchell Sharp (Minister of Trade and Commerce):: Mr. Speaker, I do not understand the purport of the hon. member's question. Perhaps he could be more specific on the order paper or in a later question.



PARLIAMENT BUILDINGS


[Stage Direction]
On the orders of the day:
Mr. Speaker:: The hon. member for Hastings South.


Mr. R. A. Webb (Haslings-Fronienac):: Mr. Speaker, I should like to direct a question to the Minister of Public Works. Will he take the necessary steps to have drinking fountains installed in the centre block to accommodate the many visitors to this place, and especially the many school children who travel hundreds of miles by bus in hot weather?


Jean-Paul Deschatelets: I thank the hon. member for bringing this to my attention, and as usual immediate steps will be taken.
[Later:)


Mr. Robert Temple (Hastings South):: Mr. Speaker, much as I might like to take credit for the question asked by the hon. member for Hastings-Frontenac regarding drinking fountains, I bow to him.
(Translation):



INQUIRY OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Mr. Marcel Lessard (Lake St. John):: Mr. Speaker, I should like to direct a question to the Minister of Finance. Following his budget speech last night, could the minister tell the house how important were the nightmares he had in his sleep?



FINANCE


[Stage Direction]
On the orders of the day:
Hon. Rene Tremblay (Minister without Portfolio):: Mr. Speaker, Tuesday the hon. member for Joliette-L'Assomption-Montcalm asked the Minister of Agriculture the following question, as found in the official report of that day:
In view of the cigar and cigarette tobacco surplus in this country, does the Minister of Agriculture intend to recommend to the Minister of Finance a tax reduction on such tobacco in order to increase sales?
Here is the answer. As the tobacco tax structure is the responsibility of the cabinet, I do not intend to comment on this matter.
(Text):



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
John (Jack) Henry Horner: Mr. Speaker, I should like to direct a question to the Minister of Transport, but in his absence I will redirect it to the Prime Minister. Due to the very unstable and unrestful conditions with regard to C.N.R. operations in the last month, can the Prime Minister inform the house when the sessional committee to study C.N.R.'s operations will be set up?


Lester Bowles Pearson: Mr. Speaker, we hope to get these committees all set up at the earliest possible date, and I am sure this is one of the committees which will be given priority.



TRANSPORT


[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, 1 should like to ask a question arising out of the question which has just been asked. In the province of Saskatchewan, under the Canadian National Railways plan some 1,275 miles of railway will be abandoned. I have received a number of communications asking whether the Prime Minister himself would communicate with the president of the Canadian National Railways and point out the serious results which will follow in these areas, served as they are at the present time by some 320 elevators. This is a matter of priority. It is one which affects people of the province as a whole, and I
Inquiries of the Ministry wonder whether the Prime Minister has been in touch with the president, or whether he would get in touch with him.


Lester Bowles Pearson: Mr. Speaker, I have also received a good many communications on this matter, the importance of which I appreciate. I have discussed the matter with the Minister of Transport, who is taking whatever steps are possible, and I am sure he will do his best to ensure that the Canadian National Railways appreciate the importance of the matter. This abandonment and other abandonments, I may say, have been under consideration for a good many months.



THE BUDGET


[Stage Direction]
On the orders of the day:
Mr. D. M. Fisher (Port Arthur):: Mr. Speaker, I should like to ask the Minister of Finance a question regarding the preparation and provenance of last night's budget speech. Can the minister assure us that he and his government officials alone prepared the budget speech without the assistance of outside consultants or ghost writers from Toronto?


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order. The hon. member knows that is not the type of question which we enjoy in this house.


Douglas Mason Fisher: Mr. Speaker, on the point you raise, this question is serious. I have information which was given to me which indicates that there were outside consultants brought in to assist in this matter, and I think a simple "No" answer is important because of the tradition that budget information should be privy to the minister and his officials until the very last minute. All I am asking, and asking seriously, is for a simple assurance that this was the fact and that outside consultants were not involved.


Mr. Speaker:: Perhaps the minister would allow me to reply. When the hon. member becomes minister of finance he can bring about suggested reforms.


Stanley Howard Knowles: Mr. Speaker, may I put the question in another way. Was the press report of a week or so ago to the effect that this was happening correct?


Hon. Walter L. Gordon (Minister of Finance):: Mr. Speaker, as Minister of Finance I take full and sole responsibility for everything which was contained in the budget.

Inquiries of the Ministry


Thomas Miller Bell: Answer the question.


John George Diefenbaker: Mr. Speaker, this is a matter which affects the privileges ot this house, and that answer does not meet the question that was asked. If there was in fact anything in the nature of occurrences such as have been referred to by the hon. member for Port Arthur, then an unequivocal no is the only answer that parliament should have. I think the acceptance of responsibility is no answer to a question of very serious importance indeed.


Douglas Mason Fisher: Mr. Speaker, I should like to reply to the response you gave me to the effect that when I was the minister of finance I could change things. The point I have been attempting to raise in all seriousness is that it is both the British and the Canadian tradition, as I understand it, that because of the importance of the changes in taxation and the consequences that advance or partial information may have, it is essential that the whole matter should be kept in secrecy. When reports are existent that the minister has brought down people from Toronto to help him in the preparation of his budget who may be outside the government service, I think I deserve a denial or an explanation of this matter.


Some hon. Members:: Answer.


Gordon Minto Churchill: Mr. Speaker, I should like to ask a question of the Minister of Finance. Did the outside consultants who conferred with him with regard to the budget take an oath of secrecy during the course of the proceedings?


Walter Lockhart Gordon: Mr. Speaker, everyone who assisted me with the preparation of the budget took the oath of secrecy.


Gordon Harvey Aiken: Mr. Speaker, I should like to ask the Minister of Finance whether there were persons who left his office prior to six o'clock last night with knowledge of the budget contents.


Walter Lockhart Gordon: I left my office before six o'clock last night and I was fully familiar with the budget, Mr. Speaker.


Thomas Clement (Tommy) Douglas: Mr. Speaker, may I ask the minister if persons other than the officials of his department participated in the preparation of last night's budget?


Walter Lockhart Gordon: Yes, Mr. Speaker; various officials of various departments participated in the budget discussions. I had advice and assistance from a great many other people. There were representations from people all over the country.


Stanley Howard Knowles: I have a supplementary question to direct to the Minister of Finance. It is this. Will he give us the names of those who assisted him in the preparation-


Some hon. Members:: Oh, oh.


Stanley Howard Knowles: I hear hon. members over there saying "Oh" and "Ah". This is serious. If people outside the government service were invited to participate along with the Minister of Finance in the preparation of the budget, I suggest we are entitled to know the names of those persons.


Mr. Lawrence E. Kindt (Macleod):: I am
rising on a question of privilege. The Speaker of the house told the hon. member for Port Arthur that when he became minister of finance he would be able to make reforms. I think the Speaker should withdraw that remark. It was facetious. It was totally out of place. It showed bias.


Mr. Speaker:: 1 have pleasure in withdrawing that remark, which was not as facetious as I thought it might be.


Mr.   Kindi@: I accept that withdrawal.


Thomas Clement (Tommy) Douglas: I wish to put a supplementary question to the minister, though my first question has not received an answer. I wish to put it in another way. I am asking now whether any persons other than officials in his department or in any other department of the government participated in the preparation of this budget. I did not ask him if he had received advice and representations from delegations. I asked him whether any persons other than government officials participated in the preparation of the budget he delivered last night.


Walter Lockhart Gordon: Certainly, I got advice from a great many people.


Some hon. Members:: Weaseling.


Thomas Clement (Tommy) Douglas: If the hon. minister wants to sit still and refrain from answering, I will understand; but to avoid the question is something else. I did not ask him about advice. I asked about assistance in the prep-paration of the budget.


Mr. Speaker:: Perhaps hon. members will allow me to turn to an authority, Beauchesne, fourth edition, paragraph 181, subparagraph 3:
A minister may decline to answer a question without stating the reason for his refusal, and insistence on an answer is out of order, no debate being allowed.
A refusal to answer cannot be raised as a question of privilege, nor is it regular to comment on such a refusal. A member can put a question, but has no right to insist upon an answer.


Thomas Clement (Tommy) Douglas: On a point of order, I am not taking exception to the minister refusing to

answer. I am taking exception to an irrelevant answer which is a complete evasion of the question.


John Whitney Pickersgill: On the point of order which the hon. gentleman has raised, I am sure that in his experience as the head of a government he must have discovered for himself that all the authorities are agreed that any minister of the crown is entitled to seek advice from any source he chooses, as long as he assumes full and exclusive responsibility for the action which has been taken. This is a well known British constitutional principle, and it applies just as much to one matter as to another. It seems to me the only point which has arisen is whether everyone who assisted my hon. friend took the oath of secrecy, and he has assured the house that this was done.


Thomas Clement (Tommy) Douglas: The Secretary of State is now proceeding to argue the case instead of discussing the point of order. If that is to be permitted, I think it should be pointed out that we are not discussing the matter of seeking advice. We are asking whether any persons who are not officials of the government participated in the preparation of the budget and in the writing of the text of the budget, thereby becoming privy to information which ought not to be in the possession of persons other than government officials or ministers of the crown.


David Orlikow: should like to ask whether people not working for government departments have been, or will be, paid for work which they did in the preparation of the budget.


Walter Lockhart Gordon: I do not think I can answer that question. Anybody who was assisting me during the last two or three months- and there have been people assisting me-will be paid. They have been members of the department or attached to the department.


David Orlikow: My question referred to people not working for the minister's department or for any other department. Will they be, or have they been, paid for work done in connection with the preparation of the budget?


Walter Lockhart Gordon: Anybody who was assisting me was working for the department.


Paul Raymond Martineau: I should like to ask the Minister of Finance if any of the outside persons who advised him on budget matters were informed in advance of any of the contents of the budget.


Walter Lockhart Gordon: I do not think I can say any more. I said earlier that I take full responsibility for the budget.
14, 1S63	1171
Establishment of Industry Department


Stanley Howard Knowles: Will the Minister of Finance give the house, either now or on Monday, the names of persons outside the government service who took the oath of secrecy when they assisted him in preparing this budget?


Mr. Speaker:: Perhaps the house will allow me to read subparagraph 4 of the same
citation:
An answer to a question cannot be insisted upon, if the answer be refused by the minister on the ground of the public interest; nor can the question be replaced on the order paper. The refusal of a minister to answer on this ground cannot be raised as a matter of privilege.



INQUIRY AS TO CHANGE IN TRANSLATION SYSTEM

[Stage Direction]
On the orders of the day:
Mr. Ralph Cowan (York-Humber):: I have
a question I should like to address to the leader of the house.
In view of the great satisfaction that members of the House of Commons who are not bilingual receive through the medium of the simultaneous translation service which is in operation in this house, I would like to ask if any conspicuous mark of thanks or appreciation will be given to those scientists and technicians connected with the Canadian army who installed the four line simultaneous translation system in the House of Commons for the use of the universal postal union congress which met in the House of Commons starting August 14, 1957. Could the minister also advise the house why the four channel translation service was removed and replaced by the present two channel system, inasmuch as the original four channel installation authorized by the St. Laurent government proved eminently satisfactory?


John Whitney Pickersgill: Mr. Speaker, if I understand the question correctly it hardly falls within the category of those questions which are urgent because the matter has arisen since we met yesterday, but I will take note of the hon. member's question and if an answer can be provided I will do my best to provide it on Monday.



INDUSTRY


[Stage Direction]
The house resumed, from Thursday, June 13, consideration in committee of the following resolution-Mr. Pearson-Mr. Lamoureux in the chair:
That it is expedient to introduce a measure (a) to establish a department of industry to be presided over by a minister of industry who shall be appointed under the Great Seal of Canada, to authorize the appointment of a deputy minister by the governor in council, and to provide for the appointment to the department on a temporary
1172	HOUSE OF
Establishment of Industry Department basis oi persons having special knowledge of manufacturing industries to assist in the work of the department; (b) to provide for the establishment under the direction of the minister of an area development agency and to provide for the appointment of a commissioner and a deputy commissioner for area development; and (c) to make a consequential amendment to the Salaries Act to provide a salary for the minister.
Mr. More:: Mr. Chairman, in my first remarks this session I should like to congratulate you on your appointment to the office you hold and through you to extend my congratulations to the Speaker and the deputy chairman of committees. I have not known you personally as I have the other two officers, but I am sure all of you have the confidence of members of the house, and we look forward to this session knowing that without prejudice and without favour you will maintain the traditions of this chamber.
From the interjections and statements that have been put on the record by the Secretary of State during the debate on this resolution I presume that by rising to speak at this time I will perhaps arouse his ire to some extent and be accused of prolonging the debate unnecessarily. I point out to him that I have been here since 1958, and words of mine do not clutter up the record. Through other means rather than speaking for the record and for the press I have been able to serve my constituency in such a manner that I have been elected on three successive occasions. In 1982 the party of members opposite took full credit for my success in the election of that year. In the recent election they made an all out effort to defeat me. I do not know whether they will admit failure in this regard or whether they will blame my being here now on someone else.
I think it is a truism that each of us who come here have had the support of people who hoped that we would be sitting on the government side. These people know, of course, that the election may decide otherwise. As this has happened in my case, I am sure I am now expected to act responsibly as a critic of the government's program, to be constructive and to assist in getting the business of the country dealt with in a proper manner after the most careful scrutiny. My mandate as a member of this house is not a negative one. I think I can meet the wishes of the people of my constituency and of Canada by being careful and diligent in my work in opposition and seeing that parliament deals with the business of the country.
The resolution under consideration is in many ways far reaching. I listened carefully to the Prime Minister when he introduced the resolution. I have read and scrutinized it very carefully. As I see it, it has three sections. It has a section providing for the establishment of a department of industry. It


has a section dealing with the dispersal of industry to depressed areas, and provision for commissioners to look after the area development agency.
This resolution is rather difficult for one to deal with just because it combines these features. I have strong feelings about one part of it and more favourable feelings toward another. However, in view of the way the government has put this matter before the house we have no choice in determining and showing by our vote our attitude on two very important matters.
The suggestion was made by one of my colleagues yesterday that the government should take notice of this situation and withdraw the resolution and put it before the house in two parts, so that each of the parts could be fully debated and the house could express itself on each matter. I take it they do not intend to do this. It would seem that constructive criticism, which we did not get from the opposition when the previous government was in power, is going to be ignored by the frontbenchers who now occupy the seats of government. However, I think it was the duty of members of the opposition to put forward this view.
We were led to believe, as were the people of Canada during the election campaign, that the party opposite had all the answers; that in 60 days we were going to have a great dynamic flood of new legislation that was going to be the cure-all for everything; that the reflection of the legislation was going to be almost instantaneous and we could forget about our problems because we would have none left. My observations indicate that we have had a lot of words and quite a bit of action and decision which has resulted in nothing but window dressing. A look at the window does not show very much of substance. There is nothing in the window for the Canadian people to purchase that which will give them very much benefit.
Throughout the country the great concern of the people seems to be about the growing bureaucracy and centralization. The Glassco commission made note of this in their final volume. Perhaps the government might heed some of the things they say there. I point out to the government that this is a fear of the people of Canada and one of which they should take some heed.
According to the Prime Minister's introductory statement this new department will be the focal point in Ottawa to which manufacturers may go. This great, dynamic effort of the government seems to me to be something upon which they will build more and more bureaucracy, and nothing else. The Prime Minister said the government was not building anything new, that the major part of the

staff requirements and facilities for this department would come from the Department of Trade and Commerce. Why then do we need the department? Why leave ourselves open to the working of Parkinson's law? We know from experience that this seems to be the case under any government. I am not pointing a finger at hon. gentlemen opposite; this seems to be the case, as anyone knows who looks at the record, and the public of Canada are concerned.
If this new department is to be merely a focal point and is not going to develop anything, as the Prime Minister said in his speech, why do we need it? All the ideas for development are going to come from the economic board. The new department will be the focal point for information for the representatives of the manufacturing industry in Ottawa. Instead of having to go to Tunney's pasture or the Hog's Back empire, down to Sparks street or Elgin street, these representatives will go to one office in Ottawa to secure information. Then, I say, why establish a new department? It may well be that the name of the existing department is wrong in the light of changing circumstances. If that is the case, why not establish a department of trade and industry? Why not take advantage of the existing set-up which perhaps has within it the knowledge and the facilities to do this work?
If the work of the department is such that one minister cannot handle it all, then why not give it to a minister without portfolio attached to the Department of Trade and Commerce, instead of establishing a new department? I feel that such a move would give the Canadian people more confidence that the government is recognizing the need for government to control itself. This is a subject in which every element of society in this country is interested. I noticed that in the 92nd report of the Canadian Manufacturers' Association-I do not put this forward because I always agree with the Canadian Manufacturers' Association-the president said, as reported at page 5:
The proposed establishment of an economic council of Canada and a Canada development corporation, as enunciated in the throne speech, are obviously of great significance to manufacturing industry.
Then he goes on to say this:
I am one of those who believe very strongly that we manufacturers must take the lead and ourselves do more planning if we are not to be "planned" by others.
I believe this statement is very sound. I was not a manufacturer, but I was in business and have had some experience with the requirements of government in relation to a small business. I think my hon. friend
Establishment of Industry Department who is heir apparent to this office knows something about the paper work connected with a small business which is perhaps only earning wages and has to try to cut costs to meet competition. It is an onerous, almost impossible task. In many cases these government requirements raise the cost of doing business to the point where the business goes out of operation.
Perhaps I can give one small example of what I mean, and I do not put it forward as any criticism of hon. gentlemen opposite. This incident occurred during the war when regulation was required. I was in a clothing business, rather a substantial business, in the city from which I come. At the time this edict went into effect we had some 10,000 or more garments in our store, men's suits, with the trousers unfinished to a length of 39 or 40 inches so we could put on a double cuff, which needs five inches. The government issued an edict that, because of the shortage of woollen imports, no more cuffs could be put on trousers. We were going to save this extra cloth. We had these garments in stock, so we proceeded to continue to put cuffs on them. We were hauled up-at least we were not hauled up but the first steps were taken to haul us up-for contravention of this edict. We said "The garments are here and they are paid for. What are we going to do with the extra goods?" They said "You cannot put cuffs on these trousers. You cut off the material and keep it, and we will tell you where to send it because we need it".
The result was that we had to spend $495 for a blind stitching machine because our volume of business was such that we could not finish these trousers by hand. We cut the cloth off, and I wish you could have seen the piles of it. What happened? We never heard from the government again. Eventually we dusted off those piles of cloth and gave them to homemakers' clubs so they could make quilts. Here was a product on the shelf, available to our customers. Anyone knows that trousers finished with a double cuff give much more wear, yet we were prohibited from giving this advantage to our customers. This is an example of government bureaucracy, and the people are disturbed about it.
Many of these programs do not produce the results which the officials who recommend them intend them to produce. The mistake in this instance, of course, was in not stating that new garments purchased from the manufacturer after a certain date should be finished shorter. In this way less material would have been used and no one could put on a cuff. There were hundreds of stores in this country that had unfinished garments in stock on which they could have put these
1174	HOUSE OF
Establishment of Industry Department double cuffs. We had not sold our complete stock by the time those restrictions were lifted. We had a $495 machine which was no use to us and which we sold eventually for $50 to a little tailor who had a use for it. The government lost some taxes as a result of the machine being sold at this price. This edict provided no service to the customer, in fact it denied him the wear he should have had from the garment.
This is the kind of bureaucracy of which I am always afraid, when governments decide they can be helpful to business. I am concerned, therefore, about the setting up of a new department if it is to be merely a focal point. It is not to be an investigative department, according to the Prime Minister. It will not be responsible for new ideas or the development of new ideas. The responsibility for any research that is to be done rests with the economic council. The sole purpose of the new department is that when a manufacturer comes to Ottawa and asks where he stands in this field, what are the recommendations and what are the problems, it will tell the manufacturer what he wants to know. He will not have to go to Tunney's pasture or out along the canal but will go to some central point to secure this information.
This in itself will be something new, and I am sure that Canadian manufacturers will welcome it. If you are going to stimulate industry, then industry has to sell its goods. Certainly the present Department of Trade and Commerce has a responsibility in that field. Why remove this responsibility from a department which, in the final analysis, has some influence upon the question of whether or not business can succeed? If the Department of Trade and Commerce does not do its job in co-operation with manufacturers, then industry is going to fail because its products are not saleable, and that is not going to promote any new jobs or any new wealth. Nothing will be accomplished. In all seriousness I say to the government that this resolution and this intention, under these circumstances, are wrong.
I notice further that in the speech of the president of the Canadian Manufacturers' Association he says:
The new department of industry is a concept we have long advocated.
On the one hand he says they do not want to be planned out of business, but on the other hand he says this is a concept they have long advocated. In addition he says it should assume importance for them because it is a place where they can go and get the answers.
A new department, removed from the department which is going to play such an important part in the success of the new in-


dustries we hope to establish, means one more link in the chain of bureaucracy. To avoid a new growth of bureaucracy we can do the same job by changing the name of the present department to the department of trade and industry, and setting up within it the focal point that is proposed and which will be capable of supplying all the answers for the manufacturers. If the government does that it will accomplish something and everybody will be happy, but to forge another link in a chain of growing bureaucracy is unnecessary and is neither good management nor good planning.
These are the criticisms I wish to make, based on my own experience. The owners of industry have to deal with revenue and finance. They have to know the incentive provisions of the tax laws, the penalties they may be required to pay and the length of time in which they have to pay their taxes. Forward tax advice and tax rulings are things of great importance to new industry, but they are not provided under any government agency so far as I know.
I have had experience of people coming to me and saying "We planned a new industry; we had so much money and the development would have provided so many jobs, but we had to have some forward advice on what our tax position would be and when we came down to Ottawa we could not get it. The officials said to us 'Here are the tax laws and you can get them interpreted. It is up to you to decide.' "
This growth of bureaucracy, and the government digging in every time it thinks it can help, are due to the belief that it will produce votes. That is true of all parties that hope to form governments; but the little fellow, the small businessman, unlike a large corporation which has the advice of all the experts to get the answers, can quite innocently get out on a limb, and when he gets out on that limb the revenue department does not give him any consideration. They say to him "Mister, you pay what you owe." What is needed is a focal point to provide some information and forecasting of the tax position in regard to new industry.
I must tell the government I am not in sympathy with the setting up of a new department of industry. The people of the country are greatly concerned each time a government spades new ground just for some little operation and then they have to sit back and watch it grow. They are stuck with the costs and never, never get rid of them. The job can be done more efficiently by a department within the present department. I make this suggestion constructively and I hope it will be considered. Reviewing the purposes set out in the speech by the Prime Minister, I can see no need for

a new department that might nourish a new growth of bureaucracy, and I say in all sincerity to the heir apparent to the new department that I hope it will not be established.


Mr. Souiham:: Mr. Chairman, this is my first occasion to participate in debate in the twenty sixth parliament, and I would be remiss in political etiquette if I did not hasten to congratulate you on your elevation to the high office you hold, and ask you to express my congratulations also to the Speaker and the deputy chairman of committees. I am sure you will carry out your onerous duties to the best of your ability and to the satisfaction of all hon. members of the house.
I am very interested in this resolution, but I would like to go along with the remarks made by the hon. member for Regina City, who has just spoken, the hon. member for Winnipeg South Centre, the hon. member for Bow River and the hon. member for Acadia, who in no uncertain terms said that as Her Majesty's loyal opposition we are opposed to the setting up of another department which would further bureaucratic control of industry in our country.
As a small businessman myself I can agree with the hon. member for Regina City that small businessmen are burdened with paper work as a result of directives from the municipal, provincial and federal governments, to such an extent that we do not feel there are enough hours in a day to carry on business and keep up with the growing demands of government.
I think it has been ably said, and I shall not labour it, that the setting up of a new department is superfluous, but I am very interested in part (b) of the resolution which reads as follows:
-to provide for the establishment under the direction of the minister of an area development agency and to provide for the appointment of a commissioner and a deputy commissioner for area development:
This is something which gives food for considerable thought. As circumstances exist at present, we find there is wide opportunity for industrial redistribution in Canada. Geographically we are one of the largest countries in the world but the biggest percentage of our population is to be found along the southern boundary of our country, and there is a great variation in our population from east to west.
In my own province of Saskatchewan, which basically is dependant on the agricultural industry, automation has created a very great problem. This has become increasingly evident in the last 30 years, and automation in the agricultural industry has limited the number of people we can employ in the
14, 1963	1175
Establishment of Industry Department province. I have spoken on this matter before and I wish to re-emphasize it this morning.
The loss of population in our province and the lagging behind of population increase creates a very serious problem in the economy of Saskatchewan. Thirty five years ago a father and two sons would be kept fully occupied on a farm of just half or three quarters of a section in size, using horse drawn implements, but with the development of automation a farmer with no sons-is not overly worked in farming that acreage now. The result is that automation takes over where families do not have reasonably sized farms, and the sons are forced to look for industrial employment.
This is due, of course, to the fact that agriculture is the basic industry out there and the population has been drained off this great province of Saskatchewan. If we look at the figures published by the dominion bureau of statistics on the growth of population we see that for the last 30 years Saskatchewan has practically stood still in this respect. Back in 1930 I believe our population was somewhere around 900,000. We have still less than one million people in our province, and with the increasing demands on the provincial government for those services which should be provided-for instance, road building, schools, hospitalization, telephone services, and so on-we find that increasing costs are falling on a relatively small population. This is creating a great hardship in our province.
I think we have had another strike against us in connection with this problem. It cannot all be laid at the doorstep of automation. I think the loss of population is possibly due to having had the wrong political environment in that province for the last 15 or 20 years. This was referred to by my colleague from Acadia, and it is still a problem out there. But we hope to rectify that in the near future. The political environment has not been conducive to the encouragement of industrial development. But if we made a concerted effort to see that the area development agency suggested in this resolution does what it is supposed to do, we would be performing a great service for Canada, particularly for those areas where industrial development has not taken place.
When one questions leaders of industry in, this country as to why they are not interested in establishing industry in the west, the reply is that we have not the large centres of population to provide a readily available market for their products. I find, after looking over the economics of the problem and especially the increased cost of transportation, that in a great many cases it is easier to purchase goods and services, particularly
1176	HOUSE OF
Establishment of Industry Department goods, from the western United States or even import them from the Orient than it is to purchase them from eastern Canada. This is a serious matter when we think about it, Mr. Chairman. We in Canada are trying to step up job opportunities and develop industry, and we find that because of our vast geographic area it is uneconomical to buy from our friends in eastern Canada.
My suggestion is that the area development agency should look very seriously into this matter and should try to encourage industries already established in the east to set up subsidiary industries in western Canada. British Columbia, through their vast forest industry, have pretty well solved this problem but we on the prairies, because of the problems of population, automation and agriculture, need special attention. Special incentives should be offered by the area development agency to encourage the establishment of subsidiary industries in the western provinces by the mother industries in eastern Canada. These mother industries should go out to the west and establish secondary industries so that we could increase our population and development. By so doing we would be able to spread the tax load under which we are now labouring. With a larger population the tax load would be easier, percentagewise, and we could have a standard of living almost equal to that enjoyed by the people of eastern Canada. The higher standard of living in the east is due to the fact that here there is a variety or multiplicity of industries.
I think, Mr. Chairman, this more or less sums up my thoughts as far as this resolution is concerned. I naturally go along with the avowed intention of the government to create more job opportunities. This is a laudable objective. However, I doubt very much whether this legislation is going to have the desired effect. The pros and cons have been pointed out quite extensively and effectively by other colleagues of mine in this debate.


The Chairman:: Shall the resolution carry?


Mr. Madill:: Mr. Chairman, this being my first speech in the House of Commons I should like to offer my congratulations to you on your appointment, and through you I should like to extend my congratulations to the Speaker. I have the honour of succeeding the new lieutenant governor of Ontario in this house. I refer to Hon. Earl Rowe, who served here with dignity and diligence for 37 years.


Some hon. Members:: Hear, hear.


John Ellwood Madill: I know he had many friends within our party and also many, many friends among the opposition.
This new department of industry is to be set up to provide jobs for 250,000 people coming on to the labour market. This is


necessary. This is not only a laudable but a very necessary objective. How far does the Prime Minister intend to go in assisting industry? Will it be an assistance of interference, an interference of obstruction or an interference of frustration? Is the manufacturer going to be placed in a position where he literally does as the department of industry advises? It is my impression that industry in Canada has been doing a good job with the many measures the Conservative government brought in. A climate was created whereby industry, for the first time in ten years, was able to show an upward trend. This was repeated in 1961 and 1962. The Canadian manufacturer has shown his ability to meet competition in the textile industry, which was on the rocks a few years ago and has now recovered and is able to meet competition anywhere. It would rather look, therefore, as though the productivity council did a good job.
The Prime Minister has indicated that there will not be anything new or anything that has not been done by the productivity council, the Department of Trade and Commerce and the Department of Defence Production. Then why, in the name of common sense, appoint another cabinet minister, another deputy minister, personnel, etc.? This is more and more bureaucracy in government; it is just a little bigger load for the people of Canada to carry.
Well, Mr. Chairman, the Canadian taxpayer is just about fed up with carrying this load. To my mind it would have been much more preferable not to appoint a minister of industry but, instead, to cut the taxes that industry is now paying. This government is now an equal partner in the profits of industry. Would it not help industry a great deal more if the taxes were cut in two and industry were allowed to run its own business, which I am sure it could do if the government would only get off its back? Would it not be better also for the taxpayer, who would not have to shoulder the cost of a new department of industry?
I think the people of Canada are wondering, what next? This will be a government with more cabinet ministers than any previous government. There will be more civil servants and more people on the government payroll than ever, in spite of the Glassco report. I repeat, there are more cabinet ministers on the payroll, in spite of the Glassco report, and they are men who were previously civil servants. Will these cabinet minister civil servants give the best ideas, the best counsel, or would these come better from some men who, unsheltered, have faced the battle and the breezes of free enterprise?

I think the taxpayers of Canada would say "Give us the man who has been tested". These are all disturbing thoughts, and the public will perhaps look with misgivings at the creation of a new department which will only cost them more money.


Marcel Joseph Aimé Lambert: Mr. Chairman, in speaking on this resolution to found a department of industry I do not know whether it is so much a resolution to establish a new department of industry as to find a place wherein the government can hive an area development agency. I am not going to deal with the difficulties in considering a resolution which in itself contains two principles. Other speakers before me have done this, and I think the committee must recognize that in voting on the resolution one must be able to extract a clear principle therefrom which you can either accept or reject.
In this connection we have, first of all, the establishment of a department of industry. One of the questions we might like to put to the hon. member on the treasury bench who may reply to the queries which have been put forward from members on both sides of the house is this. Who are to be, and what are to be the numbers of, the persons having a special knowledge of the manufacturing industry in this country who may be appointed to the department on a temporary basis? I think we should like to have some idea as to the government's thinking in this respect. In many instances government departments take on special advisers, but usually we get to know what are their intentions.
Before I deal with the economic implications of the resolution I should like to say that I have some difficulty in seeing the entire merit of an area development agency. What is to be its composition, its terms of reference, and what are going to be its powers other than, perhaps, to examine certain situations? Are its recommendations going to be forwarded to the minister of trade and industry? Are its recommendations to be subject to the approval of the governor in council before any area is determined or specified as one of slower economic growth? This becomes very important in light of the budget presented last night, and it is primarily for this reason that I have withheld speaking in the debate, so that I could see what was proposed in the budget with regard to development of those areas of Canada where there has been slower economic growth.
I must say that from looking at the budget and at what are its aims, the purpose of the area development agency becomes rather clearer to me. But I think there is a need for clarification as to how soon such an
Establishment of Industry Department agency can act, what type of survey it can make, where are its recommendations going and how are they to be approved, because nothing can be done in the matter of income tax proposals and businesses taking advantage of such proposals until we get the composition of an area development agency decided upon. It is for this reason that I have some reservations as to how quickly action can be taken with regard to the proposed income tax provisions relating to industry.
As a matter of fact, I would say that even if a department of industry were set up next week-it could not be next week, but within the foreseeable future-and the members of the area development agency were named, the agency organized, the information compiled and recommendations made thereon, considered by industry and acted upon, it would be 1965 before there would be any concrete action on the part of industry to commence establishing itself in those areas of slower growth. Some may be fortuitous in that they have already taken decisions to establish themselves in such areas without the assistance of the area development agency.
I should now like to deal with the economic implications. The Prime Minister made a statement the other day when presenting the resolution concerning the economic council to the effect that the task of the new department will also be to serve as a guide to the public and the government; to give advice on what are the sectors of our economy in which we can expect strong expansion, and what are the things a growing Canada can produce in greater quantities for the nation's benefit. This is the task of the economic council in connection with which a resolution has been passed. It is then said that in order to carry out the recommendations of the economic council as far as industry is concerned a department of industry is needed.
Now, Mr. Chairman, I do not think for one moment that a new department is necessary. I believe that within the framework of the Department of Trade and Commerce we have the organization for dealing with industry. What has been thought of here is nothing new. Industry does want assistance. It has been coming to the government for assistance for a number of years, but during the past three or four years a great deal more assistance to industry has been given. I recognize that industry requires advice, and it has been able to get it. Granted, there is always room for improvement; but on the other hand, Mr. Chairman, how in the future may a businessman come to the government with problems concerning trade and industrial development? Would it not be much easier
1178	HOUSE OF
Establishment of Industry Department for him if he could deal with those people concerned with industry and industrial development within the one department? We all know how difficult it is if we have to go from one department to another. I do not blame the people in the departments; it is inherent in the system. In the same way, if you have certain financial problems and you go first to the Department of Finance and then you go to the Department of National Revenue, you are not talking within those departments to people with the same philosophy. This is one of the problems which I think the new minister will have to face, the difference in philosophical approach as between departments.
I do not think in separating trade from industry we are going to get the benefit of concerted thinking with regard to industrial and commercial development in this country. That is why I feel that this bifurcation is likely to have a negative result. I should have thought it would have been far better to accentuate the industrial sector of the Department of Trade and Commerce; rename it if you wish, for a rose under any other name smells as sweet.
Right within the core of the Department of Trade and Commerce there has been a tremendous reorganization. There are some highly capable people in that department, particularly in the industrial section and in a revitalized trade section. I have met delegation after delegation of businessmen from western Canada particularly from the province of Alberta, who have told me that within the last two or three years they have received tremendous assistance from the Department of Trade and Commerce. They come along with their problems and they receive assistance.
I feel it would be better if the people who are carrying out this work were to remain under one roof. At the present time one minister expresses the complete philosophy of his department. The deputy minister and his assistants do the same. Now we are to have two ministers with different ways of thinking. The establishments will develop along two lines of thought. I suggest we are not taking a step forward. Indeed, the step we are taking may be retrogade.
I have another major reservation to make with regard to the establishment of this proposed department of industry. In order to avoid a proliferation of ministries the government has decided to suppress the Department of Defence Production and to switch the genial member for St. Antoine-West-mount from that department to the proposed department of industry. I am wondering what will happen to defence production as a result. The other day we heard the minister


expressing, in reply to questions, grave concern over the importance to Canada of defence sharing arrangements. Is the Department of Defence Production now to be merely an anteroom or a minor adjunct to the department of industry?
I think the committee should consider this further point. The purposes of the Department of Defence Production are vastly different from those of the proposed department of industry. It has been indicated that the new department is to be advisory in character. We are told it will help and advise businessmen with regard to the development of industry. On the other hand, the purpose of the Department of Defence Production is to organize an efficient unit to carry on the purchasing and procurement of military supplies for our forces in the most effective way possible.
Whether this has been entirely the case I am not sure, but in any event under the proposal now before us the work of defence production becomes an adjunct to industrial development. The new minister, in his concern for defence production sharing arrangements, may feel that he has an agreement or a deal working with whatever foreign power is on the other end of the production arrangement. This would involve the placing of orders for certain equipment for our armed forces in the foreign country concerned. He must, after all, remember that it is his prime concern to obtain the best equipment for our armed forces at the lowest cost to the taxpayer.
On the other hand he has the responsibility, as minister of industry, to encourage the rapid development of industry in Canada. Which of these two potentially conflicting objectives is likely to prevail? Will it be that of defence production, or defence production sharing, or will it be that of the development of Canadian industry? The new minister will have this problem to face. There will be recommendations from one section of his department in one basket on his desk, and in another basket recommendations possibly completely to the contrary.
Another question which hon. members might consider is this. What is to happen to the Department of Defence Production in the light of the sweeping recommendations of the Glassco report? We have these recommendations summarized in the last volume of the report, and for the information of the committee I think we might look at a few of them. First of all, the Department of Defence Production was supposed to change its name but its functions were to be greatly expanded. It was to become a central purchasing department, a general purchasing

agency for all government departments other than the commercially orientated crown corporations. I refer to the fifth volume of the report at page 108. The department was to take the procurement of office machines, stationery, forms and the servicing of office equipment away from the office of the queen's printer. Then again, the crown corporation known as Defence Construction (1951) Limited was to be disbanded, its charter surrendered and its functions transferred to the Department of National Defence.
In this connection I am wondering whether the minister could indicate in the course of his reply whether there is any truth in the suggestion that with retirement of the president of Defence Construction (1951) Limited it is the intention of the government to carry out the recommendation of the Glassco commission in this respect. I know this gentleman very well. I know he has taken a position in industry, and I am wondering whether this is because he has seen the writing on the wall or whether he has been privy to a decision to be announced in the future.
What is to happen to the Department of Defence Production as far as the recommendation of the Glassco commission is concerned? I feel this recommendation is incompatible with the formation of a department of industry equipped with some sort of wing for the consideration of defence production matters. I feel too that this incompatibility means that the recommendation in the report is not acceptable to the government. It, therefore, must be taken to reject certain of these recommendations; because I do not feel that a department of industry is likely to become a central purchasing agency for the government. I feel somehow that this would be altogether incompatible with what has been set out as the purpose of this new department which, as I have said, appears to be in the nature of a planning department.
We are advised that the new department is not to have a large staff. It is to be, shall we say, the economic mastermind of the nation. Is the economic council to report to the minister of industry? Is it to report to the Minister of Finance? After all, we must also look at the recommendation of the Glassco commission as set out on page 110; that in dealing with finance, the Department of Finance should undertake the conduct of the central economic analysis for the purpose of aiding the development and co-ordination of the general economic policy. This is a matter which is closely related to the stated aims of the proposed department of industry.
14, 1963	1179
Establishment of Industry Department
I cannot help wondering where the proliferation of all this planning is going to lead. Perhaps it will lead to such a situation as is hinted in the press today. I was not able to get confirmation of this information from either the Minister of National Revenue or the Minister of Labour during the question period this morning, because the period ended rather quickly while I was absent from the house for a few minutes, but it is reported that the announcement by the Minister of Labour of the $500 bonus on houses built substantially during the winter months was made without any prior consultation with the Central Mortgage and Housing Corporation. If I could have obtained confirmation, and I hope we can get confirmation, that there was prior consultation-


Charles Mills (Bud) Drury: If I may interject, I will give the hon. member that assurance now. He need not labour the point.


Mr. Lamberl:: That is fine. I am glad to see that the minister is able to speak for two other ministers. In any event, it is rather strange that C.M.H.C. officials, who apparently ought to be in the know, have indicated that they were completely caught by surprise and that they were not consulted with respect to this matter. If the answer is no then I am satisfied, and I think this will allay some disquiet in regard to such a step having been taken.
I use this as an illustration of the possibility of the right hand acting without knowledge of the left hand, and the possibility that we will have in the industrial development of this country the Department of Trade and Commerce going one way in its trade policies and the department of industry going the other way without this intimate interchange of knowledge and ideas which would be much more readily available if this were all under one roof.
These are the reservations I have with respect to the resolution. Frankly, while I admire and accept the motivation of assistance to industry and the co-ordination of certain plans, I still feel that the government is using the wrong vehicle to travel the right road.


Lucien Lamoureux: Shall the resolution carry?
Som hon. Members: On division.
Resolution reported.


Mr. Deputy Speaker:: Mr. Drury (for Mr. Pearson), seconded by Mr. Pickersgill, moves that the said resolution be now concurred in. Is it the pleasure of the house to adopt the said resolution?


Marcel Joseph Aimé Lambert: On division.
Resolution concurred in.

Municipal Development and Loan Board
Mr. Drury (for Mr. Pearson) thereupon moved for leave to introduce Bill No. C-74, respecting the department of industry.
Motion agreed to and bill read the first time.



MUNICIPAL DEVELOPMENT AND LOAN BOARD


[Stage Direction]
The house resumed, from Tuesday, June 11, consideration in committee of the following resolution-Mr. Gordon-Mr. Lamou-reux in the chair:
That it is expedient to introduce a measure to promote increased employment in Canada by the provision of financial assistance by way of loans to municipalities, the object of such loans being to enable municipalities to augment or accelerate their capital works programs subject to the approval of the provinces concerned; and for this purpose to provide a special fund in the consolidated revenue fund not exceeding four hundred million dollars to be available for the making of loans to municipalities and certain other municipal authorities for specific municipal capital works projects; to establish a municipal development and loan board to administer the fund so provided; to authorize the acceptance of municipal debentures for any loans so made; to authorize a measure of forgiveness in respect of any loans so made, depending upon the date of completion of the projects for which such loans are made; and to provide further for other related and incidental matters.
Lucien Lamoureux: Shall the resolution carry?


John Whitney Pickersgill: Could we carry it before one o'clock?
(Translation):


Maurice Côté: Mr. Chairman, how could we not welcome the resolution concerning a municipal loan fund like the one introduced by the Minister of Finance (Mr. Gordon) and which is in fact one of the proposals put forward by the Social Credit party for almost 30 years.
We are happy, of course, to see the present government accept our suggestions. This is not the first time that a Liberal government has agreed to apply Social Credit proposals. As I said last year, the establishment of the Bank of Canada in 1934, the socialization of the currency or bank notes by the Bank of Canada in 1935 and the abolishment of the gold reserve in 1940 were all proposals put forward by Social Credit and carried out by Liberal governments.
Several other social measures were applied by the Liberals under Social Credit pressure, but this is not the proper time to recite them in detail. However, when you consider the profound influence of Social Credit in the

development of the Liberal policy, you may rightly wonder why those people fought us so fiercely with so many millions if on the other hand they cannot administer without carrying out our proposals. That should prove irrefutably to every Canadian that the Social Credit platform was the only practical one since the Liberals drew so abundantly from it for their own policy.
Therefore, I have many reasons to state that we have cause to welcome this new project put forward by the Minister of Finance and so largely inspired by our ideas, our theory and our philosophy.
Of course, the project as introduced by the Minister of Finance, that is providing for the establishment of a special fund not exceeding $400 million for municipal loans, is a far cry from the constructive proposals we put forward on many occasions in the past, but it is a step in the right direction and I am quite convinced that the Minister of Finance will soon be compelled to fully apply all our suggestions because of the huge needs of our municipal governments, which are closer to people and have a better knowledge of the social needs-
Mr. Chairman, may I call it one o'clock? (Text):
At one o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 2.30 p.m. (Translation):
Maurice Côté: Mr. Chairman, the time has come to make a distinction between capital investments for social purposes and those which are made for commercial or industrial purposes. It is in that perspective that during the last week of the election campaign, the Social Credit party put forward a financial policy the second point of which read as follows:
-a Social Credit government would set up a public credit and municipal development bank lor the financing at cost of all social projects such as public works, bridges, government buildings, hospitals, etc. In addition, the bank would lend to municipalities, school boards and provincial governments for similar purposes and it would, with the approval of the provinces, refinance the compulsory debt of those various levels of government to free public capital and direct it towards commercial and industrial investments which would ensure the unlimited growth of our national economy.

Like certain economists, namely professor Jean Mehling, formerly of the University of Montreal and now of the University of Paris, we believe:
-that public works activate the economy in several ways and that they are a means to provide employment and purchasing power.
That is why we are anxious to participate actively in any legislation which could benefit the most useful of the three levels of civil government. It is the municipal government which is closer to us and which provides the most numerous and direct services. In organized communities, the municipal government provides water services and maintains a police force for the protection of our lives and property; it is also the municipality which has the equipment to fight fires, which cleans our streets, looks after sanitation and garbage removal, controls and tries to improve traffic.
For all practical purposes, municipal government is the one whose sound operation is the most important.
When the municipalities urged the previous administration to set up a municipal development bank, there was a very important reason justifying them to turn to Ottawa for that purpose, while respecting the constitution; it is that if the compact of 1867 established a division of powers and proclaimed that the provinces were sovereign in the field of civil rights and property, the same compact placed the monetary and banking system under the control or jurisdiction of the federal government. Now, nothing can be done when the monetary system paralyses instead of stimulating, as is now the case.
A sound monetary policy must automatically come from the public and private needs of the people wherever they may be, in relation to the material possibilities of providing for those needs. And since we deal with municipal bodies, they know best their needs, when to build or extend water works and sewage systems, pave streets, etc. They are aware of their needs and know very well where to find the material resources to provide for them. But here is the rub: there is always a money problem that restricts their activities.
Those are the reasons which have prompted the municipalities to ask Ottawa, as a result of the Social Crediters' unremitting efforts, the establishment of a municipal loans fund.
The purpose of the Bank of Canada at the time of its institution was:
14, 1963	1181
Municipal Development and Loan Board
To serve the people, all the people, by ensuring the sound economy of the entire country.
I hope that the bill which will soon be submitted to us by the Minister of Finance will not mention that these $400 million will again be levied on taxpayers who are already overtaxed and hard-pressed by our hateful taxation system which levies up to 80 per cent of individuals' and up to 50 per cent of corporations' income.
All capital needed for the proposed municipal loan fund will have to be supplied exclusively by the Bank of Canada. It will be new money, new credit created in exactly the same way as the chartered or commercial banks do when they regularly create bank money.
It would be absurd not to recognize society's right to own its credit and to use it without resorting to terms set by usurers or profiteers in the financial field, and without having to pay them a penalty for permission to develop this country's resources and wealth.
To this end, the Bank of Canada will, therefore, transfer new credit up to the indicated amount of $400 million. Only then shall we be able to say that the government really and honestly wants to help put an end to unemployment by financing municipal developments strictly at the administrative cost, through the municipal credit fund mentioned in the resolution before us.
The government would commit a very grave error if it considered taking this capital amounting to $400 million out of the consolidated revenue fund created by public taxation. Such action would be a backward step because the government would be interfering in private activities by taking the place of the stock brokers, who are quite capable of finding the necessary capital to finance municipalities on their own, and who have proved it for a very long time indeed.
On the other hand, if we set up a municipal credit fund with capital supplied by the Bank of Canada by resorting to new credit, we shall not frustrate the stock brokers who are an important class of financiers used to creating contacts between the investors and those in need of capital. The brokers could very well channel all liberated and available capital into the field of commercial and industrial stocks which on the other hand, could under certain conditions, be guaran-
1182	HOUSE OF
Municipal Development and Loan Board teed by the industrial development bank, as is done in other fields. Today, in order to increase investment of capital in industry, it is necessary to give greater security to the investor.
In concluding, I repeat that the municipal credit fund should not become a sterile body, which would only be interested in displacing the conventional methods of financing municipalities, but an authority or an organization able to create and produce new financial life.
(Text):


Gordon Harvey Aiken: Mr. Chairman, I would like to open my remarks on this resolution by first saying I am in agreement with any measure that will aid municipalities in providing both public works and employment, but this afternoon I would like to discuss an underlying constitutional problem different from those already raised in the debate.
There are two opposing propositions in connection with this measure. The first is that public works undertaken with a view to creating employment are often best undertaken at the municipal level because at that level the employment needs of the local residents are best known. For that reason where the work can be done in the municipality it is best done there. The second proposition is that municipalities are creatures of the provinces, and federal intervention in municipal affairs is only justified where there is a national interest involved.
I would like to point out that the British North America Act sets up two separate taxation fields. The first taxation field is the federal one, and it generally authorizes indirect taxation. The other field, the provincial one, authorizes in general direct taxation, and under this heading the municipalities levy taxes upon real estate in a direct fashion. My point is that the federal method of taxation, the federal system of taxation, is not justified in presenting taxes to a municipality which has another system authorized under the British North America Act, unless this assistance is required for national purposes.
I wish to draw the attention of the committee to the fact that in the last few years there has been intervention by the federal government into municipal works and municipal financing, but thus far in every case federal aid to municipalities has been on the pretext of a national emergency rather than on terms of helping the municipalities out on general principles. Three such schemes have been undertaken, and I would like to examine them briefly.
The first is the sewage disposal program that the former government brought in in


1960. It was a program of national urgency. The problem was marked very well by the mines, forests and waters committee of this house in 1960 when that committee undertook a complete review of the question of water resources in Canada, and particularly the question of pollution. As a result of the recommendations of that committee, and within a very few months thereafter, the fed eral government had taken up the question of sewage disposal and water pollution and brought into effect the very excellent sewage disposal program which followed.
I should like to read paragraph 10 on page 396 of the report of that committee, in which it made the following recommendation to the government:
Your committee recommends that the federal government accelerate Investigations of pollution problems in Canada particularly in those areas where it has legislative responsibility. In addition, at the request of the provinces it should provide information which would be useful in establishing objectives of water quality control. The committee recognizes that much progress has been made in this direction in the past. The province of Ontario is to be commended for the headway it is making in pollution control. However, as our population increases greater effort will be required in the future.
I would now like to read the last paragraph paragraph 30:
The evidence revealed considerable overlapping of authority relating to water resources, not only as among federal departments, but at various levels of government, federal, provincial and municipal. Your committee believes that more effective development of water resources can only be accomplished by better co-ordination of the work now being done at all levels of government.
Approximately $24.5 million will be spent in the year 1963 on the sewage disposal program introduced by the previous government, according to the figures given at page 105 of the budget papers deposited a few days ago by the Minister of Finance. This is a very large contribution towards the municipalities. It is being granted as a national control measure, and not purely to help the municipalities out of their difficulties.
The second program by which the federal government came to the aid of the municipalities was the assistance to vocational schools. It was brought into effect also in 1960, in the late fall, and was one of the most effective programs ever introduced with the aim of a reduction of unemployment. I think this will be recognized, and most of these very effective measures which were introduced at that time, are now being expanded and enlarged. They formed the whole basis of the great efforts made to increase employment and to assist municipalities, and the assistance to vocational schools was introduced for the same reason.
We all understand that the government realized something that had been developing

over the years, that vocational schools were required in order to train our young people for the jobs available. It was a measure to relieve unemployment, which no one would deny was and is a national problem. It became such a problem that the federal government, in accordance with the constitution, thereupon gave some assistance to the municipalities and the provinces in the vocational schools program. There again, however, I am pointing out that the federal government came into this program purely as a national matter, a matter of urgency, a measure to reduce unemployment, to help our young people train for the jobs which had become available in this age when jobs for ordinary people with no particular training were becoming fewer and fewer. The vocational schools program has done a great deal toward creating employment in the immediate sense of building the schools themselves; no one would deny that. In a matter of two or three years the results of this program will begin to show as the graduates come out of the vocational schools. But I would ask the committee to look again at the amount involved. In the budget papers at pages 126 and 80 there is an estimate, in a preliminary way, that the cost of vocational schools for one year, the fiscal year 1962-63, will amount to $207 million. That is for the one fiscal term.
I would like to turn now, Mr. Chairman, to the third instance where the federal government has intervened in municipal affairs to aid the municipalities. I refer to the winter works program. Perhaps I have taken these out of order, because the winter works program was in reality the first one undertaken. It grew out of our national problem of seasonal unemployment. On the basis of the fact that we had to do something for those who were seasonally unemployed because of our winter problems, the winter works program was undertaken. I do not want to review it because everyone knows the effect that the winter works program has had. I would like to point out, however, that here again it will result in the federal government spending an estimated $27.3 million in 1963. This is the amount of federal funds that will be used to assist in the winter works program. This estimate is found at page 10 of the budget papers. These are the three main examples of cases where the federal government is going into direct municipal arrangements with, of course, the approval of the provinces but with a more direct connection between the federal government and the municipalities than was ever envisaged before.
In all these cases there were two objectives, as I see it. There was a primary or
14, 1963	1183
Municipal Development and Loan Board national objective in each case, and there was also a secondary or immediate objective of creating employment. In all these cases, in the vocational schools, in the sewage disposal program particularly, we were looking to the future: we were looking to the elimination of pollution; we were looking to turning out trained students. But at the same time we were looking to the creation of immediate jobs, and these immediate jobs were in the construction of the sewage systems and the vocational schools.
With that background, Mr. Chairman, I want to come to the real point that I am trying to make on this resolution. We have not seen the bill, of course, and I may be forced to change my mind, but it is my feeling that no justification has been shown in this particular instance for moving into the municipal field. I think that we have been treading very close to the place where we should not tread and have been moving into a taxation field that is entirely different. We have a municipal taxation field and a federal taxation field, and they are quite separate. Taxes, in principle, should not be collected at the federal level on such things as income tax, corporation tax and estate tax and then returned to the provinces and the municipalities, who have another method of collecting taxes. So this basic balance is going and we must be very careful that we do not intermingle completely the two methods of taxation.
If I understand the present situation aright, any municipal project whether or not it has a federal or national objective, will be considered. Intervention by the federal authority does not necessarily mean interference. I do not mean that help is unnecessary or unwelcome. I feel that it is neither; that the federal government at the present time must intervene in municipal matters to give assistance. But I am pointing out that we are gradually moving away from what was originally intended, and if the municipalities really do need assistance-and we all recognize that they do-then before we get too far into this question of using federal funds for municipal purposes, without any recognition of the fact that national objectives should be involved, we ought to consider whether there should be changes in the taxation structure.
We know that the municipalities do need extra funds. They cannot collect the money required for their local projects out of taxation on real estate. This has become very, very oppressive. The municipalities are now getting help from the provincial governments, they are getting help from the federal government, and still their assessments and taxes are increasing each year. I am therefore
1184	HOUSE OF COMMONS
Municipal Development and Loan Board bringing to the attention of the committee, that I feel we have perhaps reached the breaking point where we are not trying any longer to use any national objective or national reason for getting into the municipal taxation field. I believe that a new deal on municipal taxation or on taxation generally as between the federal and provincial authorities must very soon be considered before we get into a complete integration of the two different types of taxation authorized under the British North America Act.
I say, therefore, that this resolution appears to depart completely from the established principle that in order to use federal funds in municipalities there ought to be a national objective. I think other speakers have pointed out that the projects in this bill are very limited. Some have expressed the opinion that they are too limited and there will not be any results coming from them because most projects will be excluded. But I merely say that those projects which are authorized have no pretext or excuse for the intervention of the federal government in providing funds.
There is also another injustice and this I think we should consider carefully. All municipalities do not take advantage of these federal-municipal projects. The vocational schools program, the sewage disposal program and the winter works program are available to all municipalities. There may be some smaller municipalities which would never qualify for the sewage disposal program, but in general it is available to them. Yet there are municipalities which are qualified and do not take advantage of some of these programs. I know that if we examine the record we will find that in any given district or county only a percentage of municipalities are able to qualify for federal assistance. This is even more noticeable in the present resolution, which is bound around by exceptions, exemptions, and so on.
I particularly asked the Minister of Finance when he brought this resolution forward- and I asked him for a purpose-what type of projects would be considered, and why. I asked the question, as reported at 890 of Hansard:
Mr. Chairman, might I ask a further question of the minister. What is the basis for the selection of the type of works that will be authorized? Is there any particular basis on which the selection has been made?
The minister replied:
They are intended to include the main works which a municipality normally carriers out and borrows for, with the exception of the items I mentioned in my explanation; hospitals, for one thing, sewers for another, and also schools. They are the main ones.
The restrictions which appear to be bound about the present legislation will be such that

a good many municipalities will not be eligible to apply, and a good many others will not financially be able to apply. Therefore there is an injustice there with regard to the municipalities which cannot and do not take advantage of the federal assistance offered.
I think all this goes to prove the point I originally made, that there is no excuse for interfering holus-bolus in any or all municipal projects without any objective in mind. I think that before we proceed any further with this matter we should give it careful consideration. This present resolution is moving us further and further into this question without getting to the basic problem of the distribution of tax sources.
There is just one more point I should like to make, Mr. Chairman, with reference to the amount of money being provided under the terms of the present resolution. We were told that it was an amount of $400 million, and that this is to be spread over a period of three years. Presumably there will be available approximately $133 million per year. I noticed in the budget speech of the Minister of Finance last night that he has estimated about $70 million for the current year for the new programs. I assume that the program we are now discussing is one of the major ones, and therefore we might look for approximately $70 million to be spent in the current fiscal year. Compared to the three programs which are now in effect in Canada, this will surely be insignificant and will not bring about the results we were led to believe might be brought about. As I pointed out a moment ago the sewage disposal program amounts in one year to an expenditure of federal funds to the municipalities of $24.5 million. The vocational schools program for the municipalities involves an expenditure of $207 million, and the winter works program $27.3 million. This totals per year $258.8 million. The proposed program, which is intended to do something to assist the municipalities, to relieve unemployment and to help in capital projects, will this year involve an expenditure of only $70 million or even less, which is less than one third of the money already being spent on projects in existence. Surely we can devise, Mr. Chairman, a better system of aid to municipalities and provide a more equitable sum of money which will have some effect on the economy of the country in the coming winter.
(Translation):


Mr. Frenette:: Mr. Chairman, there are certain parliamentary traditions which very often give rise to comments from new members. Among those, there is one I wish to respect in a special way, that of congratulating the chairman on his appointment, and since this

is my first opportunity really to take part in a debate, well, I am extremely happy to do so.
I congratulate you and extend to you my best wishes for your continued success. You may rely on our co-operation in order to make your task as easy and as painless as possible.
Mr. Chairman, I am sure a mayor of a Quebec municipality will be allowed to express his views concerning municipal problems during this debate on the resolution now before us.
The needs of our municipalities are enormous. One has to be mayor or councillor of a municipality to realize how numerous and diversified those needs can be.
I believe that the primary duty of a municipal administration anxious to meet its obligations is to provide the people with the various essential public services. In that respect, I am conscious of the rather complex problems often caused by the provision of adequate waterworks in order to meet not only the requirements of the private sector but mostly-and this is when the situation gets complicated-the requirements of industries already established or those which indicate their intention of locating in our area.
Such waterworks facilities require, of course, very large outlays and give rise to a great many problems for municipal authorities.
We must not forget either the fire protection to which our fellow citizens are entitled. That service creates the same problems as waterworks, which are a constant headache, as I said, for those who are entrusted with the administration of the community.
As far as municipal sewers are concerned,
I know that we already have legislation under which interested municipalities can secure loans at advantageous conditions.
Sewers are essential to public health, but they are just as important for urban renewal purposes and for the present and future needs of industry.
The fact remains, however, that the legislation, which is administered by C.M.H.C.,
I believe, creates a whole lot of problems for the municipalities which intend to take advantage of it.
I would mention in particular those medium-sized municipalities which have not 28902-5-76
14, 1963	H85
Municipal Development and Loan Board yet installed a real sewage system and are at grips with this most difficult problem.
I would have liked to see in this resolution announcing the establishment of a municipal fund a further increase of the help given to municipalities for the installation of sewage systems.
Municipalities must, of course, provide other services; they have other urgent needs. Among others, I would like to mention municipal roads, construction of new streets and sidewalks, development of public parks and playgrounds, in short, all improvements likely to make life easier for those who have to live in those municipalities.
There is also another field which needs special development in the province of Quebec, and it is the tourist industry.
If our municipalities had at their disposal the financial means of carrying out the development of public parks and grounds in general, they would be able to develop tourism, that most profitable industry.
All municipalities, large cities just as well as small communities, have other needs. I am thinking now of the construction of buildings to house such services as the municipal administration, the fire station, the police station, and municipal garages or any other building to serve the needs of the community.
Naturally, Mr. Chairman, any construction project entails a problem of financing which has been extremely hard to solve up until now.
The needs of municipalities cover various fields. To name a few, there is the purchase of street maintenance and protection equipment, the salaries of the various categories of employees like the firemen and the policemen who look after law and order in our communities.
Another particularly interesting point concerns expanding municipalities or those wishing to expand. More and more, the sound policy for the setting up of an industrial fund by our municipalities anxious to develop is gaining ground.
I should have liked the minister, when introducing his resolution, to propose something new in order to promote the establishment of such an industrial fund which is of particular interest to those anxious to set up new industries in areas which are not yet

Municipal Development and Loan Board
In order to meet the requirements of these industries interested in starting new factories, municipal authorities must necessarily purchase land and also erect buildings to be made available to those industries. An industrial promotion program should also be established for the provision of the required capital that unfortunately cannot be found in the budget of municipal councils.
Therefore, that list of needs compels us to say that we must find a solution to improve municipal finances because every time we are faced with a resolution about municipal affairs we are up against a wall, which is simply a problem of financing.
Our citizens, our municipal taxpayers, are already overburdened with taxes of all kinds, property tax, provincial tax, federal tax, not to mention school taxes which practically ruin our fellow citizens. It becomes almost impossible even to imagine that we could add on more taxes. Needless to say our fellow citizens, faced with this multiplication of loans and new taxes, are justly concerned about the future wondering what is going to happen.
An example is set by the municipalities whose budgets, as we know, are very often in the red. The municipalities are consequently losing that reputation for solvency they used to have.
The cost of those loans is increasing all the time. Obviously, every time we turn around to implement a public service program, we must rely on current financial means. This is why these projects must now be carried out without compelling the municipalities to pay twice for the capital investments they have to make.
Mr. Chairman, this indebtedness policy cannot be applied any longer. I believe it is high time we opened our eyes and tried to find a solution to this problem to do away with a system which unfortunately burdens future generations.
Mr. Chairman, when the party in power announced this legislation, concerning the establishment of a municipal development fund, we were expecting them to introduce something better than this. For several years, we, on this side of the house, have been advocating the establishment of that municipal development bank. We had thought the ministers were also trying, like us, to find a way to improve the lot of municipalities and, at the same time, the condition of the whole population.
[Mr. Frenette.l
Last Wednesday, Mr. Chairman, I took part in a meeting of all the mayors of municipalities in my riding. On that occasion, precisely, and in the light of what had been announced by the Minister of Finance Tuesday afternoon, we discussed this resolution and this legislation. I regret to say this, but I think it is my duty: the mayors of our municipalities are disappointed about the many restrictions provided to block, if you like, access to this municipal fund from which they expected so much.
During that meeting, Mr. Chairman, we compared the act I mentioned earlier today, with the Central Mortgage and Housing Act in respect of municipal sewage. On the whole, the bill which will follow this resolution can be considered as the extension of existing legislation.
The mayors and reeves said that they were much more interested in the development of the winter works program, because of its definite advantages, than in borrowing from that new municipal development fund.
It remains, nevertheless, that the legislation proposed by the government was much discussed during the election.
Personally, I do not hesitate to say that I am disappointed by the lack of realism which seems to pervade the resolution and the explanations supplied by the Minister of Finance.
Yet, Mr. Chairman, I want to congratulate the minister for having done something right now instead of waiting for the end of the session to present that resolution which will be followed by a bill for the creation of a municipal loan office.
I am in perfect agreement with what he said in this respect as can be seen on page 888 of the official record:
In essence, the proposed act seeks to increase employment by the creation of new jobs in the construction industry engaged in municipal capital projects. The construction industry in Canada is particularly suited to employing large numbers of persons who currently make up the ranks of our unemployed. Many without work today have relatively few skills.
I entirely agree with him when he says that the legislation mainly tends to improve the lot of workers. Since I have been one myself, I am especially sensitive every time an effort is made to improve the condition of my fellow workers. I live in an area where the building industry is prevalent; in fact, 50 per cent of its economy is dependant upon that industry.

It is also with pleasure that I recall the words of the minister who said, substantially, that it was much sounder for the money distributed among the people to be the product of work than just a mere subsidy. I support that principle and I am happy to agree with the minister in that respect.
Mr. Chairman, as I said a while ago there was in our party platform a plank regarding the availability of low cost capital for the provinces and the municipalities. In fact, it reads as follows:
It is in the field of provincial and municipal financing that the scarcity of money is most evident Unskilled labour that could be gainfully employed in slum clearance and urban renewal, which would make Canada a more pleasant and more attractive country, is still unemployed, because of the lack of low cost capital at the disposal of the municipalities. A resolution presented to the federal government in Ottawa on November 8, 1960 by the Canadian Federation of Mayors and Municipalities states the problem clearly.
Municipal administrations are still burdened by the high interest rates they have to pay, and the situation has not improved in the last year, when the federation drew to the attention of the government the problems met by its members. Unless the cost of money is greatly reduced, the municipalities will have to give up all hope of development, because they already have reached the stage where they find it difficult to meet the expenses resulting from their normal growth.
My colleagues have already suggested in this house particularly efficient and logical means at our disposal, the Bank of Canada especially, and I do not intend to go over them again. However, I should like to quote once more from our election program, this time about the establishment of a municipal assistance fund. I quote:
Financing would be achieved through a special Bank of Canada account called the "municipal development bank".
The fund would be used exclusively for "social capital developments", that is, community projects requiring capital expenditures, such as hospitals, water systems and sewage systems, street paving, roads, etc. The money would be made available to the provinces on a per capita basis and meant to be distributed to municipalities or used on provincial projects financed by that bank, as decided by provincial governments.
The municipal development bank would promote an immediate increase in employment, mainly in the field of construction, throughout Canada. It would greatly contribute to give jobs to our unemployed and to make Canada a good place to live.
Those are, Mr. Chairman, the main reasons why we support, though with certain reservations, this resolution in the name of the Minister of Finance, on the establishment of a municipal development bank.
We would also have liked the minister to offer us means that would have been easier and more available for the municipalities, in
28902-5-76i
14, 1963	1187
Municipal Development and Loan Board other words a scheme that would have been a little more withdrawn from federal activity. And this would have been more in accordance with the principle of provincial autonomy. This autonomy is seriously threatened by the draft legislation. But, under the circumstances, and because of the increased difficulties faced by the municipalities, I am of the opinion that in order to be objective we must support this measure and see to it that it be implemented as soon as possible to ensure that our municipalities may derive all possible advantages from that program this year.
Before resuming my seat, let me express a wish. I wish that the government of this country may one day understand the solution we advocate in the field of finance and that we may in a reasonably short time see the implementation of the principles advocated by our group.
(Text):


Herbert Wilfred Herridge: Mr. Chairman, I rise to speak quite briefly, first of all to support the principle and purpose of the resolution although the purpose of the resolution is far too limited from our point of view. I know that in rising to support the resolution I am supporting a resolution that provides for a temporary economic poultice on the ills of the municipalities rather than long term economic nourishment. But it does do something to assist the municipalities and on that basis we support it.
My colleagues have outlined our general attitude toward the resolution and the problem that the municipalities face at this time and have offered numerous criticisms and some suggestions. There is no necessity for repetition and I am not going to repeat. But I do wish to make a few suggestions as the result of some knowledge and experience based on, shall I say, the experience of an old man in community affairs. I must refer to one sentence in the resolution which does intrigue me. I do like the use of language in the resolution. I find that the legislation will provide for "a measure of forgiveness".
I hope that indicates that the government is facing life now with a Christian and tolerant attitude toward the opposition as well as the municipalities of Canada.
My few comments will be mostly limited to my experience with the problems of smaller towns, villages and some unincorporated communities and I make them in all seriousness because I have discussed these
1188	HOUSE OF
Municipal Development and Loan Board problems with local authorities and officials of various local organizations. First of all, I do think there is a great need for greater co-operation between government departments and government agencies to make the administration of this legislation more effective. In the past I have run into some most unfortunate blunders, I thought, as the result of lack of consultation.
To illustrate, and this is rather unusual, at the present time the officials of our glorified water branch in the Department of Northern Affairs and National Resources are doing all they can to make sure that a certain very productive community in my constituency is flooded out and buried under 30 feet of water in the very near future. The Department of Labour under the winter works program granted the same community last winter financial aid to rebuild the waterworks system and this work was done last winter. Here you have one department striving to flood out the community and another department assisting to rebuild their waterworks system. Did you ever see such an illustration of lack of co-ordination? I can give the minister the facts.
In another instance I discovered a lack of co-ordination between the Department of Agriculture and the Department of Public Works. The Department of Public Works had allocated some money to lower the level of a river and make it more navigable.
I was told by one official on no account to say anything about the fact that by doing this work we would lower the water table and drain 3,000 acres of land. They said that if public works were to hear that the scheme was draining 3,000 acres of land, we would not be able to get the money to lower the river level and at the same time drain the land. I kept quiet and the $5,000 to lower the river level was granted, navigation was improved and the water table lowered. All this occurred as a result of making certain there was no co-ordination or co-operation between the various government departments.
I should like to give you another illustration, Mr. Chairman, of the need for much more co-operation and co-ordination between the department that administers this legislation, the Department of Labour, and Central Mortgage and Housing Corporation. I think that these circumstances occur in many places, they have occurred in several communities in my constituency. There are, in my constituency, incorporated villages and unincorporated communities of, say, 1,000 or more
[Mr. Herridge.l

people. Now, the Central Mortgage and Housing Corporation will grant loans to persons living in what they call the older, established areas of the village. I will take as an example the village of Nakusp. One can obtain a loan from Central Mortgage and Housing Corporation to build a house with a septic tank that is considered satisfactory, as long as it is in the old area of the village. I know of one person who owns four acres of land almost in the middle of the village. Under the present regulations of Central Mortgage and Housing Corporation he can obtain loans on this property, if he subdivides. He would be permitted to construct houses and build septic tanks practically in the middle of the village.
With the development of the forest industry, the village of Nakusp, unincorporated as it is, has been expanded by the provincial government to include another bench of land. These people who occupy this higher bench of land are denied loans because it is not considered healthy to construct septic tanks in this area. The whole of this village is built on a sand bar 100 feet deep. The provincial health authorities have ruled that septic tanks within the village and in any additions to the village, are quite satisfactory from their point of view. At the same time, we have the ruling that permits the building of septic tanks where possibly some would consider it unwise, that is in the centre of the village, while those who are living in the extension of the village are denied loans for this purpose from Central Mortgage and Housing Corporation.
I suggest that there should be some cooperation between those who administer this measure and Central Mortgage and Housing Corporation officials who deal with problems like these. Central Mortgage and Housing Corporation has advised that loans would be available when sewage systems were installed. Everyone with any knowledge of the circumstances knows that sewage systems are beyond the financial capacity of these villages and are not likely to be installed for many years to come. It is not sufficient for Central Mortgage and Housing Corporation to say no to these applications for loans, and let it go at that. There is a great need for co-operation and co-ordination between these various government departments and agencies. These problems are often treated on a sort of piecemeal basis without one department or agency knowing what the other is doing.
My second suggestion, Mr. Chairman, is that the minister should give consideration to amending the resolution or the bill when

it is introduced to provide for loans to recognized responsible organizations in unincorporated communities. This happens occasionally now under the winter works program. It seems to me that our responsibilities should be recognized to organizations of citizens in unincorporated communities, and I am thinking of irrigation boards, water districts or something of that sort. I do urge that consideration be given to amending the act to cover these particular circumstances so that not only will municipalities be able to benefit, that is incorporated municipalities, but also local organizations in unincorporated communities.
I might say that there are various reasons for not incorporating under certain circumstances. As I say, I urge the minister to give consideration to following the practice that has been established by the Department of Labour under the winter works program. I suggest that the following types of organizations should receive some consideration: Water districts that are supplying water and irrigation to these unincorporated communities. These water districts are incorporated bodies themselves, under provincial legislation, for the purpose of water distribution. Then, there are irrigation districts that are. incorporated under provincial law. There are recreation commissions which are managing parks within unincorporated communities as well as incorporated communities. They are responsible to the provincial government. There is a great opportunity here to do something for the people living away from the large centres. I recognize that the problems of the large cities require assistance. However, I believe this measure could be a means of successfully helping the smallest community in the nation.
My third suggestion, to which I have made reference before, is that there must be closer consultation with these local authorities if this measure is going to be successful. In my opinion, you must get the co-operation of the persons you are aiming to serve with legislation of this type if it is going to be successful. In some instances our civil service requires some training in public relations. It is not good enough for an official of Central Mortgage and Housing Corporation to be almost dragged into a small community to give a short speech to the local chamber of commerce which is replete with remarks about the restrictions imposed by the regulations. There has to be better public relations with many of these local organizations that I have mentioned.
I have received this complaint from a number of places from the representatives
Municipal Development and Loan Board of organizations in the unincorporated communities in my constituency. You know, I am a rural fellow; I have what they call a rural mentality which is somewhat different from the urban mentality. Some people prefer to live in the backwoods, the smaller communities, but these are really the grass roots of the nation if people only knew it. These small communities, all through our country-


An hon. Member:: Like Toronto.


Herbert Wilfred Herridge: My hon. friend from Port Arthur will deal with the larger centres in which the intellectual elite usually live.
I do urge consideration be given to this and that officials be informed of the necessity for co-ordination and co-operation between departments. There should be consideration for the needs of the smallest and humblest community.
Now, my next point deals with the question of publicity. Often we adopt legislation of this kind and the people of the country do not know what can be done under it. I have had this experience in the past. One piece of legislation for which I think the former government did not get the credit that it should have received from the public was the ARDA program.
I think that was largely because of a lack of sufficient publicity and a lack of contact with the sources of information available to the public. I urge that every effort be made to let all persons interested-whether they represent cities, towns, municipalities, small villages or unincorporated communities- know what is possible under this legislation, what the regulations are, and how it is being administered. To that end the minister should seek the co-operation of the local organizations such as chambers of commerce, local unions and women's organizations, etc.
I am a great believer in getting union members interested in problems, in addition to the problems of wages and working conditions. There is nothing like getting people interested in their local communities in order to give them a sense of belonging and being needed. Towards this end I suggest contact with the weekly newspapers. There are a lot of people in smaller places who read the weekly newspapers to a greater extent than they read the large dailies. In doing that I know they miss the column written by my hon. friend in the Telegram, but possibly we will find some way of taking out community subscriptions and passing the paper around.
There should also be contact with local radio stations and with any organization or group of people that will inform the public of what is intended under this legislation and what can be obtained through its provisions.
1190	HOUSE OF
Municipal Development and Loan Board
In conclusion, in the administration of this legislation we must do everything possible to bring the administration of it as close to the people as possible if we are to have any measure of success, limited though it may be.


Mr. Gundlock:: Mr. Chairman, as this is the first time I rise to take part in a debate in the twenty sixth parliament I wish to congratulate you on your appointment, and through you offer my congratulations to Mr. Speaker and to the deputy chairman of committees. It is with great pleasure I join my congratulations with those of other hon. members of the house.
The resolution before us brings some questions to my mind, particularly in regard to the lack of definition. I do not want to prolong the debate, but I have one question related particularly to my area of southwestern Alberta, and especially the irrigation part of that area. I would like to know what the definition of a municipality is. Irrigation companies were mentioned by my hon. friend from Kootenay West, and incidentally he referred to himself as having a rural mentality. Well, if his is a rural mentality, then, having listened to his use of English, I am afraid I would have trouble defining mine, inasmuch as I am a farmer born and raised in a rural area.
An irrigation company formed under the irrigation act of Alberta is considered a municipality, and I believe it has been recognized in Ottawa as a municipality for the purpose of winter works. Would this kind of rural municipality come under the definition of a municipality as given in the resolution before us, and would it qualify for loans from the municipal development fund?
At the present time these municipalities or irrigation companies are facing a very acute problem. I remind the committee that a few days ago one of the ministers said his constituents were praying it would stop raining in his district. I understand he is not in the house today and that he is back in his constituency. I only hope someone will convey to him the suggestion that we would like his constituents to change their minds because there is in fact a great water shortage, and these municipalities would find a great boon in loans from this fund. I almost hope the legislation passes quickly because there is a great need for finance and aid to capital works in particular.
Some of the irrigation companies I mentioned are 75 to 80 years old, and their need for rebuilding capital works is very great.
Another question comes to my mind with regard to municipalities that are adjacent to larger urban centres or large army camps. These municipalities have to maintain roads
[Mr. Herridge.l

which are used by these other people, and their financial problems are great on that account.
I would also like the minister to explain the forgiveness clause a little more fully. It may be the saving feature of the resolution, but I wonder. The borrowing power of a municipality is limited to certain things, regardless of whether money such as this is available or not. The fact that the federal government makes additional funds available does not necessarily mean that a municipality can borrow them. It may well be that there should be a new source of funds, but the basic problem is that many municipalities have used up their borrowing power. In fact it seems to me this could lead to the rich getting richer and the poor getting poorer.
The establishment of the board itself brings another question to my mind, and I hope you will forgive me, Mr. Chairman, because we all have to have our little bit of fun. I hope the Minister of Agriculture may become a member of the board that is to be set up because, in spite of his many, many travels, and the many days he spends travelling, I think he could possibly learn something from this board, particularly in relation to the irrigation companies of southern Alberta right on his own back doorstep. You are very kind, Mr. Chairman; I hoped you would forgive me.
I do not want to be repetitious, as previous speakers have said, but I do think this is a very serious matter. I did not, indeed, expect to speak at all on this resolution until the budget came down in this house last evening and I began to wonder about these things. Here is $400 million. Just one little part of a corporation or municipality could use a percentage of that amount. I can also foresee that one municipality such as Ottawa or Toronto might well take the whole amount. These considerations raised questions in my mind. I have not yet, unlike my hon. friend from Kootenay West, been able to describe my mentality, but for what it is worth, these are big questions. I seriously question where this money is going to be used, or what is the real purpose of this loan fund. Perhaps it will be made known to us. Perhaps it is explicit and clear in the bill, and if so I am sorry to have taken up the time of the committee. But I wanted to make sure that these questions were on record, and I hope they will be answered. As I said earlier, after hearing the budget and thinking these things over, such as $500 being taken out of one pocket and put in another, and wondering where the money is coming from, I decided that I should have a question or two answered in relation particularly to my area of Canada.


Mr. Woolliams:: Mr. Chairman, I notice from the resolution that, like another resolution that was before the house, its real import is to bring in a program in order to remedy unemployment. I think the previous speaker referred to this measure as merely a poultice being put on the problem. I would describe it as merely a powder puff applied to the problem, because I recall very well that some time ago when the winter works program was implemented by the former Conservative government the then opposition called that program peanuts although $900 million, in cooperation with the provinces, was spent.
I still believe that with an unemployment problem the solution is to increase productivity. I want to emphasize, as I did yesterday, that in one year under the previous government productivity increased by 8 per cent. I believe that in order to keep productivity up we must leave working capital with industry, with the individual, so they may expand their businesses and take on people who are unemployed.
I am not going to pour cold water on the program, particularly, and say the government will not do something to help solve unemployment. I believe the Minister of Finance is quite serious when he says he thinks this legislation will in some way remedy the situation. But I say that when we are going deeper and deeper into debt it means more taxes, and more taxes means taking more working capital away from industry and individuals, which will cut down the expansion of the country. I was rather interested in listening to the hon. member for Medicine Hat a few days ago when he was speaking on the same subject. He was talking about the debt of the various provinces. This, after all, is a basic loan program and because we heard a great deal during the election campaign about debt free money and debt free provinces, it might be a good time to put on record just where we stand as far as debt is concerned, in western Canada particularly.
I am reading from page 1050 of the Canada Year Book for 1962. The debt of Alberta- that is, the provincial debt-is given as $221,504,000; Saskatchewan is $449,811,000; British Columbia is $650,707,000; Manitoba is $488,118,000. When you analyse debt you must con-cider that there is the debt of the municipalities and the debt of the provinces, and it is rather interesting to note that some provincial governments have been able to shift the responsibility very carefully to the municipalities. Although the province of Alberta has the lowest provincial debt, it has the highest municipal debt. I heard a lot about this during the last election campaign and the election campaign before that. As far as helping the municipalities is concerned, it might be well
14, 1963	1191
Municipal Development and Loan Board to keep the record straight in this regard. On page 1056 of the Canada Year Book we find that the municipal debt of Alberta is $444,754,000; for Saskatchewan, which has one of the lowest municipal debts-and I am sure the leader of the New Democratic party will be happy to hear these figures- the figure is $143,734,000; for British Columbia it is $383,210,000; for Manitoba it is $148,113,000.
In order to size up the provincial situation -because the municipalities are really a creature, by statute, of the provincial governments, under our constitution-it might be well to total these debts to see where the prairie provinces stand in this regard. In Alberta the total debt, adding together the provincial and municipal debt, amounts to $666,258,000. I might say that these two figures when added together constitute the highest debt in the prairies. For Saskatchewan the figure is $593,545,000; for Manitoba, $636,231,000; for British Columbia $1,013,917,000. So of the three prairie provinces Alberta has the highest debt when the debt of the provinces and municipalities is added together. I think the first thing to consider is that the municipalities are the creatures of government, and to finance their hospitals they rely on other governments to provide contributions.
I want to draw an analogy in this connection. The city of Calgary is the centre of a farming area and many of the rural residents come into the city and use the hospitals. So there is, I think, an obligation not only on the provincial government but on the federal government to make substantial contributions to the hospitals in that city. That is why I have always supported the Conservative program as far as hospitals are concerned, because they contributed 65 per cent of the cost. One of these hospitals is built in the city of Drumheller, which is in the riding of Bow River. I feel it is one of those institutions that serves the community from this point of view.
I would also refer to the schools program. Education has become very expensive. It is true that under our constitution education is the responsibility of the provinces, but I think it is also a responsibility of all levels of government to see that Canadians receive adequate education so they can take their place in society and, particularly, be trained for jobs. I have always said that there are not so many unemployed as there are unemployables.
The vocational training program was another program, I would remind the new government, put into effect by the Conservative government. Again, schools have been built in Alberta under this plan, as they
1192	HOUSE OF COMMONS
Municipal Development and Loan Board have been built in other provinces also. Seventy five per cent of the cost of these schools was paid by the federal government. Many of these schools bear the names of provincial premiers, and we have a new school that has just been opened in the city of Calgary, which is called the Ernest Manning school. Those programs did a lot to alleviate the unemployment that existed at that time.
I now come back to my original premise, Mr. Chairman, that in order to get full employment in this country we have to train our young people for these positions, but above all we have to have a level of productivity in the country that will enable them to find employment and further the development of industries and individual enterprises. When dealing with debt it is rather interesting to note that every time we go a dollar in debt we are curtailing our ability to produce. We hear a lot about the national debt, and I have taken the trouble to do some research on the subject. I went back to 1929, because under the Conservative government from 1957 to 1962-


John Whitney Pickersgill: Mr. Chairman, I wonder if, without being offensive to the hon. gentleman, I might raise a point of order and draw Your Honour's attention to the resolution before us, which really does not appear to have much to do with the national debt or the provincial politics of Alberta. I suggest that the debate should be on the resolution before the committee.


Eldon Mattison Woolliams: On the point of order, Mr. Chairman, the resolution calls for a sum of money to be put up by the federal government for the municipalities, which comes out of the consolidated revenue fund and is to be paid either by the taxpayers of the country or by being added to the next deficit brought down by the next government, whoever it will be. Surely I am in order and my remarks are relevant to the subject in question.
If I may continue, the further we get into debt the more difficult it will be to bring the productivity of this country up to a high level and obtain full employment. In 1929 our gross national product was at $6 billion; our national debt was at $2 billion. The debt as percentage of gross national product was 36 per cent. By 1934, in the middle of the war years, the debt had increased from $2 billion to $9 billion, and the gross national product only increased to $12 billion. The debt as percentage of gross national product rose to 74 per cent. In 1952 the gross national product was $23.9 billion and the national debt $11.2 billion. The debt as percentage of gross national product was 45 per cent. Now,

in 1957 when the Conservative government took office the gross national product was $33.8 billion. The national debt was $11 billion, and the debt as percentage of the gross national product was 34 per cent, which is 2 per cent less than the comparison between the national debt and the gross national product in 1929. In 1959 there was almost an identical comparison. Last year the gross national product rose to $40 billion, and the national debt was $13.2 billion. The debt as percentage of gross national product was 33 per cent. In other words, the debt as percentage of gross national product was reduced during the term of office of the Conservative government.
With regard to productivity, I say that this will put another charge upon the municipalities. I think the whole problem is that the municipalities, the provinces and the federal government are all striving for new avenues for revenues to meet various governmental expenditures. The federal government spends more money, which in turn means an increase in taxes. If we get down to the local level, on a home comprising 900 square feet, situated in the city of Calgary in an average area, the land taxes in 1951 were $201. Today they are over $400. On a house with approximately 2,000 square feet taxes were about $490, but today in Calgary they are $890. If we add further charges on the municipalities, this will mean higher land taxes, and believe me property owners at all levels are paying far too many taxes at the municipal level. There is also high taxation at the provincial level, and high income tax at the federal level.
The other day I asked a question in the house of the new Minister of Agriculture. I asked him whether he was still mayor of Calgary, and I throw this matter out as a question of propriety with regard to the resolution itself; because if this measure becomes law deals will be made between municipalities and the federal government. Here is a man in the cabinet holding two positions, and as a matter of propriety is there not the possibility that there could be a conflict of interest as far as this particular minister is concerned as mayor of a city and a corporation, and a minister in this government?


Lucien Lamoureux: Shall the resolution carry?


Lawrence Elliott Kindt: Mr. Chairman, it is with a great deal of pleasure that I rise to speak on this resolution. Its purpose is to set up a fund of $400 million to be lent to municipalities in order that they may undertake public works which may be started now or in the near future but which in reality were not planned to start until next year

or the year after. As I understand the wording of the resolution, the purpose is to induce these municipalities to undertake work now so as to provide employment. Whether the municipality engages in capital works projects which it had planned to undertake two or three years ago, or whether they undertake to do them now on the strength of getting a loan from the federal government, will depend on the conditions surrounding that loan. There is insufficient detail in the resolution before us to inform us of what the salient factors are to induce a municipality to take the government up on the proposition they are offering. In other words, there is no repayment schedule. Is this money to be repaid within one year, five years, ten years or twenty years? Is the loan to be amortized? Second, what will be the rate of interest? Third, how much of the loan is to be forgiven? Is there to be a flat forgiveness which would apply to all types of projects, or only on a particular project or in a particular area? Is it to be applied uniformly from one end of the country to the other, or is it to be staggered to meet new and changing conditions which are to be found in different areas? None of these matters is revealed, so we are not in a position to judge the merits of this plan and whether this proposed municipal development and loan board will accomplish the objectives stated.
Another point I might raise concerns the basis for making the loans. Are they to be made according to location, or are they to be made on the basis of the degree of chronic unemployment in an area? Are they to be made on the basis of locating projects where natural resources are greatest, in order to give the project the greatest chance of success? We are not told in this resolution whether the loans are to be made on the basis I have indicated or whether they will be made on some other arbitrary basis. It may even be that they are to be made on a political basis. Who is to get these loans? What criteria will be used by the government to determine their distribution? These are matters on which we have not been informed.
On the other hand, if such a board as this is to be created and if loans are to be made to get public works started, I think this proposition is a good one, to the degree that it will provide employment. As I see it, however, there is very little prospect of accomplishing the purpose set out in the resolution, and for this reason I prefer to withhold judgment until I have before me information on the matters to which I have previously referred, namely, the repayment 28902-5-77
14, 1963	1193
Municipal Development and Loan Board schedule, the amount of forgiveness, the interest rates, the basis on which the loans are to be made and the working relations with the provinces.
With these few remarks I draw my statements with regard to the resolution at this time to a close.


Mr. Thompson:: Speaking to this resolution which is to lead to legislation establishing a municipal development and loan board, I must say I am very disappointed with the resolution and with the legislation it will bring into being.
The stated purpose of this legislation is, in my opinion, wrong. One of the most severe problems in govermental financing in this country is the problem which the municipalities are facing. What we should be doing at this time is providing them with a source of capital for their capital development projects at low interest rates on a much more permanent basis than this resolution provides. With all its restrictions, this scheme will not begin to meet the needs of the municipalities as they have been expressed, now, for a number of years.
A few days before this resolution was introduced, the Prime Minister spoke about it to the convention of mayors and reeves in Toronto and it was with a good deal of fanfare as indicated in the press that he made his announcement and more or less invited the municipalities to come and get it. It was with great disappointment that some of these same men to whom the right hon. gentleman was speaking found that this fund had serious limitations and was not, in any case, intended primarily to help them in their over-all financial problems but was, rather, intended instead to bring temporary relief to the unemployment situation. Certainly, unemployment is a serious problem but the real responsibility of government is not to make jobs; rather it is to make sure that our economy is moving in such a way that there will be jobs for all our people who want to work. Therefore, the approach is backwards.
As I have just indicated, the most difficult financing problem in our country on governmental level is that which faces the municipalities. The Ottawa Journal of Thursday, May 30, reporting the speech of the Prime Minister to the confederation of mayors and municipalities used these words:
The convention noted that municipal government today has 16.4 per cent of national tax revenue compared to 41.7 per cent in 1933.
The basic reason for this is that the tax fields which previously belonged to local and provincial governments have been so invaded by the federal government that there is not enough money left for local governments and
1194	HOUSE OF
Municipal Development and Loan Board their projects. Second, the cost of capital has repeatedly and continuously cost more to taxpayers at municipal level, adding to the expense of the projects they are concerned with.
Here, example after example occurs to me. One which came to my attention arose in Vancouver. On March 30, 1962, the city of Vancouver paid the last instalment on a $100,000 loan which had been made 50 years before in 1912. It was discovered, while checking the amount of money which had been paid in return for this loan, that the taxpayers of Vancouver had paid $345,000 in this interval of 50 years-$245,000 for interest and $100,000 for the project. What was the project? It was for the installation of board sidewalks which had rotted away 30 years before, to be replaced by stone or concrete sidewalks at a still greater cost.
In Saskatchewan the other day I was attracted by a picture in the press of the beautiful legislative building in the queen city of Regina. My eyes were drawn to a headline just below the picture which said the last instalment on the loan to defray the cost of the legislative building had been paid after 51 years. Reading more closely, I found the taxpayers of Saskatchewan had paid $9,700,000 for this building. In making up that sum, $2 had been paid in interest for every $1 put into the construction cost of the building.
We can go right across Canada and find that most of our municipal projects are in a similar position in this respect. Unless the federal government meets this problem of municipal finances our municipalities will not be able to provide the capital services for which construction they are responsible.
The hon. member for Bow River has been talking about aid to municipalities in Alberta. As an Albertan, and a responsible one, he should be ashamed of some of the things he said in this connection, because he was distorting the facts in such a way as to give another impression altogether from the true one. The government of Alberta, believing that social capital is in an entirely different category from commercial capital, has set aside a large capital sum in a revolving fund for the use of the municipalities. They thus can come to the province and borrow the money they need for their projects, repaying the sum borrowed over a period of time. The money repaid goes back into the fund and is available to be used again. The hon. member talked about the high level of municipal debt in Alberta. It is simply money owing to the province which the province could cancel at any time, and no one would be the worse for it. Furthermore, interest charges on these loans, which are far lower than commercial interest rates also go back into this revolving


fund. What is the result? Every one of the towns in Alberta has sewage and water services and the vast majority of the villages have, too. This is something which is not equalled by any other province in this fair Canada of ours.
But even this is not sufficient because no province has sufficient income to provide the capital necessary for the capital development of its municipalities. Therefore a few years ago the province of Alberta set up a municipal finance corporation using the credit of the province to borrow money at a lower rate than the municipalities could in order to enable the municipalities to go ahead with other aspects of their capital development which were necessary.
This all leads us back to this very point, that unless we have a proper source of social capital the public works development of our country cannot go ahead as it should. It has been estimated that within the next 10 years we will need at least $10 billion for the public works development of this country, and if we are going to depend upon commercial capital with its tremendously high rate of interest, as we are now doing, then either we are going to go bankrupt as far as our municipal governments are concerned or we are not going to fulfil our own responsibilities in developing the country as it should be developed.
This is why the piece of legislation we have before us is so vitally important at this time although in its present scope it is entirely inadequate. Referring to the report of the Prime Minister's speech to the conference of mayors and reeves, as found in the Globe and Mail of May 30, I find that he said that the federal government-
-has no intention of competing with or replacing existing sources of finance. "Our purpose is to provide an additional source so that municipalities can undertake more capital works on terms they can afford," he said. "That will be the purpose, the extent and the limit of our involvement."
Therein is a frank admission that this legislation does not in any way meet the needs we now have in the country. Not only is this indicative of the shortcomings of the legislation but it is also wrong in that it confuses our capital needs by implying that they can be met from commercial sources as far as social or public development is concerned.
We in Social Credit have maintained for a long time that there are three different types of capital in our economy, and unless we recognize these types of capital we are never going to solve our economic problems. First of all, there is tax capital. Tax capital is money that governments legitimately take from the taxpayers in order to pay for the services which the taxpayers of the nation

expect governments to supply to them. The only source of tax capital is out of the pockets of our citizens. It does not come from any other place. It cannot come from any other place, and in so far as it goes to pay for the services which the government supplies it is proper. There is nothing wrong about it.
The second type of capital is commercial capital. It can be called industrial capital or subdivided into different categories but basically it is the type of capital that goes into our economy to develop our resources and to carry on our commerce on a private enterprise basis. This should come from our savings, from our credit, and from our own investment as free citizens in a free nation living under a private enterprise system. This kind of capital goes to work and produces a profit. In the spring the farmer prepares his seedbed, sows the seed and ultimately reaps his harvest. In order to do this he goes to the bank in the spring to borrow the money necessary to pay for his fuel and seed, for the help he needs and possibly for equipment and in the fall he pays back the money out of what he has earned from that which he has produced. This is legitimate. If the private enterprise economy is going to survive in this country I maintain that commercial capital must be free to serve its intended purpose instead of being largely directed into government guaranteed bonds to carry the cost of capital development which belongs to the third category of capital.
The third category of capital is social capital. This is the meaning of Social Credit. A lot of people say to me that they do not understand what Social Credit is. Social Credit actually means social capital. Social capital is that capital which supplies our social and public needs as far as the development of the country is concerned. I was pleased to see that in the budget last night the Minister of Finance actually used the term "social capital", because this is what the capital is that we use for our public works. It builds our bridges, it builds our hospitals, it builds our schools, it builds all of those things which do not make a profit and which we will one day pay for out of our tax capital, but which we do not have the reserves for at the present time and therefore must go out and borrow the money.
To borrow this money in the commercial market with a government guarantee behind it robs the commercial market of the vital capital we need for carrying on private enterprise within our economy. We in Social Credit maintain that this social capital should be available from the national bank, the central bank, the Bank of Canada, without the high cost of interest that makes the cost of money 28902-5-77J
14, 1963	1195
Municipal Development and Loan Board for our capital works projects at the present time more expensive than the projects themselves. If we did provide the capital for our public needs through the Bank of Canada without the high cost of interest, but merely a service charge to pay for the administration of the funds, we would be doing more than anything that has yet been proposed and at the same time would be giving the assistance that is so desperately needed with respect to the problem of municipal finance.
Education is one of the major costs of local government and repeatedly local governments say that they cannot continue to supply the educational services and facilities that our country needs under their present set-up simply because they do not have the money. Therefore they say that the senior government must help them in this need. They forget, when they ask the senior government to supply them with money to aid in the cost of education, that the senior government has no money except that which it takes from the taxpayers' pockets. It is the same source from which local governments obtain their tax capital. Pushing the problem farther away is certainly not helping to solve it.
Therefore unless we recognize the fact that there is a need for social capital through the Bank of Canada, which is our bank-it belongs to the people of Canada-on a basis, yes, of debt free money, we will never be able to solve the basic economic problems that we face now. All we are doing is rubbing liniment on an ache or pain that has a cause which goes much deeper. Until our Minister of Finance recognizes that very point the only kind of budgets he is going to be able to bring down are Conservative budgets, as was the budget he brought down last night. Actually there was not basically very much difference between the budget we had last night, even though it was called a face the facts budget, and the budgets we have had in the last number of years which have all resulted in large deficits.
So much have these deficits accumulated today that the gross debt of our nation is practically $25 billion, and the more than $900 million that we will be spending to pay the interest on this debt is the second biggest single expenditure of the government, second only to that for defence. Therefore we in Social Credit maintain that social capital must be recognized as a separate category of capital and that it must be supplied through the national bank, the Bank of Canada, without the exorbitant cost of interest. We say that this would lower the cost of all of our public projects from at least one third to 40 per cent. Any of you who are mayors or
1196	HOUSE OF
Municipal Development and Loan Board councillors, yes, even commissioners, and who are intimate with the problems of municipal finance know that the basic reason we cannot go forward with the expansion and development of our cities, towns and municipalities is the debt load that bears upon local governments through interest charges on debt. This is because this social capital has been taken from the commercial market.
This legislation simply does not reach down to this problem. All that it does is to offer some palliatives which will be helpful for the time being. It fails to get down to the basic problems of municipal financing. Thus, Mr. Chairman, while we are willing to give our support to this resolution, we do so with very strong reservations because we realize that somewhere down the road, and not very far down the road either, there must be a different approach.
The alternative, in my opinion, would be to set up a municipal development bank as part of the Bank of Canada. This bank could be given the necessary reserves from the government with authority to expand those reserves according to what are common fiscal policies today. This capital could be used by the municipal governments, as they meet the requirements of their provincial governments, and by the provincial governments themselves. Yes, it could even be used by the federal government for its public works expansion. There would be no infringement upon provincial economy because this bank would operate in very much the same way as the industrial development bank operates today. Provided the credit record of the municipalities meets the standard requirements, and provided the provincial requirements were met as well, the municipalities could present their debentures to this bank and get the credit they need.
As this money comes back, it enters into a revolving fund. The revolving fund then puts this money out to use over again. Our capital needs will be much greater today than they would be a little later because, as this money came back, it would be there to be used over and over again. It is interesting to note what the industrial development bank has developed into. It was intended originally to provide commercial capital from public sources for hard to finance risk projects. Within the concept of that brief definition, this bank has served a very useful purpose.
However, let us look at just what is happening today. Commercial capital is difficult to obtain for practically all types of long range development. Since this is the case, we find commercial enterprises turning more and more to the industrial development bank


to obtain the capital that normally they should be able to obtain in the private market which represents the private savings and investments of our citizens. The industrial development bank has actually become a bank in that it, itself, is expanding its reserves. But today it is defeating the very purpose of our private enterprise economy because it is unfairly competing with our own private savings, our own private investments. Private enterprise is compelled to follow this course because there is not an adequate source of commercial capital to meet both commercial and public needs. Therefore, the industrial development bank is used.
I noted with interest that the speech from the throne made the point that the government expects or intends to set up a corporation through which there can be investments made by our own citizens in a special fund to provide special risk capital. This fund would provide capital in a similar way to that in which the industrial development bank does now. This is a lead that was taken last year by the government of the province of Alberta and, within the scope of the definition of the three types of capital which I have just mentioned, it is a legitimate source of capital, with the necessary guarantee of the government, which many of our hard to finance projects require. If this idea were developed along the lines upon which it could be projected, then the industrial development bank would not be nearly as necessary as it is today.
What could be done, and I make this suggestion to the minister as a very practical suggestion, is that the industrial development bank could then become the municipal development bank. It could supply our municipalities with the social capital that we need. There is no doubt about it, Canada is overburdened with a heavy load of debt. This load of debt will cost us more than $900 million in interest charges this year. Consequently our country is not expanding as it should in so far as public works are concerned. We have not yet completed the first trans-Canada highway. A large portion of it remains to be initiated, let alone completed. Although it has not been completed, we already have need for a second trans-Canada highway. There are the ever increasing needs of universities and schools. So far as university education is concerned, we have not yet felt the impact of the population increase which followed world war II. We must provide in Canada the housing facilities for twice as many school children as we have at the present time.
Let us look at the hospital situation. It is a shame that in Canada, where we have people sitting around waiting for work, where

we have the materials necessary, the initiative and enterprise to put these two elements together, that we cannot build enough hospitals and equip them to take care of our sick people. This is a situation that is prevalent right across the country. There are bridges, highways, schools and hospitals to be built. One could prepare a very large list of public works that should be completed before our centennial in 1967. The cost of such a project would be in the neighbourhood of $2 billion or $3 billion.
Where are we going to get the money? This is the question that faces us. If we did have the capital for these projects we would not be worried about unemployment. There would be a sufficient number of jobs for all unemployed people. The purpose behind a municipal development bank would be to supply this capital and would not be, basically, to provide jobs. If the capital were supplied, then the expansion would go forward and, as a result of that there would be jobs because the economy would be expanding.
So, Mr. Chairman, I cannot emphasize too greatly the need for the establishment of a municipal development bank which would be an integral part of the Bank of Canada and which would supply the social capital the country needs to develop the public works projects. In the meantime, since we do not have such a bank, we will have to say that this municipal development loan fund is a temporary measure which will only partially solve these pressing problems. We give it our support, although we regret that the minister has seen fit to attach so many limitations to the use of this money. Obviously, in the few days that have passed since the election, there has not been time for the minister to lay out all the facts necessary for the development of a complete program. We urge that when he has time to consider a complete program he seriously consider the urgent need for the establishment of a municipal development bank, as part of the Bank of Canada, to supply those tremendous amounts of social capital that our country requires. The adoption of this course would avoid the necessity for our citizens paying for these projects two or three times over simply because the interest cost is more than the capital costs of these projects.


John George Diefenbaker: Mr. Chairman, hon. members have been waiting to hear from the Minister of Finance and a great many questions have been asked. I have further questions that I wish to ask after he does the committee the honour of telling us what the situation is in answer to the various questions that have been raised. I particularly want to
14, 1963	1197
Municipal Development and Loan Board know what his answer is regarding consultations with the provinces, and in this connection I look back to 1958 when the municipal loan fund was referred to in a Liberal program.
In that historic document entitled "The Pearson Plan" it stated this:
A Liberal government would establish a municipal loan fund in order to make available additional finance on a long term basis for major municipal improvements.
Readier availability of funds would make possible an immediate start on municipal works now awaiting financing and thus quickly provide jobs throughout Canada.
But the second part is this, to which no reference has been made yet, and about which I made inquiry when I spoke on June 11:
The exact scope and administrative set-up of this fund would be settled in consultation with representatives of the provinces and municipalities.
I would impress upon the minister that those words in the 1958 declaration were very significant. Those words represented the Prime Minister's view at that time. He made it very clear at that time that this was his particular baby, and I am now asking once more that the minister let the house know exactly what is taking place with regard to settling this matter in consultation with representatives of the provinces and municipalities.
I would also like to know the basis upon which the estimate has been made as to the number of jobs that would be available, and also the nature of the board and the powers it would exert.
I listened with a great deal of interest to the hon. member for Red Deer as he revealed this great plan, and I would like to hear the minister's view today as to whether he still agrees with the vote he gave on November 6 last in support of the Social Credit amendment at that time in favour of debt free money.
As I listened to the hon. member for Red Deer today I would have been very interested to know the degree to which these nebulous things have been carried into effect in the province of Alberta. Certainly I could say, after listening to him, that if his plan does work nobody would, but I have never heard it explained. We have heard the same old story over and over again, but he never tells us where the money is to come from.


Robert Norman Thompson: Where does it come from today?


John George Diefenbaker: I would like very much to hear where it comes from in the estimate of the hon. member.


Robert Norman Thompson: You tell us.


John George Diefenbaker: We have heard his policy enunciated over and over again. It is just
1198	HOUSE OF
Municipal Development and Loan Board a series of words without any factual background, and he does not tell us anywhere in the world where it is working. That is the interesting thing. What have they done in Alberta and British Columbia to carry out this nebulous policy?


Robert Norman Thompson: Where have you been all these years?


John George Diefenbaker: Look at the records today of the debt on those two provinces. Apparently they carry out orthodox financing, but the hon. member enunciates generalities and then comes before the house and the country and says, "I have got the solution to all these problems," and then goes on to say the same thing over and over again.
I would ask the minister to place before the committee not only the answers to the two matters I brought to his attention but also the answers to the many other questions that have been asked. I know there is a desire at this time to give the minister an opportunity to make a statement, and I do not want to say anything that will hold him up, but I do feel the committee has the right to know what consultations have taken place and whether the governments of any of the provinces have accepted this plan. I would also like to know to what degree did the ultimatum on the part of Mr. Lesage, reinforced by one of his ministers, affect this plan.


John Whitney Pickersgill: Mr. Chairman, as the Leader of the Opposition has indicated, it is the desire of the Minister of Finance, if he could have leave when the Speaker is in the chair, to make a brief statement after asking for leave to revert to motions. For that purpose I intend in a second or two to ask that the committee rise, report progress and ask leave to sit again, but before doing so, in view of the interesting queries by the Leader of the Opposition and the obvious interest there would be in having a reply from my hon. friend, the Minister of Finance, I just wonder if it might possibly be the sense of the committee, and if I might ask at five o'clock whether the house would be prepared to go back into committee so that we could continue this debate, on the understanding that the private members' hour would not of course be sacrificed, and that it could be held later on. In that way we can get the minister's statement right away, if that would meet with the general wishes of the committee. I am just indicating that now, and I will make the formal request at five o'clock.
I wonder if I might move now that the committee rise, report progress, and ask leave to sit again later this day or the next sitting of the house, as the case might be.


Stanley Howard Knowles: Does agreeing to this motion involve concurrence in the two other suggestions the Secretary of State has made? I understand there is a suggestion that the Minister of Finance be allowed to make a statement, provided opportunities are avail-statement when Mr. Speaker is in the chair, and then a further suggestion that the five o'clock hour be given up. I think the committee should know what some of us think about these two suggestions.


John Whitney Pickersgill: Perhaps I was wrong in assuming there would be general agreement to let my hon. friend, the Minister of Finance, make a statement which would be in government time, not private members' time. There would be an opportunity for hon. members in opposition to make comments on that statement, and that is why I am doing this at ten to five instead of five o'clock.


Stanley Howard Knowles: Mr. Chairman, we would not object to the Minister of Finance making a able for other hon. members to comment and ask questions because I understand the minister wishes to speak about something questioned on orders of the day and we would not want to be restricted to one statement by each of the parties.
With regard to the other question of giving up private members' hour, I think it is unfair day after day to ask that private members' hour be given up.


The Deputy Chairman:: Is it agreed that the committee rise, report progress and ask permission to sit later this day or the next sitting of the house, as the case may be?


Some hon. Members:: Agreed.
Progress reported.



THE BUDGET


Walter Lockhart Gordon: Mr. Speaker, may I ask leave of the house to revert to motions in order to make a brief statement?


The Acting Speaker (Mr. Batten):: Does the Minister of Finance have leave to revert to motions?


Some hon. Members:: Agreed.


Stanley Howard Knowles: Yes, Mr. Speaker, on the condition indicated a moment ago when we were in committee of the whole.


Walter Lockhart Gordon: With the approval of the house I should like to make a brief statement regarding assistance in preparing the budget. This morning some hon. members

raised questions in the house concerning personnel participating in the preparation of the budget. Officials of the Department of Finance and several other departments, including justice, national revenue, labour and the Bank of Canada have participated actively both in the discussion of proposals and in the drafting. In addition I had the assistance of three special consultants who joined the Department of Finance on a temporary basis shortly after the government took office, because of the very heavy volume of work involved in preparing legislation and in minimizing delay in presenting the budget. Work on the budget was, of course, late in starting because of the general election. The objective was to furnish a national accounting at an early date.
Approval for these appointments was authorized by treasury board minute No. 610618 dated May 2, 1963. All of these special consultants took the oath of allegiance and the oath of office and secrecy. All have been working full time since they joined the department on April 22. The individuals mentioned are Dr. M. P. O'Connell, of Harris & Partners in Toronto and a former professor of the University of Toronto, who is a specialist in the field of municipal finance. Mr. G. R. Conway, C.A., who has a special knowledge of the tax system and is a doctoral student at Harvard, was asked to join the staff of the royal commission on taxation early this year. I was able to arrange for him to join the Department of Finance for a short period before he goes to the commission. Then there was Mr. D. C. H. Stanley of Wood, Gundy & Company, who has many years of experience in the investment field. Incidentally, Mr. Speaker, Mr. Stanley is no stranger to the public service, having been granted leave last year to serve the royal commission on banking and finance.
I regret my hesitancy this morning to reveal the names of the three individuals I have mentioned. This hesitation stemmed from my feeling that the budget is the product of the work of a great number of departmental officials and I did not think it fair to single out individuals for certain attention.


Gordon Minto Churchill: That was not the reason.


Walter Lockhart Gordon: Since these three gentlemen had all taken the necessary oaths, it did not seem to me that there could be any special question about their status. However, it now seems desirable that their names should be made public and certainly I have no reason to make any mystery of them. In doing this I wish to express my personal thanks to these gentlemen, along with all the other people who have assisted me so greatly since I became Minister of Finance. I hope they will
The Budget-Mr. Gordon be able to continue to help me in the future. I should like to reiterate that I accept full responsibility for the budget and for the secrecy maintained in the course of its preparation. Subject to this principle of ministerial responsibility, it will be the policy of this government to continue to seek specialized advice and assistance from experienced people in all walks of life and all occupations whenever this may be in the public interest.


John George Diefenbaker: Mr. Speaker, it is a strange thing that the minister should have adopted so surreptitious a manner of answering questions today in the face of the simplicity of the answer which he now gives, because he certainly was a sorry figure in the manner in which he acted this morning. Parliament is entitled to information.


An hon. Member:: You have got it now.


John George Diefenbaker: The fact that he assumes responsibility for the secrecy of the budget is no answer to the request for information that was made. However, I can only say that I hope his experience today will be a salutary lesson to him and to other ministers like-minded, that when parliament asks for information, the information should be provided, rather than a series of evasive statements which result in an accumulation of suspicion which had to be answered frankly this afternoon by the minister. It should be a good lesson to the minister and others associated with him.


Thomas Clement (Tommy) Douglas: Mr. Speaker, I do not think this is a very satisfactory way of dealing with the question that was asked this morning by my colleague the hon. member for Port Arthur (Mr. Fisher). We are now simply being given a statement with very little information and I think the Prime Minister (Mr. Pearson) and the house leader for the government ought to provide an early opportunity for a much fuller discussion of this very serious question.


An hon. Member:: Oh, no.


Thomas Clement (Tommy) Douglas: Someone says "Oh, no". I would point out that it is a standard procedure in Canadian and British parliamentary life that no persons other than members of the government and officials of the government shall have any knowledge of what is in the budget. It is not many years ago that a chancellor of the exchequer in Great Britain, the Right Hon. Hugh Dalton, resigned because of the very minor indiscretion of telling a newspaperman, on his way into the house to make his budget speech, in a general way some of the contents. This is a

The Budget-Mr. Gordon much more serious thing. This is not someone being told in a casual conversation five minutes before the budget is delivered, but persons outside of the government who worked with the minister in the preparation of the budget.
There are some questions on which we would certainly like to have further information. Did these men continue their association with the investment companies with which they were connected? Have their services with the government now terminated? Have they gone back to work for these companies? Was there any way in which these persons could personally gain as a result of the knowledge which they secured during the preparation of this budget? The minister has either said too little or too much, and I think the house should seek an early opportunity to get a great deal more information on this question than we have secured up to the present time.


Walter Lockhart Gordon: Mr. Speaker, I am sure the hon. member for Burnaby-Coquitlam (Mr. Douglas) would not wish to cast any doubts or aspersions on the character and honesty of the three gentlemen who have been helping me. As I said in my statement, they were officials of the department; they were appointed by order in council and they took the oath of secrecy. In those circumstances I think that any suggestion that they would do anything improper is something that is hardly fair to the three people in question.


Some hon. Members:: Hear, hear.


Douglas Mason Fisher: Mr. Speaker, I would like to ask the minister if he would-


Gordon Minto Churchill: Mr. Speaker-


Douglas Mason Fisher: -give us more detail about the relationship-


The Acting Speaker (Mr. Batten):: Order.


John Whitney Pickersgill: Mr. Speaker, I wonder if I might ask the indulgence of the house generally to permit any reasonable additional questions being asked about this matter, because I feel sure the whole house wants to have full information.


Lawrence Elliott Kindt: Why do you butt in all the time?


The Acting Speaker (Mr. Batten):: Is it
agreed?


Some hon. Members:: Agreed.


Douglas Mason Fisher: Would the minister tell us what has been the relationship between these gentlemen, particularly the two who had an active business connection with their firms

during this period? Are they still on salary, for example, with their firms? Have they still been carrying out duties on behalf of their firms? It is all very easy for the minister to bifurcate their role in time, but it may be more difficult for the individual himself to do that. I should also like to know what precedents he has found within his department for this kind of action, whether it has taken place before and whether he can show us that this is an old tradition. I should also very much like an answer to the question which was asked by my leader relating to the role these men are in today.


Walter Lockhart Gordon: I will be glad to answer those questions, Mr. Speaker. The two gentlemen referred to were given leave of absence by their firms. They were paid by their firms. They have not been back to their firms but have been working full time for the Department of Finance. As to precedents, I cannot give many because I have not looked the matter up, but I can cite one precedent which occurred in connection with the 1941 budget, I think it was, when I served the then minister of finance in exactly the same way and on exactly the same terms that these three gentlemen have just been serving me. With regard to the question as to what is their status now, they are in the same position as they were on May 1; they are still serving the Department of Finance and I hope they will continue to do so for at least some weeks to come, perhaps longer than that.


David Orlikow: Mr. Speaker, did I hear the minister correctly to say that these people were picked to work for the government while still being paid by their firms? If he did say that, I would suggest that, in my opinion at least, that is completely wrong. If the department is short of competent people to do a job and needs to bring in people from outside, even if this has been past practice and there may be a case for it, to expect people to work for any department of the government and to give their all while they are in fact being paid by outside companies to which they are going to return I suggest is completely and morally wrong.


Walter Lockhart Gordon: All I can say to that is that I did exactly the same thing myself on more than one occasion, and as far as I can remember the department and the government of the day were quite satisfied with the help I was able to give them. I think this has been true on other occasions with many other people.
I should like to say one word about this. If governments in this country particularly are to get things done and get the best advice possible, which is sometimes needed for short periods only, they must as a matter of policy

feel free to call in people who are experienced in the fields in which the government seeks advice. I hope we will see a great deal more of this in Canada. It seems to me that this is what we need. For example, if the government decided to bring in legislation in the field of labour, I cannot see any harm in their consulting people in the labour movement or, if the labour movement were willing, in asking for one or two people to be seconded to them for a short period of time.


Gordon Minto Churchill: But this is the budget.


John George Diefenbaker: I would suggest this to the minister, that the analogy does not apply. Is it not quite different to deal with a financial matter than to deal with labour relations? When the minister has gone beyond what ordinarily takes place-I know I am speaking again and I should not, and neither should he, but we are being very free at this time in view of the peculiar circumstances. Is it not a fact that the essence of budgetary secrecy under the British system is that in the United Kingdom no one knows of the particular contents of a budget excepting the chancellor of the exchequer and those within the civil service who operate with him and the prime minister? No one else has that information; so far as the cabinet is concerned it just receives a general outline. In the particular circumstances relating to the preparation of budget matters of financial importance in respect of which illicit profits could be made, is it not necessary that under no circumstances should individuals be called in from outside, who, no matter how honest and whatever their integrity may be, are placed in an impossible position? I must say, after listening to the minister that I am more convinced than ever that it will be necessary for the house to look more fully into this matter.


Stanley Howard Knowles: Mr. Speaker, I should like to ask the minister a question based on his statement that he thinks that more of this should be done. I should like to ask him what he thinks the further pursuit of this policy will do to the status of deputy ministers and other full time civil servants. I got the impression from what the minister said that these three gentlemen, whose names he has now given, took precedence over the deputy minister of finance and other top civil servants in the preparation of the budget. We have the right to assume that the work done for us by the civil service is done by people who parliament knows are employed on a permanent basis. I should like to ask whether these people were given a position of precedence over those in the department who would normally do this
The Budget-Mr. Gordon work, and is there any relationship between this and the request of the deputy minister of finance to be moved to another position?


Walter Lockhart Gordon: I should like to answer that question, Mr. Speaker. These three gentlemen did not have precedence over the officials in the department. Each one of them has specialized and useful knowledge in a particular field which was made available to the officials, and most certainly this has nothing to do with the change in position of Dr. Kenneth Taylor, for whom I have the very greatest regard, respect and admiration.


Paul Raymond Martineau: Might I ask the minister whether these three special assistants had access to the final draft of the budget before delivery to the house?


Walter Lockhart Gordon: As members of the staff of the Department of Finance they and other senior officials did have such access.


Thomas Clement (Tommy) Douglas: Mr. Speaker, I just want to say a final word at this time, although I think more should be said about it later. The minister said that he was sure I would not want to cast any reflection on the honesty and integrity of the three gentlemen in question, and that is perfectly true; I have no desire to question their motives in any shape or form. I am taking strenuous objection, however, to a departure from an established principle, namely that persons outside the government service should be privy to information to which no person outside the government service is entitled. It is not a question of whether we trust this or that individual. It is whether or not we place any individual in a position where he can have information which can be personally gainful to him. In order to remove such temptation this has been a standing rule.
I am, frankly, appalled that the minister should say we should have more of these people in, using them as advisors and leaving them on the payrolls of the companies from which they come. If the government needs to bring in advisors from time to time, surely they ought to be hired by the government, paid by the government, and wholly under the control of the government during the time they are employed. To ask any man to serve two masters, to be working for the government but receiving pay from his own company, is putting a strain on that individual to which no person ought to be subjected. When the minister tried to draw the analogy of bringing in someone to advise on legislation, surely that was drawing a red herring across the trail. Obviously, from time to time people will be brought in to advise on legislation, but that is a totally different thing

The Budget-Mr. Gordon from helping to prepare the budget. While we may take strenuous objection to the budget being inclined toward Bay street, we take even stronger exception to Bay street itself drafting the budget.


John Whitney Pickersgill: I wonder if I might again raise a point of order in the most noncontroversial way possible.


Some hon. Members:: Again?


Thomas Clement (Tommy) Douglas: Is the hon. gentleman rising on a point of order?


John Whitney Pickersgill: Yes, I am. I asked the house to give consideration to extending the time for the purpose of having additional questions asked of the minister, questions to which he made an endeavour to reply. I think that was reasonable. I took no exception when the hon. member for Burnaby-Coquitlam replied to a point made by the minister. But it does seem to me that perhaps the hon. member for Burnably-Coquitlam was right in saying there might be an occasion set aside for debating this question, though the occasion is not now.


Some hon. Members:: Why?


John Whitney Pickersgill: It seems to me the hon. member for Burnaby-Coquitlam is now going beyond the purpose for which the house gave unanimous consent.


Thomas Clement (Tommy) Douglas: On the point of order, the leader of the house certainly has a most elastic notion of the rules. He was prepared to give the widest possible latitude as long as the minister was making an explanation or providing an alibi for his action, but the moment someone seeks to comment on the situation he wants the rules enforced.
I do not intend to pursue the matter at this particular time, but I would say that if the minister has the right to make a statement trying to cover up what I think is an unfortunate situation, any member of this house has an equal right to reply and to comment on that statement.


George Clyde Nowlan: I am inclined to agree with the leader of the house. I understand that this started out as an informal statement on motions. We have a definite rule that a matter which has been debated cannot be raised again in debate. It should be made very clear by you, sir, that this is not a debate and it therefore does not preclude the matter being raised at whatever suitable opportunity may arise-and I hope a suitable opportunity does arise by arrangement, because this is one of the most important subjects which could be brought before the house. In fairness to the house, to the budget which was brought forward


last night and to the people concerned, I believe it should be dealt with in the immediate future.


John Whitney Pickersgill: I am in complete agreement with what the hon. member has just said. I hope no hon. member would regard what has happened up to now as constituting a debate or as being anything other than comment on a statement made on motions. There will certainly be no effort on the part of the government to prevent the fullest possible debate of this matter at an appropriate time.


Stanley Howard Knowles: Perhaps I may say a word on a technical point. I am sure the leader of the house would agree with me. I think the importance of this incident is such that the record of what has happened should appear in Hansard at this point in the day's proceedings. As the Secretary of State knows, sometimes when a subject is brought up again later in the day, Hansard uses the word "later" and places the report earlier in the proceedings. 1 think it should be clear in Hansard that what is happening now happened shortly after five o'clock.


John Whitney Pickersgill: I trust the editor of Hansard will take note of what the hon. gentleman has said.



BUSINESS OF THE HOUSE

John Whitney Pickersgill: I wonder if I might now make a request which I indicated earlier I intended to make. If hon. members do not wish to accede to it, that is perfectly all right. My suggestion is that we should go back into committee again to continue the debate which was interrupted at five o'clock. The government would give an undertaking that the hour, part of which is gone anyway, would not be taken away from private members during the session.


The Acting Speaker (Mr. Batten):: Is it
agreed?


Some hon. Members:: Agreed.


Thomas Clement (Tommy) Douglas: On the question which was raised by the Secretary of State, I think it is unfair to ask hon. members from time to time to give up the private members' hour. There are a number of private members' bills, and if this hour is taken up with government business it means that all of them are put back another day. It seems to me unfair that each time private members' hour come along pressure should be put on one hon. member or another, and I think it would be better to allow whoever is concerned to go ahead with his bill.


John Whitney Pickersgill: I had thought there was unanimous consent but, if not, we shall proceed with whatever is left of the time of the hon. member who, in any event, is done out of 20 minutes of his hour.


The Acting Speaker (Mr. Batten):: It was
my understanding there was agreement that I should now leave the chair.


Some hon. Members:: No.


The Acting Speaker (Mr. Batten):: I shall
be guided by the wishes of the house.


An hon. Member:: Private members' hour.


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



SMALL LOANS ACT


David Orlikow: the second reading of Bill No. C-9, to amend the Small Loans Act (advertising).
He said: Proposals such as I am making today have been made on many occasions to this house and by members of the other house. They have been made by members of all parties in Canada, by President Kennedy and by various governors of states in the United States.
The question has arisen continually because of the tremendous increase in credit which we are witnessing. One has only to look at statements which are issued from time to time by the dominion bureau of statistics to see what is happening in this country. A bulletin issued by the d.b.s. in June, 1962, shows that consumer credit increased from $492 million in 1954 to $772 million at the end of June, 1962. Cash loans increased from $209 million at the end of 1954 to $579 million at the end of June, 1962. Department store credit increased from $186 million at the end of 1954 to $364 million at the end of June, 1962.
The Bank of Canada in its statistical survey for September, 1960, indicated that total loans to consumers by finance companies and retailers had gone up steadily. In 1957 the total for such loans was $1,968 million; in 1958 it was $2,030 million; in 1959, $2,205 million and in 1960 it was $2,253 million.
I am not suggesting that consumer credit ought to be cut out completely, but when we realize the tremendous and fantastic rates paid by people, when we realize that they are paying anywhere from 30 to 50 per cent annually because the terms of credit they
Small Loans Act
are getting have been hidden through relating them to monthly payments and by adding fees, charges and discounts of various types, then we realize that the consumer in fact finds it completely impossible to know how much he is paying.
The proposal in this bill is that the Small Loans Act be amended, therefore, to require any moneylender or small loan company, in any advertising in which the amount required by way of monthly or periodic payments in order to repay a loan is indicated, to state what the cost of such loan amounts to in terms of per centum per annum. I have in front of me, Mr. Speaker, an advertisement which appeared in the Winnipeg Free Press on June 11, 1963. It is a fairly large advertisement by World Financial Systems Company Limited. The advertisement is headed up in this way: "How You Can Get A Loan Of $1,525 to $5,000 If You Can Pay Back $33.70 A Month'*. I should like to quote part of the advertisement.
Here's your chance to get the money you need to consolidate all your bills, pay off a mortgage or for any other worth-while purpose. We specialize in lending money to employed men and women. We cut out all the red tape. Because we want to lend you money-
All we ask of you is this: The ability to pay back the small monthly payments without hardship. In other words, if you can pay back $33.70 a month we 11 give you $1,525 in cash. If you can pay back $44.20 a month we'll give you $2,000 in cash. And if you can pay back $66.30 a month we'll give you $3,000 in cash.
Its as simple as that. No endorsers or bankable security required. Your friends, relatives or employers won't be asked questions.
Then they go on to give examples of loans. If you receive $1,525 you pay $33.70 a month. If you get $2,000 you pay $44.20 a month. If you receive $2,500 you pay $55.25 a month. If you receive $5,000 you pay $110.50 a month. Nowhere in this advertisement is there any indication of how many months you have to pay the small monthly payment. Nowhere in this advertisement is it indicated what the rate of interest is. I am sure that if you follow their advice and call on them they will tell you, of course, before making you a loan how many monthly payments you will have to make; but they will certainly be very careful if they can, not to tell you what the annual rate in simple interest is, because if they do many people will think twice or three times about whether they ought to take such a loan.
I am sure most members of the house will have had examples in their own constituencies of the kind of practices that are being carried on. In a very interesting memorandum presented to the government recently by the Confederation of National Trade Unions they give some examples and I

Small Loans Act
want to take the liberty to quote several of the cases they use to indicate the emphasis they put on getting legislation to control the borrowing of money. Here is one case they mention. A man borrowed $1,000. In the course of two years he paid $340 on his loan. The interest for 24 months was $298 and of the $340 the actual amount paid on the original loan was only $42, so that at the end of two years, having paid $340, he still owed $958. The organization analysed the loan and pointed out that during the course of seven months less four days the man had paid an amount of $120, only $10 of which had been applied against the capital. They compare this with what would have happened if the same man had borrowed from a credit union. They point out that in the two years the man would have paid interest of $110 and $230 on the original loan and that at that time the debt would have amounted to only $770.
This is the kind of thing which is going on continuously and members who want to check loans made from the large finance companies like Household Finance, Beneficial Finance and so on will find out that this is the practice followed by all these companies. Not only those companies which lend money directly follow this practice. Companies that sell furniture and companies that sell cars follow the same practice. With the exception of a few large retailers, companies dealing with merchandise do not in fact carry the loans themselves. They sell the paper, as it is called in the trade, to finance companies, and there have been some very interesting studies made of this kind of practice.
In an article which appeared in the Toronto Star on April 12, 1951, Pierre Berton had this to say:
In the new car field interest rates seem to run between 13 and 23 per cent. On used cars interest rates vary more widely. In a recent case a Toronto man paid upwards of 32 per cent in interest charges on a five year old Mercury sedan financed through Danforth Discount.
A customer who had bought a new car at a true interest rate of 16.8 per cent through General Motors Acceptance Corporation decided to pay it all in the fifth month. The extra finance charges brought the cost of his loan to 25.3 per cent per annum. That's because there are certain fixed charges on these loans that can't be returned.
He went on to point out that on a loan of $1,500 six automobile firms offered the following real interest rates: Ensign Motors quoted a rate of 6 per cent if there was a 25 per cent down payment and 9 per cent otherwise, but the actual cost of the loan was 13.4 per cent for 24 months and 12.3 per cent for 12 months on the 6 per cent loan, and 18.7 per cent for the 9 per cent loan. Plaza Chev, Eglinton quoted 8 to 9 per cent but the actual loan rate came to 17.7 per cent for 30 months. Volkswagen Canada Limited, Golden Mile,
[Mr. Orlikow.l
claimed their rate was 6 per cent but actually it was 13.3 per cent for two years, 14.1 per cent for 30 months and 14.5 per cent for 36 months. York Mills Pontiac, Yonge street, claimed that their interest rate would be 11.4 per cent when actually the real interest rate was 22 per cent for 24 months. At Grant Brown Motors the salesman said that the interest rate would be 6.8 per cent whereas it was really 16.8 per cent over 30 months.
I could go on for a long time with cases because there have been cases reported in every newspaper in every large city across Canada, but they would all tell the same story. Legislation of this kind has been supported in Canada by some of our most influential and representative organizations. If I may name but a few, I would refer to the Consumers' Association of Canada, the Canadian Federation of Agriculture, the Canadian Congress of Labour, the Canadian Welfare Council, the Canadian Catholic Conference, the Anglican Church of Canada, credit unions and co-operatives as well as many others.
This is only one of about seven bills on the order paper concerning the same subject, which are to be discussed this session. I hope that these bills, instead of being talked out as happened in recent years, could be permitted to go to the committee which has jurisdiction in this field, so that we could hear representations from the interested organizations and interested people. The committee could then make a report to the house and the government could give serious consideration to the introduction of legislation which would not only require the loan companies to indicate in their advertising what the real rate of interest is but would also change the laws respecting these companies in other ways.
One need only look at the annual profits of the companies which are in this field to realize that this has been a tremendously lucrative business. One cannot complain about legitimate business, but this is a business which is taking money from people who, in many cases, simply cannot afford to pay what they are being required to pay.


Mr. Macdonald:: May I ask the hon. member a question? May I take it that the hon. member has no quarrel with the Small Loans Act to the extent it permits an interest rate up to a maximum of 24 per cent per annum, and that his only objection to the statute is that it does not require disclosure?


David Orlikow: That is not quite correct. I, in fact, have four different bills on the order paper, one of which proposes the reduction of the interest rate which is permitted. This particular bill which we are discussing today

simply requires the loan companies to put in their advertising the actual rate of interest which is being charged.


Mr. S. Perry Ryan (Spadina):: The Small Loans Act, Mr. Speaker, is designed to govern moneylenders and small loan companies and was made part of the law of Canada in 1939. An amendment to the act was assented to on August 14, 1956. This amendment raised the regulated loans field from $500 to $1,500. The act licenses and controls only a segment of the country's loan business, roughly one sixth or one seventh of the total amount. In the year ended December 31, 1961 total loans numbered 1,169,699 and amounted to $605,687,740. The average loan for that year was $518. The sum of $294,495,936 was deducted from the total loans I have mentioned to repay existing outstanding balances on previous small loans made to current borrowers. Thus, the net amount of small loans made or the total of the new funds advanced to borrowers, was $311,191,804 in the year 1961. About two thirds of all loans are consistently made, year after year, to previous and current borrowers-in other words, if you wish, to chronic customers.
From 1958 to 1960 the volume of loans to new borrowers remained at a remarkably uniform level. This was no doubt due to the continued expansion of credit unions and to the greatly expanded activities of the chartered banks in the field of personal loans. There was, however, a substantial increase in new borrowers in 1961 due to many factors, including I should think the more intensive advertising by licensees under the Small Loans Act.
In considering the proposed amendment to the Small Loans Act one should realize that many licensed companies and individuals making small loans in amounts up to $1,500 under the act also do a business in the unregulated field above the $1,500 figure. Several licensees under the act also purchased conditional sales agreements through dealers, so they were carrying on businesss in the so-called sales financing field. At the end of 1961 delinquent small loans for all licensees totalled $90,874,267 or 21.3 per cent of the total. Of the balance of the outstanding loans, 4 per cent were delinquent or overdue for more than six months.
Between 1959 and 1961, the figures of the department of insurance show a growing tendency for delinquency to increase, particularly those overdue for more than six months, yet the number of new offices of licensees under the act opened at the rate of about 100 per year in the same period.
Instalment credit, the principal component of consumer credit, falls readily into two
Small Loans Act
divisions which, because they are similar, are often confused. These two divisions are, first, credit advances to finance the sale of goods and, second, cash personal loans. The one common denominator is the requirement of regular repayments of equal size, but there the similarity ends. Instalment goods credit supplies the funds for purchases which people are unable to make out of their savings. On the other hand, the chief function of cash personal loans is to enable families to organize their functional affairs, to help them to cope with emergencies created by unexpected demands or through some interruption of their income. This permits families to work their way out of debt at a pace suited to their earnings. There is no doubt about it, therefore, these small loan firms or moneylenders do serve a good purpose across the nation.
Instalment goods credit is advanced directly by retailers or through sales finance companies. The credit is secured by a lien on the merchandise, and title or ownership does not pass to the purchaser until he has paid in full. The finance company which specializes in this service to dealers rarely deals directly with the purchaser in assessing his credit worthiness. In many cases, the dealers concerned endorse the notes and thereby secure the sales finance company against loss.
Consumer loan companies, in extending cash credit, deal directly with the borrowers and are fully responsible for investigation of their credit and administration, and collection of the loans. Since the majority of loans are made without liquid or readily saleable security, lenders must regard character and paying ability as the prime security and therefore must ensure that these factors are accurately assessed. Money lending has been traditionally looked upon with prejudice, and there were good reasons for such prejudice in Canada, especially in regard to consumer lending before 1940, when there was no effective legislation to protect borrowers. These reasons were particularly apparent in the larger cities where many borrowers were forced to pay as high as 400 per cent per annum for small loans. Legislation of that time was not effective in preventing lenders from making extra charges of various kinds, with the result that the cost to the borrower was often exorbitant. Because of this many borrowers were unable to get out of debt and found themselves subjected to harsh collection methods.
The lenders who did not condone such practices went to great lengths to bring these conditions to the attention of responsible people in the hope that legislative action would be taken. These efforts led eventually to a complete examination of the subject by

Small Loans Act
successive parliamentary committees between the years 1936 and 1939. During these years witnesses appeared at committee hearings representative of social agencies in Canada and the United States, banks, credit unions and consumer loan companies, and the findings of these studies were:
1.	Our economy creates the need for this type of loan to wage earners and salaried people.
2.	The cost of making small loans is considerably higher per dollar loaned than that for larger loans, and therefore a much higher rate is necessary.
3.	Existing legislation does not provide the protection that borrowers should have against excessively high rates.
The Small Loans Act, which became effective on January 1, 1940, took account of these conclusions. It is estimated by the Bank of Canada that in the year 1962 about $1,856,000,000 of retail dealer credit was extended to consumers, that loans to individuals by the banks and credit unions reached $1,778,000,000, and that instalment loans by consumer loan companies reached $644,000,000. This means that just over one seventh of the total loans of $4,277,000,000 was made under the Small Loans Act.
The business of making small loans is a retail business. Money is borrowed at a wholesale rate, usually from a parent company or a bank, and merchandised at a retail rate. About one half of the gross profits of the five small loan companies incorporated by special acts of this parliament, and licensed under this act in question, presently goes to the federal and provincial governments for corporation taxes. Therefore the federal government is already a participating partner, as well as to some extent a controlling partner in their enterprises.
The gross profits, before taxes, of these five small loan companies from their small loan business for 1961 were as follows: Beneficial Finance Company of Canada $5,721,850.08; Canadian Acceptance Company $96,217.12; Community Finance Corporation $92,677.68; Household Finance Corporation of Canada $11,349,765.00, and the Laurentide Finance Company showed a loss of $75,807.44. In the year 1961, out of 78 moneylenders who reported under the act, 30 showed losses but their gross profit over all was $3,561,941, and many of the losses were comparatively small ones. Only 10 of the losses were for more than $5,000.
I suggest to all hon. members it is apparent therefore that this business is not as risky as many, without the facts before them, might think. It is of course true, as in any other

business, and even in government, that the quality of the management determines a good or poor result.
I would like all hon. members to refer to Senator David Croll's bill called the Financial Charges (Disclosure) Act. He is presenting it in the Senate for the fifth time. It is Bill S-6. It reached committee on second reading in the last session and it would likely have passed both the Senate and the House of Commons but for dissolution on February 5 last. The debate on the second reading of the bill, as reintroduced in the Senate this session, has commenced, but it is temporarily adjourned. In any event the bill will likely reach this house this fall, and it is one I am sure most hon. members will be very enthusiastic about. Because the hon. senator recently referred to the Small Loans Act when discussing his bill I should like to refer hon. members to the Debates of the Senate for Wednesday, June 5, 1963 at page 87, beginning at the last paragraph in the first column:
Let me try to make it as simple as X can. The law has not kept up with the development of consumer credit. The law has not paralleled the progress in that field. Thus we have-and I can give it to you in capsule form-an anomalous situation which has developed in which the consumer by borrowing money and paying cash is protected by the Small Loans Act, whereas if he commences his acquisition by instalment purchase he has no protection. It is as simple as that. There it is in a nutshell. This bill is an endeavour to set right a situation that has long cried out for some kind of attention.
It is also true that dollar disclosure is not sufficient to allow comparison of credit costs. This provides for the disclosure of dollar amounts and simple interest rates, and it is the answer to the proposition that I presented to you. I repeat, because I think it is worth remembering, that the man who borrows money from a loan company and pays cash is protected by the Small Loans Act, whereas the man who goes in and makes an instalment purchase is not protected. This would protect such a man.


Hon. Mr. Choquette:: May I ask my honourable friend a question? Let us assume a young married couple want to buy furniture, and they cannot get credit from the bank. They have no security whatever upon which to borrow from a loan company. If you say to them: "Do you know that after a year and a half you will have paid $150 more than the goods are worth?", they will answer: "So what? We need them, and we cannot borrow the money". I submit that that is the case with respect to eight out of ten users of consumer financing. What does the honourable senator say about that?


Hon.   Mr. Croll@: All I say to such a couple is: "Good luck to you". As long as they are told the cost in dollars and the interest rate, then it is all right. I am one of those who believe that it is good business for the individual and for the country to have the use of the goods while they are paying for them.


Stanley Howard Knowles: Mr. Speaker, I rise on a point of order, but without any malice towards the hon. member, because he is on

our side. However, I believe it is a rule of the house that we are not supposed to refer to debate in the other place. This is a rather extensive reference. It is a good reference but should we not stick to the rules?


Sylvester Perry Ryan: I stand corrected, but possibly under the circumstances, and seeing it is such a good reference, I might have the unanimous consent of the house to continue it. There is only another paragraph.


The Acting Speaker (Mr. Batten):: Has the
hon. gentleman unanimous consent to continue with his reference?


Stanley Howard Knowles: We have broken quite a few rules today.


Marcel Joseph Aimé Lambert: He had better make his own speech.


Sylvester Perry Ryan: I think, Mr. Speaker, I got the point across. It is quite clear that Senator Croll does think there are some laudable things about the Small Loans Act as it stands. I think it is apparent that in the small loans business there is better control than in the field of retail sales credit. However, if we can strike any kind of blow for the little man and improve his position, without driving the loan companies and moneylenders out of business, I think we should do so.
If disclosure or advertising of the total cost of a small loan in terms of percentage per annum, as sought by the hon. member for Winnipeg North (Mr. Orlikow) will educate borrowers to be certain to try banks, credit unions, relatives, and other possible cheaper interest rate sources before committing themselves to a small loans company or moneylender, I believe that we should insist upon it.
I think we are entering a more humane age and the concept of social justice is gradually replacing the idea that the weak are fair game for the strong. Twenty four per cent per annum on a $300 loan is a high rate of interest. It sounds much better if it is stated at 2 per cent per month to the average working man, who is inexperienced in such matters. Everybody as far as possible should know, in fairness and truth, that even though the monthly repayments reduce the cost of a $100 loan to about $13.48 per year, the effective rate to the borrower is still 24 per cent per annum. I think that should be made clear to the public. If this rate per annum were advertised, the moneylenders would probably be glad to reduce their interest rates to some extent. They would, I submit, experiment and compete for better sounding rates than 24 per cent per annum, and this would at least be of some benefit to the little man.
Small Loans Act
This amending bill has been before the house for many sessions, and from reading past Hansards the main objections to it seem to be, first, that it is more difficult to present a table of scaled rates over radio and television than it is to print it in a newspaper and second, that the proposed amendment is unconstitutional. Of these arguments I think only the second one gives any real concern. For a good picture of this problem of unconstitutionality may I refer hon. members to the argument of the hon. member for Kenora-Rainy River (Mr. Benidickson), now the Minister of Mines and Technical Surveys, which appears in volume 4 of Hansard for the 1956 session at page 3920, the second column.
The unconscionable transactions relief act of the province of Ontario was declared ultra vires by the supreme court of Ontario last fall. This decision is now under appeal to the Supreme Court of Canada. The judgment of the Supreme Court of Canada should do much to clarify the picture and may even determine whether or not the "interest" jurisdiction of this government includes "advertising" jurisdiction. If it does not do so, then the question should be resolved by a specific reference to that court from this house.
(Translation):


Mr. C. A. Gauthier (Roberval):: Mr. Speaker, I wish to congratulate the hon. member for Winnipeg North (Mr. Orlikow) for presenting Bill C-9, an act to amend the Small Loans Act. I congratulate him in particular for his persistence although I deplore, and always will as long as I sit in the house, the uselessness of this hour reserved for private members' business, which never gives any positive results.
That bill will require finance companies to reveal in their advertisements the amount required by way of monthly or periodic payments to repay the loan, the cost of such loan in terms of per centum per annum.
What are the results of the present act? The finance companies take advantage of its lack of clarity to hide their deceit from the borrower.
And I am wondering why we should go in such a roundabout way to pass legislation when it would be much easier to take the direct approach. That may make some lawyers laugh or smile but I am asking the question in good faith. If lending companies had to account for all the charges included in their contracts, some of these institutions would be less likely to become dens of financial pirates, and would serve the public honestly.
1208	HOUSE OF
Small Loans Act
Mr. Speaker, we have acquired proof of

those exploiters by its silence. In the last analysis, it will be responsible for the serious problems of our family economy and for problems still more serious that such a tolerance
hypocritical and even infamous transactions based on false representations.
Do you not fear that our government, which is supposed to pass laws conceived in the people's interest, might be accused by the public of being partly responsible, through carelesness, for that state of affairs?
Indeed, we may be branded as accomplices for having left so many loopholes in the law, for having allowed usurers to take possession *of properties which our workers burdened with large families have acquired through toil and sacrifices. Mr. Speaker, this legislation defends straightforwardly the small property-holder. It is perhaps the last recourse of the innocent victims, fallen prey to cold-blooded swindlers.
Mr. Speaker, I could give you a thousand and one examples to prove what I am saying. I even have notarized and registered contracts which prove that poor borrowers will have to pay twice and even three times as much as the amount they have borrowed.
Our present legislation provides indirect protection to those usurers as they are not obliged to give all the details of their transactions. So much so that the worker wonders nowadays whether the laws are conceived to defend him or to protect financiers. I call those fellows usurers because, in my opinion, an interest of 24, 30, 35 and 40 per cent on a loan is robbery.
That is why I say that such transactions are the most infamous actions that can be perpetrated against credulous people.
Yet, our business men, our small financiers as they are called, those who draw up contracts of that kind or who are called upon to defend lenders of that sort, have the cheek to speak against the exploited worker and accuse him of not fulfilling his commitments, of not meeting his obligations.
Mr. Speaker, if this government does not intervene immediately to put an end to that orgy, I feel it will become the accomplice of
could create.
I am still wondering why the federal government does not decide to fix and set interest rates once and for all-
(Text):


The Acting Speaker (Mr. Batten):: Order. I apologize for interrupting the hon. gentleman but I must advise him that the hour for the consideration of private members' business has now expired.



BUSINESS OF THE HOUSE

Gordon Minto Churchill: Mr. Speaker, will the government house leader advise the house as to the order of business for Monday and the following days next week.


John Whitney Pickersgill: Yes, sir. On Monday the government would like to continue with the debate on the resolution preceding the municipal development and loan board act, to be followed by the resolution respecting the Atlantic development board. If both those items should be completed on Monday we would then take the resolution respecting the Department of Agriculture. If that business is not all completed on Monday, it would be the same business for Tuesday, though there may be a possibility of taking the department of industry bill on Tuesday. But it would not be taken on Monday unless all three resolutions got through.
In general, the government plans on the first two days of next week to proceed with the economic legislation that is on the order paper and to begin the budget debate on Wednesday. Once the budget debate begins it is our proposal that it should continue until completed. I think that is as far as I can go at the moment.


[Stage Direction]
At six o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Monday, June 17, 1963