1964-10-15

Hon. Paul Marlin (Secretary of Slate for External Affairs):: Mr. Speaker, with the consent of the house may I state that after consultation with the Prime Minister and the leaders of all the other parties it has been agreed that the motion expressing loyalty and gratitude to Her Majesty the Queen will be proposed when we meet tomorrow morning at eleven o'clock.



LIBRARY OF PARLIAMENT


Mr. Speaker:: I have the honour to lay before the house a report from the committee of both houses on the library of parliament with respect to certain revisions of the rates of pay of employees of the library of parliament.



CANADIAN CONSTITUTION


Hon. Guy Favreau (Minister of Justice):: Mr. Speaker, I have the honour to inform the house of an agreement which will be a landmark in the constitutional evolution of Canada. After years of stalemate, the federal and provincial governments agreed yesterday afternoon, on a definite text conferring on Canadians themselves the unlimited and exclusive power to amend the British North America Act.
As the representative of the federal government in the discussions which preceded the final agreement, I want to pay tribute to my provincial colleagues-attorneys general and other ministers-for their broadmindedness and their patriotism. These statesmen's arduous labour helped the government to define a formula ensuring the dignity of Canada and the freedom of each of its governments.

The text of the amending formula announced yesterday by the Prime Minister and premiers is the fruit of arduous and statesmanlike labour by all Canadian governments, both federal and provincial. It was imposed on no one, but forged from the free consent of men who recognize themselves as Canadians first. As chairman of the preparatory conference of attorneys general I was proud that my colleagues adopted unanimously the following resolution, moved by Nova Scotia and seconded by Manitoba:
That the report made by the chairman at the end of the conference this morning, together with the consolidated formula submitted by the federal delegation bearing date October 8, 1964, as amended in accordance with the report of the drafting committee dated October 13, 1964, and adopted this morning, be submitted to the conference of Prime Minister and premiers as the report of this conference of attorneys general.
By accepting our draft with like unanimity the Prime Minister and premiers swept away the anachronism that has for too long clouded our status as a fully independent country. Once again they proved that our federation rests upon a deep and abiding unity.
I am pleased to assure hon. members that the government of Canada intends to place the new amending formula on the order paper at the earliest convenient moment. After the Canadian parliament has adopted the formula in a joint address, and after each province has formally approved it as well, the parliament at Westminster will be asked to enact the formula as part of the constitution of Canada. I am sure that Canadian as well as British parliamentarians will be relieved to consider that this will be the last time such action will be required. As of that moment, Canada's constitution will indeed be wholly and truly Canadian.


Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, first may I say that Canadians as a whole will be glad to learn that their constitution will hereafter be in the custody and control of Canadians rather than being subject to what was described by the minister as the anachronism that has existed since confederation. We in this party endeavoured to bring about agreement. A

Canadian Constitution
formula was advanced by the then minister of justice, Hon. Davie Fulton, on behalf of the government of that day and it was all but accepted, though there were some reservations on the part of Quebec and greater reservations on the part of Saskatchewan which in those days had a C.C.F. government.
Once before I said there would be entire agreement with the objective which the conference had in mind. I have had the opportunity of looking over the draft, and I am not going to make any extended observations at this time. When the matter comes before the house there will be discussion regarding certain sections, but in no way would I want to leave the implication that we, who advanced the process of agreement and the achievement of a formula so far, are now in any way holding back. At the same time changes have been made. There are changes in section 91 and section 92 which will require careful and considered examination between now and the time the resolution or address is brought before parliament.
The minister did not say so, but I take it that should the address be accepted it will go to the parliament at Westminster in order to bring about the repatriation of the constitution. This is a rhetorical question at the moment, but I ask whether thereafter it will not be necessary that the constitution as a whole, in so far as it is embodied in the British North America Act, be brought before this parliament.
Dealing with one or two sections, and I shall refer to them briefly, the communique that was issued yesterday contained the following sentence on page 2:
To provide for greater flexibility in the constitution, legislative powers may be delegated between the federal and provincial authorities under conditions specified in the formula.
I simply ask the question at this time, what will be the effect of the removal of section 91(1) and section 92(1)? Section 91(1) provides for amendments to the constitution in matters exclusively federal, with exceptions relating to language and the calling of parliament. Section 92(1) provides for amendments to the constitution of the provinces by the provincial legislatures. Thus these sections relate to amending powers of both the federal parliament and the provincial legislatures in matters within their legislative competence, and these have been excised.
Then there is another section that must be very carefully examined. That is the one authorizing Canada to make laws dealing with matters coming under subsections 6, 10,
[Mr. Diefenbaker.l
13 and 16 of section 92, subject to the consent of each individual province. Those particular subsections deal with penitentiaries and local works and undertakings other than those under federal jurisdiction. They also deal with property and civil rights within a province, and generally all matters of a local and private nature within a province.
Under the draft the federal parliament will be permitted to legislate in certain enumerated fields hitherto exclusively under provincial jurisdiction, subject to the restrictions of consent by four provinces and the like; and incidentally the consent given may be subsequently revoked.
Then I am disappointed by the fact that no provision has been made for the incorporation of the bill of rights as an immediate amendment by agreement; because when the hon. gentlemen now sitting opposite were over here they used to press so strongly for a bill of rights which would be part of a constitutional amendment. At that time we could not bring it about because several of the provinces would not agree; but now that the excellent spirit of agreement to which reference has been made by the minister has been achieved, it strikes me as passing strange that a matter of such importance as the inclusion of a bill of rights could not have secured the necessary degree of agreement to have been incorporated among the changes.
Now I come to subsection 3 of the new section 94(A) which says that the legislature of a province may make laws in that province in relation to any matter coming within the legislative jurisdiction of the parliament of Canada. The restrictions set out are consent by parliament to the enactment by the provinces; enactment of a similar statute by the legislatures of at least three other provinces, with consent subject to being revoked at any time by either the federal government or the provinces as the case may be. This is something which will require very careful examination since provision is made for the right of provinces, within the limitations and within the limited scope of the provisos, to legislate in matters which are exclusively within the federal power. In effect, four provinces are empowered to legislate by agreement within the federal field on any matter provided that a parliamentary majority is secured. I ask this question. Is this not exactly what I raised in the house, by way of questions, and which was denied on September 4 as reported at page 7655 of Hansard; and on September 3, as will be found

on pages 7605 and 7606? I do not intend to read all these questions at this point-


Some hon. Members:: Hear, hear.


John George Diefenbaker: The applause from over there indicates that the susceptibilities of hon. gentlemen opposite are being touched by what I am bringing before them. I asked a question then regarding statements made by Hon. Ross Thatcher, premier of the province of Saskatchewan, in which he dealt with these very matters, and the danger involved. I asked whether there was any suggestion that any of the provinces would have the authority to legislate in certain recognized federal fields such as immigration and the like, or would have any veto power over monetary or tariff policy. The Prime Minister replied "The answer to the last part of the question is no."
Well, I can understand the provinces agreeing to this. But, I ask, what is the effect likely to be on the federal authority? It opens up to provincial legislation, on the request of four provinces and with the approval of a federal parliamentary majority, such fields as immigration, monetary policy, tariffs, trade policy and matters affecting the native population of Canada, among others. Naturally the provinces would agree to such a proposal, but has there been that careful examination by the federal government, before consent was given, to the effects of abdicating, as it were, authority over these fields in order to achieve agreement? As I say, I do not intend to go further today than to question this particular formula regarding matters exclusively within the federal authority; for if my reading be correct there will be many who will ask whether the price being paid by the federal authority is not a very high one, for the acceptance of the repatriation of the constitution to Canada.
At the moment I go no further than to place before the house the implications inherent in giving to four provinces, provided there is a parliamentary majority in the Senate and the House of Commons, the right to legislate on matters which are exclusively within the federal authority, which one can believe is a course fraught with danger to the unity of our country in the years ahead.


Mr. Andrew Brewin (Greenwood):: Canadian Constitution
and the federal parliament set out in sections 91 and 92 of the British North America Act.
This, as any person with any knowledge in this field knows, represents the very core of our constitutional system, and the formula in effect hands an absolute veto to every individual province in respect of amendments to that constitutional core. Even the United Nations, which has been plagued by the veto, gives that power of veto only to the great powers. We propose by this formula to hand it to every individual province no matter how small.
It is not only the substance of the proposed amending formula but the way it has been arrived at which calls for the strongest comment. This formula has been presented to the Canadian people as the result of a closed conference between the Minister of Justice and the attorneys general. We say that this hole in the corner procedure is totally unsatisfactory. For one thing, this parliament is being practically bypassed. It is true that we were allowed one day to debate this matter, but on that one day the Minister of Justice carefully refrained from stating what the attitude of the government was, or from seeking to justify the restrictive formula which is apparently proposed by the government.
In that debate the hon. member for Royal, speaking for the official opposition, and I, speaking for my own party, both suggested the importance, which has been mentioned today by the right hon. Leader of the Opposition, of linking an amending formula with the entrenchment of basic individual rights, creating a constitutional bill of rights. Our suggestions made in this parliament appear to be totally ignored in favour of this closed conference.
It seems to me that the government of Canada is not being carried on by the elected representatives of the people in parliament, but rather by the presentation to parliament of faits accomplis, arrived at in closed conferences. One must wonder who are the advisers who advised the government in this disastrous course. Do they include any known experts in the constitutional field in Canada or elsewhere? We are not told that. Have they or have they not warned the government of the danger of the inflexibility of the method of amendment which is now suggested?
According to a press statement the prime minister of Quebec, referring to the dangers of rigidity, used the expression that the formula "freezes" the constitutional rights of the provinces. Looking at the matter from the point of view perhaps now prevalent in the province of Quebec, a point of view which is

concerned almost exclusively with expanding and protecting provincial rights, there may be something to be said for welcoming this freezing of the constitution. No one, least of all the party which I represent and for which I speak here, denies the importance of freezing, or entrenching as it is sometimes called, the basic rights of language, religion and education. But to freeze the general distribution of powers as they affect the whole broad field of social progress and labour legislation, marketing legislation and other economic matters, may well be disastrous to Canada's future.
Mr. Speaker, I want to say here that we in this party will fight this formula as vigorously as we can. We urge that before it is too late Canadians as a whole give careful and detailed study to what is involved in this proposed formula, and we urge Canadians to let the government know before it is too late that they are not in favour, under the guise of protecting Canadian national pride, of the fixing of constitutional fetters on Canada's future greatness as a nation.


Mr. R. N. Thompson (Red Deer):: Mr. Speaker, I do not make my remarks at this time as a constitutional authority or from a background of legal training, but as a Canadian. I believe they will express the general feeling of many Canadians on the outside who are concerned and interested in this country moving forward as a nation.
I am reminded of events that took place 100 years ago which led up to the confederation of this country, when the provinces of that time met together and drafted the British North America Act which has been our constitution since 1867. Again at the present time the provinces, now twice as many in number, have come together and worked out an agreement with the federal government which will make it possible to bring the British North America Act to Canada as our constitution.
I have a great deal of respect for our provincial governments, and I believe the record of practically every province is outstanding. The attorneys general of these provinces have spent long hours in discussion of the agreement which has now been arrived at. As well, the premiers of the ten provinces have likewise given much thought and consideration to this agreement, and we owe a great debt of gratitude and appreciation for what they have done.
In saying this I stress my confidence in the governments of the provinces as they have now laid down the necessary pattern of things so that we can truly have a Canadian con-

stitution. I also believe congratulations are in order for the Minister of Justice. I believe that a good share of the credit should go to him for bringing about this meeting of minds. There should be an expression of appreciation extended as well to the deputy minister and other officials of the department, who are capable men and who have spent long hours working this out.
We as the nation's House of Commons should be a little more considerate of the men who are the attorneys general of these provinces and who have been able to come together with a tremendous amount of determination to work out an acceptable formula and agreement. I believe this is the attitude that most Canadians from coast to coast have today toward these men. There is no doubt their decision may not be the ideal, but I do believe that what has happened is all that could possibly have been hoped for at this time, and that the agreement has been reached in unanimity.
As I quickly looked over the communique and the announcement I found that three elements have been involved. One is the repatriation of the constitution, or the bringing to Canada of the British North America Act so that it can be our constitution. Second, there has been a spelling out of the amending formula. Since 1950 when this was first brought out in formal discussions this has been one of the stumbling blocks which has prevented agreement from being reached. Third, there has been provision for the delegation of power from federal to provincial governments and from the provinces to the federal government.
For the stability of a constitution it is imperative that there be some rigidity to the amending formula. The agreement reached regarding the delegation of powers provides for this, so that local needs can be met as far as the provinces are concerned without requiring or making constitutional change. I believe the agreement that has brought the formula to a basis where there must be four provinces in accord is one that gives us the assurance that there will be stability in this arrangement. I agree that we must study it very carefully, but on the other hand I believe that credit must be given where credit is due.
I am convinced that the past few days will go down as a landmark in the history of this nation, and I would hope will mark the beginning of a new era of unity and progress in which we will move forward. Many amendments may have to be made to the constitu-
Canadian Constitution
tion other than those which have been agreed upon now, but with the bringing back to Canada of our constitution they can be done within the realm of our own autonomy and our own authority. Therefore I believe these days perhaps mark the beginning of a new era as we move forward in our ship of state, with consideration being given to the provincial governments and everything else that goes to make up confederation. Even though the ship may travel through stormy seas I believe we will be moving forward in the best interests of the nation and the progressive development of our Canada.


Mr. Gilles Gregoire (Lapointe):: Mr. Speaker, unfortunately I have not yet had time to analyse and study the release issued after the meeting between the provincial attorneys general and the Minister of Justice. I was unaware also that the Minister of Justice was to make a statement today in this regard.
However, there is at least one remarkable thing about this. From now on Canada will at least be able to amend its own constitution and, most important, we hope that the constitution will be amended in quite a radical way so that our country will adapt itself to the modern world.
Her Majesty Queen Elizabeth II stated in Quebec city that what could be normal 100 years ago should perhaps be amended or changed today.
There is no doubt for us that the constitution should be amended. Some radical changes must be made to meet the requirements of our modern times, the progress and development of Canada as well as the atmosphere prevailing in 1964 in our country.
I note that in the case of problems concerning a single province, any desirable amendment will be made after agreement between the federal government and the government of that province. We hope that in the case of the province of Quebec amendments will be made, while the other nine provinces will be left free to establish other relations with the federal government if they want to.
In my opinion, if the Canadian constitution allowed relations between Ottawa and Quebec to be different from those between Ottawa and the nine other provinces, such latitude or broadness of mind would lead to what everyone has been seeking for a long time, but has been unable to achieve, namely national understanding.

Canadian Constitution
But if everything is to be put in the same mould, then understanding is no longer possible. Still, we note, on reading the press release, that amendments could be made with regard to this or that province only on agreement between the province concerned and the federal government. That could be done by means of amendments to the constitution or delegation of powers.
As a matter of fact, this is, in a way, what I like about the new formula. Thereby, each province will be given enough leeway to legislate as it sees fit in certain fields, perhaps to exercise more authority than that granted to it by the present constitution. The formula will also allow those provinces which so desire to exercise less authority and to fall back on centralization to a greater extent in keeping with their ideology of centralization in the federal government. That might produce two different ways of life in Canada, but not necessarily. At any rate, having two kinds of administration would achieve the goal being pursued, national understanding.
It is now possible to amend our constitution. I wonder, however, about one thing. I have read only a few press reports mentioning that in order to amend the constitution in certain fields, the approval of five provinces or 50 per cent of the population will be required. But let us suppose that the ten provinces propose an amendment to the constitution which is refused by the federal government. The ten provinces represent undoubtedly 100 per cent of the population, but the federal government can also claim to represent 100 per cent of the population. Would the federal government automatically have the right to veto?
Is the formula clear and specific enough to indicate, in the event of agreement among the ten provinces and disagreement on the part of the federal government, who would prevail over whom? Is it the ten provinces or the federal government, in view of the fact that both represent 100 per cent of the population and are not of the same opinion on one point?
In my opinion, the amending formula should be well defined in this respect, because it seems to me that when ten provinces agree to amend a point of the constitution, their authority should carry the same weight as that of the federal government.
At any rate, without knowing all the details of the agreement entered into by the attorneys general and the Minister of Justice, I believe that we can be happy that, in future,
IMr. Gregolre.]
when we want to amend the constitution, the members elected by the population will turn their attention to it and not a parliament 2,000 miles away which does not understand all our problems and does not represent the Canadian people.
The very fact that we are able to amend our constitution ourselves makes us that much more responsible before parliament and the people than we were before.
I should like to suggest an amendment to the effect that the title "British North America Act" become simply "The Canadian Constitution", so that, at long last, it can become a Canadian fact.



On the orders of the day:


John George Diefenbaker: Mr. Speaker, I have a question with reference to the announcement made this afternoon by the Minister of Justice regarding the repatriation of the constitution. The minister stated that an address would be placed before both houses of parliament for transmission to the parliament at Westminster. Is it the intention of the government thereafter to have the British North America Act brought before the parliament of Canada to be passed as a statute, or what is the general plan the government has in mind in this regard?


Guy Favreau: Mr. Speaker, of course parliament must first approve the address to the United Kingdom parliament. As far as I am concerned, I am authorized to state what immediate steps will be taken by the government in so far as placing the resolution to that effect before both houses of parliament. As to further matters or further dealings in respect of the constitution, this will be a matter of government policy, as the right hon. gentleman will understand, and will be announced once it has been decided by the government.


John George Diefenbaker: Mr. Speaker, as a matter of fact that is not government policy at all. Does the minister then say there has been no decision made yet as to the course the government will take following an address passed by the parliament of Canada, transmitted to Westminster and there accepted? Has the government made no decision as to the further course to be taken in this regard?


Guy Favreau: Mr. Speaker, of course this is one of the matters to which consideration is

being given, but a final decision has not yet been taken.


Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I ask a supplementary question. In view of the fact that this question was raised by some of us before the recent conferences were held, may I ask the minister whether this aspect of the matter was discussed at any of those recent conferences between the federal government and the provincial governments?


Guy Favreau: No, Mr. Speaker. One of the
reasons the government has under consideration the question which has just been raised is precisely because it has been raised in this parliament, particularly by the hon. member for Winnipeg North Centre. There was no formal discussion in this respect at the conferences.


Mr. T. C. Douglas (Burnaby-Coquitlam):: have a supplementary question for the Minister of Justice, Mr. Speaker. Would he consider sending this matter to a parliamentary committee in order that hon. members might have an opportunity of hearing expert opinion on this very important matter of the constitutional amending formula which is being proposed?


Guy Favreau: Mr. Speaker, I will accept that question as notice, and as a suggestion which I will make it a duty to consider with my colleagues.


Mr. H. A. Olson (Medicine Hal):: Mr. Speaker, I should like to ask the Minister of Justice a supplementary question. He has said they have had no discussion and have arrived at no decision as to how we are going to proceed to adopt a constitution for Canada. I should like to ask him whether there is any way of adopting a constitution for Canada, other than by bringing it to this parliament and having it accepted by this and the other house?


Guy Favreau: Mr. Speaker, of course Canada already has a constitution. Whether subsequent to full repatriation, primarily of the right to amend the constitution, there will be placed before this parliament a bill to give formal sanction to the B.N.A. Act as the Canadian constitution, is a very interesting and important matter to consider. That was not part of the agenda of the federal-provincial conferences, because the exclusive matter for discussion on that agenda was the devising of and arriving at a formula which in future, once it has been enacted as the last law in this connection by the United King-
Tax Structure Committee dom parliament, will allow this parliament in future to amend the Canadian constitution. That is the reason the subject to which the hon. member has referred was not on the agenda of the conference of attorneys general.


Horace Andrew (Bud) Olson: I have another supplementary question, Mr. Speaker. Will the minister then explain where this constitution is going to be domiciled if it is not brought to this parliament after the United Kingdom parliament has passed an act releasing it?


Guy Favreau: Mr. Speaker, we are getting into a discussion on constitutional law. The principal factor in domiciling a constitution is the ability of the parliament of Canada to dispose of or amend in any way its own constitution. The title of the draft act suggested both by the previous government and by this government is "An act to amend in Canada the constitution of Canada."



DOMINION-PROVINCIAL CONFERENCE ANNOUNCEMENT OF ESTABLISHMENT OF TAX STRUCTURE COMMITTEE

[Stage Direction]
Hon. Walter L. Gordon (Minister of
Finance): Mr. Speaker, it is my privilege to announce another major achievement of the federal-provincial conference that concluded this morning. Unanimous approval was given to the establishment of a tax structure committee and to the terms of reference under which it will function. Agreement was also reached on the nature of the studies the committee will undertake and on the manner in which it will conduct its work.
The purpose of the tax structure committee, as its terms of reference reveal, is to conduct a complete and fundamental re-examination of federal-provincial fiscal arrangements. This is an undertaking of major significance in the history of federal-provincial relations. Not since the Rowell-Sirois commission has such a thoroughgoing analysis been undertaken. It is our hope and expectation, and in this we are joined by the provincial governments, that the committee will find better ways of effecting a balance between the requirements and the resources of Canada's 11 governments. It will also be the committee's task to ensure that the fiscal partnership which results can be used effectively in the achievement of Canada's economic goals, namely the full employment of our people and the full use of their rich resources.
Hon. members will welcome, I am sure, this major step in federal-provincial fiscal relations. For the first time the federal gov-
[Stage Direction]
Tax Structure Committee ernment and the provinces will together study the fiscal problems of the 11 governments, will together assemble the facts necessary to illuminate these problems, and will together develop fiscal arrangements which meet the needs of Canada. This approach to federal-provincial arrangements met with the unanimous and wholehearted support of all governments.
After this portion of the work of the conference was over, the Prime Minister reported briefly what was agreed in the following terms:
I.	The committee is directed by the federal-provincial conference to study and to report upon the following matters, its report to be submitted to the conference early in 1966:
1.	Trends to be expected during 1967-72 in public expenditures by the federal government, the provinces and the municipalities, taking into account the broad priorities likely to be accorded by governments to expenditures on major programs that will compete for available funds;
2.	The problems involved in financing these expenditures and their relationship to the economic circumstances to be expected, the probable levels of costs of public services and facilities, and the prospective levels of government debt;
3.	The general policy to be followed in respect of shared cost programs during the period 1967-72;
4.	The tax fields that should be used exclusively by the federal government and by the provinces and municipalities, and the fields in which joint occupancy is desirable;
5.	The arrangements to be made in respect of jointly occupied tax fields;
6.	The relation of equalization grants to the fiscal requirements and fiscal capacities of the provinces, and the best equalization arrangements for the period 1967-72;
7.	Future intergovernmental liaison on fiscal and economic matters;
8.	Other related matters.
II.	The committee agreed upon the nature of the studies that should be undertaken to facilitate its work. These will be put in hand as quickly as possible.
III.	The committee agreed that the continuing committee of officials on fiscal and economic matters, originally established by the federal-provincial conference of 1956, should be assigned responsibility for general direction of the studies to be undertaken and the working out of the assumptions and methods to be used in those studies requiring a common basis of approach. Mr. A.W. Johnson was selected to co-ordinate and expedite this work, as well as to be secretary of the tax structure committee itself.
Hon. George C. Nowlan (Digby-Annapolis-
Kings): Mr. Speaker, the minister has just made an interesting statement with regard to this tax structure committee which is going to be responsible for a long range study of some of our pressing taxation problems. I believe we are going to have quite a few studies in the next little while, but I am not sure whether we will have enough students to absorb them. We have the refer-

ence the minister has just made to this tax structure committee. We have the Minister of Justice referring to the report of the constitutional conference and the fact that there may be substantial changes in the constitutional relationship between the provinces and the federal government. Then, of course, almost in the background we have the Carter commission which was set up some two or three years ago, and which I hope will be reporting within the next few months. Certainly there will be a high degree of elasticity in our tax structure in the immediate future, and a great deal of midnight oil will be burned before all the problems are finally settled.
I think it is a very good thing that we have this approach made today. Certainly the impact on fiscal arrangements of the ten provinces and the dominion occupying parallel fields and in some cases occupying the same fields, with power to borrow and power to tax, could create almost a financial jungle in this country. It is necessary to have studies made. It is necessary to evaluate. I trust the evaluation of conflicting claims which are being made upon provincial governments and the dominion will be evaluated.
There is no point in discussing this matter further at the moment. This is a long term matter, the results of which will not be before us for many months-I think the minister said about 1967-and by that time we will have had ample opportunity to study all the implications contained therein.
Mr. Colin Cameron (Nanaimo-Cowichan-The Islands):: Mr. Speaker, I am sure no one could object to the purposes of the committee's work. One might perhaps regret that it was not established earlier. Its establishment now does raise some questions in one's mind as to the future of some of the shared cost programs. It makes one wonder what is going to happen to the much touted Canada pension plan, what is going to happen in the interval to the possibility of advancing a program of medical care, and what is indeed going to happen-whatever life may be left in it-to the Canada Development Corporation.
I wonder if we are to take it from this announcement today that the establishment of this committee at this time postpones until at least 1967 any advance along these lines. It seems difficult to understand how any advance could be made while the government is waiting for the results of this study. It would be interesting to hear from the minister as to whether the Canada pension plan, any steps that may have been taken toward

Tax Structure Committee
the development of medical care plan, or any other shared cost program will be now held in abeyance until this committee makes its report.


Horace Andrew (Bud) Olson: Mr. Speaker, I listened with some interest to the statement by the Minister of Finance, and read press reports this morning containing much of the press release that was given yesterday by the Prime Minister. To say the least, I am not impressed with the progress that has been made. It seems to me if you carefully analysed the press release and the statement made by the Minister of Finance, about all you could find would be some general agreement on the terms of reference to this tax structure committee. After you have said that, you have said it all. We have noted that over the past few months the Minister of Finance and every other minister of the crown has ducked answers to inquiries relating to the fiscal relationship between the federal government and the provinces by saying that all these matters will be referred to the tax structure committee, which will come forward with a comprehensive plan to reallocate the distribution of taxation between the two levels of government.
There was one bright spot in the press report that came out, and that was that the federal government had agreed to take into consideration the matter of priorities. This is something that several of the provinces, led I think by Manitoba, have been advocating for some time. It seems to me that when we have a government capable of turning out one Diece of legislation after another requiring enormous expenditures on a piecemeal basis, it certainly leaves the budgets of some provinces and the federal government confused.
I hope this committee does not break down into a series of studies taking into consideration all the so-called pressure plays, the temporary expedients, but will in fact address itself to finding an acceptable formula for the rearranging of tax distribution under the agreements, and that those arrangements will be based on the jurisdictional responsibility of the two levels of government. We hope that when a formula has been reached the federal government will be disposed to confine its legislation to the areas where it has constitutional authority. We note that there have been many pieces of legislation passed by the federal government that do in fact require expenditures by the provinces, and many of those have been passed without the consent of the provinces. In fact, Mr. Speaker, sometimes these pieces of legislation involving increased expenditures have been passed after the budgets of the provinces were passed, thus upsetting their whole budget arrangements.
We also know that the announcement does not preclude changes being made between now and 1967. We hope this is not an indication that the federal government intends to yield to a lot more of these pressure plays to such an extent that it will determine in advance how much additional money it is prepared to give each province, and then construct a formula to meet the predetermined figures. We have seen this happen too many times during recent months and years, and it causes frustration to a number of the provinces.
We cannot go into the details now. The Minister of Finance is well aware of some of the objections we raised during the past few months to some of the charges that have been arbitrarily laid on the provinces. We are not particularly impressed with the statement he has just made, because it does not seem to indicate any set direction in which we are proceeding.


Gilles Grégoire: Mr. Speaker, the Minister of Finance has just announced the creation of a committee composed of representatives of the federal government and of the provincial governments to study the tax structure of the taxation system in Canada.
In my opinion, it would be preferable to create a committee for the purpose of studying the means of decreasing taxes in Canada. Our taxation system is defective because taxes are too high. Discuss this matter with any Canadian citizen, any company director, any businessman, any ratepayer, and they will recommend that the first step to be taken is to lower the taxes, because they are too high.
I hope that the Minister of Finance will tell us before long that such a committee has been set up, that it will examine this matter and recommend means to decrease taxes and help Canadian citizens to retain more money in their pockets.
At this time-and the committee will find that out if the Minister of Finance does not know it yet-for every dollar earned by the Canadian citizen the various levels of government, federal, provincial, municipal and school boards levy 47 cents as taxes. Out of all earnings, 47 per cent goes to governments as taxes. Indeed, the amount of figuring on the

Tax Structure Committee Canadian citizens' cheque stub is larger than on the cheque itslef and, before long the Canadian worker would rather get the amount appearing on his cheque stub than what is left on the cheque itself.
The minister also announced that the committee will try to ascertain priority requirements where they are, and that an attempt will be made to leave the main tax fields to meet priority requirements.
It will be recalled that during the hostilities the federal government said that war was the priority requirement and it invaded almost all tax fields. While the priority requirements have changed, the government has not yet withdrawn. Today those requirements are felt in the fields of education, health, roads and public works. All those fields come under provincial jurisdiction, but the federal government has not yet given back those tax fields in order to enable the provinces to face their priority needs.
The minister also told us that the committee will study the problem of the financing of public expenditures. Why must public expenditures be financed exclusively on the people's taxes?
Could the Minister of Finance not recommend to the committee to find other means to finance public expenditures or public works instead of digging constantly into the pockets of the Canadian people?
When England feared a devaluation of its pound sterling another method was found to prevent it and even to revaluate the pound sterling. What was the action taken? They called on the Bank of Canada which, at that time, was authorized to lend money to England at an unknown interest rate, in order to prevent a devaluation of the pound sterling. England was not forced to levy new taxes. Why not do the same in Canada when it would mean greater wealth for the country.
If we want to make our country richer through public works, health insurance plans, old age pensions or family allowances, let us seek other means apart from taxes to finance public expenditures.
England found one. It comes and dips into the funds of the Bank of Canada, or, at least, the Bank of Canada is authorized to lend it money, almost interest free, to enable it to restore itself. Why not do the same for Canadian citizens?
This is a recommendation that the committee, the setting up of which is proposed today, should take into serious consideration. This committee should not be limited to considering taxes alone, because we know that they

are too high; it should be commissioned to find ways of financing public expenditures without raising taxes, and by using the Bank of Canada instead.
The Minister of Finance also announced that this committee would study the tendencies of public debt levels in the federal, provincial or other fields.
If this committee studies the tendencies of debt levels, it could also be requested to study the harmful aspect of public debts. This harmful aspect is easily recognized when one sees that the biggest problem for the finance minister in Canada at the present time, is the interest he pays on the debt of Canada, which amounted to $1 billion 81 million in 1964. If he did not have to pay this interest on the debt the problem he is now facing would not exist.
The same thing can be said for provincial and municipal governments.
The minister also states that the purpose of the committee will be to study joint programs.
Mr. Speaker, may I also express my viewpoint on joint programs. Those programs practically set up two different authorities to manage the same thing. Consequently, too many people are in charge of directing a plan. And when there are too many people to cook the soup, the soup is spoiled.
Those joint programs have been popular for some time in Canada, with two different authorities which endeavour to direct the same thing, and give contradictory orders. In the long run it is found that the joint program does not serve its purpose.
I want to make a suggestion to the committee: let us eliminate those joint programs and give the authority to manage a program of that type to only one level of government.
Mr. Speaker, this committee is now too restricted in its activities. It does not receive enough instructions; it is not sufficiently requested to think about a program other than the taxation system and to try and make the Canadian economy operate. It is too restricted to the taxation field and to the effects of taxes in some fields, while it should instead be asked to make a general review of the Canadian economy.
The Minister of Finance states with a big smile that everything is fine in the economy of this country. A labour organization in Ontario mentioned recently that there were four million poverty-stricken people in Canada. Well, the Canadian economy is not as good as that. The Minister of Finance should set up a committee which, besides analysing our taxation system, would attend

to decreasing taxes and give Canadian citizens a more prosperous economy.



On the orders of the day:


Thomas Clement (Tommy) Douglas: Mr. Speaker, may I direct a question to the Minister of Finance regarding the tax structure committee which he announced on motions. I would ask the minister two very brief questions. First, can he give us some idea of the make-up of the committee at the ministerial level and the technical level; and second, can he assure the house that the economic goals which he outlined in the terms of reference are economic goals which the federal government intends to pursue, and will see to it that it does not allow itself to he deprived of the necessary powers to maintain the counter-cyclical techniques which are necessary to attain those goals?
Hon. Walter L. Gordon (Minister of
Finance): Mr. Speaker, there will be three members from the provincial government on this committee and one member-and if requested, one alternate-from each of the provincial governments. The federal representatives will be-


Thomas Clement (Tommy) Douglas: Mr. Speaker, the minister said there will be three members from the provincial government. Did he not mean from the federal government?


Mr. Gordon:: Yes, three from the federal government. The three federal ministers will be the Minister of Justice (Mr. Favreau), the Minister of National Revenue (Mr. Benson) and myself, as chairman. The premiers of Ontario, Quebec, Saskatchewan, Manitoba and British Columbia plan to serve on the committee. With regard to the other provinces, I think the decision so far is that they will be represented by their ministers of finance or provincial treasurers.
With regard to the second part of my hon. friend's question, I would like to assure him and all hon. members that the federal government, under this administration, intends to remain strong, independent and competent to take whatever actions to influence the economy as may be called for from time to time.


Some hon. Members:: Hear, hear.
Tariff Concessions FINANCE



TARIFF CONCESSIONS TO PERMIT MANUFACTURE OF FOREIGN AUTOMOBILES IN QUEBEC

Walter Lockhart Gordon: On behalf of my colleague the Minister of Industry I wish to announce to the house certain temporary tariff arrangements which have been extended by order in council to the General Investment Corporation of Quebec in order to permit that company to begin the production of Renault and Peugeot automobiles in Canada.
The General Investment Corporation of Quebec is a private company, wholly owned by Canadians, which was created by the government of Quebec last year to stimulate and promote the formation and development of industrial undertakings in that province. It has entered into agreements with the French companies, Regie Nationale des Usines Renault and Societe Anonyme des Automobiles Peugeot for the manufacture of their automobiles in Canada. Under the agreements the General Investment Corporation will build and equip a factory of its own to assemble and finish these vehicles.
This undertaking is unique in that a Canadian owned company will make automobiles under licence for a foreign motor vehicle producer. From the outset components will be purchased from Canadian parts makers; other parts will be imported from French companies. There will be a progressive reduction in the proportion of imported parts used as Canadian sources are developed. The finished automobiles will be sold to the Canadian subsidiaries of the French companies for distribution in Canada and for export.
Initial plans provide for annual production of 8,000 automobiles requiring a work force of 250 people.
The output of the company, when added to that of Volvo in Dartmouth, Nova Scotia, will give Canada a substantial production of European type automobiles. There has been a continuing demand for this type of vehicle by Canadian consumers, who will now be able to choose between several Canadian made products.
These transitional arrangements in respect to customs duties are comparable to those provided Volvo of Canada Ltd., taking into account the relative values added in Canada in the production of these vehicles. As in the case of Volvo, the special arrangements are for five years and there is a progressive reduction in the tariff concessions over this period.

Tariff Concessions
I should like to table, at this time, the order tiative of making necessary arrangements with in council giving effect to the temporary the French companies to have one more intariff arrangement extended to the General dustry established in Canada in the best Investment Corporation of Quebec.	interest of Canadians.


Hon. George C. Nowlan (Digby-Annapolis-Kings):: I am sure the house is interested in the announcement which has just been made by the Minister of Finance. It is good to know that other European car manufacturers, through an agency established here, are developing their cars in this country.
As the minister has suggested, Volvo blazed a trail in this regard some two or three years ago. I think a very happy procedure was adopted at that time, and I am glad it is being followed now. We will see the order in council in due course and note what concessions or arrangements have been made. There were some which we made in connection with Volvo, and I understand approximately the same is being done now in connection with these companies. As I say, we shall study the order in council.


Mr. Reid Scott (Danforth):: In keeping with the other short statements on motions, all I should like to say is "Hear, hear".


Mr. Guy Marcoux (Quebec-Montmorency):: Mr. Speaker, we must be grateful to the French industrial interests for being interested in our country to such a point that they agreed to build here automobile production plants and to give the General Investment Corporation a licence to carry out that project.
It must also be noted that concessions made by the federal government in terms of taxation surely facilitated the decision reached by the Renault and Peugeot firms.
We hope that the establishment of a foreign industry will result in a proper competition among Canadians. There should be no fear of unfair competition, because the impact of that new establishment will particularly be a large reduction of unemployment in Canada.
In view of the fact that the Quebec metropolitan bureau for commerce and industry was the first to promote such a project, it is to be hoped that the chosen site will be near Quebec, at Ldvis, as recently suggested by Mr. Armand Viau, the general director of the bureau.
In short, Mr. Speaker, the announcement just made by the minister is welcome and even though we must deplore the fact that Canadians do not seem prepared to invest enough capital to be the sole owners of automobile plants, we must commend the General Investment Corporation which took the ini-


Mr. Lucien Plourde (Quebec West):: Mr. Speaker, we, in this corner of the house, are pleased to hear that Peugeot and Renault automobile plants will locate in the province of Quebec.
The establishment of those new industries in the province of Quebec will reduce unemployment, especially in the Quebec area, as the hon. member for Quebec-Montmorency (Mr. Marcoux) mentioned a moment ago.
Those industries should definitely come to the Quebec area because my own riding, a labour riding, is greatly affected by unemployment. And this would greatly alleviate unemployment there.


Gilles Grégoire: Mr. Speaker, I should like to direct a question to the Minister of Finance who a moment ago made a statement on behalf of the Minister of Industry (Mr. Drury).
Is he in a position to tell the house today where exactly the Renault-Peugeot plants, referred to in this statement, will be located?


Walter Lockhart Gordon: Mr. Speaker, it will be in the Montreal area; I think in Terrebonne but I am not sure of this. The Minister of Industry is having a press conference now in Montreal on this subject, and I have no further details to announce.


Gilles Grégoire: Could the Minister of Finance and the Minister of Industry exert pressure for the plants to locate in designated areas affected by unemployment and for granting them, besides special tariffs, special favours to locate in designated areas?


Walter Lockhart Gordon: 
Mr. Clement Vincent (Nicolel-Yamaska):: Mr. Speaker, may I direct a question to the Minister of Finance?
Could the minister tell us if the establishment of the Peugeot and Renault plants in the Terrebonne region, which follows that of General Motors in Sainte Therese, can make us hope that a steel complex will be set up soon in the province of Quebec?
CText]


Walter Lockhart Gordon: Mr. Speaker, in the first place I am not exactly sure where the Renault-Peugeot works are going to be built, except that they will be in the Montreal area. If it was my good fortune to come from that area I would certainly hope that a great steel complex would be built there one of these days.



PROCEDURE


[Stage Direction]
On the order:
That the eleventh report of the special committee on procedure and organization presented to the house on October 7, 1964. be now concurred in.
Horace Andrew (Bud) Olson: I would ask that this motion stand. I hope we can go ahead with it on Monday.



THE ROYAL ASSENT

Mr. Speaker:: I have the honour to inform the house that a communication has been received, as follows:
15 October 1964
Sir,
I have the honour to inform you that the Hon. Robert Taschereau, P.C., Chief Justice of Canada, acting as Deputy to His Excellency the Governor General, will proceed to the Senate chamber today, the 15th October, at 5.45 p.m., for the purpose of giving royal assent to certain bills.
I have the honour to be,
Sir,
Your obedient servant,
A. G. Cherrier
Assistant Secretary to the Governor General EXTERNAL AFFAIRS



RUSSIA-REPORTED CHANGES IN LEADERSHIP OF COMMUNIST PARTY

[Stage Direction]
On the orders of the day:
John George Diefenbaker: I should like to direct one
Inquiries of the Ministry or two questions to the Secretary of State for External Affairs regarding the reported resignation of Chairman Khrushchev and the succession of Alexei Kosygin, a deputy premier, as acting premier, and Leonid Brezhnev as head of the communist party, he having previously been chairman of the praesidium. Is the minister in the position to give the house any idea whether the accession of these two men signifies any disagreement between them and Chairman Khrushchev over the question of coexistence and, particularly, whether in view of their rather close relationship over the years with Mao and communist China their achievement of power does, in the opinion of the Department of External Affairs, cause any fear for international security and peace?


Paul Joseph James Martin: Over the past 24 hours there has been private speculation, and, since this morning there has been considerable public speculation, concerning changes in the direction of the government of the Soviet union. These rumours have been given substance by the failure to publish today the U.S.S.R. government newspaper Izvestia. I am advised that it is possible there might be a publication of this newspaper by the end of the day. This is a pattern that has been observed in the case of other important changes in the government of that country.
We are led to believe that official announcements of changes at the top level in the government of the Soviet union will be made tonight or tomorrow morning. However, as of 3.30 this afternoon I cannot say that there is any official announcement that I could rely on at this moment which would confirm these speculations. In any event, I would ask my right hon. friend not to press me for views as to what these changes might mean if in fact they have taken place.


Mr. H. W. Herridge (Kootenay West):: supplementary question, Mr. Speaker. In view of the great international importance of this news, would the Secretary of State for External Affairs keep the house fully informed on any information he gets from our ambassador in Moscow with respect to the truth of these reports?


Paul Joseph James Martin: Mr. Speaker, this matter is of considerable importance to this parliament, to the people of the country and to the world, and I certainly will keep the house informed. I have just received a further bulletin, which confirms that there is no official information as yet.
9080	HOUSE OF
Inquiries oj the Ministry MINES AND TECHNICAL SURVEYS



INQUIRY AS TO LOCATION OF PROPOSED NEW OBSERVATORY

[Stage Direction]
On the orders of the day:
Robert Norman Thompson: Mr. Speaker, my question is to the Minister of Mines and Technical Surveys. I am sure we were all interested in the fact that it was indicated to Her Majesty the Queen when she was here that there would be a giant telescope and observatory constructed in western Canada which is to be called the Queen Elizabeth II observatory. Could the minister tell us where this observatory will be located; or if that information is not available, when he could give us some word in regard to it?


Hon. W. M. Benidickson (Minister of Mines and Technical Surveys):: Mr. Speaker, I thank the hon. member for Red Deer for his question. I agree with him that this announcement was received by Her Majesty, and I think the country at large, with great pleasure. But I would point out that it is a recent announcement. Before the announcement was made there had been some investigation as to site, but those investigations have not been completed. The officials of my department are considering possible sites, knowing the necessity for making a decision at an early time. I think perhaps within three or four weeks we will be able to tell my hon. friend what selection has been made. Certainly it will be made on a technical basis, so that this will be one of the most important telescopic sites in the world.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. Reynold Rapp (Humboldl-Melforl-Tis-dale):: Mr. Speaker, I have a question for the Minister of Agriculture, and in his absence I should like to direct it to his parliamentary secretary. My question involves an urgent matter. Would the minister consider raising the import tariff on live turkeys coming into Canada from the United States, or impose import quotas so as to give adequate protection to turkey raisers who will otherwise be put out of business?


Mr. B. S. Beer (Parliamentary Secretary to Minister of Agriculture):: Mr. Speaker, I have in my possession a telegram received by the minister from the Canadian turkey federation. It suggests that they may request a 

meeting with the minister, and the minister has replied that he would be delighted to meet with them at any time.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. T. S. Barnett (Comox-Alberni):: Mr. Speaker, I should like to direct a question to the Minister of Fisheries. It has been some time since we discussed his estimates, and I should like to ask him whether in the interval any progress has been made in negotiations which will enable him to indicate to the house when he expects some straight base lines to be established which will untangle our fishing zones from the sinuosities of the coast line.


Hon. H. J. Robichaud (Minister of Fisheries):: Mr. Speaker, as I previously stated in the house, the second phase of negotiations is under way. In recent weeks we have had discussions with a number of countries, yesterday with Norway and the week before with Denmark. These negotiations are not completed and I will not be in a position to give any further details to the house until they are completed.



IMMIGRATION


[Stage Direction]
On the orders of the day:
Mr. Huberl Badanai (Parliamentary Secretary to Minister of Citizenship and Immigration):: Mr. Speaker, on October 7 the hon. member for Danforth asked the Minister of Citizenship and Immigration whether he had completed an investigation into the I.T.U. situation in Toronto, particularly with reference to people from outside Canada who were working for the newspapers, and if he had completed his investigation was he in a position to give the house a report.
On behalf of the minister I wish to say that the persons involved number 12, of whom five have been admitted as landed immigrants. Of the remainder, six have been permitted to enter Canada without status and one is an applicant still in the United States pending a decision in his case.
Of the five admitted, one is of managerial status and does not come within the context of the strike situation. The other four were to meet all the requirements for persons seeking to become landed immigrants, and

they were consequently granted such status on the basis that they qualify under our legislation. Nevertheless, had the immigration officials responsible for the admission of these four applicants recognized the sensitive nature of the situation existing between the union and the newspapers in Toronto, and that it might be interpreted that these persons were not bona fide immigrants capable of meeting all our legal requirements, as our officials were convinced they did, then their admission might have been delayed in order to get direction from the immigration branch headquarters at Ottawa. The fact is they have now been landed and the law makes no provision to reverse that action in cases such as this.
As for the remaining seven persons, six are in Canada without status. We shall look further into their cases and shall take cognizance of the extremely sensitive situation in respect of the newspaper strike. The minister proposes to consult further with his colleague the Minister of Labour, and decide as quickly as possible whether they will allow these persons to remain in Canada or see that they leave. The seventh person in this group, the applicant in the United States, will not be admitted.
It should be pointed out that the persons to whom I refer today, who have already met our immigration requirements for landed status or might possibly do so, are entirely different in character from the group regarding whom the minister reported to the house on August 28. That group consisted wholly of non-immigrants who could readily be excluded from Canada.


Stanley Howard Knowles: May I ask a supplementary question, Mr. Speaker. Will the parliamentary secretary ask his minister, when he discusses this matter with the Minister of Labour and any other colleagues, to have regard to the assurance the Prime Minister gave some months ago that strikebreakers would not be permitted to come into Canada to exacerbate the situation in Toronto? In view of the information that has been given today and in view of the information that was given yesterday, as found on page 9036 of Hansard in response to a starred question of mine, will regard be had to announced government policy in connection with this matter?


Hubert Badanai: I shall bring this question to the attention of the minister.
Department of Insurance Act


Reid Scott: A supplementary question, Mr. Speaker. Can the parliamentary secretary tell us anything about the work being done by the six individuals who have been permitted in without status? It seems to me they have been here quite a while and this matter should have been investigated. Is there any information as to what they are doing and for whom they are working?


Hubert Badanai: Mr. Speaker, the matter of any further information with regard to this question will be brought to the attention of the minister and he will be able to report.



ROYAL CANADIAN MOUNTED POLICE


[Stage Direction]
On the orders of the day:
Mr. Erik Nielsen (Yukon):: Mr. Speaker, my question is directed to the Minister of Justice and is based on the edition of Le Soleil for last Tuesday, October 13, in which is printed textually on the front page what purports to be a translation of a confidential order to members of the Royal Canadian Mounted Police signed by Superintendent J. A. A. Thivierge and giving instructions to all sections, "C" division, regarding measures to be taken to provide security for Her Majesty the Queen during her recent visit. Can the minister explain how this confidential document came into the possession of or was made available to the press, and will he cause an investigation to be made as to when it was so made available and under what circumstances?


Guy Favreau: Mr. Speaker, I must say I have not read Le Soleil of last Tuesday. However, since the hon. member has brought the matter to my attention I shall of course inquire.


Mr. Churchill:: Why did your officials not bring it to your attention?



FINANCE


Walter Lockhart Gordon: the second reading of Bill No. C-123, to amend certain acts administered in the Department of Insurance.
He said: Mr. Speaker, this bill, an act to amend certain acts administered in the Department of Insurance, proposes amendments to four acts, namely the Canadian and British Insurance Companies Act, the Foreign In-


Mr. Lambert:: May I ask the minister a question? It is related to a point of order. Is he satisfied that the amendments he proposes to put forward in committee do not extend the principle of the bill? If they do, he would find himself in a procedural difficulty because we could not adopt the amendments if they had the effect of extending the principle of the bill.


Walter Lockhart Gordon: I am satisfied they do not extend the principle of the bill. In any event I put these suggested amendments forward by way of explanation. It will be up to the members of the committee to decide whether or not they should be approved.


George Clyde Nowlan: We have listened with a great deal of interest to the minister giving a general outline of this bill, a bill which in effect: amends four different Canadian statutes. As the hon. gentleman has said, most of these amendments are technical, at least as far as investments are concerned, and I agree it would be much better to deal with them in detail when we are in the committee. I agree also that this measure should be referred to a standing committee of the house rather than be dealt with here, in detail, in committee of the whole. If this is done I am sure the committee will spend several lengthy sessions considering these intricate matters; I am glad to see the chairman of the committee smiling hopefully as he assesses the task ahead.
As the minister has told us, we are dealing here with the Canadian and British Insurance Companies Act, the Foreign Insurance Companies Act, the Trust Companies Act and the Loan Companies Act. Quite a melange. As a lawyer who practised for a long while in a small town I always took strong objection to these blanket amendments in which three or four acts were dealt with under one roof. In the absence of a large legal staff or the facilities of a great library one can devote a great deal of time delving into statutes looking for an amendment to, say, the Insurance Companies Act. You do not find one; you tell your client there has been no amendment, and then, by golly, you find it has been, amended as part of a blanket operation which includes half a dozen others. This is a bad practice. I am not blaming the minister, in particular; the government in which I had some part to play carried on the same practice, over my protests I must say. And I still think the practice is a reprehensible one. However, that is a more or less technical point which I raise in passing.
As the minister says, this bill can be divided into two principal parts, one dealing with control and ownership and the other dealing with investment powers of companies. The hon. gentleman spent the major part of his time dealing with the investment provisions. Each of these parts is technical, but I think the investment sections are the more technical of the two. I do not propose to


property, that of being able to sell something that you own and sell it to a person to whom you want to sell it. There are some restrictions on that today, I know, but they are very, very few. This legislation restricts that right and says that if you sell, the man who buys will be very foolish because he will not be able to transfer his shares; he will not be able to vote them. This creates a problem, because I think you may have one market for shares inside this country and one for shares outside the country. We are going to have, too, I think, a rather black eye again with regard to investment in Canadian securities.
Of course this measure will not affect anyone who bought shares up to September 23. But people who bought them at that time may want to buy more, and they are going to find themselves up against this provision with respect to registration. I doubt very much whether this type of legislation is in the interests of the Canadian financial community. As I said, Mr. Speaker, there are some elements of control in regard to foreign companies in certain areas and certain corporations, with regard to which I agree steps need to be taken. However, I doubt very much if they need to be taken in this particular field.
The minister spoke about the purchase of subsidiaries, or dividends, and I believe he referred to Union Carbide. That was a very happy way of repatriating a lot of dividends and getting them out of this country. I am not sure what the effect will be in the end, in so far as Canadian markets are concerned, where shares to the value of $60 million, $70 million or $80 million are sold and dividends are accordingly repatriated. The minister's purpose is to encourage minority interest in foreign-controlled corporations. I wonder just how much good it does to have 10 per cent, 15 per cent, 20 per cent or 25 per cent interest in a foreign-owned corporation. The control, I think, is exercised within the small group of directors, and moneys which are being invested for some reason in these equities in a minority position could much better be used in the development of further investment in Canada and in strengthening our financial position here, rather than doing it as is proposed in this bill.
Mr. Speaker, I notice that the clock is rapidly approaching the hour of five. There will be ample opportunity to discuss this measure in committee, when we can deal with the details of it. I know there are other hon.

members who wish to speak on this bill, and that is all I propose to say at this time.


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



PRIVATE BILLS


Mr. Ron Basford (VancouveT-Burrard) moved: the second reading of Bill No. S-13, to incorporate Laurentide bank of Canada.
He said: Mr. Speaker, it is my pleasure and honour to move the second reading of Bill No. S-13, to incorporate the Laurentide bank of Canada and to ask the house to refer the bill to the standing committee on banking and commerce. The incorporation bill in this case follows the example set out for these acts in the Bank Act. You will note from sections 1 and 2 of the bill that the sponsors of the bill and the provisional directors of the proposed bank are Mr. Peter Paul Saunders and Mr. Andrew Saxton, president and executive vice president respectively of Laurentide Financial Corporation, together with Mr. William Mainwaring, Mr. Paul Paine, Q.C., Mr. Edgar Saba and Mr. Howard Mitchell, all of the city of Vancouver, and Mr. Bernard Bourgeois, Q.C. and Mr. Lionel Leroux, both of the city of Montreal.
Naturally the sponsors will appear before the banking and commerce committee, where each of them may be examined individually as to his experience and ability. I would assure the house now that all of them are men of wide and varied experience in the financial, professional and business activities of their communities.
The capital of the new bank will be $30 million, divided into three million shares. The banking and commerce committee will be able to examine the plans for sale and distribution of these shares in detail. However, that committee will see that through the proposed distribution to the widely dispersed and varied existing Canadian shareholders of Laurentide Finance to the extent of 47 per cent, and through underwriters to the general public to the extent of 53 per cent, the shareholders of the new bank will represent a wide and varied segment of the investing public and that control of the bank will not rest with any small group of people or corporations.
Private Bills
Section 5 of the bill is a special section which provides, first, that the directors of the bank shall be Canadians and, second, that at least 90 per cent of the shareholders of the bank shall be Canadian. These provisions anticipate the legislation that we were discussing in the house this afternoon, and which we will be discussing this evening, as introduced by the Minister of Finance (Mr. Gordon). It is interesting to note that long before the Minister of Finance introduced this legislation, the promoters of three private banks were prepared to come to parliament promoting them in terms more stringent than the legislation introduced by the Minister of Finance.
Hon. members will note from the bill that the head office of the Laurentide bank shall be in Vancouver; that six of its provisional directors are from British Columbia and two are from the city of Montreal. It is intended that the bank shall be thoroughly national in character. It is obvious that any new national bank must start from some regional base, as did our existing chartered banks, and therefore the first branches will be opened in and around the two cities of Vancouver and Montreal, where the provisional directors reside. It is intended eventually, as conditions warrant, to provide a general banking service throughout Canada. It is because the head office will be in Vancouver and the principal management will be located there that I am proud to associate myself with this bill and with the incorporation of the Laurentide bank of Canada.
Without being critical of the existing banks, I am also aware of the difficulty that western Canadian businessmen face in capital formation. In the west, and in British Columbia particularly, we have a fast growing and developing region, a boom area, and yet not one chartered bank has seen fit to have a head office west of Toronto-a head office and financial policy oriented to the special needs and problems of western Canada. We in British Columbia have long felt the need of establishing financial institutions that are oriented to our special needs and problems, and I would hope that no one in this house will stand in the way of helping to fill this need for British Columbia.
Many members are not familiar with the tremendous developments going on west of the Rockies. Briefly I would point out that the gross provincial product of British Columbia, as of 1963, is equal to the gross national product of Canada in 1924. In 1924 Canada had some 19 chartered banks instead of the

Private Bills
present eight. Our economy in British Columbia now is equal to that of the whole of Canada in 1924 and is such as to require, and is certainly well able to support, the head office operations of a new bank.
The other region of Canada to be immediately served by this bank is the province of Quebec. There are two leading French Canadians on the board of directors. Lauren-tide Financial Corporation has carried on business in the province of Quebec for a long and, I think, happy period. I trust members from Quebec, all eager to see the further development of their province, as I am of mine, will recognize the value of creating additional banking facilities within their province to contribute to the economic development of Quebec.
This is the second bill to come before this house for the incorporation of a bank. Some members have raised the question of whether Canada needs additional chartered banks. Members of the banking committee will want to examine this question in detail. Briefly, however, I would refer members to the royal commission on banking

the Porter report-* which throughout makes it clear that in the opinion of the commission there is no hazard to Canada's chartered banking system by the incorporation of additional chartered banks. The Porter report has recommended a more open and competitive banking system. It has referred to the dangers of undue concentration in our banking system. I quote very briefly from page 362 of the report where it states:
There must be sufficient competition among these institutions that borrowers and savers have alternatives open to them.
If the incorporation of an additional bank would endanger the Canadian banking system, one of the finest in the world, any of the existing banks or the Canadian bankers association had the full right and opportunity to come before the Senate committee and say so. They did not. Our Canadian bankers believe, like most members of this house, in the free enterprise system, and believe that the very essence of that system is the free play of competitive forces. We do not believe in the stifling of competition. Surely we cannot believe that our banking system should be left static, and ultimately by way of merger and takeover, fall into the hands of two or three chartered banks. In the last ten years alone the number of banks has gone from 11 to 8. This process should not be allowed to continue.
There are those in the house, of course, who do not believe in the free enterprise system. There are those in the house who want to make drastic and sweeping changes in the banking system, but surely they also are not going to use their position in this house to prevent passage of this bill, resulting in protecting the existing chartered banks from further and desirable competition, and resulting in their giving the existing banks a monopoly over Canadian banking business.
There are those who point to the number of branches that we have in Canada, and say that that number is ample and sufficient for the needs of Canada. I suggest, Mr. Speaker, that it is not sufficient simply to say that we have so many branches and that that is enough. Surely a bank is, and must be, a policy making financial institution, whose services may be offered by one branch or by a thousand branches. The paucity or abundance of its branches is nothing more than a convenient extension of its services, but is not an extension of its policies. A bank, no matter how many hundreds or even thousands of branches it may have in operation, is one bank, having one policy, paying one rate to its depositors and demanding one rate from any particular class of borrower. This policy is formulated at head office and simply implemented by the large number of branch managers, and there is certainly not one policy for each branch, but one for the entire structure.
In Canada we have now shrunk to the point where, other than in Quebec and small portions of Ontario and the maritimes, there are only six chartered banks, and I include the Mercantile Bank in this number. In British Columbia we have only six, and in Alberta only five. To me it is self-evident that the person proposing to transact banking business and having eight alternative policy making financial institutions to which to turn obviously is better served than the Albertan or British Columbian who is limited to five or six. To me it is obvious that an increase in the number of chartered banks, thus providing to Canadians and the Canadian economy additional policy making financial institutions, can only be of benefit to the growth and development of our economy.
The incorporation of this bank was endorsed by my own premier, Premier Bennett, who is somewhat involved in the banking business himself, when he made it clear to the banking and commerce committee of the Senate that he fully supported the incorporation of the Laurentide bank.

At page 50 of the proceedings of that committee on July 22 appears the following statement:


Hon.   Mr. Bennett@: I would say that British Columbia welcomes the Laurentide bank as well.
I can only assume that the premier's friends here in the house, both in the Social Credit party and in the Creditiste party, will allow this bill to go to committee in order to indicate that the premier was being completely frank and honest with the Senate and with the country.
In deciding whether to incorporate this bank or any other bank one must surely apply the standards laid down by the Minister of Finance (Mr. Gordon) in the house some months ago. First is it properly financed? I say that the Laurentide bank of Canada, with a proposed capitalization of $30 million, with the support it will obtain from Laurentide Finance Corporation and the general public, is properly financed. Second, is it supported by financially responsible people? In my opinion, Mr. Speaker, in my brief outline with respect to the sponsors of the bill I have indicated that they are financially responsible people with wide and varied experience in the business life of their communities. Third, will control of the bank remain in Canadian hands? Section 5 of the bill provides for this.
I suggest that the Laurentide bank of Canada meets all of these conditions and careful scrutiny by the members of the banking and commerce committee will satisfy them that the Laurentide bank should be incorporated. In the words of a Vancouver Sun editorial of July 25, 1964:
The bank is assured of a broad and diversified ownership, yet its backers have the resources of experience to ensure that it will be firmly established. One of its main objects is to meet the special needs of British Columbia industry and people. In this it will fill a long felt want. We welcome the bank's progress and wish it success.
There is no good or valid reason, Mr. Speaker, why the bill should not now be referred to the banking and commerce committee so that careful scrutiny of its proposals can be commenced, and I ask the house to give the bill second reading now and refer it to the banking and commerce committee.


Mr. Laprise:: Mr. Speaker, would the hon. member allow me to direct a question to him?


Stanley Ronald Basford: Certainly.
Private Bills


Gérard Laprise: Does the hon. member know that the sponsors of Bill No. S-13 have asked for three million shares, which would increase the sales value to $30 million instead of $10 million? Is that correct?


Stanley Ronald Basford: Yes, this is true. An amendment to the bill was made in the other place. The original bill provided for a capitalization of $10 million and an amendment was moved and approved in the Senate to make the capitalization $30 million or three million shares.


Marcel Joseph Aimé Lambert: Mr. Speaker, in view of the fact that this year we are seeing a proliferation or a sort of covey of applications for the incorporation of banks, I think it would be useful to look at the history of banking and chartered banks in Canada to see what has been the effect of the chartering of banks. Today we have a very limited number of chartered banks which are all engaged in the branch banking business. I suppose it is ultimately the intention of the incorporators of the Laurentide bank and of those who have other such proposals before parliament to go into the branch banking business, if business so warrants. Otherwise one might say to them: You are limiting your operations; all you want to do is to get in on the cream of the business.
In so far as stability and the requirements of the banking system of this country are concerned, banking is a quasi-public service and there are responsibilities in so far as the public of Canada are concerned with regard to the offering of banking and credit facilities. We know that much of the operations of the chartered banks today, particularly with the great expansion in the number of branch banks, is on the basis of a quasi-public service. If one were able to study the profit and loss statements of each branch, he would see that a great number of the smaller branches are in effect operated at a monetary loss, although I am sure that in the over-all picture they are not operated at a loss. Otherwise the chartered banks, who are not in the business merely shall we say for charitable purposes, would certainly not continue the operation of branch banks measured only on a profit and loss basis.
However, in the examination of any of these proposals to incorporate new chartered banks I think it would be good to look at the evidence of the superintendent of insurance when he appeared before the banking and

Private Bills
commerce committee of the other place, in order to indicate just what has happened with regard to banks chartered by parliament. The first bank charter was granted back in 1822 in the old province of Canada, and between that time and 1867 some 80 banks were created in British North America, of which 35 had survived as of July 1, 1867.
It is instructive to note that those banks incorporated prior to 1867 have exhibited some characteristics of longevity which are rather admirable, because five of those banks or their successors are in operation today out of the total and limited number of chartered banks now in operation. However, as we know, in 1867 banking was placed under the exclusive jurisdiction of the parliament of Canada, and since that time up to the present day 77 further banks obtained charters, of which only three have survived. Of the 112 banks that were active on or which have been incorporated since July 1, 1867, 104 have ceased to exist. Of these, 38 never commenced business. I think it is quite instructive to note this as we go along in that we have three and possibly four proposals to consider this year and it is to be wondered whether they will all actually commence business. Twenty eight of those 112 banks have failed and 38 have been taken over or have been amalgamated with other banks. True enough, because of their limited operations and their limited financial resources it is quite probable that many of the mergers in earlier years were really for the purpose of salvaging the business and they would have failed had they not been taken over by stronger institutions.
We may say that 104 have ceased to exist, including 28 which failed and 38 which were amalgamated, but what did this mean so far as loss was concerned? I think it is an indication of the strength of the Canadian banking system that losses to the public have been only $15 million over the whole history of banking in Canada, of which half resulted from the failure of the Home Bank of Canada. The sum of $15 million included only a quarter of a million dollars of bank note holdings, and all of those losses occurred prior to 1882.
The last bank that failed in this country was the Home bank, in 1923. In looking at the structure and stability of our Canadian banking system I think it is very instructive to note that it survived a really serious onslaught during the early depression years. In other countries we saw banks falling by the wayside like grain before the scythe or

mower. But in modern times, in the last 50 years shall we say, there were five banks incorporated which never commenced business. In the period 1913 to 1923, there were six mergers; from 1923 to 1934 there were seven mergers; from 1934 to 1954, there were no mergers; from 1954 to 1964, there were three mergers.


Stanley Ronald Basford: Would the hon. member permit a question?


Marcel Joseph Aimé Lambert: Yes.


Stanley Ronald Basford: I presume he is aware of the fact-I am not sure of the point he is making -that since the creation of the office of inspector general of banks in 1924, there have been no bank failures, and that under the modern Bank Act no bank, even after it has been granted a charter by parliament, can commence business until it receives a certificate from the treasury that it is in a position to commence business.


Marcel Joseph Aimé Lambert: This is granted, and I am sure it was as a result of the Home bank failure of 1923 that the office of superintendent of banking was created. This is an indication that the appropriate steps were taken and that control by parliament of our Canadian banking system has been salutary.
Let us have a look at the location of banks that have been incorporated, because it has been indicated there is a certain regional interest in promoting banks today. This is a small example, but we have one called the bank of western Canada with a proposed head office in Winnipeg. There is another, the bank of British Columbia and it will have a head office in Vancouver. There is this Lau-rentide bank and the petitioners for it are from both Montreal and Vancouver. This may be said to have a national span, but in essence the directors as named in clause 1 of the bill are primarily from Vancouver. They are in finance, the printing business and other businesses.
The hon. member for Vancouver-Burrard (Mr. Basford), who is the sponsor of the bill, has indicated a great desire for a bank with its head office located in Vancouver. I suppose this may have been of some consideration in the establishment of other banks, but perhaps not so much, because of the more limited communications that existed in earlier days. Let us look at the number of banks which have been created since confederation, their location and the number that have ceased to operate. In Nova Scotia, there were four, three of which failed and one was merged; in

New Brunswick there was one, which failed; in Prince Edward Island there was one, which was merged; in Quebec there were nine, of which two merged and the remainder failed; in Ontario there were 16, of which ten were merged and the remainder failed; in Manitoba there were two, of which one failed and one was merged; in Saskatchewan there was one, which was merged; in British Columbia there were two, one of which failed and the other was merged.
As to those charters which were issued but not used, it is interesting to note the following figures: two in Nova Scotia; two in New Brunswick; ten in Quebec; 13 in Ontario; seven in Manitoba; two in Saskatchewan; one in Alberta; one in Yukon, making a total of 38 charters which were granted but never used.
In so far as the present bank is concerned I feel that the provisions relating to shareholders are an improvement over some of the provisions brought forward by the Minister of Finance (Mr. Gordon) in relation to maintaining Canadian control. The requirement is that a director shall be a subject of Her Majesty and ordinarily resident in Canada. In other words he shall be a British subject resident in Canada. Other legislation merely asks that they be residents of Canada though they may be citizens of any other country in the world. This is an element of Canadian ownership, of Canadian fiscal control in connection with the operations of the bank. There are restrictions also in connection with the registration of shareholders and of shares of non-residents of Canada. I feel it is incumbent upon me at this time to draw attention of hon. members to the history of bank charters as issued in Canada to date, to show that not all the charters which have been issued have seen the successful operation of a bank. The mere fact that we do issue a charter does not mean that there is going to be a successful operation.
We have certain near banks. I do not know about the operations of the Laurentide Finance Company, which would be closely affiliated with this bank, but I rather suspect its operations come within the ambit of what is called a near bank. We have in the province of Alberta not only a number of these near banks but we have provincial treasury branches whose operations come within the regulations of the superintendent of banks.
I do not want to delay the legislation. I am sure other members of this house want to express their points of view with regard
Private Bills
to this proposal. I think it should be examined very carefully. Certainly in committee there will be a number of questions to which hon. members will require more extensive information perhaps than was given before the committee on banking and commerce in the other place, although the deliberations of that committee were of considerable assistance in considering this particular matter.


Colin Cameron: I have been interested in this bill and in the two other bills mentioned by the hon. member for Vancouver-Burrard (Mr. Basford) dealing with applications for bank charters. I think I should say at the outset that I have no fears whatever that this bank, if established, will fail because it happens that under our monetary and banking systems it is virtually impossible for a bank to fail. If anyone has any fears about that, then I would refer him to the evidence of Mr. Graham Towers some ten years ago before the banking and commerce committee when we were revising the Bank Act. I think we can be sure this is a question we do not have to bother with today, as earlier legislators had before them the possibility that a bank charter, if issued to someone, was going to be a failure. I believe that is virtually impossible today.
However, this bank interests me. It interests me because of some of the questions that were asked in the banking and commerce committee in 1955 when the small loans companies were under examination because of the amendment to the Small Loans Act that was proposed by the superintendent of insurance. I think it is not too much to say, sir, that there was not a member of that committee who was not deeply shocked by the revelations made at that time of exorbitant interest rates being charged by some small loans companies. I recall on one occasion the revelation of an effective interest rate of 80 per cent on a small loan. I might say at this point, Mr. Speaker, that I am mentioning this because, in the evidence given by Mr. Peter Saunders before the banking and commerce committee in the other place, there was a clear indication of the intention to have a very close association with the Laurentide Finance Company. Therefore I think the operations of finance companies are of interest to us in connection with this application for a bank charter.
There was not a member of that committee at that time who was not profoundly shocked to discover the exorbitant rates

Private Bills
charged by small loans companies, the enormous profits they were making, and the quadrupling and quintupling of the assets of these companies in the space of six or seven years, as revealed by the financial statements they were obliged to produce for the benefit of that committee.
We were also impressed by the fact that these exhorbitant rates were in no way justified by the loss records of those companies which at that time-and I do not imagine they have changed since then-were less than one quarter of 1 per cent. The usual argument in favour of exhorbitant rates is that a very risky loan is involved, yet we had evidence before us which clearly indicated, as the former superintendent of insurance pointed out, that the vast bulk of the Canadian people are almost pathologically honest and are determined to pay their debts at any cost.
We have before us a bill which is introduced largely by two extremely enterprising young men in Vancouver, one of whom I was very well acquainted with a few years ago and for whom I have a very high regard; but I was interested in the evidence given by Mr. Saunders on Wednesday, May 27, this year, before the banking and commerce committee of the other place, in which he had this to say:
When Senator Cameron introduced our bill for second reading in the Senate, he mentioned that the bank was intended to be a subsidiary of Lau-rentide Financial Corporation Ltd. It has been our intention that the new bank should be in some fashion allied with the latter company, for the operations of the two institutions can be in many ways complementary one to the other as has been evidenced by similar alliances established by some of the existing chartered banks. Initially, it appeared appropriate that this alliance should take the form of a parten-subsidiary relationship, with subsequent public participation in the bank being invited when its circumstances had somewhat matured. However, it is apparent that if the bank should be a subsidiary of Laurentide Financial Corporation, the restrictions upon non-resident participation in its share capital-as set forth in section 5 of the bill before you-would have little meaning; transfer of control of the parent company to a non-resident would effectively place the bank under foreign control. I shall refer further to the question of control of Laurentide Financial Corporation later.
We have here a clear and frank statement by Mr. Paul Saunders that it was the intention of the promoters of the Laurentide bank that it should be a very close affiliate of a loan company; that in the minds of the promoters the operations of the two institutions would be complementary. I can well believe they would be so. I can well believe this would be as complementary as, in fact almost identical

with a corporation which sets up a wholesale house and has a retail outlet too.
I suspect, Mr. Speaker, this is what would be the real definition of the Laurentide bank, that it is to be the wholesale house which will use the credit creating facilities of a chartered bank to funnel funds into a small loan company which will, in turn, lend them to the general public at vastly larger interest rates than the Laurentide bank itself would be legally entitled to charge. You may say, sir, that this is legitimate business, that this is the way to do it, and maybe it is. Maybe some of us do not quite like it. I do not question its legality, or anything of that sort, but it does raise another question.
The hon. member for Vancouver-Burrard (Mr. Basford) and Mr. Saunders before the Senate committee, and others who have spoken on these applications for bank charters, have stressed quite rightly the need for the establishment of a new bank in western Canada, particularly I think in B.C., and when I say that I am not speaking in any narrow, provincial, nationalistic frame of mind. But as the hon. member for Vancouver-Burrard has pointed out, there is a vast booming expansion taking place in our province at present, and there can be no question whatever that it is to some extent being inhibited by the fact that there is no chartered bank in Canada located in B.C. as its head of operations, and I would make this distinction between merely having its head office located in Vancouver and having the main centre of its operations centered in the province of B.C., in the first instance at least.
The analogy that has been drawn between the situation in California some years ago and the present situation in B.C. is a valid one. Many economists have pointed out that there is a very striking coincidence between the formation and development of the Bank of America, which was the first large bank in the United States to move on to the west coast, and the huge expansion which took place in California and which has now brought that state to the first position in the union to the south of us. Here in Canada we are now reaching the point where we need the same type of development in B.C., and I suggest that development cannot be achieved by the establishment of a bank which is going to deal, not apparently with industrial expansion but with a small loans business. It is going to provide the raw materials for a small loans company.
I am not suggesting for a moment that such a bank should not be established, but I am

rather afraid, and I have some misgivings on account of what I heard in the other place and here, that if the house should pass this particular bill, and later pass the bill for the bank of western Canada, this will lay the foundation for a refusal to establish the bank of British Columbia on the grounds that the needs are now being filled by these other two institutions.
I suggest that the needs of B.C. will not be filled by either the Laurentide bank, which is to have its head office in Vancouver, or the bank of western Canada, which is to have its head office in Winnipeg.
I do not usually find myself fighting on behalf of the present government of B.C. I have grave misgivings about that government, but those misgivings do not go to the extent that has been suggested by some people, that the present government in B.C. in some strange, malign manner would be able to use this bank to interfere with the central government's authority over the monetary system and the total money supply of the country. Only a complete monetary ignoramus could ever suggest such an idea. While I have misgivings about the present government of B.C., I am quite sure the confines of the Bank Act and the scrutiny of the inspector general of banks will keep them in line.
Of course, Mr. Speaker, I have a further interest also, and I may say this just as a matter of historical political interest. Some years ago I succeeded in getting my colleagues in the C.C.F. to agree to insert a plank in our provincial platform which called for an application for a charter for a bank under the Bank Act. Later, I regret to say, my rather timid colleagues decided to take it out. So, I have a rather personal interest in the establishment of this bank. But quite seriously, sir, I am afraid some of the hon. gentlemen in the other place, and perhaps some hon. gentlemen in this place, who have never been able, or willing, or prepared to go very much further west than Yonge street in Toronto, have literally no idea what is happening in western Canada today, and the urgent requirements of that area for adequate financial institutions to finance the sort of expansion that must take place in Canada, in the same way as expansion took place in the union to the south of us.
So I am hoping that perhaps this chamber may decide to wait before making up its mind on this bill until we hear from the other place what is to happen with respect to the third bill which has been introduced
Private Bills
in the Senate this session for the incorporation of a bank.


Horace Andrew (Bud) Olson: We listened with considerable interest to the plea by the mover of this motion that the bill before us be sent to the committee on banking and commerce for further discussion there. At that time, he suggested, it would be appropriate to examine some of the officers of the bank, the petitioners, and deal with the subject in some detail.
But I wonder if it would not be useful to consider having all three of the proposed bank measures referred to the committee at roughly the same time so as to avoid overlapping or repetition in some of the general questioning of officers which would have to take place. I realize that each of the promoters of these banking enterprises has expressed some different purpose. At the same time, if we examine the two bills S-6 and S-13 we will find, I suggest, that they are almost identical except for the names of the petitioners, the names of the banks and the location of the head offices. I expect that when the petition of the bank of British Columbia comes before this house for consideration the bill will be written in terms identical with those of the two measures which are now before us. Because of these striking similarities it seems to me a useful purpose would be served by having all three of these bills considered, possibly not together, but at roughly the same time.
A number of suggestions have been made in this debate that the Laurentide bank will not in fact provide the kind of financial services which are required to assist the tremendous industrial and commercial expansion which is taking place on the west coast. My hon. friend from Nanaimo-Cowichan-The Islands (Mr. Cameron) has suggested that perhaps the purpose of this bank would be to provide the funds necessary to the Laurentide Finance Corporation. He found grounds for this suggestion in the evidence which was placed before the committee of the other place that there would be, at any rate, a close alliance between the bank and the finance corporation should the bank come into existence. The Laurentide Finance Corporation, as all members know, is primarily concerned with the provision of consumer credit. This may be desirable; it may be a service which is demanded by Canadians on the west coast as well as in other parts of Canada. But it certainly seems to me that there is a very real need for a banking institution in the far west of Canada which would

Royal Assent
be disposed to provide the kind of financing necessary in the much larger field of industrial and commercial expansion. I think some of the promoters of the proposed bank of British Columbia have stated that they are more concerned about the financing of industrial expansion than they are about providing what might be called retail credit facilities in competition with those offered by existing bank branches. I think the sponsor of this bill would agree that providing these large corporations with the capital they need for expansion is a most desirable move on the part of a bank.


Stanley Ronald Basford: I am most happy to agree with that. That is why I am sponsoring the incorporation of a new bank which will provide this sort of service.


Horace Andrew (Bud) Olson: I am pleased to hear the sponsor of the bill say that. But his words are perhaps slightly at variance with the evidence which was given in the committee on banking and commerce in the other place, where it was suggested there would be a close alliance-there was even the suggestion of a subsidiary arrangement-between the Laurentide Finance Corporation and the Laurentide bank. As I say, I believe the Laurentide Finance Corporation is more concerned with providing credit on a consumer credit basis-perhaps not exclusively-than about lending money to finance industrial expansion.
As members are aware, over the years we have expressed concern over the fact that the chartered banks are able to circumvent to some extent the statutory limit on interest.
Mr. Speaker, may I call it six o'clock?



THE ROYAL ASSENT

[Stage Direction]
A message was delivered by Major C. R. Lamoureux, Gentleman Usher of the Black Rod, as follows:
Mr. Speaker, the Honourable the Deputy Governor General desires the immediate attendance of this honourable house in the chamber of the honourable the Senate.
Accordingly, Mr. Speaker with the house went up to the Senate chamber.
And being returned:
Mr. Speaker informed the house that the Deputy Governor General had been pleased to give, in Her Majesty's name, the royal assent to the following bills:
An act to provide for the extension of credit to farm machinery syndicates.
An act to amend the Crop Insurance Act.


Mr. Speaker:: It is my duty, pursuant to standing order 3 9A, to inform the house that the questions to be raised at ten o'clock p.m. this day are as follows: (1) the hon. member for Kootenay West (Mr. Herridge); water resources, speech by U.S. official to Alaska chamber of commerce: (2) the hon. member for Halifax (Mr. Regan); national parks, Nova Scotia, transfer of land for second park: (3) the hon. member for Port Arthur (Mr. Fisher); immigration, Hal Banks, purported publication of departmental documents.



FINANCE


[Stage Direction]
The house resumed consideration of the motion of Mr. Gordon for the second reading of Bill No. C-123, to amend certain acts administered in the Department of Insurance.
At six o'clock the house took recess.

AFTER RECESS

The house resumed at 8 p.m.
Colin Cameron: Mr. Speaker, it is the ill fortune of the Minister of Finance (Mr. Gordon) that myself and others who are going to speak tonight have to compete with the British election. However, we will just have to hold our souls in patience until it is through and we can find out what it is all about. I understand also that I must be rather careful tonight not to interfere with the minister's sleep. However, I want to warn him that I am going to cast all the pearls in my necklace before I allow him to get off to bed.
There are two purposes in this bill. I think most of us will agree with the general purpose of the bill. One is to inhibit and curb the continued foreign investment in Canadian financial institutions, and the other is to promote as an alternative the investment of Canadian funds in such institutions and in the general national development.
Sir, there are wider implications in this bill than are covered by those two concrete purposes. The bill presents a question to us that goes beyond even the question of foreign

domination, imprtant as that may be. It goes right to the question of just what is our economical and ;0litical philosophy in regard to world development. Just what do we think should be the Purposes of a national economy, and what should be the purposes of an economic organisation? We have also to decide in our ovs^ minds what price we are prepared to pajr for the purposes that the hon. minister his jn mind in this bill.
I think it is true to say that what I am inclined to call the g.n.p. economics has pretty well ruled the rest of the western world for a number of years past. This type of economic philosophy uses only one yardstick for measuring the validity or desirability of any economic policy, that is, the cheapest and most efficient way and place in which you can produce goods and services. It is perhaps carrying that theory of division of labour to its ultimate conclusion, with possibly even a certain amount of dreamy contemplation of one world which does not yet exist. The assumption seems to be, under gross national product economics, that man is primarily a producing and consuming animal rather than a social and political creature.
No one of course follows this thesis completely to its logical absurdity. Always there are reservations, and always there are exceptions. I think it is true to say, however, that this type of economic thinking has been the keynote of our economic thought for quite a long time past-possibly for 50 or 60 years -and any departure from that philosophy has required to be excused as a regrettable, if necessary, heresy.
On the basis of that type of economic thinking, which is all too popular in the world today, there is very little to be said for the minister's bill, because it insists on setting up roadblocks in the way of continuing foreign investment. Perhaps from the point of view of this very narrow school of economic thought one could make out a good case for this type of economic foreign investment in our economy. If we are prepared to eliminate all other considerations, all national considerations and all other social considerations, we have to decide, when we come to judge this bill of the minister's, just how much these other considerations mean to us.
The Fathers of Confederation, about whom we hear so much today, of course flew straight in the face of economic logic and common sense. I never cross the Rocky mountains on the way to my home in British Columbia without being impressed again with the folly and the grandeur of the concept from
Department of Insurance Act which this country was born. It was supposed by most of the Fathers of Confederation at that time that they had achieved the impossible when they had successfully defeated logic, geography and economics, and established the nation of Canada. The idea was perhaps in their minds that the job was completely done once and for all, because of course at that time they were living in a premodern capitalistic world. They had no concept of the sort of developments that we were going to see in later years, and the difficulties that they would pose for a country such as Canada, created in the face, as I say, of economic logic and geographic logic.
I think the same question faces us today that faced John A. Macdonald and his colleagues. That question is, is it worth it? They had to ask themselves that question. Was it worth flying in the face of all common sense, logic and geography to establish a nation in the northern half of North America? They decided the answer was yes. Again I think we have to ask ourselves today, is it worth it? Is it worth continuing? Is it worth attempting to preserve a Canadian identity, both economic and political, or would the part of wisdom be to relax comfortably into becoming merely an adjunct to the much larger and wealthier economy to the south of us, which would probably give us a fairly comfortable living but which would inevitably destroy the work done by the Fathers of Confederation?
This is a quite difficult question to answer, a question that Canadians have always been dodging for the last 100 years and have never come up with a continued and consistent answer. But I believe if we turn to the outside world away from North America we may find an answer to this question, because one very significant fact emerges, that virtually the whole of Canadian foreign and external policy is a repudiation of the economics of the gross national product. We are committed throughout the world to the building, to the encouragement, to the establishment of viable national economic units in the emerging countries of the world.
Not long ago I was on the Gaza strip where I saw the representative troops that Canada has had there for the last eight years. One of the purposes of our keeping our troops there and preserving the uneasy peace of the Middle East has been to enable the state of Israel to establish itself as a viable economic unit. The Israelis, of course, did exactly what our Fathers of Confederation did. They thumbed their noses at logic and geography,

Department of Insurance Act at economics and common sense. But there were other values involved and we as a people have recognized those values and consider them worth protecting and promoting.
We should perhaps examine those values in our own case and the very first thing we have to face is that the old adage that you cannot eat your cake and have it is just as valid today as ever it was. We cannot eat the nice, juicy, easy cake of sale of our institutions, our resources, our industries to wealthy foreigners and reap the short term benefits, and at the same time hope to achieve the long term benefits of an independent national identity, as an independent nation with independent thinking, with an independent culture and society. We just have to make our choice in this regard. If we are going to eat our cake quickly now, the Minister of Finance is wasting his time in bringing a bill like this before us and we should throw it out of the window out of hand.
I happen to think that Canada is still worth preserving. I think that Canada and Canadians have a role to play in the world. This year I had a better opportunity than I have ever had in my life before to visit other countries as the guest of the governments of two foreign countries in the Middle East, and I was impressed by the position that Canada and Canadians hold in the minds of these people. I admit that the irreverent thought occurred to me now and again that this high esteem was possibly based on ignorance of us, because one heard very little about Canada in other parts of the world, and it may be that when they know us better their esteem will drop. But one thing we can be quite sure of is that we shall not continue to enjoy that esteem if we decide we are going to take the easy way out and sell off bits of the family homestead, and whoop it up in town with the proceeds without any consideration of the future.
I am far from convinced that the minister's bill is going to achieve the very worth-while purpose he has in mind. I have suggested to him in earlier debates in the house that I thought he would have great difficulty in policing it. I have an idea that the complex ramifications of modern, large scale corporate capitalism are going to make it very difficult to deal with the problem of national independence by the means the minister is proposing. I do not, for instance, anticipate the possibility of seeing a great many company directors behind bars, alluring as the prospect might be. I suspect they will not get behind bars and I rather doubt if they will even


suffer the $5,000 toe, but in any event we will give the minister an "A" for effort and cheer him on as aHoratius standing on the bridge. I am quite Prepared to stand alongside him but I shal run away if large clubs are thrown at me. However, I will give him an "A" for effort.
I think, for instance, it would be possible to make out a case for the value of foreign investment in productive enterprises, that is, enterprises producing goods in this country, although to my mind the disadvantages would outweigh the advantages. But I do not think there can be any question at all that the continued ownership and control of financial institutions by Canadians is a prerequisite to Canadian independence, and that if we allow these levers of power in a modern economy to fall into other hands, then all power will fall into other hands also. However, I have an idea that the minister will have to go rather further than he is prepared to go now.
I doubt that the doctrine of laissez-faire is going to be able to deal with the world of automation and giant corporations. I suspect that laissez-faire will take its place with a number of other divine revelations that have been discarded in the course of human history, and that the minister will have to take more drastic and positive action than he is prepared to take at the present time.
There is for instance the Canada Development Corporation. Perhaps one should speak in a hushed voice in the presence of the dead when one refers to this corporation but I am hoping it is not completely dead and that the minister may be able to resuscitate it. I would hope that he would find the funds to deal with this problem of foreign ownership in public hands, that he might for instance be able to use the funds contributed to the Canada pension plan. Do we hush our voices here? I am not quite sure, but one thing I am quite sure about is that this would be a source by which a really decisive effort could be made with regard to Canadian investment in Canadian institutions along the line of the developments that have taken place in Sweden, where the funds from their extensive social security program now constitute one, if not the major, source of investment capital in that country. In that connection I would suggest that to my mind it is a daft idea to consider turning over all the proceeds of the pension fund to the provinces. I should like to hope that at some time we would perhaps replace a large part of the business of private insurance by public insurance,



IS, 1964

[Stage Direction]
and there again have funds by which we could direct investment in our economy in the directions which seemed to us most desirable.
I was interested this afternoon to hear the voice of the dinosaur from the primeval swamps when the hon. member for Digby-Annapolis-Kings (Mr. Nowlan) told us that this was an invasion of the age old rights of private property. I could almost hear the voice of Charles I saying "hear, hear". He had age old rights, the age old rights of the divine right of kings, and of course he lost his head over them. I do not imagine that the genial member for Digby-Annapolis-Kings is going to lose his head, but I suspect that the minister must be very cheered at hearing this enunciation of the Tory credo, because it made him look like a positive apostle of progress and made us perhaps forget that this very hesitant, gentle, timid step against the whole bastion of modern capitalism is but a slight chipping at one of the outlying bastions of that structure. However, I think we can perhaps be thankful for small mercies. We have to be, with regard to the present government. I should like to conclude by saying that to my mind the Minister of Finance might perhaps be considered one of the small mercies of the Liberal government now in office.
Robert Norman Thompson: Mr. Speaker, it has now been several weeks since the Minister of Finance (Mr. Gordon) introduced this very lengthy and profound legislation we have before us in the form of Bill No. C-123. He has announced that this legislation is intended to prevent foreign takeovers of Canada's most important financial institutions. In principle this is good. The objective is right. I believe that the motive behind the proposed amendments is good and one to which we can subscribe. What I am concerned about, Mr. Speaker, is whether or not this legislation that we have can in any way be effective in reaching this stated objective. I believe that what we have before us is something that is correct in the direction at which it is aiming, but it is wrong in the means through which it is expected to attain that objective.
What concerns me in relation to the investment provision is that under existing regulations insurance companies are allowed to invest 15 per cent of their money in common stock. What percentage of that which they are allowed to invest is being used? My understanding is that it is less than one third of the 15 per cent that is being utilized at 20220-576
Department of Insurance Act this time. It is my understanding also that the reason for the reluctance of insurance companies to put any substantial percentage of their investment money into common stocks is that the loss in value at any given point is not taken into consideration by the Department of Insurance in the evaluation of the balance sheets of these insurance companies. There was no provision in this statement to change this condition. My question to the minister would be, does he intend to rectify this situation so his proposal of 25 per cent can be effectively utilized by the insurance companies which are allowed 15 per cent now.
In my opinion the basic reason the insurance companies are not now using this permissible 15 per cent in common stock investments is that they are required to show the market value of this common stock on their balance sheets at the time the balance sheets are made up. Should this stock be low in value at that time it would affect their financial situation in so far as their reserves are concerned in relation to the requirements for their outstanding policies. This is the reason I have grave concern about what the minister has stated as being the objective of this legislation being reached. If the insurance companies have too much money in common stock, it could result in a serious situation. This cannot be said of mortgages or of government bonds or even the bonds of large corporations. If it is essential, perhaps there is some other way of encouraging insurance companies to invest their money in common stocks, which are really the basic type of investment, the most valuable type, so far as the general economy is concerned.
I have watched carefully the financial pages of our press, and I find that this doubt is generally held by many of those who are considered experts in this field. I quote particularly from one of the lead editorials in the Globe and Mail for September 25:
This appears to be again the case with the new policies he has announced-
The reference is to the Minister of Finance.
-concerning ownership and operation of the country's financial institutions. It may be months before the lawyers and accountants have worked out in detail exactly what the legislation means. But it would appear from a first look that Mr. Gordon is seeking a reasonable end by unreasonable means.
Then, going on in this editorial I read:
The damage he may do to foreign investment is not likely to be offset by the gesture he is making toward the encouragement of Canadian investment. He is probably right to permit insurance companies and other financial institutions to invest up to 25


the necessary capital which we need for the development of our industry, the development of our resources and the general economy.


Marcel Joseph Aimé Lambert: Mr. Speaker, I made my initial remarks, on the proposal that is before us this evening, on the night of September 23 when the minister introduced the bill after his statement on motions. At that time I made certain observations on the purposes of this bill, and I think subsequently it has been pretty well clarified that its purposes were as I had indicated. However, on that occasion I had to make certain reservations until such time as I had an opportunity of reading the bill. I must say, Mr. Speaker, that I think my guardian angel must have been with me on that occasion because, having read the bill, all 54 pages of it, I now find it is full of prickly burrs and contains one or more fish hooks.
I was especially amused by the remarks of the hon. member for Nanaimo-Cowichan-The Islands (Mr. Cameron), who made quite a play about the stand taken by my hon. friend from Digby-Annapolis-Kings. In so far as the hon. member for Nanaimo-Cowichan-The Islands was concerned, he seemed to think this bill was a mere nibbling away or cautious approach to a problem. All I can say is that if one followed the train of thought in his speech, assuming there was any thought in it, one would conclude that the N.D.P. would go much further, but how far we do not know.
The hon. member was most coy. He hinted at a great nationalistic approach, at a sort of massive take-over of foreign interests in Canadian corporations. He did not limit his view to the bills being amended but dealt with the whole ambit of foreign ownership. He asked, where was the Canadian development fund, and this was the first time I heard that fund was to be used for this purpose. I understand it is to be used for the infusion of funds, accumulated in Canada by the government, into the development of industry, and not for the purposes of patriation of foreign interests.
Then he asked, where was the great fund that was to be accumulated under the Canada pension plan, and said the government might have used that fund in order to return to Canada a greater degree of ownership in our industry and business. Of course we know that the funds which will be accumulated under the Canada pension plan have already been given away to the provinces, and it is clear there was never any thought that they should be made available for this purpose. The hon. member did not tell us where and how far his party would go in this regard,

and I say quite frankly to him he was either afraid to do so or did not know where it would go.
I must confess that the detailed provisions of this bill are very complicated, and I am pleased the minister has agreed that it be sent to the banking and commerce committee. I am pleased that he is not repeating the mistake made by his colleague, the Minister of Agriculture (Mr. Hays), who had to fight on the floor of the house to get a bad bill passed, a bill which would have taken half the time in committee of the whole had it been sent first to the committee on agriculture, the members of which could have gotten a great deal more information which ultimately would have resulted in a better bill. Therefore to that extent the minister acted very wisely. Perhaps it was a question of live and learn.


Walter Lockhart Gordon: Live and let live.


Marcel Joseph Aimé Lambert: No, I think it was a question of live and learn. In any event, there are provisions in this bill dealing with the retention of ownership in Canada and the control of Canadian life insurance companies not now under foreign control.
I must reiterate what was said by my colleague, the hon. member for Digby-Anna-polis-Kings (Mr. Nowlan), that there seems to be some sort of fixation on the matter of control of the companies covered by the four bills that are being amended by Bill No. C-123. I believe the minister really means he wants to establish a greater degree of Canadianism in the ownership of these firms because the question of control, as pointed out by the hon. member for Digby-Annapolis-Kings, really lies with the superintendent of insurance and the governor in council.
This area of financial activity, and that of the chartered banks, are among the most carefully scrutinized and overseen. There is not any manufacturing or retail concern which has, in a manner of speaking, some government official sitting alongside the president's desk, as one might literally say is the case with life insurance companies and foreign insurance companies, where there are regulations governing the nature of their investments and the trust funds they must have on deposit with the government. My colleague put these matters on record this afternoon and they will be found in today's Hansard. Therefore I say this question of ownership and control is confused in the government's thinking, and it is trying to convince the public that by introducing these provisions it will establish greater control over these companies.
20220-576J
Department of Insurance Act
The minister is trying to do something with one hand which he is undoing with the other, and I cite one point, in that right at the very beginning of the bill there is a provision which reduces the financial qualifications for directorship. Under the law as it stands, in order to be elected a director of a life insurance company a shareholder must have in his name shares in the amount of at least $2,500, or on which at least $500 has been paid as capital, or credited as capital, if such calls have been made on those $2,500 shares; but under the provisions of this bill this amount is reduced to $250, which it is stipulated shall be paid in cash. In other words there is a reduction of the application for shares to one tenth, or of the actual posting of cash to 15 per cent. This means nothing so far as ownership and control are concerned.
I shall have something to say later about the question of who is a resident of Canada, but under this proposal a foreign national resident in Canada, having $250 worth of common stock in a life insurance company, is fully qualified to be elected a director. The control lies in a whole body of directors and you could have a whole series of foreign nationals resident in Canada, as executive officers of a life insurance company, but whose investment is a mere $250. That is a pittance, and one can give them the whole beneficial interest. They do not have to hold these shares in trust.
What is $250 today? And therein would lie the day to day control of the board of directors, the control of that company; because in a public company such as many of our life insurance companies are, it only requires effectively a small group owning a relatively inconsiderable proportion of the share capital to really control it, because the individual shareholders do not turn up; they sign proxies in favour of management. As long as things go reasonably well you can control one of these companies with 20 per cent of the shareholdings. It is a continuation, so control lies not in Canadian hands but in foreign hands. But we are asked to say they shall be residents.
Again I make the point I made last year at the time of the minister's budget and again this year, on this question of Canadianiza-tion. The fact that persons are ordinarily resident in Canada, if this is to be the yardstick of Canadian control, I say to the minister is meaningless. I would prefer, as I indicated this afternoon, the provision in one of the private bills for the incorporation of a

Department of Insurance Act new chartered bank which lays down that these people shall be British subjects ordinarily resident in Canada. It the minister is talking about Canadian control, let him say "Canadian citizens ordinarily resident in Canada" not just "residents".
Let us come to the other point of residence. The bill speaks of a non-resident being an individual who is not ordinarily resident in Canada. The emphasis is on the negative all the time; you are something because you are not something else. But what do they mean by "a person ordinarily resident in Canada"? For the income tax law it is that your ordinary day to day residence is in Canada for at least 180 days. Does this mean that for the purpose of this act one shall be deemed a resident of Canada if there is a stay here of 180 days in one calendar year or one fiscal year? There is nothing in the bill to indicate this. Again, I say to the minister that he is only going half way. I am not necessarily accepting the principle of what he is trying to do, but in the attempt to do what I think he has in mind I do not believe he is going about it in the right way.
I know the minister's preoccupation with some sort of Canadianization of our corporations. I will not repeat the remarks made by my hon. friend from Digby-Annapolis-Kings (Mr. Nowlan) as to the complexities of the 10 per cent in the hands of one individual and the acquisition of anything over and above that which cannot be voted. This will have to be studied in committee. All I can say is that this is going to be almost a Frankenstein to administer. I may be wrong, but I have a feeling that a great administrative monster is being created. I do not know what sort of burden this will place on the backs of the registry and transfer agents who keep the day to day records of the ownership of the shares of any of the companies which may be affected by this legislation, but 1 am certain they will have a very difficult job, and of course it will mean an increase in the administrative costs of overhead of all these companies. The numbers indicated by the minister this afternoon do not indicate too many companies in a numerical sense. I do not know, but I suppose there may be a couple of hundred at the most. We hope there will be others. After all, the bill provides for investment in subsidiaries and the creation of subsidiaries, controlling interests by life insurance companies, trust companies, loan companies, etc. as well as participation by other life insurance companies in the acquisition of certain assets. All this represents

shareholders, and one must keep a careful watch upon who owns what to see they do not get over the indicated percentages.
However, there was another point to be considered, and this is one which I think we shall have to go into in committee in much greater detail. This was that the burden of any infraction-and it is a knowing infraction by a director-of the registration of shares in excess of the amounts permitted in the amendments to the acts will be the responsibility of the directors, who may face a prison term or a fine or both. But this says nothing about any penalty which may be imposed upon the transaction leading to the acquisition of these shares. It does say the transaction shall not be void in so far as the shares as concerned. True, I think there is a disability in not being able to vote them when the percentage is in excess of the 10 per cent or the 25 per cent as the case may be. But I am wondering, and I hope the minister can give me an answer in this regard, why it was not indicated in the legislation that a transaction entered into knowingly with a view to acquiring in excess of the amount prescribed should be void, in other words, not even the beneficial interest in the shares could be acquired; or perhaps not void-that might be going too far-it might be voided, and that a share transfer which was in breach of the amendment would be validated if it had been carried out bona fide and for consideration by a person who was not knowingly endeavouring to acquire shares in excess of those permitted.
There is one other aspect of this legislation I should like to speak about and that deals, I believe, with the trust companies and the life insurance companies. I refer to the delegation by parliament to the governor in council of the right to change the name of a company into a French or English form as the case may be, by way of order in council, without their having to come to the house and to the Senate in order to get the change of name. We have seen a goodly number of bills in this regard and I must say I express some sympathy personnally with a company which faces this problem.
Unfortunately there have been some instances where a bill that has come to both the Senate and the House of Commons to give a French version of an English name has been seized upon as a weapon to stall, and to get into matters which have no relevance but which occupy the time of this house tremendously. I think, subject to further consideration, this provision may balance

itself out. I do not know which is the greater convenience. Certainly I would think it would be cheaper for the company to do it by application to the governor in council, as will be provided for under the regulations that will be passed in this regard, than to do it through petition and private bill.
I would also like to receive some clarification from the minister as to who is to determine the degree of residence and who is to determine whether there has been indirect control by a trust, as mentioned in clause 16 with regard to section 4 (b). This is of great interest to us. Is it the superintendent of insurance who is to determine whether there is such indirect control under the trust? The bill is silent in this regard; nowhere have I been able to see this. Perhaps the minister would make a note of this point and give the house the information, because I think it is very important to know what person or persons are to be the judge of matters of this kind. Where lies the discretion of the interpretation; and is there appeal from it? What recourse would a corporation have with regard to an adverse decision as to the residency of one of its shareholders, or as to whether there was a breach of the rules through indirect trust? This is all I am going to say at this time in regard to the ownership or the retention of control, so-called, of Canadian life insurance companies not under foreign control.
I would like to turn now to the consideration of the changes in the class of assets that may be vested in trust in Canada by British insurance companies and foreign insurance companies, so that they are both put on the same basis. There is an extension provided for in regard to bonds issued by fabriques of parishes in Quebec. I may be a little hazy in this connection, but does this mean the incorporation of a religious parish in the province of Quebec; and is there any difference between that and a properly constituted parish in one of the common law provinces, because they all issue bonds to cover indebtedness for capital purposes. I know there are fabriques in other provinces because during my experience with one of the chartered banks I was certainly aware of bank accounts being maintained by the fabriques of French speaking parishes outside the province of Quebec. Why, therefore, is the provision limited to fabriques of parishes in Quebec? Why not in New Brunswick; why not in some of the other provinces? Perhaps the minister will answer this question when he is replying later.
Department of Insurance Act
There is also going to be an extension of investments in leases and leaseholds. In the committee we will be able to go into some of the legal implications of what you can do in the hypothecation of leaseholds in those provinces with the Torrens system, where they do not provide for the separate registration of titles to leaseholds. This is a narrow legal point. There cannot be a separation of the freehold from the leasehold, at least as the legislation now provides. If my memory serves me correctly-and I hope I have not been away from the law of the province of Alberta too long-this would be the case in that province. True enough, one can hypothecate a lease through filing a caveat, but it is a complicated process and it is not as neat as would be the case if the leasehold were registerable as a separate title. I will not go into that matter further, but we can deal with it in committee.
The one instance where I think the minister has taken a step in the right direction, though, is that he has opened up the provisions concerning investment in the preferred shares ef companies which have the proper dividend or earnings record. The old provision which required a company to have had earnings of a minimum rate of, I believe, 4 per cent and to have had declared dividends for a period of five or more years was, I think, self-defeating because this category of companies was forced to divest itself of its earned surpluses through dividends so that it could sell its preferred shares to a firm that was investing in it. It was being prohibited from accumulating capital for its own expansion by the requirements of the act, which forced it to declare and pay dividends so that life insurance companies could invest in its preferred shares or in other types of obligations. I think that was wrong and I am glad to see the minister has taken this step. I am hopeful that this amendment will see an improvement in this particular type of investment.
One concern that I hinted at when the minister made his first statement was that now trust, loan companies and life insurance companies would be able to invest in real estate companies. It is all right if you have these companies able to control a realty holding company which is concerned with the reai property or the premises-the bank premises, or whatever you want to call them -or in any event, the premises of the life insurance company, and actually administering those properties. True enough, we know that the life insurance companies have rather

Department of Insurance Act large office buildings; they only require part of them, and the rest is an investment in order to lower the cost of their own premises. I think this is perfectly all right. But what concerns me is the possibility that by owning and controlling real estate companies, life insurance companies and trust companies will be able to get into the really promotional field in real estate development. If there is anything that is creating an inflationary pressure in Canada and in the United States, it is this particular process of real estate promotion whereby an individual can get into a proposition with only his shirt, obtaining mortgage upon mortgage and deal upon deal at very high costs.
Perhaps we should look at some of the real estate promotion deals which have been very speculative and have turned sour. I am not going to mention any names, but we are all aware of a very large operator in Canada who had to liquidate rather quickly, and at great loss, some of his more grandiose real estate development schemes because of this increase in pressure and need for money.
A great deal of pressure would be put on trust and life insurance companies, to the detriment of the policyholders of those companies, as a result of some form of financial recession, and a great many of these real estate schemes would then begin to go sour. This is an area of our economy which must be watched very carefully. I am hopeful that during the committee hearing stage we will have the benefit of full and frank explanation by appropriate officials, including the superintendent of insurance and others who may be able to advise the members of the house in this regard.
I am pleased to note that there is an increase in the ceiling on mortgages to 75 per cent of the appraised value of properties. I think such an increase has been due for some time. This certainly will do away with that sort of fringe or second mortgage business by which the purchaser of an older home, who is not able to purchase it under the Central Mortgage and Housing Corporation provisions, must borrow $5,000 or $6,000 in order to obtain $3,000. This second mortgage field at this time is rather nauseous and, in my opinion, requires a great deal more control by parliament at an early date.
Mr. Speaker, I could say a good deal more In this regard, but in conclusion I should like to make reference to the news we received today about a loan company owned by foreign interests which has made what is considered to be the first move to link

up with a mutual fund distributor-a mutual fund distributor being a Canadian company. Perhaps at the present time this type of operation is being undertaken in order to wiggle past the provisions of this amendment. In any event I think we should have a great deal more in the way of explanation before we can really give our approval to this measure. I might suggest to the minister that we should have a clear indication of other proposed amendments, because I am a little worried about the procedural problem with which we will be faced if we do step outside the principles of the bill as enunciated.


Mr. G. H. Aiken (Parry Sound-Muskoka):: Mr. Speaker, I should like to make a few remarks, and because of the pressure of time I will be as brief as possible. One of the remarks made by my colleague who has just resumed his seat, concerning the increase of the mortgage loan percentage to 75 per cent, represents one aspect of this measure with which I cannot agree. I shall deal further with that subject in a moment.
This bill leaves us wondering just what the Liberal party policy is on foreign investment. We have heard very diverse views expressed. The minister on previous occasions at any rate, and to some extent in respect of this measure, has attempted to choke off foreign investment as fast as possible by increasing taxes, or attempting to do so, and by imposing restrictions.
The Prime Minister (Mr. Pearson) and other members of the Liberal party have advocated a free exchange with the United States, particularly in respect of the passage of funds. The pre-election promises of 1962 and 1963 were that anti-Americanism, as it then was defined, would come to an end. We wonder exactly what the Liberal policy is.
The bill we have before us represents a compromise, at least within the Liberal party, of the two extreme views. I can recall the anguished cries that were raised when the former Conservative government brought in the comparatively innocuous bill on corporation and labour union returns. That was not a restrictive bill but a bill which became law, intending to give the government more information in respect of foreign corporations carrying on business in Canada. The hon. member for Hull (Mr. Caron) on April 2, 1962, as reported at page 2402 of Hansard said this:
We need foreign capital. In order that we can develop a country as big as Canada, we need that foreign capital. If we need it, we should not discourage it before we start.

This remark was made in respect of a rather innocuous part of the bill, but it does make us wonder how quickly an attitude can change, depending upon the position one is in.
In support of my view that this bill is somewhat watered down and has only a moderate effect, I point to the reaction it received in the United States. Judging from the small amount of editorial comment we have noted, the bill itself is not very effective. I should like to quote from the Toronto Daily Star of September 23, 1964, and particularly a report from Washington by Martin Goodman, Star staff writer, as follows:
U.S. officials accepted almost casually today Canada's latest effort at economic self-determination.
"We had anticipated most of this," one official said of finance minister Walter Gordon's new rules limiting foreign ownership of insurance, trust and loan companies to 25 per cent, and expanding the investment power of insurance companies in common stocks.
"Naturally we oppose any discrimination against foreign investors," he continued, "but in practice, I don't think this will have much effect on U.S. interests."
With these general remarks I pass on to two or three particular matters on which I should like to comment. As has been stated, the bill really is in two sections. The purpose of the first is to reduce the possibility of further invasion by foreign interests of our life insurance companies, foreign insurance companies carrying on business in Canada, trust companies and loan companies, resulting in the taking over of such companies by outside interests. I think this is quite a desirable objective. The main objection that has been raised is that administratively this will be very difficult to control and time only will tell whether it is effective.
The life companies and other companies are given the power to require declarations and other evidence, but it seems to me it will be almost impossible for these companies to find out in many instances who are the real shareholders. Quite recently in the committee on banking and commerce we were discussing amendments to the Corporations and Labour Unions Returns Act which is administered by the dominion bureau of statistics under the Minister of Trade and Commerce (Mr. Sharp). At that time it was stated with reference to similar situations that it was almost impossible to do this and that most of the companies would not make the effort to discover who the real owners of the stock were, to ascertain whether the company was foreign or Canadian controlled. In that regard
Department of Insurance Act the obligations of the company under this bill are quite limited.
The right to have an English or French name is commendable, although I think there may be some technical difficulties. Perhaps the wording is not strong enough because it does not make a change in the name of the company but only permits the company to use another name. As far as I am concerned as a member of the banking and commerce committee and the private bills committee, some relief from having so many bills come before us involving nothing more than a change of name will be welcome. I think it will result in many members being able to get on with other work because the only argument that ever arose in those committees was as to the semantics of how the French or English language should be use*l in translating the original name of the company. I should think that someone outside of parliament who is versed in the language could do just as good a job.
The last subject I want to mention relates to the investment powers of life insurance companies, trust and loan companies under the bill, and there are two aspects involved. The first is real estate. As I stated at the beginning, I believe that 75 per cent of the appraised value of real estate is too high a figure for the mortgage investment of funds belonging to other people, notwithstanding the recommendation of the royal commission on banking and finance.
Not very many years ago companies would not accept anything more than 40 per cent of the appraised value as a trust loan, and in some cases some companies will not do so yet. Fifty per cent is marginal. The percentage was previously raised to 60 per cent and then 66 per cent, which I thought was stretching it quite a bit. I think that raising it now to 75 per cent takes the security of a first mortgage beyond what is prudent and into the realm of a risk investment.
The royal commission itself was not too enthusiastic in this regard. They did come up with a figure of 75 per cent, but on page 287 of their report they mention that there are two kinds of companies lending mortgage money, one comprising the caisses populates, credit unions and finance companies. In regard to these they had this to say by way of horrible example:
Some of these, as we have mentioned, are now making first mortgages up to 80 per cent or more of property values for fairly extended terms.
They thought this was pretty high. On the next page they went on to state:


Mr. Deputy Speaker:: If the minister speaks now he will close the debate.


Walter Lockhart Gordon: Mr. Speaker, before I comment on some of the interesting speeches that have been made, might I ask the permission of the house to apologize for a remark I made earlier today? I said I thought the Renault and Peugeot works were going to be established in Terrebonne, although I was not quite sure about it. I have since made inquiries and I find they are to be established at Point aux Trembles in Mercier. I apologize to the two hon. members who might have been embarrassed by my earlier remarks.

The hon. member for Digby-Annapolis-Kings (Mr. Nowlan) in his remarks referred particularly to the ownership clauses of this bill. As I interpreted what he said, I gathered that he had no real objection to the limitation of 10 per cent against the holdings of any one non-resident, but he thought that the total holdings of 25 per cent for all nonresidents was overly restrictive. I recalled, as he was speaking that he was a member of a government which, in 1957, enacted legislation which enabled Canadian life insurance companies to become mutual companies and in this way to avoid any of their shares being acquired by non-residents. As I said in my statement earlier, this undoubtedly prevented some of the larger Canadian insurance companies from falling into the hands of nonresidents. To that extent I, for one, commend the legislation. I must say I did not think at the time, and I do not think now, it went quite far enough. However, I hope this particular bill will fill the gap.
The hon. member for Nanaimo-Cowichan-The Islands (Mr. Cameron), in his usual witty and cogent remarks, said that he agreed with the bill in principle but that he was afraid it would be difficult to police. Several other speakers also referred to their fears that this bill would create administrative difficulties. I think the hon. member for Edmonton West (Mr. Lambert) referred to it as a Frankenstein to administer and that it would become a great administrative monster. Well, Mr. Speaker, the bill has now been open to public gaze for some weeks, and while I respect the fears of the hon. members who have spoken on this subject I am also interested in the fact that the companies themselves, who will have to do the administering, have not seen fit to suggest, to me, that they see any particular difficulties involved in the administration of these particular provisions. On other occasions I have noticed that when the officials of companies are fearful they will be involved in administrative difficulties they have not been hesitant in coming forward and letting me know about it. The absence of these representations in this case, therefore, rather cheers me. I have a feeling it is going to work very well and very easily.
The hon. member for Nanaimo-Cowichan-The Islands stated, and I thought there was a rather plaintive note in his voice as he expressed the view, that he did not think there would be many corporation directors who would find themselves behind bars as a result of this legislation. I hope that his fears turn out to be justified. I would not
Department of Insurance Act like to think of our jails being filled with company directors or anyone else. In this particular case I will expect, as I am sure all hon. members of the house will expect, that if this bill is passed by parliament company directors and everybody else will obey the law. They will see that the wishes of parliament are carried out and, incidentally in the process of so doing avoid any possibility that any of them might incur the fate to which the hon. member referred.
As I remember, he also mentioned the Canada Development Corporation and, if I am quoting him correctly, added that one should speak in hushed tones in the presence of the dead. I should like to reassure him on this point by stating that this particular body is not dead and I hope it will be produced in lively form, and that he will be one of the first to support the measure when it comes before this house.


Herbert Wilfred Herridge: Has it been hibernating over the winter?


Walter Lockhart Gordon: My hon. friend and neighbour in the Roxborough apartments has asked whether this project is hibernating. I think it is fair to say that the weather has been a little inclement for it in recent months. I do not know if I am overly optimistic, but I think the weather is getting better and we may see more of it in the not too distant future. It seemed to me there was a somewhat different tone to the remarks the hon. member for Edmonton West (Mr. Lambert) used to commend this legislation, when it was presented to the house and discussed on September 22, from the tone he used tonight. I have not looked up Hansard within the last day or so, but it seems to me that on that occasion he was quite enthusiastic about this legislation.


Marcel Joseph Aimé Lambert: Certain aspects of it.


Walter Lockhart Gordon: I remarked upon it particularly because he is not always known for the enthusiasm with which he greets legislation presented by this government, and on that occasion it seemed there was a rather happy change in his tone and viewpoint. I am only disappointed that on reflection, or perhaps after discussions with some of his friends-


Marcel Joseph Aimé Lambert: No, on looking at the bill.


Walter Lockhart Gordon: We are only talking about the principle of the bill at the moment, and the hon. member seems to have somewhat modified his earlier enthusiasm. I liked the hon.

Department of Insurance Act member for Edmonton West on September 22 more than I liked him this evening. Naturally I am not talking in a personal sense, but he did raise some questions that deserve to be answered. However, Mr. Speaker, I would not like to offend Your Honour, or the house, by dealing with detailed questions which I am sure you would rule could be better discussed in committee. So, if my hon. friend will forgive me, I shall try to stick to the principle of the bill this evening, but I assure him that the points he raised will be carefully considered and will be answered fully when the bill reaches committee stage. As an example, he referred to the question of fabriques, the qualifications they would have, and whether they would come under this bill. This is the kind of technical question that could be better handled in committee.
One other point of principle was touched on by the hon. member for Parry Sound-Muskoka (Mr. Aiken). He questioned the desirability or the wisdom of permitting insurance companies, trust and loan companies to lend up to 75 per cent of the value of real estate on mortgages. I would remind him that this was a recommendation of the royal commission on banking and finance.


Gordon Harvey Aiken: Are royal commissions always 100 per cent correct?


Walter Lockhart Gordon: Some have a better batting average than others, and I can think of one whose batting average is going up.


Stanley Howard Knowles: Would that be the Hall commission?


Walter Lockhart Gordon: My hon. friend from Winnipeg North Centre seems to be going a little astray from the principle of this bill in that comment, although I sympathize with his interest in the subject to which he refers.
On this question of whether it is wise to allow these lending institutions to lend money up to 75 per cent of the value of real estate, or whether the limit should be retained at 66| Per cent, I think this is a matter of judgment and opinion. I must say I was impressed by the views of the royal commission on this point, and after careful consideration and full discussion with my colleagues in the government we felt this was the kind of recommendation that we were prepared to recommend and implement.
I think those are the main points of principle that were raised, and I assure hon. members they will have ample opportunity of discussing the clauses of the bill in com-


mittee. As I said earlier, I would move that it be referred to the standing committee on banking and commerce.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on banking and commerce.
[Stage Direction]
The house in committee of supply, Mr. Lamoureux in the chair.

[Stage Direction]
1. Departmental administration including fees for membership in the international organizations listed in the details of the estimates, $5,180,500.
Mr. More:: Mr. Chairman, it is not my intention to hold up the passage of these estimates but I would like to bring one or two matters to the minister's attention.
I have no fault to find with the general statement he made, which contained some interesting things that I was glad he mentioned. I remember the great cries of Liberal party spokesmen that Conservative policies were ruining our economy, yet in the minister's statement he referred to 44 straight months of advance, and a partisan Conservative like myself was glad to hear him make that statement and to see it in print.
There is a most interesting article in tonight's Ottawa Citizen, headlined "Wheat Sale" and written by Garth Hopkins, associate editor of the Financial Times of Canada. This rather concise article points out the impact on the economy of at least the prairie provinces, and in retrospect upon Canada as a whole, of the benefits received from the sale of wheat and flour under the deal that was announced with Russia last September. It points out that this sale meant direct increases of $205.8 million in the income of farmers in prairie provinces in the first six months of this year, as compared with the amount they received in the first half of 1963.
Indirectly this sale meant much more than that because it provided extra work for the railroads, for ports and shipping, and all other industry which dealt with the moving and delivering of the grain to the export market. I note that the article points out that the increase during the first half of this year for Alberta was $46,703,000; for Saskatchewan $155,305,000 and for Manitoba $3,784,000. I think the minister would be the first to admit that this has had a terrific impact on the economy of the country.
Certainly no politician was responsible for the bounteous rains, good climate and growing

season which produced the grain, but I have a memory of the minister jumping into his first puddle, when he went west and said the advice of the former minister of agriculture was irresponsible when that former minister told farmers to grow all the wheat they could. Far from being irresponsible I think it was far-sighted advice, and I am sure the minister was happy the wheat was on hand when the sale fell into his lap here in Ottawa. I hope more sales fall into his lap, or if he gets them himself I will give him credit for them. We are all delighted that the economy received this great boost during the first half of the year.
I should like, now, to refer to another industry in the province of Saskatchewan which will be of great benefit to the economy of the province and to the economy of Canada as a whole, that is the growing potash industry which has been established there. There are now two plants operating in Saskatchewan. There is one at Esterhazy which is a shaft mining venture. It is so successful that I understand it is to be extended and another shaft sunk. Then we have the new plant of Kalium Chemicals Limited at Belle Plaine 30 miles west of Regina. In deference to my hon. friend from Moose Jaw-Lake Centre I should like to say it is only 15 miles from Moose Jaw, but then they have to establish themselves in Regina to get the services they need for an industry this size. It was my good fortune to be present at the official opening on September 30. I was pleased to see the hon. member for St. Paul's in attendance there, also; I know this development is of great interest to him. This development uses a different method of procuring this mineral from those which have been used in the past. The potash deposits in this area lie some 5,000 feet below the surface. The depth is so great that I understand shaft mining is not economic, so this new process has been developed. It has been tried in various countries of the world over the last 50 years without success. Kalium Chemicals Limited some nine years ago began a strenuous effort to develop this successfully. Some seven years of hard research went into it and some two and a half years of operating a pilot plant, and today we have this $50 million plant operating successfully. On the opening day, the official opening day on September 30, 7,000 tons of this mineral were shipped in two trainloads to some areas in Canada, and throughout the United States. It was pleasant to see the cars going out on trains, one on the Canadian National and
Supply-Trade and Commerce one on the Canadian Pacific-we must be fair to both our rail complexes-for many states of the union south of us. It is also interesting to note that large amounts of this potash will be shipped to Europe and to all parts of the world where the need for it is very great.
In his remarks, the premier of Saskatchewan on the official opening day intimated that the returns to the provincial government from this venture in a year's operation would be nearly $400,000 and that the two ventures operating in the province in this current year would have net returns of $30 million. I was interested in a note I took out of the Globe and Mail, I think it was, of September 30 to see that prospective further developments will mean some 1,500 new jobs in the Saskatoon area where the proposed new developments are taking place. This one plant of Kalium Chemicals Limited in its own operation provides 235 new jobs and it is considered that the over-all figure, including those who serve the plant and deliver the product, will amount to some 500 new jobs. This indicates the great impact this industry has on the economy.
The reserves of potash in this region are tremendous and I am told they are sufficient to supply world demand for 8,000 years. These are proven bodies. One well known figure in this area of development told me that for all they knew at the moment it could be they had sufficient for 88,000 years. I think this indicates that the minister should take a concrete interest in this development. The government should take a great interest in it and certainly the people and the government of my province and, I believe, the people of Canada as a whole, welcome it. I am told on good authority that there is a prospect of ten more major potash operations in the near future in Saskatchewan and that many of them will be of the solution type.
The reason I am talking about this tonight is that involved in whether these can go ahead in the immediate future or not is the question of federal taxation policy. On September 21 my colleague from Kerrobert, Kindersley directed a question to the Minister of Finance with regard to the tax on solution mining operations. As is well known, the shaft mining operation qualifies for tax concessions over a three year period. The solution mining operation has none. Yet I am told the capital investment for this alternative method of mining is the equal of the shaft. I know there are some problems connected with a formula which will permit the removal of

Supply-Trade and Commerce this discrimination but I am sorry to say that there appears to be not too great a sense of urgency in the thinking of the minister or the government in regard to finding the new formula which is needed. My colleague asked a question on September 21. He was told this was a matter of policy to be announced in due course. This was the answer after notice of the question had been taken by the parliamentary secretary to the Minister of Finance. The answer was given on September 30, some nine days later, and that is all the information he got. On October 1, I believe it was, I directed a question to the Minister of Finance on this matter. I thought I was on good ground in quoting a statement which I alleged was made by the premier of Saskatchewan that the minister's policies in this connection were stupid and shortsighted.
I have never got involved in personalities in making my arguments and it certainly was not my intention to get involved in any personalities when I asked this question, because a press conference was held in connection with the official opening of Kalium. I did not hear the statement but two people- and I checked carefully about it-told me that these were the words the premier of Saskatchewan had used. I thought it was a forthright statement of criticism. I did not see anything personal about it because the policies which the minister presents in this house are, as I understand them, the policies of the government and it was the policy the remarks were directed to. Certainly there is no difference between the premier of Saskatchewan and myself in urging this government to take action to remove a discrimination which may affect the early development of further potash operations in Saskatchewan. We are resolved in our aim and it is to arouse this government and arouse its interest in this matter so that they will take some action.
As I say, I know the difficulty but certainly it is not right that companies producing the same product in the same area from similar ore bodies should suffer discrimination because of tax policies and be placed at a disadvantage. These bodies of potash are there at great depth. There is interest in developing them. The capital is there but the taxation policy now in existence may cause a delay, the premier says, of two years in their exploitation. I do not think we can afford such a delay, nor can the people of Canada. As I say, I quoted the premier of Saskatchewan correctly, as I understood it

at the time, as saying the policy was stupid and shortsighted. He has denied using the word stupid. I accept and apologize for having attributed it to him. In the Leader-Post of October 7 the premier of Saskatchewan- and we are not having a quarrel about this and I am not trying to argue whether he said it or not-denies saying that Gordon was stupid, according to the headline.
I did not say that either; I said that I understood the premier to say that the policies were stupid. I think this headline is wrong, because as I understand it the premier was referring to the policies also and not to the individual who occupies the office of Minister of Finance. I point this out, Mr. Chairman, realizing the impact of new industries of this size and this kind of investment on the economy of my province, and Canada as a whole in the years ahead-and it can be in the immediate years ahead.
All I wish to do at this time is urge the minister to impress upon his colleagues the Minister of Finance and the Minister of Industry-he has a great, new department of highly paid experts-to work on this problem and remove this discrimination. The Minister of National Revenue should also get at this problem, and get at it right away, because there is just no reason that we can condone for having a taxation policy continued, now that the solution mining process has been proven successful and is in operation; a taxation policy that discriminates, that may stall huge capital investment that will provide a large number of needed jobs within the next few years. This type of policy will not be condoned by the people of my province, and I certainly believe they would have the sympathy of the people of Canada.
I regret having directed my question to the Minister of Finance using words I alleged had been made by the premier of Saskatchewan, which he now denies and which denial I accept. I say nothing more in that regard. My purpose, however, is the same; I wish to ask the minister to use his good offices to urge his colleagues to find a solution to the problem that may hinder the development of which I have spoken. We need it; we do not want it to be stalled, and the matter has real urgency.


Mr. Alkenbrack:: Mr. Chairman, in taking part in the discussion on item 1 of the estimates of the Department of Trade and Commerce this evening I have two or three points of criticism of the system as it is today, and

the administration of the department. I will not be too severe in my criticism this evening, I congratulate the Minister of Trade and Commerce upon bringing forth his estimates, although I do not always agree with him or his colleague the Minister of Finance with whom he must at all times maintain close liaison.
Our trade and commerce, broadly speaking, cannot prosper if we employ a narrow outlook in the legislation concerning our secondary manufacturing industries. I point out to the minister a gross injustice that has been perpetrated on the area which I represent, the riding of Prince Edward-Lennox mainly, although it goes beyond that. In 1954 the Del Monte company of California was permitted to buy Canadian Canners, which was our largest secondary manufacturing industry in Prince Edward county, manufacturing agricultural products into food products. The Del Monte company of California bought out Canadian Canners in our area and, sad to say, immediately closed up all the factories, and to the agreements in connection with those factories which they sold to Canadian individuals and Canadian companies they attached a solemn clause right in the deed that they would no longer be used for canning agricultural products. In other words, today we still have at least one of these good canning factories that could be started up at very short notice to continue to serve the area as it did before 1954; but according to the agreement, that hard headed bargain made by the modern Sam Slick across the border, that factory can no longer be used to can tomatoes, peas and corn, the products of Prince Edward county. I deplore the situation that was permitted by a Liberal administration back in the 1950's and I recommend to the minister that he use his powers to correct it. Any agreement of that kind should be automatically voided in connection with these properties. I have no doubt that in other industries the same thing has occurred. It may have occurred in our lumbering industry, in our paper making industry and in other forms of secondary manufacturing.
Only about a week ago I had a strong, forceful but reasonable complaint from a citizen of Prince Edward county who owns one of these factories but cannot use it for the purpose for which it was built. Second, Mr. Chairman, I have a complaint regarding the Corporations and Labour Unions Returns Act, over which the minister has jurisdiction. This complaint is in the form of a letter from a prominent Canadian manufacturer. The
Business of the House
letter is dated August 13, 1964, and I wish to quote from it as follows:
Under normal conditions I do not sign cheques on the current account except when they exceed a certain figure.
The letter is signed by the vice president of this company. It continues:
However, I had this opportunity today when our secretary treasurer was on a short vacation. Amongst the cheques to which I affixed my signature today was one in the amount of-
-almost $600, for-
-payment of union dues for July 1964-district 50, united mine workers of America, to be sent directly to 1435 Kay street N.W., Washington, D.C.
It seems incredible to the undersigned that our government would stand by and let moneys for union dues go out of the country. This must be an average monthly payment that we're making on behalf of the union and when you multiply this by thousands of manufacturers in our country, the amount going across the border must be fantastic.


Mr. Regan:: Mr. Chairman, will the hon. member permit a question?


Almonte Douglas Alkenbrack: You will have a chance to make your remarks after I have finished. The letter then continues as follows:
Again, when it contributes to the elegant living of such union leaders as we read about in newspapers, the situation is that much less digestible.
Surely some legal aspect of this situation could demand that the dues be held in Canada for the use of our own citizens. At least a great proportion of it would be spent here.
I am sure this is just a "cry in the wilderness", but I could not help but comment on the situation when it was drawn to my attention in the manner as outlined above.


Mr. Patterson:: Mr. Chairman, it is ten o'clock.


Almonte Douglas Alkenbrack: I think we should have unions of a national and Canadian nature controlled in Canada and not by union officials of the republic to the south.
Progress reported.



BUSINESS OF THE HOUSE

Gordon Minto Churchill: Mr. Speaker, I should like to ask about the business for tomorrow, and for a forecast of business for next week.


Mr. MacNaught:: Mr. Speaker, tomorrow we will continue our discussion on estimates of the Department of Trade and Commerce. However, if that discussion is not concluded by one o'clock it will have to be interupted, because the minister will not be available after that time. We will then consider the votes relating to the Central Mortgage and Housing Corporation, under the jurisdiction of the Postmaster General. After that we

Proceedings on Adjournment Motion will take up the estimates of the Department of Veterans Affairs, followed by the estimates of the Department of National Revenue.
I regret, Mr. Speaker, that I cannot make any forecast at this time for the business on Monday.



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
A motion to adjourn the house under provisional standing order 39A deemed to have been moved.

Herbert Wilfred Herridge: Mr. Speaker, what a good many Canadians consider as a tragic surrender of Canada's national and historic right, the surrender of vast quantities of Canadian natural resources, and the unnecessary invasion on civil and property rights of a good many Canadians under the terms of the Columbia river treaty, has alerted many to the need for a Canadian inspired national water management policy which provides for a determination of the future requirements of water in Canada. It is because of this concern and because of a speech made by a certain gentleman in Fairbanks, Alaska, that on Tuesday last I asked the Minister of Northern Affairs and National Resources the following question:
Has the minister's attention been directed to the report of a speech made by Mr. Gus Norwood, executive secretary of the United States northwestern public power association, to the Alaska chamber of commerce? If so, would the minister inform the house of his reaction to these proposals and projections and their effect on the future development of Canadian water resources?
It is for the particular reasons I have mentioned that we are watching very closely these speeches made by United States authorities, and particularly those of the United States army engineers who, as everyone who is aware of the history of the development of the Columbia river treaty knows, got their way almost completely in so far as the terms of that treaty are concerned.
The speech I have reference to was made in Fairbanks, Alaska, and I am going to quote a few paragraphs from it before the parliamentary secretary to the minister replies.
An American expert says the west coast of North America is entering a golden age of hydroelectric power and long distance power transmission development.
A golden age from their point of view.
Gus Norwood, executive secretary of the northwest public power association, bases his prediction on almost $5 billion worth of construction
[Mr. MacNaught.l
planned or under way. In a speech to the Alaska chamber of commerce he said the total is composed of: $700 million in electric interties between the United States Pacific northwest and the southwestern states; $700 million in developments under the Columbia river treaty between the U.S. and Canada; $800 million Peace River development in northern British Columbia; $2,500 million in hydro projects in the U.S. Pacific northwest.
Then it continues:
"This hydro and intertie program is shrinking the whole west coast of North America," Norwood said. "From Rampart dam on the Yukon river to Los Angeles is 2,700 miles. By the end of 1968 there will be in operation 1,800 miles of 500,000 volt transmission lines from Fort St. John, B.C., on the Peace river, to Los Angeles."
He continued:
The advent of extra high voltage transmissions "opened the door of opportunity for the Rampart dam and other projects on the Yukon river and many other great rivers in Alaska and Canada."
The article continues:
The interties are part of a vast grid planned by the U.S. government that would link 11 states. Four extra high voltage lines would carry surplus power from the Pacific northwest states to California and Arizona. Examining the "problems" of power surplus, Norwood maintained that the interties permit "building hydro in advance of local loads and selling the surplus in the southwest."
That is the southwestern United States, Mr. Speaker.
"The availability of the huge Pacific southwest market assures any west coast dam building agency of an outlet for surplus power, especially in that critical period when power comes on the line and debt service must be paid, but the local power market takes years to load the project."
I presume in that instance he is referring to the Canadian market to a considerable extent. I was also very interested in a letter that appeared in the New York Times of Sunday, October 4, written by a gentleman by the name of Daniel Allan, of Brooklyn. He deals with the army project for an Alaska dam and says:
It is no surprise that the army corps of engineers wants to build a dam where it would do the least good, effect the most damage and cost the most money. That body has consistently demonstrated a singularly unique immunity to reason and a callous disregard for the beauties of nature.
Then he goes on to deal with the Rampart dam proposal in Alaska which will affect the development of Canadian water resources on the Yukon river. He says:
Not content with this, the dam builders have moved on to bigger but not better things, in this case intending to surpass in Alaska their dubious accomplishment in Colorado. Such shameful waste is more characteristic of the 19th century than the 20th.
I see my time is nearly expired, Mr. Speaker. I have asked a question, made

reference to the report of the speech by Mr. Norwood and mentioned the apparent concern of a United States citizen who is aware of the projects that the United States army corps of engineers has under consideration.
In conclusion I want to ask the minister an additional question. Will he tell the house what the government is doing to protect our remaining water resources in Canada?


Mr. John N. Turner (Parliamentary Secretary to Minister of Northern Affairs and National Resources):: Mr. Speaker, the hon. member drew the attention of the house to some United States comment seeking a continental water policy. I can assure him at the outset, and I assure the house, that the Minister of Northern Affairs and National Resources is thinking primarily in terms of a Canadian water management policy.
On September 28, in answer to a question posed by the hon. member, which is found at page 8487 of Hansard, on the same subject, the minister stated in his reply:
At the present time the building of that dam-
That is the Rampart dam.
-and the transmission of power through Canada would not be in the interests of Canada. Moreover, the economic considerations involved in the transmission of power for well over 1,000 miles as well as the fact that transmission would have to take place entirely through Canada would, I think, place us in a very strategic position.
This reply, which was given by the minister to the hon. member on that occasion, indicates I believe the minister's reaction to the proposals and projections about which the hon. member was worried this evening. It indicates also his views on their effect on future development of Canadian water resources. I can only say to him that Mr. Norwood's speech before the Alaska chamber of commerce provides no additional substantive information upon which I could make comment this evening. All it does is speculate hopefully on the possibility of this development taking place some time in the near future from the United States point of view. This is all I can say in answer to the hon. member's comments this evening.



NATIONAL PARKS-NOVA SCOTIA-TRANSFER OF LAND FOR SECOND PARK

Gerald Augustine Regan: Mr. Speaker, despite the undoubted preoccupation of members of the house with the elections that are taking place in Great Britain and the changes in the Soviet union today, I should like to turn the attention of the house to the question of the new national park in western
Proceedings on Adjournment Motion Nova Scotia. On Tuesday I asked a question of the minister of northern affairs which reads in part as follows:
Inasmuch as preparation of the new national park in western Nova Scotia appears to be behind schedule, can the minister indicate whether the province of Nova Scotia has transferred the land involved to the federal government so that construction can be started? If not, can the minister say what is delaying the government of Nova Scotia in this matter?
I think it goes without saying that this new national park in western Nova Scotia is of great importance to the development of the tourist industry in that part of the province. In recent years the tourist industry has become a very important part of the economy of Nova Scotia. It is important also to the nation, of course, because any United States tourist dollars that come into the country as a result of the visit of tourists from New England to Nova Scotia are new dollars. They are new money and they certainly help us with our balance of payment problem. At the present time most of the tourists who come to Nova Scotia, other than by the Bluenose from Bar Harbor to Yarmouth, do not visit western Nova Scotia. Those who come on the Bluenose obviously do. I feel that the presence of a well developed national park in the western part of the province could result in many of those who come around by Amherst, and into the province that way, visiting the western part of the province. This would result in a lengthier stay by visitors and result in more money being left in the province by those tourists. This is desirable.
In view of the fact it is now well over a year since the agreement was concluded between Nova Scotia and the federal government for the establishment of this second national park, and according to the statements that were made by both levels of government at that time, there was an indication that the land necessary would be passed over to the federal government by the province much earlier than this, so construction of the national park could proceed, I ask the minister why this has not happened. I would ask him if he knows whether the province has acquired all the land involved and, if not, how soon it will be in a position to transfer the land it does hold.
I would point out to the house that a very large proportion of the land which will comprise this new national park was provincially crown owned, and a large part was owned by the Mersey Paper Company. With regard to those lands there should not be any holdup or delay. If there has been some delay on the
9114	HOUSE OF
Proceedings on Adjournment Motion part of the province I would be very eager to hear the explanation for it, especially concerning delay on individual plots of land. I would urge the department to work out an arrangement with the province of Nova Scotia whereby the vast amount of land already acquired could be transferred to the national government so that work on that part at least could begin.
It is very important that we have this new national park in operation and fully equipped by 1967. That will be a year in which there will be a great inflow of American tourists to this country, and it is important that we have the park well advanced at that time.
I might also say I am pleased to see that the original plan has been expanded so as to include a physically separated area along the coast in Queens county, which will provide beachland as part of the park. This is something to be commended, but if there is any delay in the acquisition of land in that area I would urge the minister to work out an agreement with the province whereby construction in other areas of the park could begin as quickly as possible.
If the province of Nova Scotia has not acquired all the land, then I hope it will take action to have its agents step up the pace because I see no reason, after this passage of time, why all the land should not already have been acquired by the province.


John Napier Turner: Mr. Speaker, I want to echo the enthusiastic applause which greeted the rising of the hon. member for Halifax (Mr. Regan) this evening. I am sure it was a tribute by his fellow members to his industry in representing the city of Halifax

and the province of Nova Scotia in the courageous and conscientious way he does.
In answer to his query I must say that the province of Nova Scotia has not yet transferred to Canada, free of encumbrances, title to the lands which it agreed should form the national park in that province. By way of explanation I might say that where the title to the land lay with the crown in right of the province there was, of course, no difficulty. However, clear title has still to be obtained from private individuals and concerns in respect to some of the potential park area before that land can be transferred outright to the crown in right of Canada. I understand that the province is still proceeding with such acquisition and that this acquisition involves negotiation with the owners.
I shall inform the minister of the constructive suggestion made by the hon. member, that where there has already been a substantial block of land assembled by the province of Nova Scotia it should be deeded immediately to the Canadian government so that plans for the park may proceed. Though the land has not yet been transferred to the federal government, the national parks branch officers have been on site, taking surveys of the land and preparing development plans so that the federal government will be ready, immediately upon transfer, to initiate the park immediately, so as to satisfy, I hope, the legitimate ambitions of the hon. member to have this park ready for the people of the country, as an added glory to the province of Nova Scotia, by the anniversary of confederation.
Motion agreed to and the house adjourned at 10.22 p.m.



END OP VOLUME VIII