1964-08-06

Hon. Mitchell Sharp (Minister of Trade and Commerce):: Mr. Speaker, yesterday in this house the hon. member for Qu'Appelle directed a question to the Prime Minister and asked whether any minister of the government had held discussions with either the management of Maclean's magazine or any of the editorial staff with regard to Liberal policy and the editorial policy of Maclean's magazine. You, Mr. Speaker, said this was a very interesting question but far too long for immediate answer. The hon. member for Qu'Appelle then said:
Mr. Speaker, then I would like to direct my question to one of the ministers, if I may. Have I your permission, sir?
You replied:
I have suggested to the hon. member that the question be put on the order paper because it requires a very detailed answer.
Today, when I returned to my office, I found that my office had been approached by Mr. Victor Mackie of the Winnipeg Free Press who said that in an interview with the hon. member for Qu'Appelle I had been named as the minister to whom he had meant to direct his question.
My question of privilege is this, that the hon. member should put his question on the order paper where it can be answered adequately, rather than spreading rumours and gossip through the press.
High! Hon. J. G. Diefenbaker (Leader of the Opposition): The hon. member for Qu'Appelle is absent and all I have to say, Mr. Speaker, is that the statement made by the minister is a gratuitous one and has no basis in privilege.



PROVISION RESPECTING JURISDICTION OVER PARLIAMENTARY STAFF

Mr. G. H. Aiken (Parry Sound-Muskoka) moved: for leave to introduce Bill No. C-115, respecting the parliamentary staff.


Some hon. Members:: Explain.


Gordon Harvey Aiken: The purpose of this bill is to provide that all public employees working within the precincts of parliament shall come under the supervision of parliament and not departments of government.
Motion agreed to and bill read the first time.



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, would the Secretary of State for External Affairs bring the house up to date on the perilous situation in southeast Asia? Would he advise what representations, if any, Canada has made to the United States in connection with this matter and whether, in the circumstances of the last few hours, he is able to give the house a more optimistic view than he could give yesterday?


Hon. Paul Martin (Secretary of State for External Affairs):: Mr. Speaker, since the Prime Minister and I informed the house yesterday of the situation as we saw it, there have been no fresh military developments in the crisis in Indochina. As the house knows, there was a meeting yesterday of the security council, and that meeting has been adjourned sine die to permit private negotiations to take place.
Since yesterday the main interest has centred around the probable reaction of the Chinese people's republic. In an official statement the Peking government has in effect reaffirmed and strengthened an earlier stand indicating that China would take action in the event that hostilities in Indochina were extended to North Viet Nam. This statement however, is ambiguous and there is no clear indication what kind of action is contemplated.
The Soviet union has predictably criticized the United States but again has not indicated what specific action if any it proposes to take. An examination of the statement of the Soviet ambassador at yesterday's security council meeting does not offer an indication of what action the Soviet union has in mind,

Inquiries of the Ministry other than to make a general condemnation on the part of his government of the action taken by the United States. They have failed to realize that the action taken by the United States was, as the Prime Minister said yesterday, obviously one of a defensive character in pursuance of the right of a country to defend itself against an attack wantonly made against some of its ships. The British government has likewise taken a stand in support of the right of the United States to defend itself against unprovoked attacks on ships operating on the high seas.
This morning I received a protest from the North Vietnamese foreign minister, as have other countries I suspect, with regard to other alleged incidents, but not with regard to the attacks on the United States destroyers which were made, presumably, pursuant to the authority of the government of North Viet Nam.
It will be noted that yesterday Mr. Adlai Stevenson, on behalf of the United States, took no objection to the suggestion that, as the United States has put forward its appreciation of the situation, North Viet Nam should not be denied the right to be called before the security council at some future time to give reasons for the action it took, or to respond to the position taken by Mr. Stevenson on behalf of the United States. I do not believe anything could usefully be added at this moment.


John George Diefenbaker: The minister mentioned that the security council adjourned to permit private negotiations to take place. What is the significance of that? Does he mean private negotiations under the aegis of the United Nations, or outside the United Nations?


Paul Joseph James Martin: The Canadian ambassador to the United Nations has been in touch with the ambassador of the United States and with representatives of other countries. I do not believe that at this time I could add anything more regarding the character of these negotiations.


Mr. T. C. Douglas (Burnaby-Coquitlam):: May I address a supplementary question to the Prime Minister. Does the Canadian government intend to make any representations or take any steps designed to prevent an escalation of the hostilities in southeast Asia? Is the Canadian government offering in any way to conciliate between the disputants in the hope of preventing this explosive situation from becoming worse?


Right Hon. L. B. Pearson (Prime Minister);: We have already been in touch with the United States government on this matter, as I said yesterday, and expressed the strong hope that no action would be taken which would result in what the hon. member calls the escalation of the incident. As I said yesterday, we expressed the hope that any retaliatory action required in defence will be limited to the necessities of the circumstances. I do not know what useful steps we can take with regard to the conciliation of the two governments concerned, since we have no representative in North Viet Nam. But we are members of the international commission in Viet Nam, and perhaps our membership there will give us an opportunity in the days ahead. If so, we shall not hesitate to take advantage of it.


John George Diefenbaker: In that connection, has there been any communication by Canada with the other two members of the commission as to any beneficial course which might be taken at this time; because action now is certainly most important in this connection? Canada's recent stand regarding the reconvening of this commission appeals to some of us to have been quite unjustified.


Paul Joseph James Martin: I do not know
what the right hon. gentleman means when he speaks of Canada's attitude toward the reconvening of this commission. The international control commission in South Viet Nam is in operation, and I may say that our representative on that commission has been in touch with the representatives of Poland, and India, the other members of the commission, with regard to this matter. I suspect that what the right hon. gentleman meant was the calling of the 14 power conference.


John George Diefenbaker: That is what I had in mind.


Paul Joseph James Martin: The calling of that conference, as I have indicated on a number of occasions, does not in our judgment necessarily offer the solution to this problem. The North Vietnamese have violated the agreements that were entered into in Geneva in 1954 and 1962. If the communists would observe those agreements there might be none of the present difficulties in Viet Nam or, for that matter, in Laos.
However, I have indicated that, if it is thought desirable that there should be such a conference, we would of course participate. But in arriving at our point of view, we have had to bear in mind not only our own

view of what was desirable, but as well the view of other countries. In this instance, bearing in mind the heavy responsibility of the United States, our action has not been unrelated to what we believe to be its position.


John George Diefenbaker: The United Kingdom is fully aware, of course, of all the circumstances to which the hon. gentleman has alluded, and with its vast experience in international affairs the United Kingdom must have had sound reason for its application. Why is it, therefore, under the circumstances, that Canada chooses to drag its feet, as it were, in this connection?


Paul Joseph James Martin: Canada, of course, is not dragging its feet in this matter. There is no difference between the positions of Canada, the United Kingdom and the United States in this matter. My right hon. friend is likely referring to the statement attributed to the British foreign secretary last Saturday, when he made a suggestion that the members of the international control commission in Laos should call a conference of the three factions in Laos itself. In answer to that, I pointed out that the commission had no authority to call such a conference.
But I may say, as I did indicate the other day, we were very active in consultations with the properly constituted government of Laos to see that steps were taken so the three factions could meet. As a result of those representations, and representations made by India as well, the prime minister of Laos, Souvanna Phouma, is taking steps to bring together the three factions in Laos to discuss not the calling of a full 14 power conference, but the terms and conditions under which such a conference would meet.


Thomas Clement (Tommy) Douglas: A supplementary question, Mr. Speaker. May I ask the Secretary of State for External Affairs this question. If, as he says, the North Vietnamese have violated the agreements of 1954 and 1962, would it not seem to be the responsibility of Canada, along with the other two members of the commission, to report to the 14 nations who set up the commission that their task has been made impossible, and ask for a meeting of the 14 nations in order to receive fresh instructions? Why is Canada not taking some action, rather than allowing the situation to drift along and deteriorate from day to day?


Paul Joseph James Martin: Canada has certainly taken action. As we have indicated several times within the course of this parliamentary session, Canada has pointed
Inquiries of the Ministry out that because of the refusal of the representative of Poland to act on the basis of a majority decision in the commission, it was not possible for the commission to follow courses which we felt were in the interests of the situation both in Viet Nam and in Laos.
With regard to the commission reporting to the conference as a whole, that is not the procedure laid down in the Geneva accord. The commission reports to the co-chairmen, who are the United Kingdom and the Soviet union. Canada and other countries, recognizing that the procedure and the machinery for settlement exists in the Geneva accord of 1954 and 1962, is not, if this can be avoided, anxious to afford to communist China the opportunity of using a larger forum simply for the purpose of making propaganda.
This is a consideration which has to be borne in mind. However, we have taken the position that if all members who attended the meeting in Geneva in 1962 and in 1954 believe there is no other course now open but to have a conference, Canada will be anxious to do its part.


John George Diefenbaker: All members?


Mr. Mariin (Essex Easi):: All members.


ASSISTANCE TO REBEL FORCES BY CHINESE COMMUNISTS
[Stage Direction]
On the orders of the day:
Mr. R. N. Thompson (Red Deer):: Mr. Speaker, my question is directed to the Secretary of State for External Affairs and concerns the situation in Congo, where heavy fighting continues. Does the minister have information for the house with regard to the situation there, particularly as it relates to the extent of the role being played in these hostilities by agents of the communist Chinese government?


Paul Joseph James Martin: Mr. Speaker, I should like to give further consideration to that question.


REQUEST FOR STATEMENT ON PRESENT
[Stage Direction]
On the orders of the day:
Robert Norman Thompson: My question is to the Secretary of State for External Affairs, and involves the very important crisis in Cyprus which seemingly has been laid aside for more urgent questions in the house during the past few days. In view of the continuing hostilities on the island, and the continuing serious situation as it applies to all peace keeping troops, does the

Inquiries of the Ministry minister have any word of negotiations or developments relating to the Cyprus situation?


Paul Joseph James Martin: There are negotiations going on in Geneva, and the secretary general of the United Nations met on Tuesday with the representatives of Canada and some of the other countries participating in the United Nations peace keeping force. The secretary general is seeing the President of the United States today.


Thomas Clement (Tommy) Douglas: May I ask a supplementary question. The minister promised to make a statement with regard to the four Canadian soldiers who were under fire from both the Turkish and Greek Cypriots. Is he prepared to make that statement now?


Paul Joseph James Martin: On August 4 my hon. friend mentioned this question. We have received official information which indicates that on July 30 a jeep containing members of the Canadian contingent on patrol was fired upon just north of Nicosia between the villages of Geunyeli and Kato Dhikomo. The jeep was flying the United Nations flag. There have been similar incidents with regard to other participants in the force. General Thi-mayya, of course, has taken this up with the government of Cyprus, as has the United Nations.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Mr. Gilles Gregoire (Lapointe):: Mr. Speaker, I should like to direct a question to the right hon. Prime Minister.
Could he tell the house the result of the meeting held at 5.15 yesterday afternoon in his office between the leaders of the different political parties in the house?


Lester Bowles Pearson: Mr. Speaker, as I am sure hon. members know from the report given to the press, there was a meeting in my office, a very useful and friendly meeting, at which we tried to work out an arrangement which would enable the house to deal with certain matters quickly, then recess and come back in the autumn. The proposal of the hon. member for Burnaby-Coquitlam was the basis for our


discussion. We were unable to reach an arrangement or agreement on the basis of this proposal because it was not possible to agree to a time limit on the debate on the flag resolution upon our resumption after the recess.


Gilles Grégoire: A supplementary question, Mr. Speaker. Could the Prime Minister tell us who rejected the arrangement proposed by the hon. member for Burnaby-Coquitlam (Mr. Douglas) and whether other meetings will be held in this connection?


Lester Bowles Pearson: No, Mr. Speaker, I do not think any useful purpose would be served by going into the details of the discussion. An arrangement was not possible.


John George Diefenbaker: Mr. Speaker, a full report was given by the Prime Minister last evening immediately after the meeting, apparently. In view of the fact that under the circumstances an agreement was not arrived at for the debate on the flag to be confined to a period of one week, and in view of the declaration of the Prime Minister last evening that the government intend to go ahead as originally planned with its several flag resolutions, which means that parliament will continue to sit, will the Prime Minister not now consider as a priority bringing in the legislation regarding the pension plan? I am sure-


Some hon. Members:: Oh, oh.


John George Diefenbaker: From the interruptions across the way this is not very much desired by certain hon. members in the Liberal party. So there will be no misunderstanding as to identification, the Minister of Trade and Commerce was the only one who applauded.


Mitchell William Sharp: I was applauding the government.


John George Diefenbaker: My question is this. In view of the fact that we are continuing to sit, would the Prime Minister consider bringing in the pension legislation, having a discussion limited to one member from each party, if so agreed, and then having the bill submitted to a committee of the house so that evidence may be heard from interested parties and suggestions made in order to improve the quality of the bill, so that many members of the house will have an opportunity to serve during the next few days or weeks, as the case may be?


Lester Bowles Pearson: Mr. Speaker, I think we should follow the program that has already been outlined to the house, because we have not been able to agree upon a change in that program. That means, Mr. Speaker, that we should proceed with interim supply, which I hope will be granted without too much delay, and the bill respecting fiscal relations with the provinces; then we can go on to discuss the flag resolution. We have already spent six days on the flag resolution. I suggest that we complete consideration of that matter and when it is decided we can then go on with pensions and other important legislation.


John George Diefenbaker: The pensioners forgotten again.


Mr. Stanley Knowles (Winnipeg North Centre):: A supplementary question, Mr. Speaker. Now that we have had this demonstration of unanimous support among all the parties in the house for the Canada pension plan, can we now have the white paper which the Minister of National Health and Welfare said in all probability would be presented this week?


Lester Bowles Pearson: Mr. Speaker, the white paper is in the hands of the printer and is being translated. If the translation is completed it will be possible, I think, to table it tomorrow. I should however like to table it in both English and French. If the translation is not completed, perhaps my hon. friend will agree that we should wait until Monday and table it in both languages.


Stanley Howard Knowles: A further supplementary question, Mr. Speaker. If the government has reached the point where it can table the white paper, can it not also put the new resolution on the order paper?


Lester Bowles Pearson: Mr. Speaker, that will be done in ample time to permit of discussion of the matter.


John George Diefenbaker: The poor pensioners forgotten again.


Mr. Real Caouetle (Villeneuve):: A supplementary question, Mr. Speaker.
Would the Prime Minister care to repeat to the house what he stated last night to the effect that, if no understanding could be reached between the various parties, it was not the fault of those in this corner, but due to the systematic boycotting practised by the leader of the official opposition (Mr. Diefenbaker)?
Inquiries of the Ministry


John George Diefenbaker: Mr. Speaker, I rise on a question of privilege. I appreciate very much the close relationship today between the hon. member for Villeneuve and the Liberal party.


Some hon. Members:: Oh, oh.


Some hon. Members:: Hear, hear.


John George Diefenbaker: The Prime Minister did not give the reason, but we stated that we would not be restricted as suggested by those who proposed the plan to debate the flag for a period of one week or, in other words, five days. So far the debate has lasted six days and only 19 members of the official opposition have spoken. Nineteen members of the Liberal party have also spoken, as well as a number of members of the other parties. We were not going to place ourselves in a strait-jacket to accommodate hon. members opposite, or particularly the hon. member for Villeneuve.


Thomas Clement (Tommy) Douglas: Mr. Speaker, on the question of privilege which the Leader of the Opposition has raised, in view of the fact that I was the member who made the proposal last Monday I would invite all hon. members to read the text of what I said. I mentioned one week as a target for limitation of the flag debate when it was resumed in the fall, but I proceeded to say that this was merely my suggestion and that if the house leaders agreed, there was no reason why a longer period for debate could not be negotiated. This could easily be two weeks. I understand the position of the official opposition to be that there will be no time limit, whether it is two weeks or three weeks. It is the time limit they object to and not the length of time.


John George Diefenbaker: Mr. Speaker, even with the fine spirit of co-operation between the New Democratic party and the government, let me make it perfectly clear that we do not intend to retreat from our responsibilities by putting a throttle on ourselves on a matter as important as the flag.


Lester Bowles Pearson: On the question of privilege, Mr. Speaker, I agree that the matter is extremely important, and if the right hon. gentleman would like a few days longer than a week I am sure that could be arranged.


John George Diefenbaker: Nice co-operation. [Translation]


David Réal Caouette: Mr. Speaker, on the question of privilege raised by the hon. Leader of the Opposition, I would say we have here the

Inquiries of the Ministry sort of man who is sending balloons up in the air and bluffing in order to make an impression before the Canadian people. That is why he is putting on other people's shoulders the blame he cannot bear himself. Now, I should like-


Some hon. Members:: Order.


Mr. Lambert:: It is cowardly to say such things-


David Réal Caouette: Mr. Speaker, now, the hon. member for Edmonton West (Mr. Lambert)-


Mr. Starr:: Mr. Speaker, I rise on a question of privilege.


Mr. Speaker:: Order. It does seem to me we have had considerable discussion of this matter which was discussed and finished yesterday. May I suggest that we get on with the business before the house.


David Réal Caouette: Mr. Speaker, I rise on a point of order. The question of privilege which was raised-


Michael Starr: Mr. Speaker, I think I must be heard on my question of privilege.


Mr. Speaker:: Order. I can only listen to one question of privilege at a time.


David Réal Caouette: Mr. Speaker-


Some hon. Members:: Sit down.


An hon. Member:: Sit down, Hitler.


Mr. Speaker:: Order. The hon. member for Villeneuve on a question of privilege.


David Réal Caouette: Mr. Speaker, my question of privilege concerns the one raised by the right hon. Leader of the Opposition who is blaming every fault on everybody but himself.


Mr. Churchill:: That is not privilege.


Mr. Monteith:: Sit down.


David Réal Caouette: We are tired of that game and if today, in the eyes of the people right across Canada, we are considered as school kids, the blame rests squarely on the shoulders of the Leader of the Opposition who is playing politics to the detriment of the interests of the Canadian people.


Mr. Speaker:: Order.


Michael Starr: Mr. Speaker, I rise on a question of privilege in view of the nonsensical remarks which have been made by the hon. member for Villeneuve, who considers himself the leader of a party.


An hon. Member:: He is a demagogue.


Michael Starr: He has attacked the Leader of the Opposition without any foundation.


Some hon. Members:: Oh, oh.


Some hon. Members:: Hear, hear.


Michael Starr: The stand taken by the Leader of the Opposition is the stand taken by the Progressive Conservative party in this house on the matter of limiting the debate on the flag to one week after we come back in the fall, provided there is a recess. This is the unanimous consensus of the official opposition, and if the noisemakers in this house would stop their racket we could get on with the business of the house.


Some hon. Members:: Hear, hear.


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order. All hon. members have had a chance to express themselves, and I hope this part of our session is over. The hon. member for Kootenay West.


Gilles Grégoire: On a question of privilege, Mr. Speaker-


Some hon. Members:: No.


Mr. Speaker:: If it is on the same subject, no. We have had more than enough discussion. I recognize the hon. member for Kootenay West, and I think I will have an opportunity to say something once he poses his question.



USE OF WORD &quot;PRAYER&quot; IN PRESENTING PETITIONS

[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, as an Anglican I wish to address a question to the Minister of Justice on behalf of one of the other bodies of opinion in Canada. In view of the fact that the Canadian Bill of Rights guarantees the right of the individual to equality before the law and the protection of the law and freedom of religion and freedom of speech, and in view of the fact that any petition to parliament must contain a prayer, would the minister inform the house how persons of the Rationalist

society or others who do not believe in any form of prayer can present a petition to the House of Commons?


Mr. Speaker:: Order. This gives me the opportunity to make a short statement. It seems to me this question is completely out of order. In the first place, the hon. member is asking for a legal opinion, which he should not do at this time. Second, it is not within the jurisdiction of the government to decide this question, in that the form of petitions has been prescribed by parliament and not by the government. Third, the premise of his question is wrong, for under present day usage the word "prayer", to my way of thinking, has no particular religious significance but is rather a traditional form of usage and is in fact used as a form of courtesy. For these reasons, therefor, I must rule that the question is out of order.


Herbert Wilfred Herridge: I thank you for your explanation. These people are of the opinion they do not wish to use the word or to utter a prayer to anyone.



INQUIRY OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Hon. Theogene Ricard (St. Hyacinihe-Bagot):: Mr. Speaker, I should like to direct a question to the Minister of Transport. Can he tell the house whether the agreement between the federal government on the one hand, and the Quebec provincial government on the other hand, was reached after a careful study and with a view to possible byelections in the Gaspe north and Matane ridings?


Hon. J. W. Pickersgill (Minister of Transport):: I did not even know, sir, anything about these matters.



BROADCASTING


[Stage Direction]
On the orders of the day:
Mr. Robert Simpson (Churchill):: I should like to direct a question to the Secretary of State with regard to a very disturbing report in today's issue of the Globe and Mail dealing with a new policy of the C.B.C. This report indicates there will be an expenditure of many millions of dollars on the consolidation of facilities in Toronto and Montreal, as opposed to the extension of service to areas not now served. Will the government take the necessary steps to set up a special committee
Inquiries of the Ministry on broadcasting so parliament will be given an opportunity to study this very serious situation?


Hon. Maurice Lamonlagne (Secretary of State):: Unfortunately I have not seen the report referred to by the hon. member. All I can say is that there has been no government decision with regard to these consolidation projects. They are being reviewed by the advisory committee on broadcasting at the present time.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. S. J. Korchinski (Mackenzie):: I should like to direct a question to the Minister of Agriculture. Having had a long, close look at both sides of the turkey question, is the minister in a position to inform the house that he can see eye to eye with the United States government, and also tell us what positive steps he will take to deal with this situation?


Hon. Harry W. Hays (Minisier of Agriculture):: At this time I have nothing to add to what I have already said.



RATE OF REPAYMENT OF LOAN TO FARMER

[Stage Direction]
On the orders of the day:
Mr. Gerard Laprise (Chapleau):: Mr. Speaker, since the Minister of Agriculture is in the house I should like to take this opportunity of putting a question to him. Does he think that we are helping agriculture when a farmer who borrows $40,000 from the Farm Credit Corporation has to pay back $82,600?


Mr. Speaker:: It strikes me this question is not in order. In any event, perhaps the hon. member would put it on the order paper.



AMOUNT OF P.F.A.A. PAYMENTS IN 1962

[Stage Direction]
On the orders of the day:
Mr. Gerard Perron (Beauce):: Mr. Speaker, I wish to direct to the Minister of Agriculture a question about the report of the prairie farm assistance administration commission of inquiry. How much approximately were the western farmers overpaid under the P.F.A.A. in 1962?
6462	HOUSE OF
Inquiries of the Ministry


Mr. Speaker:: This is a question tor the order paper.


Gérard Perron: I should like to put a supplementary question to the Minister of Agriculture. Does he intend to conduct a survey in order to determine, as accurately as possible, the overpayments which are alleged to have been made according to the report of the royal commission on prairie farm assistance?


Harry William Hays: I can answer that for 1962-63. There was nothing contributed by the federal government. There was enough taken in on the 1 per cent collected from the farmers.


Gilles Grégoire: Mr. Speaker, I should like to put a further question to the one asked by the hon. member for Beauce to the Minister of Agriculture. Does the minister intend to follow up the recent report on prairie farm assistance, in view of irregularities committed in the prairies under that act? Does he intend also to investigate the activities of certain hon. members involved in the irregularities committed in Saskatchewan with regard to the administration of the Prairie Farm Assistance Act?


Harry William Hays: Mr. Speaker, during the interim supply debate I hope to be able to make a statement in so far as this is concerned.



ASSISTANCE TO MAPLE SYRUP


[Stage Direction]
On the orders of the day:
Mr. Pierre-Andre Boutin (Dorchester):: Mr. Speaker, I wish to direct a question to the Prime Minister. Can he tell the house if he has received from the board of producers of maple sugar and syrup of Quebec South a resolution asking him to help those producers as soon as possible, in view of the fact that the crop in that region was completely ruined last spring?


Lester Bowles Pearson: I will look into that matter as soon as I get back to my office. I do not recall having received such a communication, but I had better make inquiries.



NEGOTIATIONS RESPECTING SALE TO YUGOSLAVIA

[Stage Direction]
On the orders of the day:
Mr. H. A. Olson (Medicine Hat):: I should like to address a question to the Minister of Trade and Commerce. There is a Canadian Press dispatch this morning to the effect that officials of the Department of Trade and Commerce are consulting with officers of the Yugoslav government in Belgrade respecting the sale of wheat to Yugoslavia. I should like to ask him if these consultations are taking place and whether there has been any success from them.


Mitchell William Sharp: I can confirm that we are in consultation with the government of Yugoslavia because of reports that there has been a serious crop failure in that country. We shall be doing our best to get a share of the business.



U.S. REPRESENTATIONS RESPECTING COMMUNIST CHINA AND CUBA

[Stage Direction]
On the orders of the day:
Mr. Marcel Lessard (Lake St. John):: Mr. Speaker, I should like to put a question to the Secretary of State for External Affairs.
Now that we know what the People's Republic of China thinks of the conflict between the United States and North Viet Nam, could the minister inform us as to whether the government of which he is a member intends to revise the Canadian policy with respect to continental China?
Could he tell us also whether, following the incidents which recurred last Sunday between the United States and North Viet Nam, the American government has made representations urging to discontinue its trade relations with communist China?


Paul Joseph James Martin: Mr. Speaker, in reply to the second part of the question I can say the U.S. government has made no representations to Canada. There is no change in our policy toward that country. The question is still under consideration and the events will be taken into account.


Herbert Wilfred Herridge: Mr. Speaker, I wish to direct a supplementary question to the Secretary of State for External Affairs. Has the government of Canada received any representations from the

government of the United States to stop Canadian citizens trading with Cuba, since the meeting of the organization of American
states?


Paul Joseph James Martin: No.



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Mr. Thomas M. Bell (Saint John-Alberl):: should like to direct a question to the Minister of Labour. Has the minister received a report from Judge Lippe which recommends the immediate establishment of a new retirement fund for longshoremen on the St. Lawrence river? Has he any information as to when the report will be made available?


Hon. A. J. MacEachen (Minister of Labour):: I will make inquiries about this report. I have not seen it personally.


Thomas Miller Bell: In that connection, in so far as the federal government is concerned, will the minister assure the house that the rights of the longshoremen at Saint John and Halifax, who evidently desire an increase in the existing pension and want no part of the new idea will be protected?


Allan Joseph MacEachen: Well, I would want to look into the situation before making any comment.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. T. S. Barneit (Comox-Alberni):: I have a question to direct to the Minister of Fisheries; I would not want him to think we are forgetting him. Now that the act relating to the territorial seas and fishing zones has been proclaimed, can the minister report to the house what progress is being made toward the establishment of straight base lines which are provided for in this act?


Hon. H. J. Robichaud (Minister of Fisheries):: The matter of establishing the straight base lines is under consideration. Progress is being made in the negotiations with the countries involved and with whom we have completed the first phase of negotiations.
As to the implementing of this legislation, the hon. member will be interested to know that on July 28, at 10.30 in the evening, one of the fishery patrol boats apprehended eight U.S.S.R. vessels, which were operating eight
Inquiries of the Ministry miles from the coast of Newfoundland and escorted them outside the 12 mile limit.



INDIAN AFFAIRS


[Stage Direction]
On the orders of the day:
Hon. Rene Tremblay (Minister of Citizenship and Immigration):: Mr. Speaker, on Thursday, July 30 the hon. member for Bruce asked whether it was the intention of my department to resettle Indian people when no economic basis for the existence of a reserve can be found. The answer to this question is no. However, the department does offer advice and assistance to Indians who wish, particularly for economic reasons, to relocate. Also, on occasion, when there is no economic potential the department may advise an Indian or a band to consider relocating.
The resettlement of Indians for economic or any other reasons is a matter of choice for Indians, as individuals or groups.


Mr. Gene Rheaume (Northwest Territories):: As a supplementary question, in view of his answer would the minister consider holding discussions immediately with the Minister of Forestry to see whether the provisions of the ARDA program could be made available to Indian reservations?


René Tremblay: Yes, Mr. Speaker. I sent a letter to my colleague the Minister of Forestry-


Thomas Miller Bell: Did you send it air mail?


John George Diefenbaker: What address?


René Tremblay: -so that in the event of any agreement the provisions of ARDA may apply to all reserves in Canada.



CANADA COUNCIL


[Stage Direction]
On the orders of the day:
Mr. Maurice Cote (Chicoutimi):: Mr. Speaker, I should like to direct a question to the Secretary of State. Could he tell the house whether the government is considering increasing its contribution to the Canada Council so as to enable this body to meet more requests? I am thinking, for instance, of the Lake St. John Music Camp.


Maurice Lamontagne: Mr. Speaker, we have received from the Canada Council a request to the effect



CANADIAN BROADCASTING CORPORATION

[Stage Direction]
Inquiries of the Ministry that its funds be increased. Unfortunately, no decision has been reached as yet by the government.


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Minister of Finance. We would not want him to feel neglected, either. Now that this session is going to last a little longer than might originally have been thought, will the government review the possibility of bringing in an amendment to the Public Service Pension Adjustment Act, or find some other way to improve the pensions of civil servants and other government employees already retired?
Hon. Walter L. Gordon (Minister of
Finance): Mr. Speaker, I thank the hon. member for his consideration in making me feel I am still around. I can assure him this matter will receive consideration.



UNEMPLOYMENT INSURANCE


[Stage Direction]
On the orders of the day:
Gérard Perron: Mr. Speaker, I should like to direct a question to the Minister of Labour.
On several occasions we have asked whether there were any negotiations going on with the representatives from the state of Maine, with regard to unemployment insurance for Canadians working in that state.
The last answer given by the department informed us that negotiations had not resulted in any concrete agreement.
Should we consider as definitely impossible an agreement between the unemployment insurance commission of Canada and the department of social security of the state of Maine to allow Canadians working in the forests of Maine to receive unemployment insurance benefits on their return to Canada?


Mr. Speaker:: This certainly seems to me a very long and detailed question which requires a very careful and detailed answer. I think it is a question for the order paper.
[Mr. Lamontagne.l



VANCOUVER


[Stage Direction]
On the orders of the day:
Thomas Clement (Tommy) Douglas: Mr. Speaker, may I direct a question to the Minister of Industry and ask him whether he has received a proposal from the city of Vancouver regarding the Kitsilano property. If so, what decision has the government arrived at?


Hon. C. M. Drury (Minister of Industry):: We have not yet received any follow-up proposal, Mr. Speaker.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. Fred F. Stenson (Peterborough):: Mr. Speaker, I would also like to direct a question to the Minister of Industry. Now that we know there is no tax on production machinery used in industries in Great Britain, the United States and Japan, would his department take steps to have the tax on production machinery removed, so as to put Canadian industries on an equal footing with industries in the countries I have mentioned?


Charles Mills (Bud) Drury: Mr. Speaker, I do not think I can add much to what the Minister of Finance mentioned the other day in answer to a similar request, when he pointed out that the alleged hardship caused by this tax seemed to have a beneficial effect on the rate of investment in production machinery in Canada this year.



NORTHERN AFFAIRS

[Stage Direction]
CEREMONY MARKING EXTENSION OF RAILROAD ACROSS 60th PARALLEL
On the orders of the day:
Eugène (Gene) Rhéaume: Mr. Speaker, may I direct a question to the Minister of Northern Affairs and National Resources. Could he advise the house what special plans are being made by the government of Canada to have representatives present when the Pine Point railway crosses into the Northwest Territories for the first time in history?


Hon. Arthur Laing (Minister of Northern Affairs and National Resources):: Mr. Speaker, I believe the Canadian National Railways are

now arranging some sort of a function at the boundary, in other words at the 60th degree of latitude.



PRIVILEGE


[Stage Direction]
On the orders of the day:
David Réal Caouette: Mr. Speaker, I rise on a question of privilege.
As reported on page 6423 of yesterday's Hansard, of which we received a copy this morning, I directed the following question to the right hon. Prime Minister:
The Prime Minister announced earlier that there would be this afternoon a meeting of the leaders of the various groups represented in the house. Has he the assurance that the right hon. member for Prince Albert (Mr. Diefenbaker) will be in attendance?
The Prime Minister did not answer my question yesterday. But I see in today's Hansard the following remark from the hon. member for Battle River-Camrose (Mr. Smallwood) which I did not hear yesterday:
Whom do you lead? You couldn't lead a horse to water.
Yesterday I did not hear his remark, but I believe that it is my privilege to tell the hon. member for Battle River-Camrose that he comes under the baneful influence of his leader and that it is easier to lead a horse to water than to lead such a member to a source of intelligence.



INTERIM SUPPLY

[Stage Direction]
The house resumed, from Wednesday, August 5, consideration in committee of the following resolution-Mr. Mcllraith-Mr. La-moureux in the chair.
Resolved, that a sum not exceeding $696,010,791.01, being the aggregate of-
(a)	two twelfths of the total of all of the items set forth in the main estimates for the fiscal year ending 31 March, 1965, laid before the House of Commons at the present session of parliament $658,598,418.50;
(b)	an additional three twelfths of the amount of transport items 15 and 25, (schedule A) of the said main estimates, $7,044,425;
(c)	an additional one twelfth of the amount of agriculture item 60, fisheries item 20, justice item 1, legislation item 20, mines and technical surveys items 10, 15, 25, 45 and 60, national film board item 1, national health and welfare item 15, northern affairs and national resources items 15 and 35,
Interim Supply
privy council item 25, transport item 1, loans, investments and advances item L10 (schedule B) of the said main estimates, $9,525,758.34;
(d)	two twelfths of all the items to be voted in the supplementary estimates (A) laid before the House of Commons at the present session of parliament, except national defence 56a, loans, investments and advances items L17a and L37a, for which no proportion will be granted, $20,840,372.50;
(e)	an additional two twelfths of the amount of justice item 12a (schedule C) of the said supplementary estimates (A), $1,806.67;
be granted to Her Majesty on account of the fiscal year ending 31 March, 1965.
The Chairman:: When we adjourned yesterday the hon. member for Beauce had the floor.


Gérard Perron: Mr. Chairman, last evening, before the house adjourned, I was saying that-


Mr. Mcllraith:: Before the hon. member
begins his remarks-


Lucien Lamoureux: Is the minister rising on a point of order?


George James McIlraith: Yes, Mr. Chairman. Before the hon. gentleman begins his remarks may I be permitted to recall that I had interrupted him just before six o'clock last evening to ask whether it would be agreeable to the committee if I were to withdraw the resolution before the committee asking for two months' interim supply and replace it by a resolution providing for three months' interim supply. I am in the hands of the committee. I am ready to do that now, if it is agreeable.


Some hon. Members:: Agreed.


Lucien Lamoureux: Has the hon. minister
unanimous consent to proceed with the submission of the new resolution?


Gilles Grégoire: Mr. Chairman, I should think that the suggestion made by the President of the Privy Council (Mr. Mcllraith) is no longer fitting since we have reached the date on which the interim supply bill must be approved if we want civil servants to get paid.
But, if we follow the Conservatives' reasoning, an interim supply bill totalling $700 million should be debated for ten days, that is at the rate of $70 million per day. Now, if we add a third month, it will mean another $350 million and an additional five days of debate on interim supply; otherwise, the Conservatives would neither be logical nor consistent.

Interim Supply
If the debate goes on for five more days, Thursday and Friday and Monday, Tuesday and Wednesday of next week, it will then be too late to pay civil servants' salaries, family allowances and old age pensions.
As far as we are concerned, we have too much respect for Canadian children, for our senior citizens, for those who need hospital insurance benefits, etc., to let the Conservatives deprive them of their benefits or allowances and cause the civil servants to go unpaid. That is why we feel interim supply for two months will be sufficient, the more so since we will be here all summer.


Lucien Lamoureux: Obviously we do not have the unanimous consent of the committee, so we will have to proceed at least for the time being on the basis of the resolution now before the committee.


Gérard Perron: Mr. Chairman, in the course of my remarks last night, I said that I wanted to put on record some evidence obtained by the commission of inquiry on the administration of the prairie farm assistance 10 bushels per acre instead of the 6 bushels to the western farmers.
So I was quoting some, including the evidence given by farmer No. 4. One could also refer to the evidence given by farmer No. 10, who claimed that he had a 1,477 bushel production instead of 2,409 bushels. This farmer admitted that his yield amounted to 10 bushels per acre instead of the 6 bushels he reported.


Lucien Lamoureux: Order. May I bring to the attention of hon. members the fact that it is extremely noisy in the chamber, and I should like the co-operation of all hon. members in this regard.


David Réal Caouette: Mr. Chairman, I rise on a point of order.
The hon. member for Edmonton West (Mr. Lambert) is going around talking to every member of the Conservative party and that is the reason for the noise which prevents the hon. member who now has the floor from being heard.


An hon. Member:: The hon. member for Edmonton West is noisy.


Gérard Perron: I thank you, Mr. Chairman. [Text]


Lucien Lamoureux: Order, please.
[Mr. Gregoire.l


Mr. McIntosh:: I intend to speak later this afternoon on this subject, too, and since the hon. member is putting on the record extracts from this report I would request that in future he put them on correctly, because the ones he is putting on now are not correct. I will admit there may be some difference in translation, but what he is supposed to be reading from this report, and the inference he draws, are entirely different from what is actually contained in the report and I would ask that this be looked into.


Lucien Lamoureux: My understanding is that the hon. member is reading from the French text, and it may be that the interpretation would not correspond entirely with the words the hon. member has before him. That might cause difficulty, but I am sure the hon. member for Beauce would wish to heed the advice given and follow the text he has before him.


Gérard Perron: I thank the hon. member for his remarks. I hope he has received an English copy of the report-we have received one in French-to which he can refer if my remarks are not in accordance with the details of the report of this commission.
Now, with respect to farmer No. 12, according to the summary in the version I have, the actual production of his farm was:
881 bushels compared to a stated production of 454 bushels, which increases the stated production from 4.5 bushels an acre to 8.8 bushels.
But a still greater discrepancy is noted when we refer to the report of farmer No. 15.
This farmer stated a production of 4,467 bushels. Questioned on that matter, he reconsidered his figures and arrived at a total of 12,874 bushels, so that his report was changed from 9.5 bushels an acre to 27.3 bushels. This man received, in 1962, an allowance under the Prairie Farm Assistance Act-


Lucien Lamoureux: Order. The hon. member for Swift Current-Maple Creek rises on a point of order.


John (Jack) McIntosh: On the same point of order, Mr. Chairman. Just for clarification and for your information, I think the hon. member, if I heard the translation correctly, said "his statement was" with regard to farmer No. 15. It was not the farmer's statement; it was the judge's statement. If I heard the translation correctly, the hon. member said "he said", but it was the judge who said that.


Lucien Lamoureux: My understanding is that this is not strictly a point of order. The hon.

member for Swift Current-Maple Creek may wish to correct the hon. member who has the floor when he speaks later.


Gérard Perron: Mr. Chairman, is it proper to continually interrupt those who have the floor because their remarks seem to irk some Conservative members of this house? I have quoted the exact wording of the commission's report. If this afternoon, I am making a point of reading into the record some paragraphs of that report, it is precisely because I think the time has come for people to open their eyes and for Quebec farmers to realize in what way the agricultural assistance policy favours western farmers in comparison with the assistance offered eastern farmers. The same can be said of ARDA policy.
In the west, grants are given, but in the province of Quebec, loans are authorized. People are pushed into debts and thus, a solution is supposed to have been found.
In a letter to the farmer the question is asked:
Who may borrow?
Are any persons aged 21 or over eligible for an ordinary loan, whose main business is or will be agriculture on an economic unit-
Reference is made to an economic unit, but we know very well that according to the federal government policy, family farms in the province of Quebec are considered as uneconomic units and we know that 75 per cent of Quebec farms are marginal income farms on which a family could not make a decent living under the present conditions of market and support prices.
This means that within the present federal farm policy, it is impossible to borrow under the farm loan legislation. Nothing can succeed in the province of Quebec under the federal government's way of thinking.
Maclean's magazine recently published a report of several pages on the Quebec farmer's position. It was quite clearly stated that the Quebec family seemed very attached and rooted to its farm, where those people wanted to live decently under the federal farm loan legislation, but that it is impossible for the Quebec farmers to obtain the amounts which are available to companies or large operations in the prairies under the standards established by the federal Farm Credit Corporation. In Quebec there is no such possibility, unless the formula of consolidating farms is accepted or collective farms are established, as they exist in other areas.
That is why it would be logical to call that legislation the "rural displacement act". On 20220-409
Interim Supply
the other hand, as mentioned by the representative of the Catholic farmers' union, the farmers do not so much want credit or loans as support prices or the guarantee of a reasonable profit on their products. The farmer wants an income that will make it possible for him to live decently; what he wants is not just loans, credit and debts, but markets.
I mentioned yesterday that, when one hears about federal farm policy, one gets the impression that there are only wheat producers in Canada. No mention is made of our eastern farmers, whose production depends to a very large extent on the production of feed grain.
Ever since we came here we have been urging the federal government to consider the advisability of building, at suitable locations along the St. Lawrence river, elevators from which feed grain could be supplied to eastern producers at reasonable cost, so they could offer their respective products at competitive prices. For instance, take poultry and eggs. In eastern Canada, we could specialize in this field, but none of those suggestions seems to have been taken seriously.
In view of those facts, Mr. Chairman, I think the Quebec farmer is beginning to realize that he must not count on the federal government for any assistance. That is why they turn more and more to the government of the state of Quebec. And we should not be surprised if their representations are finally expressed in a manner quite contrary to our wishes, we who sit here, namely a Canada united from coast to coast.
In the field of federal policy, under cooperative federalism, practically the same results are obtained as previously, and I wonder if Quebec farmers will not be justified in asking in turn what others have requested, namely independence, because it will be easier for them to have access to a government which would understand them, while here some rural areas get everything they want, thanks to their majority.
I realize that the problems of the eastern farmers are not those of the western farmers and that efforts must be made to solve the problems of eastern producers, but it is not through loans that the question will be settled, even if the possibility of a loan up to $100,000 was admitted, as long as it will be felt that Quebec marginal farms cannot be eligible to federal loans it will be a policy of nothingness, a wait-and-see policy; but pending hopelessness, I wonder if Quebec farmers would

Interim Supply
not be justified in turning elsewhere than to Ottawa tor an opportunity to solve their problems.
We have problems in the field of markets. Commissions have been set up to assure the exportations of wheat through the Minister of Finance (Mr. Gordon) and the Minister of Trade and Commerce (Mr. Sharp) by guaranteeing the payment of wheat sales to foreign countries. Was anything done to find markets for some feed grain surpluses? Not much. There are statistics to prove that. Through the Canadian wheat board, feed grain sales are controlled by very powerful trusts which, in turn, control the sale of feed grain and shorts, which makes it possible to control the purchase of cattle through packers. It is the same interests from one end to the other which control and have in hand the fate of agriculture in eastern Canada.
There is for instance the field of hog production. It costs the Quebec farmer $6.19 more than the western farmer to feed a hog. How is it possible to be competitive on this market unless there are subsidies from the federal government to guarantee to the eastern producer a reasonable price for his production. With support prices, I am convinced that he would become an expert in his field, because we already have organized farms in the province of Quebec where certain private enterprise has invested huge sums of money.
I remember that ten years ago already, during an election campaign, much was made about eggs coming from Poland. That is an obvious contradiction with regard to the warranted aspirations of egg producers in eastern Canada who were asking for price stabilization in that field.


Lucien Lamoureux: Order. I am sorry to interrupt the hon. member, but his time has expired.
However, I must tell him that I took into account the points of order which interrupted his speech earlier this afternoon.


Mr. Cowan:: Mr. Chairman, in rising to speak today I trust that none of those people who are in favour of changing the national flag will accuse me of filibustering the flag debate. I have let it be known in some quarters that I am in favour of the retention of our present distinctive national flag.


Some hon. Members:: Hear, hear.


Ralph Bronson Cowan: In speaking today I am following the cue of the hon. member for Algoma East, the leader of the Liberal party, who when in opposition in December of 1962- and I sat across the aisle with him-spoke on

the then motion for interim supply. The member said in part:
Mr. Chairman, this discussion on interim supply has roamed far and wide. Indeed, I have taken part in the roaming myself and I make no apology for that. If I speak again, it is to deal with a specific matter arising out of the request for interim supply. But I think it should be pointed out that, while the discussion of this matter has roamed far and wide, some very important matters have been brought before the house which could not have been brought before the house in any other way at this time...
We have had to take advantage of this kind of motion in order to bring these matters to the attention of the house in the hope that government spokesmen would deal with them in replying...
It is a traditional and fundamental right of parliament to vote taxes before they are collected and to approve expenditures before they are made. When these rights are ignored, when they are violated, parliament Itself is being violated and we are taking a step toward its destruction. No matter how wide a circulation we give and no matter in what form.. .and no matter how much we may talk about Magna Carta.. .no matter how emotionally we may wrap ourselves up in parliamentary or national flags, both these rights I have mentioned are being deliberately and systematically violated by the present government...
Now, Mr. Chairman, we are being asked to vote blind on another monthly instalment of the annual expenditures.. .Then we are being asked to go home...and come back to issue another blank cheque... As I have already stated, parliament's examination of, and control over, government spending is the very foundation of our democratic parliamentary system...The government will not be explaining.. .its plans... It will be reporting to the house on old history, on what it has already spent...Mr. Chairman, the Canadian people are entitled to something better than perpetual interim supply.
In this motion before the house we are being asked to vote interim supply for the fifth and sixth months of the present fiscal year, and with very, very little discussion of any of the major departments and major expenditures. I intend to devote my attention today to the expenditures of the C.B.C. and the B.B.G., as they are familiarly known. I have done a little bit of research into this matter during the past two weeks, and I am not at all happy with my findings with regard to parliamentary control or investigation of the expenditures of the C.B.C. Here we are being asked to vote the fifth and sixth months of interim supply for C.B.C. expenditures, which in the book of estimates that we all have for the fiscal year in which we are now operating amount to a total of $88 million, which is something over $7 million a month. This interim supply vote will give the C.B.C. better than $14 million, with very little discussion with regard to their operation.

I checked with regard to the C.B.C. expenditures for the fiscal year ending March 31, 1964, and I had the assistance of very able civil servants. I would report to this committee that the only discussion which occurred in this parliament on the estimates of the C.B.C. for the fiscal year ending March 31, 1964 took place on December 21, 1963, when nine months of that fiscal year had already passed and only three months remained. This discussion took place after the supper hour on the evening of December 21, and you can imagine, Mr. Chairman, the thorough going over the C.B.C. estimates had at that time on December 21, the night the house adjourned for the Christmas recess.
With regard to the fiscal year ending March 31, 1963, the C.B.C. estimates were never discussed in the House of Commons. Following the election in April, 1963 this government tidied up the matter and we okayed the expenditures in July, 1963, long after the expenditures concerned had been made.
The C.B.C. estimates for the fiscal year ending March 31, 1962 were never discussed in this house. They were passed on September 22, 1961, as will be seen from pages 8757 and 8758 of Hansard. The total expenditure forecast, and which was passed on that day, September 22, 1961, was $70,418,000. I should like to quote the words of the hon. member for Bonavista-Twillingate on September 22, 1961 with regard to those C.B.C. estimates. As reported at page 8757 he said:
I am not going to oppose the carrying of the vote right now...there are two considerations in the minds of the opposition in agreeing to the carrying of this vote...The second reason is that the session has already been so prolonged. But we do hope that in taking this position... we will not read in half the newspapers in the country tomorrow that, notwithstanding the shocking increase in the cost of the C.B.C., parliament dealt with the item in 10 minutes.
As I say, $70 million worth of estimates were passed on that day, September 22, 1961.
The estimates for the fiscal year ending March 31, 1961 were discussed at some length on July 8, July 12 and July 13, 1960 and totalled $62 million. The estimates for the fiscal year ending March 31, 1960 were discussed on July 18, 1959, only and passed that same day. I have gone back to show, Mr. Chairman, the amount of attention which has been paid the C.B.C. estimates in this House of Commons during the past five years, and I have to say that the entire matter is being allowed to get out of hand.
Yesterday afternoon the public accounts committee of this house tabled its fifth report
20220-409J
Interim Supply
with regard to questions it had asked the chairman of the C.B.C. in regard to the operation of the C.B.C. during the years 1962 and 1963. This was a request by the House of Commons. I have in my hand a copy of that report, which is a report by members from all parties in the house. Paragraph 7 is as follows:
The committee expressed concern over the increasing cost of the corporation's annual operating requirements which the president stated he believes will continue to increase in size each year in future-
Then the committee points out:
The president indicated that the estimates for Montreal and Toronto, shown on the corporation's balance sheet at March 31, 1963 to have been $83 million, have since been further revised and are expected to cost $105 million. The committee would also record that it has since noted from the corporation's balance sheet as at March 31, 1964, tabled by the Secretary of State in the house on July 14, 1964 that the present estimates of the future cost of consolidation of facilities for the corporation is stated to be $128 million.
In the name of the taxpayers of Canada let me ask this committee, how far are we going to allow this crown corporation to roam without some check being placed on its operations?


Some hon. Members:: Hear, hear.


Ralph Bronson Cowan: Then paragraph 7 continues:
The committee expressed grave concern over the size of these large capital outlays estimated by the corporation to be required to provide for the consolidation of facilities, as opposed to the extension of services to areas not now adequately served...
Nevertheless, the committee is seriously concerned at the levels the corporation's spending on operating and capital account have reached since television was first introduced into the national service in 1955.
Let me emphasize, Mr. Chairman, that I am speaking in this committee of supply on interim supply; I am not filibustering the flag resolution: The paragraph continues:
The committee emphasizes that the House of Commons, through the committee of supply, has a definite responsibility to exercise control on the extent to which public funds should be expended for the maintenance and development of the national broadcasting service.
This report is drawing the attention of the House of Commons as a whole to the ever increasing expenditures of the C.B.C. I point out that in 1962, according to the Auditor General's statement which the public accounts committee was investigating, the C.B.C.'s total operations cost $78 million. In 1963 they amounted to $81 million; and according to the blue book for the present fiscal

Interim Supply
year the operating expenses will amount to $88 million if there is no cut-back of any kind.
What is the fate, Mr. Chairman, of questions asked by a mere member of parliament as to how the C.B.C. is conducting its affairs or what it is doing? These questions could not be shushed off more abruptly if they were asking about the internal operations of the Bank of England, which is no concern of ours. We are simply asking questions with regard to the operations of the C.B.C., and to show the sort of interesting answer, if not informative, which is given. I would like to refer the committee to Hansard for July 29, 1964. As reported at page 6116 the hon. member for Dorchester asked:
What fees were paid by the Canadian Broadcasting Corporation during 1963 to (a) Andre Lau-rendeau (b) Jean-Louis Gagnon (c) Jacques Hebert (d) Jean Marchand (e) Mrs. Jeanne Sauve-
Whoever she is. The answer comes back from the Secretary of State:
I am informed by the Canadian Broadcasting Corporation that it is not customary to require the corporation to disclose the fees paid to program participants because of the competitive business in which the C.B.C. is engaged.
I would ask, why is the Canadian government engaged in competitive business? Why are the funds of this nation pitted against taxpaying commercial interests in the community who are printing magazines and newspapers, putting up billboard advertising, engaging in direct mail advertising, private station advertising, and who have to compete with a national competitor who is able to draw on the taxes of this nation?
The hon. member for Vancouver East asked a question on March 9 of this year with regard to a promoter of perversion, Mr. Gins-burg from New York, who had appeared on the C.B.C. The hon. member asked how much the C.B.C. paid Mr. Ginsburg for his contribution to the "culture" of this country, and the following is part of the answer given by the parliamentary secretary to the Secretary of State, as reported at page 673 of Hansard:
It is considered to be not in the public interest to require the corporation to give such information as it could affect the corporation in the competitive business in which it is engaged.
Once more I ask, why is the Canadian government engaged in competitive business against taxpaying commercial enterprises in this country?
On March 23, 1964, I myself asked this question, as found on page 1329 of Hansard:

What has been the advertising revenue, month by month, secured by radio station CJBC, Toronto, since it became an independent station, separate from a network?
Back comes the echo from the Secretary of State:
It has not been customary to require the corporation to give information which could adversely affect it in the competitive business in which it is engaged.
Why in the name of God is it in a competitive business? On July 15, 1964 the hon. member for Port Arthur asked the following question, as found on page 5495 of Hansard:
1. What was the chronology, with an explanation for each step, in the C.B.C.'s dealings with the production by R. Kelly entitled "The Good Life" from its genesis to the decision not to present it to television audiences?
Hon. members will recall the question. Back comes the echo, this time from the parliamentary secretary:
The C.B.C. is engaged in a competitive business and has customarily been left free to conduct its day to day business without being obliged to make public details of its production operations.
This thing is getting absolutely impossible to put up with. I have in front of me here three different statements. I do not like to use the word "criticize" but that is the only word I can use. I will not say "comment", which is a little milder. I do not like criticizing public servants or civil servants since they cannot answer in the same forum I am using but, believe me, when civil servants make the statements they do in what has come to be known in the broadcasting industry as the troika report, the memorandum on broadcasting issued by Alphonse Ouimet, president of the Canadian Broadcasting Corporation, in 1964, and the comments they make in the annual report of the C.B.C. and in speaking to the association of Canadian advertisers in Toronto, they are asking for a reply and this is the place where they should get it, because they come here looking for supply, usually on an interim basis. I should like to read from page 9 on the memorandum on broadcasting which I have in my hand and which is available to all members of the house. Mr. Alphonse Ouimet proclaims as follows:
The C.B.C. was created three decades ago as the publicly owned national agency.
At the top of page 14 in the same memorandum he also states:
The corporation was established as an instrument of national purpose.
If there ever were mouthfilling words or phrases signifying next to nothing, it is these

two statements. Many members are kind enough to say that I do not show my years, but that is because of the good attention my wife gives me. I am 62 years of age, and I can stand here today and state that I was present at the meeting held in Ottawa under the aegis of the then prime minister, R. B. Bennett, when the decision was made as to who should be appointed the first general manager of the C.B.C.
When Mr. Ouimet says the C.B.C. was created three decades ago as a publicly owned national agency and that the corporation was established as an instrument of national purpose, I should like to give him the facts of life. At that time the radio world was in a state of flux, in that not as much was known about radio then as today, and Canada was being assigned six channels by the international control commission. Of course there were hundreds of businessmen seeking those channels. They saw this new medium of communication as a sure-fire profit maker. The government of the day and the commentators of the day-I mean those of the newspapers and magazines-maintained that the airways were the property of the public, and that since they were limited and Canada was being offered six channels, to put them into private hands was the same as giving a man a licence to print money.
If you want me to be specific, the meetings in Ottawa were held in the Chateau Laurier hotel and the east block of the parliament buildings. They lasted for a good number of days. We dealt with the applications which had been received for the position of general manager. I was connected with an organization then, as I was for almost 40 years, that was operating the first radio station to be operated in Canada. I am frequently asked by-I will use the word-young punks in the C.B.C. what gives me the right to talk about radio or television. They were not born when I first became interested in the radio world, and I have been greatly interested in it ever since.


John George Diefenbaker: Where is the Secretary of State?


Ralph Bronson Cowan: The C.B.C. was not established as an instrument of national purpose. It was established so the government could maintain control of these channels, and there was no intention at that time of engaging in competitive business. I tell you quite frankly that in those days we did not have the briefcases that lawyers carry around today. We used gladstone bags and we used to pick them up
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and travel from here to there carrying our gladstones.
The committee of selection, of which I was a member, recommended a certain appointment and Mr. Bennett said, "If that is your choice he will be appointed". We recommended as general manager a gentleman who had been operating with the British Broadcasting Corporation in the British Isles. The reason he was recommended was that the British Broadcasting Corporation at that time did not accept advertising of any kind in competition with the established advertising media. We figured that if he was appointed general manager of the Canadian organization he would fully understand the system, the government would be advised that the British system was the best, and we would have a radio system that would not be competing with the established commercial advertising world.
Over the years changes have come about, and today we have a publicly owned system competing actively with a privately owned organization with both of them seeking advertising moneys. I believe that in this day and age the C.B.C. is unnecessary in this country. It is not performing a single function that cannot be performed just as ably and just as well by the private organizations that now exist in this nation.


An hon. Member:: And a little cheaper.


Ralph Bronson Cowan: Yes, and I would say better as well. In only half an hour I cannot express all my feelings or the feelings of the advertising world with regard to the C.B.C. I am glad this is only interim supply we are considering, because we will have another opportunity to discuss the C.B.C. when the main estimates come forward. I want to quote a statement that appears in Dennis Braithwaite's column in the Globe and Mail of June 12 in which he is dealing with the C.B.C. and uses these words:
The C.B.C. does not know what it is there for any more. Its only purpose seems to be to go on existing. It is rapidly reaching the point where it will soon be impossible for any outside investigator to trace the source of a C.B.C. decision, which is presumably the bureaucratic ideal.
Believe me, I could not agree more than I agree with Dennis Braithwaite's comment in the statement I have just read. These are very expensively prepared reports, the memorandum on broadcasting, the statement of Alphonse Ouimet, the president of the Canadian Broadcasting Corporation, and the annual report of the Canadian Broadcasting Corporation for 1963-64. The statement that

Interim Supply
Mr. Ouimet made before the association of Canadian advertisers is very nicely printed. Many people take these statements as the most authoritative word that can be said on such a vast subject. On page 5 of the annual report of the Canadian Broadcasting Corporation we find this statement, and I want hon. members to pay close attention to it because it is really something:
The directors epitomize a basic tenet to the effect that broadcasting exists to serve people, and not vice-versa.
My God, for $70 million we find that broadcasting exists to serve people and not people to serve broadcasting. On page 8 of what is known in the advertising world as the troika report, which was prepared by Messrs. Jamieson, Stewart and Ouimet, we find this really shocking announcement:
We believe the principle of hearing all cases in public is sound.
You know, until I read that I had a lot of doubt in my mind with regard to whether we were being fair to applicants for television and radio licences by making them appear in public. When I read that Messrs. Ouimet, Stewart and Jamieson put in this report to the government "We believe the principle of hearing all cases in public is sound", I thought of Moses coming down from the mountain top. I have a note here which reads "I wonder if Mr. Ouimet endorses the ten commandments", but that is outside the point.
On page 28 of this memorandum we read:
A second principle recognizes the needs of the national service as predominant.
Now, is this a personal statement by the chairman of the C.B.C. or did it come down from mount Sinai? I cannot tell. It is called a principle.
A second principle recognizes the needs of the national service as predominant.
Well, for Pete's sake, you do not know how far you can go in this ridiculous situation.
Now, on pages 19 and 20 of this memorandum on broadcasting you will find a statement by the chairman to this effect:
For the past 30 years the number of public inquiries into broadcasting have been more than adequate. The great lack has been the absence of a planned program of assessment and review...
A major public examination of the over-all Canadian broadcasting system and its components at regular intervals of ten years is suggested for consideration.
The Canadian Broadcasting Corporation could be operated under a public "charter" or mandate for a period of years which would coincide with the intervals between major public studies. This mandate would state generally the aims, objectives and

scope of the corporation and include a firm basis for corporation financing for the ten year period.
When I read that the C.B.C. wanted a ten year charter, as they call it, I was really dismayed. The people who pay taxes in this country have to work every day in order to earn the wherewithal with which to keep the C.B.C. operating on its present gargantuan scale. Then I began to think of the disciple who came to the Lord and asked Him how to pray. In the eleventh chapter of Luke you will read how one of the disciples said "Lord, teach us to pray". Then we read:
And He said unto them, when ye pray, say... give us day by day our daily bread.
Now, Mr. Ouimet cannot take the time to ask for his sustenance on an annual basis. Parliament has to meet on an annual basis to pass the army bill, but it should not have to meet on an annual basis for the C.B.C.; once every ten years should be enough.


An hon. Member:: That is a pretty good reference.


Ralph Bronson Cowan: I have a better one. In the sixteenth chapter of Exodus you will read that the children of Israel were murmuring against the Lord because of hunger. I quote:
Then said the Lord unto Moses, Behold, I will rain bread from heaven for you; and the people shall go out and gather a certain rate every day, that I may prove them, whether they will walk in my law or no.
And it shall come to pass, that on the sixth day they shall prepare that which they bring in; and it shall be twice as much as they gather daily.
And Moses and Aaron said unto all the children of Israel, at even, then ye shall know that the Lord hath brought you out from the land of Egypt... At even ye shall eat flesh, and in the morning ye shall be filled with bread; and ye shall know that I am the Lord your God...
And the children of Israel did eat manna 40 years, until they came to a land inhabited; they did eat manna, until they came unto the borders of the land of Canaan.
If the C.B.C. board of governors had been running that operation they would only got food four times in ten year instalments and would not have had to worry about daily bread. These people believed that if they got bread daily they were very fortunate and blessed amongst the people of the earth; that is the way the Lord treated it because the C.B.C. board of governors had not been created yet to evolve this system of ten year instalments.
What perplexes me immensely is the use of this word "mandate". The C.B.C. are everlastingly telling us they operate under a mandate, they operate under a parliamentary mandate. I have in my hand a copy of the

annual report, and on the very first page you will read this:
Parliament has accepted these stated aims and objectives which are now known as the parliamentary mandate-
This is written by the C.B.C. board.
Parliament has accepted these stated aims and objectives which are now known as the parliamentary mandate-
I ask you to look at pages 6 and 7 of the memorandum on broadcasting which was issued at the same time. You have the flatfooted statement there that parliament has accepted these stated aims known as the parliamentary mandate. On pages 6 and 7 of the memorandum on broadcasting the chairman of the board writes:
For many years the corporation has made reference to its parliamentary mandate, a term which is sometimes misunderstood.
Then there is this statement:
In the corporation's view, and in my personal view, the acceptance by parliament of the C.B.C. role as developed by its trustees-
Note that phrase.
-as developed by its trustees constitutes a parliamentary mandate which is as effectively binding as though it were spelled out in detailed legislation.
He admits there is no detailed legislation spelling out the parliamentary mandate, yet he talks about it incessantly, incessantly and incessantly. There is no parliamentary mandate. This C.B.C. is not a thing apart from the taxpayers of Canada, nor from this parliament of which we are members. It is a crown corporation, and it should be held responsible to this parliament of ours, and should be held responsible on an annual basis.


Lucien Lamoureux: Order. I have to bring to the attention of the hon. member the fact that his time has expired.


Some hon. Members:: No, no.


Lucien Lamoureux: Order. We have to have the unanimous consent of the committee.


Some hon. Members:: Agreed.


Ralph Bronson Cowan: I wish to thank the committee for their indulgence. I regret that I have not contributed much to this interim supply debate, but I will do my best. Yesterday I purchased on Sparks street at Smith's book store the August edition of Show. It is a monthly magazine and contains an article headed "The Ten Year Decline of TV", by Harriet Van Horne. This book costs one dollar and it is well worth five. The writer,
Interim Supply
Harriet Van Home, is a woman who is decrying the disappearance of live shows from television and radio. It is all canned today by tape, and the actors and actresses do not make the money they used to make. This is the burden of her story.
There are some excerpts here I should like to read into the record with regard to the future of television. I believe the future of television is a matter that comes within the purview of a motion for supply when they are asking for as much as $15 million in interim supply for the C.B.C. I should like to read the first couple of paragraphs:
The current-which is to say banal, cheap and joyless-state of television recalls a story Charlie Weaver, the Mt. Idy philosopher, used to tell on the old "Tonight" show. Its hero was Charlie's cousin, who enjoyed a spectacular rise in show business.
"He started small with a hand organ and a monkey," related Charlie. "And today he's got a pipe organ and a gorilla."
As the article says:
There you have a capsule history of television. From merry little comedies and honest, moving drama to "Million Dollar Movie" and "Bonanza" in living colour-with real blood. From engaging little parlour games with no grand prizes to rigged quiz shows involving millions.
She writes on in much the same way. An interesting thing about television's future is that we are told it is worth $128 million in Montreal and Toronto alone, not to mention what they want to spread around the rest of the country. Here is another comment from the same article:
Today there is almost a sense of embarrassment about t.v. watching. It has become a secret vice, like marijuana or stag reels.
We are talking about when television probably began to decline, and this phrase is in here:
On the other side of the set, people date the decline of t.v. from the day they moved the set to the bedroom. Or the day it broke and they forgot to get it fixed for a month.
To me that is a capsule history of the popularity of t.v. and radio today. You have the $64,000 rigged questions, something which was proven in the courts. You have the Nielsen ratings showing how many people were looking at programs they did not even know existed.
There is another case here I thought I should draw to your attention showing the way people in this business are not entirely held above suspicion. This writer in the American magazine says:
In some large cities, such as Austin, Texas, a shrewd business mind and an obliging friend or

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two on the FCC, have maintained monopolies. Viewers who do not wish to see what the only channel is offering can go read a book (though in Texas, one suspects, it's not often done).
The final conclusion in the article is:
Some observers say that more people may be watching, but they're in the under 12 or the shut-in group. Or they're the unemployed, or the group that has no consumer power to speak of, beyond the essential food and clothing funds supplied by public welfare.
The day will come, say those who have lost faith in t.v.'s potential, when sponsors discover that they cannot sell their products via television. The people who can afford to buy won't be watching.
I now would like to swing over to another angle of the t.v.-radio business that should be drawn to your attention. This week's issue of Newsweek, now on the stands, has a long article about pay t.v. in California. The issue of Time magazine which came out yesterday also has an article on pay t.v. in California. In yesterday morning's Montreal Gazette Dink Carroll-I knew him when he played in the backfield for McGill University in the early twenties-had a long column dealing with the moneys being paid to football teams, baseball teams and hockey teams for television rights, and it is quite interesting to read because Dink makes the statement:
Harold Ballard, one of the principal stockholders in the Toronto Maple Leafs, revealed that the club sells its television rights for Saturday night games for $500,000 a year.
"Our present contract expires in two years," he added. "When it's up for renewal our asking price will be $2,000,000 a year and that figure could change rapidly. We may even ask $5,000,000."
Those big baseball and football television contracts have got everybody talking that way.
Then Dink goes on to say:
This isn't the hockey season, but N.H.L. club owners operate on the theory that making a dollar is never out of season.
I draw this to the attention of the committee for this reason. Dink Carroll points out that the owners of the teams are interested in the television money, but I ask what about the players? Do the owners not think they are interested in that television money? I can tell you at this date, August 6, that a brief will be submitted to the Fowler commission on radio and television on behalf of professional athletes, which will demand some compensation for the entertainment they are giving the public on Saturday nights, Saturday afternoons, and Sundays. At present the owners of these professional clubs treat the players as little more than trained seals.
If you follow the rules in football you know the teams can only ask for a certain

number of times out, but if you check television practice you find there are three or four times as many times out as are allowed, in order to let the commercial be shown on the television broadcast. How many of you know that three minutes before every professional game ends in Canada there is a time out so that the advertiser sponsoring the broadcast can get in his final clincher?
I was told by a professional hockey player you all know, but who shall be nameless in this chamber, "You haven't any idea how often they change the puck in the national hockey league." I do not know whether they need better pucks or more uninterrupted viewing, but it is just a little insight on this television business. Jim Proudfoot of the Toronto Star had a column in last Saturday's paper dealing in part with television. I asked some west coast members if they knew about this particular matter and they said they were not aware of the situation. Jim Proudfoot says:
Lions are beaming their home games into a Nanaimo theatre. With the Victoria outlet, this gives them 4,000 closed circuit seats.
I say to you that with the ferment the radio and television world is in today, it is no time to be giving anybody a blank cheque for 10 years, let alone for one year; and I oppose the suggestion for a ten year-what shall I say-solitude or respite from the prying eyes of members of the House of Commons. When they talk about a 10 year respite I would point out that on page 11 of the annual report of the C.B.C. there appear these words of the chairman:
The number of variables involved means that there are constant changes in the planning lists from year to year and sometimes oftener.
Now, standing on that great principle, because you do not have to read very far until that statement is called a statement of principle, they say, "Give us our largesse in ten year instalments so we won't have to come to you hat in hand and ask for money every year." They must be prophets of the first water to be able to make statements like that.
I am in favour of selling the assets of the C.B.C. to tax paying commercial interests, and when they have made such a sale we will get an income from the private stations such as we get now in a limited way from the existing stations. I say to the government, get out of the competitive business of the advertising world.


An hon. Member:: Spoken like a good Tory.


Ralph Bronson Cowan: I am a good Liberal. I have not sunk that low yet.
On page 10 of the address by the president of the Canadian Broadcasting Corporation to the association of Canadian advertisers there is this statement:
We believe the C.B.C. is the most influential advertising medium in this country.
This is a great big mouth-filling expression, and on page 46 of the memorandum on broadcasting we have Mr. Ouimet again extolling the tremendous advertising value of the C.B.C. saying:
As I stated earlier C.B.C. is the only truly national advertising outlet available to Canadian business.
When I hear that this is the greatest advertising force in Canada today, I cannot figure how Eaton's ever developed to their present position. They did not have the benefit of any radio advertising; they did not have the benefit of any television advertising. We have to admire the Hudson's Bay Company for reaching its present prosperous state. This company, too, grew and expanded without the benefit of radio and television. The C.P.R., likewise, was built up in an era when there was no radio or television advertising. How they were able to get ahead before the C.B.C. came into existence I have not yet been able to figure out.
It is a known fact in the advertising world that the C.B.C. sets its rates, not according to cost but according to how much it can get. I was talking this over the other day with an hon. member of this house, but before I tell you what he said, Mr. Chairman, let me read some more from Mr. Ouimet. This is Mr. Ouimet speaking:
The private sector has a proper concern with the total advertising picture but it is perhaps unfortunate that from time to time the commercial activity of C.B.C. is believed responsible for a drop in revenue in certain parts of the private sector.
Here is the great prophet himself speaking:
This feeling is not supported by the facts. The total of Canadian net advertising revenues in 1963 was over $594 million. Of this amount, non-broadcasting media accounted for approximately $467,300,000, private broadcasters for $103,800,000 and the C.B.C. for $23 million.	'
And the member to whom I was speaking said to me "That is a very limited bit of the total advertising, being only 3 per cent." I said, "You never were in the advertising business, my friend. It only took a small hole in the bottom of the Titanic to sink her to the bottom of the Atlantic and it only took a small gash in the Andrea Doria to send her to the bottom of the sea, and when you have a com-20220-410
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petitor in the advertising world who is subsidized by the taxpayers' money, he sets his rates according to what he can get, not according to cost of production." It is a known fact that the C.B.C. is paying 80 per cent of the cost of these sports spectaculars. The sponsor gets full credit for promoting them, and the big fellows in the advertising world cannot afford to stay off the C.B.C., they get their advertising so cheaply. So when a commercial enterpriser approaches representatives of these companies and says: I should like you to use my billboards, or order some pamphlets, because I have a printing press, or take some newspaper space or magazine space, or take some time on my radio or television station, the big fellow says "No, I can use the C.B.C. so much cheaper than I can use you." I say that what is going on is not fair to the commercial advertising world and that the C.B.C. has got to get out of the commercial advertising business.
But Mr. Ouimet says, as will be found on page 43:
A retreat from advertising dollars by the C.B.C. on the grounds that it would help the over-all private sector would not be warranted.
I have written on the side: "Who says so?" I can get a thousand men to subscribe to my statement without the slightest trouble in the commercial world of Montreal, Toronto, Winnipeg and Vancouver, if further support is needed for what I am saying.
The committee has suffered these remarks in patience and silence. I have exceeded the time allotted to me. Let me sum up by saying that I do not believe the C.B.C. should be in existence. I do not believe it should have any commercial advertising business whatever. Since we shall have another opportunity of discussing the C.B.C. when the next interim supply resolution comes up for consideration, or when the general estimates are before us, I will withhold some further comments I have to make on the subject. Let me say I am not counting on the general estimates of the C.B.C. to come before us soon, because I have read the five year history-[DOT] how nobody ever discusses the affairs of the C.B.C. And when we make inquiries, we are told: "This is a competitive business and we don't tell nothing to nobody."
What did the public accounts committee have to say? In its report yesterday, the last paragraph reads:
The committee recommends that the Secretary of State table an official memorandum in the house presenting the corporation's views and its replies to each of the matters dealt with by the royal

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commission in its report No. 19, and that this be done before the estimates of the corporation are considered by the house.
This recommendation was made because Mr. Ouimet, giving evidence before the committee, explained that the Glassco royal commission had apparently failed to understand the nature of the problems of broadcasting. Well, I thank whatever gods there be for Mr. Alphonse Ouimet, who is able to point out that the commission did not understand the nature of the problem. Now, on the basis of this recommendation, the C.B.C. will be able to take the next six, seven or eight months preparing the corporation's views, and its replies to each of the matters dealt with by the Glassco commission.
I say: Stop all capital expenditure by the C.B.C. until we get a little fact into this fantasy which is now running around the country and until we can discuss the operations of the corporation intelligently and in detail, without being told "Keep quiet, because it is engaged in a competitive business".


John George Diefenbaker: I am sure the committee has listened with attention to the views expressed by the hon. gentleman. While he was speaking I have been viewing the front benches of the government. Their reaction to what he said, and the views he expressed, would lead me to believe that his popularity among them will not be tremendously increased.
I wish you could have seen them, Mr. Chairman. There is the Solicitor General. He had a lugubrious appearance during the progress of the hon. gentleman's remarks which one would expect him to have if he were reviewing a capital sentence. The attitude of the Minister of Justice was: There is certainly no justice in this. The Minister of Finance-


Mr. Favreau:: It is all very well for the right hon. gentleman-


John George Diefenbaker: Oh, I am not going to be interrupted like that. I have the floor. There is no question of privilege here.


Lucien Lamoureux: Order. The Minister of Justice is rising on a point of order and I should be given the opportunity to hear him and determine whether it is legitimate or not.


Guy Favreau: Any member who is referred to during the speech of another member has a right to rise-


Some hon. Members:: Oh, oh.


Guy Favreau: -and I want to state that the right hon. gentleman must take full responsibility for his descriptions of our alleged reactions which must be deemed to have been seen through his own particular optics.


John George Diefenbaker: I take full responsibility, and the hon. gentleman's reaction indicates that the views I expressed are actually in keeping with the facts. He was a study, which even an artistic and cultural custodian such as the Secretary of State would have admired in any histrionic performance. It is of interest, too-


Gilles Grégoire: Mr. Chairman, on the same question of privilege-


John George Diefenbaker: Is one of the allies rising on a question of privilege?


Gilles Grégoire: On the same question of privilege, Mr. Chairman. I think it is true that the Leader of the Opposition is able to judge others by the expression on their faces, since he turned pale so many times at the speeches of members of his own party-


Lucien Lamoureux: Order. There is no point of order or question of privilege here. The Leader of the Opposition has the floor.


John George Diefenbaker: Every time I look at the hon. gentleman who has just interrupted, I am reminded of Sir Winston Churchill's statement on one occasion: "It is a hard thing on the house to watch the hon. gentleman creeping down from his perch".


Lucien Lamoureux: Would the hon. member resume his seat?


Gilles Grégoire: I rise on a question of privilege-


John George Diefenbaker: I refer to the Secretary of State-


Gilles Grégoire: Mr. Chairman-


Lucien Lamoureux: Order. Will the hon. member kindly resume his seat.
I would only like to suggest at this point that it might be useful if we returned to the item now before the committee of supply. It seems to me there is no question of privilege or point of order raised. The right hon. Leader of the Opposition has the floor.

I would ask him, while I am on my feet, to restrict or limit his remarks to the resolution now before the committee.


Gilles Grégoire: Mr. Chairman, my question of privilege is this-


John George Diefenbaker: Mr. Chairman, I ask you to exercise your authority in regard to this interruption that goes on from time to time by this hon. gentleman.


Lucien Lamoureux: I will have to listen to the hon. member for Lapointe state his question of privilege.


Gilles Grégoire: Mr. Chairman, my question of privilege stems from the remark made about myself by the right hon. Leader of the Opposition. I must say that I consider this remark as a compliment, knowing all the admiration the Leader of the Opposition had for Sir Winston Churchill.


John George Diefenbaker: Mr. Chairman, I was referring to the various ministers-


Lucien Lamoureux: Order, please. The hon. member for Lapointe is apparently now raising a new question of privilege, and surely the right hon. gentleman will realize-


Mr. Pugh:: Why don't you get the Sergeant-at-Arms to throw him out.


Lucien Lamoureux: -that the Chair has to listen to the point as it is made to the committee.


Gilles Grégoire: Mr. Chairman-


Some hon. Members:: Order.


Mr. Smallwood:: Go and get some more peanuts.


John George Diefenbaker: Mr. Chairman, the interruptions of the hon. gentleman from Lapointe are so frequent whenever one is discussing the government that the completeness of his alliance must from time to time bring heartburn to the Minister without Portfolio, who dealt with both that hon. gentleman and the hon. member for Villeneuve so effectively in the last election.


Some hon. Members:: Hear, hear.


John George Diefenbaker: I was about to mention the fact that the Secretary of State, as the 20220-410J
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custodian of culture and as the minister responsible for the C.B.C., while he was in the house earlier today did not see fit to be here during the progress of the speech of the hon. gentleman. I look back over the years, as far as the C.B.C. is concerned, and see Right Hon. R. B. Bennett bringing before parliament the measure for the establishment of this body as a national institution-and so it must remain. I would not want anybody to conclude that, while in reference to expenditures what the hon. gentleman has said will receive somewhat general support, we in this party have changed our view in regard to this institution. We stand where we have always stood, namely on behalf of a national corporation for radio and television, in order to represent and epitomize the best things of our nation.
Having said that, I want to add this. In the last few weeks and months there has been on the part of the C.B.C., in the examination of so-called freedom of speech by so-called independent commentators, a tendency to bring parliament into disrepute and use virulent language to criticize members of parliament or the official opposition as such. This was very obvious in a broadcast this morning. I am not going to spoil the record of parliament by giving the name, but only this morning there was a contemptible exhibition by a so-called commentator in which a personal attack was made, which by no stretch of the imagination could be dictated by other than excessive uncontrolled and virulent partisanship. I want to make that very clear.
I believe in freedom of speech; but one thing the C.B.C. will have to guard against, if it is to maintain its reputation for being completely neutral, is the degree to which in recent months-and I am emphasizing that again-the commentators have been using that forum for the purpose, not of giving a picture of parliament but to indulge in statements bordering on libel and slander. I said a moment ago that we support, and shall continue to support, the Canadian Broadcasting Corporation and the objectives that were set forth in the act passed by parliament. We do believe, however, that there is no justification whatever for the failure of this government to bring the C.B.C. before parliament and a parliamentary committee for the fullest investigation and examination. We have the right to information.


Some hon. Members:: Hear, hear.

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John George Diefenbaker: We have an example in British Columbia-I realized that in raising this matter it might not bring me any favour with some of those in high places in the C.B.C.-in connection with the Kitsilano property out there, when there is widespread demand on the part of the people of Vancouver that a portion of the Kitsilano property should not be turned over to the C.B.C., whether absolutely or for a period of 35 years. Yet the head of the C.B.C., when speaking out there, indicated that it is only a question of when it will be taken over by the C.B.C., regardless of the wishes of the people of British Columbia. That is not in keeping with the responsibility that rests on the president of the C.B.C.
Mention has been made of the pyramiding costs of the C.B.C. As far as advertising is concerned, one or two commissions have dealt with that matter. Advertising was limited in the recommendations of those commissions. I feel sure this is something the Fowler commission will have to give earnest attention to, so that above everything else private advertising will not find itself unfairly competed against by a public enterprise which from year to year is requiring ever increasing amounts.
We believe in the necessity for and the responsibility of parliament to exercise control over public funds that go to the C.B.C., which now reach massive amounts. We believe-and we have not been able to make any advance in this connection-that a committee of the house should have placed before it the C.B.C. picture, to the end that after the fullest examination recommendations may be made by the people's representatives regarding the rightness of the expenditures being made, so that a proper control of such expenditures may be ensured: because, after all, this is the taxpayers' money. Have we been able to get it? Nothing of the sort. It has been brushed off, as the hon. member said, by supercilious answers of almost contemptuous import-"This is a matter you have no right to look into. You must not ask this question. The C.B.C., in the public interest, says it shall not be answered". Only yesterday, as was mentioned a moment ago, the public accounts committee made certain recommendations in this regard. When we were in office we decided that in order to make the public accounts committee effective it should have a member of the Liberal party, the then opposition, as chairman. That tradition is now being followed by the present government and this committee has been an effective one.

This committee pointed out yesterday in its fifth report that as of March 19, 1963 the cost of the Montreal and Toronto facilities of the C.B.C. had been $83 million. However, the president of the C.B.C. advised the committee last month that this figure had been increased to $105 million. Since that time the corporation in its annual report for 1963-64 boosted its estimate of the future cost of consolidation of facilities in the two cities to $128 million.
I ask, Mr. Chairman, where are we going? Are we going to permit the creation by parliament of a corporation that can spend without any conception of control on the part of parliament? This is a matter which a committee of parliament could look into. Finally, the committee emphasized that-
-the House of Commons, through the committee of supply, has a definite responsibility to exercise control on the extent to which public funds should be expended for the maintenance and development of the national broadcasting service.
I rise, Mr. Chairman, simply to say that parliament today has little or no control over the degree to which the C.B.C. expands or spends money, money which is to a very large extent the taxpayers' money. We have the right to have that control. There is no way in which we can get this committee unless members of parliament are given the freedom to vote in this regard regardless of party. We are being denied this, and it is something that we are entitled to and to which the Canadian people are entitled. I support to the full the basic principles which Mr. Bennett enunciated and which are incorporated in the legislation of the 1930's regarding independence for and the integrity of the C.B.C.; but such does not demand a freedom from the fullest examination, and such should not permit the granting of that independence 10 years in advance without examination by parliament.


Mr. Gordon:: Mr. Chairman, it is not my intention or purpose to delay the passage of interim supply, which I am sure all members of the committee would wish to see disposed of at the earliest possible moment, but in view of the absence of the Secretary of State I should like on behalf of the government, to say a word or two in reply to some of the criticisms-in fact, I do not think it is going too far to say attacks-which have been made on the C.B.C. this afternoon.


Mr. Winkler:: By whom?


Gordon Minto Churchill: Name your own member.


Mr. Muir (Cape Breton North and Victoria):: What do you want to do, canonize him?


Walter Lockhart Gordon: I do not mind mentioning names if necessary but that is not my purpose and I do not want to get into that kind of debate.
In the opinion of the Liberal party and of some other parties in this house the importance of public broadcasting in Canada can hardly be exaggerated. As a member of the government and as a member of the Liberal party I want to make it perfectly clear that we believe in public broadcasting. We believe in the C.B.C. and we intend to support that institution.
While I am on my feet I should also like to deplore the personal attacks which have been made on the president of the C.B.C., Mr. Alphonse Ouimet, who I suggest is a dedicated public servant of whom all Canadians can properly be proud.


Robert Muir: Is he above criticism?


An hon. Member:: Get on your feet.


Robert Muir: Mr. Chairman, I was asking whether the president of the C.B.C. is above criticism, like the Minister of Finance.


Walter Lockhart Gordon: I do not intend to get into that kind of discussion, Mr. Chairman. What I am saying is that when a public servant like Mr. Ouimet is attacked in the house I believe that some member of the government should get up and support him, and that is what I am doing now. That is something that I would do on behalf of any public servant who was singled out in this way.


Mr. Crouse:: Would the minister permit a question. He has just made the statement that he would protect any public servant who had been charged in this way. Would he not tell the house who made these charges against Mr. Ouimet, and what the charges were?


Walter Lockhart Gordon: Mr. Chairman, if I may carry on with my remarks without indulging in personalities, the Leader of the Opposition said a moment ago that it is important that parliament have appropriate control over the expenditure of all public funds, and obviously all members of this committee will agree with that. One of the important terms of reference which was given the committee which is looking into the C.B.C. was to determine the best way of controlling expenditures by the C.B.C. I quite agree with this; I think this should be done and it will
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be done. That is one of the purposes which the government had in mind when it set up the committee.
Having made those few remarks, Mr. Chairman, which I cannot think were at all annoying or upsetting or disturbing to my hon. friends opposite, I hope that perhaps we can get rid of or pass-


Some hon. Members:: Oh, oh.


An hon. Member:: Get rid of you.


Walter Lockhart Gordon: All right, I made a slip there;
I	do not suppose it will be my last slip and why should it be? I should have said, perhaps we could dispose of interim supply and get on with other business.


Eric Alfred Winkler: Would the minister permit a question. May I suggest to him that he could rectify one of those slips by eliminating the
II	per cent sales tax.


David Vaughan Pugh: Mr. Chairman, could I ask a question of the minister about setting up the committee which he suggests. He said he wanted this committee to be set up to study the C.B.C. Is it his intention to have this committee answer questions on advertising costs of the C.B.C. and all pertinent figures? Is that what the minister meant when he suggested full powers would be given the committee?


Walter Lockhart Gordon: I was referring to the committee that has been set up under the chairmanship of Mr. Robert Fowler and which was announced by the Secretary of State some time ago. If any hon. members have questions on that score perhaps they would ask them of the Secretary of State tomorrow.


Mr. Nesbitt:: Mr. Chairman, I very much regret having to take up any time of the committee, but certain events have taken place in the last couple of weeks, indeed in the last 24 hours. As there will be no other opportunity in the foreseeable future to get an answer to these questions, I am afraid I will have to take six or seven minutes of the committee's time to request the government to give some sort of answer now. I direct my request to the Prime Minister and the Secretary of State for External Affairs and ask them to give an explanation of what certainly appears to be a two-faced, fence-sitting, wishy-washy foreign policy in southeast Asia.
In the first instance, I refer to the government's position in the current Indonesian and Malaysian question. On the one hand, apparently we are going to provide increased economic and military assistance to our friendly

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sister nation in the commonwealth, Malaysia, whose territory is under constant, unprovoked attack by Indonesia. Dr. Sukarno, the Indonesian dictator, has already sworn to destroy Malaysia. On the other hand, we apparently are giving increased economic and perhaps even indirect military assistance to Indonesia. It is well known that the economy of that country is in a shocking state of disorganization due to the neglect and mismanagement of Dr. Sukarno. Yet this government is endeavouring to help keep him in power and is giving him at least moral encouragement in his unprovoked aggressions against peaceful and friendly states by continuing to give him hundreds of thousands of dollars every year of Canadian taxpayers' money.
Just what does this largesse consist of and how much does it amount to? We do not know. All we can get from the Prime Minister and Secretary of State for External Affairs are evasive and contradictory answers. For example, at the recent meeting of the committee on external affairs on Thursday, July 16, the Secretary of State for External Affairs was a witness, and as found on page 1598 of the proceedings the hon. member for Brandon-Souris asked this question:


Mr. Dinsdale:: Did I understand the minister to say that Canada is providing assistance to Indonesia?


Murdo William Martin: Yes.


Walter Gilbert Dinsdale: Of what kind?


Paul Joseph James Martin: It is mostly teaching but some equipment and some food.
I then refer to the meeting of the committee on external affairs on Tuesday, July 21 last. The witness before the committee on that occasion was Mr. Moran who is in charge of the external aid branch. As found on page 1629 the hon. member for Brandon-Souris asked these questions and received these answers:


Walter Gilbert Dinsdale: How is the $850,000 for other commonwealth countries allocated? This is the information which I understood was going to he forthcoming.


Mr.   Moran@: I can give that to you. Burma. $350,000; Indonesia, $350,000; Viet Nam, $150,000.


Walter Gilbert Dinsdale: Are these not commonwealth countries?


Mr.   Moran@: Those are non-commonwealth countries.
Note the figure there, $350,000. In the house on Wednesday, July 29 last I put a question to the Prime Minister. As found on page 6120 of Hansard I asked the following question:
A supplementary question. I was wondering if the Prime Minister can tell the house whether
CMr. Nesbitt.]
the government is planning to continue aid to Indonesia in view of these arrangements with Malaysia.
I was referring to a question asked by the hon. member for Three Rivers about aid to Malaysia.


Lester Bowles Pearson: Mr. Speaker, the only economic aid to Indonesia at present is in the form of flour or wheat to the extent of some $400,000, I am informed. This matter was mentioned to the prime minister of Malaysia, and he understood the position. There is no intention to interfere with that shipment, but we will not be sending to Indonesia any defence equipment or strategic material of any kind.
It is all right for the Prime Minister to say that the prime minister of Malaysia understood the situation. What else could the poor man do when he came here to ask for gratuitous aid? Hon. members will note that Mr. Moran told the external affairs committee on one occasion that $350,000 worth of wheat was being sent to Indonesia. The Prime Minister told us the amount was $400,000, and in the committee on external affairs the Secretary of State for External Affairs told us that aid to Indonesia was "mostly teaching and equipment but some food".
The only implication anybody can draw from these statements is that there must be vast amounts of money being spent on teaching and equipment if $350,000 or $400,000- no one seems to know which figure is right- is being spent on food for Indonesia.
I refer now to a document which was submitted to the members of the committee on external affairs, and which I presume is available to anybody, by the external aid branch. The document lists the aid to various countries, and on page 6 Indonesia is dealt with and we get a different story. We find there these words:
Since 1950, funds totalling $3,988,000 have been made available by Canada to Indonesia for development purposes. A large part of this amount has been in the form of wheat flour valued at $1,875,000, including $325,000 worth of flour in 1962-63.
Among the 73 Indonesian trainees studying in Canada in 1962-63, the largest groups included undergraduate students in science and engineering and in medicine. Others included students of public administration and earth sciences.
Here is the interesting part:
Two Canadian advisers served in Indonesia in 1962-63. A Canadian flying instructor continued his assignment at the Indonesian air academy-
Apparently the other is a statistician. What we are doing supplying a flying instructor presumably to the Indonesian air force I do not know. It may be said that perhaps he is simply teaching civilian flying, but I have no doubt in my mind that this flying instruc-

tor is helping to train the Indonesian air force and in this way we are certainly giving indirect military assistance to a small degree, to say the least, to Indonesia.
Under the circumstances I think that the house and the Canadian people are entitled to an explanation of what can only be called the two-faced behaviour of the government and also a complete, specific and detailed explanation of just what assistance is being given to Dr. Sukarno. All we have been receiving so far are contradictory and evasive answers.
The second instance to which I wish to refer is the position of the government with respect to the present crisis in Viet Nam. The statements of the Secretary of State for External Affairs, both in reply to questions in the house and in statements to the press and on television outside the house, are only capable of one interpretation, namely that the government does not approve of the actions of the United States government in the North Viet Nam area. Of course, this is exactly the interpretation that the press has taken with regard to this matter. To be fair I will say that today the observations of the Secretary of State for External Affairs did seem to have a little backbone in them in this regard, but not too much.
As far as we know, and the facts do not seem to be too much in dispute, P.T. boats from bases in North Viet Nam attacked units of the United States seventh fleet about 65 miles off the coast in international waters. The attackers were driven off but next day the attack was renewed.
In spite of this unprovoked aggression on the high seas, which was also clearly an act of war, and notwithstanding what can only be described as a very delicate and sensitive situation, the United States government replied in the only way the communist aggressors could understand, namely destroy the bases from which these attacks were being launched. Now, it seems the United Kingdom, as the Secretary of State for External Affairs told us this afternoon, and the allies of the United States in western Europe with the possible exception of France, approved the action of the United States. However, apparently the approval of this government is not so pronounced in this instance. The government should make it quite clear that it places itself firmly behind the United States. It should not, by any vague statement or by silence, give assistance or comfort or perhaps even tacit approval to the communist aggressors in southeast Asia.
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President Johnson has made it quite clear his country will not spread the war and will only reply to warlike attacks in kind for the purpose of preventing further attacks on United States forces in international waters. All of us in Canada are proud of the various mediation efforts in which Canada has successfully engaged since 1945 under successive governments. All of us wish Canada to continue this role in international affairs. This does not mean we should adopt a lofty posture of detached interest or, worse still, tacit approval of illegal acts of war on the high seas, particularly when our closest friends and allies are those attacked.


Mr. Prittie:: Mr. Chairman, the speech by the hon. member for York-Humber has resulted or will result in about four other speeches this afternoon. The Leader of the Opposition made a speech, followed by the Minister of Finance, and I shall speak for a few minutes. I believe the hon. member for Medicine Hat may speak as well. There are two things I like about the hon. member for York-Humber. He speaks in a very entertaining way and the house is very much alive when he is speaking. In addition, he is very frank and very honest. He does not believe in the principle of public broadcasting and he says so quite frankly. This is in contrast to many people in the country who really do not believe in the principle but hesitate to make a frontal attack.
I was very interested when the hon. member for York-Humber said that the government should sell the Canadian Broadcasting Corporation. This remark was greeted with a great deal of approval from the Conservative benches. I believe it is quite significant, however, that the Leader of the Opposition got up later and made a point of saying he believed in the principle of public broadcasting, despite what some of his backbenchers may have indicated by their desk pounding.
When it suits members of parliament, they quote the views of various organizations in this country which have taken certain positions. Today this suits my purpose. I am going to remind hon. members that the Canadian federation of agriculture, the Canadian labour congress and the Canadian home and school association as well as other bodies have supported the idea of public broadcasting in Canada. I suspect this is the reason that all cabinets, of whatever party, have continued to support the Canadian Broadcasting Corporation. This was why the hon. member for Digby-Annapolis-Kings, when he was minister of national revenue, fought off his

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own members continually. Cabinet ministers realize the widespread support there is in the country tor public broadcasting, substantially as it is at the present time. They will allow the C.B.C. to be used as a whipping boy regularly, as the hon. member did this afternoon, but no substantial attack can be made upon it to reduce its effectiveness in the country.
Now, Mr. Chairman, I think you can well accept the principle of public broadcasting of radio and television, and within that principle make certain criticisms of the operations of the corporation and perhaps of the board of broadcast governors. It may be that the C.B.C. spends too much on administrative expenses and not enough on programs. This may be, although I suggest we have not had any real investigation to And out whether or not that is so. It may be that they spend too much capital on buildings, at points, but I suggest that we really will not know that unless we can make comparisons with similar organizations in other countries.
Some horror has been expressed at the fact the C.B.C. has asked for a charter for a period of ten years. I think this is a rather long time, and I do not believe they should have a charter for that period of time. I do agree however that they should receive a charter for a certain number of years, perhaps three or four. The Leader of the Opposition expressed great horror at this lack of parliamentary control. Quite frequently he refers to the mother of parliaments at Westminster as a model for us to follow. I would suggest the same is true of the British Broadcasting Corporation. I believe there should be a periodic review by parliament of the spending and plans of the CB.C., but I do not believe this should be on an annual basis. I feel there are practical reasons for this. Every time the C.B.C. is called before the house, we have a real witch hunt. I do not think they can do a very effective job if they have to face that situation annually. While I do not agree with a ten year charter, I think some lesser period should be recommended for an investigating committee.
A great deal of horror was expressed by the hon. member for York-Humber about increasing budgets. I should like to know about some public body in this country which does not have an increasing budget, whether it is a city council, a schoolboard or whatever it may be. The country is growing and we have more people. In order to service more people, we have to spend more money. Private corporation budgets are growing as well.

Some hon. members expressed great horror that $88 million may be used for the C.B.C.'s budget. Nobody has objected to the fact that over ten years this country has spent approximately $15 billion for defence that may be of very doubtful value. I mentioned this in an earlier debate.
There is just one point upon which I think I could agree with the hon. member for York-Humber, Mr. Chairman. He did not like the idea of the C.B.C. being in the advertising field. I do not like it very much, either. I believe that in so far as television is concerned we have to accept it because the costs of television products are very great. If the C.B.C. did not receive certain revenues from advertising for television productions, they would come here and ask for more. Then there would be more complaints because they were asking for more money. I believe there is one side to it where they can operate without commercial revenues. I am thinking of the radio network. It seems to me that with all the wavelengths we have available in this country there ought to be at least one in every major centre of the country to which you could tune and not have to listen to advertisements. I recognize they are absolutely essential to commercial broadcasting. This is one of the reasons they exist; they cannot pay their way any other way. However, in so far as the C.B.C. radio network is concerned, I suggest we could well get along without commercials.
This procedure would have two beneficial effects. It would please the listeners who want that kind of broadcasting and the advertisers could go to the commercial stations. This would increase their revenues.


Horace Andrew (Bud) Olson: I am only going to take about three minutes this afternoon. There are some very interesting points raised in some of the speeches regarding the C.B.C. It is obvious from the response that was given to some of these speeches that there is a widespread support in this House of Commons for an examination into the C.B.C. by a committee of this house, notwithstanding the fact that the Fowler commission has been set up outside of the house.
Now, Mr. Chairman, this has been adequately proven by the remarks made previously this afternoon. There has not been a thorough examination of the C.B.C. spending program for the last five years. As has been pointed out, the vote for the last fiscal year 1963-64, went through after supper on December 21, the date for prorogation of that particular session.

The Minister of Finance also said this afternoon that it is obvious to him all hon. members of the House of Commons agree that the house should in fact have some control over the expenditures of the C.B.C. Surely, if there has been no examination in detail for the last five years, we are not in fact effectively exercising that control which it is our responsibility to exercise. Only a few minutes were spent during the last fiscal year on expenditures of something like $78 million. The year before that they were not examined at all, and the year previous they were introduced and passed the same day. In fact the Minister of Finance made a good argument for the setting up of a committee of the house to inquire into these expenditures.
The hon. member for Burnaby-Richmond supported that when he stated there has not been a recent investigation of the allocation of funds by the board of directors of the C.B.C., but he went on to say it should not be done annually, that these examinations should have a longer interval between them If there had been an examination of C.B.C. expenditures at any time during the last four or five years, if there had been an opportunity for hon. members to make an examination in depth and find out where the policy is set, and get some reasons from officers of the C.B.C. for the policies they have pursued, there would not have been built up that animosity which exists at present on the part of hon. members toward the operations of the C.B.C.
Nothing would be more beneficial than to bring the opinions of hon. members and of the executive of the C.B.C. into harmony, and to make a fair study of the C.B.C. expenditures and bring them out into the light of day. I ask the Secretary of State for External Affairs, the Minister of Finance and the Secretary of State,-and I notice the latter two are not present,-to give an undertaking, after the demonstration they have seen in this chamber this afternoon, to set up a committee of the house to go into this problem that is frustrating and bothering many hon. members. When the light of day is thrown on these activities I believe there can be a little harmony between the house and the C.B.C.


Lucien Lamoureux: Shall the resolution carry?


Some hon. Members:: Carried.


George James McIlraith: Before the resolution carries I would like to put forward for the third time-and I am told the third time is lucky- my request, in accordance with the suggestions made yesterday and today, that the
Interim Supply
resolution now before the committee for two months' interim supply be withdrawn and there be substituted for it a resolution for three months' interim supply.


Lucien Lamoureux: Is this agreed?


Some hon. Members:: Agreed.


Mr. Peters:: Before this is agreed to, I would like to say a few words. We have had the resolution on interim supply before us for some time now, and I have not taken any time to speak on it. We are presently being asked to honour a commitment that was made in a negotiation on something which was originally suggested by the leader of the New Democratic party. I think that the government and the official opposition, particularly the Prime Minister and the Leader of the Opposition, have been making a farce out of parliament in the last few days.
It seems to me we are being asked to provide another month's supply when we are not going to have any recess. Asking for three been done, and in asking for three months' only two departments have been passed, and half the year has gone, is really stretching it, unless the government is willing to make some concession to members of parliament themselves.
If arrangements which were studied by a committee of the house had been put into effect we might have found that the financial portion of the government's business, including the estimates, would have been completed in the early part of the session, as they are in other parliaments. This has not been done, and in asking for three months' supply it means it will be late in the fall before we come to discuss those departments that have not been opened, and those that have been opened but have not been completed. Unless we are given a better timetable than this, I suggest the government is abusing the authority it has in asking for the extension of supply.
If we are not smart enough as members of parliament to be able to sit down and arrange the business of parliament so that it meets the needs of the day and the needs of the country, then 1 think we are going to have to act in a dog eat dog fashion, and have the true personalities of the Prime Minister and the Leader of the Opposition clash. We all know that when the Prime Minister went away for several days the Acting Prime Minister was able to accomplish a greater amount of business than had been accomplished for a considerable length of time, leaving only four items of business to be completed before

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a recess, items which still remain with us after many weeks. To be fair about it I should also mention that when the Leader of the Opposition was away for several days the same type of co-operation was arranged.
We have a personality clash that is affecting every member of parliament, and it is about time we made some arrangement concerning what we are to do about this particular clash. When we see the way the very legitimate and well planned approach to a compromise, initiated by the leader of the N.D.P., has been treated, we must realize that every member of the house is being abused and every elector in the country is being abused.
I would like to know whether the Leader of the Opposition really wants an election. I would like to know whether the Prime Minister wants an election? In every vote the house has taken the government has had a fairly substantial majority, and so long as it continues to give us legislation and leadership it will continue to have that support. But now the government is failing to do that. If the Leader of the Opposition wants an election he should say so. At present we are in an impasse because the government cannot govern and the opposition is not putting forth its proposals. All we are faced with is this personality clash that is causing such a great deal of difficulty.
So far as the government is concerned, I think we have to have a recess because it has not the legislation ready that has been requested. I think the Leader of the Opposition has his tongue in his cheek when he asks for the pension legislation to be brought forth immediately. There has not been time to prepare it. The government has been busy doing other things.


Eric Alfred Winkler: Does the hon. member know we asked for this legislation to be brought forward weeks ago, as did his colleague, the whip of his party?


William Arnold Peters: Of course we have been pressing hard for this over a long period of time; but from the answers given by the government it is clear that the legislation is not prepared, and the only way it can be prepared is to give the cabinet a month or six weeks holiday in which to prepare it.
The legislation which was introduced concerning student loans was terrible legislation, poorly and improperly drafted, indicating terrific haste. I suggest the government needs a recess, but the Prime Minister has gone on television and made some asinine statements which he really did not understand, which he

really did not document; and we are now faced with a continuation of the type of abuse that is taking place in parliament while we wait for the two protagonists to make up their minds on what they are going to do about it. I have no objection to its being three months rather than two months, or it can be granted until the end of the year. It looks now as though this government, along with others in previous years, has decided that the estimates do not really mean estimates, but public accounts. We have been discussing estimates long after the year to which they referred has gone by. Governments should take a look at this matter before they ask for interim supply.
The President of the Privy Council who is asking for this extension today is perhaps the person best qualified to tell the committee about the whole program covered by the estimates, and what discussion of the estimates means in a democratic country. He is well aware of the situation and has made statements about the principles involved on many occasions. I think that in asking today for three months' supply, without making a commitment that some real result of benefit will follow either for members of this committee or for the country, he is being unfair. We are placed in the position of being pawns in a game which we are not playing at all but which is being played outside this chamber at the present time.


George James McIlraith: 1 would simply say that the proposal I placed before the committee, as I pointed out last night, was not based on information from any of the leaders or from any of the leaders' meetings, but based on suggestions made here in the committee of the whole house. It was put forward by the Leader of the Opposition and supported by other hon. members.
I do not wish to develop the subject, because I see it is almost five o'clock. The point I want to make is this: If hon. members will consider the time spent this session on interim supply, in the four months of the fiscal year just past, they will find that the proportion spent on interim supply as opposed to the time spent in study of the estimates is relatively large. I would hope that we could get three months' interim supply so that we might have an opportunity to get the estimates before the committee of the whole house for detailed study. That is the way, I think all members will agree, in which these matters should be considered.


William Arnold Peters: Would the minister make a commitment that he will consult with his

colleagues in order that this shall be done? My point is that in the early part of the session, in the first six months at least, the estimates should be completed and interim supply should be only on a supplementary basis from then on. If the hon. gentleman would make the commitment I have mentioned I would have no objection to following the course suggested.


George James McIlraith: I will be glad to put that suggestion forward. That has been my whole point. I will be glad to discuss that matter with my colleagues.


Thomas Speakman Barnett: In spite of the fact that it is getting close to five o'clock I wonder whether the committee will permit me to ask one question of the minister. He has just stated that this proposal for the granting of three months' supply was brought forward because of a suggestion made in this committee, and he has apparently been quite ready to act upon that suggestion. My question has to do with another suggestion which was put forward in the course of this debate. It relates to having the estimates of certain departments sent at an opportune time to various standing committees of the house, the committee on estimates, for example. I wonder whether the minister can give us any information as to what consideration he or the government is giving to this idea for better organizing consideration of the estimates.


George James McIlraith: That suggestion was made some days ago and it is receiving consideration right now.


Lucien Lamoureux: Is it agreed that the resolution respecting three months' supply shall be substituted?


Some hon. Members:: Agreed.


Lucien Lamoureux: Resolved, that a sum not exceeding-


Some hon. Members:: Dispense.


Lucien Lamoureux: Shall I dispense?


Some hon. Members:: Agreed.


Stanley Howard Knowles: Put it in Hansard.
[Editor's Note: The text of the resolution in substitution above referred to is as follows:]
Resolved, that a sum not exceeding $1,037,030,109.84, being the aggregate of-
(a)	three twelfths of the total of all the items set forth in the main estimates for the fiscal year ending 31st March, 1965, laid before the House of Commons at the present session of parliament except external affairs item 20, for which the proportion is two twelfths, $987,817,169.42;
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(b)	an additional three twelfths of the amount of transport items 15 and 25. (schedule A) of the said main estimates, $7,044,425;
(c)	an additional two twelfths of the amount of agriculture item 60, legislation item 20, (schedule B) of the said main estimates, $4,235,450;
(d)	an additional one twelfth of the amount of agriculture item 25, fisheries item 20, mines and technical surveys items 10, 15, 25 , 45 and 60, national film board item 1, northern affairs and national resources items 15 and 35, privy council item 25, transport item 1, loans, investments and advances item L110, (schedule C) of the said main estimates, $6,442,850;
(e)	three twelfths of all the items to be voted in the supplementary estimates (A) laid before the House of Commons at the present session of Parliament, except national defence item 56a and loans, investments and advances items L17a and L37a, for which no proportion will be granted, $31,260,558.75;
(f)	an additional two twelfths of the amount of justice item 12a and loans, investments and advances item L12a, (schedule D) of the said supplementary estimates (A), $229,656.67;
be granted to Her Majesty on account of the fiscal year ending 31st March, 1965.


[Stage Direction]
Motion agreed to.
Resolution reported and concurred in.
Mr. Deputy Speaker:: Does the house wish to defer consideration of private members' business for a few moments so that we may pass the supply bill?


Some hon. Members:: Agreed.



WAYS AND MEANS

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

["Mr. Speaker, in approaching debate on a bill of this kind, which in its short form is entitled the Federal-Provincial Fiscal Revision Act, 1964, it is possible of course to become almost inextricably involved with statistics, and as debate moves about from one side of the house to the other or from one member to another there can be a very extensive selection of statistics proving a great many points of view but not perhaps acceptable to all points of view. Therefore I shall endeavour, in what I have to say now -if I can have enough silence to be heard at all-to avoid statistical references and deal with one or two principles that are involved in this bill.\nOne of these principles has been mentioned already this evening by two of the previous speakers. It was referred to on an earlier occasion, at the resolution stage by the hon. member for Kamloops (Mr. Willoughby), and it was referred to again tonight by the hon. member for Burnaby-Coquitlam (Mr. Douglas) and also the hon. member for Medicine Hat (Mr. Olson). This is the question with respect to the assessment of income from natural resources in a province as part of the basis of establishing the province's participation in equalization payments. There has to be, as was suggested previously and again tonight, some consideration given to the question of the nature of this income, for obviously part of the income from the natural resources of a province is drawn from", 'Federal-Provincial Relations non-renewable resources, from minerals, oil and natural gas. The income is being derived from a wasting resource. There is nothing the province or anyone can do to renew that resource. Once it is gone, it is gone forever. Once it has been used, there will be no further income from it; there will be no renewal of income from that particular resource-it has been expended.\nTherefore to take into account revenue as a consequence of a sale of that resource as part of the income of a province is undoubtedly dangerous. Serious consideration should be given by the federal government to some formula by which a province is credited with the depletion of its resources. Unless such a depletion allowance is provided in the consideration of income of the province, this formula is not fair and is not equitable. There are other resources, forest resources and water resources, that can be used, renewed and used again. There, again, it is not equitable that the province should be charged with all the income derived from those resources in considering its share of tax equalization payments, because obviously these renewable resources must be managed.\nEach province must spend a substantial amount of money annually in renewing its forest resources, protecting and to a substantial extent renewing and perpetuating, through some measures that can be taken in some provinces, its water resources. These are charges upon the province which do not appear in the equation as indicated in this bill. If there is to be equity in the consideration of the economic wealth of the provinces, these factors must be taken into account by the federal government. There must be this recognition of depreciation of non-renewable resources, and recognition of the cost of perpetuating and preserving renewable resources.\nI trust that the minister, when he comes to answer the comments made, will have some understanding of what I have just said, as I notice he is paying not the slightest attention. These factors have not been taken into account in any statement made by the government. The minister has not even caught up with my latest intervention, but I hope he will later.\nI submit these factors must be taken into account if there is to be an equitable sharing of financial resources in the provinces. If the provinces are to have the responsibility for and the cost of administering, protecting and preserving their resources, the federal government in taking revenue from them and the provinces being required, in effect,\n[Mr. Fleming (Okanagan-Revelstoke).l\nto share that revenue with the federal government, the costs to the provinces must be taken into account by the federal government before it makes its assessment. I think that is fundamental and applies to any business. You simply do not milk your assets till they are gone and there is no asset left with which to produce future revenue. Any business can be destroyed pretty fast by not taking into account depreciation of assets. In the income tax and corporation tax structure of the federal government depreciation must be taken into account, and it must be taken into account in this formula which has been established by the federal government in arriving at which of the provinces shall not participate in equalization payments. The formula must also take into account that this will work to the benefit of some provinces which now benefit substantially from equalization payments and at the same time are provinces which can derive substantial revenue from the sale of natural resources. Such provinces might benefit from this consideration as well as provinces like British Columbia and Alberta, which find that their natural resource income deprives them of the right of participation in equalization payments under the present formula.\nAnother matter which has been mentioned many times in the house, both in the course of the resolution debate and also this evening, so therefore I will not labour the point, is that an equally important point with regard to this federal-provincial fiscal revision act does not appear in the bill. It is something which is absent from this bill but has not been absent from the considerations of this house during the past few days. It is an indication of government policy on sharing the cost of highway building in the provinces.\nLate in July the Minister of Public Works (Mr. Deschatelets) indicated that this fall there is to be a dominion-provincial conference on national highways policy. Naturally no one would argue with the necessity for such a conference; members from every province would welcome one. But it was assumed that at that time there would be a general assessment of the federal role in highway construction in the provinces, whether the federal government had in fact any role or responsibility at all. It could be assumed that when this announcement was made about this conference, federal government participation in road building programs in the provinces on a major scale would wait until after the conference. That might be one\n\nProceedings on Adjournment Motion\nreason why this particular aspect of federal-provincial co-operation is not included in this bill.\nWithin the past 48 hours-in fact yesterday-we found that although there is to be a highways conference in the fall the government has come to an ad hoc arrangement with one of the provinces and decided to spend $13 million on a purely provincial road. It is not even a road which could be considered in the national context. It might have come within the general context of roads to resources or even forest access roads, but we know that the present administration has eliminated both those programs and they are gone. Therefore we cannot find any over-all national policy to account for this sudden, one-shot roadbuilding program introduced in one province.\nI am not arguing against the merits of such a program but I am arguing against this ad hoc arrangement, this one-shot deal undertaken in the face of what we had assumed would be federal government policy to consult with all the provinces to arrive at a national highways policy. Then when one is confronted with this bill and finds that it provides that a province like British Columbia is not to participate to any extent in tax equalization programs, and when one finds that the roads to resources and forest access programs have been discontinued and no other provision made for a joint federal-provincial roadbuilding program, which is of tremendous importance, if not of vital necessity, to the provinces, it is clear this bill has been circumvented in this sudden, one-shot, ad hoc arrangement with one of the provinces. This is in defiance of the very principles established in the bill and contained in other government statements, including that of the Minister of Public Works, relating to a national highways program.\nIn view of the fact that there seems to be plenty of precedent in the house tonight for a member speaking on behalf of his own province and perhaps considering provincial interests over national interests, I must say that it seems to me that this is something which is being thrust upon us by the provisions of this bill and the announcement made yesterday, coupled with the inadequacy of federal policy in regard to British Columbia, the particular problems of communications in that province and the absolute necessity for federal interest in highways policy as it applies to the west coast in particular. In this regard I refer to the necessity for linking the Pacific coast of Canada more satisfactorily with the rest of Canada through direct highway access to the seaports on the coast.\nMr. Speaker, may I call it 10.30.']
George James McIlraith: Resolved, that towards making good the supply granted to Her Majesty on account of certain expenses of the public service for the fiscal year ending 31st March, 1965, the sum of $1,037,030,109.84 be granted out of the consolidated revenue fund of Canada.


[Stage Direction]
Motion agreed to.
Resolution reported and concurred in.
Mr. Mcllrailh thereupon moved for leave to introduce Bill No. C-116 for granting to Her Majesty certain sums of money for the public service for the financial year ending the 31st March, 1965.
Motion agreed to and bill read the first time.
['Resolved, that towards making good the supply granted to Her Majesty on account of certain expenses of the public service for the fiscal year ending 31st March, 1965, the sum of $1,037,030,109.84 be granted out of the consolidated revenue fund of Canada.']
Lucien Lamoureux: When shall the said bill be read the second time?


Some hon. Members:: By leave.


Lucien Lamoureux: By unanimous consent.

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George James McIlraith: the second reading of the bill.


[Stage Direction]
Motion agreed to, bill read the second time, considered in committee and reported.
['the second reading of the bill.']
Lucien Lamoureux: When shall the said bill be read the third time?


Stanley Howard Knowles: By leave, now.


George James McIlraith: the third reading of the bill.


[Stage Direction]
Motion agreed to, and bill read the third time and passed.
['the third reading of the bill.']
Eric Alfred Winkler: Conservative co-operation.


Lucien Lamoureux: It being after 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 motion (papers), private bills, public bills.



Mrs. Margaret Konantz (Winnipeg South) moved: the second reading of Bill No. S-6, to incorporate Bank of Western Canada.


Mr. Deputy Speaker:: Is it the pleasure of the house to adopt the said motion?


Some hon. Members:: Explain.


Margaret McTavish Konantz: Mr. Speaker, it is a privilege for me to bring Bill No. S-6 to the attention of all hon. members. As the representative of Winnipeg South and a lifelong resident of that city whose family and forefathers pioneered in western Canada, I consider this occasion a great honour.
The Minister of Finance (Mr. Gordon) has said in this house that the government is not opposed to further competition in the banking field. In fact, he has indicated that more competition in banking, as in other fields, would be welcome provided three conditions were met. Any new bank, he said, must first be adequately financed; second, it must be supported by financially responsible people; and third, provision should be made for retaining control in Canada. I would like to take these points one by one. First, a new bank must be adequately financed. The Bank of Western Canada, if incorporated, expects to be able to commence business with $13 million in capital and rest account, which would be the largest amount any Canadian chartered bank has had at its beginning. Rather than merely indicating the intention to raise $13 million, it was decided to obtain
[The Chairman.]
these funds on a trusteed basis pending the granting of a charter. Should a charter not be granted, the funds would be returned to would-be subscribers.
At this time I do not want to go into all the details of the financing of this bank as I am hoping that all questions will be answered in committee. Briefly, though, the capital stock of the bank will be $10 million divided into one million shares of $10 par. In addition to the 100 initial subscribers of stock listed as incorporators in Bill No. S-6, there are now 6,000 Canadian residents holding trustee subscription certificates entitling them to subscribe for stock in the new bank if and when incorporated by parliament. I would say that the Bank of 'Western Canada will be adequately financed.
The second point was, a bank should be supported by financially responsible people. In clause 1 of this bill hon. members will see the names of the 100 individuals who have joined together to be petitioners in the application for incorporation of the bank. Eighty five per cent of them are residents of the four western provinces and 15 per cent are from Ontario. About 60 per cent of the total petitioners are businessmen in these areas, but there are also physicians, lawyers, chartered accountants, university professors, farmers, engineers, journalists, pharmacists and other occupational groups. I can assure the house that this is a very representative list and I believe that all these people will be of great help in organizing the bank. The directors of the proposed bank will be drawn from this list, and other persons active in Canada's economic life. The majority will be resident in the west.
The third point the Minister of Finance made was that there should be retaining control in Canada. I believe that the Bank of Western Canada will be truly all-Canadian. No foreign participation will be accepted in the formation of the bank. The pre-incorporation offering prospectus made it clear that this stock may not be purchased by non-residents of Canada. Each subscriber has been requested to sign a statement which would ensure that ownership of shares can only be held by Canadian residents and cannot be transferred to a non-resident or any person acting as a nominee, agent, trustee or on behalf of a non-resident. The applicant must be a person ordinarily resident in Canada, or a company incorporated under the laws of Canada or of a province of Canada, and one which has its principal place of business in

Canada, and is not by any means whatsoever under the control of non-residents of Canada.
I would like to draw the attention of the house to clause 5, subclause 3 of this bill, which spells out the restrictions of transfers of shares to non-residents, the total aggregate of which may never exceed 10 per cent of the total number of shares then issued and outstanding. Again I say, Mr. Speaker, that the Bank of Western Canada will be truly all-Canadian.
Now, why has this request for a new bank been made? Certainly the petitioners have no grievance with any of the existing banks in Canada. They believe that our banking principles have been the backbone of our excellent Canadian banking system, which enjoys a world-wide reputation for soundness and stability. But times have changed, even since 1963. I would like to give the house some of the basic reasons why I believe there should be a Bank of Western Canada. First there is the extraordinary economic growth of Canada, particularly western Canada. This growth needs an increase in the banking institutions to serve that economy. In 1954 Canada had 11 chartered banks; now, in 1964, there are only eight. I think I am right when I say that the gross national product of Canada has almost doubled in those last ten years; I think the figures are, from $25 billion to $43 billion.
I believe that western Canada should have a bank with its head office, with its seat of control and management, in western Canada. It seems ridiculous that no bank has its head office west of Toronto. Only in this way will the financial needs of western Canada receive the close attention and understanding they deserve. Then I believe that the economy of Manitoba, Saskatchewan, Alberta and British Columbia is sufficiently varied and broadly based to support a western Canadian bank without having to go to the capital markets of Toronto, Montreal or New York.
The capital needs for the western provinces are sufficiently important to the people living there to warrant their asking parliament to incorporate a bank specially devoted to the development of this part of our country. What I heartily approve of is that the Bank of Western Canada would have modest branches operating in an economical and efficient way with concentration on small and medium sized accounts. In this way I believe the Bank of Western Canada would fill a growing need for a regional financial institution to take care of regional economic
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development. The interprovincial co-operation between the four western provinces in the development of water resources, power, irrigation and mineral growth point to the need for such a financial institution. It should be based in the west and geared to the business opportunities that are developing in this vast and exciting area. The headquarters of this Bank of Western Canada would be in Winnipeg.
Hon. members, I believe the incorporators of this bank have shown great foresight and initiative in all their planning. Six weeks after they had made application for their charter, the report of the Porter royal commission on banking was tabled here in this house, namely on April 24. So many of the ideas they had had when drawing up this bill have been expressed in this massive document. The Porter report has recommended a more open and competitive banking system in Canada. It has referred to the dangers of undue concentration. Allow me to quote a few of its passages relating to competition in banking. This passage is to be found at page 362:
There must be sufficient competition among these institutions that borrowers and savers have alternatives open to them.
Then again at pages 367 and 368:
It is undoubtedly true that in banking, as in other business, there are advantages in being big and in being able to provide specialized services in many fields. However, there are disadvantages as well and we do not subscribe to the view that size alone will give the banks a necessary advantage. . .In any event, there is no reason why smaller banks and other institutions cannot compete successfully for all other types of business: indeed they may handle large accounts by splitting them among a number of smaller institutions.
Then at page 375 the commission make this recommendation:
We have therefore recommended the continuance of certain features of the present act, and the introduction of others, with a view to ensuring that competition is not blunted by price agreements or the uncontrolled acquisition of competing institutions by their rivals.
My final quotation is from page 564:
We have, in summary, favoured a more open and competitive banking system-carefully and fairly regulated under uniform legislation but not bound by restrictions which impede response of the institutions to new situations-
The Bank of Western Canada fits into this pattern. The sponsors realize that business opportunities in western Canada deserve special attention. Such a bank would give western residents encouragement to mobilize their own capital resources for investment in

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the opportunities they see around them and a chance to develop new and imaginative ideas.
Hon. members, I hope there will be no delay of this bill to incorporate the bank of western Canada. Today's Bank Act on the statute books applies to the incorporation of a new bank. Bill S-6 complies with the Bank Act as it now stands. Under the Bank Act parliament has a duty to consider each applicant seeking to incorporate a new bank on that applicant's merits.
I urge you all to allow this bill to go before our parliamentary standing committee on banking and commerce, where all the most technical questions will be answered. We, particularly those of us from western Canada, look forward to the day we can show in a tangible way our enthusiasm for this proposed new bank. It has been heartily endorsed by so many. Let us give these Canadians an opportunity to assist our banking system to meet the needs of our growing and increasingly international young country.


Horace Andrew (Bud) Olson: Mr. Speaker, I just want to say very briefly that we in the Social Credit party have no objection to sending this bill to the standing committee on banking and commerce. It is well known to all hon. members of this house that we do take some objection to the way the banks in this country are operated today, but we do not believe that it would serve our purpose to restrict the number of banks in the country. We are happy to note that the Bank Act will be coming before the committee of the House of Commons some time later this year, we hope, and certainly not later than June 30 next year, at which time we will have an opportunity to state our objections to the present situation and to suggest some changes to the act. However, Mr. Speaker, I make it abundantly clear that this bank, if it comes into existence, along with other existing banks would of course be subjected to the rules and changes which will be made when the Bank Act is before this house.
I think the report of the Porter commission, to which the hon. member for Winnipeg South (Mrs. Konantz) referred a number of times, indicates that the chartered banks in this country have failed in many respects to provide the kind of credit facilities demanded by the Canadian people. This is manifest by the growth of what have been termed "near banks", treasury branches, credit unions, and so on. We will be making a detailed examination of this failure and the changes which are necessary to meet the demands of the Canadian people when the Bank Act is before

the house and the committee. In the meantime we have no objection to sending this bill to our standing committee.


Gérard Perron: Mr. Speaker, before coming to the few principles I intend to set forth before the house concerning Bill No. S-6, I must congratulate the hon. member for Winnipeg South (Mrs. Konantz) for the excellent statement she made in order to justify the existence of this new bank, when she referred to the necessary competition in the banking field.
But considering that we already have had more than 30 different banks in Canada and that, during the last 60 years those banks have been centralized into eight banks, I am wondering whether one is justified today in requesting a decentralization, through the creation or incorporation of new banks, as a means of solving banking credit and monetary problems in this country.
And, by an irony of fate, I find among the 100 representatives, as pointed out by the hon. member for Winnipeg South, the name of Mr. James Coyne.
It will surely be recalled that in 1954, when he was governor of the Bank of Canada, Mr. Coyne told us, Canadians, through the press-and you remember that some of his statements were discussed in this house: You, Canadians, have been living beyond your means for the past 15 years and the time has come to tighten your belts. He was then announcing a tight money policy.
No attention was paid to the fact that, in 1954, Canada could produce a great deal of useful goods, consumer goods or services to accommodate its people. But the financial structure led Mr. Coyne to tell us that we should do without certain things and tighten our belts, because we had been living beyond our means.
In fact, this restrictive credit policy was established. We witnessed its disastrous results, reflected in a slowdown of the economic business of our country, in 1955, 1956 and 1957, years which followed the advice to restrict credit given to the chartered banks. That policy caused such a slowdown that unemployment settled in our country as an awful plague.
Already, in 1957 and 1958, discussions took place in the House of Commons in order to seek a solution to the unemployment problem.
I am not saying that the whole problem is due to the tight money policy recommended by Mr. Coyne in 1954, but I hold it to be one

of the major causes of that economic slowdown which created the depression and the unemployment which prevailed during those years.


Mr. Deputy Speaker:: I have been listening with much interest during the past few minutes to the comments made by the hon. member for Beauce and I wonder if he is not straying too far away from the bill before us.
I think his comments are not directly related to the bill before us and I would ask him to co-operate with the other members of the house in restricting his remarks to the legislation before the house.


Gérard Perron: Thank you, Mr. Speaker. I was just going to explain how credit restrictions can have ill effects on a country's economy and end up by giving the reasons why we are opposed to the issuance of a charter which would allow this banking system which has led us to economic stagnation to go on.
Since parliament is being asked to authorize the issue of a bank charter, I feel it is only normal that we should examine a little the economy's activities in relation to banking.
I have precisely given as an example the 1954 credit restrictions.
In 1957 and 1960, we were not the only ones to criticize those restrictions, as a matter of fact, statements made by certain professors and economists led to the resignation of Mr. Coyne, who was then governor of the Bank of Canada. Therefore, such a policy had repercussions, not only according to the Social Credit people, but also to those economists who realized that the banking system, as applied under directives from the Bank of Canada, was not adapted to the needs of the Canadian nation.
The following reason could also be given: that bank will operate under the Bank Act now in force in Canada.
The Bank Act will probably be amended next year as a result of the report of the commission which for several years has been studying the improvements which should be made to the said act, but in accordance with the present banking system.
Now let us consider the results of that system: Canadians are now in debt for over $72 billion. This fact, Mr. Speaker, is mentioned in the report of the commission on banking activities in this country which points out that the total debts of Canadians which now reach $72 billion are divided as follows:
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Government of Canada: $19.4 billion in 1962.
Provinces: $9 billion in 1962
Business: $4.3 billion
Commercial credit: $14 billion
Mortgage loans: $5.4 billion
Consumers: $14 billion.
Personally, I am not prepared to make it easier to secure new bank charters because I see banks as leeches sucking the economic blood of the nation, leading and controlling it in its economic activities.
I am surprised to see, in this day and age, when practically the world over there is talk of nationalization-nationalization of power, nationalization of forests, nationalization of mines, nationalization of everything that can be big, nationalization of telephone service- that nobody talks of nationalizing credit institutions and yet 90 per cent of the economic activities of the individuals who make up the nation depend on them.
Nowadays, some people are ready to nationalize or put under state control everything, except the greatest of all trusts.
That reminds me of those who want to get rid of vermin but who continue to feed handsomely the breeding stock that bring forth vermin. They do exactly the same thing; they denounce trusts of all sorts, economic and financial interests which control everything, through easy access to credit, thanks to means made available to them by our banking system as a whole-either by trust associations or by means of rights granted under the Bank Act to multiply the deposits in the form of banking credit-but they allow the mother of all trusts to continue breeding more trusts.
People even go so far as asking that others be added to the existing ones.
Therefore, with regard to the bill before us and to the remarks of the hon. member who preceded me, I realize that it is meant to favour competition.
I said just now that we have had more than three kinds of banks in Canada. Indebtedness rose, and even multiplied steadily so that today we cannot but wonder who really controls Canada. In the same way we may wonder who really controls some of the provinces.
Those who control the country are not the politicians responsible for government administration. In many cases they are not actually responsible, but those who have taken control of the money and credit and,

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therefore, of our economy and all opportunities of some scope-or rather of the immense possibilities-offered by this country's natural wealth.
I am certainly not one to like compromise or half-measures. I admit that, under the present system, this might favour some economic development in the west. But it would only be at the expense of some other development, or mean a strengthening of a few people's centralizing power even if there was only a hundred of them.
It is all very well to demand that all shareholders be residents of Canada. But whether one is exploited by a Canadian resident or a foreign resident through a system leading to rack and ruin, which prevents Canadians, because of their economic system, from attaining the highest possible degree of prosperity in a political, economic and cultural order and freedom which is everybody's goal in this world-what does it matter?
We are the only ones to denounce it. Though we belong to the Social Credit movement, we do not want to see other private business controlling the issue of money and credit. Indeed we consider that such control over money and credit, whether in the form of script money, paper money or coins, must not be left in private hands because we consider money as the most social instrument needed by society.
Whoever we may be we all depend on money in that field. However abundant production by the great trusts may be-whether they represent private enterprise or co-operative business-the ownership and volume of goods becomes a question of service which must reach the consumer.
Why? Because the monetary system requires it. It is because discretionary powers were centralized in the hands of some group which today rules the destiny of peoples in a way which runs counter to their true spirit because they want in no way to follow that course.
I have before me some remarks which were made by authors who, though being experts in economy none the less are not crediters but who, mind you, indicate that credit in society should not be left in the hands of private enterprise.
I believe that too often, alas, when we deal with monetary questions, as is the case today, when we are studying this bill, the object of which is a charter intended for a bank-we see no better principle-first of all there are two main factors which must be taken into account in the question of credit.

First of all, there is the real credit based on productive and consumptive capacity. Such is real credit, that which can be called the credit of society. The real credit of the Canadian society is what it is able, as a whole, through its technical knowledge, its natural resources, its political, economic, cultural and social development, to develop and to give in the largest possible measure, to the smaller and even to the younger member of society, the real credit of the Canadian nation.
At the present time, how many companies, private enterprise or co-operatives cannot develop normally on account of credit restrictions imposed by the banks? To my mind there is not a shadow of a doubt about it.
There is quite a difference between real credit and bank credit. That is why we say that the credit of society must be turned into money, not by private enterprises, but by a social credit agency or by an agency responsible to society, which will look after credit facilities in areas needing such credit.
I have before me an extract from a book entitled "The Economic Doctrine of the Church", by Dauphin Meunier, in which he points out the disadvantages of the creation of bank credit by private banks. Here is what he says:
Modem commercial banks accept deposits only to use them, they borrow only to lend to production. These operations were done and undone by way of mere entries in the books, without the use of coin or paper money, which shows that banks have at their disposal a new power, that of issuing what the Belgian economist Anciault called script money.
When we know that today 90 to 92 per cent of economic activities in Canada are done by way of script money, through credit-debit columns, transferred from one branch to another in the various banks operating in Canada, is this not proof that our nation's economic activity is controlled by our eight chartered banks?
Indeed, during the contradictory debate which went on in 1954 and in 1960, Mr. James Coyne, one of those who applied for this bank charter, threw the blame on the chartered banks to which Mr. James Weir, the then chairman of the Canadian Banking Association replied: "How can we be held responsible when we have to borrow from the Bank of Canada at a rate exceeding 5 per cent, and we are limited to a rate of 6 per cent on our loans?" However, he did not say that the banks could increase their credit eight to 10 times, thus getting $600 in interest on a $1,000 deposit because they could create ten times that amount through bank credit.

It was such statements which created such a mess of confusion and which, after two years of debate, brought about the resignation of Mr. James Coyne as governor of the Bank of Canada. And the then minister of finance, Mr. Fleming, found out all about credit restrictions.
We are not the only ones, therefore, to deplore this fact. Today, there is some talk of nationalizing everything in the best interests of individuals and of social progress. On the other hand, when the banking system is referred to as the most powerful of all trusts and of all economic forces that may exist in any country, how is it possible then to think of granting a further bank charter?
There are surely some reasons to object to such a decision, at least until a more complete study of the report submitted following an investigation on banking activities has shown that it is the only or the best way to promote the development of certain areas in our country. Therefore, I do not think we have to pass immediately the incorporation of a bank for western Canada.
Mr. Speaker, I realize that, in certain quarters, it will be said that we are against economic development, against credit facilities and economic expansion in the western provinces. On the contrary, we hope that, as soon as possible, at least the two provinces now headed by premiers who say they are promoters of Social Credit will demand, at federal-provincial conferences, the revision of the banking policy of this country in order that, through the Bank of Canada, or even through the provincial governments, a real system of exchange, easier and more in line with the needs of our time, more consistent with the facts of the 20th century, shall be set up and that discretionary powers shall not be further centralized through the banks.
For those reasons, before I conclude my remarks, I move seconded by Mr. Laprise, member for Chapleau:
That Eill No. S-6 be not now read a second time, but that it be deferred six months.
To give further explanations-


Mr. Deputy Speaker:: Order. I regret to interrupt the hon. member, but his time has expired.


Mr. L. P. Antoine Belanger (Charlevoix):: Mr. Speaker, I would be remiss in my duty if I did not support the amendment just moved by my colleague, the hon. member for Beauce (Mr. Perron).
At the outset, I must mention to the house that the fact I object to the passing of this bill and agree with the amendment defer-
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ring for six months the motion for second reading of the bill, has nothing to do with the persons mentioned in the bill. As a matter of fact, among the hundred people mentioned I do not know any one personally, except maybe Mr. Coyne, whom I do not know personally but of whom I have heard, as everyone has, precisely in relation with the now famous debates which took place on this subject, a few years ago.
In the first place, I object to the passing of the legislation as a matter of principle. I have nothing against people from western Canada or against people from eastern Canada. Indeed, this bill could be introduced by anybody that I still would object to it because I was sent here for the purpose of changing the present banking system, and I would be remiss if, instead of endeavouring to change the banking system, I would favour extending its application by giving approval to the incorporation of a new banking institution.
We, Social Crediters, have had enough of the banking system which piles debts upon debts. The hon. member for Beauce pointed out a while ago that, according to the report of the Porter commission on banking and finance, our debt amounted to $72 billion. However, that assertion might not be absolutely accurate because even then, they forgot to mention the deposits in banks which, after all, are debts, and it would mean that our total debt, at this time, adds up to $90 billion.
Mr. Speaker, for 100 years our country was continuously pushed into debt because, at the beginning of confederation, in 1867, the national debt amounted to only $93 million, and thanks to our good old banking system, the same debt now amounts to $22 billion. Therefore, it is crystal clear that we could not approve of such a system.
Personally, as a Social Crediter I have endeavoured for at least 20 years to have that system changed, and it is a sure thing that I would not take the liberty to authorize an extension of the system.
Mr. Speaker, I am against that bill because it gives to the bank discretionary powers and it gives to the bankers powers that are absolutely contrary to the welfare of the population. It is absolutely contrary to public interest and I gave evidence of that a minute ago when I mentioned the continued growth of our debt.
Power is granted to bankers-under the Bank Act-to create money and credit, and

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these are the people who actually govern today.
In fact, our leaders, from whatever government or level of government they are, either federal, provincial or municipal, or member of school boards, are subject to our financial system, which decides whether there will be crisis or prosperity. However, when a war breaks out, it is still through the same financial system that it is found possible to put into circulation millions of dollars when it is impossible to find dollars to help our Canadian families.


Mr. Auguste Choqueiie (Lotbiniere):: Mr. Speaker, would the hon. member allow me a question?


Louis-Philippe-Antoine Bélanger: Yes, Mr. Speaker.


Auguste Choquette: Mr. Speaker, is the hon. member saying that the setting up of a financial system in accordance with the Social Credit formula would have the effect of abolishing all the debts in the world?


Louis-Philippe-Antoine Bélanger: Mr. Speaker, one would show very little intelligence in pretending such a thing. But there is a difference between having a system which is always accumulating debts, and creating a provisional debt. A debt is something that must exist.


Auguste Choquette: To what extent would debts be reduced under your system?


Louis-Philippe-Antoine Bélanger: Mr. Speaker, if the hon. member for Lotbiniere wishes to have a full account of the Social Credit doctrine, he just has to wait a few moments, I can give it to him. If what I say is not sufficient, he only has to come to my office and I will spend another hour to explain it to him, but I doubt very much that he would be able to understand.


Auguste Choquette: Nobody can understand it.


Louis-Philippe-Antoine Bélanger: There are none so deaf as those that will not hear.
When we explain our theories on Social Credit, no opponent of ours ever stands up with figures in his hands to prove that he is right. Indeed, we are not the only ones to say so.
For the time being, I merely wish to explain how the banks came to wield such enormous power.
Allow me to quote a single section of the Bank Act which gives them such power. I refer to section 71 (1) which provides:
The bank shall maintain a cash reserve In the form of a deposit with the Bank of Canada and of Bank of Canada notes held by the bank, and such reserve shall be not less on the average during
	-
any month than 8 per cent, or such other percentage as may be fixed by the Bank of Canada under the provisions of the Bank of Canada Act, of such of its deposit liabilities as are payable in Canadian currency.
In simpler terms, or in overly simple terms, this means what? That as long as the bank has a deposit of $8, it can lend up to $100.


Auguste Choquette: I know that.


Louis-Philippe-Antoine Bélanger: You know it and you are satisfied that bankers are allowed to do this, that is with $8 they can lend $100 at 6 per cent interest?


Gilles Grégoire: To the government, for instance.


Louis-Philippe-Antoine Bélanger: Yes, to the government.
What would the hon. member for Lotbiniere say if he knew of a baker who, in order to sell bread, would borrow it from his neighbour instead of baking it himself? He would say he is a simpleton. That is what the government is doing at present.
Banks are obliged to have a reserve of 8 per cent. But that is not all; there is more to it than that. They accumulate another 7 per cent reserve, thus making a total reserve of 15 per cent.
This means that whenever you make a deposit of $1,000, the bank places $150 aside as a reserve. It can use the $850 which remain as a reserve and it can multiply that amount by 10; then it can lend $8,500 at 6 per cent. That is the way it can make a profit.
If the hon. member for Lotbiniere does not feel that this is a racket, I do not know how we can call it.


Gilles Grégoire: That makes 60 per cent interest.


Louis-Philippe-Antoine Bélanger: Lending institutions in Canada are blamed because they charge interest rates up to 32 per cent, while the bank itself charges at least 54 per cent on its loans, if everything is taken into consideration. When the bank lends you $100 at 6 per cent interest, mind you, it has only $10. Therefore, if it charges $6 for $10, that makes 54 per cent.


Mr. Deputy Speaker:: The hour appointed
for consideration of private members' business has expired.

It being six o'clock I do now leave the chair.


Mr. Lloyd:: Might I have the indulgence of the house to pose one question before Your Honour calls it six o'clock. My question is based on a very simple philosophy. It was

Socrates who said that we must strive to improve upon the law, but in the meantime we must uphold it. I wonder if the hon. members who have opposed the passage of this bill would permit an immediate vote on their amendment, and then an immediate vote on second reading?


Gilles Grégoire: Mr. Speaker, in view of the remark made by the hon. member for Halifax (Mr. Lloyd)-


Mr. Deputy Speaker:: Order. I feel I should bring to the attention of hon. members that it is six o'clock and that the hour appointed for the consideration of private members' business has expired.


PROCEEDINGS ON ADJOURNMENT MOTION
Mr. Deputy Speaker:: It is my duty, pursuant to provisional standing order 39A, to inform the house that the question to be raised at ten thirty o'clock this day is as follows: The hon. member for Cumberland (Mr. Coates); Canadian flag, attitude of government.
It being six o'clock I do now leave the chair.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.

Walter Lockhart Gordon: the second reading of Bill No. C-lll, to provide for the revision of certain fiscal arrangements with the provinces and to provide adjustments of fiscal arrangements and taxation provisions consequential upon the provision of youth allowances to parents resident in certain provinces.
He said: I recognize that all members of the house are anxious to avoid repetition during the discussion of all matters which come before us, and having had an opportunity to review what I said on the resolution stage on July 7 and July 13, I do not
Federal-Provincial Relations think there is anything I can usefully add at this moment. If, later, when we are in committee, there are any questions which hon. members might care to put to me, I will do my best to answer them.


Mr. H. M. Horner (Jasper-Edson):: I want to deal briefly at this stage of the bill with some general matters affecting the federal relationship with the provinces, and then to deal more specifically with the situation as I see it in Alberta. A good deal has been said with regard to the situation in which Alberta finds itself and I think the position should be straightened out.
First I wish to say something with regard to the general confederation picture. The fiscal arrangements between the federal government and the provinces are the very core around which our federal system has to operate. I am one who believes that if we are to have a strong country we need a strong central government. This is not to say the provinces should not have and maintain the rights which are theirs under the British North America Act. However, we must be careful that we do not set up in Canada ten local potentates and give them the money with which to operate local countries on a lavish scale. I think we are bound to have regard to the taxpayer who, after all, will have to pay the shot, whether through federal taxes or provincial taxes, however the tax revenues are shared between federal and provincial governments.
I think the meeting of the premiers held recently in my riding underlined certain of the problems we are facing at this stage of confederation. Among them is the situation we are getting into with regard to trade between provinces. Surely we will not reach a position where there are trade barriers at every provincial boundary. We need a strong central government to make sure there is a free flow of goods from one province to another. Again there is the question of the location of industry. Surely we must not allow ourselves to get into a situation where one province tries to rob another, or attempts to attract new industries at the expense of its neighbours. Thus the central government is bound to maintain a strong position, particularly with regard to fiscal matters. It has to be the leader in these fields so that the provinces may know where they stand and so that they can all act together to build a vigorous and healthy Canada.
This need for leadership at the federal level affects almost every facet of our daily

Federal-Provincial Relations lives-health, education, industrial development, trade, even the basic liberties of the individual. In past years, the government led by my right hon. friend, the member for Prince Albert (Mr. Diefenbaker) did a great deal to satisfy some of the demands of the provinces for increased revenue to meet their increased responsibilities and enable them to deal with the "growing pains" which all of them are experiencing. Bill No. C-lll proposes to make certain changes in the fiscal arrangements with the provinces and to provide adjustments-the so-called equalization provisions-to bring the "have not" provinces up to the level of the two richest provinces. We in Alberta, of course, will not get anything from these equalization provisions, since they are drawn up so as to take into consideration revenue from natural resources-revenue from resources which are being sold off, and which represent the sale of an asset rather than continuing revenue from an asset. Even though the government which happens to be in power in Alberta today does not regard it as such, and seems to think on occasion that it does not really matter what they do with their money, the good Lord is going to look after them, in that they do not have to finance like the rest of the provinces. They have spread across our province and into the province immediately west of us-and they would like to get the idea across Canada- that debt is a very bad thing. Certainly it is a very bad thing if you do not have the assets with which to back it up.
While talking about debt, I think it might be worth while, particularly with regard to the situation in Alberta and the need for increased revenues for the provinces, if I mentioned that one of the big factors, of course, has been the division of the revenue the province receives down further to the municipal level. We have heard in this house on occasion some talk with regard to the amount of debt there is in the provinces of Alberta and British Columbia. I am not going to say too much with regard to the situation in British Columbia, other than that they have done the same thing there, of course; they have transferred the debt from the province to crown corporations and it becomes an indirect debt, but it is still a direct charge against the province. I understand that in British Columbia they have managed to increase their debt by a billion dollars in the last six or seven years.
In the province of Alberta in particular we have the situation at the moment whereby our municipal government is weighed down

by a tax structure which is higher than anywhere else in Canada. The net per capita, municipal debt-according to the Canada Year Book for the latest year I can find-in Alberta is higher than any other province in Canada. In other words, in Alberta they have a far higher municipal debt, per capita, than in any other province of Canada. I would like to put some of these figures on the record, because sometimes they get a little clouded. In Alberta the per capita municipal debt-that is, including the debt of the municipalities and school districts-amounts to $360. In British Columbia it is $270; in Ontario, $280; in Quebec, $302. The other provinces are well below 200 per capita in municipal debt. I want to repeat Alberta's figure; it is $360 per capita, which is quite a bit higher than it is in any other province in Canada.
One of the problems we have in Alberta, then, is to do something to see that this extra money which is going to go to them out of Bill No. C-lll gets down to the local government level, in order to help relieve them of the crushing debt which the property owners in Alberta are now carrying. They are carrying it themselves, in their own names, because the province of Alberta of course has a very strong psychological feeling against going into debt on its own. This is, of course, just fooling the people in this regard. One of the results is that the property tax in Alberta is extremely high. I have not been able to find any comparative rates, but I am sure it is as high as or higher than it is in any other province in Canada. The two big factors in this high debt and this high tax rate are these -property owners in Alberta are paying for health and education. In most of our counties, towns and municipalities the municipal tax rate is relatively normal; but our educational tax rate is high, and of course we are the only province in Canada which imposes a property tax for hospital purposes.
The hon. member for Red Deer (Mr. Thompson), earlier, at the resolution stage, talked about co-insurance, which I will deal with in a moment. But we are still the only province in Canada which finances part of its hospitalization program by means of a direct property tax of at least 4 mills, an additional mill for public health and an additional mill for chronic hospitals. We have in Alberta all this burden dumped directly back on to the property owner. We are hoping that with this additional money which is to become available to the provinces, the premier of the province of Alberta will see fit to relieve

some of this crushing debt on the municipalities and take over the entire basic costs of education and health, which the municipalities are now paying. We see no reason why our property owners should pay income tax as well; why their share of this increased income tax which is going to go to the provinces should not be used to relieve this crushing debt.
The Michener report published in Manitoba recently gives, I think, a guide to some of our provinces in this regard. We certainly need to do something to relieve the very difficult situation in which our municipalities, counties, towns and cities find themselves in the province of Alberta, even though our provincial government, with its very large resource revenue, has not had too much difficulty. The hon. member for Red Deer also mentioned a revolving loan fund which he thought was still in existence. I am sure he has not been in Alberta very much of late, because in 1956 or 1957 they scrapped their municipal loan fund and set up a crown corporation to borrow money on the outside money market and re-lend it to the municipalities.
Of course, the money this municipal financing corporation borrows is not a debt of the province, if you listen to them; the province only guarantees the debentures that the M.F.C. sells. If this is not a direct debt of the province, I would like to know what is. A similar situation exists with regard to the telephone system under the Alberta government, and some other crown corporations in Alberta are borrowing money, as any crown corporation or other corporation would that required capital; they have been borrowing both inside and outside Canada. To suggest that the province of Alberta is debt free is just nonsense.
There is another question which should also be looked into; that is, whether or not the federal government should have some control over the fiscal lending policies of our provincial governments. I am not so sure that it has been a wise thing for the province of Alberta to refrain from getting itself into debt, particularly at times when it could have borrowed money at a very good rate of interest, for the development of our province. They failed to do this then and instead said, "We are going to pay our way". We are only paying our way because we are selling off part of our resources. This is not a recurring resource; it is only recurring in so far as the markets for oil, gas and the by-products of the petroleum industry are available, and it is
Federal^Provincial Relations only recurring in so far as exploration causes new fields to be found which will build up the resource of the province. Once this oil, gas and other by-products are sold off, it is gone; it is not a continuing resource. We feel very strongly that we are being penalized because of the policy of our provincial government to sell off our resources.
I should now like to say a few words about the equalization formula. Of course, our per capita, maximum income is something like $90, which is very much more than any other province in Canada, so Alberta does not enter into the equalization formula at all. I want to say one or two more words with regard to education. It was said during the debate on the resolution stage that there should be a federal department of education. I feel strongly that one of the things that a federal or central government should do is to oversee and to set standards of education for the provinces to meet, and I fail to see where this would infringe, or interfere with provincial autonomy. Another matter which we in western Canada have always felt with regard to provincial autonomy, and which I would throw out as a suggestion to my hon. friends from Quebec, is this, that the federal government should have a check rein on any local potentate who might want to take over a province. If the provinces are given too much local autonomy there is no one who would be able to stand up for the civil rights of the individual within that province.
Again I think that a federal standard of education applied across Canada would not impinge upon any provincial autonomy and might give us a basic standard in the most economical manner; and certainly with the continuing cost of education this will need to be provided as economically as possible. In Alberta, as I say, the total cost of education amounts to $100 million a year, and we hope that the government of Alberta will take the additional money given to them over the next two years under this bill in order to assume the entire cost of education, as it has now gone beyond the stage where the provincial government or local governments can properly finance it.
One other comment regarding health and hospitalization, and the co-insurance fee. Being involved in the health profession I am in favour of the co-insurance fee as a deterrent to unnecessary hospitalization. I see nothing wrong with it and I hope that the federal government will take a further look at the situation in Alberta so that the people in that province will not be penalized as they

Federal-Provincial Relations have in the past-as a matter of fact since the implementation of the national hospitalization act. We think that the co-insurance deterrent fee is justified and see nothing wrong with such a deterrent fee. We think it is worth while; it works out in practical terms and it helps prevent unnecessary hospitalization. If a province wants to take the initiative for such a measure then I do not think it should be penalized.
They are some of the main points, Mr. Speaker, regarding this bill. Again I point out that we in Alberta are very strong-minded toward a one Canada approach, toward a strong central government, keeping in mind that our provincial government has to have the autonomy to run the affairs within its boundaries. On hearing one hon. member talk of the plight of farmers in eastern Canada I could not help but think that we in western Canada would have been in a sorry state had we not had a very strong federal government at the time to which we could make representations over the years on behalf of western agriculture. Perhaps one of the reasons that the eastern farmer, particularly in Quebec, is in this plight is because he has allowed his quest for provincial autonomy to be so much uppermost in his mind that he has not felt like making representations in a forceful manner to the central government. One of the reasons for having a central government is that it should play the role of overseer and make sure that each part of our country is coming along on relatively the same scale. That of course is done by way of equalization payments, something with which we do not disagree as we showed during the years we were in office.
We believe in the equalization system. However, I think all hon. members will agree that equalization is a temporary method, which has to be reviewed at regular intervals so that the government grants can be adjusted, because our provinces do not develop at the same rate. Certainly an equalization program is at best only a temporary measure; the objective we have to work for in Canada is the provision of equal opportunities for all people in the country, so that each one of our provinces can develop itself to the utmost and will not need this additional help from the central government. I think that should be our aim.
With those few remarks, Mr. Speaker, may I say we are of course willing to support Bill No. C-lll.


Thomas Clement (Tommy) Douglas: Mr. Speaker, it is not my intention to speak at any great length, but I did want to express my disappointment that the Minister of Finance (Mr. Gordon) had not made a lengthier statement with reference to the bill to which the house is now being asked to give second reading.


Stanley Howard Knowles: It could not have been much shorter.


Thomas Clement (Tommy) Douglas: I was hoping that the
minister would take some time to tell the house the reason behind these changes. Since he has not done so on second reading I would hope that he will do so on the first clause of the bill when we go into committee.
When the minister made his speech to the house on July 7 on the resolution stage he told us what the changes were, and gave us statistical information as to what would be the effect of them in terms of the amount of money which the respective provinces would receive. But as to the basic reason for these changes and why they were made, we have not had a satisfactory explanation. For instance, I asked three very simple questions when I spoke on the resolution. First of all, I asked why we were equalizing to the two top provinces rather than equalizing to the top province, as the Liberal party had been committed to in all its pre-election literature, and as the Prime Minister (Mr. Pearson) at the beginning of the federal-provincial conference quite calmly admitted had been the pledge of the Liberal party, to be carried out at the first opportunity. There must be some explanation why we are equalizing to the two top provinces rather than to the top province, and had the government followed their policy in this regard it would certainly have been much fairer.


Walter Lockhart Gordon: Mr. Speaker, I wonder
whether the hon. member would allow me to ask him a question. My question is: Did he not see the answers which I gave to a number of the questions which were asked, including this one, on July 13?


Thomas Clement (Tommy) Douglas: Mr. Speaker, I thought I had followed the minister fairly closely.


Walter Lockhart Gordon: My hon. friend was not in the house at that time but I thought he might have seen the answers in Hansard.


Thomas Clement (Tommy) Douglas: I have gone over Hansard but I did not think there was a satisfactory explanation of any of these points. Nor did I think there was a satisfactory explanation as to why the government has included

natural resources revenue collected in the provinces when computing the equalization payments. There could be some argument for computing all provincial revenues in order to get some idea of the fiscal needs of the provinces, but I do not know why one particular field of revenue should be selected-and that a field of revenue which really is not a good criterion because in many respects it represents a return for very large public expenditures in the provinces affected. I hope when we get into committee stage on the bill the minister will give us some explanation of why this particular factor was introduced into the formula which is used in computing the equalization payments.
I also hope he will tell us in committee of the whole why the increase in the abatement of succession duties from 50 per cent to 75 per cent is to be excluded from the equalization formula. As I said when speaking at the resolution stage, there is much more justification for including this item than the former item, and certainly if natural resources revenue is going to be included I can see no logical reason whatsoever why the revenue from succession duties ought not also to be included. So I hope we will get some further explanation of these three points when the bill is in committee of the whole.
I rose mainly because I wanted to say a word or two about the trend in the whole field of federal-provincial fiscal relations. When I was speaking on July 9 the hon. member for Lapointe (Mr. Gregoire) interrupted me and, as found on page 5268 of Hansard, he said:
I heard the hon. member say that Ottawa should help Quebec. I do not know whether the hon. member is aware that only two provinces pay more taxes to Ottawa than they receive in a year. They are Ontario and Quebec; and Quebec pays $800 million more in taxes.
I said at the time that I thought the hon. member was misinformed. Therefore I think I should spend a few moments dealing with this matter, not because it is terribly important that the member for Lapointe should have interrupted, but it is important that we should remove any misconceptions that may exist in this house or outside of it with respect to the matter of the virtual redistribution of income which takes place as the result of these federal-provincial arrangements.


Gilles Grégoire: It is a fact that Quebec pays more in taxes than it receives.


Thomas Clement (Tommy) Douglas: If the federal government
collects the taxes and allows the provinces to
Federal-Provincial Relations retain some of them, naturally the provinces must retain less than the total amount collected. Otherwise the federal government would not have anything with which to function. I am quarrelling with my hon. friend's statement that there are only two provinces that pay more in taxes to Ottawa than they receive.
I have a table here, Mr. Speaker, and if I have the permission of the house I should like to table it, which will save me reading it. I will gladly send a copy to the hon. member for Lapointe.


An hon. Member:: Read it.


Thomas Clement (Tommy) Douglas: This table is headed "Distribution of Personal Income, Corporation and Estate Taxes in Canada, Net of Tax Sharing and Other Fiscal Arrangements". It sets out first of all the amount of money which the federal government gets in these respective fields, then the share which goes to the provincial governments, then the total taxes collected by provinces and finally the percentage the provinces get in each case. If I could have the consent of the house to table this or rather have it put on Hansard, it would save me reading it.


Mr. Deputy Speaker:: Is it agreed that the table now produced by the hon. member for Burnaby-Coquitlam will be printed in Hansard as part of his speech?


Some hon. Members:: Agreed.


Norman Platt Lambert: What is the source?


Gilles Grégoire: We would agree but we would like to have a copy, too, because it is very interesting.


Mr. Deputy Speaker:: Order. Would the hon. member indicate the source of the data on the document which he seeks to have printed in Hansard?


Thomas Clement (Tommy) Douglas: These are figures taken from the records of the Department of Finance.


An hon. Member:: What year?


Thomas Clement (Tommy) Douglas: For the years 1959-60, 196061 and 1961-62.


Mr. Deputy Speaker:: Is it agreed?


Some hon. Members:: Agreed.


Thomas Clement (Tommy) Douglas: These figures are available to all hon. members. It is just a matter of putting them together on one page.
[Editor's Note: The table referred to above is as follows:]

T?orlprnl-Pm-iiinrinl Rpintiowa


DISTRIBUTION OF PERSONAL INCOME, CORPORATION AND ESTATE TAXES IN CANADA, NET OF TAX SHARING AND OTHER FISCAL ARRANGEMENTS
[Stage Direction]
Classified by Provinces 1959-60
Federal	Provincial	Totalshare	share	taxes	PercentageNewfoundland	Nova Scotia	
Prince Edward Island
New Brunswick	
Quebec	
Ontario	
Manitoba	
Saskatchewan	
Alberta	
British Columbia...

[Stage Direction]
Newfoundland	
Nova Scotia	
Prince Edward Island
New Brunswick	
Quebec	
Ontario	
Manitoba	
Saskatchewan	
Alberta	
British Columbia...
[Stage Direction]
Newfoundland	
Nova Scotia	
Prince Edward Island
New Brunswick	
Quebec	
Ontario	
Manitoba	
Saskatchewan	
Alberta	
British Columbia...
[Stage Direction]
millions of dollars)	(millions of dollars)	(millions of dollars)	Provincial-12.1	37.3	25.2	1484.2	41.7	45.9	91-3.7	7.6	3.9	1952.3	35.6	37.9	94637.1	238.4	875.5	271,275.3	305.5	1,580.8	1986.0	41.5	127.5	3324.7	42.4	67.1	63125.8	59.0	184.8	32239.3	69.5	308.8	23. 2,392.2	822.3	3,214.5	261960-61	. -8.6	37.7	29.1	130. 15.3	42.1	57.4	73. -3.2	8.0	4.8	167. 6.1	36.0	42.1	86. 701.7	256.9	958.6	27. 1,346.5	326.2	1,672.7	20. 90.9	42.2	133.1	32. 31.5	42.7	74.2	58. 131.9	61.0	192.9	32. 249.8	75.2	325.0	23. 2,572.9	928.0	3,500.9	271961-62	. -5.6	37.4	31.8	118. 22.8	42.4	65.2	65. -3.0	8.1	5.1	159. 7.7	35.5	43.2	82. 760.0	295.9	1,055.9	28. 1,490.0	331.9	1,821.9	18. 98.1	42.6	140.7	30. 33.2	42.8	76.0	56. 147.8	63.0	210.8	30. 276.0	77.0	353.0	22. 2,752.9	976.6	3,729.5	26
Thomas Clement (Tommy) Douglas: First of all, these figures show that there are only two provinces in Canada, Newfoundland and Prince Edward Island, which receive more money by way of equalization payments than is collected in taxes. Therefore it is quite incorrect to say, as the hon. member for Lapointe said, that there are only two provinces in Canada which pay more in taxes than they get back. All provinces except Prince Edward Island and Newfoundland pay or have collected within their borders more in taxes than they receive back in equalization payments.
But I think hon. members will find that the interesting thing in looking at these figures
is that an examination of them destroys this whole concept of trying to meet the problems of confederation by surrendering to the provinces their tax potential. Every once in a while when some matter arises where the federal government is seeking to help the provinces we have members rise and say that the solution lies in giving the provinces a larger share of the tax field. If they mean by that a larger adjustment of the equalization payments, this is true, but this is not usually what these people mean. What they mean is that the provinces should get more of the taxes which are collected within their borders.

We had a good example of this in the statement which was issued by the hon. member for Three Rivers (Mr. Balcer) on July 9 and which was reported in the Montreal Gazette. The report reads in part as follows:
Deputy Conservative leader Leon Balcer issued a policy statement yesterday-
The report goes on to say that he said that "the central government's refusal to restore to the provinces the sweeping tax and economic powers conscripted to meet war and economic crises" was responsible for the situation. The article continues:
He said that Quebec Conservatives rejected utterly Ottawa's contention that it was necessary for the central authority to retain and utilize these powers "to establish uniformity in the land through the application of national standards". The concept that the federal government, retaining these powers, could then help the provinces meet their constitutional obligations by "favours" and handouts was completely unacceptable in Quebec.
The article reports him further as follows:
He cited federal Bill No. C-108, for the extension of family allowances, and thus touched the provincial field of social welfare, as an example of the kind of federal legislation which "exasperates the autonomist province of Quebec."
He goes on to say:
Under the Canadian constitution, the domains of social security and education are assigned to the provinces and should normally be administered by the provinces. The (federal) government should return to the provinces a much larger field of taxation to give them the power to discharge conscientiously their responsibilities, such as those of social security and education.


Gilles Grégoire: May I ask-


Thomas Clement (Tommy) Douglas: If I may develop my argument, then my friend can ask me a question afterwards. If the hon. member for Three Rivers or anyone else who follows this argument, means the federal government should return to the provinces a much larger share of the aggregate pool of income, corporation and succession duties, then I agree with him. But this is not what the member said, and I take it it is not what he meant. He said that the federal government should return to the provinces a much larger field of taxation. I want to point out to those people who constantly take this position that if we take any one of the years in the table which I have just asked to be put on Hansard, we will find that if we had turned over to the provinces the entire field of taxation for income taxes, corporation taxes and succession duties, the province of Newfoundland would have obtained less money than it is getting now. In 1961-62 it would have obtained $5,600,000 20220-411
Federal-Provincial Relations less; 1960-61, $8,600,000 less; 1959-60, $12,100,000 less.
If Prince Edward Island had received the whole of the taxation revenues collected within its borders in 1961-62, it would have received $3 million less than it got in that year under these equalization payments. In 1960-61, it would have obtained $3,200,000 less; 1959-60, $3,700,000 less. The point I want to make is that when members, particularly members from the provinces of Quebec and Ontario, speak of allowing the provinces to meet their constitutional responsibilities by turning over to them a larger share of the tax field, they are losing sight of the fact that there are provinces in Canada where there is not the tax potential and that giving them a larger share of the tax field will not help them because the tax potential is not there.
It is for this reason I am heartily in support of the system of federal-provincial fiscal relations which we have. I criticize the formula. I think there are many things wrong with the formula. However, I do not believe we can build a country unless we think in terms of the fiscal needs of the provinces and not just the fiscal potential of the provinces, because there are provinces, particularly the Atlantic provinces, which cannot possibly meet their constitutional responsibilities even if the federal government withdrew entirely from the tax field and left them all the revenue that is collected in those provinces.
In other words, I think we must never lose sight of the basic principles that were laid down by the Rowell-Sirois commission, which pointed out that if we were going to have in Canada a great country, if we were going to have a certain minimum standard of health, welfare and education, if a Canadian citizen in one part of Canada was going to have equality of opportunity with another Canadian citizen in another part of Canada, then there must be some pooling and some sharing of the tax revenues, particularly the tax revenues which are jointly occupied by the federal and provincial governments, namely income, corporation and inheritance taxes.


Gilles Grégoire: May I ask a question?


Thomas Clement (Tommy) Douglas: Yes.


Gilles Grégoire: Can the hon. member explain these statistics to us because I must admit that I do not understand exactly what he means by these figures?


Thomas Clement (Tommy) Douglas: Well, I could do it more easily if my hon. friend would tell me what his difficulty is. Let me take 1961-62. If my

Federal-Provincial Relations friend looks at the total column he will see that the total amount collected for the three tax fields in Canada was $3,729,500,000; that was divided and the provinces got $976,600,000 and the federal government got $2,752,900,000. In other words, the federal government got 74 per cent of the total revenue collected in these fields and the provinces got 26 per cent.
Now, how was that 26 per cent divided amongst the provinces? Newfoundland got 118 per cent; in other words, they got 18 per cent more than was actually collected within their borders. Nova Scotia got 65 per cent of what was collected within its borders. Prince Edward Island got 159 per cent; in other words, it got 59 per cent more than was collected and it got it out of the general pool of tax revenues. New Brunswick got 82 per cent; Quebec, 28 per cent of the taxes collected in that province; Ontario got 18 per cent; Manitoba, 30 per cent; Saskatchewan, 56 per cent; Alberta, 30 per cent and British Columbia, 22 per cent.


Gilles Grégoire: Would the hon. member permit another question? How can he arrive at a total federal-provincial collection of $3,700 million when the federal government alone collected over $6 billion and the provincial governments collected as much as that? How can he arrive at a total of $3,700 million?


Thomas Clement (Tommy) Douglas: If the hon. member will look at the line at the top he will see that this is a distribution of personal income, corporation and estate taxes; just the three tax fields.


Gilles Grégoire: No sales tax?


Thomas Clement (Tommy) Douglas: No, we are talking about the three tax fields which are jointly occupied and which are the concern of this legislation because federal-provincial fiscal relations has to do only with the three shared tax fields.


Gilles Grégoire: How do you explain Newfoundland's federal share at minus $5 million? How can they collect a minus amount of tax revenue?


Thomas Clement (Tommy) Douglas: I have already explained that, but I will do it again.


Gilles Grégoire: We do not understand the language.


Thomas Clement (Tommy) Douglas: The total amount collected in Newfoundland in personal, corporation and estate taxes in the year 1961-62 was $31,800,000. Now, the province, under this equalization formula, got $37,400,000; in other words, they got $5,600,000 more than was collected in their province. This is why I keep arguing that to say, as some members did

when the school loans measure was before the house, we should give the provinces another one percentage point or two percentage points in income tax abatement, so far as Newfoundland or Prince Edward Island are concerned there is not much use giving them another 2 per cent of the income tax field, because they are already getting more than is being collected within their borders.
In other words, Mr. Speaker, the plea I am making is that those of us who live in provinces where our revenues per capita from these tax fields are above the national average and who sometimes argue that if we were to keep the taxes collected in our provinces we could discharge all our constitutional responsibilities and the federal government could get out of these fields entirely and concern itself with running the post office and the armed services, forget that there are provinces in Canada that would be bankrupt. There are provinces in Canada whose standards of education, health, welfare, roads and other services would be greatly reduced.
That is why I make this appeal to hon. members who live in the wealthier provinces, that these federal-provincial relations are part of an attempt to meet the goal which was set by the Rowell-Sirois commission, namely that as Canadians we accept our sense of responsibility for Canadians in other parts of Canada, particularly in those parts of Canada where people are less fortunate than people in other parts. If we are ever going to have a really great country it will only come about if we are willing to share some part of these tax revenues. That is what we are doing under these federal-provincial relations.
The taxes are going into a pool, as it were, and the provinces are getting back revenue under equalization payments roughly according to their needs. I should qualify that by saying I think we have departed a long way from the basis of fiscal need laid down by the Rowell-Sirois commission, but at least the minister is making some improvement under his most recent arrangements with the provinces. We have come from equalizing to the national average, up to equalizing to the top two provinces, and the minister has agreed to a further two percentage points in abatement of personal income taxes, and another 25 per cent abatement in estate taxes.
In this table which I asked to have printed in Hansard it shows that in 1961-62 26 per cent of this total from the three tax fields, went back to the provinces, and the changes

which the minister is now proposing will bring the provinces' share up to roughly 30 per cent. I wonder if the minister agrees with that. I am asking the minister whether these changes will mean that the provinces will get roughly about 30 per cent of the total revenues coming from these tax fields?


Walter Lockhart Gordon: On a point of order, Mr. Speaker, I did not know it was proper for me to answer questions at this stage of the debate, but if it is allowed I shall do so.


Mr. Deputy Speaker:: I would suggest it might be preferable not to do so at this stage.


Thomas Clement (Tommy) Douglas: Well, there will be lots of chances later. I would ask the minister to shake his head up and down to indicate if the figures I gave were correct.


Norman Platt Lambert: The shakes could not be recorded on Hansard.


Thomas Clement (Tommy) Douglas: No, but the knocks could be recorded.


Stanley Howard Knowles: People can sometimes ask questions and in so doing make statements.


Thomas Clement (Tommy) Douglas: Mr. Speaker, I want to close by saying that we in this party are in full and complete agreement with the principle of equalization in federal-provincial relations, and we are fully in agreement with moving steadily toward a greater measure of fiscal equity as between the various provinces. We think the federal government has a responsibility to do this out of the taxes which are collected all over Canada on the wealth which is created all over Canada, and in many cases created in a different province from where it is taxed. We think these changes in the legislation will help to discharge the responsibility of assisting the provinces which are less fortunate and of equalizing the discrepancies which exist as between the different regions of Canada.
I hope that we will keep this principle of equalization. As a matter of fact we have been departing from it and I hope we will reverse the trend, and we are beginning to do it. For a while we moved a long way from the policy of fiscal need. We are now beginning to swing back to a greater recognition of the principle of fiscal need, and we are also going in the right direction in that we are increasing the share of the total revenues from the three tax fields which are to be made available to the provinces for the discharge of their responsibilities.
As I said a moment ago, in 1961-62 about 26 per cent of the total amount of taxes col-20220-411J
Federal-Provincial Relations lected in these fields went to the provinces, and I think that under the changes which are being proposed this will be brought close to 30 per cent. The responsibilities which the provinces have are growing in geometric progression, particularly in education but also in health and welfare, and I think the clay will come in Canada when 50 per cent of the gross revenues from these three fields will have to be allocated to the provinces on an equalization basis. And when that day comes I think the provinces will be much better able to discharge their responsibilities.
There can be no doubt that the provinces need more money. The way to give them more money is not to turn tax fields over to them, which would enable some provinces to meet their responsibilities but would leave other provinces worse off than they are now. The way to help the provinces discharge their responsibilities is to continue this pooling system, these equalization measures, and by giving the provinces a larger share with the eventual aim of seeing to it that about half the total revenues from the three tax fields in question find their way back to the provinces. If that were done the federal government could get rid of a lot of its conditional grants. These conditional grants in many cases are burdensome and difficult to administer and are not always equitable.
I hope the time comes when 40 per cent or 50 per cent of the revenues from these tax fields is returned to the provinces, and then the federal government, in return, could discontinue many of these conditional grants, and everyone would be happier because the federal government would be out of fields in which it has not any real constitutional responsibility while the provinces, on the other hand, would have by right under these federal-provincial arrangements the revenue to discharge the responsibilities which belong to them under our constitution.


Horace Andrew (Bud) Olson: Mr. Speaker, I did not take the opportunity to speak on this matter at resolution stage and there are a number of general remarks I wish to make at this time respecting the many amendments proposed to the federal-provincial fiscal arrangements.
When the Minister of Finance spoke on resolution stage, I believe it was on July 7, he said we should not be misled by the innocence of the resolution that had been on the order paper for a number of days, and certainly in so far as the impact of that innocent resolution is concerned he said a mouthful. We had not expected legislation that

Federal-Provincial Relations would involve so many and so profound changes which, by 1966-67, will amount to some $265 million annually.
Tonight I want to speak briefly about five different areas of financial arrangements between the provinces and the federal government, some of which are contained in the amendment, and some which should be but are not. First of all there is the matter of revenue received from the development of natural resources being included in the equalization formula. There is the matter of authorizing federal crown corporations to pay sales tax, not only from this date forward but to make a grant in lieu of sales tax as if it had been in effect from April, 1962. There is the matter of income tax incurred by privately owned utilities and there is also the matter of the cost-sharing arrangement between the federal government and the provinces respecting hospitalization.
At the outset, as one representing a constituency in Alberta, I think I am entitled to say that the province of Alberta-the government of Alberta-has always shown a high level of willingness to co-operate and be reasonable with the federal government in all the negotiations which have taken place on the subject of tax-sharing. If I may, I should like to quote some of the remarks which were made by the premier of Alberta prior to the federal-provincial conference held here in Ottawa on November 25, 1963, because it is important when discussing the discrimination which we feel is present in this bill to understand the concept which the government of Alberta has of federal-provincial fiscal arrangements.
First of all, the government of Alberta regards the following four points as being particularly important.
(1)	The necessity to evolve an arrangement under which each government will be assured sufficient financial resources to enable it to discharge its constitutional responsibilities without loss of its rightful sovereignty and without imposing oppressive burdens of taxation and debt upon its people.
The hon. member for Burnaby-Coquitlam has just reviewed the problems which some of the provinces would experience in this respect if there were no such thing as equalization payments. I do not intend to repeat all that, but in essence, I agree, and I think it is evident from this statement by the premier of Alberta that he, too, agrees with this concept. To continue:
(2)	The provision of effective incentives to stimulate more active economic growth and the forms such incentives should take and the means by which they can best be provided.

I think we must come to the realization, sooner or later-and the sooner the better, in my opinion-that if we are to stimulate a more active rate of economic growth we must keep uppermost in our minds at least some of the time the likely effect of additional taxation on private industry and private enterprises throughout Canada which, after all, are the foundation upon which all this taxation rests.
The premier of Alberta went on to mention the importance of the following:
(3)	Shared-cost programs and the desirability of devising more acceptable methods of providing federal fiscal aid to legitimate projects which by their nature are of national as well as provincial importance and concern.
I think that is self-explanatory. The fourth point he made prior to this federal-provincial conference was this:
(4)	Practical monetary and fiscal programs which may be undertaken to assist in resolving the financial problems confronting governments, industry and the Canadian people generally, with a view to ensuring a supply of private and public capital adequate to finance economic expansion and social capital projects and maintain effective consumer demand without further pyramiding the public and private debt.
This is something of which we must ever be mindful when we talk about more and more social services and quick progress in this direction, namely that there is a level, or a limit-a point of diminishing returns as far as the welfare of the Canadian people is concerned. The premier went on to say:
While these and other related matters properly are included on the agenda and should be fully and frankly discussed, it is the view of the government of Alberta that the initial objective of this conference should be to clarify the respective responsibilities of the two levels of government and adopt a set of sound principles or ground rules on the basis of which, we believe, practical procedures can be developed for the solution of the financial and economic and social problems we face. Unless this is done as an initial step, the conference discussions will, in our opinion, be inconclusive and the problems which have brought us together will remain largely unsolved.
It has long been the contention of the government of Alberta that the pie is only so large, no matter how we cut it. If all levels of government, and all the provinces, are continually to make financial demands having in mind what they think are their obligations, we must do one of two things-either increase the size of the pie, or adjust our demands so as to fit it. This is not easy. It takes a government with a great deal of courage to say to the people of Canada, or to the people it represents, that immediately, in this very year, the total amount of the services they

demand from their government will have to be paid for. This is a situation to which we will come, eventually. We have reached a position in Canada today where $1,035 million out of rather more than $6 billions, or around 15 per cent of the total revenue from all sources, is going to pay interest on the national debt. We are anticipating another deficit of $455 million plus the supplementary estimates, so we shall be faced with even higher interest payments next year. Some year, some time, whether it is in 1964, 1967 or 1970, we must have the courage to say to the Canadian people: That which you demand must be paid for, and paid for this year.
I need go back only to 1935 to illustrate the situation I have in mind. In 1935, when the Social Credit government was first elected in the province of Alberta, there was a desperate situation with respect to debt and debt service charges. Many people do not understand this. In that year, out of a total budget for all purposes amounting to something over $15 million, $8 million was allocated to the payment of interest on the provincial debt. More than 50 per cent of all the revenue going to the province from all sources was being paid over in interest charges. Surely we do not have to wait until a situation like that occurs before taking steps to deal with it. Surely we do not have to keep rolling from one temporary expedient to another until we reach a situation so desperate that we find the courage to say to the people we represent: Let us slow down and sober up a bit with regard to these expenditures, and see what we can do. The premier of Alberta has pleaded at one after another of the federal-provincial conferences that there should be a realistic and sober analysis made. So far we continue to go on as if something magic is going to come along and straighten out this financial mess for us.
As I said, Mr. Speaker, there are four or five other matters that I want to deal with in connection with this bill. The first one is extremely important and we have not as yet been able to get a satisfactory answer from the Minister of Finance (Mr. Gordon). It is as to why he has included revenue from natural resources in calculating the amount of tax equalization? The hon. member for Burnaby-Coquitlam (Mr. Douglas) asked him these questions: Why not sales tax? Why not other forms of taxation?


Thomas Clement (Tommy) Douglas: Liquor revenue.
Federal-Provincial Relations


Horace Andrew (Bud) Olson: Yes, liquor revenue, and all the other provincial taxes and sources of revenue. Why are they left out and natural resource revenue taken in? Is this some form of taxation, or another way of obtaining revenue in lieu of taxation-although in many respects I do not think it is taxation at all? Why include it?


Walter Lockhart Gordon: Mr. Speaker, I wonder if the hon. member would allow me to ask him a question? Is it not true that in the province from which the hon. member comes, in their own published accounts they show these revenues from natural resources as tax revenues? That is the way they record them in their own accounts, in their published statements. Is that not a fact?


Horace Andrew (Bud) Olson: No, Mr. Speaker, that is not a fact at all. Certainly they include it as public revenue, but they do not include it as taxation. I would point out to the Minister of Finance that if he goes into any other province the liquor tax, the retail sales tax, the licence taxes, gasoline tax and all the other taxes are included in the records as provincial revenue in just the same way as the three taxes that are used as a basis, or are supposed to be used as a basis, in this regard. If the minister is saying the reason is that the province does their accounting on this basis, he will also have to agree, if he is to follow that argument through to its logical conclusion, that they include all these other forms of taxation as well.
But that is not all, Mr. Speaker. In addition, there is no provision in the bill, as far as I can see, for the cost of maintaining this revenue from natural resources. In the province of British Columbia, for example, great amounts of money are spent in the protection of forests and the development of the continuity of forests and all that involves. But instead of using the net amount that comes from this kind of natural resource revenue, they use the gross. In those provinces where they do not have a high gross natural resource revenue, they also do not have any expense in order to maintain that resource. In the province of Alberta the gross amount received from oil and gas happens to be the highest source of revenue, but there are such things as forest products, coal and a number of other things. In the case of oil and gas, for example, there is also a large expenditure which is required to supervise the operation of this whole business in that province. The Alberta oil and gas conservation board is only one example; in addition they have to set up

Federal-Provincial Relations a large administrative staff to see that this industry does in fact operate so they have the optimum production from the gas and oil fields which they find. Surely this expense, if you want to be a little fair, ought to be deducted before any amount is posted in this formula for equalization.
We cannot understand the reason for this. One or two suggestions have been made. It has been suggested that perhaps somebody in the Department of Finance, somebody in the government, for reasons which have not as yet been explained, arrived at some kind of distribution of federal tax moneys and then concocted a formula to meet that pre-determined amount. That is what we believe; there does not seem to be any other explanation for it. We cannot understand how else the Minister of Finance could have arrived at such a figure.
I look at the table he presented to the House of Commons on July 7, indicating the amounts that will be payable, under the changes in the equalization formula, for the year 196465. I am not going to read this all back into Hansard, but it is to be found at page 5184. We find there are certain payments to Newfoundland, Prince Edward Island, Nova Scotia and all the other provinces except Alberta and British Columbia. For Alberta there is nothing; for British Columbia there is nothing. For the fiscal year 1965-66 we find the very same thing. They are going to change the formula again to 19-9-50, but for Alberta and British Columbia, nothing. For 1966-67, under the changes in the equalization formula to 20-9-50, the province of Alberta will get nothing; the province of British Columbia, nothing. The province of Saskatchewan will get a wee bit-it is not quite nil, but it is very low-under these changes.
But this is simply not fair; it is not fair to count the gross amount as revenue, because it certainly is not net revenue such as the collection of personal income taxes, corporation taxes and succession duties. The amounts collected under all those three forms of taxation are net, but what is collected from the sale of natural resources, and from royalties, and so on, is not net. Then there is the other point made by the hon. member for Jasper-Edson (Mr. Horner) which must be considered. Some of this revenue that is collected from natural resources is not in fact what you might call income at all because it is derived from the sale of capital assets in some respects. For example there are sales of crown reservations. While the province does not surrender the ownership of these crown


reservations-they lease them-nevertheless they lease for a long period of time the right to develop. This is not, in the ordinary sense, income from natural resources. There has been no explanation as to why this was included, and we think it is discrimination against the province of Alberta particularly, and to a lesser extent but to far too great an extent, if I may put it that way, against the province of British Columbia.
We are wondering why this was done. Have we reached the stage in federal-provincial fiscal relations where it is necessary to talk tough, to talk about separation and make all kinds of other threats before the government of the day understands the language you are trying to speak? I hope not, Mr. Speaker. But in view of the conditions that are going to exist in federal-provincial fiscal relations after this bill comes into effect, it appears this is the only conclusion one can come to. As I said, the province of Alberta has over the years-and I do not think any responsible minister will deny this-gone out of its way to be reasonable and fair.
I have been at Social Credit conventions when this matter has been brought up and I have heard the provincial treasurer and premier of Alberta say that when you are asking for something from some other level of government the fair thing to do is to put yourself in their position and ask them for what you would be willing to give. Another matter concerns shared hospitalization costs. I could cite many quotations to the house where the Minister of Finance, the Prime Minister, and so on, have said that every province in the country should have the right to run its own affairs the way it wants; that all people across Canada should be treated in the same way. The province of Alberta does not levy a hospitalization premium. It does not collect by means of a sales tax some of the revenue which it needs. Rather it chooses to pay some of the cost of operating its hospitals by means of what it calls deterrent fees or co-insurance fees. I have asked the Minister of National Health and Welfare (Miss LaMarsh) about this matter a number of times. I have asked her why it is that the federal government subtracts $1.50 or $2 a day from the cost of operating the hospitals before the federal and provincial governments share the balance, but she has evaded the question. The last time I asked her she said that it was a matter for the Minister of Finance, who deals with fiscal relationships with the provinces. We would like an explanation from the Minister of Finance as to why

regulations have been instituted which are a direct interference with the way in which the province of Alberta happens to choose to run its hospitalization program.


Mr. Francis:: Mr. Speaker, I wonder whether the hon. member would permit a question. Would he not consider that a charge which is made to a patient at the time the patient is admitted to hospital in order to meet an uninsured portion of that patient's bill is therefore not liable to the theory of the hospitalization insurance act with regard to cost sharing?


Horace Andrew (Bud) Olson: I am not sure I understand the import of the hon. member's question, but the fact is that some provinces have levied a retail sales tax and have claimed that this was for hospitalization purposes only. Other provinces collect a premium from the residents and say that this is to be part of the cost of the province's share of operating the hospitalization program. The province of Alberta happens to be of the opinion that a small deterrent fee, co-insurance fee, call it what you will, is a proper and beneficial way of collecting part of the provincial share of their hospitalization program.
We do not think that it is any of the federal government's business how the province of Alberta collects the revenues which it assigns to certain of its social programs, including hospitalization. It is not a large item; this is costing the residents of Alberta about $2 million a year. It is also not a burden. Many of the hospital wards in the province of Alberta cost as much as $24 a day per bed to operate and the fee levied on the patient during the days when he occupies a bed is from $1.60 to $2 per day. Therefore this amount is substantially less than 10 per cent of the actual cost. What is more, if anyone requires hospitalization and is unable to pay the $2 a day, the provincial government will pay that as well. When it comes to sharing the costs, the federal government claims that it is paying 50 per cent of the cost of hospitalization across the country, but in the province of Alberta, because of the regulations which have been imposed regarding this matter and because of other unapproved costs, the share of the federal government amounts to 39.11 per cent, I believe it is. Therefore, we think this is an interference in provincial rights and is a discrimination against the province of Alberta. What is more, we are of the opinion that this would not be tolerated by some of the other provinces in the country. If the only kind of language which is understood by the federal govern-
Federal-Provincial Relations ment is getting tough and being unco-operative, then we may have to change to that kind of language.
There is also the question of sales tax. Why is the federal government now authorizing the federal crown corporations to pay provincial sales tax? This is indirectly further distribution of federal money through crown corporations which are subsidized. It cannot be anything else. The province of Alberta does not levy a retail sales tax, and the other retail sales taxes across the country are at varying levels. This will be a bonus to those provinces which levy the highest tax. We cannot understand why this particular tax was selected to redistribute federal money to the provinces.
On May 13 I asked a question of the former parliamentary secretary to the Minister of Finance, now minister of revenue (Mr. Benson), when the bill to authorize crown corporations to pay these taxes was passed. It is reported on page 3239 of Hansard as follows:
Has any consideration been given to making cash payments to those provinces which do not levy sales tax, in lieu of tax revenue from these corporations?
The parliamentary secretary replied:
No consideration has been given to this matter. It would be extremely difficult to calculate how much revenue would have been realized had a sales tax been imposed, or at what rate it might have been imposed.
After that answer from the former parliamentary secretary, the government are now making under this bill the payment of sales tax retroactive to April 1962. If it is so difficult to calculate how much the grant would be to provinces which do not levy a sales tax, how is the government going to calculate how much the tax will be for these past two years? This is a complete somersault and is a change which is too serious to be taken lightly. The Minister of Finance has said that we should treat all people and all provinces alike. Why is no consideration being given to distributing some money under some other form of taxation? It is not too difficult to find out what the figure will be for provinces who opt out of the students loans legislation, and in all other types of programs in which certain provinces do not wish to participate the government are able to calculate the amount of the grant due in lieu of participation. But in this case we are told the amount is too difficult to calculate. What is more, there has been no consideration of this matter. A year or two ago the province of British Columbia, after having re-

Federal-Provincial Relations ceived a commitment from the then federal minister of finance, decided to call a special session of the legislature to pass a very special bill to deal with a special situation, the taking over of the power company in the province of British Columbia. There have been many discussions with regard to why this was necessary. Why did the premier of British Columbia do it? The fact is that in March of 1962, I believe, although it may have been 1961, the then minister of finance, according to the premier of British Columbia, had agreed that the federal government would refund the corporation income tax on privately owned power corporations to the provincial treasury, but the session of the House of Commons continued, the budget was passed and no such provision was made.
It is well known, Mr. Speaker, that all taxes from all privately owned corporations which are paid to the federal government must eventually come from the products or services that are sold by the corporation, and in the case of British Columbia they had to some out of the power rates. In the provinces of Saskatchewan, Manitoba, Ontario and so on, the power companies are not required to pay any corporation taxes because they are publicly owned. That was the situation, Mr. Speaker, and that is how the province of British Columbia dealt with it. The federal government lost all of the corporation income tax the minute that the premier of British Columbia nationalized the power company and took it over as a provincial crown corporation.
Is the federal government now going to remedy this inequity? The people of the province of Alberta through the rates they are paying for power are in fact contributing a disproportionate share to the federal treasury in relation to other provinces. We have continually asked the federal government to treat all provinces the same but so far the federal government is returning only 50 per cent of the corporation tax to the provincial treasury. Here again, because of the policies of the federal government the province of Alberta is perhaps going to be forced to take action that it does not wish to take.
I do not wish to go through all of the details tonight but it can be satisfactorily proved on the basis of the figures available that, taking two comparable power corporations of about the same size and using the same kind of fuel, power is in fact delivered at a lower price under private enterprise than by publicly owned corporations, for reasons with which everybody is familiar.

There is a higher level of efficiency. This is no reason for the federal government to insist on tax laws that are going to penalize certain provinces.
These are some of the things that need to be dealt with, Mr. Speaker. Over the years the premier of the province of Alberta has pleaded with the federal government to lay down a basic set of principles that will be applicable to all provinces, but so far the federal government has failed to do so. As I said before, this hodgepodge of amendments to the federal-provincial fiscal arrangements is another case of reeling from one temporary improvisation to another on the basis largely, I think, of political pressure and political expediency of the moment. I do not think we are going to find a satisfactory solution until we are prepared to set down rules, delineate responsibility between the two levels of government, and then treat everybody the same. That has not been done. We are not satisfied or happy with what is contained in the bill and in my opinion we need to have far more detailed and satisfactory explanations from the Minister of Finance before we can endorse it.


Gilles Grégoire: Mr. Speaker, I did not intend to take part in this debate but, following the statement made by the hon. member for Burnaby-Coquitlam (Mr. Douglas), I feel somewhat obliged to express my views on the subject.
First, I must admit I found the hon. member's comments very clear, quite to the point and even convincing. Indeed, I think that if I were in the situation, the atmosphere where he possibly finds himself, I would recognize that the points he made were well taken. As a matter of fact, even if I have to contradict him on certain matters this evening, I must say I have always had a great deal of respect and even admiration for the hon. member. Even after the speech he made tonight, I still have somewhat the same feelings toward him. In my opinion, the arguments he put forth were good, if we place ourselves on the level where he wants those federal-provincial fiscal arrangements to be discussed.
Having said that, I would ask him to try to understand our arguments, let us say, in the same spirit that moves us. I appreciate it is not the same spirit as his own and that circumstances of time and conditions are different, in one word, that it is not the same atmosphere. Perhaps I could best make him understand our point of view by reminding

him of the fable "The Dog and the Wolf" by the famous French author La Fontaine.
As the story goes, the dog was telling the wolf that he was well fed, had a good home and was well treated; he showed off his well-fed body and his long hair. Envious of the dog, the wolf ventured to ask: "Would your master take me in also and treat me as well as he treats you?" "Certainly," said the dog, "I have a good master, I am well treated, well fed and well lodged." By that time, the wolf was willing to share the dog's lot when, suddenly, he noticed that the hair around the dog's neck was pretty well worn off and that there were marks on the neck itself. He inquired: "What is that?" To which the dog replied: "Most of the time, I have a collar around the neck and I am chained. My master chains me." The wolf cried: "No, I would rather be lean and run freely in the woods than be fat, wear a collar and be chained." Mr. Speaker, that is somewhat the atmosphere which exists today.
According to some people, our economic lot would be much worse than at present. They may be right, but I do not think so. Even if it were true, we would rather be free and decide for ourselves than be tied with the chain of federalism, be it co-operative federalism or any other kind of federalism. We would rather be free than be well fed and well treated, wear a collar and be chained.
Mr. Speaker, perhaps our fate would not be better. Personally, I do not share that view. On the contrary, I am convinced that our fate would be preferable.
The hon. member for Burnaby-Coquitlam quoted figures. I must say that his table is somewhat complicated.


Thomas Speakman Barnett: Will the hon. member permit a question?


Gilles Grégoire: Certainly.


Thomas Speakman Barnett: I have listened with great interest to his story about the dog and the wolf. I should like to ask him whether or not there might be some room for the suggestion that the hon. member is arguing that the wolf should be free as well as being well fed?


Gilles Grégoire: Mr. Speaker, I agree with the hon. member for Comox-Alberni that it is possible to have both, and it is precisely what we want: freedom and security. In fact, we feel that we are able to get them by ourselves, and be free from this ball and chain represented by federalism, by which 20220-412
Federal-Provincial Relations Ottawa tries to control our destiny. By being free, we might enjoy in Quebec a still greater security than the one we now have. But I would also like hon. members to understand that the tale I told is only to illustrate the spirit and the atmosphere which now exist in the province of Quebec.
It is obvious that any comparison can be considered only in the perspective in which we want to see it. It may leave something to be desired on other points, but I ask hon. members to consider the comparison I made in the perspective intended. Our security now, yes.
The hon. member for Burnaby-Coquitlam gave some figures and I want to do the same. As a matter of fact, my own figures speak for themselves. They were supplied by Mr. Maurice Allard, professor of constitutional law at the University of Sherbrooke, Mr. W. Taylor-


Mr. Valade:: Mr. Allard is the former Conservative M.P. for Sherbrooke.


Auguste Choquette: He was not here long.


Georges-J. Valade: He was here long enough to do something.


Gilles Grégoire: Mr. Speaker, it might be that Mr. Allard was not here long, but let us study the figures just the same. The individual who received them is less important than the one who gave them. Here are the figures supplied by Mr. Taylor, a civil servant in the federal Department of Finance.
The table shows estimated revenues collected by Ottawa in taxes of all kinds, income tax, corporation income tax, estate tax, sales tax, etc.
In Ontario, for example, taxes collected in 1961 by the federal government totalled $2,747,900,000, while the amount returned to that province under any form whatever, was $1,667,000,000, a difference of $1,080,900,000 in favour of Ottawa at the expense of Ontario.
On the other hand, Ottawa revenue collected in the province of Quebec by way of taxes of all kinds amounted to $1,748,900,000, while the amount returned to Quebec, in all kinds of payments, including family allowances, salaries, old age pensions, hospital insurance, farm credit, unemployment insurance, in short, from all sources, was $1,072,700,000.


Mr. Habel:: That has been denied.

Federal-Provincial Relations


Gilles Grégoire: -a difference of $676,200,000 in favour of Ottawa at the expense of Quebec.
In Saskatchewan, the province where the hon. member for Burnaby-Coquitlam was premier-


Thomas Speakman Barnett: Does that include the cost of operating ice-breakers on the St. Lawrence river?


Gilles Grégoire: Yes. I will give you the total figures, and then you will be able to realize what they mean.


Auguste Choquette: The trans-Canada highway also.


Gilles Grégoire: Yes, in 1961.
Ottawa revenue from all kinds of taxes collected in Saskatchewan, $88,900,000. Total amount of payments made to Saskatchewan in 1961-and I think the hon. member for Burnaby-Coquitlam was still premier at that time-$266,100,000, a difference of $177,200,000 in favour of Saskatchewan.


Thomas Clement (Tommy) Douglas: May I ask the hon. member if he will give a breakdown of that? He cannot be talking about money paid to the provincial governments. It exceeds the total provincial budget. Can he give a breakdown, and does it include family allowance payments?


Gilles Grégoire: I am obviously not talking about the amounts returned by the Ottawa government to the Saskatchewan government. The returns I am talking about are the amounts that Ottawa is getting from the provinces, by way of sales tax, income tax, tax on corporation profits, succession duties, and so on. And when I am talking of payments made to this province, I am referring to old age pensions, family allowances, hospital insurance, the trans-Canada highway and so on.
So Ottawa gets from the province of Quebec $676 million more than it is paying, whereas in the case of Saskatchewan, it is paying $177,200,000 more than it is collecting.
In British Columbia, the revenue collected by the Ottawa government, in whatever form it may be, amounts to $451,700,000, while it pays to that province $540,800,000; therefore, British Columbia is getting $89,100,000 more than it is paying.
There are only two provinces-


Thomas Speakman Barnett: That is not what Mr. Bennett said.


Gilles Grégoire: It may not be what Mr. Bennett says because he does not take all the figures into account. He takes only the equalization payments, that is all. When you consider the complete figure, the complete total of all the payments and receipts by the provinces, it is a different point.


Thomas Speakman Barnett: Is the hon. member taking into account the cost of operating the various federal departments within the provinces?


Gilles Grégoire: This also comprises the civil service and administration in each of the provinces. But of course it does not include the servicing of the debt.
The difference at the end will be the servicing of the debt, if we also include highway contracts, defence production contracts, public works contracts, and so on. If you want me to prove it, I shall immediately give you the total of estimated revenues for all this country's provinces.
If you add up the figures given by Mr. Taylor in 1961, the total comes to $5,691,300,000. That was the total federal budget for that year. Now, the approximate payments in all provinces equal $4,890,400,000. This gives a difference of $1,200 million, representing the amounts which cannot be computed by province, that is the interest on the debt and, let us say, the cost of the House of Commons, which is something outside payments to any province.
But there we consider that only two provinces in Canada can pay the federal government more than they get back in the form of taxes and duties of all kinds. They are the province of Ontario, which gets a billion less than it supplies, and Quebec which obtains $676 million less than it gives.


Joseph-Alphonse-Anaclet Habel: May I ask the hon. member a question?


Gilles Grégoire: Yes.


Joseph-Alphonse-Anaclet Habel: Will the hon. member admit that if Ontario and Quebec did not happen to have the customers they do have in the other eight provinces of Canada, they might perhaps not have to pay the same taxes?


Stanley Howard Knowles: That is right.


Gilles Grégoire: Mr. Speaker, it is obvious that Saskatchewan is a customer of Ontario. But, on the other hand, Ontario is also a

customer of Saskatchewan. In the same way, the province of Quebec buys its feed grain and wheat in the west, as the west comes and buys things in the province of Quebec.
If we want to pursue the argument of the hon. member for Cochrane (Mr. Habel), we may say that, if there was not a single person living in the United States, we would have no Americans to buy our pulp, our aluminum, our paper, our asbestos, our iron ore, etc.
It appears, therefore, that if we were alone in this world, we would only be 18 million customers. But we must look at the facts as they are without supposing that if we did not have any other province as customers, and so on. This is becoming childish talk. Let us accept things as they are, and not as we might want them to be.


Joseph-Alphonse-Anaclet Habel: You are yourself on childish ground.


Gilles Grégoire: Even if the western provinces were an independent country they would have to buy steel in Ontario, asbestos and paper in Quebec, while Quebec and Ontario would have to buy wheat in the west. That stands to reason.
I continue:
While Newfoundland pays $41 million in taxes annually, it gets back $137 million, therefore $96 million more than it paid.
Nova Scotia provides in taxes $78 million and gets back $330 million annually.
Prince Edward Island pays in all kinds of taxes $5.4 million per year, and cashes in from the federal government $44.4 million, that is a difference of $39 million.
Alberta, a rich province, pays out in taxes of all kinds $252.7 million and pockets from the federal government $376.8 million, that is a difference of $124.1 million.
Mr. Speaker, those are figures and facts.
It is said that Quebec is poor. But we pay out $676 million for the benefit of the rest of the country; out of this amount, Saskatchewan gets $177 million, Alberta $124 million, British Columbia $89 million and Manitoba $80 million.
Mr. Speaker, we do not mind helping other provinces in need, but what we are asking for-and this meets what I said at the outset of my remarks-is to be free to run our own business. We want to be free to collect our own taxes; we want to be free to mould our own destiny. That is what I would like to get across to the hon. member for Burnaby-Coquitlam.
I understand his way of thinking. I recognize-and it meets with my approval-that the
20220-412J
Federal-Provincial Relations nine other provinces of Canada should form one separate and self-sufficient unit so to speak. The nine other provinces might wish more and more centralization so that with a single administration system, a single government structure, the ten provinces might benefit more.
But the people of the province of Quebec realize now that they also constitute a distinct nation. They do not want to take off the spurs, they do not want to destroy everything, they do not want to repudiate traditions; they are prepared to remain in association with the rest of the country, to make up a single country, but they want to be masters of their own destiny and to have their own leadership.
Some people may say: Yes, but the province of Quebec would then become economically weak. This is not the case; indeed the state of mind now prevailing in the province of Quebec did not prevent important foreign companies to set up plants there. On the contrary, since the province of Quebec has started to awaken foreign companies have shown increased confidence in our province.
Will that help in freeing us? Not necessarily, I admit it. We have the feeling today that we can set up and develop by ourselves an automobile industry, mining industries and newsprint plants.
But what suggestions are we offered? Further centralization in many fields.
We have no objection to the fact that nine provinces favour centralization for themselves, but the province of Quebec should be master of its own administration and fate.
We are not in favour of co-operative federalism. This formula is condemned everywhere in the province of Quebec now, or at least by the majority of those who are proud of their race.


Mr. Prud'homme:: And yet Premier Lesage is for it.


Gilles Grégoire: Yes, there are some who are still in favour of it and I could even understand them-
If the hon. member for St. Denis would only stop saying silly things, I could carry on.


Joseph-Alphonse-Anaclet Habel: That is all you can say yourself: silly things.


Gilles Grégoire: There are still some people who are for co-operative federalism; some for political expediency because they understand nothing else; others perhaps by conviction such as, for instance, the Secretary of State (Mr. Lamontagne) who is undoubtedly

Federal-Provincial Relations convinced of the value of this concept of co-operative federalism. But then they argue simply on the basis of mathematical data and forget one thing, that politics is the art of leading men, human beings, and human beings are not adding machines, but they have brains.
Nowadays, with the turn of mind that is developing more and more in the province of Quebec, there is a peaceful awakening, regardless of what is said about it; the purpose of which is to make North America conscious of the existence of French Canada. And indeed such a presence is being felt.


Joseph-Alphonse-Anaclet Habel: Oh, oh.


Gilles Grégoire: I would ask the hon. member for Cochrane to please keep still.
Mr. Speaker, before the hon. member for Lotbiniere asks me a question, I shall request the hon. member for Cochrane to keep quite still. When he speaks, he wants to be undisturbed; let him do the same thing for the others.


Joseph-Alphonse-Anaclet Habel: It is hard to remain quiet when one hears such nonsense.


Mr. Gauthier:: That is all you can say. Simpleton.


Joseph-Alphonse-Anaclet Habel: I can say something else.


Gilles Grégoire: I wonder whether the real simpleton is not the hon. member for Cochrane.
Mr. Speaker, one fact remains and that is that Quebec itself, despite the figures the hon. member for Burnaby-Coquitlam may have furnished, has always done its share in confederation and is still ready to do the same, but no more in assisting progressive and regular centralization-


Hon. Yvon Dupuis (Minister without Portfolio):: May I direct a question to the hon. member?


Gilles Grégoire: Yes, certainly.


Yvon Dupuis: I assume the hon. member lives in the Lake St. John area?


Gilles Grégoire: No, in the Quebec area.


Yvon Dupuis: No, naturally, I know he does not live in his constituency, but represents a constituency of the Lake St. John area.


Gilles Grégoire: Saguenay.


Yvon Dupuis: What would he say if the inhabitants of the city of Montreal stated they pay the major part or almost the whole of the taxes of the province of Quebec, and the provincial government levies them in Mont-

real in order to build highways in the Saguenay area? This is precisely the same reasoning my hon. friend makes on the federal level. The Saguenay constituency does not pay as many taxes to the provincial treasury as the city of Montreal, but it is a part of the same large family to which the city of Montreal belongs-


Gilles Grégoire: You have not yet asked your question.


Yvon Dupuis: I am asking it right now. But when the time comes for the provincial government to spend those sums of money, it is not true that it spends more than it collects in the Saguenay district; that Montreal gives more than it receives from the Quebec government? And yet, you are pleased with this situation.
Why could it not be the same in the federal field? Let those able to pay, that is most of the people, share with their fellow citizens throughout the country?


Gilles Grégoire: Mr. Speaker, I do think that all the hon. member for St. Jean-Iber-ville-Napierville wanted-


Joseph-Alphonse-Anaclet Habel: On a point of order, Mr. Speaker. The hon. member for Lapointe is not speaking from his seat, but from the seat of the hon. member for Villeneuve (Mr. Caouette), which he should not do when he speaks in the house.


Gilles Grégoire: Mr. Speaker, I frankly admit that what the hon. member for St. Jean-Iberville-Napierville said is actually true. More taxes are probably collected in Montreal than in the riding of Lapointe-


Yvon Dupuis: Not probably, but surely.


Gilles Grégoire: But there is one thing that I would like to have him admit: when the hon. member for Burnaby-Coquitlam produced a table showing that the province of Quebec does not give any more than the other provinces, proportionately maybe, and when I produce another table showing that the province of Quebec pays a greater share than the other provinces, then probably-


Yvon Dupuis: Would you like me to answer the question now?


Gilles Grégoire: Prior to that, I would like to
conclude my reply to the minister's question. I would also like to have him admit this: That between Montreal and-


Joseph-Alphonse-Anaclet Habel: On a point of order, has the hon. member the right to speak from another member's seat?


Gilles Grégoire: Mr. Speaker, if the hon. member for Cochrane had come to the house more often-


Joseph-Alphonse-Anaclet Habel: Oh, oh.


Gilles Grégoire: -I think he would have noticed a long time ago that yourself, sir, and others before you, decided that there is no rule which prevents an hon. member from speaking, even if he is not occupying his seat.


Joseph-Alphonse-Anaclet Habel: That goes when the house is in committee.


Gilles Grégoire: It was said a little earlier that the only rule that applies in that case is that an hon. member must take off his hat when he wants to speak.


Joseph-Alphonse-Anaclet Habel: That is in committee.


Gilles Grégoire: Now, Mr. Speaker, the reason why I speak from here is that I feel more comfortable and have more room.


The Acting Speaker (Mr. Batten):: It might be as well to avoid any argument, if the hon. member for Lapointe would remain within his own crease.


Gilles Grégoire: Now to carry on with my remarks, after listening to the antics of the hon. member for Cochrane I am pleased to say that the hon. member for St. Jean-Iber-ville-Napierville asked intelligent questions, which happens very seldom to the hon. member for Cochrane.
Mr. Speaker, there is one thing that I should like to ask the hon. member for St. Jean-Iberville-Napierville, that is to admit, since I recognize the merits of his question- it is true that some parts of the province of Quebec give more than others, which is to the advantage of the province of Quebec- that there is a distinction to make, because in the province of Quebec there is what may be called a racial, cultural and ethnic entity, with minorities, that is true, while the same thing does not occur when we compare western Canada and Ontario with Quebec; it may not have been as evident in the past as it is now, but it can be felt much more today because of the development of mass media such as television and C.B.C. news, and that the awakening is felt precisely because those means of communication and expression of thought have developed and that, through circumstances, a waking up occurs
Federal-Provincial Relations today which is irreversible and cannot be checked. That is something which perhaps does not exist between different provinces, but it certainly does exist between various regions of the province of Quebec.
We do not want the bridges to be torn down, frontiers to be set up or a wall like the one in Berlin to be put up between the provinces. No. We only want the two groups living in this country to be allowed to look after themselves in the fields which concern them, after which there could be established, above all that, a Canada composed of two associate states that would have their own jurisdiction, their own legislation.
I think I have said that over and over again while dealing with taxation, and this is still the best time to repeat it, because when each of the two races will be able to decide which way it wants to go and to look after itself, we shall have good understanding in Canada, but until then that will not be easy. When you have two friends and each one minds his own business, they can get along together, but when they always want to-


Ralph Bronson Cowan: Would the hon. member permit a question?


Gilles Grégoire: I beg your pardon.


Ralph Bronson Cowan: The hon. member for Lapointe has just referred to the two races in this country. I should like to ask him, when did the French Canadians leave the white race. I thought we had one race in this country, but two tongues.


Gilles Grégoire: Mr. Speaker, it might be that the word "race" does not have the same meaning in French and in English, just like the words "demande" and "demand", as I have found out. Besides that error in interpretation made a lot of noise and it was corrected when it was noticed. I even learned that the word "nation" has a different meaning in French and in English. If in English the word "race" means "colour", it does not in French.


Stanley Howard Knowles: Would the hon. member permit another question? In answering the hon. member for York-Humber would he make it clear that one does not have to belong to the white race to be a Canadian?


Gilles Grégoire: Absolutely.


Gilles Grégoire: Absolutely. Some English speaking Canadians are coloured, but it does

Federal-Provincial Relations not mean that they are not English speaking Canadians. I see then that the words may have a different meaning in French and English, so I would ask my hon. friend from York-Humber (Mr. Cowan) to take it as we mean it, that is as an ethnic group. I think that we could then agree on terms.
Therefore, when we wish to put an end to an agreement, such as the one now existing, which, in my opinion, is impossible, it would then be possible to agree, but as long as an impossible agreement is sought, quarrels, division and scission are likely to occur.
Agreement can easily be brought about providing each group respects the other's wishes and its desire to be master of its own destiny. That is possible, Mr. Speaker.
The first solution to the problem probably lies within the field of taxation.


Auguste Choquette: Mr. Speaker, I do not think there is a single country where freedom is more respected than in Canada. In what way are we not masters of our own destiny? I do not see why my hon. friend sees problems where there are none.
I am perfectly free to speak my language wherever I am, to go to any province of my choice and to enjoy the rights given me by my Canadian citizenship.


Gilles Grégoire: Mr. Speaker-


Auguste Choquette: I rise on a question of privilege. During his whole speech the hon. member has cast doubts on the extent of freedom we have in Canada. There in no place in the world where freedom is more respected than in English speaking or French speaking Canada.


The Acting Speaker (Mr. Batten):: Order. The hon. member for Lapointe has the floor.


Gilles Grégoire: Mr. Speaker, I do not see
any objection to the hon. member for Lot-biniere making remarks. On the other hand, I should like to remind him that when he submitted to the house a motion for the replacement of the word "dominion", which means dependence, while we are not dependent but independent, everybody in the house- we were not here, unfortunately, otherwise we would have supported him-except him, voted against his bill. What does that mean? Mr. Speaker, if there is one person who talked about dependence in respect of the constitution, who said that we were not masters in parliament, who even moved an amendment to the constitution, it was the

hon. member for Lotbiniere and I should like to point out that we were the only ones to support him.


Auguste Choquette: Mr. Speaker, I rise on a point of order. My hon. friend-


The Acting Speaker (Mr. Batten):: Order. I think the house is now getting away from the second reading of Bill No. C-lll.


Gilles Grégoire: Mr. Speaker, I wish to point out to you that I did not stray from the point purposely but that I have been prompted to do so. I have no objection to it and I am always ready to discuss reasonably with those who are willing to do so.
Nevertheless, when I am referring to control on the part of a people, I mean that it should be the master of its own destiny and of its own direction.
Whenever I see that the federal government is invading the educational field, which comes under exclusive provincial jurisdiction, then I maintain that the federal government is trying to take away from the provinces means of action which belong to them by right under the constitution; whenever I see all fields under provincial jurisdiction which the federal government is invading more and more, then, I say the federal government is trying to suppress freedom of action in those fields.
For instance, I see that the central government collects six times more taxes than the provincial governments. Then, I say that the central government is six times as powerful as the provincial governments, because he who collects taxes is the master of a people's fate, and it is the central government which collects the major portion of taxes. I say consequently that it is the federal government which has the possibility, the opportunity to direct destiny. It is the master.
This is so true that the Minister of Finance (Mr. Gordon) admitted one day that if the federal government was no longer master of most taxation fields, then it would no longer be able to direct the economy as it wants. The one who controls the sources of revenue is the master of the people he leads. That is why the Minister of Finance is so anxious to keep the revenue for the federal government and remain master in the taxation field because he wants to keep on controlling our destiny.
We do not make any difference between the English group and the French group liv-

ing in Canada, but it is the way I see the mastery of their own destiny. I think that the hon. member for Lotbiniere will say that I am right about that. I admit that an individual living in Toronto or Vancouver is as free as another one and enjoys the same privileges. I do not consider things at the individual level, but at the level of the whole people, of the French Canadian people which lives in the province of Quebec and would like to control its own destiny, its future, and for that purpose must be the master of its sources of revenue.
It is true that the Quebec premier, a year and a half ago, asked for 25 per cent of corporate taxes and 25 per cent of the personal income tax. What happened? Just to be mean, the powers that be granted him 24 per cent and 1 per cent more two years later. It is ridiculous, after all, that when the premier makes a request in due form, asking for 25 per cent, that 24 per cent only would be granted, or 1 per cent less.
Why? Would it not have been simpler to give the requested 25 per cent? Then it would have been possible to say more or less that complete agreement has been reached. But no, the government stops along the way, exactly at 1 per cent.


Auguste Choquette: Do you think the government stops deliberately, just to frustrate Quebec? Personally, I do not believe it.


Gilles Grégoire: It is only to frustrate Quebec. But one thing remains: under the constitution any direct taxation is within the exclusive jurisdiction of the provinces. And it is so true that during the war it was called "leasing direct taxation fields", not taking them but leasing them. And those agreements were to terminate at the end of the war. But the war has been over for 19 years, and the federal government still controls direct sources of taxation. This is one of the main causes of discontent.
The Ralliement Creditiste suggests that the government should withdraw from several fields and, in return, hand over its sources of income to the province of Quebec.
If the nine other provinces want to maintain the present situation, very well; we are not against it. If they want to encourage more centralization in Ottawa, we do not object to it. But the province of Quebec wants more taxes. Let the province get back its sources of income and it will administer and legislate in many other fields which actually come under provincial jurisdiction. This is what we are asking for the province of Quebec.
Federal-Provincial Relations
Mr. Speaker, the figures I quoted may have been somewhat at variance with those of the hon. member for Burnaby-Coquitlam. That will prove to him, at least, that the province of Quebec has always done its share and that it does not hesitate to do so.
There is one thing I would like the hon. member for Burnaby-Coquitlam to understand, and I think he is able to understand it. It is that the atmosphere now existing is more than a question of figures, it is something more than a question of machinery; it is the awakening of a whole people's mentality.


The Acting Speaker (Mr. Batten):: Order. I must interrupt the hon. member for Lapointe (Mr. Gregoire) to advise him that the time allotted to him has expired.


Walter Lockhart Gordon: Mr. Speaker-


The Acting Speaker (Mr. Batten):: Order. I should advise the house that if the Minister of Finance speaks now, he will close the debate.


Mr. Stuart A. Fleming (Okanagan-Revel-stoke):: Mr. Speaker, in approaching debate on a bill of this kind, which in its short form is entitled the Federal-Provincial Fiscal Revision Act, 1964, it is possible of course to become almost inextricably involved with statistics, and as debate moves about from one side of the house to the other or from one member to another there can be a very extensive selection of statistics proving a great many points of view but not perhaps acceptable to all points of view. Therefore I shall endeavour, in what I have to say now -if I can have enough silence to be heard at all-to avoid statistical references and deal with one or two principles that are involved in this bill.
One of these principles has been mentioned already this evening by two of the previous speakers. It was referred to on an earlier occasion, at the resolution stage by the hon. member for Kamloops (Mr. Willoughby), and it was referred to again tonight by the hon. member for Burnaby-Coquitlam (Mr. Douglas) and also the hon. member for Medicine Hat (Mr. Olson). This is the question with respect to the assessment of income from natural resources in a province as part of the basis of establishing the province's participation in equalization payments. There has to be, as was suggested previously and again tonight, some consideration given to the question of the nature of this income, for obviously part of the income from the natural resources of a province is drawn from

Federal-Provincial Relations non-renewable resources, from minerals, oil and natural gas. The income is being derived from a wasting resource. There is nothing the province or anyone can do to renew that resource. Once it is gone, it is gone forever. Once it has been used, there will be no further income from it; there will be no renewal of income from that particular resource-it has been expended.
Therefore to take into account revenue as a consequence of a sale of that resource as part of the income of a province is undoubtedly dangerous. Serious consideration should be given by the federal government to some formula by which a province is credited with the depletion of its resources. Unless such a depletion allowance is provided in the consideration of income of the province, this formula is not fair and is not equitable. There are other resources, forest resources and water resources, that can be used, renewed and used again. There, again, it is not equitable that the province should be charged with all the income derived from those resources in considering its share of tax equalization payments, because obviously these renewable resources must be managed.
Each province must spend a substantial amount of money annually in renewing its forest resources, protecting and to a substantial extent renewing and perpetuating, through some measures that can be taken in some provinces, its water resources. These are charges upon the province which do not appear in the equation as indicated in this bill. If there is to be equity in the consideration of the economic wealth of the provinces, these factors must be taken into account by the federal government. There must be this recognition of depreciation of non-renewable resources, and recognition of the cost of perpetuating and preserving renewable resources.
I trust that the minister, when he comes to answer the comments made, will have some understanding of what I have just said, as I notice he is paying not the slightest attention. These factors have not been taken into account in any statement made by the government. The minister has not even caught up with my latest intervention, but I hope he will later.
I submit these factors must be taken into account if there is to be an equitable sharing of financial resources in the provinces. If the provinces are to have the responsibility for and the cost of administering, protecting and preserving their resources, the federal government in taking revenue from them and the provinces being required, in effect,
[Mr. Fleming (Okanagan-Revelstoke).l
to share that revenue with the federal government, the costs to the provinces must be taken into account by the federal government before it makes its assessment. I think that is fundamental and applies to any business. You simply do not milk your assets till they are gone and there is no asset left with which to produce future revenue. Any business can be destroyed pretty fast by not taking into account depreciation of assets. In the income tax and corporation tax structure of the federal government depreciation must be taken into account, and it must be taken into account in this formula which has been established by the federal government in arriving at which of the provinces shall not participate in equalization payments. The formula must also take into account that this will work to the benefit of some provinces which now benefit substantially from equalization payments and at the same time are provinces which can derive substantial revenue from the sale of natural resources. Such provinces might benefit from this consideration as well as provinces like British Columbia and Alberta, which find that their natural resource income deprives them of the right of participation in equalization payments under the present formula.
Another matter which has been mentioned many times in the house, both in the course of the resolution debate and also this evening, so therefore I will not labour the point, is that an equally important point with regard to this federal-provincial fiscal revision act does not appear in the bill. It is something which is absent from this bill but has not been absent from the considerations of this house during the past few days. It is an indication of government policy on sharing the cost of highway building in the provinces.
Late in July the Minister of Public Works (Mr. Deschatelets) indicated that this fall there is to be a dominion-provincial conference on national highways policy. Naturally no one would argue with the necessity for such a conference; members from every province would welcome one. But it was assumed that at that time there would be a general assessment of the federal role in highway construction in the provinces, whether the federal government had in fact any role or responsibility at all. It could be assumed that when this announcement was made about this conference, federal government participation in road building programs in the provinces on a major scale would wait until after the conference. That might be one

Proceedings on Adjournment Motion
reason why this particular aspect of federal-provincial co-operation is not included in this bill.
Within the past 48 hours-in fact yesterday-we found that although there is to be a highways conference in the fall the government has come to an ad hoc arrangement with one of the provinces and decided to spend $13 million on a purely provincial road. It is not even a road which could be considered in the national context. It might have come within the general context of roads to resources or even forest access roads, but we know that the present administration has eliminated both those programs and they are gone. Therefore we cannot find any over-all national policy to account for this sudden, one-shot roadbuilding program introduced in one province.
I am not arguing against the merits of such a program but I am arguing against this ad hoc arrangement, this one-shot deal undertaken in the face of what we had assumed would be federal government policy to consult with all the provinces to arrive at a national highways policy. Then when one is confronted with this bill and finds that it provides that a province like British Columbia is not to participate to any extent in tax equalization programs, and when one finds that the roads to resources and forest access programs have been discontinued and no other provision made for a joint federal-provincial roadbuilding program, which is of tremendous importance, if not of vital necessity, to the provinces, it is clear this bill has been circumvented in this sudden, one-shot, ad hoc arrangement with one of the provinces. This is in defiance of the very principles established in the bill and contained in other government statements, including that of the Minister of Public Works, relating to a national highways program.
In view of the fact that there seems to be plenty of precedent in the house tonight for a member speaking on behalf of his own province and perhaps considering provincial interests over national interests, I must say that it seems to me that this is something which is being thrust upon us by the provisions of this bill and the announcement made yesterday, coupled with the inadequacy of federal policy in regard to British Columbia, the particular problems of communications in that province and the absolute necessity for federal interest in highways policy as it applies to the west coast in particular. In this regard I refer to the necessity for linking the Pacific coast of Canada more satisfactorily with the rest of Canada through direct highway access to the seaports on the coast.
Mr. Speaker, may I call it 10.30.



BUSINESS OF THE HOUSE

Gordon Minto Churchill: Mr. Speaker, I presume that we are continuing with this debate tomorrow.


Mr. MacNaughi:: Tomorrow we will continue with this debate and the committee stage. Should it be concluded tomorrow, and I have every reason to believe it will be concluded early tomorrow, we will take up main estimates, those of the Department of Citizenship and Immigration and the Department of Labour. Then on Monday we will go on with the flag debate. Should this debate not conclude tomorrow it will be the first item of business on Monday, followed by the debate on the flag resolution.



PROCEEDINGS ON ADJOURNMENT MOTION

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


Mr. Robert C. Coates (Cumberland):: Mr. Speaker, the question I posed to the Prime Minister (Mr. Pearson) yesterday and which he refused to answer was based on an independent survey carried out by Gruneau Research Limited, an international and highly respected research organization, in which two questions were asked of those interviewed; whether they preferred the retention of the red ensign as Canada's national flag, or the design favoured by the Prime Minister and proposed by the government. The results of the survey indicate majority support for the retention of the red ensign in every province of Canada with the exception of Quebec.
Surely in view of this new evidence and the show of strength across this nation in favour of the Canadian red ensign, no responsible Prime Minister would desire to move forward with a flag design which he learns is acceptable by the majority in only one province of this nation. Surely the evidence tendered is of such importance from the point of view of national unity that a responsible government can reach only one of two conclusions; either to withdraw the design proposed, or to support the initiation of a national plebiscite which would give Canadians a number of preferences from which to select the
6516	HOUSE OF
Proceedings on Adjournment Motion flag of their choice. Surely this evidence produces the danger signals that tell the government to go slow on an issue which is of such an emotional nature that the very foundation on which confederation was built could erode to the point where we could well have difficulty in arriving at our 100th birthday. Surely the fact that there is overwhelming support in the province of Quebec and only minority support in the remaining nine provinces should not be a reason for his adamant stand to push forward with his resolution.
I am not so naive, Mr. Speaker, as to think the Prime Minister was not aware of the results of the survey in question. One must then ask the question as to why he has refused to answer my question and, indeed, alter the stubborn and irresponsible stand he now takes. There has never been an issue before this parliament where more backroom, clandestine, political intrigues have been worked out between the government and the splinter parties. No better piece of evidence is available than the statement yesterday by the hon. member for Villeneuve (Mr. Caouette) which appears on page 6439 of Hansard:
I believe the government is unanimous with us to vote against part B and in favour of part A.
How much longer does the Prime Minister consider he can carry on in this dictatorial manner of pressing forward with a flag design that is acceptable in one province and unacceptable to a majority in the remaining nine provinces, or is this only the first phase of a grand plan to make Canada a republic? Lest you think I am exaggerating, let me quote directly from Hansard. Here is what one member said who is supporting the Prime Minister's flag. I refer to page 4946 of Hansard.

We are proud to endorse the resolution concerning a distinctive flag, but we are determined to get rid of the union jack. We want "O Canada" as our anthem but we are unwilling to recognize "God Save the Queen".
Another said, as found on page 4964:
I have advocated for 25 years the establishment of a Canadian republic and called for the red ensign and union jack to be set aside.


John Watson MacNaught: Mr. Speaker, when this question was asked on August 5 the Speaker said, as found on page 6421 of Hansard:
Order. In my opinion this question might properly be asked at the time the flag debate commences.
In view of that ruling, Mr. Speaker, 1 think it is not altogether correct to say that the Prime Minister (Mr. Pearson) refused to answer the question. He was prevented from answering the question by the Speaker ruling the question out of order.
I might also refer to the answer that the Prime Minister made at that time to the question put to him by the hon. member for Three Rivers (Mr. Balcer). The Prime Minister said:
When the debate on this issue is resumed, which I hope will be very shortly, all these matters may be considered.
There is every indication that the debate on the flag resolution will be resumed on Monday or at the very latest on Tuesday, and I think that is the proper time to reply to all these questions posed by the hon. member for Cumberland.


Gordon Minto Churchill: The proper time, but will answers be given?
Motion agreed to and the house adjourned at 10.35 p.m.

Friday, August 7, 1964