1964-05-14

Mr. Speaker:: I have the honour to present, in English and in French, the fourth report of the special committee on procedure and organization. It deals with two subjects that are the concern of the subcommittee on organization chaired by the hon. member for Edmonton West (Mr. Lambert).



DEFENCE


Mr. J. E. Walker (York Centre) moved:: That the special committee on defence appointed May 8, 1964, be composed of Messrs. Asselin (Notre Dame de Grfice), Bechard, Brewin, Deachman, Fane, Granger, Groos, Hahn, Harkness, Lambert, Langlois, Laniel, Lessard (Lake St. John), Lloyd, MacLean (Queens), MacRae, Martineau, Matheson, McMillan, Nielsen, Pilon, Smith, Temple and Winch.


[Stage Direction]
Motion agreed to.


Hon. Guy Favreau (Minister of Justice) moved:: That, notwithstanding standing order 56 (5), on the next occasion when a motion for an order for supply is called, the estimates of six departments of the government instead of three be taken up and entered for consideration and that the said motion be deemed to be the fourth supply motion in the current session.


[Stage Direction]
Motion agreed to.

Guy Favreau: That on Friday next, the hours of sitting shall be from 10 a.m. to 2 p.m. without interruption, and when the house adjourns that day, it shall stand adjourned until Tuesday, May 19, 1964, at 2.30 p.m.; and that in relation thereto, the provision of standing orders 2 and 6, shall be suspended.


[Stage Direction]
Motion agreed to.


Hon. G. J. Mcllraith (for the Minister of Transport) moved: that the house go into committee at the next sitting to consider the
following resolution, which has been recommended to the house by His Excellency:
That it is expedient to introduce a measure to authorize the implementation of certain recommendations of the royal commission on transportation with respect to the rationalization of branch lines of railways and passenger train services and the fixing of freight rates under and consistent with a national transportation policy suited to modem transportation conditions; to establish a branch line rationalization authority and a branch line rationalization fund to be continued for fifteen years to assist in the establishment of an orderly program for the improvement of the efficiency of railway branch lines; to provide authority for public funds to be used where assistance of a type similar to that provided by the branch line rationalization fund may be required after such 15 year period; to provide for payments out of the consolidated revenue fund on a reducing scale for a period of five years commencing with 1964 to compensate railways under the jurisdiction of parliament for passenger train deficits incurred in Canada during such period; to authorize payments to maintain the prevailing level of freight rates on western grain moving by rail to export positions; to permit the lapsing of the subsidy (known as the "bridge" subsidy) now provided for the maintenance of the trackage of the Canadian Pacific Railway Company between Sudbury and Fort William and the corresponding trackage of the Canadian National Railway Company between Capreol and Fort William and between Cochrane and Armstrong; to authorize agreements relating to the carriage by rail of Her Majesty's mail, and members of the Canadian forces and police travelling on Her Majesty's service and to provide further for other matters consequential upon or related or incidental to any of the foregoing.


[Stage Direction]
Motion agreed to.


[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, with reference to the NATO ministerial council meeting the Prime Minister said yesterday that whatever statement was made by the Secretary of State for External Affairs was made at a confidential session. I would ask him whether he has reviewed his statement of yesterday in that connection, particularly when it is considered alongside the fact that secretary Rusk of the United States authorized the state department to make available to the press a complete transcript of his remarks. I would ask the Prime Minister whether he would table in the house the statement made by the Secretary of State for External Affairs so that the house will be in a position to judge whether the report by Mr. Duffy in the Globe and Mail, a considerable portion

Inquiries of the Ministry of which is in quotation marks, represents in fact what the minister said respecting recognition of communist China?


Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, the meeting was a confidential one but as very often happens at confidential meetings of this kind certain delegates do give out their own statements to the press afterwards. As this has been done by certain delegates in this instance, I can see no objection to the tabling of the statement made by the Secretary of State for External Affairs, and I will be glad to see that it is done.


John George Diefenbaker: Does the Prime Minister have it available now?


Lester Bowles Pearson: I do not have it available at the moment but I will table it tomorrow and I will be glad to send a copy to my right hon. friend this afternoon.


John George Diefenbaker: I want to thank the Prime Minister. I will then be in the same position as the press.


SUGGESTED SETTLEMENT BY NATO
[Stage Direction]
On the orders of the day:
Hon. D. S. Harkness (Calgary North):: Mr. Speaker, 1 would like to direct a question to the Prime Minister. The newspapers report the Secretary of State for External Affairs (Mr. Martin) as having stated that the Cyprus problem should be settled by NATO. Could the Prime Minister tell us whether this is indeed the view of the government and, if so, how the Canadian government believes NATO can settle the Cyprus question?


Lester Bowles Pearson: Well, Mr. Speaker, I am afraid I cannot answer the last part of my hon. friend's question. So far as the first part is concerned, I think it is undoubtedly a matter of concern for NATO and that NATO has a definite responsibility in view of the fact that two of the governments directly concerned-indeed three, if you include the United Kingdom-are members of NATO. I have no doubt that when the Secretary of State for External Affairs is in his place he will be making a report on the council meeting and will be able to deal with the points raised by the hon. gentleman.


Douglas Scott Harkness: A supplementary question to the Prime Minister: in view of the fact that the United Nations is already attempting to settle this dispute, does the government believe it should withdraw in favour of NATO taking over this duty?


Lester Bowles Pearson: No, but surely it is possible for NATO, which is concerned with this 

dispute, to see what can be done within the ambit of that organization to make a solution easier to find.


John George Diefenbaker: Has the Prime Minister worked out in his own mind how a mediator such as the secretary general of NATO could operate alongside a mediator appointed by the United Nations? That is a difficulty which I see in the statement made by the minister.


Lester Bowles Pearson: I do not know whether that is the difficulty to which the hon. member for Calgary North was referring. But I do appreciate the difficulty of the position mentioned by the right hon. gentleman. While I am not familiar with all the details of the appointment which was just made, I believe that this appointment of Mr. Galo Plaza the former president of Ecuador as mediator was intended to take some of the burden off the commander-in-chief of the United Nations forces who had been asked to intervene in certain situations which could be turned over to a civilian representative of the United Nations. If that is the situation, I think Mr. Galo Plaza's appointment will be a helpful one. It is not meant, I understand, to replace the task entrusted to the mediator, the former prime minister of Finland.


John George Diefenbaker: Has the mediator appointed by the United Nations, the former prime minister of Finland, been consulted in connection with the proposition advanced by the Secretary of State for External Affairs that there should be a NATO mediator as well?


Lester Bowles Pearson: I do not think it is a question of appointing a NATO mediator. The suggestion made by the Secretary of State for External Affairs at the NATO council meeting was, as I understand it, that the NATO members particularly concerned should get together and see what they could do to ease the situation in Cyprus. Of course, it would not be desirable for them to intervene in such a way as would cut across the work of the mediator appointed by the United Nations.


CYPRUS-REPORTED INADEQUACY OP TRAINING
[Stage Direction]
On the orders of the day:
Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, I should like to direct a question to the Minister of National Defence. Has the minister seen reports which appeared in yesterday's La Presse by one of their correspondents in Cyprus to the effect that some officers have some reservations as to the type of training which our forces sent to Cyprus

have received in regard to the role they are actually discharging; that their United Nations standby training is not adequate for the type of job they have been assigned?


Hon. Paul Hellyer (Minister of National Defence):: No, I have not, Mr. Speaker.



EARTHQUAKE DAMAGE


[Stage Direction]
On the orders of the day:
Lester Bowles Pearson: Mr. Speaker, perhaps I can continue these courtesies with the right hon. Leader of the Opposition by answering a question he raised the other day regarding the situation in the Alberni valley and the federal government's relationship thereto. I hope I will be forgiven, Mr. Speaker, if the answer is a little longer than normal.
As soon as the news of the damage caused by the tidal wave in the Alberni area was received the government, as the house knows, made an offer of assistance to the government of British Columbia, subject to the usual condition, namely that the federal government be given details of the extent of the damage and an indication that the cost of meeting the damage was beyond the means of the local municipalities and the provincial government. We have not yet been given the report of the experts appointed by the province to assess the damage but we have been informed, as the house knows, by telegram from Premier Bennett that the net depreciated loss suffered by private citizens amounts to approximately $1.5 million.
While Premier Bennett has not, of course, maintained that this sum is beyond the financial capacity of his province, he did propose that the federal government should provide one half of the amount. As my right hon. friend knows, I think, it has not been the practice in the past for the federal government to meet 50 per cent of the loss sustained in a local disaster where the scale of the damage was well within the capacity of the provincial government. In the present instance, therefore, the government has concluded that it would be preferable to make a substantial grant to the disaster fund than to follow the policy proposed by the government of British Columbia. Therefore, Mr. Speaker, the government has decided to make a grant of $250,000 to the Alberni valley disaster fund.


John George Diefenbaker: The Prime Minister, Mr. Speaker, has mentioned the general rules that have applied in the past with regard to assistance on the part of the federal government, and
Inquiries of the Ministry with his statement in that regard I am in entire agreement. Might I suggest, however, that the amount that is being provided by the federal government as a grant, while substantial, is considerably less than members generally would have expected in view of the loss suffered by so many private people.
Is there any possibility-and I can go no further-that there would be a reconsideration given to increasing that amount? I think that Canadians as a whole would have felt the situation would have been met had the amount been at least double that which has been provided. I ask the Prime Minister, is there any possibility of giving reconsideration to this? I know the difficulties, and I am not trying to place him in an embarrassing position.


Some hon. Members:: Oh, oh.


John George Diefenbaker: I see him looking at the Minister of Finance who, apparently, is also interested in this question. I think that the general question I have asked is a reasonable one under the circumstances.


Lester Bowles Pearson: I am quite sure the right hon. gentleman would not wish the government to retreat from a decision which has been made.


Some hon. Members:: Oh, oh.


Lester Bowles Pearson: Naturally, when the Leader of the Opposition makes a request of this kind for reconsideration the government is always happy to reconsider. I cannot give him any assurance the result of the reconsideration will be any change in policy.


John George Diefenbaker: I would say to the Prime Minister that in this case I would not call it a retreat; I would simply call it a realistic reappraisal.


Mr. T. C. Douglas (Burnaby-Coquiilam):: While I do not believe the members of the house would ask the Prime Minister to make a retreat, they would like him to advance on this matter. In view of the fact this sum is only one sixth of the estimated cost of the damage, a relatively small contribution, is the government still keeping open the possibility of acquiescing to Premier Bennett's request to put up one half of the total damage estimated at $1.5 million, when the details of that damage are available to the federal government?


Lester Bowles Pearson: There have been certain principles laid down for federal participation in relief measures of the kind that I have been talking about. I think those principles are reasonable ones, that when the locality and the province can deal with a disaster then they should accept that responsibility because it is their primary responsibility. When they

Inquiries of the Ministry make a request to the federal government, the federal government should acknowledge that request and do what can be done in the circumstances.
I think in these circumstances that exist today, Mr. Speaker, that a grant of $250,000 to the fund is not an unreasonable one, having regard to the practice and principles of the past and the undesirability of creating a precedent in future, by which the federal government will have to take primary responsibility for all disasters, however local they might be.


Thomas Clement (Tommy) Douglas: I am sure the Prime Minister will recall the precedent set in the Rimouski fire, which could hardly be considered a national disaster, yet assistance was given in that case although it was not beyond the capacity of the province. Are we to take it from his statement that the request of the government of British Columbia for half of the cost of the damage is now being rejected?


Lester Bowles Pearson: All I can say, Mr. Speaker, is as I have told the right hon. gentleman, that I will re-examine the situation.


Mr. T. S. Barnett (Comox-Alberni):: As a
supplementary question, Mr. Speaker, I would like to ask the Prime Minister whether, in view of the gap which now remains between the amounts suggested by the provincial government as its contribution coupled with that which he has announced, he would at least consider taking some steps at the federal government level to assist the voluntary committee in furthering their appeal for voluntary contributions, so that the gap, not only between the figures on this depreciated net value but the much larger gap between these amounts of the total required suitably to reestablish the victims, can be met?


Lester Bowles Pearson: I will be glad to take that into consideration, Mr. Speaker.


Mr. Gerard Laprise (Chapleau):: A supplementary question, Mr. Speaker. Can the Prime Minister tell us if the fact that a contribution of a quarter of a million dollars as assistance to the victims of the disaster that occurred in British Columbia could impair the autonomy of that province?


Mr. Speaker:: Order please. It seems to me this question is more by way of a general statement. If it was intended to be a question, it is far too wide to ask at this time.



HUMAN RIGHTS


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I wish to ask the Minister of Justice a very proper question of national significance reaching into the future. It is based on an act to establish the British Columbia Hydro and Power Authority passed by the British Columbia legislature on March 10 this year. It is further based on section 53 of that act which reads:
Notwithstanding any specific provision in any act to the contrary, except as otherwise provided by or under this act, the authority is not bound by any statute or statutory provision of the province.
Further, in view of that fact that section 56 makes it illegal for employees of the authority to strike, would the minister give this bill very careful consideration when it comes into his hands to make sure there is no violation of the bill of rights and to arrest the development of czardom in Canada?


Guy Favreau: Mr. Speaker, of course this bill will also be given full and careful consideration, like all the other bills submitted to the Department of Justice for the purpose provided by law.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. Auguste Choqueite (Lolbiniere):: Mr. Speaker, I would like to direct a question to the Minister of Industry. I would like him to tell us what is the policy of his department concerning those places where the radar stations are to be closed shortly.


Mr. Speaker:: Would the hon. member put this question on the order paper?


Auguste Choquette: Mr. Speaker, I would like to avail myself of provisional standing order 39A and transfer this question for debate at ten o'clock, if you please.


Mr. L. J. Pigeon (Jolielle-L'Assompiion-Montcalm):: Mr. Speaker, I should like to direct a question to the Minister of Industry, if he will listen to me.
Could the minister tell the house what the government intends to do in order to assist families who are in a critical situation following the decision of the government to close the radar station at St. Sylvestre, in the county of Lotbiniere?


Auguste Choquette: That is exactly the same question I have already asked.


Mr. Speaker:: Order, please. Would the hon. member put this on the order paper.


Louis-Joseph Pigeon: May I raise that question again after ten o'clock tonight?



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. W. H. A. Thomas (Middlesex West):: have a question of great importance to the dairy industry to address to the Minister of Agriculture. Is the minister yet in a position to inform the house what export assistance is to be offered to producers of cheese?


Hon. Harry W. Hays (Minister of Agriculture):: The stabilization board announced this morning that they would be supporting the export of cheese by two cents a pound. This is one cent less than a year ago.


Mr. Clement Vincent (Nicolet-Yamaska):: Mr. Speaker, may I ask a supplementary question?
Does that mean two cents less per pound than two years ago, when the Conservative government was in office?


Harry William Hays: Yes, it was four cents a year ago. We reduced it by one cent and, this year, in line with the current export market situation, we thought it should be reduced another cent.


Some hon. Members:: Shame.


Harry William Hays: The producers of milk will still receive more for their milk than they did under the previous administration.


Some hon. Members:: Hear, hear.


Mr. Speaker:: May I suggest to hon. members that if the questions are to be as political as this we must use a little control. But if these are inquiries for information, then by all means proceed.


William Howell Arthur Thomas: I was about to ask the minister if he could explain briefly the reasoning behind this action by the board.


Harry William Hays: I will be very pleased to do this, Mr. Speaker. In 1961 the price of cheese in Great Britain was the equivalent of 29 cents a pound. The government of the day thought that this price should perhaps be supported by four cents a pound by way of export subsidy.
Inquiries of the Ministry Subsequently the price of cheese increased. In Great Britain it is now over 33 cents a pound, which is quite a bit higher than the 29 cents when the four cent subsidy was required, so it is now considered in the best interests of all that this subsidy should be reduced by a further one cent per pound.


Mr. Vinceni:: Could the Minister of Agriculture tell us whether he has received a request signed by the cheese producers of central Quebec areas regarding that new policy he announced to the house on April 29 of this year? If so, has the minister any comments to make?


Mr. Speaker:: Order. This question is very important, I admit, but nevertheless it is not so pressing as to demand an immediate answer. Would the hon. member put it on the order paper.


Pierre H. Vincent: Mr. Speaker, may I transfer that question for debate at ten o'clock this evening?


Mr. Gilbert Rondeau (Shefford):: Mr. Speaker, may I put a question to the Minister of Agriculture?
Could the minister tell us whether it would be possible for fluid milk producers to obtain a subsidy on cheese manufactured with surplus fluid milk in Canada?


Mr. Speaker:: Would the hon. member put this question on the order paper.


Gilbert F. Rondeau: Mr. Speaker, I shall be glad to raise the question after ten o'clock tonight.


Mr. R. A. Webb (Hastings-Fronienac):: Mr. Speaker, because of the announcement of the Minister of Agriculture a few minutes ago that there has been a further reduction of one cent per pound on the export subsidy on Cheddar cheese, I wonder whether the minister would express his view as to what effect this will have on the cheese producers' board selling our Cheddar cheese to overseas markets.


Mr. Speaker:: Order, please. The question, though important, has not that sense of urgency that is required under the rules as given me by the house. Would the hon. member put his question on the order paper.
Inquiries of the Ministry


Roderick Arthur Ennis Webb: It is very important,
Speaker-


Some hon. Members:: Order.


Roderick Arthur Ennis Webb: Mr. Speaker, I transfer question for debate at ten o'clock.



REQUEST FOR REPORT ON PROGRESS OF COMMITTEE ON DAIRY INDUSTRY

[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I should like to direct a question to the Minister of Agriculture. Can the minister tell us whether the committee of 16 members set up in February, 1963, composed of representatives of the dairy industry in Ontario and Quebec and representatives of all three governments, to study the problems of the dairy industry has met since the date it was set up?


Harry William Hays: Mr. Speaker, I am not sure whether they have met regularly. If it is the committee to which I think the hon. member is referring, it has been meeting quite often.



CANADIAN FLAG


[Stage Direction]
On the orders of the day:
Wallace Bickford (Wally) Nesbitt: Mr. Speaker, I should like to direct a question to the Prime Minister. Has the Prime Minister had any conversations, either directly or over the telephone, on or since last Sunday with the mayor of Toronto concerning the proposed recommendation of Toronto city council for the retention of the red ensign as Canada's national flag; and in particular with respect to questions of federal and municipal jurisdiction in this regard?


Lester Bowles Pearson: No, Mr. Speaker.



BROADCASTING


[Stage Direction]
On the orders of the day:
Mr. Gilles Gregoire (Lapointe):: Mr. Speaker, may I direct a question to the Secretary of State?
Would he be able to tell us today, or in the near future, when he intends to create a committee of inquiry in respect of the C.B.C. and what kind of committee will be created for that purpose?


Hon. Maurice Lamontagne (Secretary of Slate):: Mr. Speaker, I hope to be able to make a statement next week.



FRENCH REPORTERS FOR HOUSE OF COMMONS COMMITTEES

[Stage Direction]
On the orders of the day:
Mr. Eldon M. Woolliams (Bow River):: Mr. Speaker, I should like to direct my question to the Secretary of State. Has he made arrangements to have French reporters at the committees? We have borrowed French reporters for the committee on privileges and elections, a very important committee, but it now seems that we are going to lose one of them. Surely during the next few days the Secretary of State will be able to assure us that French reporters will be supplied so that we can proceed without the undue delay which we had the other day.


Maurice Lamontagne: Mr. Speaker, I made it quite clear yesterday that this question does not come under my own responsibility.


Eldon Mattison Woolliams: Mr. Speaker, I wish to direct a question to the Minister of Justice but in his capacity as house leader and commissioner of internal economy. Is the minister prepared to recommend to that committee that money be made available for French language reporters, so that committees may carry on their work in the House of Commons?


Guy Favreau: Yes, of course, Mr. Speaker; but this matter as the house may know, is under consideration by the committee at the present time.



REQUEST FOR REPLIES IN FRENCH TO QUESTIONS ON ORDER PAPER

[Stage Direction]
On the orders of the day:
['It is very serious.']
Gérard Laprise: Mr. Speaker, may I direct a question to the Minister of National Revenue?
Yesterday, in reply to question 1,045 the Minister of National Revenue stated that 421 English speaking civil servants were attending French language courses. Could the minister urge his own department's officials to attend those courses so that they can provide answers in French to the questions put by us on the order paper?

Mr. this


George James McIlraith: Mr. Speaker, I have always followed the practice of giving a reply in French to a question which is asked in French.



[Stage Direction]
On the orders of the day:
Mr. Albert Bechard (Bonaventure):: Mr. Speaker, I should like to direct a question to the Prime Minister which fills the two basic requirements: urgency and national interest.
Could the Prime Minister tell the house whether the secretaries, in short, all the staff of the House of Commons is going to benefit from the coming long week end?


Lester Bowles Pearson: I think they will, Mr. Speaker, but this matter is really in your hands.


PUBLIC SERVICE
[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I wish to direct a question to the Prime Minister. Could he say when we may expect from the government a report on the work being done by the committee set up to investigate the possibility of collective bargaining between the government and the public service?


Lester Bowles Pearson: Mr. Speaker, I have had an interim report which I think I gave to the house some weeks ago. I will make inquiries to see whether I can get a second progress report, and if so I will be glad to make it available.


Stanley Howard Knowles: A supplementary question. Does the Prime Minister know whether the government will be in a position to bring in legislation on this matter at this session?


Lester Bowles Pearson: Mr. Speaker, I understand that the committee is not expected to complete its work until the autumn. We will be glad to include it if there is room on the parliamentary program, but I suspect it will be difficult to have this matter dealt with legislatively during this session.


TRANSPORT
[Stage Direction]
On the orders of the day:
Mr. H. A. Moore (Weiaskiwin):: Mr. Speaker, I have a question for the Minister of Transport, but in his absence perhaps the
Inquiries of the Ministry acting minister could answer it or take it as notice. Is consideration still being given to representations made by individuals or organizations from central Alberta concerning the installation of distinctively coloured flashing dome lights on locomotives in Canada?


Mr. Speaker:: I do not have much doubt about suggesting that this question be put on the order paper.


Harry Andrew Moore: Mr. Speaker, it concerns every person in Canada.


DOMINION-PROVINCIAL RELATIONS QUEBEC-STATUS AS AN ASSOCIATE STATE
[Stage Direction]
On the orders of the day:
Louis-Joseph Pigeon: Mr. Speaker, may I direct a question to the Prime Minister?
Could he tell the house whether he shares the opinion expressed by a minister of the Quebec government, namely Hon. Ren6 Levesque, to the effect that he drew his inspiration from Mr. Pearson when he stated that Quebec should be an associate state? [Text]


Mr. Speaker:: Order, please. This question is obviously out of order.


Louis-Joseph Pigeon: It is very serious.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Thomas Clement (Tommy) Douglas: Mr. Speaker, a week ago yesterday I asked the Prime Minister whether it would be possible for him to outline at an early date the program of legislation which it is desirable that the house deals with prior to a summer recess. The Prime Minister promised to make a report at an early date and I am wondering whether he expects to do so fairly soon?


Lester Bowles Pearson: Mr. Speaker, I hope that the early date will be tomorrow, when I hope to be in a position to give the house a list of the legislative enactments which it is hoped will be dealt with in this session, either before or after the summer "long week end".



INQUIRY FOR RETURNS

[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Leader of the
Opposition): Mr. Speaker, when the Prime Minister is making his report to the house, would he also let the house have a record of the number of returns which have not been
[Stage Direction]
Inquiries of the Ministry brought down from the last session, and also for the present session, so that we will have a complete record?
Lester Bowles Pearson: I will do even more than that, Mr. Speaker. I will give the right hon. gentleman a return of the record number of questions which have been answered and orders which have been tabled.


John George Diefenbaker: I am interested in those which have not been revealed.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Hon. Theogene Ricard (St. Hyacinlhe-Bagot):: Mr. Speaker, I wish to direct a question to the Minister of Labour. In view of the fact that there are still over 400,000 unemployed in Canada, could the minister tell us what plans he has to provide jobs to Canadians who wish to work, and who at one time believed that the Liberal promises were going to be fulfilled?


Hon. A. J. MacEachen (Minister of Labour):: Mr. Speaker, the statistics released yesterday by the dominion bureau of statistics show a progressive reduction in unemployment-


J.-H.-Théogène Ricard: It is still 400,000.


Allan Joseph MacEachen: -indicating the lowest unemployment figure since 1957. It is our expectation that the continuing application of the policies of this government will effect a further reduction in the unemployment level.


Mr. H. Russell MacEwan (Pictou):: A supplementary question to the Minister of Labour. Since the minister was in the Atlantic area yesterday, may I ask him what plans he has to counteract the still high unemployment in the Atlantic area, which I believe is around 12 per cent.


Allan Joseph MacEachen: Mr. Speaker, the present unemployment of the Atlantic provinces is considerably below that of the best year of the former government.


Gilles Grégoire: Mr. Speaker, I should like to ask a supplementary question. Can the Minister of Labour tell us whether the statistics published yesterday and concerning the number of unemployed in Canada include only those registered jobless people who are drawing unemployment insurance benefits, or whether they also include people out of work who draw social assistance benefits and who are not on the list of unemployment insurance benefits at the present time?


Allan Joseph MacEachen: Mr. Speaker, the statistics released yesterday have been developed as the result of the studies of an interdepartmental committee appointed some years ago to establish a uniform method of measuring unemployment in Canada. That interdepartmental committee was chaired by the former deputy minister of labour and its results were accepted by the former government in 1960. This survey is the monthly labour force survey conducted by the dominion bureau of statistics. It is conducted on a uniform basis throughout the whole of Canada and has been, since the acceptance of this report, regarded as providing the official statistics on unemployment. These official statistics on unemployment are issued monthly in a joint statement to the press, produced by the Department of Labour and the dominion bureau of statistics. If my hon. friend wishes to secure a copy of this report from the Department of Labour, he will find in it a full explanation of the difference between this official measurement of unemployment and the figures of those registered from time to time at the national employment service offices.


Gilles Grégoire: A supplementary question, Mr. Speaker. I feel that the Minister of Labour has not answered the question at all. I asked him whether official statistics on unemployment include only those who receive benefits or whether they also include all unemployed, even those who do not get such benefits.


Allan Joseph MacEachen: Mr. Speaker, the official statistics are the result of a sample survey conducted, and represent an attempt to secure a measure of persons willing and able to work and seeking jobs. The statistics in the national employment service offices for unemployment insurance purposes and for registering unplaced applicants are an entirely different matter and give different results. To get a full explanation of these differences and the different purposes for which each of these sets of statistics is kept, I refer my hon. friend to the report, prepared in 1960, which is still the basis for the issuance of these unemployment statistics.


Gilbert F. Rondeau: Mr. Speaker, I should like to ask a supplementary question. Is the Minister of Labour aware that those statistics concerning unemployment insurance are I would say, almost false?
I request that this matter be considered after the house adjourns at ten o'clock tonight.


Mr. Speaker:: Order. May I suggest that if further details and questions are necessary in regard to the statistics being right or wrong, if such questions could be put on the order paper I am sure detailed answers could be given. Then, if the answer is not satisfactory, the matter should be raised again.


Allan Joseph MacEachen: Mr. Speaker, with respect to the proposal of my hon. friend to refer this matter to the evening adjournment debate, 1 wish to rise on a point of order and suggest that in light of the fact that my hon. friend asked no question at the time, it is quite improper for him to refer a subject matter of this kind to the adjournment debate.


Mr. Heath Macquarrie (Queens):: Mr. Speaker, I wish to ask a supplementary question having to do with the statistics being right or wrong. Knowing the minister's pride in the statistics for the rest of the country, could he tell the house what his plans are to bring the terribly high unemployment figures in the Atlantic region somewhere close to those which apply nationally?


Allan Joseph MacEachen: It is apparent to the government, and to most observers in the country, that unemployment at present in Canada is largely an area or regional problem and is greater in certain areas of the country. I am sure my hon. friend is pleased to note that in the past year there has been a significant reduction in the very high unemployment levels that prevailed in previous years in the Atlantic provinces. We hope that the application of the area development agency, the special tax concessions provided by the Department of Finance, and the work of the newly capitalized Atlantic development board will have a significant effect in reducing unemployment in that area.


Howard Russell MacEwan: A supplementary question, Mr. Speaker. In reference to the minister's answer, may I ask him whether he has now had a reply from the last mentioned board, the Atlantic development board, on the matter of the very high unemployment in the Pictou county area, which was referred to the minister in a question asked by the hon. member for Burnaby-Coquitlam (Mr. Douglas) several months ago? Has he received a reply from the Atlantic development board in connection with the study to be undertaken?


Allan Joseph MacEachen: Mr. Speaker, I shall be glad to draw this matter to the attention of the minister reporting for the Atlantic development board.


J.-H.-Théogène Ricard: Mr. Speaker, a short while ago the minister referred to action taken by his
Income Tax Act
colleague the Minister of Finance. Was the minister referring to the 11 per cent tax?


Allan Joseph MacEachen: No, Mr. Speaker; I was referring to the special tax concessions, which have had the effect of providing substantial, new industries in high unemployment areas.



INQUIRY OF THE MINISTRY

[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. Does the legislation which is now before the provincial legislature of Newfoundland, which would change the name of that province from Newfoundland to Newfoundland and Labrador, require an amendment to the British North America Act?


Mr. Speaker:: It seems to me this also is a question for the order paper. Perhaps that last wise decision of mine should be qualified slightly in that the question asks for a legal opinion.



INCOME TAX ACT

Hon. Walter L. Gordon (Minister of Finance) moved: the second reading of Bill No. C-91, to amend the Income Tax Act.


Mr. Churchill:: Is the minister going to make a statement?


Walter Lockhart Gordon: Mr. Speaker, I made some general comments on the various paragraphs of the resolution which preceded this bill and I think it is unnecessary to repeat these at this stage. I shall, of course, be glad to give a detailed explanation of any clause on which members may have questions as the committee deals with the clauses of the bill in turn.
The bill is based very closely on the resolution approved by the committee of ways and means on April 28. As I indicated at that time, the bill contains a few amendments not specifically referred to in the resolution but these are generally of a technical nature.


Marcel Joseph Aimé Lambert: On a point of order, Mr. Speaker, I wonder whether the minister's colleagues who have access to his microphone would please conduct their conferences outside. We cannot hear a thing he is saying.


Walter Lockhart Gordon: I would be glad to support that suggestion. As I indicated at that time, the bill contains a few amendments not specifically referred to in the resolution but these are generally of a technical nature or designed to correct sections of the law which have been found over the years to have results not originally intended.
The bill contains 25 clauses but a number of these are consequential upon amendments

Income Tax Act
to other clauses. The explanatory notes in the bill itself will indicate the nature of each amendment and I shall be glad to add to these where requested. The interval since the bill was given first reading on April 28 has given those interested in its application a chance to examine all its provisions carefully.
Again this year the Canadian tax foundation arranged to have members of the legal and accounting professions come to Ottawa to examine the bill and as usual this careful scrutiny by expert practitioners in the tax field has proven to be helpful. All suggestions for changes in the bill have been carefully examined and some of these suggestions have been marked for further study before next year's legislation is presented. When the committee reaches the relevant clauses I propose to move one or two amendments based on suggestions we have received which I believe will clarify the meaning of the proposed legislation.
As indicated in the resolution, the bill contains an amendment concerning the deduction to be allowed in 1964 to parents of children age 16 and 17 in respect of whom the new allowances will be paid. It also contains an amendment to modify the definition of a child qualified for family allowance, which is consequential upon payment of the new allowances. When these parts of the resolution were under consideration in committee a number of members asked questions about the administration of the new allowances and the comparison of the position of parents of children age 16 and 17 in Quebec and the rest of Canada.
It was apparent that some members were reluctant to deal with the income tax changes related to the new allowances until more information was available about the allowances themselves. Legislation will be required to provide for payment of the new allowances and also to authorize an additional income tax abatement or equivalent compensation from the federal government to the province of Quebec equal to the amount which the federal government will save because it will not be paying allowances to children age 16 and 17 in Quebec. Since this legislation will have to amend the Income Tax Act in any event to adjust provincial abatements I believe it would be much easier for hon. members to deal with all these changes at one time. In this way members will have before them the details of the administration of the new allowances, the arrangements for fiscal compensation for Quebec and the related income tax changes, and they may then be considered together.

For this reason I propose to ask the committee when we reach that stage to consider amendments to delete two portions of the bill which relate to the new allowances. I shall place these amendments before the committee when the relevant clauses are reached.


John George Diefenbaker: Before the minister concludes, in order to assist the house would he set out in general terms the amendments he intends to move when we get into committee? I think that would shorten the debate on second reading greatly.


Walter Lockhart Gordon: I will be glad to do that. The first change is a technical one to clause 5. I do not know whether hon. members have the bill before them. The amendment is to lines 37 to 39 on page 5 and it adds the following words: "at the time the outlay or expense was incurred and at the end of the second taxation year following the taxation year in which the outlay or expense was incurred". I think it might be easier if I gave the explanation of the proposed technical amendment when we come to that point. On page 6 of the bill an amendment is proposed to lines 12 and 13 of clause 5 which would add the following words: "on the first day of the third taxation year". Again it is a technical amendment suggested by the tax foundation.


Marcel Joseph Aimé Lambert: These do not have any relationship to the family allowance question at all.


Walter Lockhart Gordon: No. The next amendment is to clause 7 (3) and its purpose is to strike out subclause 3.


John George Diefenbaker: Subclause 3?


Walter Lockhart Gordon: Yes. That is the explanation I gave a moment ago, Mr. Speaker, that it will be dealt with more easily, I think, when we come to the legislation dealing with the whole subject. Similarly, in clause 24 there is a consequential change in subclauses 2 and 3. The proposed amendment will delete the redefinition of a child qualified for family allowances.


Mr. Monleith:: What is that last one?


Walter Lockhart Gordon: Clause 24. Those are the only changes.


Marcel Joseph Aimé Lambert: Mr. Speaker, on the second reading of a bill the rules of relevancy demand that we discuss the principle, and immediately there comes to mind the question, what is the principle of this bill? One could say that we must discuss certain amendments to the Income Tax Act. However, there comes to mind some other principles. Are there not any

principles of revisionism or retreat from that so-called bold experiment of last year?
Let us look at what there is in this regard. We have today an amendment to the increased withholding tax which was imposed last year which returns us to the position prior to last year's budget. If we look at paragraph 12 of the resolution, we find some changes with regard to depreciation incentives. There are more revisions in the matter of designated areas, and all that is related to that question. Then, we have possibly one of the most complicated clauses that I have ever seen. I refer to paragraph 16 of the income tax resolution in which we are getting practically a book on the definition of Canadian ownership, in order to plug loopholes that have become apparent in only a few months of administration. Last year it was pointed out very clearly to the minister by speaker after speaker in this house, and by writers outside, that he was starting out on very tricky ground in connection with Canadian ownership. Events have proven that to be so, even from the legal point of view. Later on, I am going to come to the question of whether there has been any change in the equity holdings of Canadians in corporations as a result of this. Certainly, I would appreciate any information the minister can give us in this regard.
We have spoken about the revisions. Now, we come to the extensions. Of course, there shall always be extensions of certain principles in amendments to the Income Tax Act. We have the one dealing with part-time students. It is an extension of the exemptions that have been granted to full-time students a year or two earlier by the previous administration. We have an extension of the exemption granted to a taxpayer for a brother or sister over 21 who is also completing his or her education. Then, we have the particular items dealing with pension plan provisions, which are extensions either in amount or in ambit of the present provisions of the act.
Finally, we come to new departures. These are very limited indeed compared to last year. We have, first of all, contained right in the very first clause of the bill, provision for allowance for legal costs in respect of an appeal against an assessment. At a later stage in the deliberations I certainly want to go into the complexities of the drafting and what is apparent on the face of the bill before us, and what the minister has had to say during discussion at the resolution stage. I will go into the complexities of this because, somehow or other, it seems to me the cart has been put before the horse.
First of all, the act says that you shall add to income the legal costs awarded to you by a court. Then, somewhere else, and
Income Tax Act
you have to go looking for the section, the act allows legal expenses. At the moment I have the 1962 consolidation and the 1963 amendments, so I find it difficult to find this provision, but I will find it if it is there. Then, what confused me no end when I was reading the minister's remarks at the resolution stage, for which I was not present, was the fact he indicated there would be allowed solicitor and client costs including the expenses of a solicitor coming to Ottawa if he accompanied the taxpayer. If you read section 1 of the act it says, "Legal costs awarded to him by a court on appeal", and that shall be added into income. As I say, at first sight this is somewhat confusing and it only points out the difficulties I indicated to the minister at the time of the budget debate.
When you get into these legal costs, what is the yardstick that the department is going to apply? I realize that, in so far as the rule of relevancy is concerned, this has to do with the administration of the Department of National Revenue. I feel the minister might consult with those who administer the act because the administration of the act is just as important as the implementation of the act. What is the yardstick they are going to apply, for instance, to solicitor and client costs? It may be that one solicitor may charge a moderate fee. On the other hand, one may run into what you might call high priced counsel. What is going to be the criterion for determining the adequacy or otherwise of legal costs? There must be some limitation or some yardstick that can be applied to all taxpayers. We know that solicitors' costs vary from province to province as do accountants' fees vary from province to province. There are regional differences, so what is going to be the criterion? I should like to have an answer from the minister.
I was a little surprised when the minister did suddenly retreat, it seems to me, from a very dangerous position on the matter of family allowances. After all, there are pages and pages of discussion at the resolution stage primarily concerning the differences in the allowances to parents in the nine provinces other than Quebec, as compared with a person who is a taxpayer in Quebec, when the children are qualified for family allowances. We will come to that discussion, the minister says, at some date in the future when, I presume, the amendments to the Family Allowances Act will be introduced, along with corresponding amendments to the Income Tax Act. I must say that I would have thought the minister and his colleagues, after the experience of last year, would have learned a lesson to stay out of this type of situation whereby he is trying to make one

Income Tax Act
group of taxpayers in one part of the country subject to one consideration, and the vast bulk of the taxpayers in the rest of the country subject to another consideration.
I for one cannot see why there should be any distinction with regard to education in respect to this proposal for family allowances. After all, so far as the older age groups are concerned, family allowance does provide that they must be attending a school. It would be so simple to propose an amendment to the Family Allowances Act and leave it at that.
If the province of Quebec does already pay an allowance to students in the age groups of 16 and 17 years, provided they are going to school, well, more power to the province of Quebec for doing so, so long as they find the money for it. If they find they have the money to do it, then all very well; but if we say federally we cannot do it because they are already doing it, therefore we are setting up two classes of taxpayers in this country, and to me this is unacceptable.
We are all taxpayers in Canada, all in the same category. Because I happen to live on one side of the Ottawa river as against the other, I can see no difference at all in regard to family allowances. The point is that the children in Quebec shall be treated the same as children in other parts of Canada. They will derive the same benefits from the same source. I can see no cause for complaint.
The act does say that they shall be attending school, and makes provision if they are infirm or otherwise. There are some modifications. Certainly we do not pay family allowance to a child aged 14 or 15 anywhere in Canada, if that child be working. He must be attending school, so why create this distinction after the age of 16 and 17 years?
As a matter of fact, I am very pleased to see the minister withdrawing this nonsense from his income tax bill. To me it is absolute nonsense that we have this distinction. I know some of my colleagues are going to have some more things to say about it and, though the minister has indicated he is withdrawing it, it is still part of the bill and therefore we can discuss the matter. I hope that what the government will hear during this debate will serve as guide lines to it for amendments in the future.
We have seen the three categories of amendments that are being brought forward. Be that as it may, the discussion is not going to be as extensive this year as a year ago. Last year we had difficulty keeping up with the changes and the various versions. There have been no changes this year except the one we have just heard of, and the one contained in paragraph 17 of the resolution concerning the

rate of abatement, which arose out of the Quebec conference between the federal government and the provinces.
Going back to the things about which I have spoken, and dealing first with the withholding tax, I would consider this amendment to the withholding tax a confession of abject failure on the part of the government. I am sure this has been forced on it by the criticisms which came from abroad, particularly from the United States, in the investment field, and I more than suspect from government level. The criticisms have come from domestic sources here in Canada in the investment field. They came in this house, and actually they followed the predictions made in this house last year by both the Leader of the Opposition (Mr. Diefenbaker) and my colleague, the hon. member for Digby-Annapolis-Kings (Mr. Nowlan).
This withholding tax and its combination with the provisions last year, which attempted to induce a greater degree of Canadian control of our corporate entities, has not worked out at all. I do not think you will ever use a stick to force Canadianization, certainly not to the degree the minister was hoping for.
Now, let us turn to the depreciation incentives which were set up under resolution No. 4 and are covered by certain of the clauses in this bill. I am concerned as to why there is presently introduced into the legislation a distinction of fair market value as against capital value of the goods, if 95 per cent of the goods to be used must be new. If they are new, why is there this disparity between fair market value and the capital value? This deserves a full explanation, because last year the minister clearly indicated that this, being by way of an incentive, could not cover used equipment and capital goods. They had to be new in order to induce production.
I can see the philosophy behind that reasoning, but there must be some specific reasons why this distinction of fair market value as against capital value is now introduced, and I hope the minister is able to furnish us with those reasons.
Dealing with clause 13 on page 10 we have here introduced the word "owned" as against "leased", while last year the amendment as introduced spoke only of "leased". Now we come to a further distinction, or the introduction of the word "owned", and again we would like to have a full explanation.
Then we go along to further changes in the depreciation incentives as to designated areas. Paragraph 5 of the income tax resolution, with its amendments in the act show that the minister is actually incorporating into the act a provision to deal with a problem I raised with him last year and about

which he, as I remember, rather casually told me, "Oh well, that would naturally follows".
This deals with what the Minister of Industry (Mr. Drury) has indicated regarding a certain area that is a designated area; but as a result of administrative changes or, shall we say, an improvement in economic conditions it no longer retains that status of designated area. But someone has started to build under this particular provision, and the question arises, does that company or individual lose the advantages of the depreciation incentives? The answer, of course, is no. They continue as though the area had continued to be a designated area. But now the minister is asking us to incorporate it in the act, and I am glad his advisers have seen the light of day in this regard and have not said, quite so casually: Oh, that would follow.
Then we come to the extension of these depreciation incentives to March 31, 1965. This is a two year extension. I recall that last year during the debate on this subject hon. members advised the minister that the period originally set was too short to enable companies to assess the situation, carry forward construction and get into business. I am glad to see these provisions are being extended for two years, but I would issue a word of warning: The minister had better make this the terminal point, otherwise this theory of depreciation would become permanent, and I do not think the hon. gentleman's taxation program could stand it.
I think the minister will agree that as a result of the fixing of the original time period some people have certainly been prejudiced. Many a businessman must have looked at the situation and said: I cannot possibly do anything in two years, so it is no use my going ahead and attempting anything in these designated areas, because we shall not be able to comply with the requirements of the act. If the act had originally included the date March 31, 1967, I feel there might have been more activity under this section. If the minister has any information with regard to the number of firms which have taken advantage of these provisions, or indicated that they are taking advantage of them, we would certainly like to have it. I believe there was some discussion of this on the resolution stage.
I should like to pass, now, to the matter of the degree of Canadian ownership as dealt with in paragraph 16 of the resolution-a subject which occupies a great many of the pages of the bill before us. This is almost a book, and I am wondering, frankly, just to what extent this whole experiment has meant any achievement. I have here an article written by the financial correspondent of
Income Tax Act
one of the Toronto newspapers. The heading is: "No Need for Fanciest Footwork Outside of Dallas Courtroom-One Cent Shares, Other Tax Dodges Averted by Gordon Budget Shift". It is incredible, to me, that some of these things should not have been present in the mind of the minister and his advisers. After all, the minister himself comes from a milieu where corporate financing is an everyday affair, and his so-called advisers last year were supposed to be real experts in this field. They were the whiz kids. Yet these very obvious subterfuges have come to light left, right and centre, the net result of them being that the measures introduced last year did not change Canadian ownership one iota. The corporations concerned were qualified for certain privileges. They were qualifying for withholding tax benefits and they were qualifying for other incentives when, in fact, there had not been one iota of change in the so-called Canadian ownership content.
I come back to this point: I still do not think the minister's provision of last year meant one single thing when it comes to true Canadian control. Canadian residence is the easiest thing on earth to acquire. Being a resident of Canada does not mean one is a Canadian. It was easy to defeat the hon. gentleman's stipulations and it will continue to be easy to defeat them. I will say that the provisions contained in that act respecting the degree of Canadian control, coupled with the withholding tax, have done nothing except show a certain degree of ultranationalism which has created only ill will. It was a most inept way of proceeding.
Now I should like to turn briefly to the principle of paragraph 6 of the resolution, dealing with research. One of my colleagues intends to deal, later, with research in Canada and research elsewhere, and with the rationale behind the amendment to the Income Tax Act brought down by the previous administration in order to encourage research in Canada. This was the essence of the representations which have been made year after year by industry, by the universities, and by various other organizations. It was that we should encourage the carrying out of research in Canada and thereby retain many more highly skilled people in this country. Here we are dealing with research outside Canada. I know we have always had provision of some kind for allowances in respect of research undertaken outside this country, provided it could not be done here in Canada. I agree with that. But this goes beyond such a provision. What interests me most is this: Why was the year 1962 chosen? Why go back? Is there a particular class of

Income Tax Act
taxpayers who are affected? This is retroactive legislation recalling those expenses which were to be given to certain oil concerns last year in the budget. The minister saw the light of day and made them effective from the date of his budget but, again, I should like to have an explanation why the year 1962 has been chosen. If there is a particular group of taxpayers who are affected by this measure, we should know, because a provision of this kind appears to me to be a singular one.
A number of clauses in this bill deal with student expenditures and we shall have something to say about them when we reach those clauses in committee. I come now to my final point. There are certain consequential amendments which are of such a technical nature that I think we had better reserve our comment until we get into the bill itself and are able to deal with them one by one.
I hope the minister has noted the points made at this time both by myself and my colleagues, because we should like very full explanations of a lot of the matters dealt with in the bill. We have followed in the course of reasonable debate amendments to the Estate Tax Act, to the Customs Tariff, and now this particular Income Tax Act. As I said at the opening of my remarks, I think the debate this year is going to be somewhat shorter than last year, and I think the minister will be quite relieved that we will not be quite as tempestuous because, quite frankly, the budget contains nothing much compared with last year. It contains nothing of a radical nature with the exception, as I have said, of the way the government proposes to handle family allowances. Now that matter is being pulled back away from us, so we will have to defer our discussion on it until a later date.
As I said, he is correcting some of the errors of last year, and I think this shows that the minister is a much wiser man this year. However, whether the country has benefited at all from his excursions into income tax provisions, planning and administration is very much open to question.


Stanley Howard Knowles: Mr. Speaker, it was not my intention to take part in the debate on second reading of this bill, but there is one point which I would like to draw to the minister's attention and I am afraid that if I do not do it now I might be out of order at a later stage.
The point to which I wish to refer concerns an omission from the bill. The minister will recall that last session I drew to his attention the need for a new look at the provision in the Income Tax Act regarding the deductibility of trade union dues for income tax pur-

poses. I pointed out to the minister that although this provision is there-indeed, it has been there for a number of years, having been inserted when Mr. Abbott was minister of finance-in the view of many of us it does not go quite far enough. There are many aspects of trade union dues which are prohibited from being included by the provisions of the section in the act covering this point.
When I drew this question to the attention of the minister during the last session he said that he was putting it on the list of the matters he was studying with a view to dealing with them at a later date, and I had hoped that this time the budget would include this provision. After all, there is so little in the budget as it is; here is the chance for the minister to put something in which would at least be noted. Since he proposes to introduce some amendments to the clauses of the bill as we go along, I hope that even yet he might consider bringing in at this session an amendment to make it possible to deduct the full amount of legitimate trade union dues for income tax purposes. As the minister knows, that same heading includes dues to professional and other associations, and I think that same consideration applies to this whole range of dues. I hope that the matter will yet be considered favourably by the minister at this session.


Mr. P. B. Rynard (Simcoe East):: Mr. Speaker, I should like to raise a point of clarification with the minister. Does a student attending a trade school get this allowance? Another point I should like to raise is this. Supposing we have a disabled child of 16 years of age who has been tutored in the home; does this child get the family allowance?


Walter Lockhart Gordon: Mr. Speaker, on a point of order-


Mr. Deputy Speaker:: Is the minister rising to a point of order?


Walter Lockhart Gordon: I was only going to suggest, Mr. Speaker, that when we go into committee it would be easier to deal with these specific questions as we deal with each clause.


Mr. Deputy Speaker:: This is the very point which the Chair wanted to bring to the attention of the hon. member, that if the minister answers these questions he would automatically be closing the debate. Therefore it might be preferable to have these matters brought up and discussed when we reach the committee stage.


Marcel Joseph Aimé Lambert: With this exception, Mr. Speaker. If a certain matter is not in the bill then it cannot be discussed on the committee stage. This is the only time-either on the

resolution stage or now on second reading- to draw attention to the fact that certain matters are not in the bill. Therefore I respectfully suggest that if hon. members wish to make points in that regard they should make them at this stage and not defer them. Otherwise they will have to hold their peace.


Mr. Deputy Speaker:: What the hon. member says is obvious. I was just referring to the particular remarks made by the hon. member who was asking specific questions of the minister, questions which should be asked at the committee stage.


Philip Bernard Rynard: I respect your ruling, Mr. Speaker, but I do not think that this matter is included in the bill, because I referred it before to the parliamentary secretary and I do not believe he answered it at the time.


Mr. R. W. Priilie (Burnaby-Richmond):: Mr. Speaker, 1 should like to mention another matter which is not covered by the bill. I believe I brought this question up when the national revenue estimates were before the house last time. This has to do with the question of income tax deductions for contributions made to political parties, and I just throw out this idea to the minister, who perhaps might consider it at some time.
There is a private member's resolution on the order paper in the name of one of the hon. members for Halifax which is due to be discussed next Wednesday concerning this very subject. Some reform in connection with the payment for elections is a matter which has been talked about before; indeed, I believe it was part of the Liberal party's platform. I would suggest that at least modest amounts should be exempt for income tax purposes. It seems to me that this would be a very easy step to take and that some measure of reform should be instituted in this rather vexed question of campaign expenses. I make that suggestion now for the minister's consideration and I hope that he and his colleagues in the cabinet will discuss this matter before very long.


Mr. C. A. Gauthier (Roberval):: Mr. Speaker, I have a suggestion to make to the minister before he rises to speak, regarding the deduction of the cost of the equipment used by the workers, especially the loggers.
I would have liked to see in those amendments something which would have made it possible for bush workers to deduct from their net income the cost of the equipment which they use.
In my opinion, this is a gross injustice toward the small wage earner. While all the big companies are allowed to deduct the cost
Income Tax Act
of their equipment, there is absolutely nothing in the legislation to do justice to the small wage earners, allowing them to deduct the cost of their own equipment.
About ten years ago, in the forest industry of our area people were not as hurried as we are now and equipment was less costly. But now, things have reached a point where a bush worker has to spend substantial sums of money-between $500 and $600-to be suitably equipped, and that before starting to work in order to earn about $1,000. He is required under the Forestry Act to buy a power saw, special clothing and so on. So that a bush worker has to contract a debt of $400, $500 or even $600 before he starts to work.
That is why I am asking the minister to put in an amending clause that would enable the bush worker to deduct the cost of that equipment.
Some might say: Well, that equipment enables bush workers to earn more.
If the cost of production or the price of a cord of wood had increased because of this equipment, we would not insist so much. But the price of a cord of wood is still the same as it was 10 years ago, yet the heavy burden of this modern equipment is being imposed on our bush workers. I think this is a glaring injustice. I again ask the minister to provide an amendment along those lines.
The situation has become urgent. Even last winter, when salaries were supposedly decent, there were lumbermen who left the forest to collect meagre unemployment insurance benefits, because that was more than they were getting cutting wood in the forest.
I hope that the minister will take note of that situation.
I should like to raise another point with regard to equipment, that is the farmer's equipment.
I fail to understand why an amendment could not be introduced to assist the farm people in this regard. That is a very efficient method of assisting the farmer, by allowing him to deduct from his income the cost of the new and modern machinery he needs.
I think that such an amendment would be extremely important also as far as farming is concerned. I ask the minister to consider the matter and to introduce some measure which would bring a few extra benefits to our farmers, the same as we do very generously in the case of the big companies.
I hope, Mr. Speaker, that the minister will take these points into serious consideration.


Mr. Lucien Plourde (Quebec West):: Mr. Speaker, I was anxiously waiting for the day when I could express my ideas against this Income Tax Act. As a piece of legislation, it is the worst mess one could find. One cannot

Income Tax Act
make head or tail of it. It seems to me that the laws of a country should be written in short, simple terms, in order to be understood and obeyed. But today our legislation is so muddled and complicated that only a lawyer can understand it. In my opinion, the Income Tax Act is one of the most discriminatory and ambiguous acts we have in this country. And yet if the people complain and shout "enough", the government is taken aback.
To avert such misunderstandings, I would suggest that the government revise this act as soon as possible and make it clearer by using very plain but precise terms, without forgetting to grant, for charitable donations, a uniform exemption throughout Canada; whether it be of 10 or 8 per cent does not matter, but let it apply to all Canadians without anybody having to show receipts for his contributions.
Those in charge of charitable organizations should be left alone once and for all, and the pestering of parish priests should be stopped by means of a new and better legislation. No member of this house would tolerate the inconvenience imposed upon our parish priests who are very busy and already overworked, and who are asked to do this free of charge, of course.
The best solution would still be to grant a $3,000 exemption to single people and a $5,000 exemption to married people. This would eliminate a lot of red tape and save on stationery. I think that in the end, the government would not lose so much and tax-papers, as well as the clergy, would be very grateful. Why require receipts if officials are to decide the amount to be accepted, on orders from the deputy minister of national revenue or from any other authority?
On the basis of all the complaints I have received from my riding, that of Quebec West, I have come to the conclusion that the taxation division of the Department of National Revenue has accepted the $100 deduction as a standard, regardless of the income. I am speaking of the people who are in that category, those whose total charitable donations were not allowed. It seems to me that the department has been more strict in the case of single people, as if the latter did not have to think about their future or give to charity.
I should like to give you just a few examples to illustrate the complaints I have received from my riding. There is the case of a bachelor, Mr. Dollard Wiseman, 310 Marie de l'lncarnation st., Quebec city 8, who on April 11, wrote me as follows:
Two days ago, I received by mail from Ottawa, a notice of assessment informing me that, after examination, my claim for charitable donations had been reduced to $200. In my federal income tax return for 1963, I claimed a $424 deduction from a salary of $4,240.

Hon. members, charity is a personal matter. However, what I do not understand is that a Canadian government bureaucrat, who happens to be your employee, since you are a member of the House of Commons-and since you are unquestionably the boss, being a servant of the people-takes the liberty of managing his business without your consent.
It is true that I am single, but, good heavens, I do not have to pay the piper. We are allowed to deduct 10 per cent for charitable donations, and I find that the law is not adhered to in my case.
Mr. Speaker, the taxpayers can see that the government does not even abide by its own legislation; then, why would you have them observe such legislation? Why they, and not the government?
I hope that you will do your best in order that I may be granted my 10 per cent. I am sending you the notice and the said cheque.
After consideration, your claim for charitable donations has been reduced to $200.
The following is extracted from another letter which he wrote me.
Charitable donations can be made to religious institutions as well as to parochial or other organizations. I would like you to tell me why I am deprived of my right, that is 10 per cent for charitable donations. My question can be summed up as follows: Is every Canadian denied his 10 per cent and is the amount claimed reduced to $200, as in my case? If so, I have proof to the contrary. This confounded red tape in Ottawa about single persons in Quebec must stop.


Mr. Deputy Speaker:: Order. For the last few minutes, I listened with much interest to the speech of the hon. member for Quebec West.
I know he has a point to bring before the house and we all listened to him with much interest, but I think his observations are not directly relevant to the matter the house is now asked to pass.
He must relate his comments to one specific point, that is to the bill now under discussion. Besides, that is the usual practice in the house. It is not only a matter of making comments generally related to the field of taxation or national revenue. Comments must be specifically related to the bill we are discussing.
It is a bill amending another act, and the speech of the hon. member must relate to the bill amending the act, and not to the act which is amended.
Consequently, I request the hon. member to relate as much as he can his remarks to the bill now under study.


Lucien Plourde: I understand that I am infringing the rules of the house with my claim concerning the income tax. I have taken this opportunity to put forward the rights of my voters because I wonder when the opportunity will be given to me to raise a grievance against the Department of National Revenue

or to make new suggestions which would enable it to take action along those lines.
However, I will not say more about it today. I shall resume my remarks some other time, but I could not let Bill No. C-91 now under study pass without exposing the way in which our people are treated by the income tax office.
Consequently, I move, seconded by Mr. Gauthier:
That Bill No. C-91 be not now read a second time but that it be decided that in the opinion ol this house, an investigation should be ordered regarding the doing of the inspectors of the Quebec city office of the Department of National Revenue.


Walter Lockhart Gordon: Mr. Speaker, I would suggest that this amendment is out of order.


Mr. Deputy Speaker:: If no additional comments are forthcoming with regard to whether or not the proposed amendment is in order the Chair is prepared to make a ruling. I feel that the proposed amendment is out of order because it is not relevant to the matter now before the house. I would simply refer hon. members to May, sixteenth edition, page 554, where it says that an amendment is out of order if it is irrelevant to the subject matter or beyond the scope of the bill. This amendment deals with matters relevant, I suggest, to the administration of the Deparment of National Revenue and not relevant to the bill now before us. With regret I must therefore say that the amendment is out of order.


Mr. Lloyd R. Crouse (Queens-Lunenburg):: Mr. Speaker, I wish to speak only briefly on the bill. It is not my intention to delay the minister in presenting his arguments. However, since holding his present portfolio I believe the minister has been toying with the possibility of discouraging foreign investment in Canada. Instead of discriminating against foreign investment I believe he should reconsider his views and do what he can to encourage capital investment from any country. Certainly we in Nova Scotia have seen considerable expansion in industrial growth due to capital which has been brought into our province from the United Kingdom, and especially by Swedish interests. I should like to leave the thought with the minister that he should not worry too much about where capital comes from because once it is invested in Canada these companies generally become good corporate citizens.
I believe further that we need to encourage Canadian investment in common stocks. According to recent reports Canadians today have something like $800 million or more in their savings accounts. This is a larger 20220-207
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amount in reserve than ever before in the history of the nation. If we are to encourage the release of this capital we must make investment in Canadian common stocks more attractive to Canadians.
At the present time investors are allowed to deduct 20 per cent of the amount of their dividends from common stocks when paying their income tax. This encourages Canadians, of course, to participate in buying the common stocks of Canadian companies. But if we are to release the great fund of money at present resting in savings accounts I suggest that the minister should give some thought to increasing the percentage of dividends on common stocks, which is deductible for income tax purposes. I believe it could well be increased from the present 20 per cent to 30 per cent or even 33J per cent. If this action were taken it would provide a greater incentive for Canadians to participate in the economic growth of this country.


Mr. Barry Mather (New Westminster):: Mr. Speaker, in a very few words I should like to add a British Columbia voice in support of a proposal put forward a few minutes ago by a speaker from a Quebec constituency. He and I would both like to have the minister give serious consideration to an amendment to the income tax regulations which would permit the deduction from income of the moneys which have to be spent by producers such as loggers, fishermen and farmers on special equipment, tools and clothing in order to carry out their functions. I believe that such deductions are already allowed in the United States. I can see no reason why we should have one set of rules enabling the operators to make such deductions for income tax purposes, and yet the actual workers involved in the same industries do not have this benefit. I strongly urge that real consideration be given to such an exemption. There are many thousands of workers in British Columbia who would benefit from it and who now lose because of the lack of it.


William Howell Arthur Thomas: Mr. Speaker, there are a few comments I should like to make in this debate. First of all, I would be prepared to commend the minister, at least in some respects, upon his aims and objectives. No doubt every government that has ever undertaken to govern this country has tried to do its best for the citizens and so far as possible, to provide equity as between citizens. I take it that this budgetary effort is no different from others in this regard.
Now, of course, the job of the opposition is to find weaknesses in these budgetary efforts. We find in this one some areas in

Income Tax Act
which we have no difficulty at all in finding some glaring weaknesses. One area of the budget which we can commend is the deduction of tuition fees for full-time students, as well as for part-time students. This I believe is a provision that will meet with general acceptance across this country and will be of considerable assistance to our university students, as well as to our high school and technical school students.
The favourable adjustments in the depreciation allowances to encourage the establishment, development and expansion of industry in areas where unemployment still persist is also a move in the right direction and should be commended. Anything that can be done to create more job opportunities in Canada certainly should be done, and I think will meet with ready acceptance by all citizens. The adjustment of the depreciation on heavy machinery at this time will be good news to many of our contractors and we must admit that contractors across Canada are having their difficulties at this time. This machinery is given a terrible beating and it wears out very rapidly. The increase in the rate of depreciation from 30 per cent to 50 per cent will, I am sure, be very welcome news to many of the people in the contracting business.
There is not much in the budget anywhere for agriculture. These amendments are no exception. I should like the minister to give serious consideration to one item which, as it is presently applied, is not fulfilling the purpose for which it was intended. I refer to the depreciation allowances provided for agriculture. One of the expenses on farms across Canada which is expressly prohibited from being disallowed, is the expense associated with clearing brush. In the newer areas of the country, the clearing of brush is done for the purpose of plowing up that land. The Income Tax Act treats this as a capital expenditure and, in some respects, I would agree it may be capital expenditure. In so far as the older parts of Ontario are concerned, however, where the land was cleared 100 years ago and has grown up a number of times with succeeding crops of thorn bushes, the clearing of those thorn bushes is not a capital expenditure. It is, in effect, the clearance of a weed crop although it is only undertaken every year or two, whereas weeds may need to be dealt with every week.
The eradication of thorn bushes in southwestern Ontario is a current expense of the agricultural industry in that area. It may only be done once a year or twice a year, or one might not cut these bushes for five or ten years, but it is a continuing current expense on these farms in southwestern Ontario.

I feel that where expenditures are made for that purpose, certainly the intention of the act is that a deduction should be permitted for income tax purposes.
We come now to the provisions that are being made for educational assistance to our 16 and 17 year old students. We have been warned by the minister that this problem may be dealt with in a different way. We have been warned that certain amendments will be made to the act. I consider this very welcome news. This is a thorny problem and it was debated at length during the resolution stage of this legislation. Since we do not know what will be contained in the amendment, since we cannot possibly know, I see no alternative but to make our wishes known at this time during second reading of the Income Tax Act bill.
The discussion of this problem the other evening was extended and most interesting. It seems that the government is undertaking to mix two things. This point was brought out during the discussion the other evening. It is the intention to provide educational assistance for boys and girls during their 16th and 17th years. Normally, during those years they are in high school and the expenses for keeping them in high school are great. This legislation fits in very well with other efforts, the scholarships, student loans and other financial measures that are being taken to assist our students.
But when we try to deal with this project as educational allowances, immediately we run into constitutional difficulties. The minister has admitted this, and it is generally admitted. We are faced, therefore, with alternative policies. We can continue or attempt to continue with this project to provide educational grants. We can keep trying to get around all of the constitutional difficulties involved, or we can take the simpler way, which is to extend family allowances from the present level of 16 years of age to the level of 18 years of age.
As was so well pointed out by the hon. member for Peace River (Mr. Baldwin) the other evening, the Family Allowances Act already provides that allowances may only be paid to children who are in regular attendance at school. The act reads as follows:
The allowance shall cease to be payable if the child does not regularly attend school as required by the laws of the province where he resides, or does not receive training that, in the opinion of the competent educational authority designated by such province-
-and so on. It goes on to deal with Indians and Eskimos, and other special cases, but it is not the intention of the legislation to pay family allowances to children who should be in school and who are not in school, and it

is the intention of the proposed project for providing assistance to children aged 16 and 17 years that they should not receive any assistance unless they are going to school.
It therefore follows that only school children can be paid family allowances under the Family Allowances Act, and if we expand the act to take in boys and girls in their 16th and 17th years it would accomplish the very same thing in a general way, that the proposed educational grants would accomplish. I will try to make this point clear. If we extend family allowances to the 18th birthday this will cover children who possibly will always be dependant, crippled children who would not attend school, and retarded children. However, the same regulations which now apply to boys and girls aged 14 and 15 years, namely that they must be in school, would apply to boys and girls 16 and 17 years of age.
We would get almost exactly the same effect by an extension of family allowances as we would get through educational allowances, and I believe the cost will not be significantly greater. It would be approximately the same, and we would get away from all of the constitutional and other difficulties, and from the confusion into which the educational grants proposal is leading. I think this has been admitted by all concerned, and I would make a plea to the minister and the government to stay away from the educational grant concept and make a straight, simple extension of family allowances to the 18th birthday. We will then have the parents all across Canada, the children all across Canada and the taxpayers all across Canada treated in exactly the same way. I am sure this would be much more satisfactory to all concerned and would be well received by all concerned.
So far as the program which is now being carried on in Quebec is concerned, a similar program might be carried on in any other province which wishes to undertake it, but I want to say that an allowance of $20 for high school students aged 16 and 17 years is not too much, and other provinces may wish to supplement the family allowances if they are increased to the extent proposed, of $10 per month for children aged 16 and 17 years. The proposed allowance is not too much, even if it were doubled by some of the provinces.
The family allowance method is a much simpler way of dealing with this problem, and I hope the minister and the government will stay away from these proposed educational grants and give a straight extension of family allowances to the 18th birthday.


Mr. Jean-Louis Freneiie (Porineuf):: Mr. Speaker, I will not take more than a few 20220-207i
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minutes to call to the minister's attention a problem which is very close to my heart. It concerns the little people who, because they get a few hundred dollars interest a year on capital they saved the hard way, are penalized by having to pay income tax on that amount.
We admit that, since the minister assumed his post, we have noticed his very definite intention to give Canadians the possibility to regain control of the country's economy or at least to take an active part therein. In that light, I would be inclined to believe that it would benefit Canadians to exempt from income tax the interest paid on the savings of small people up to-I take the liberty of giving a figure-$250 or $300, for instance.
There is, of course exemption of 20 per cent on Canadian corporations dividends but, in my opinion, it is not enough to stimulate savings as we should stimulate them.
Economists are always preaching thrift, putting it as a desirable virtue. I think they are right; looking back upon the past, I notice that countries like France may have avoided, at times, economic disasters precisely because of the small savers, especially the French farmers.
In my opinion, this is a most appropriate opportunity to ask the minister whether it would not be advisable to consider granting the small savers certain tax exemptions on the interest they receive.
We talk about investments. I can well understand that it is difficult, if not impossible, for Canadians to make investments if they are not encouraged to save their money.
I honestly believe that, there, the Minister of Finance (Mr. Gordon) would really have something to encourage workers and farmers to save, those people, as I said, to whom savings would come in handy.
I do not wish to stand up for capitalists who are paid such a tremendous amount of interest on their equally tremendous investments. I want to speak for people who have but a little sum of money put aside and who, in my opinion, deserve to be encouraged.
Before returning to my seat, I also wish to say that I am in complete agreement with the requests made by the hon. member for Roberval (Mr. Gauthier) in respect of the exemptions which should be granted to certain workers such as farmers and bush-workers, especially as regards the purchase of special tools and equipment.
I feel that those citizens are now suffering an injustice. It may well be that the problem now facing them has never been considered. That is why I think the time has come to

Income Tax Act
deal with this particularly delicate and interesting problem which workers and farmers are up against.


Mr. L. P. Antoine Belanger (Charlevoix):: Mr. Speaker, I cannot but echo the opinions of my fellow citizens in the county of Charlevoix, and I would say, throughout Canada who are dissatisfied with the present Income Tax Act.
As the Minister of Finance announced his intention to introduce a few amendments to this legislation, I might submit a few myself.
To my mind, the present act has become obsolete, in respect of deductions, for instance. Admissible deductions for single and married people, which are $1,000 for a single person and $2,000 for married people, are no longer justified at such a low rate. The reason I raise this point is that the exemption was set about 20 years ago; at that time, it had been estimated that the amount of $2,000 was the absolute minimum to support a family and that it should not be taxed.
But since, the cost of living is probably three times, if it is not four times, as high, yet we still have the mere exemption of $2,000 for a family and $1,000 for a single person.
That is blatant injustice, nonsense which should be rectified as soon as possible. Such a move would certainly be well received by the Canadian people, and this government would certainly gain a great number of followers.
I also would like to mention another point, already raised by other hon. members who preceded me. As a former workman, who had the opportunity of seeing what happens in plants and factories, I was able to establish that there was some discrimination with regard to tax deductions for tools.
A doctor, or any other professional man who buys the tools needed in his profession is allowed quite important deductions. Yet, a workman who has to get a tool chest in any plant, which often costs him $200, $300, $400, $500 and even $1,000-and I must say that today, you do not get a very good tool chest for $1,000-is not allowed any tax deduction for that equipment.
This proves that the act, which might have been good 20 years ago, is now quite incomplete in this field, which results in serious discriminations. And I would like the Minister of Finance to think of those discriminations when he introduces his amendments.
I would like to point out another very serious injustice arising from the present Income Tax Act. I am speaking of succession duties. These are most unfair, because they only affect small businesses. Big businesses

do not pay succession duties, for they do not die, they are passed along from shareholders to shareholders. On the other hand, small family industries are handed down from father to son and suffer immensely from the estate tax, so much so that sons are often obliged to sell the family business in order to pay the tax.
That is particularly unfair. Especially when people had the courage and the ability to build an estate to hand down to their children when they pass away, they do not deserve to be treated that way or, at least, they should be spared just as are the big businesses.
I only wanted to make those few remarks because as far as the bill itself is concerned, as I have just stated, I have nothing much to say, for it does reduce taxes. As long and as often as the government will propose tax reductions, it may be assured of my support.


Mr. Mac T. McCuicheon (Lambion-Kent):: I have no intention of taking up much time or of delaying the progress of this measure but I should like to repeat, as the hon. member for Middlesex West (Mr. Thomas) has pointed out, that there is opportunity in this legislation for discrimination. I direct the minister's attention to clause 3, which has to do with the end of the taxation year and the period within which payment may be made into a registered pension fund or plan. An employer is now to be permitted to make payments into these funds 120 days rather than 60 days after the end of the taxation year, whereas the ordinary individual is limited to 60 days. It seems to me that under this provision there is a chance of discrimination taking place, and I direct the hon. gentleman's attention to it although I am abundantly certain that this was not his intention.


Jay Waldo Monteith: May I call it five o'clock?


The Acting Speaker (Mr. Batten):: Does the house agree to call it five o'clock?


Some hon. Members:: Agreed.


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



MOTIONS FOR PAPERS


[Stage Direction]
The house resumed from Thursday, May 7, consideration of the motion of Mr. Martineau:
That an order of the house do issue for a copy of all maps drawn up or deposited with the chief electoral officer or the representation commissioner pertaining to the proposed redistribution of electoral boundaries in Canada.
Eldon Mattison Woolliams: Speaking in support of this motion, and as one who seconded the motion, I may say frankly, at the outset, that I should like to be a little better prepared than I am this afternoon. We have in the last few days been busy in the committee on privileges and elections.
Nevertheless, I should like to say a few words in relation to these documents-some call them maps; others call them mathematical exercises-and in so doing I wish to refer to the provisions of the Representation Commissioner Act which was passed in 1963 and assented to around December 21, 1963 just before the Christmas recess. I doubt that even when another related bill, the bill dealing with redistribution, was before the house-and it passed second reading-many hon. members realized just what that bill said, for that matter, what the Representation Commissioner Act said. Section 8 of that act is right to the point:
As soon as possible after the completion of any decennial census, or in the case of the census taken in the year 1961 as soon as possible after the coming into force of this act, the commissioner shall prepare maps showing the distribution of population in each province and setting out alternative proposals respecting the boundaries of electoral districts in each province, and shall thereupon supply such maps to the appropriate electoral boundaries commission.
Thus, the act provides that the representation commissioner shall provide maps referring to electoral districts and, in particular, maps related to the year 1961. There have been a great many words spoken about these maps. In fact, the hon. member for Winnipeg North Centre (Mr. Knowles) had this to say-and I know we are not supposed to quote from Hansard during debate if an hon. member objects. However, if he will waive the rule I will read the exact words which were used by him on April 30, as reported at page 2780:
I am told there are no maps so far.
This was said in answer to a question put by the hon. member for Rosthern (Mr. Nasserden).
Therefore one cannot say he has seen the maps. However, in response to the suggestion that was made I have seen some of the sketches that are referred to as transparencies, consisting of lines drawn on transparencies that are put over old maps.
The hon. member for Winnipeg North Centre is a very meticulous man in the use of his language. He has set out that he has absolute confidence in the representation commissioner, as I think we all have, as far his duties are concerned, provided those duties are free from any political bias or prejudice, or from any influence exercised by
Electoral Boundaries Maps any minister by whom he takes his directions. So that when hon. members come before the house and say to you, Mr. Speaker, and through you to the house, that there are no maps, then I do not know what kind of argument they are prepared to present. The hon. member says in one breath that he has seen something. To me he is just mincing words. I know that on many occasions the hon. member for Winnipeg North Centre gets very pious, particularly on this subject. He is one who has said down through the years that he wants to take redistribution out of politics. I think there is one thing about which this party can be proud, and that is that we have stood for that for a long time. The reason-and I might as well make this point now-is-


The Acting Speaker (Mr. Batten):: Order. I must point out to the hon. member for Bow River (Mr. Woolliams) the very narrow limits of the debate at the present time. The question we have to decide is whether or not the maps in question should be tabled.


Eldon Mattison Woolliams: I appreciate the rules and the narrowness of debate, Mr. Speaker, but I read the debate thoroughly at noon, and with the greatest respect the hon. member for Winnipeg North Centre, as reported at page 2778 of Hansard, took up two pages, if that can be translated into time, dealing with taking redistribution out of politics. I am just answering his argument. He having opened up the subject I am sure, in all fairness to the Chair, that you would not want me to narrow the debate beyond the limits of the debate at the present time.
Throughout the years the Conservative party has stood for independent redistribution and for taking the matter out of politics. The reason of course is that either in 1953 or just before, the province of Saskatchewan lost one, if not two constituencies, including that of the Leader of the Opposition (Mr. Diefen-baker), who was the only Conservative member of the house at that time outside of Calgary in western Canada. So we have had some experience of this kind of gerrymandering, and when we have to rely on the minister who is piloting the particular act in question, and who is behind the drafting of these maps, we are naturally a little suspicious as to what might occur in the future, and have to look into the matter very carefully.
Coming back to the point about the maps, I say that there are maps and that every hon. member in the house who has seen these sketches, or whatever my hon. friend from Winnipeg North Centre wants to call them, he himself, as I say, having seen them, will

Electoral Boundaries Maps say that they are maps; make no mistake about that. If they are not maps, then the taxpayers of Canada are paying the representation commissioner money for something he should not be doing, because clause 8 of the bill requires that maps be drawn.
The next question is this. If these maps are going to be withdrawn, what is the secret behind it? Why did the minister in the last debate and during the debate on the redistribution bill, when asked whether there were maps, become white hot? Why does he lose his temper on so many occasions? He loses his temper because he has something to hide, and that is why he is opposing this motion at the present time.


George James McIlraith: May I ask the hon. member a question?


Eldon Mattison Woolliams: Yes, I would be pleased to answer it.


George James McIlraith: In the hon. member's last reference to losing tempers, is he speaking for himself?


Eldon Mattison Woolliams: No, I am speaking for the Minister of Transport (Mr. Pickersgill), the man who was secretary of state but was demoted. He is the man I am speaking about. I am not speaking about the member for Bow River or about the minister who has just interrupted me.
Many of us have seen these maps. I should like to ask who hired the staff of the representation commission? Was there any influence exercised by the Minister of Transport, the former secretary of state, in that regard? Did he recommend these people as staff? Is this matter above politics? These are questions we would like answered. There are also other questions I should like to ask. I have been interested in the attitude of certain newspapers with regard to their suspicions about these maps, and I will read from an editorial in that regard in a minute or two. Why are these maps being hidden? Why are we suspicious? The answer is that about 65 to 75 per cent of the constituencies of this country are going to be affected, some more than others.
I have not had an expert go over these maps, and that is why I want them placed before the house so that experts can take a look at them. It would be a strange thing if we were to see that the constituencies of the frontbenchers of the Conservative party have either been wiped out or so altered that they cannot be recognized. One perfect example in this regard is the constituency of Perth, which is an old, historical riding. Would it not be strange if that constituency were wiped out?
What makes it so strange is the sales job which has been done by the former secre-

tary of state who was demoted to Minister of Transport. He keeps telling the newspapers of this country: "Oh, don't worry; we believe in a tolerance". This tolerance, Mr. Speaker, is a lot of tommyrot. I say that, because it may be as low as 1 per cent, or as high as 20 per cent, or as low as 20 per cent, or be a decimal point of 1 per cent, or exist not at all. I am dealing with just one map, in spite of what my hon. friend from Winnipeg North Centre has said, and I suppose he will want to hear what I have to say.
The fact is that there are maps. I looked up the word in the dictionary, and it means a geographical area with boundaries. Maps show boundaries, places and populations. They show geographic descriptions of various parts of the country, including mountains, and I will have something to say about mountains later.
What about the constituency of Perth? The constituency of Perth is populated by about
70,000	people, so you would not expect it to have been changed at all. But when we ask about this the government say they have either applied the metropolitan method, whatever method that is, or the other method. The other method is the urban method or the corporation method.


Mr. Rapp:: The corporate method.


Eldon Mattison Woolliams: Yes, the corporate method; I thank my hon. friend from Humboldt-Mel-fort-Tisdale. But whatever method it is we want it described. Why are the members of this house denied this information? I think the Liberal members of this house would also be most interested in that question, and I trust that they will raise it at their caucus. If they have not been permitted to see the maps their opinions might change. Many hon. members have seen them. Why should I have the privilege of seeing them, when you are denied that privilege?


An hon. Member:: I don't want to see them.


Eldon Mattison Woolliams: If you don't want to see them, you may be very fortunate. I do not know the details of the riding you represent. The riding of Perth has the exact population; many of these ridings have the exact population. I have always taken this position. Certainly there are many places which have a population as low as 15,000 or 20,000. Highly populated constituencies exist in the city of Toronto and in the city of Montreal, while some of our farm communities and some of our rural communities in Ontario and Quebec are less highly populated. If you want to change the situation to bring the formula closer to representation by population, why change those constituencies which fit into the

formula? How strange it is that these constituencies happen to be represented by the front bench members of the Conservative party.
That is the reason I ask the ex-secretary of state, now the Minister of Transport, to produce these maps. I say to him, what has he to hide? I am sorry he is absent today-in fact, many of his colleagues seem to be absent-because I would have liked him to explain to the house at this time what he is hiding. How can we believe that this redistribution is above politics, prejudice and bias? I know the newspapers say that no one will question Mr. Castonguay. That may be very true. But in all fairness to that Canadian- and I have expressed my views about Mr. Castonguay, and there is no question that he is above reproach-the fact is that he has a job to do and under the act he is to be paid $25,000 a year. What influence may be brought to bear on him? What influence has the Minister of Transport, formerly the secretary of state, exercised in this regard? Who influenced the hiring of the staff in that respect? Who decided whether we would apply the metropolitan or the corporate method when bringing about a redistribution in this country? What consideration has been given to the historical value or the historical facts of these constituencies?
Mr. Speaker, let me go back to the constituency of Perth, the place where the plays of Shakespeare are to be relived on this continent. Even the United States, including Hollywood, is looking to that area in which to relive Shakespeare's plays. My colleague represents that constituency. If its borders are correct; if it has the proper population; if it fits into the formula, why wipe out that constituency? What influence has been exercised in this regard? Let us take into account the factors of geography. One may say these ten commissions which are to be set up will be above prejudice and bias and will solve the matter; but the fact is that there will be no hearings before those commissions until judgment is rendered.
I have the greatest respect for members of the judiciary. As a member of two bars in this country I have respect for judges of this country, but surely when the matter comes before them and somebody steeped in the atmosphere of redistribution, who understands the subject, lays on their desks maps drawn and prepared without proper scrutiny, or at least the scrutiny necessary to find out what influence might have been exercised, they are going to be mere rubber stamps. Therefore we say they may not even take into account the geographical features involved.
Let us consider my own riding. The newspapers say one must not mention his own riding. This is said by the Calgary Albertan.
Electoral Boundaries Maps This newspaper says one must not mention his own riding because a member has a personal interest in the matter. Well, Mr. Speaker, I have a personal interest in the matter and I have a personal interest as far as all members of parliament are concerned who agree with my point of view, because I do not think this matter is above politics at the present time.
One map includes Jasper, stretched right out to the constituency of the hon. member for Jasper-Edson (Mr. Horner). The centre of Bow River is the city of Calgary. If an election was called in the winter, the only way you could get into Jasper from Calgary, Alberta, or any other part of Bow River, would be by helicopter; and we have not those fat electoral sums of money that other parties appear to have and boast about in this regard. Therefore the only way I could get into my own riding to electioneer or process the work I have to do would be to drive to Edmonton, and then through Edmonton come into Jasper through the back door. I say, Mr. Speaker, these maps should be subject to scrutiny and laid before parliament so we may look at them.
Supposing the commission set up in Alberta does not understand the geography of certain ridings? No one man in any province can understand all these things. They have hired a group of university students in the city of Ottawa. When I asked two or three of them if they had university degrees, they said they had no particular training. They just took a group of people living in a certain spot-they did not care whether you had to cross the Cascade mountains-and the idea was, "There are so many people living in this area. Go to it". If this is the kind of redistribution we are going to have, one may well ask whether it is above politics.
I have the greatest respect for some newspapers of this country. I am not saying that about all of them, and I am going to attack particularly some of the western newspapers which have not yet grasped what is involved in this question. I read an editorial which appeared on May 6, 1964 with reference to this particular subject. It said, "Mr. Wool-liams protests too much". I intend to protest on this subject today and tomorrow and continually, Mr. Speaker, if necessary, because it affects not only my riding but, I repeat, probably 85 per cent of the ridings in this country. The main thing for which they spanked me in the editorial was this. They said that surely if the right hon. Prime Minister (Mr. Pearson) is to appoint one member to the commission to look at these maps, and

Electoral Boundaries Maps the Leader of the Opposition (Mr. Diefen-baker) is to appoint one member to the commission to look at these maps, the member from Bow River and other Conservative members will be protected. The Calgary Albertan does not even know we have been supporting that section of the bill and we are opposed to the amendment of the hon. member for Winnipeg North Centre (Mr. Knowles), so how can they be unprejudiced and unbiased? They are very quick to come to the support of the former secretary of state, now the devoted Minister of Transport, but they wrote this editorial without knowing the facts. Everything I read here in reference to this matter shows they are not in possession of the facts.


Stanley Howard Knowles: How about reading the editorial?


Eldon Mattison Woolliams: I do not want to take the time to read it. You can go into the reading room and read it for yourself. It is an editorial in the Albertan of May 6, 1964. It says that members of parliament will be looked after because the member for Bow River and the other Conservatives will have a member appointed to the commission by the Leader of the Opposition, and the Liberals will be looked after because the Prime Minister will appoint a member to the commission. We support that; but that is not the section of the bill about which we are concerned and which the government, having reversed their position, are now supporting.


Stanley Howard Knowles: Read the last two sentences.


Eldon Mattison Woolliams: I have not time to read them. You can read them later, if you wish. I am very glad, Mr. Speaker, the hon. member for Winnipeg North Centre has raised this problem. Why has he put his finger in the pie? I know why he is so anxious to rush this thing through. It is because, if I may use the word, they have stolen the best part of the constituency of the hon. member for Winnipeg South Centre (Mr. Churchill) and put it in his constituency. It is that area that might perpetuate the hon. member for Winnipeg North Centre's right to sit in this House of Commons. That is just how comfortable he is.


Some hon. Members:: Shame.


Eldon Mattison Woolliams: Let me point this out, Mr. Speaker. There were 85,000 people in the constituency of Winnipeg South Centre. That is greater than the 70,000 required; it is probably even greater than the tolerance figure. Why was this constituency so readjusted? They changed it from west-east to north-south.


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


Gérard Laprise: Mr. Speaker, a few observations only on the motion for papers now before us, to say that I agree with the hon. member for Pontiac-Temiscamingue (Mr. Martineau) that we should be made aware of the true facts concerning the sketches or drafts being made in relation with the boundaries of electoral districts in every province.
It goes without saying that the purpose of having those maps tabled in the house is precisely to enable hon. members to have a better idea of what will be the new boundaries of the districts. I also agree with those who would like to know why this redistribution will entail changes in the boundaries of certain ridings. But, between that and the fact that the changes I had the opportunity to see in the offices located on O'Connor street have to be made, there is certainly something that is not conformable to the situation of certain districts.
Moreover, the idea of following only mathematical systems is completely ridiculous, and we should adhere to the existing circumstances in economic areas.
Mr. Speaker, I particularly studied one district that concerns me, my own district of Chapleau, which is the second largest in the province of Quebec. According to the sketches or the maps I have seen, it is the intention to cut out a large slice right in the middle of the riding so as to leave only the two ends to the riding of Chapleau.
Undoubtedly, Mr. Speaker, the one who prepared those plans might have had good intentions, but I think he does not know anything about the region for which he made a sketch, and he should have asked for advice or obtained information on the spot, in order to know what it was all about.
I should also like to refer to an observation made by the Minister of Transport (Mr. Pickersgill) two weeks ago, that is on April 30, when he indicated that those maps would not be used when the provincial commissioners would be called upon to make a final decision. Therefore, I wonder why that work has been done, if it is not to be used? Why were requests made to prepare plans or sketches if the commissioners who will set the boundaries of electoral ridings do not use them?
Mr. Speaker, I feel that if they do not know what to do with the chief electoral officer, they should merely pay him a holiday. That would not upset the applecart as it is said that the work he was requested to prepare will not be used.

Mr. Speaker, I am convinced that those maps will have a considerable influence on the decision of the commissioners, and that is why I support the motion of the hon. member for Pontiac-Temiscamingue to the effect that those maps should be placed at the disposal of the hon. members, so that each may see them and know not only where we stand but also what will be the result.


Louis-Joseph Pigeon: 
Guy Favreau: Mr. Speaker, I rise on a point of order.


Mr. Speaker:: Order. The Minister of
Justice has a point of order.


Guy Favreau: I shall ask the hon. member whether he allows me to put a question, and if not, I shall raise a point of order.
Can the hon. member for Joliette-L'As-somption-Montcalm tell the house at which caucus such indiscretion is supposed to have been committed and from whom he holds such information?


Louis-Joseph Pigeon: Mr. Speaker, I am happy to reply to the Minister of Justice that the caucus was held a month ago and it was a Wednesday caucus; I know it from a reliable source and I wish the minister would not oblige me to tell from whom; besides, I am not going-


Mr. Habel:: Innuendo.


Louis-Joseph Pigeon: -to mention anybody.
Electoral Boundaries Maps
In other words, it was reported that members on the government side were told: "Make your choice, make your recommendations." So that the opposition members would take what remained after the members on the government side had helped themselves.
That is one of the reasons why the Minister of Transport refuses to produce those maps before the House of Commons; simply, he is afraid public opinion in Canada may revolt against the attitude taken by the government, who would apparently discriminate against opposition members.
On this side of the house, we have reason to worry, because we know the kind of politics practised by the Minister of Transport. Moreover, this bill, which should normally be sponsored by the Secretary of State (Mr. Lamontagne) is being sponsored by the Minister of Transport.
We are aware of this kind of petty politics in which the latter so often indulges even in the house. This is why, it would be in the public interest if these maps were produced, in order to prove once for all to the Canadian people that we, on this side of the house, are justified in being concerned and asking questions in connection with the redistribution bill.
It is not without reason, as I said earlier, that the Minister of Transport refuses to produce these maps in the house; there is some kind of agreement between members on the government side. Moreover, Mr. Speaker, the hon. member for Drummond-Arthabaska (Mr. Pepin) and even the Secretary of State have admitted that the Liberal conventions are packed. But we, on this side of the house, do not want the redistribution to be made at the expense of the opposition.


Joseph-Alphonse-Anaclet Habel: Union Nationale.


Louis-Joseph Pigeon: We want it to be made with justice and fairness. That is why we ask that the maps be produced in the house, in order to prove to the Canadian people that we were justified in wrangling over this matter and in asking for the production of those maps.


Joseph-Alphonse-Anaclet Habel: Union Nationale.


Guy Favreau: Mr. Speaker, on a point of order, I wish to caution the hon. member for Joliette-L'Assomption-Montcalm against his source of information.
The charge that he made a moment ago in the house is certainly one of the most serious which can be brought in this place, where the hon. members, who represent the people of our country, fulfil their duties and perform their functions daily. He accused the government of having introduced a piece of legislation while offering in caucus, that is secretly,

Electoral Boundaries Maps to his members to choose their ridings or their limits. This means that the government would have proposed to the members to use a measure passed in the public interest in order to cheat the Canadian people and to abuse their own privileges.
I say that this, connected later on with the name of the Minister of Transport, becomes a charge that the hon. member for Joliette-L'Assomption-Montcalm has no right to maintain, unless he tells the house that he assumes the responsibility for it.
Now I assert as a member of the Liberal caucus of Canada and as a minister of this government that such a proposal or such an offer has never been made to the Liberal members of Canada or to any Liberal group. I say that the hon. member for Joliette-L'As-somption-Montcalm must take my word for it and I tell him that the person who gave him that information-


Eldon Mattison Woolliams: Will the minister permit a question?


Guy Favreau: Yes.


Eldon Mattison Woolliams: Will the Minister of Justice deny that all members of his caucus have not seen these maps and are well aware of them?


Guy Favreau: I do deny that. I just want to assert that those who informed the hon. member for Joliette-L'Assomption-Montcalm (Mr. Pigeon) of this have uttered a falsehood, a lie, and that he must take my word for that and now withdraw.


Louis-Joseph Pigeon: Mr. Speaker, I rise on a question of privilege. My word is surely as good as the word of the Minister of Justice-


Joseph-Alphonse-Anaclet Habel: Never.


Louis-Joseph Pigeon: I will not give the names of the two Liberal members who made allusions to that matter.


Some hon. Members:: Name them.


Louis-Joseph Pigeon: I will not name them, Mr. Speaker.


Mr. Deputy Speaker:: Order.


Louis-Joseph Pigeon: I am not at all surprised at what happened at the government caucus, because I know very well the habits of the Minister of Transport since he has been sitting here.


Joseph-Alphonse-Anaclet Habel: Mr. Speaker-


Mr. Deputy Speaker:: Order.


Auguste Choquette: Mr. Speaker-


Mr. Deputy Speaker:: I cannot see the good it will do to keep up this debate any longer. I think that hon. members will accept as true the words of the hon. member, whether he is a minister or not, whether he sits on one side of the house or the other. I am sure that the hon. member for Joliette-L'Assomption-Montcalm will follow the judgment of the house.

Pursuant to provisional standing order 47, subsection 2, I must advise hon. members that the time allotted for consideration of this motion has expired, except for two five-minute periods, one for a minister speaking on behalf of the government, and one allocated to the mover of the motion who will close the debate.


George James McIlraith: This debate on the
motion for the production of these papers has now gone on for two hours and thirty-three minutes and under the rules I am allocated a very limited amount of time to deal with the subject. Since a minister has spoken earlier in the debate, I will confine my remarks to some of the points raised today.
In so far as the remarks made by the hon. member for Joliette-L'Assomption-Montcalm (Mr. Pigeon) are concerned, I am sure all hon. members who heard them or who will read them tomorrow when they appear in Hansard, will dismiss them at once with the contempt they deserve. He did not deal with the subject matter before the house, but purported to put out, on his responsibility, the procedures in caucus-


Eldon Mattison Woolliams: I rise on a point of order. Surely, the distinguished minister is not implying that the word of the Minister of Justice (Mr. Favreau) must be accepted and the word of the hon. member for Joliette-L'Assomption-Montcalm cannot be accepted. Is he implying that one rule should be applied because one member graces the front benches and another rule should be applied because an hon. member does not grace the front benches?


George James McIlraith: 
Eldon Mattison Woolliams: I wonder if the minister would permit a question?


George James McIlraith: I have only five minutes, and I should like to reply.


Eldon Mattison Woolliams: Are you going to be like the rest of the members on your side, and like the hon. member for Winnipeg North Centre (Mr. Knowles) and deny that there are maps in existence?


George James McIlraith: I will say that I have been told. I have not seen them, and there obviously can be no maps until the bill that is before the house is passed. I should like to use the time allotted to me, since I have only five minutes.
The hon. member took the time of this house to reflect upon an officer of parliament in a way that simply will not be accepted by those people who know that officer, the representation commissioner.


Eldon Mattison Woolliams: I rise on a point of
privilege.


George James McIlraith: You raise your point of privilege at the conclusion of my remarks.


Mr. Deputy Speaker:: The hon. member for Bow River.


Eldon Mattison Woolliams: I was very careful on this and on another occasion to say that I have absolute confidence in the representation commissioner; that I was not reflecting on his personal integrity. The hon. member is putting words in my mouth or putting the wrong interpretation upon my words. I did not impute motives to the former secretary of state who was demoted to Minister of Transport (Mr. Pickersgill), and I stand by that remark.


George James McIlraith: It is contrary to the rules to impute motives to any hon. member of the house, but I will not raise that point of order now.
All I wanted to say was that there are obviously no maps, within the meaning attributed to that term by the hon. member for
Electoral Boundaries Maps Bow River, in existence, and I hope that these sketches will not be produced. It is obvious that there cannot be maps prepared until this independent commission we hope to have set up, is set up.


Eldon Mattison Woolliams: How can you say that?


George James McIlraith: They cannot be set up until
the independent commissions are created or appointed under the legislation before the house; that is the point of my argument.


Eldon Mattison Woolliams: Have you seen those
sketches?


An hon. Member:: Sit down.


George James McIlraith: I hope the hon. member will observe some of the courtesies of the house for a moment. Since there are no maps, how can he ask that they be produced? The documents that he does ask to be produced are documents that I have not seen myself, but I am told they are some kind of sketches.


Eldon Mattison Woolliams: It is a good thing it is hearsay, because your tongue would get thick-


Mr. Deputy Speaker:: Order. I regret that I have to interrupt the minister but his time has expired. If the mover of the motion speaks now, he will close the debate.


Hon. Paul Martineau (Poniiac-Temisca-mingue):: I have only a few remarks to make at this time. First of all, it has been established by action which we took when we were on the government side, that we stand clearly for independence in redistribution. We were the ones who placed a resolution on the order paper calling for the establishment of an independent commission to deal with this very important matter. If today we ask for the production of these maps, it is because we want to make sure that redistribution is independent and, second, that the judgment that we exercise on this matter as legislators will be a well informed judgment. There is no other purpose for calling for the production of these maps.
Speaking to this motion two weeks ago the Minister of Transport (Mr. Pickersgill) adopted what I would call a most fantastic line of reasoning. First of all he said there existed no maps. These were his words in reference to them, as recorded at page 2775 of Hansard for April 30:
-virtually, mathematical exercises which could not conceivably bear any relationship to the ultimate disposition-
Surely, Mr. Speaker, the representation commissioner who has been appointed by this house has other things to do than engage in activities that, if we are to believe the Minister of Transport, have absolutely no bearing

Electoral Boundaries Maps on the subject with which he is treating. I think that that does not stand up at all.
Those who have seen the so-called exercises-and I am one of those, although I had not seen the maps when I called for their production-


Some hon. Members:: Oh, oh.


Mr, Marlineau:: Yes, I am not afraid to say it. I was called in to have a look at them, and I will treat with that particular subject in a few minutes. I have seen these so-called exercises and I am satisfied they can be described in no other word than maps. In any event, Mr. Speaker, the representation commissioner-


Mr. Lloyd:: On a point of order; it has been made abundantly clear to the house that the documents which are being referred to are nothing more than the working papers of an officer of the house-


Mr. Deputy Speaker:: Order please.


John Edward Lloyd: -and they cannot be described-


Mr. Deputy Speaker:: Order please. The hon. member is making an argument. There is no point of order.


Paul Raymond Martineau: Mr. Speaker, I will move to the second fantastic statement by the Minister of Transport. This is what he said in this house, and I would ask you to listen carefully to his words. In his speech he said:
-an offer was made, through my mouth, by the representation commissioner, to ail parties in the house that they-
-whoever "they" referred to-I believe it was hon. members-
.-could choose a few of their members to look at these maps and have them thoroughly explained-
Since when have we the right as members, all duly elected members, to make distinctions as between members and members? The absurd result that would directly flow from such an action would mean that when the redistribution bill is placed before the house some members of parliament would be in a better position, would be better informed than others, and therefore some of them would be able to make the right judgment and others would not.
As members of this house we are called upon to judge the issue, and the issue is to know whether or not the 20 per cent tolerance is the tolerance that should be accepted as a criterion for the determination of the new constituencies. I submit that in order to be able to make an informed judgment on that tolerance we should not be denied all the evidence and information that it is possible to obtain, and the best information that can be obtained is the production of these maps.


Mr. Deputy Speaker:: I declare the motion lost.


Mr. Cashin:: Mr. Speaker, I was paired. Had I not been paired, I would have voted against the motion.


Mr. Pennell:: I was paired, Mr. Speaker. Had I voted, I would have voted against the motion.



BUSINESS OF THE HOUSE

Mr. Deputy Speaker:: It is my duty, pursuant to provisional standing order 39A, to inform the house that the questions to be raised at ten o'clock this day are as follows: The hon. member for Port Arthur, Quebec-federal participation in provincial study of independence; the hon. member for Joliette-L'Assomption-Montcalm, fraudulent bankruptcies in housing construction;

the hon. member for Chapleau: reduction of tax load.

At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.

[Stage Direction]
The house resumed consideration of the motion of Mr. Gordon for the second reading of Bill No. C-91, to amend the Income Tax Act.
Jay Waldo Monteith: Mr. Speaker, I do wish there were more members present on the government benches to hear the solid words of wisdom I am about to utter. However, I suppose their absence is understandable. Unfortunately the attitude of the government has been one of not paying too much attention to the opposition. I do not have too many remarks to make concerning Bill No. C-91. The hon. member for Edmonton West (Mr. Lambert) dealt with the principle of the bill this afternoon very adequately and at some length. I propose to
Income Tax Act
be reasonably brief but I believe there are some things that should be said at this stage.
When we get to the committee stage it will be necessary to examine many of the clauses of the bill in great detail and I say this for many reasons. To use the words of one speaker this afternoon he said, if I am correct, that it took a man of law to understand the Income Tax Act, and I assume he also meant the amendments now before us. He said that it was discriminatory and confused. I agree completely and wholeheartedly with that statement. Mind you, Mr. Speaker, the same hon. member said some things this afternoon with which I did not agree, but with that particular portion of his speech I must agree because it is so completely and absolutely true.
I have spent several hours studying the amendments, and their application to the act as it existed after the amendments of 1963. I am afraid I spent most of the time checking cross-references and so forth. To me the Income Tax Act has become almost completely impossible to understand for anybody but-


Mr. Carter:: A chartered accountant.


Jay Waldo Monteith: No, not even a chartered accountant. I doubt whether the minister knows too much about the act and its application. This is my point. I had been going to ask the minister earlier if he had received many representations from individuals, corporations, associations, organizations and what have you, concerning the terms of Bill C-91. I had intended to do so prior to second reading, but in his opening statement on second reading he said there had been and that there had been some consequential amendments. I wonder whether enough of the suggestions that may have been made in the interval since the bill received first reading have been listened to.
At the suggestion of the Leader of the Opposition (Mr. Diefenbaker) the minister outlined this afternoon the amendments he proposes to make as we progress through the committee stage. I have no quarrel with the amendments he has suggested will be presented, and which will undoubtedly be accepted, but I am wondering whether he has gone far enough. He referred to two amendments to delete references to family allowances. The minister suggested that as a result of the debate on the resolution stage the house seemed to be of a mind that the family allowance amendments, certain fiscal arrangements with the province of Quebec which are necessary, and the matter of income tax application should be taken up later and at one time. I agree with this step, because taking them up in a disjointed way does not

Income Tax Act
give one the whole picture of the application of each segment of the suggested extension of family allowances. I hope when the minister closes the debate he will intimate just when he contemplates the additional family allowances suggested in the budget speech will be effective. I think it is very important that we should know this.
I know there are amendments to the act, or there were, that will have the effect of adjusting exemptions for people receiving family allowances for part of this year, and that sort of thing. However, I am interested in the three categories the minister mentioned which were going to be brought in together at some future date. I am assuming that this entails amendments to the Family Allowances Act and whatever other legislation might be necessary to bring about the abatement for the province of Quebec. I am wondering when he is going to introduce these measures, and also when the family allowances are actually going to have effect. When are the people with children in school going to be able to receive these additional allowances?
The minister mentioned also that there were some further representations which were going to be given study between now and next year. I think the minister might well take a leaf out of his own book and go back to what happened to the budget of 1963. I am not going into past history, but we all remember distinctly that there were retractions, modifications and changes all the way along the line. Are we simply going to take these representations that have been made since Bill No. C-91 reached the floor of the house and deal with them at some future date? I feel we should give very close attention to all of these things at this time.
Earlier I intimated I had spent several hours studying Bill No. C-91 and the application of these amendments to the present act. At one time both the minister and I made our livelihood as practising chartered accountants. I ask him today, in all frankness, could he go back to practice as a chartered accountant today and interpret this act so he could advise clients exactly what they should do, without having to charge the clients an unholy amount of money? I do not think I could, and if the minister could he is brighter than I am.


Walter Lockhart Gordon: What do you call "unholy"?


Jay Waldo Monteith: I said an unholy amount of money. My point is that this act has become so complicated that neither a chartered accountant nor some of these lawyers we have in this house could understand the act without giving it so much attention that it would make it almost prohibitive for a client to ask us to interpret the act.


Mr. Pugh:: If you had two lawyers, they would be on opposite sides.


Jay Waldo Monteith: As I said, I doubt if I could go back to practising today and do an honest job for a client at a reasonable fee. As a matter of fact this act is getting completely out of hand.
I did mention earlier, I believe, that I would not deal with any specific provision in the bill. However I believe there is one point that I might mention. I am going to refer to the item having to do with research. The hon. member for Edmonton West (Mr. Lambert) mentioned this this afternoon. I recall an experience of my own during my term as minister of national health and welfare. We tried to encourage pharmaceutical firms to do their research in Canada. I admit that very few did. However, these new amendments will encourage firms to have their research done at a head office in the United States, or wherever it may be. I believe we should examine this provision very closely at the committee stage.
I should like to refer to an article in the Globe and Mail of May 6, 1964. This article was written by one Ronald Anderson and he is quoting Stuart D. Thom of the Toronto legal firm of Osier, Hoskin and Harcourt. I could not be more wholeheartedly in agreement with what Mr. Thom has had to say in this article, in many respects. He says that the language of Bill No. C-91 has become "tortured and involved." I think those words describe it very well. This has been done in the hope of plugging all possible loopholes, and it will take weeks to trace all its implications. This is my concern. Anything to do with income tax does seem to take longer and longer. I am sure the layman would not have a hope if he were trying to study the Income Tax Act with any idea of ascertaining how it might affect his business. Mr. Thom says that-
*-the government has been unwilling to trust the courts to interpret general terms.
The minister has gone overboard in tinkering in an effort to try to plug up all the loopholes. I am not in favour of taxpayers getting away with anything. I have had to fight some taxpayers in the past who have attempted to get away with things. I am not in favour of that.
I do believe there is some way this act could be revised at this stage. I believe the last complete revision was in 1949. At that time we thought we had a simplification put in front of us. Since then it has grown like Topsy. I will mention one section, section 139, and say that if anyone without experience tries to trace his way through all the

consequences and cross references connected with this section he will be completely lost.
I like this particular term used by Mr. Thom. He goes on to say that the minister has attempted to define each term in specific gobbledegook. I believe that is self-explanatory. He says that the draftsmen have dug themselves deeper and deeper into something. This is my chief concern, Mr. Speaker, the whole business of the Income Tax Act and these amendments, how they will affect the act and so on. I think we are getting this legislation into such form that nobody really knows how discriminatory it might be.
He also mentions section 23 of the act, and we will be coming to that in due course. Mr. Thom mentions, in connection with trusts in which all beneficiaries must be residents of Canada, that it would be impossible in the case of any long-standing trust to apply this test. This is only an example of what people who are practitioners think of the clause in this bill and of the application of the act as a whole. Possibly this is a rather strong term, but he also adds:
I hope the idiocy of this section will be recognized before the bill is passed.
Incidentally, there is another article here. I do not believe it is by Ronald Anderson but it may be. It is entitled, "Banana-Republic Image Laid to Gordon Policies," and it gives a statement by Mr. A. G. Davies, taxation controller of the Rio Tinto-Zinc Corporation. He says:
Finance Minister Walter Gordon's attempts to put curbs on foreign investment have caused some foreign commentators to class Canada among the banana republics.
This is what he told the international corporate tax conference, and he added:
There are plenty of people in England, France and other countries who are extremely sceptical of the role of foreign capital in their economies-
But he goes on to point out that the rules should be made clear before the foreign investment comes in, so that those who provide it would know what they were doing.
The rules should not be changed in midstream, as the minister attempted to do in his budget of a year ago; and unfortunately he has not completely retracted in this budget. Rather than discriminate against foreign investment I believe there should be incentives for Canadian investment in Canadian securities.
Mr. Speaker, I said I would be brief, and I shall be. I would like simply to summarize my own conclusions concerning the minister's approach to the Income Tax Act and how it applies to Canada. I think the minister loves to tinker. He has indicated he is trying to do a tidying up job. That is fine. Tidying
Income Tax Act
up to a degree is acceptable, but I still think he is preserving all the last vestiges of discrimination that he can. I hope and pray he will soon cease trifling and tinkering with the laws which have so much to do with the welfare of our citizens. To me this approach is simply not understandable, and I hope before another year passes, in fact even before we conclude the debate on the committee stage of this bill, the minister will have some change of heart.


Mr. K. H. More (Regina City):: Mr. Speaker, I am surprised at the minister being in such a hurry, because it seems to me he loves the limelight and he could have had it all to himself for eight or nine minutes tonight before some of his colleagues came in to back him up. Therefore I hope he will not mind staying in it for a bit longer. He has more support now and should do very well.


Mr. Benson:: Where are your colleagues?


Kenneth Hamill (Ken) More: I don't need any when I am speaking; I am getting along fine. I do not want to take up the time of the house just to delay this bill, but it is one that has to do with principles concerning income tax, and with perhaps a wider scope of general principles that concern taxation as a whole.
The statements made by the speaker who preceded me had a lot of merit because people across the country are becoming convinced more and more that rather than having a new era, under a new minister who has seen a new light, we are simply having a practising tinker. This word gobbledygook I think is very applicable. Those people who paid tribute to the minister and built up the stature he seemed to enjoy before he came into the house, did it on the basis of a book he wrote, but in the light of the practices he is following today it seems to me that book was a bunch of gobbledygook, and it is no surprise that this term is being applied to the bill which he has presented to the house.
In his short term in office he has tinkered with so many features of the economic field in Canada that nobody really knows in which direction we are going. I am not one of those who have great concern about friendly foreign investment in Canada. The efforts the minister made in that direction were pretty terrible, and it will take us a long time to overcome the results.
I would be far more receptive to the minister and his policies if he showed some concern about the thieving inflation that is taking place in the country. The cost of living continues to jump, and I notice that the report we got today from the dominion bureau of statistics shows it is going up and up across the country. The answer the Prime

Income Tax Act
Minister (Mr. Pearson) gave yesterday to a question about the rising cost of living, that certainly there would be inflation in this buoyant economy of ours, did not reassure anybody, especially when one considers that there are still over 400,000 unemployed in the country.
I see a misdirection in some of the policies he put forward and in some of the things contained in the general income tax measures being brought before the house. Much of what I had in mind to say on this subject has already been said, and therefore I do not believe it will carry any more weight by repetition, but in case I am not here when we come to deal with certain of the clauses in the bill I wish to pose a question which I hope the minister can answer. It has to do with provincial income tax.
As I understand it, a resident pays income tax on the basis of his residence as of December 31. It has been brought to my attention that there are differences in the provincial income taxes, in some provinces the surtax charge being 17 per cent and in others 23 per cent. Even though a man might have earned eleven twelfths of his income in one province where the 17 per cent is applicable, if he is living in another province on December 31 where the 23 per cent is applicable, he has to pay the 23 per cent on his total earnings for the year. To me this is not right. I suppose it works both ways, but I still think it is an imposition on many individuals.
When a man reports that he has earned eleven twelfths of his income in a province where the 17 per cent applies, and only one twelfth in a province where the 23 per cent applies, I am wondering why he cannot pay the 17 per cent on the eleven twelfths he earned in the first province, and the 23 per cent on the remaining one twelfth?
I was not bright enough to do this. I paid the 23 per cent. I do not quarrel about it, because I live in the most wonderful province in Canada. If we did not have so many laws made down here placing us in a discriminatory position we would have a flowering economy, but I hasten to add that, despite what happened there recently, it will continue to flower in Saskatchewan.
I would like the minister to explain why a man has to pay 23 per cent on his total earnings, if eleven twelfths of them, or ten twelfths were earned in a province where there is only a 17 per cent charge. Why should discrimination of this sort continue to exist? To an average taxpayer, $46 represents a considerable amount. I would be obliged if the minister would turn his attention to this problem.


Mr. Henri Laiulippe (Compton-Frontenac):: Mr. Speaker, while we are discussing Bill No. C-91, an act to amend the Income Tax Act, I should like to expound a few ideas which, I am sure, should hold the attention of all members. We are living in an economic structure which is strangling the Canadian taxpayer at whatever financial level he may find himself.
I should like to begin by giving the house some statistics concerning the revenue of the Canadian government from taxes of all kinds, for the fiscal year 1962-63.
For instance, the general sales tax brought in the sum of $1,044,557,000; the tax on alcoholic beverages, $206,277,000; the tax on tobacco contributed $367,386,000 to the national revenue. The tax on automobiles yielded $25,270,000, the estate tax, $84,579,000-


An hon. Member:: Dispense.


Henry P. Latulippe: Other taxes combined
brought in some $25 million in revenue.
What do those figures indicate? To a lesser or greater degree, each of those taxes is paid by the consumer, the individual.
Let us now compare the amount of taxes paid by companies, on the one hand, and private individuals, on the other. In 1962-63, companies contributed $1,302,179,000 to the federal treasury, as against $2,051,606,000 for individuals. In other words, individual taxpayers have paid $749,427,000 more than the companies.
Now take indirect taxes and add them to the figures I just gave you; you will see that, proportionally, Canadian taxpayers paid in taxes almost twice as much as the corporations. On the other hand, corporations' profits increased, always proportionally, much more than private income. Evidence that the standard of living is decreasing as far as collectable taxes are concerned is that the Minister of National Health and Welfare had to increase her department's budget by more than a billion dollars this year.
On the other hand, in Quebec, 9 per cent of the population are unemployed whereas, in 1962, the unemployed made up 6 per cent of the labour force; in mid-January this year, 466,000 people were out of work in Canada, that is 7 per cent of the labour force, and needless to say that taxable income, under the terms of the Income Tax Act, is decreasing.
And as budgets increase, taxes in the present situation do not decrease; and it is the workers who, already overburdened, have to take in the increases through government surcharges, at all levels of government, federal, provincial or municipal.

In addition, whoever considers carefully the legislation introduced in any Canadian province, as well as in this house, will readily realize that generally, companies and corporations are getting the most out of them. These companies may be the backbone of the Canadian economic structure but no need to say that the individuals are its blood and that a transfusion will soon be necessary. If the Canadian government is its nervous system then it should give the required impetus.
What is important, therefore, is to legislate with the people in mind and to fully review our position with regard to them.
The family is the basis of our society. It is therefore to the family that the greatest advantages should be granted. Let us take the head of family in the first place. Since everything nowadays is based on interest, from the financial point of view, I suggest that the government should pay interest on taxes collected from taxpayers. This would encourage people to file their income tax return, while reviving the purchasing power, and it would also help to cover, through the additional amounts collected, the administration costs and part of the interest.
I also advocate that the exemptions be increased to $3,000 for single persons and $5,000 for married people and also that a 10 per cent exemption be granted for charitable donations.
We, members of the house, seem to forget that 55 per cent of taxpayers do not earn $4,000 a year and that 34 per cent earn less than $3,000. Therefore, the number of those who pay taxes is rather small compared to the total number of Canadian taxpayers.
This 34 per cent of 4J million persons represents approximately one million and a half, and if we add to this figure the two million people who paid no income tax at all, if we add their wives and children, unemployed, old age pensioners, disabled persons, widows, small farmers, fishermen with a very low income, there is no doubt that a revision is called for.
We believe that tax cuts should benefit lower and average income groups, who would use this artificial supplement to buy consumer goods and thus help indirectly to maintain a balanced economy.
I wish to make it clear that my suggestion to pay an interest, in the present context of the financial system, is not what the Social Credit party advocates. What we advocate is to give more freedom, to give all the necessary initiative, so that everyone, either at the level of the individual or of the corporations, will be able to develop. According to Social Credit technique, taxation would apply only to capital surplus which are prejudicial to the public weal, by balancing the volume
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of money and the volume of production. By a dividend originating from the Bank of Canada, the present balance of the gross national product, which is not consumed, would go into the economy, would be distributed, either by a discount offset by a drop in prices or by the dividend as outlined a moment ago. Then, we would not have to overburden individuals or companies, as long as they do not hinder the collectivity. The purchasing power enjoyed by each individual would ensure a sounder administration, quickly remove accumulated debts, give us all kinds of controls and, for once, permit all Canadians to work freely for the development of their country.
Also, the government should insist on the fact that family allowances be paid, even in Quebec, for children 16 or 17 years old, on the basis used previously. It would be up to the Quebec government to increase those allowances in the case of older students. No matter whether it is a joint program or not, we must first think of the welfare of the people; that is our primary duty.
On several occasions, attempts were made to put old age pensions in line with the cost of living. It is also important to adjust family allowances to the cost of living. The government can afford it.
If you consider that at the end of April 1963, therefore a year ago the stocks listed on the stock exchanges were valued at $54,837,791,829 and that a month earlier, they were valued at $52,503,742,402, it goes without saying that the increase of $2 billion was profitable to the companies.
Our financial organization should provide for a participation of the people, to various extents, to any economic growth, whether it comes from the government or private enterprise.
Corporations do not pay succession duties. They are taxed only after reserves and depreciation. They have therefore considerable more advantages over the individuals.
It is essential that the government introduce legislation which looks after the interest of the people in the first place. And if they do not want to cut down taxes, as in the United States, they should at least make sure that there is a fair redistribution or that the whole community pays equal taxes on a proportional basis.


Mr. Deputy Speaker:: I should caution the house that if the minister speaks now he will close the debate.


Walter Lockhart Gordon: Mr. Speaker, I shall try to deal with some of the points which were raised.

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If I do not deal with them all I hope hon. members will realize they will be dealt with when we come to the respective clauses in the committee stage. I have already suggested to the hon. member for Edmonton West (Mr. Lambert) that some of the points he brought up can, I think, better be dealt with by me when we come to the committee stage.
With regard to some of the points of principle which were brought up, it was proposed that the Income Tax Act should provide for deductions from income of union dues, workmen's tools and equipment, particularly in the case of loggers, farmers' equipment, and all other forms of expenditure which are necessarily paid out in order to earn income. I agree that this is a question of principle and an important one. It is a difficult one to deal with on an individual basis or on an item by item basis. It is a very complex question, difficult to determine, and it is my hope that it will be one of the important subjects with which the royal commission on taxation deals carefully, with the benefit of their research staff. I am rather inclined to think that if we tried to deal with it ourselves hurriedly we would find that we might solve one or two particular situations, but that others would remain to be dealt with. Therefore I would prefer to deal with these various questions, and others like them, in a more general way after receiving the report of the royal commission.
On the question of charitable donations I think I stated in the budget speech, and I think I may have mentioned it again during the resolution stage, that the government has given a lot of attention to the very difficult and irritating problem which several hon. members have mentioned. However, with the staff at our disposal, we were unable to come up with a solution which we thought would be satisfactory, and therefore the late Mr. Garland, the former minister of national revenue, with the approval of the government and after discussions with myself as Minister of Finance, referred the matter to the royal commission and asked them to give it their attention and the attention of their research staff. That is being done.
The hon. member for Burnaby-Richmond (Mr. Prittie) raised the question whether contributions to political parties should be allowed as a deduction for income tax purposes. This is an intriguing idea, Mr. Speaker, but I am not sure whether it is a good one. However, I certainly find it intriguing.


Louis-Joseph Pigeon: Ask Mr. Davey.


Walter Lockhart Gordon: I understand there is a bill on the order paper which advances this suggestion and I think we might leave it until that bill comes up for debate.

Several hon. members referred to the fact that the Income Tax Act is very complex and difficult to understand. This is a complaint which I certainly share. I think it is extremely difficult. However, I would remind hon. members that with every exception which we add, with every change that we make, and with the implementation of each good idea suggested by hon. members, the act becomes just that much more complex. You can single out any section of the act and say it is more complex than some of the others; but the truth of the matter is that as a whole it is a very complex and difficult piece of legislation.
When we are faced next year with the extremely difficult task of rewriting the tax laws of this country, following upon the royal commission report, I do not know whether we will be any more successful than some of our predecessors in producing a simple, workmanlike, understandable piece of legislation. I hope we succeed; but I think we all know that income tax legislation in other countries is also very difficult and complex. While it is a good thing, I think, to remind ourselves as often as we reasonably can of the increasing complexity of these matters-it is probably good for our souls to have this fact rubbed in now and again- and while I think we should continue to strive for simplicity, I fancy that we will find next year when we are drafting new tax legislation that this is easier said than done. I say that because it is very easy to make funny remarks about the complexity of the drafting of the Income Tax Act.
The hon. member for Perth (Mr. Monteith) referred to a friend of mine, Stuart Thom, who rather delights in making remarks about how difficult the Income Tax Act is to understand. I might say that Mr. Thom is an excellent tax lawyer; I used to retain him myself at one time when I was operating in another sphere. I would remind hon. members-and perhaps Mr. Thom will also be reading Hansard-


Jay Waldo Monteith: I wonder.


Walter Lockhart Gordon: -that I have on occasion invited anyone who felt so inclined, and practically all the practitioners in the income tax field, to make suggestions for meeting the stated objectives of the government in various fields in simple language which would not be full of loopholes. I do not remember having received any constructive suggestions from my hon. friend's friend, Stuart Thom. I have received, since issuing this invitation, many suggestions from many lawyers and

accountants who practise in the field of taxation, and their suggestions have been included in some of the amendments that are now incorporated in this bill.


Jay Waldo Monteith: I imagine the minister means *"some" of their suggestions.


Walter Lockhart Gordon: I am referring to their constructive suggestions. Those who just said, "Don't do anything" or, "Don't do anything you set out to do" I have not taken too seriously. As I think by this time some hon. members may realize, it is my hope and it is the objective of this government to see that Canadians gradually acquire a greater share of the resources, the assets and the equities of this country. We believe this will be a good thing. We do not think it can be done without a certain amount of controversy; we do not think it can be done easily, but I can assure my hon. friend that we are not going to be deterred from that objective.


Jay Waldo Monteith: No matter what the penalties are on foreign capital.


Walter Lockhart Gordon: Mr. Speaker, there seems to be a little off-stage noise from my friend the hon. member for Perth (Mr. Monteith).


Jay Waldo Monteith: I admit that I did not stand up to make my statement.


Walter Lockhart Gordon: However, Mr. Speaker, there are not any penalties that I know of. I do not know whether I would be out of order if I referred to the question that was asked me about the extension of family allowances. I think an hon. member raised the question as to when this particular piece of proposed legislation would become effective. I can assure my hon. friend that, while it is not incorporated in this bill and therefore perhaps it is not appropriate to deal with it, the government has every intention of proceeding with this legislation just as fast as we can. I think if he and other hon. members will wait until tomorrow, perhaps the Prime Minister (Mr. Pearson) will have something to say about that subject.
That is perhaps all I need say at this stage, Mr. Speaker. Perhaps when we go into committee other hon. members will have questions that they wish to raise, and I will do my best to answer them.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Lamoureux in the chair.
On clause 1-Legal costs.
Marcel Joseph Aimé Lambert: Mr. Chairman, clause 1
deals with the classification as income of legal costs which may be awarded to a taxpayer by a court of appeal in relation to an
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assessment of tax. This must be related to
clause 3, paragraph five, which appears on page four. I had some difficulty this afternoon-and I wish to thank the parliamentary secretary for his assistance in this connection-in relating the wording of the proposed amendment at line 15, paragraph (w), when in actual fact section 11(1) of the Income Tax Act prior to this year has contained a paragraph (w).
As I said this afternoon, though, I have some difficulty in understanding why there is not any clearcut indication as to just what level of fees or expenses may be incurred by a taxpayer in "instituting or prosecuting an objection to, or an appeal in relation to, an assessment of tax" under subparagraph (w) on page four. I raised a number of questions this afternoon and it is not my intention to repeat them; but I think we must understand that from an administrative point of view there must be some yardstick whereby the Minister of National Revenue will be able to measure whether or not fees are reasonable. I would hope this would not be another area of the Income Tax Act where indirectly the discretion of the Minister of National Revenue is brought into play.
After all, we do know that assessments vary in amount, and of course fees are related to the importance of the problem being taken before the taxing authorities. There are matters which have to be considered, such as the distances that have to be travelled, the number of appearances that have to be made, the calibre of counsel or the accounting firm who may be retained, or the specialist tax adviser. All these matters have to be considered. After all, Mr. Chairman, the business community of this country and all taxpayers are entitled to know, with a reasonable degree of certainty, what they may be allowed. I am not sure that on the face of what is contained in this bill there is any indication of this. There is no provision within the wording of the clauses that regulations may be promulgated in regard to this question. True enough, there are general provisions within the act for the making of regulations, but this matter has worried me considerably, because in my own profession as a lawyer I would like to be able to advise my clients that if they prosecute an appeal and are successful certain of their costs will be allowed, and I should like to know the extent to which such costs are allowed. The cost involved often determines whether a man thinks it is worth the candle to proceed with an appeal. There is no point in his spending hundreds and hundreds of dollars to save a lesser amount of tax if he has to spend a large sum of money prosecuting an appeal which may be disallowed by the Minister of

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National Revenue in the administration of this clause. Therefore, Mr. Chairman, I should like clarification from the minister in regard to this question.
In addition I would like to know whether this provision will be implemented with regard to reassessments of taxation for years prior to 1964. Will they have anything to do with assessments for the year 1963 which are now being worked out, or will they have relationship only to assessments in connection with the taxation year 1964? Those are the two prime questions that I put to the minister in this regard.


Walter Lockhart Gordon: Mr. Chairman, to answer the second question first, they will apply to any expenses incurred in 1964, whether they apply to the year 1964 or prior years. As the hon. member for Edmonton West pointed out, we are dealing with an item in clause 1 that is related to another item in clause 3. The reason they are taken in this order is that it is customary in these amendments to follow the order of the act. With the consent of the committee perhaps I might be permitted to deal with the two clauses together.
The purpose of allowing expenses in connection with appeals or objections is essentially to give the smaller taxpayer the same break that most large taxpayers have anyway. In the case of many large taxpayers the fees they pay to the hon. member for Edmonton West and other tax lawyers, and to the hon. member for Perth and other tax accountants, are not always broken down and itemized according to each individual service that is performed. Frequently the annual fees that my hon. friend receives as auditor for a company may include an amount which covers all services of this kind and they are allowed as a deduction for tax purposes. Similarly, my legal friends frequently receive retainers which cover a variety of things and for the most part they are allowed as deductions and do not have to be itemized in detail.
But if smaller taxpayers, and sometimes a large one, feel they have not been treated fairly by the income tax authorities and want to appeal they may be in a position where they are afraid it will cost them a lot of money in the form of fees to carry through an appeal, and that the expenses in the form of the fees they incur will not be allowed as a deduction against their income. I think all hon. members really believe that we should, wherever we can, provide for appeals. I remember that last fall some of my hon. friends opposite felt that in another section there was not sufficient provision for appealing from certain rulings. I agreed that this should be rectified and an amendment was introduced which met the wishes of my hon. friends across the aisle.

What we are trying to do here is to give taxpayers as reasonable a chance as we can to appeal assessments that in their opinion are unfair and to put all taxpayers on the same basis. In the case of large companies as I have said, I suspect that most of these fees are allowed as deductions without question. My hon. friend asked if there was going to be some sort of regulations or set of rules which would stipulate the amounts that members of his profession should charge their clients in connection with these appeals. I think that the members of the committee would hesitate before they found it necessary to lay down rules as to what the fair charges should be by a taxpayer's advisers in the field of taxation. By and large I think most lawyers and most accountants who succeed over the years try to charge what they think is a fair fee for services rendered. If they charge too much the chances are they will lose the client or the client will refuse to pay.
I would remind my hon. friend that the taxpayer has a real sanction over the amount of the fees that he is going to pay. It is he who has to pay them. It is true that under the proposed amendment he will be allowed to deduct those fees from his taxable income but if he is in the 50 per cent bracket, for instance, he still has to pay half the fees. When I was in practice I did not find many taxpayers who were prepared to pay me more than I was worth just for the good of my health. I think this will be a pretty good check.
I would also remind my hon. friend that if the income tax authorities felt in any particular case that any expense, including any legal or accounting fee, was unreasonable they could invoke section 12(2) of the act which provides that in computing income no deduction shall be made in respect of an outlay or expense otherwise deductible except to the extent that the outlay or expense was reasonable in the circumstances. That is not a new section. It is there now and it gives the Minister of National Revenue discretion to disallow any expense, including any fee, that he may consider was not reasonable in the circumstances. Presumably if he disallowed some legal fee the taxpayer might appeal again, but that is his right and I think it is a good right to retain.
To come back to clause 1, if under this amendment a taxpayer is allowed to deduct from his taxable income any fees that he may pay in connection with an appeal, it is only reasonable that if he is awarded what are known as costs by the court those costs should be included in his income. Otherwise he would be getting a double break. While I am sorry for taxpayers as a rule I think we have got to be reasonable about this thing,

and he should only get one break and not a double break. That is the purpose of clause 1 in providing that any recoveries in this way should be brought back into income.


[Stage Direction]
Clause agreed to.
On clause 2-Compensation by Federal Republic of Germany.
Marcel Joseph Aimé Lambert: Mr. Chairman, has the minister any estimate of the extent of the payments or indemnities that may be received in this regard? I ask purely for purposes of information. I think every member of the house is in sympathy with the aim of the amendment, but is there any extensive payment under this plan or does it simply involve a relatively isolated number of cases?


Walter Lockhart Gordon: We are almost certain it is just a relatively small number of cases where there has been a feeling of injustice. These people were victims of persecution. They are being paid a small amount as compensation for that persecution, if it is possible to measure persecution in terms of a monetary payment, and it was felt they should not be taxed on it. But as far as we know it would not apply to very many people.


Jay Waldo Monteith: Mr. Chairman, I agree entirely with what the minister has said. This provision is to apply to 1960 and subsequent taxation years. Were there any such payments in prior years? Has any attempt been made to tax them in prior years? Why is this being brought forward at the present time?


Walter Lockhart Gordon: My understanding is that there have been representations on this point for some time. There may have been some cases prior to 1960 where they were taxed. As my hon. friend knows, under the act it is not possible to go back more than four years. In some cases the records are not available, and that is why 1960 was taken.


Mr. Lessard (Lake St. John):: Mr. Chairman, I should like to ask the Minister of Finance what group exerted pressures or made representations to him to have this clause inserted in the act. Was it a special, well-defined group, a racial or social one? Was it an imposing group? Could the minister give us some indication of the number of Canadians affected by the amendment and the approximate amount of income that has entered Canada and will be protected by this amendment to the Income Tax Act?
I seem to detect here a very special intention to have a very particular group benefit therefrom. I have no preconceived idea against anybody, but I would really like to know how did a group of individuals succeed in
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having amendments brought to the Income Tax Act in order to protect them?


Walter Lockhart Gordon: Mr. Speaker, this group would include people who came from Germany to Canada and who, prior to or during the war, were persecuted in Germany. Following the war, the courts awarded them compensation in the form of certain capital sums. In some cases, they were awarded lump sum payments which have not been taxed, and in other cases instead of lump sum payments the amount was paid over a period of years. These representations were made to the department by certain individuals and also on behalf of other groups by the Canadian Jewish congress.


Mr. Marcoux:: I appreciate that the minister does not have all the figures at hand, but could be give some indication of the number of people who will be affected by the amendment and of the amount involved? Would it be $100 million, $100, $200 or $200,000? He must certainly have some idea of the amount and I am sure that, with the help of his assistants, he can give us that information.


Walter Lockhart Gordon: I would judge somewhere between 100 and 200 people. I am not in a position to make a guess as to the amount, but it would be a modest sum. Certainly, it would not be anything like the figure my hon. friend mentions. I do not like to guess because I might be quite a bit out.


Marcel Joseph Aimé Lambert: There is one explanation I should like with regard to the last phrase of this particular subparagraph. It reads:
-where no tax is payable in respect of that payment under a law of the Federal Republic of Germany that imposes an income tax.
As I interpret this phrase it means that a payment made by the Federal Republic of Germany to this particular class of people shall not be subject to tax where no tax is payable under German law. If a tax is payable under German law, then a tax would also be payable here in Canada. I do not know whether there is a tax convention between the two countries and therefore if a payment is subject to tax in Germany, then obviously it may be subject again to taxation in Canada.


Walter Lockhart Gordon: There is a tax treaty with Germany, so if it is subjected to income tax in Germany there would be a tax credit here.


Mr. Rheaume:: I have one brief question for the minister, and perhaps he could have his advisers give us an explanation. Subsection (2)

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says that this section is applicable to the 1960 and subsequent taxation years.


An hon. Member:: The minister has already explained that.


Eugène (Gene) Rhéaume: I am sorry; I was distracted. [Translation]


H.-Pit Lessard: Mr. Chairman, I come back again to that point because I find it is a little strange that, tor about 200 people, whatever their present social or economic status in Canada, the Income Tax Act should have been amended so that they may get benefits refused to other Canadian taxpayers.
Representations have been made here for many years by various groups which want to benefit to a greater extent from the Income Tax Act; and I notice that special consideration is given to the case of 100 or 200 people, immigrants who came to Canada. I am of the opinion that they do not deserve more than Canadians because if, on the one hand, those people are in need, they are no worse off than those who come under social assistance, like thousands of other Canadians who are dependant on it.
On the other hand, I am surprised that the minister should be willing to accept such a tax exemption which will represent a loss of revenue. Indeed, he claims that he needs more money and he refuses to grant similar advantages to other groups of Canadians who submit requests which are just as justified as those.


Walter Lockhart Gordon: Perhaps I could give some further explanation which may indicate that these people are not in the same class as others. These people suffered persecution in the concentration camps in Germany. They lost everything they had. This is a payment that the government of the Republic of West Germany is making to them as compensation for the loss they suffered. These payments are not coming to them in the form of income. I have felt, and I think others have felt, that it was quite improper that payments of this kind should be treated as income for tax purposes. I can assure hon. members, Mr. Chairman, that if there were a similar situation applicable to Canadians, which thank God there is not, these payments would not be treated as income.


Gérard Laprise: Mr. Chairman, could the minister tell us the nationalities of the persons who were admitted to Canada since the last world war and who will get this tax exemption?


Walter Lockhart Gordon: I would hope most of these people are now Canadians. Most of them arrived here after the war. I am sure that most of them have received their Canadian citizenship since then.


H.-Pit Lessard: They were Germans.


Walter Lockhart Gordon: They were Germans or Poles, or other people who were caught up in these atrocities during the war and were placed in concentration camps. I dare say some of them would find difficulty in proving just where they came from, and some might be French.


[Stage Direction]
Clause agreed to.
On clause 3-Employer's contribution to pension fund.
Marcel Joseph Aimé Lambert: Mr. Chairman, with regard to subparagraph (i) of the amendment, there is reference to 120 days as against 60 days. I believe this afternoon the hon. member for Lambton-Kent raised the question as to why there was a distinction between payments made by an employer for his employee into a pension plan and the individual himself making a payment into a registered retirement plan. The individual is limited to 60 days. Undoubtedly, there is a valid explanation, but we would like to have it.


Walter Lockhart Gordon: I made inquiries, Mr. Chairman, after this point was raised during the debate on the resolution. I do not believe any representations have been received on behalf of individuals in this connection. I do not think there will be any hardship against any individual. If there is, I would be only too pleased to bring in an amendment next year. But it is desirable in the case of people who know where they stand and, so far as I know, all the individuals affected do know that they should make up their minds to file their claims within two months. I do not believe this is difficult for individuals, and I do not think it will result in any hardship.
In the case of some of the company profit sharing plans, there has been more difficulty because they have not had their books audited by the end of two months, and this is intended to meet that problem.


Mr. Lamberi:: If this were so, Mr. Chairman, would it not be by reason of the fact that corporations are now required to file their returns by April 30, if the fiscal year is ending December 31; and I believe I am correct, as a result of last year's amendments the income tax return of a corporation whose fiscal year ends December 31 must now be filed by April 30-


Walter Lockhart Gordon: May I-
(Mr. Rheaume.]


Marcel Joseph Aimé Lambert: All right-the payment by them. If their books are closed at the end of 120 days they are able to deal with this problem, but why was the figure of 120 days taken? Is this merely an arbitrary figure?


Walter Lockhart Gordon: It is just an arbitrary figure, because we received a lot of complaints that 60 days were not enough. Maybe 90 days or 150 days would be better, but I think 120 days will probably meet the problem.


Jay Waldo Monteith: I know that during the resolution stage the minister gave some explanation concerning this but I have just been reading clause 3(2) paragraphs (ii) and (iii). I am afraid I am not just up to it at this stage of the night, of appreciating the full import of this. Could the minister give a brief explanation?


Walter Lockhart Gordon: Well, the change is in the number of days.


Jay Waldo Monteith: That is the first one.


Walter Lockhart Gordon: I beg your pardon. I think the best thing I can do is read the explanatory note that is printed in the bill, because we took some trouble over it and 1 think it as clear as I can make it:
This amendment provides that a deduction for amounts contributed into a pension plan in respect of services rendered by an employee in previous years while he was not a contributor shall not exceed an amount equal to $1,500 times the number of years in which the employee rendered services while he was not a contributor. It also provides that an amount shall not be deducted under the subparagraphs being amended if it was deductible in the immediately preceding year under section 11(1) (u) of the act which refers to a transfer of contributions from a registered pension plan or a deferred profit sharing plan to a registered retirement savings plan or to another registered pension fund or declared profit sharing plan. This amendment also allows an employee to deduct an amount contributed to a pension plan in respect of services in past years while he was a contributor even though he may also claim a deduction in the same year in respect of services in past years while he was not a contributor.
To summarize the situation, the amendment makes three changes. It closes a loophole existing under the present wording. It provides that an amount may not be deducted twice, and it implements paragraph 8 of the income tax resolution which we discussed at the resolution stage. The maximum amount that anybody can obtain under this is $3,000.


Mr. Olson:: Mr. Chairman, this clause is very long and involved, and even after reading the explanatory note on the opposite page it is not completely clear. I would like to recite a particular case to the minister and ask him how this clause would apply to it.
Income Tax Act
For example, there is an employee who has been working a number of years-20 years- for a company that has had a pension plan. Now, for some of those years while deductions for a pension plan were valid as deductions from income, naturally he used them. But then his employment was terminated and he was given a refund of what he had paid into the pension plan plus that portion of the company's contribution which, under the terms of the pension plan, were recoverable by him, and of course the income tax department deducted that portion. They took taxes to make up for that portion that was deducted from taxable income during those years when this was part of the law.
Now he has been reinstated and he has had to pay a lump sum back in, being the total amount he received from the pension plan when his employment was terminated. He was allowed to deduct the maximum of $1,500 from income tax as a contribution to a pension plan and in this case, after his employment was reinstated, the amount of his current contribution to the pension plan was subtracted from the maximum of $1,500, and that amounted to something like $1,200. The income tax department has refused to acknowledge or to make provision for the other amount over and above this $1,200. They have refused to accept this as a deduction in future years. I would like to ask the minister if amending the Income Tax Act in a case such as this will allow for the residue of the sum total he paid back to the pension plan to be carried on in future years until the total is used up?


Walter Lockhart Gordon: Mr. Chairman, I am not in the tax practitioner business any more, and I find this a very complicated case. My suspicion is that my hon. friend's friend is in a better position than he was before, on two counts. First of all, I think this amendment will help him, and second, he will be able to pay a fee to some lawyer in an effort to help him solve this problem with the income tax department. But I cannot give a decision or ruling off the top of my head.


Horace Andrew (Bud) Olson: When we are in the process of passing amendments to the Income Tax Act, respecting contributions to pension plans, I think it would be well for us to understand what the effect of them will be. Does this allow for carrying forward the residue of payments that have been made, when the aggregate of those payments exceeds the maximum of $1,500? Does it allow him to carry the unclaimed balance forward until it is used up?


Walter Lockhart Gordon: He is allowed to do that.

Income Tax Act


Marcel Joseph Aimé Lambert: I have discussed briefly with the deputy chairman a little matter of procedure with regard to these clauses of the bill which are long and which deal with different subject matters. It would seem simpler to deal with them subclause by subclause. For example, clause 3 has eight subclauses dealing with unrelated matters and I think it would help if we were able to proceed with the consideration of these long clauses on that basis.


Lucien Lamoureux: I assume that this will be the desire of members of the committee. Without, perhaps, actually carrying the different subclauses we might, for the sake of order in discussion proceed from one subclause to another.


Marcel Joseph Aimé Lambert: We have finished two.


Lucien Lamoureux: We have completed consideration of subclause 2.


Marcel Joseph Aimé Lambert: On page 3, subclause 3, subparagraph (iii) deals with allowances for tuition of part-time students. I have read the remarks which the minister made on the resolution stage and I agree with him there has to be an arbitrary figure somewhere, and perhaps the figure of $25 is a suitable one. However, does the minister feel that within the terminology of the amendment he will cover all the educational groups or institutions which are frequented by part-time students? We know about institutions beyond high school level. That is in subparagraph (i). Then there are schools operated by or on behalf of Her Majesty or in the public field. After that, there are high schools or secondary schools providing courses leading to a secondary school certificate or diploma required for entrance to a college or university. Is this list exclusive, or do other establishments qualify if they meet these same conditions? What about the position of a full-time student who is attending a high school or secondary school where fees are being paid? For example, one of my sons attends a high school where tuition fees have to be paid. He is a full-time student. Presumably, under this measure, I shall have to continue to pay tuition fees. But if I read subclause 3 (iii) correctly, if he were a part-time student at this school which awards a secondary school certificate which is a prerequisite to entrance to a college or a university, I would be entitled to deduct the tuition fees. I am a little surprised at the ambit of this amendment. It had been my feeling that all tuition had to be at the post secondary school level, rather than within the high school level, so as to qualify.


Walter Lockhart Gordon: That used to be the case but it would not be so under this amendment.


Marcel Joseph Aimé Lambert: Therefore the part-time student has an advantage over the full-time student with regard to high school education.


Walter Lockhart Gordon: This clause applies to students and obviously it would apply to a full-time student.


Lucien Lamoureux: Has subclause 3 been dealt with?
Subclause 4? Subclause 5?


William Howell Arthur Thomas: On subclause 5. This paragraph has apparently to be read in conjunction with clause one which provides for the reduction of legal costs. Is that right?


An hon. Member:: Yes.


William Howell Arthur Thomas: The question I should like to ask is this: Is there any chance that under this amendment a taxpayer can claim twice? This new paragraph provides that the amount paid by a taxpayer in relation to an objection to an assessment or an appeal from an assessment can be set off against tax. Suppose a taxpayer incurs $300 expenses to go to Ottawa with counsel. This money is paid. Then, after his case has been heard some weeks later, a judgment is rendered and his costs are allowed. Now we have these two amounts-the amount he has paid and the amount he was awarded by the court. What happens in such a case?


Walter Lockhart Gordon: The amount he paid is allowed as a deduction from his taxable income. The amount awarded by the court under the heading of costs is included in his taxable income. One offsets the other.


Paul Raymond Martineau: Would that include accountant's fees as well as legal fees, and does it also include travelling expenses?


Walter Lockhart Gordon: Yes.


Paul Raymond Martineau: Is there any limit to the amount which may be claimed?


Walter Lockhart Gordon: No.


William Howell Arthur Thomas: The way this reads, unless I am all mixed up, which is quite possible, is that the costs awarded by the court may be deducted for tax purposes in addition to the amount that is paid, which may also be deducted.


Walter Lockhart Gordon: Perhaps I can help the hon. member. I gave an explanation of this matter when we were discussing clause 1 but if the hon. member was not here he would not have heard it. However, I will willingly repeat it. I will have to begin with clause 3(5). Under the provision there set out, a

taxpayer is entitled to deduct from his taxable income the expenses he has to meet in the form of fees paid to his lawyer or his accountant, and those other expenses incidental to filing an appeal from or objection to an assessment. Those expenses are deductible in the year in which they are incurred. If, following an appeal, the court awards costs-I gather this legal expression means he is reimbursed by the court or by the crown for part of his expenses-the part he gets back will not be considered as free of tax, because he has already been allowed to claim those expenses as a deduction. They are regarded as taxable income.


William Howell Arthur Thomas: Can the minister point out the place where that is stated in the bill?


Walter Lockhart Gordon: Clause 3(5) refers to subsection 1 of section 11 of the act, which sets out the items which can be deducted in computing the taxable income, which include -and then comes the new paragraph (w), which reads-
-amounts paid by the taxpayer In the year in respect of fees or expenses incurred in preparing... an appeal-
That is where that item would come in the act. If the hon. member refers back to clause 1, reference is made to section 6, which is the section of the act which specifies the items which must be included in taxable income and which will now include these amounts which are recovered through awards of the court.


Mr. Baldwin:: Just one brief question. I suppose in the case of a lawyer or accountant, if either one ever gets to paying any tax, and he takes an appeal or an objection, the use of the words "amounts paid" would preclude a lawyer or accountant from being able to claim an exemption under this clause 3(5); am I correct in that?


Walter Lockhart Gordon: I think so. After all, if a lawyer or an accountant, instead of working for a client and earning income, takes a few days off to fight his own claim, that is his privilege.


Mr. Hales:: In view of what the minister has said tonight in connection with section 5 and the related section 1, I think we are passing some legislation here which is not necessary. I think this piece of legislation is going to jam up our courts of appeal. There are already more appeals and objections being filed than the department can handle, and we are now going to make it possible for those appealing to have their costs paid, and there is no limit on the costs. This is a real bonanza for the lawyers and others in the profession. I think we are in-
Income Tax Act
troducing legislation here which is not necessary and that in a year or two we will be sorry it was ever put on the books.


Walter Lockhart Gordon: Perhaps I should make the speech I made earlier on clause 1 when some of my hon. friends were not here.


Alfred Dryden Hales: I heard it.


Walter Lockhart Gordon: Then if it was not convincing I see no point in repeating it.


Lucien Lamoureux: Shall we now move on to subclause 6?


Marcel Joseph Aimé Lambert: Subclause 6 is related to clause 6 of the amended act. I find the principle rather startling. I should like the minister to correct me, but I think that in accepting this amendment we are accepting the principle that there can be a loss in the disposition of a capital asset in the nature of a depreciable property. For example, suppose I own a house which I have rented or I own an apartment block which I have rented, and which is subject to depreciation. It is still a capital asset. Then I sell it with either a mortgage back or on the basis of an agreement for sale. Then a year or two later I need some cash so I am prepared to sacrifice this mortgage or agreement for sale at a discount. To the extent that the proceeds of this mortgage or this agreement for sale are less than the face value of this contract of mortgage or agreement for sale, I am entitled to claim that loss, which is a capital loss, as a deduction from income.
To me, Mr. Chairman, this is a departure, because if, on the other hand, I hold another capital asset on which I suffer a loss on disposition, I am not entitled to deduct the loss from income in that taxation year; I am given the contra-privilege- that if I sell it at a profit I am not charged income on the excess. It may be that I misunderstand the principle underlying this amendment, but I should certainly appreciate getting from the minister the rationale. I realize this will also be related to clause 6, because I think clause 6 is a related amendment.


Walter Lockhart Gordon: First of all, Mr. Chairman, dealing with the principle of the paragraph itself which is amending the section, if a taxpayer has a depreciable property and he sells it for more than its written down value, he pays tax on it.


Marcel Joseph Aimé Lambert: On the recapture.


Walter Lockhart Gordon: If he sells it for less than its written down value then he can claim the loss against his other income if it is the only asset in that particular class for depreciation purposes. This is the law as it stands. All that this amendment does is to extend the

Income Tax Act
section to include agreements for sale and put them on all fours with mortgages or hypothecs relating to land.


Marcel Joseph Aimé Lambert: Am I correct in my re-examination of this matter that the sale refers not to the disposition of the mortgage or the agreement for sale at a discount but to the actual sale of the property in the initial instance at a figure below the depreciated value of the capital asset?


Walter Lockhart Gordon: There is just one more step here. If it is a depreciable property and a man sells it under an agreement for sale for $10,000, this gives him a profit over and above the written down value of, say, $2,000, so he pays tax on that.


Marcel Joseph Aimé Lambert: On the $2,000.


Walter Lockhart Gordon: Yes. Now, if he subsequently does not collect the $10,000 under the agreement for sale-say he only gets $7,000 for it -he can then recover the $3,000.


Lucien Lamoureux: Shall we go on to subclause 7?


Some hon. Members:: Carried.


Lucien Lamoureux: Shall we go on to subclause 8?


Some hon. Members:: Carried.


[Stage Direction]
Clause agreed to.
Clause 4 agreed to.
On clause 5-Unpaid amounts.
Mr. MacNaught:: I move:
That Bill C-91, an act to amend the Income Tax Act, be amended by striking out lines 37 to 39 on page 5 and substituting therefor the following: "dealing at arm's length at the time the outlay or expense was incurred and at the end of the second taxation year following the taxation year in which the outlay or expense was incurred, is unpaid at the end of that second taxation year, either"
and that the said bill be further amended by striking out lines 12 and 13 on page 6 and by substituting therefor the following:
"(ii) that person shall be deemed to have made a loan to the taxpayer on the first day of the said third taxation year in an amount equal"


Lucien Lamoureux: Shall the amendment carry?


Jay Waldo Monteith: Mr. Chairman, I wonder whether the minister would just give us a summary of the effect of this amendment? It all seems pretty complicated to me.


Walter Lockhart Gordon: Mr. Chairman, the effect of the proposed amendment-not this amendment to it-is that the taxpayer shall deduct an expense in the year it becomes owing even if it is not paid in that year. Those taxpayers will not be able to postpone the deduction of expenses involving payments between persons at arm's length to obtain a

tax advantage. That was the purpose of the main clause. When the tax foundation examined the proposed bill, they thought that the addition of the words that have been read out in this proposed amendment would tie it down a little more tightly. This particular amendment does not alter the substance of the proposed legislation, but it was suggested by the representatives of the tax foundation, and we agreed with them, that these changes in wording would remove the possibility of uncertainty concerning the interpretation of the new provision.


[Stage Direction]
Amendment agreed to.
Clause as amended agreed to.
On clause 6.
Marcel Joseph Aimé Lambert: Mr. Chairman, I think clause 6 deals with the particular problem which I raised, although it was related to clause 3 subclause (6), that in this instance the instrument, the agreement for sale is sold at a loss. I presume this is in order to achieve the same end, that if a taxpayer has paid the tax on recaptured depreciation, and then sells the agreement for sale at less than the actual depreciated value of the property, he will be able to get an adjustment with respect to that particular loss.


Walter Lockhart Gordon: The hon. member is quite right, Mr. Chairman. It does exactly the same thing as did the other clause, but in this case it relates to the situation where the transaction occurs in the one year. There is no delay.


[Stage Direction]
Clause agreed to.
On clause 7.
Eugène (Gene) Rhéaume: Mr. Chairman, when this question was discussed the last time in the house some time ago, along with other hon. members I raised several points which I asked the minister to clarify. At that time the minister, in order to expedite the business that evening, suggested that we wait until we were at the committee stage after second reading, and at that time he would answer quite a few specific questions that had been raised in relation to family allowances. I am well aware that the rules and regulations under the Family Allowances Act are quite a different matter; none the less-


Walter Lockhart Gordon: Mr. Chairman, I wonder if my hon. friend would permit me to point out that, as suggested by the hon. member for Edmonton West, perhaps we might deal with these clauses which contain quite a number of subparagraphs, one subparagraph at a time. I think the point my hon. friend is raising is found in clause 7(3).

Proceedings on Adjournment Motion


Lucien Lamoureux: Shall clause 7, subclause A motion to adjourn the house under <1) carry?	provisional standing order 39A deemed to
Subclauses 1 and 2 agreed to.	have been moved:
On clause 7(3).


Walter Lockhart Gordon: With regard to clause 7(3), it is moved by Mr. MacNaught:
That the said bill be further amended by striking out subclause (3) of clause 7.


[Stage Direction]
Amendment agreed to.
Clause as amended agreed to.
On clause 8.
Marcel Joseph Aimé Lambert: With regard to clause 8, Mr. Chairman, I would ask the minister whether this provision should not actually be incorporated into the appropriate act. If I remember rightly, this provision has been in existence for about eight years. It deals with children of immigrants in respect of whom an allowance is paid during their first year of residence in this country, since under the Family Allowances Act a year's residence in this country is required before a child may qualify for family allowance. How will this provision affect those children who may now be 16 and 17 years of age? Are they going to receive the same compensation on the basis of the proposed increase under the Family Allowances Act? If they happen to live in the province of Quebec, how is this provision going to be administered?
As it is ten o'clock, Mr. Chairman, I think the minister might ponder on this little problem for consideration and clarification at the time we deal with the amendments to the Income Tax Act and the Family Allowances Act dealing with the extension of family allowances.
Progress reported.



BUSINESS OF THE HOUSE

Gordon Minto Churchill: Mr. Speaker, may I ask about the business for next Tuesday, if the acting house leader can tell us.


John Watson MacNaught: Mr. Speaker, the business for next Tuesday will be as outlined by the house leader last night.


Gordon Minto Churchill: That is, the bill to amend the Income Tax Act?


John Watson MacNaught: Yes; and tomorrow we will take up the estimates of the Department of Agriculture.



PROCEEDINGS ON ADJOURNMENT MOTION

[Stage Direction]
(Subject matter of questions debated under adjournment motion).

Mr. Deputy Speaker:: In accordance with provisional standing order 3 9A, a motion to adjourn the house is deemed to have been made and seconded at this time. Therefore, the question is that this house be now adjourned. The hon. member for Port Arthur.


Mr. D. M. Fisher (Port Arthur):: Mr. Speaker, my question was: I should like to ask the Prime Minister whether he is considering taking any immediate public position with regard to the official endeavour of the Quebec legislature in studying factors relating to the separation of Quebec from Canada? We remember well, Mr. Speaker, that as the propaganda build-up reached its crescendo before the last election the Liberal party claimed two points above most others. First, they had a leader who would lead, not procrastinate, who would make decisions, not postpone them. Second, aside from other inherited virtues such as administrative genius, the Liberal party through history and in present support was the chosen vehicle, probably by act of God himself, to bind the French and English speaking people of Canada together.
I remember in the last campaign an article beneath a picture in the Toronto Liberal twinkle explaining the significance of the affable platform togetherness of Mike and Jean. What a "combo". At last a man and party in Ottawa to match and understand the new Liberal hero in Quebec. At last someone who really understood the aspirations of Quebec.
We have had that party and that leader for 14 months. I ask any member of the house to answer this fairly: Have the relations between French Canada as represented by Quebec and English speaking Canada improved? Of course they have not. The responsibility for the drift, the indecision, the wavering, the howeverish, maybeish, on the otherhandish approach is, it seems to me, the inanition of the Prime Minister (Mr. Pearson).
If anyone in English speaking Canada comments unfavourably on this or on the quiet revolution and its course, he is labelled as destructive and as an English speaking separatist. The Prime Minister perambulates saying that English speaking Canada must realize that if we lose Quebec we will slip down the slope into the United States. It would seem to me that the new dispensation this government has given us overlooks the
3294	HOUSE OF
Proceedings on Adjournment Motion national spirit and loyalty to a Canadian concept of English speaking Canada in its apparent willingness, if you follow the cliches of the Prime Minister and the Minister of Justice (Mr. Favreau), to decentralize. Quebec, they say, and many of us agree, is not a province like the others. Then they go on to glorify and support a decentralization that must destroy the Canada that many of us thought we had. It is the Prime Minister and no one else who has the policy that will fragment Canada and lead to American absorption.
The question raised in the house is a case in point. What a reflection, when you think of it, that it had to be asked. Can you imagine presidents Kennedy or Johnson or even Eisenhower remaining mute at the decision of a state in the American federation through its state legislature to study and report on the separation of that state from the union?
The situation revealed by the Quebec legislature's intention is covered very well in the discursive report in yesterday's Montreal Star. Listen to it and you will see why I ask the question and why it never should have had to be asked, why the Prime Minister should have given a statement on the attitude of the government toward this intention. I am not suggesting for a moment that the Quebec legislature should not go ahead with this kind of study, but surely I as a citizen of Canada should not feel that I may have to turn to the premier of Ontario to get someone who will go into Quebec, deal with these people and see if we cannot turn aside from the direction in which we seem to be going because the federal government cannot seem to do anything about stopping it. The story reads as follows:
On the surface, at least, nobody has any real quarrel against the study that will be undertaken in the next few weeks by a group of experts to find out what possible repercussions separatism might have on the people of Quebec.
Interviews with prominent legislature members and high civil servants showed that the move is welcome in all quarters. One member of the legislature-who asked that his name be kept secret-said he did not think the separatists themselves would be "angry" because the government is actually "recognizing a fact of life".
He added that the group of experts-still to be appointed-will, in fact, feel the pulse of the population and report on the real implications that would face the people should Quebec secede from confederation.
The Prime Minister has told us that he does not intend to preside over the dissolution of Canada. I suggest that it is about time he took a more positive stand than his present lack of any comment on this matter would seem to indicate.
Yesterday, the parliamentary committee on the constitution decided to ask a number of specialists to try to find out what "possible repercussions the


independence of Quebec would have on the economic, political, social and cultural realities of the problem."
I suggest there is one point that they missed in their study-what these economic, cultural and social repercussions would be on the rest of the country. It is a rather dreadful irony that at the very time the royal commission on bilingualism and biculturalism is peregrinating across the country, especially in English speaking Canada, asking for English speaking Canadians to consider a move toward some greater understanding that we have this particular move within the province of Quebec and no real reply to it. What an irony that these two commissions are going on at the same time.
I continue to quote from the story, Mr. Speaker:
But the main problem is not what the group of experts will find out, most sources say. Rather, it is what the committee on the constitution is ready to accept as a fact and thus recommend to the legislature.
This, they say, is the major point. No matter who takes an active part in the study on separatism, their conclusions will influence the policy of the government for years to come.
This is rather obvious, yet we do not even have a statement of the position of the federal government except from those federal cabinet ministers who go into Quebec and appeal to the people not to talk about separatism.


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


Douglas Mason Fisher: Mr. Speaker, I do not want to challenge your ruling but I was watching the clock and I thought I started at three minutes after ten.


Mr. Deputy Speaker:: There is a time keeper at the table who recorded when the hon. member for Port Arthur started. I have been informed he started at 10.01 and it being now 10.08 the hon. member's time has expired.


An hon. Member:: He did not start then.


Mr. Deputy Speaker:: The hon. member will realize I do not want to become embroiled in a controversy. If the hon. member feels he should go on for another minute, I certainly would not want to deprive him of that. Is it agreed?


Some hon. Members:: Agreed.


Douglas Mason Fisher: I continue quoting:
Cabinet ministers, on the whole, are behind the idea of a study on separatism. They say-although none of them would like to be quoted here-that they will be glad when the findings of the inquiry have been made public.
They also say a cool analysis of the "revolution in Quebec" will profit the party in power, because it will give it a tool against the opposition, already trying to woo the separatists.

Should the movement prove itself economically and emotionally profitable, a cabinet minister told me yesterday afternoon, then there would be no alternative for the government but to separate from the rest of Canada.
I just put that on the record, Mr. Speaker, to indicate what I think is the seriousness of the possible result of this study if the national government, and I assume we still have a national government, does not take some kind of public position on what contribution it is going to make to this question.


Mr. Jack Davis (Parliamentary Secretary to Prime Minister):: Mr. Speaker, in my opinion, the position of the Prime Minister on this matter has been made abundantly clear. Separation is unthinkable. Let me quote from the Prime Minister's speech in the budget debate which appears on page 2145 of Hansard for April 14, 1964. I quote:
Every province must be in a position to exercise its right and discharge its responsibilities, and Quebec in these matters has a special position. But equally it must be accepted and established that Canada is above all the provinces, embracing all the provinces, respecting provincial division and provincial responsibility, but that Canada, as a nation, is greater than its parts or the sum of its parts. French speaking Canada must play a proud and equal part in that nation, must feel that it belongs to Canada and that Canada from sea to sea belongs to it.
Canada is a very proud name in the world today and has been over the years. Our country need not and must not become balkanized-
Farther along I read this:
We must do nothing, either by provocation or by weakness or by stubborn unawareness of the basic nature of our federalism or by words or actions based on prejudice or fear, to bring about that weakening or disappearance.
I think those quotations, Mr. Speaker, should answer the question raised by the hon. member.



ADMINISTRATION OF JUSTICE


Louis-Joseph Pigeon: Mr. Speaker, a few days ago, I directed to the Minister of Justice (Mr. Favreau) a question which I would like to repeat tonight to the house:
At the request of home builders of the province of Quebec in particular, does the government intend to amend the Bankruptcy Act in order to stem the present wave of fraudulent bankruptcies in the field of housing?
May I say that French Canadians had nothing to do with 86 per cent of commercial bankruptcies in Canada and 72 per cent of those which occurred in the province of Quebec in the first quarter of 1964. This was
Proceedings on Adjournment Motion shown by the economic development council in its bulletin: Le Laissez-passer canadien-frangais.
On the other hand, if I refer to a report from the dominion bureau of statistics, here is what it says:
In 1963, there were 3,678 commercial bankruptcies in Canada (3,190 in 1962). Their total liabilities amounted to $193,771,000 ($149,440,000).
In the housing field, there were 714 bankruptcies in the total amount of $40,137,000.
Mr. Speaker, while Hon. Mr. Fulton was minister of justice, he had instituted, in 1962, I believe, an inquiry on bankruptcies. I am wondering why this government has not continued the excellent work undertaken by the minister of justice?
In my opinion, it is important and urgent- in fact nationally urgent-to amend the Bankruptcy Act so as to prevent as many frauds as possible. There are in Canada people of good faith who lose large amounts of money because the Bankruptcy Act is too vague.
Mr. Speaker, there is another important point I should like to stress concerning bankruptcies. The 11 per cent tax on building materials contributes to the financial difficulties of contractors and subcontractors. It should not be forgotten that a housebuilder's margin of profit is only 10 per cent, according to statistics; therefore, it is not surprising that bankruptcies are on the increase in Canada.
It seems to me that it is necessary and even essential to amend the Bankruptcy Act if we are to prevent as much as possible those frauds which involve great losses for private enterprise.


John Watson MacNaught: Mr. Speaker, in reply to the question raised by the hon. member I must say I am unable to accept the premise contained in it. His question affirms that there is at present a wave of fraudulant bankruptcies in Canada, particularly in the field of housing. I have made inquiries of the officials in the Department of Justice, in particular of the officials charged with the administration of the Bankruptcy Act, and they inform me there is no evidence in the department that would support the premise alleged by the hon. member that there is a wave of bankruptcies involving fraud at the present time.
Very often we read in the newspapers and hear statements that fraud exists to a great extent in bankruptcy proceedings, but on investigation these prove to be rumours, surmises and not borne out by the facts.
We have had, of course, many representations from responsible people to the effect that
3296	HOUSE OF
Proceedings on Adjournment Motion the Bankruptcy Act should be amended, particularly in relation to fraud. I am sure the hon. member will realize that there is a conflict of jurisdiction here. The federal government has exclusive jurisdiction in the field of bankruptcy, but the provincial government is charged with the responsibility of the administration of the criminal law, and the line here is rather close and difficult to define. For that reason much care must be given to this subject. I want to assure the hon. gentleman that the problem of amending the Bankruptcy Act is receiving very careful study at the present time.



FINANCE-INQUIRY AS TO POSSIBLE TAX REDUCTION

Gérard Laprise: Mr. Speaker, last Tuesday, that is on May 12, 1964, I put the following question to the Minister of Finance (Mr. Gordon):
In order to stimulate the Canadian economy, does the minister intend to comply with the wish expressed by the president of the Canadian Manufacturers' Association, Mr. Roy Crabtree of Montreal, who asked recently in Calgary for a reduction of the fiscal burden similar to that applied by the United States government?
Mr. Speaker, everybody knows that our southern neighbours have decided to reduce the fiscal burden by $11 billion this year, in order to stimulate the expansion of their economy.
I am in perfect agreement with the president of the Canadian Manufacturers' Association, and I think that if a tax cut were implemented in Canada, our economy would benefit greatly.
Taxes are designed-I suppose that the Minister of Finance is aware of that-not to take money where there is not any but to remove financial surpluses. But what happens now, under our fiscal system, is that money is being taken where there is not enough and that creates problems for the Canadian consumers. If they are deprived of part of their income, Canadian consumers cannot buy in stores, keep their business going or spur the economy. That increases unemployment and does not reduce in any way the cost of living.
Mr. Speaker, I believe that the Minister of Finance should listen attentively to the requests of the Canadian Manufacturers' Association and of all Canadians.
We know that last year, when the minister levied a new tax or rather when the 11 per cent tax on building materials came into effect, there was an outcry of protests from house builders as well as from Canadian manufacturers.


In my opinion, the minister would be quite popular with Canadian taxpayers if he granted a tax reduction to get business rolling in Canada and to keep it under our control, so that what is now left to us will stay in our hands.
This tax burden which we have to bear has for effect to put a greater part of our business undertakings, of our industries and of our trade under American control.
On February 24 last, Mr. Maurice Huot, editor of the newspaper Le Droit stated in an editorial:
One of the results of the rising government expenses coupled with increasing taxes is to place more and more the country under foreign control.
Mr. Huot also recognizes that this tax load allows foreigners to take over the trade and the business undertakings of the country.
I feel that the minister, even though he had a very busy day with the discussion of the Income Tax Act, should lend a sympathetic ear to those claims and announce a tax cut for all Canadians.


Walter Lockhart Gordon: Mr. Speaker, in reply to this question I should first of all like to remind my hon. friend that in the budget speech I gave certain comparisons of the taxes payable by Canadian individuals and by corporations compared with their counterparts in the United States after the United States cuts have gone into effect. Those comparisons showed that in almost all cases except those in the high income brackets the Canadian taxpayer will still be paying less income tax than his counterpart across the line.
I would also remind my hon. friend that in the budget speech I forecast a deficit for this current fiscal year of some $455 million. Since then and following the federal-provincial conference in Quebec the federal government has proposed that very substantial transfers be made from the federal government to the provinces, which will mean quite substantial reductions in the federal government's revenue not in this current year but in the future.
I did notice the proposals of the president of the Canadian Manufacturers' Association. He has been making these same proposals for some time. I saw him shortly after he made his speech in Calgary. I also saw him in Vancouver, but on that occasion it was my turn to make the speech. I pointed out at that time that the Canadian economy is going ahead at a very encouraging rate; that the pick-up over the corresponding situation a year ago is very marked and encouraging.

This is a fact with which I think we can all be delighted. I am not suggesting the situation is as good as any of us would like to see it in every single section of Canada, but taken as a whole the improvement is very encouraging, particularly as the near term prospects are equally good.
14, 1964	3297
Proceedings on Adjournment Motion Mr. Deputy Speaker: Order. I regret I have to interrupt the hon. minister. Pursuant to special order made earlier this day this house stands adjourned until ten o'clock tomorrow morning.
Motion agreed to and the house adjourned at 10.25 p.m.

Friday, May 15, 1964