1964-08-11

[Stage Direction]
Mr. Russell C. Honey (Durham) presented the second report of the standing committee on agriculture and colonization, and moved that the report be concurred in.
Motion agreed to.


[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, I would direct a question to the Prime Minister and ask whether he is able to report on conversations which have taken place between the Minister of Labour and the members of the maritime trustees board relative to their appearance before a committee of parliament. I would also ask him whether these trustees can be expected within the next few days to appear before a committee of parliament so this house may secure information which up to the present has not been vouchsafed.


Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, there has been an exchange of communications between the minister and the chairman but I will ask the minister, who is returning today, to make a report on this question tomorrow.


John George Diefenbaker: Mr. Speaker, in the exchange of opinions has there been an agreement on the part of the trusteeship board to appear, the only question being the determination as to date?


Lester Bowles Pearson: I have not the correspondence before me, but the correspondence does provide for the appearance of the chairman.



FINANCE


[Stage Direction]
On the orders of the day:
Hon. Marcel Lambert (Edmonton West):: Mr. Speaker, I wonder whether the Minister of Finance could tell us whether Canada has received a request, either informally or formally, for an increase in its quota subscription of $137 million to the international monetary fund and, if so, what has been the decision in this regard.


Hon. Walter L. Gordon (Minister of Finance):: Mr. Speaker, I made a statement on motions yesterday about the discussions on this matter, and I tabled the report. No decision has been reached, and I do not expect to be in a position to say anything until after a meeting which we are planning to have in Tokyo at the beginning of September.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. T. C. Douglas (Burnaby-Coquillam):: Mr. Speaker, in the absence of the Minister of Labour may I direct two questions to his parliamentary secretary. First of all I would ask whether the attention of the Department of Labour has been drawn to a communication which has been sent out to all the municipalities in British Columbia by the minister of municipal affairs in that province stipulating that only persons who have been on social welfare for three months will be allowed to participate in winter works incentive programs. Second, what action does the federal government intend to take in this regard, in view of the fact that in a number of communities many of the persons on welfare are unemployable, which will virtually cancel out many of the programs which have already been approved?

Inquiries of the Ministry
Mr. J. A. Byrne (Parliameniary Secretary
to Minister of Labour): Mr. Speaker, the article in question referred to by the hon. member for Burnaby-Coquitlam has not come to my attention, but I am sure that when I bring the matter to the attention of the minister on his return this afternoon he will make inquiries to determine whether in fact what is reported in the papers is correct.


Thomas Clement (Tommy) Douglas: A supplementary question. May I ask the parliamentary secretary whether he has received any communication from the provincial government, because this is not a matter of a newspaper report; I have copies of a letter sent out by Mr. Dan Campbell, the minister of municipal affairs.


Mr. Byrne:: I shall bring that question to the minister's attention when he returns.



TRANSFER OF JURISDICTION OVER NATIONAL EMPLOYMENT SERVICE

[Stage Direction]
On the orders of the day:
['May I suggest that this is a question for the order paper.']
Mr. Russell MacEwan (Piciou):: Mr. Speaker, in the absence of the Minister of Labour I should like to direct a question to his parliamentary secretary. May I ask the parliamentary secretary when it is expected that the national employment service will be placed directly under the Department of Labour instead of the unemployment insurance commission, having regard to the statement made by the Minister of Labour in Vancouver yesterday?


Hon. Judy V. LaMarsh (Acting Minister of Labour):: Mr. Speaker, as Acting Minister of Labour I shall take this question as notice.



[Stage Direction]
On the orders of the day:
Mr. R. N. Thompson (Red Deer):: Mr. Speaker, last week I asked the Secretary of State for External Affairs whether he could give us any information as to the extent of the participation in the civil war now in progress in the Congo by the Chinese communist government or agents of that government. In view of the sacking of the Burundi embassy in Leopoldville last night and the continuing critical situation in the eastern half of the Congo, has the minister any information he can give us at this time?


Hon. Paul Mariin (Secretary of Slate for External Affairs):: Mr. Speaker, not any more than I have already given, except that I


would add that there is evidence of communist influence. Part of my hon. friend's original question dealt with that matter.


[Stage Direction]
On the orders of the day:
Mr. Arnold Webster (Vancouver-Kingsway):: Mr. Speaker, I have a question for the Minister of National Health and Welfare. In view of the fact that Canadian athletes in track and field have now been selected to represent this country at the Olympic games in Tokyo later this year, will the minister tell us to what extent the federal government plans financial assistance through grants provided by the fitness and amateur sport or any other program?


Mr. Speaker:: May I suggest that this is a question for the order paper.



THE MINISTRY


[Stage Direction]
On the orders of the day:
Mr. L. J. Pigeon (Jolielle-L'Assomplion-Montcalm):: Mr. Speaker, I have a question for the Minister of Forestry.
I should like to ask him whether he enjoyed his stay in Europe and why he cut his holidays short?


Hon. Maurice Sauve (Minister of Forestry):: Mr. Speaker, I spent two weeks in Europe. The first week I was on official business. The second week, since I thought the house would adjourn on August 8, I saw fit to take a week's holiday. I felt I needed a holiday because I was seriously ill last April, as everybody knows.
I feel, moreover, that the hon. member for Joliette-L'Assomption-Montcalm should have taken a holiday too at the same time.


Mr. Clement Vincent (Nicolet-Yamaska):: A supplementary question, Mr. Speaker. Could I ask the Minister of Forestry, since he told us just now that he thought the house would adjourn on August 8, if that matter was discussed by the cabinet?


Maurice Sauvé: Mr. Speaker, I feel that the business of the house should have been adjourned at the end of July. If the official opposition had co-operated with the government and the other parties in the house, we would all be enjoying now well-deserved holidays.


John George Diefenbaker: Mr. Speaker, the latter part of that observation has no place in the records of parliament, and I am sure the hon. gentleman will find that the isle of Capri is quite different from the House of Commons.


Mr. Speaker:: May I suggest we get on with the business of the house.



PENSIONS


[Stage Direction]
On the orders of the day:
Mr. Eric A. Winkler (Grey-Bruce):: Mr. Speaker, I should like to direct a question to the Minister of National Health and Welfare. As the result of a brief study of the Canada pension plan white paper, do I understand from the first paragraph on page 21 that the province of Ontario will have veto powers over future amendments to the act after it is constituted?


Julia Verlyn (Judy) LaMarsh: Mr. Speaker, this is a very comprehensive document, and I would ask my friend to consider it even further before he begins asking questions which may require long explanations on orders of the day.


Eric Alfred Winkler: I have a supplementary question. In my opinion, this is an extremely important aspect of the plan, which I believe deserves an explanation, particularly in respect of the formula as stated therein, before we proceed.


Mr. Stanley Knowles (Winnipeg North Centre):: I have a supplementary question, Mr. Speaker. Now that we have the Canada pension plan white paper with its considerable detail, is it not possible for the government to place the resolution preceding the new bill on the order paper?


Eric Alfred Winkler: This is bread and butter legislation.


Stanley Howard Knowles: Mr. Speaker, can we not have an answer to the question?


Lester Bowles Pearson: Mr. Speaker, the resolution will be on the order paper well in advance of the discussion of the bill by the house.


Stanley Howard Knowles: Mr. Speaker, in view of the fact that this is the same answer the Prime Minister gave a few days ago, could he not
Federal-Provincial Relations go a little further and tell us when it is the government's intention to have this matter discussed?


Lester Bowles Pearson: Yes, Mr. Speaker, it is on the priority list for legislation, and I hope we will be able to discuss it once we deal with the flag resolution.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. Reynold Rapp (Humboldi-Melfori-Tisdale):: Mr. Speaker, I have a question for the Minister of Agriculture but in his absence I will direct it to the Minister of Trade and Commerce, since it has to do with grain. It is a repetition of a question I directed to the Minister of Agriculture on a previous occasion and has to do with the moisture content of spring and durum wheat. Farm organizations have repeatedly asked the minister for an appointment to discuss this matter but, it seems, to no avail. Would the minister bring this matter to the attention of the Minister of Agriculture?


Hon. Mitchell Sharp (Minister of Trade and Commerce):: Mr. Speaker, I am quite sure my colleague the Minister of Agriculture is very much aware of this subject, and as soon as convenient will grant an opportunity for the farm organizations to state their opinions.



MARITIME PROVINCES


[Stage Direction]
On the orders of the day:
Mr. Robert C. Coates (Cumberland):: Mr. Speaker, I have a question for the Minister of Agriculture but in his absence I will direct it to his parliamentary secretary. Has the federal government been contacted by the governments of any of the maritime provinces with regard to the crop devastation in the maritime provinces by army worms? If not, is this problem under study by the Department of Agriculture at the present time?


Mr. Speaker:: Order. Surely this is a question for the order paper.



DOMINION-PROVINCIAL RELATIONS PROVISION FOR REVISION OF FISCAL ARRANGEMENTS AND TAXATION PROVISIONS

[Stage Direction]
The house resumed, from Monday, August 10, consideration in committee of Bill No.
€652
[Stage Direction]
Federal-Provincial Relations C-lll, to provide tor the revision of certain fiscal arrangements with the provinces and to provide adjustments of fiscal arrangements and taxation provisions consequential upon the provision of youth allowances to parents resident in certain provinces-Mr. Gordon-Mr. Lamoureux in the chair.
On clause 1-Short title.
Mr. MacLean (Queens):: Mr. Chairman, at 10.30 last night I had almost completed my remarks but had not quite finished. Before I proceed I should like to make a correction in the reporting of something I said about the gasoline tax last night. Either it was a slip of the tongue on my part or an error in reporting. As found on page 6633 of Hansard, I am reported as having said:
-let us consider the tax on gasoline. In Prince Edward Island it is 18 cents a gallon. There are only two other provinces with a gasoline tax that high, namely. Nova Scotia and Newfoundland.
What I meant to say was that there are only two provinces with higher gasoline taxes, namely Nova Scotia and Newfoundland, the tax in those provinces being 19 cents a gallon. In New Brunswick the tax is also 18 cents a gallon, but the other six provinces of Canada have lower rates of gasoline tax.
I was pointing out last night that Prince Edward Island feels it will be getting less than it deserves and less than its rightful share of the increased payments to the provinces provided by the bill. I hope this is in no way due to the myopic view of the economic problems of the maritimes which the Minister of Finance has exhibited on occasion in the past. I am not naive enough to believe that anything I say at this stage will bring about any material change in the bill, but I appeal to the minister once more to reconsider the adjustment as far as Prince Edward Island is concerned in case some improvement could be made.
Failing that I want to make one suggestion to the government with reference to shared cost programs. On their face, shared cost programs seem to be a bargain as far as the provinces are concerned when, for instance, the federal government offers to pay a fixed percentage of a roads program or something of that sort. Unfortunately, however, as the minister well knows, something one cannot afford is not a bargain at any price. These shared cost programs may be well and good for provinces that have a good taxation base and can reasonably raise their share of the costs involved, but in the case of provinces where the tax base is now exploited almost


as far as it is practicable it is very difficult for them to pay their share of these fixed charges.
I suggest to the government that consideration should be given to these shared cost programs. I suggest that in future the percentage of the shared cost programs to be paid by each province should be in proportion to that province's ability to pay. In other words the share of the federal government should be in proportion to the equalization payments made to each province; otherwise a proportionately greater load is placed on the poorer provinces, thus throwing their future budgeting completely out of balance.
Now, lest the minister misinterprets the general trend of my remarks, let me say I am not advocating bigger and bigger raids on the federal treasury by the provinces. I realize fully the great responsibility under which the minister labours.


The Chairman:: Order, please. May I bring to the attention of the members of the committee the fact it is rather noisy, and that is unfair to the hon. member who has the floor at the moment.


John Angus MacLean: I realize the great responsibility that is placed on the shoulders of any minister of finance of this country under present conditions of increasing public debt generally, increasing demands for further public services, the general growth and expansion in our country and the growing need for the expansion of public works, using that terms in the broad sense. However, I believe it is time that we Canadians faced up to some of our responsibilities so far as our financial position as a nation is concerned.
I am directing these remarks to all levels of government. It is a fallacy for any level of government to believe it can get whatever it needs from another level of government, and that this is free. The taxpayers who have to pay the shot in the end are the same Canadian people, regardless of what level of government makes the expenditure.
Now, I am not advocating the ultra strict situation that is expressed in the constitution of some of the states of the United States under which they are not allowed to go into debt at all in some cases, while in other cases they cannot go into debt without having a referendum. I do believe that making public expenditures, creating debts, by all levels of government represents good

business procedure If the money is invested in valid national assets.
On the other hand, I do not approve of the careless attitude which is sometimes expressed in some circles that you do not have to worry at all about public debt; it is the generations yet unborn that will have to pay for it anyway. The feeling is that, in effect, you just phone the money number, as it were, and let somebody else worry about the debt when its liquidation becomes necessary. I think we have to look carefully at the debts we hand on to posterity. There certainly will be a very large national debt handed on to generations yet unborn, but that is valid provided we also hand on comparable national assets to offset those debts.
I am considerably worried, though, about the snowballing effect of public expenditure at all levels of government, and in this connection I would take as an example one of our public corporations which parliament has spent very little time considering in the past few years. I refer to the Canadian Broadcasting Corporation just by way of illustration. I am not saying these expenditures are necessarily wrong; I am using them as an example of the tremendous increase which has come about in expenditures.
In the year 1963-64 the C.B.C. spent $115 milion, in round figures, 70 per cent of which was paid by the government or a total of almost $81 million just to make up the deficit of the C.B.C. alone. As recently as the fiscal year 1907-08 the total budget of the federal government for all services was only $76 million. The C.B.C. costs the taxpayers more in a year now than it took to run this whole country in 1908.
I am concerned, too, about the very rapid increase in our debt at all levels of government, and I should like to briefly quote some figures for the information of this committee. In 1942 the total debt of all the provincial governments was less than $2 billion. By 1952 it was well over $3 billion and by 1960 it was over $7 billion. The federal debt in 1932 was less than $3 billion. In 1942 it was almost $7 billion and in 1952 it was over $11 billion. By 1960 it had reached $26 billion. In 1960 the total municipal debt in Canada was almost $5 billion, so that by 1960 we had a total public debt amounting to $38 billion, or about $2,000 in respect of every man, woman and child in Canada.
I am not saying this is necessarily a bad thing, but I feel the Canadian people should consider whether or not they have assets to balance this huge debt, assets in the form
Federal-Provincial Relations of public utilities and facilities resulting from these capital expenditures, such as roads and everything else which go to make possible the development of a country. If we have those assets, the situation is good. If we do not, we should watch very carefully that we are not overspending recklessly.
Having said that, I wish to conclude my remarks; but before doing so I should like to make one more appeal to the minister to examine carefully the formulae in this bill, because I think they produce an effect which is not entirely fair-relatively, that is-to the province from which I come, namely Prince Edward Island.


Mr. Francis:: This debate, as the hon. member for Digby-Annapolis-Kings has pointed out, has been the occasion for a number of good statements in the best parliamentary tradition. Some excellent observations have been made on the whole question of federal-provincial relations.
I think we have all become aware, in the period since 1945, that the requirements at provincial and municipal levels of government in Canada for additional sources of revenues to carry out their obligations in respect to such fields as education and highways, to name only two, have expanded very rapidly indeed. The present legislation recognizes this need, but it also goes as far as it is possible for the federal government to go, in my opinion, in terms of making concessions to recognize provincial requirements for more revenues.
There is a great deal of talk these days about the constitution and constitutional responsibilities. One of the things that frighten me is the degree to which a series of myths are gaining acceptance by the people who do not always look at the record and the facts. The first myth runs in these terms: since the second world war there has been a huge, bureaucratic, centralizing government which has strangled the life out of the provinces. It has become fashionable in many quarters to decry centralization and to plead the cause of provincial autonomy.
What people forget is that the wartime agreements eliminated a tax jungle of confused municipal sales taxes, provincial sales taxes, federal sales taxes, income taxes and so on. The tax rental agreements which eventually emerged provided for a national system which, in turn, made possible national development. What we must not forget is that those years since 1945 have been years of unparalleled growth; growth in population, growth in gross national product and growth in per
6654	HOUSE OF
Federal-Provincial Relations capita incomes. All provinces have shared in this growth, although some of them particularly the Atlantic provinces, have not shared as much as the others.
In this period the federal government did carry out several basic functions which in my opinion were absolutely essential for the continued growth and prosperity of Canada. On the whole, fiscal and monetary policies were followed which were appropriate for Canada's development. Vigorous trade expansion took place. Canada's representatives participated in conferences abroad with a well founded confidence that the government they represented could carry out the commitments made in Canada's name. Trade and commercial policy, monetary policy, protection of the Canadian dollar, policies concerning national development relating to our frontiers, our resources; these were all possible. Along with them went a tax structure that had a great deal of logic to it and went a long way toward minimizing overlapping of jurisdictions and unnecessary confusion.
These were good years. There is not a member of this house who will rise and say that our record of growth and development would not compare favourably with that of any other part of the world. In my opinion you are not a centralist when you say the federal government must protect its money and banking powers, must control immigration, and must represent Canada not only in external relations but also in trade and development policies with other nations of the commonwealth and the world. These powers are the essence of the federal function, and they cannot be destroyed.
At the other end of the scale there are functions which are clearly provincial. These included such fields as education, property and civic rights. There is no thought of the federal government taking any measures which would disturb the independence of a minority group or groups. Firm guarantees were written into our constitution years ago, and these must be respected.
Just as there is no serious thought of the federal government taking over provincial responsibilities, it would be equally disturbing to our national growth and prosperity for the provincial authorities to undermine federal powers. Canada could not have ten currencies, or ten trade policies, or ten immigration policies. Interregional and interprovincial barriers to trade must be resisted at all costs. There have been a number of speeches made on this aspect, including some by hon. members opposite.


There is, however, a large grey area between those powers which are exclusively federal and those which are exclusively provincial. This is the area where confusion has arisen on almost a continuous basis since 1867, and where our new concepts of cooperative federalism have most to offer. This area is perhaps well illustrated by health and welfare grants-


Mr. Nielsen:: I wonder if the hon. gentleman could inform us what document he is reading from?


Cyril Lloyd Francis: -where the principle of shared cost-


Erik Nielsen: I do not mean to be flippant If they are the hon. member's notes, that is fine, but if he is reading from some sort of text I think the committee would be interested to know what it is.


Lucien Lamoureux: My understanding is that the hon. member is referring to his notes or reading from notes, something which has been done quite commonly in the house.


Cyril Lloyd Francis: This area is perhaps well illustrated by health and welfare grants, where the principle of shared cost grants by the federal government to programs which are provincially operated has been steadily developed. It is fashionable in some quarters today to take all these arrangements and say that the federal government must get out of hospital insurance, health grants and unemployment assistance, blindness allowances, disabled persons allowances and old age assistance.
The difficulty with this approach is that the provinces which wish the federal government to leave these fields insist, quite understandably, upon compensation by way of additional revenue sources or additional tax abatement. The principle of opting out has been developed to provide compensatory grants to provinces that will not choose to participate in the shared cost programs. The present measure before us, for example, provides for an additional tax abatement of 3 per cent for those provinces not participating in the youth allowances program.
The problem here relates to how far tax abatement can go. In the present legislation the federal government will derive only 25 cents out of every dollar collected in succession duties. What will this mean when the problem of the amendment of succession duties legislation is considered? Any proposal to decrease succession duties-I admit that we do not often decrease taxes these days, but it

is conceivable that we might-could conceivably involve prior discussions at a federal-provincial conference. If we commit ourselves to such a degree that flexibility in regard to taxation by the federal government is impaired, then one basic federal function will have been destroyed.
The Minister of Finance and the hon. member for Digby-Annapolis-Kings both commented in the course of this debate that they were worried about the limited scope left to the Minister of Finance in relation to the job which he has to do. The Minister of Finance made it quite clear in the debate that he is convinced he has ample authority to do what he considers necessary. In my opinion the authority of the Minister of Finance cannot be curtailed any further than it has been, and I do hope that the annual conferences with the provincial ministers which are anticipated, from the remarks of the Minister of Finance, will not move into the field of detailed administration of federal succession duties or federal income tax legislation.
The Minister of Finance has been kind enough to make available to me some rough calculations of the effect of tax abatement on personal income taxes if the provinces choose to contract out of hospital insurance, hospital construction, health grants, old age assistance, blindness allowances, disabled persons allowances and unemployment assistance. If an equalized procedure is adopted in tax abatement, an additional 18 per cent might be involved for the province of Quebec on top of the 27 per cent which would be automatic, in the legislation now under consideration, for 1966. In other words a total of 45 per cent of personal income tax might be abated, assuming an equalized approach. If equalization is not adopted, an even greater percentage of tax abatement would be involved.
There has been discussion relating to some of these matters, but to the best of my knowledge and belief no other shared cost program has been under this type of discussion by spokesmen for the government. However, the premier of the province of Quebec last December made reference to opting out of the old age security program, and from my own calculations this would involve an additional 20 per cent. If we were to accept this kind of proposal- and I do not think any responsible group is suggesting this-in regard to family allowances also, something in excess of 80 per cent of income taxes might be involved.
Federal-Provincial Relations
It is abundantly clear that there is a limit to how far tax abatement can be adopted by the federal government on the opting out principle. If the provincial stake were to exceed 50 per cent, then the federal position would become difficult indeed. Up to the present point, so far as I am aware, no province has raised the question of participation in discussions on actual federal tax rates, probably because the percentage of tax abatement has been relatively small. I note from the press, however, that the conference of provincial premiers has raised a question of procedure for collection of each other's sales taxes, and a serious constitutional question is raised as to how far the provincial authorities can interfere with the federal powers. So far in this house we have heard a tremendous volume of complaint about federal intervention in provincial rights. I think it is equally valid to say to the provincial authorities, "Canada cannot exist as a nation if you undermine certain basic federal responsibilities in money and banking, currency and national development".
The over-all national rate of economic development must depend on federal policy. Basic to national development is the avoidance of a national tax jungle and, in this area, the federal contribution should not be subjected to any self denying act on the part of this parliament. As an easterner, for example, I deplore very much the attempt of the premier of British Columbia to set up his own bank. Surely banking and currency is a federal matter. I do not believe that the extension of provincial powers into certain federal functions is in the interests of Canada, and I believe it would lead to the impoverishment of every one of us if it were pursued relentlessly, as some quarters would have us do.
We all know that the key to responsibility is in the tax power and the allocation of revenues. The bill before us at present goes a long way to meeting the requests of the provincial authorities and, in my opinion, this is just as far as any federal government can go. There should be no question whatsoever of the federal ability to raise and lower taxes, to incur deficits or surpluses in accordance with what is considered to be appropriate for the particular stage of the business cycle in which we find ourselves. This ability cannot be compromised. If a federal-provincial conference must precede every change in the succession duties or the personal income tax, then the ability to carry out basic fiscal policy will have been seriously impaired.
6656	HOUSE OF
Federal-Provincial Relations
There is still another reason why we must think carefully before agreeing to a general extension of the opting out formula. The shared cost programs were a means of achieving minimum national standards in areas where confusion would otherwise have reigned. In hospital insurance, for example, each province worked out its own program. There are great variations in methods of financing programs, in administration and in the type of services provided through hospitals from one province to another in Canada. When each province signed an agreement with the federal government, however, as a result of which they received federal participation funds, they agreed to provide as insured service, hospital care at the standard ward level, to eliminate discriminatory charges and make provision to accept people who moved from one province to another without subjecting them to waiting periods. They also agreed to use uniform accounting procedures and a uniform basis of statistical reporting.
The shared cost programs recognized regional and provincial diversity but left the essential administration in provincial hands, and maintained at the same time a procedure for regular conferences of officials and the achievement of national minimum standards. These standards were achieved with the advice of conferences and through agreements in the general field of shared cost programs.
One cannot help but ask, what would opting out in health grants and hospital insurance do to the dominion council of health which meets every six months? How would its agenda be affected? Would provincial officials still confer regularly on their problems and try to deal with them in the same orderly way, exchanging experiences from the Atlantic to the Pacific in Canada? If Quebec, for example-again-opts out, who will be the spokesman for the French language hospitals and institutions at the federal conference table? Could a province which opts out still insist on its right to participate in the discussions relating to the administration of the non-opting out provinces? If Quebec were to opt out from a wide range of the health and welfare programs, could a federal minister from Quebec be responsible for that department in this house? These questions are very fundamental and are still unanswered.
A second myth of our time, which has been perpetuated by responsible people, relates to the revision of our constitution. Just a few weeks ago in this house we passed


a resolution asking the parliament of the United Kingdom to, in effect, amend our constitution so the federal authority could legislate for pensions with survivor benefits. I think spokesmen for every party in this house at that time rose and said how humiliating it was to have to go to the parliament of another country to amend our constitution, to ask for this permission.
It is quite clear why we must do this. The rule of unanimity of the ten provinces has been upheld, and not least by the province of Quebec, because that province fears that we cannot agree upon a procedure for amending our own constitution which will at the same time give to those of the French language and culture the minority protection that they have every right to expect. I do not blame or criticize the province for this fear; it is their right to insist on safeguards. Just for this reason our constitution cannot be amended here, and we must undergo the humiliating experience of asking someone else to change it for us.
I cannot help but contrast this with the speech made, for example, by the hon. member for Pontiac-Temiscamingue on July 13, when he added his voice to the chorus being raised for a constitutional amendment. The same hon. member for Pontiac-Temiscamingue denounced co-operative federalism in strong terms but had a rather grudging admiration for the contracting out or the opting out principle. I am not surprised at this, because it seems to me that the group he represents on that side of the house is in the process of opting out or contracting out from its own party. I think the full constitutional implications of the position they are taking have yet to be worked out by the people involved.
The same demand for a fundamental constitutional revision has come from the other end of the chamber from spokesmen for the Ralliement Creditistes. No small or minor amendment is envisaged but rather a fundamental amendment which would give the same province, the province of Quebec, the equivalent status of associate state. Those who wish to see what are the implications of this might recall the constitution of Austro-Hungary before the first world war in order to find the closest parallel.
It is astonishing to me to see how many responsible people in this house, and outside it, men holding senior positions in the press and public life, are insisting that the constitution be blithely and fundamentally rewritten, and are ignoring the rule of unanimity of

the ten provinces, which has been scrupulously observed at the insistence of the province of Quebec. Has any one province the right to think that the rule of unanimity can be waived like this because that particular province wants to make a particular fundamental constitutional revision?
The great renaissance which is going on in Quebec fills us all with admiration. We are filled with respect for them when we read of the construction of the Manicouagan dams, the development of hydro resources and the tremendous effort they are putting into education. We know that the results of these efforts can only mean good for all of us. We know that in doing this the government of the province of Quebec is serving its people constructively and well. But there are those in the province of Quebec, the lunatic fringe- there is one in that province as well as in other places in Canada-who have built up a very different type of expectation, who have on occasion demonstrated that they would resort to terrorism and violence. But they are a small minority.
The question which comes to my mind is what will happen when the expectations which have been built up in the minds of this group for associate state status are not achieved. Let us be more specific. Suppose the parliament of the United Kingdom by 1967 or 1968 were faced with a resolution from one province asking for a fundamental constitutional revision. Suppose that one or two provinces also asked for relatively minor revisions, and also suppose that resolutions were presented from a large number, if not a majority, of the provinces opposing constitutional revision. Does anyone think the United Kingdom parliament would act in such circumstances? If the United Kingdom parliament did not choose to act in such circumstances, what would be the consequences to the expectations which some people are now building up?
I	suggest, Mr. Speaker, that these are reckless statements made by responsible people who should know better, and they are influencing certain people who are ready to do these things and think they are within the reach of realistic attainment. Will the disillusionment which will then take place take the form which a radical and dissident group in that province has shown on previous occasions?
In my opinion, Mr. Chairman, the present legislation goes just about as far as we can expect the federal government to go in meeting the requirements of provincial authori-
Federal-Provincial Relations ties for additional sources of revenue. We have in Canada very clear fields which are the responsibility of the provinces. There are equally fundamental responsibilities for national growth and development, areas which must be a federal responsibility. In between, Mr. Chairman, is an area where our co-operative federalism must work, where we must work together in this grey area to achieve federal-provincial co-operation in a constructive way to develop those services which we have the right to expect and which all Canadians hope we will achieve.


John George Diefenbaker: Mr. Chairman, I take it the hon. member who has just spoken, having been in the higher echelon of the civil service for quite a period of years, in speaking today is speaking for the government, for he has behind him the authority of having been a bureaucrat in high position over a period of years. I had not intended to participate in the debate today, although I had a few questions to ask. However, the concluding words of the hon. gentleman will certainly bring to the provincial premiers a sense of fear regarding future financing, for if I took down his words correctly he said that this bill before the house and the plan offered goes about as far as the federal government can go. That is certainly a statement which means that the provinces are going to return once more, as was the case between 1952 and 1957, to the strangulation of finance which they suffered at the hands of the previous Liberal government.
I am sure the hon. gentleman did not speak without inspiration. He had a fully documented speech before him which he read with care and attention, all of which indicates that what he was doing was stating from the back benches what the front benches believe and concur in but as yet will not admit. We are indebted to him for the contribution he has made in this regard in bringing the searchlight of the back bench on the concealment of the front bench.


Cyril Lloyd Francis: Mr. Chairman, on a question of privilege, I should like to say that I spoke as a private member and that is all.


John George Diefenbaker: The hon. gentleman could not speak as anything but a private member, because that is his position. But what I was saying was that his speech bore all the indicia of having been inspired by the government of the day; and I am sure that if I am not right in this regard, when I conclude the Minister of Finance will immediately rise

Federal-Provincial Relations and disavow the theories advanced by the hon. gentleman. Indeed, I look forward to that disavowal in a very few moments. The Minister of Finance smiles with that benign countenance that he possesses and utilizes when embarrassing occasions arise. However, I welcome the expectation of hearing him disavow the political philosophy of the hon. gentleman and if he does not do so, while the hon. member spoke as a private member the theories he advanced had all the authenticity of the thoughts of the government of the day.
I am not going to go over the field I dealt with when I spoke on this matter at the resolution stage. I borrow the word "myth" from the hon. gentleman, because Liberal mythology is one of those things in respect of which there has never been an equal in this country. The hon. gentleman referred to myths. One of the myths that the government has endeavoured to exploit to the fullest extent is the myth that under Liberalism the provinces receive the best treatment.
So there will be no mistake in this regard I am going to place on the record the various amounts that were advanced to the provinces during the first year we were in office, and from 1957 on. So there will be no suggestion that I have failed to take full regard of some changes that were made in April of 1957 I am going to compare the amounts the provinces received during the period we were in office with other, lesser amounts which the provinces received under the St. Laurent government. After all, we now know the amounts that will be available to the provinces under the new plan that has just been enunciated. The new plan indicates that the additional amount that will be received by all the provinces in 1964-65 is $87,479 million; for 1965-66, $171,176 million, and for 196667, $264,973 million, or almost $265 million in round figures.
Sir, this is described as one of the greatest examples, if not the greatest, of the federal government translating the philosophy of cooperative federalism into practical dollars and cents. One naturally asks oneself this question. How is this extra amount of money to be raised? Is it going to be raised by added taxation on the part of a government that has already increased taxation in the period it has been in office by some $300 million a year? What is going to be done to meet even these additional amounts? Certainly there has been no indication given of the ways and means.

We used to hear arguments advanced in respect of the terrors of deficits, but the terrors of deficits are no longer felt by the government as they were when they were in opposition. The minister no longer talks of balanced budgets and no longer condemns deficits. Indeed, he embraces them to his bosom in a manner that is quite out of keeping with the views he expressed from 1961 on and, of course, even further removed from the views expressed in his one incursion into the book world.
Sir, I want to find out what is going to be done. How is this money going to be raised at the very time the United States of America, also with deficits, has greatly cut taxation? This government is increasing taxation and at the same time maintaining this very large deficit. I should like to know what the minister's philosophy is now. Does he believe that Canada can successfully compete for exports against the United States which under President Johnson has so materially reduced taxation? We want to know what the government's attitude is in respect of the problems of inflation.
During the period we were in office we maintained a level of prices in this country for the individual that was commended by the late president of the United States, President Kennedy, when he said that no other country in the western world had kept down the cost of living to the extent that Canada had. Today when the minister is asked these questions he just brushes them aside with generalities. The people in all parts of Canada are asking, what is his policy? What is being done to meet the increasing cost of living? What is being done to hold back the inflationary trend?


Eric Alfred Winkler: Nothing.


John George Diefenbaker: The hon. member for Grey-Bruce says "nothing", and that is in keeping with the facts.
All these questions concern the financial picture, Mr. Chairman. Where is the government going to get this money? They will get it in only one way, by continuing the course that this government has followed in increasing taxation and, in particular, by the imposition of that totally unjustified 11 per cent tax on building materials and machinery. What is the government going to do?
The minister may laugh off the question in respect of inflation, but everywhere across Canada people are asking, what is the government going to do about the greatest thief of the economy which is working

to an extent that we have not seen for a period of seven years, a thief that works insidiously reducing the purchasing power of the individual? Surely the minister is in a position to advise. He has told us the amounts of the increased contributions, and I have placed them on the record. He has given us the total amount of this increase in contributions and abatements, being of the order of $265 million.
What will happen when the pension plan comes into existence and hundreds of millions of dollars are siphoned off under it? What does the minister have in mind in this regard? We should have the answers to these questions, because unless we have them the provinces have no indication what the government intends to do in the future, except for the words of the hon. member for Carle-ton who put a wet blanket over the hopes of the provinces by stating that this is as far as they were going to go, and no farther. I imagine those words will be received with some dubiety by the premier of Quebec. He was promised $150 million or $250 million, I am not sure which, just before the election.


Walter Lockhart Gordon: What is the one hundred million?


John George Diefenbaker: I am not sure which is the correct figure, because there were two different reports of what happened during that Friday meeting.


Mr. Starr:: The minister says "What's a hundred million?"


Some hon. Members:: Oh, oh.


Walter Lockhart Gordon: Mr. Chairman, on a question of privilege-


John George Diefenbaker: I am speaking now. I have the floor.


Lucien Lamoureux: Order. The minister-


John George Diefenbaker: I have the floor.


Lucien Lamoureux: -is rising on a question of privilege.


John George Diefenbaker: He wants to back up now.


Walter Lockhart Gordon: Mr. Chairman, a few minutes ago the Leader of the Opposition said something about $150 million or it might be $250 million, and I should have got up to ask him whether $100 million did not make any difference to him. Unfortunately I spoke from my seat and I apologize to the committee for doing so.
Federal-Provincial Relations


John George Diefenbaker: The minister's interruption from his seat needs to be repeated: "What's a hundred million, anyway". It shows that when the hon. gentleman speaks from his seat he speaks from his heart.


Howard Russell MacEwan: Another C. D. Howe.


Lucien Lamoureux: May 1 ascertain the purpose of the minister in being on his feet?


Walter Lockhart Gordon: Just a question of privilege, Mr. Chairman. I am sure the right hon. gentleman would not want to misrepresent anybody in this house, but if he is not very careful he will be falling into that error.


John George Diefenbaker: Mr. Chairman, I am being careful. I pointed out that one newspaper reported that Mr. Lesage had been promised $250 million, and another said $150 million. In either case he certainly has not received what was promised before the election. When the hon. gentleman says I misrepresent him all I can say is that what he said is in Hansard, and I am sure he will have to explain from time to time what he meant, although "What's a hundred million anyway" is in keeping with the kind of amateurish tinkering that has gone on in the Department of Finance since he took the ministership. I am sure the hon. gentleman would not suggest that I am close to misrepresenting him in that statement.


Walter Lockhart Gordon: On that question I certainly would, and I do not think you should do it.


Mr. Mandziuk:: Thin skinned, eh?


John George Diefenbaker: Mr. Chairman, I am waiting for the answer from the hon. gentleman with regard to when he hopes to give us his considered views on the ideas advanced by the hon. member for Carleton who, while he spoke from the back bench, had the philosophy of certain members on the front bench.
Before I was interrupted I was comparing the manner in which the two governments, the present government with its $250 million over a period until 1966-67 and the previous government, had been of assistance to the provinces. When I spoke on an earlier occasion the minister was kind enough to agree that the various tables I asked to be put on the record should be put on Hansard. Unfortunately that was not done. Only one of the tables was placed on the record. For that reason I now wish to place on the record so there will be no mistake-


Walter Lockhart Gordon: I wonder whether I might ask my hon. friend a question. Is he aware

Federal-Provincial Relations that the table that was put on Hansard is incorrect and, if so, would he like to correct it at the same time he puts anything further on Hansard that he has in mind?


John George Diefenbaker: I took it from the record of the federal-provincial conference, and it was copied by Hansard. If it was incorrect it must have been because of one of those unfortunate errors that happen so seldom in Hansard reporting.


Walter Lockhart Gordon: I thought you would have checked it.


John George Diefenbaker: After all, surely Hansard is entitled to be wrong sometimes when the hon. gentleman regards $100 million as of such insignificance as he did just a few minutes ago. I will just place a summary of the figures for each province on the record, because it has been contended by the minister that this legislation is indeed the epitome of all the perfections in dominion-provincial relations. I should like to place on Hansard the figures in this regard for the last year of the St. Laurent government and the last year we were in office.
Starting with Prince Edward Island, the total amount paid to that province in 1956-57 was $5,048 million. I stated that I would also place on record the 1957-58 figures so no one could complain that I had disregarded the legislative enactments passed in the spring of 1957. The figure for 1957-58 was $7,072 million, while the figure for 1962-63 was $15,035 million or more than double the amount advanced in 1957-58.
For Nova Scotia the 1956-57 figure was $31,336 million while in 1957-58 it was $39,613 million and in 1962-63 $82,388 million. The increase was tremendous, more than double the amount available in 1957-58. For New Brunswick the amount in 1956-57 was $29,505 million, in 1957-58 $34,058 million and the preliminary estimate for 1962-63 was $66,484 million. There were vast increases in the case of the maritime provinces which had been neglected and starved for so long between 1935 and 1957.
I come now to Quebec. In 1956-57 the total amount by way of unconditional grants, conditional grants and payments for the benefit of provincial institutions was $177,463 million. In 1957-58 the amount was $205,896 million, while in 1962-63 it was $496,136 million, which represents a tremendous increase of approximately $250 million a year. Yet there are some who say that during the period we were in office we unjustly treated certain groups or provinces in this country.

For Ontario the figure in 1956-57 was $214.887 million. In 1957-58 it was $282,790 million and in 1962-63 the amount was $679,084 million. For Alberta the 1956-57 figure was $49,805 million, in 1957-58 $62,322 million and in 1962-63 $144,096 million. There is the same trend everywhere, vast increases of hundreds of millions of dollars and a total increase of over $1,000 million for all the provinces of Canada during the period we were in office. Yet those opposite speak of the increase being made under this present legislation as though it was something that had never taken place before. For British Columbia the 1956-57 figure was $77,911 million, in 1957-58 $92,690 million and in 1962-63 $159,096 million.
Those are the official figures, Mr. Chairman. Those are the figures that are appended as part of the record of the 1963 federal-provincial conference. Now, the minister has stated that there was some error in the record regarding the general, composite picture. If there was I can only say, as I said before, that Hansard had this particular document before it. If any correction is to be made I suggest that the minister do so, in order that all of us will fully understand what he meant by the interruption he just made while I was speaking.
There is the picture. It shows the tremendous increase in the assistance to the provinces to enable them to discharge their responsibilities. I repeat that if it had not been for our action in this regard we would not have had deficits during the period we were in office.
I come now to the question of the amounts that have been distributed. A moment ago I mentioned the promise made to the premier of Quebec. Whatever the amount was, it was certainly a long way removed from what actually has taken place. In the federal-provincial conference that took place in October, 1963 some $86 million was distributed. This distribution provided an extra amount for Newfoundland of $3,282 million; Prince Edward Island, $599,000; Nova Scotia, $5,742 million; New Brunswick, $5,558 million; Quebec, $42,716 million; Ontario, $14,416 million; Manitoba, $7,023 million; Saskatchewan, $2,469 million; Alberta, $1,722 million; British Columbia, $3,921 million. This division satisfied no one and was the reason for the major difficulties at the dominion-provincial conference early this year in Quebec city. What had happened was that consideration was promised, but consideration was given only to a modicum of what the promise actually was. I wanted to have the record clear so

there would be no misunderstanding of what has taken place under this legislation, because it represents very little compared to what was done on behalf of the provinces under the Conservative administration between 1957 and 1963.
When we come to those clauses dealing with the question of equalization, and the like, there will be some questions asked thereon. I am not going to say anything more at this time. One must be most careful not to raise any arguments in this house or continue the discussion of matters relating to hundreds of millions of dollars because there will be those who will say it is part of a plan to frustrate parliament. There was no better editorial on this subject than the one that appeared in the Winnipeg Tribune. I will not read it; I will simply bring it to the attention of the committee. It was entitled "Thermometer of Democracy". The title of itself is sufficient to indicate the purport of the argument advanced that there is a responsibility to discuss these matters, regardless of whether or not there be some who, either in their own interests or for political purposes, would endeavour to lead the people of Canada to believe that when arguments are made they are advanced for some improper purpose or, as some say, to bring about an election. This is furthest from our thoughts, and has been from the beginning. Our purpose is to discharge our responsibility, regardless of the thermometer, and to discharge it irrespective of the degree to which misrepresentations may be made as to our reasons.
If I may summarize, sir, I would say that after all the promises that were made as to what co-operative federalism would bring about, we find that the experience since April, 1963 can be properly interpreted by the phrase "muddled uncertainty." This has been a government of accidents. There have been constitutional accidents. So far as the minister is concerned, he has given paternity to a series of economic accidents. When one looks at what we have before us today I can only wonder what the Liberals sitting opposite would have said were they to describe it in the kind of terms they used when we were in office. Meaningless, they said; unimportant; merely a bone. We do not say that to them, although the minister does think $100 million is of no significance. But we do say that if the hon. member for Carleton, who is not in his seat now, was speaking with the authority that his appearance would indicate, it is a sad day for the provinces of Canada;
20220-421J
Federal-Provincial Relations because under this plan, which apparently is to be the last, there being no further expansion in the mind of government, the provinces cannot discharge their responsibilities.
This brings me to place before the minister the need for this question of constitutional development, changes in the constitution, repatriation and all those things which can only be decided by a constitutional conference given the authority to meet over a period of weeks. The holding of such a conference would permit the exchange of frank opinions to bring about the agreement necessary for changes in the constitution as well as the means whereby the provinces will not be denied the ability to discharge their responsibilities, while at the same time assuring the federal government the fullest means for carrying out the great responsibilities that must be discharged and can only be discharged by the federal government.


Mr. Martineau:: I do not have very much to say at this stage of this debate. I have already expressed some opinions during the resolution stage, and if I rise at all at this moment it is to continue along the line which the Leader of the Opposition has just taken with regard to some of the remarks made by the hon. member for Carleton.
I know he is a private member, as he so modestly and humbly stated to all of us, and we believe that to be the case. At the same time we know-and I do not think his modesty will be shocked when I say this- that he is a much respected supporter of the present parliament and, whether or not he speaks with the tacit or explicit approval of the Minister of Finance or other front benchers, his words cannot fail to find an echo in their minds and be reflected in the decisions they may make in the future.
The hon. member for Carleton brought out a number of interesting points, and I listened to them with great attention. First, in regard to co-operative federalism, he seems to think that anyone who criticizes this approach is almost a traitor to this country; that is the only way in which I can interpret some of his remarks. Well, I think co-operative federalism has been a complete failure, no matter how many smokescreens the government may put up to disguise the real position. I believe it has been a failure not only from the point of view of the province I happen to represent but also from the point of view of the other provinces. Many enlightened people in Canada are asking, is it co-operation? Is it even

Federal-Provincial Relations federalism? I, for one, have great doubts that it is federalism.
What are the objections to co-operative federalism? Some people say-this is the thesis of many authoritative spokesmen of the province of Quebec-that it is a disguised way of violating the constitution. This is what it amounts to; because apparently it is held by those who advocate cooperative federalism that the provinces can agree together and, by agreement reached behind closed doors, arrive at decisions which are plainly contrary to the provisions of the British North America Act.
I know the hon. member for Carleton may say "What does it matter, provided we agree?" But we cannot, by agreement, commit a crime or perform any other illicit action. Similarly, those who from time to time represent provinces cannot by agreement bind their provinces for the future when it is contrary to the law of the land. Yet that is what they are doing, and this is why so many people have drawn attention to the dangers that are inherent in this approach to co-operative federalism. These are serious objections raised by people who are constitutional authorities in the province of Quebec, objections made in good faith by people who are in favour of co-operation and in favour of confederation.
Where is this approach likely to lead us? Many people believe that, perhaps unconsciously and in an indirect way, the government is leading up to a situation which amounts to de facto separatism. Many editorials in publications throughout Canada have raised this question, and the government has not been able to answer. The situation now is that the federal government, for alleged reasons of economic necessity or for other reasons, is invading those fields which the hon. member for Carleton called "grey fields", though I do not think they are grey at all; to me they are either black or white. In any event the federal government says to the provinces, referring particularly, perhaps, to the province of Quebec, "You have nothing to worry about because you can opt out if you wish to do so". A provincial government which finds itself unable to accept the proposition then signifies to the central government its intention to opt out and, in compensation, receives a fiscal concession of some sort so that it may go ahead and implement its own plan. After this process has been repeated over and over again in various fields one ends up with a situation which amounts to de facto separatism, a situation
tMr. Martlneau.]
where there is one law for one part of the country and another for the rest.
I say there are serious and well founded objections to this approach along the lines of co-operative federalism. I say it is not a solution. It is not a solution for those who believe in a strong central government, and it is not a solution for those-and I am one of them-who while being convinced federalists and admirers of confederation stand for the rights of the provinces. The way to go about this is surely to bring the various parties together and seek an amendment to the constitution itself. Then if there are departures from the present way of doing things, those departures will be based on a legal enactment. At this time there is no legal basis for the way in which the government is carrying on its relations with the provinces, fiscal or otherwise. That is why I protest.
The hon. member for Carleton says those who argue in favour of constitutional amendment, or repatriation of the constitution, do not know what they are talking about. I can only say he is placing the Prime Minister of this land in that very position, because the right hon. gentleman has made numerous speeches in this house pointing out the need to effect the changes necessary to bring about that harmony which is essential to the very future of this country. That is the logical approach to this question. We cannot bury our heads in the sand like ostriches. We cannot be content to say that as long as we are able to reach agreement we shall pursue our objectives, and if Quebec or some other province does not like it, they can opt out.
Mr. Chairman, it does not take too much imagination to see where that can lead. The hon. member for Carleton said "You cannot get a constitutional amendment, because you cannot get agreement". He said that the last time an attempt was made the province of Quebec, for very good reasons, refused to accept the formula. As I recall, it was not the province of Quebec at all that refused to accept the formula for this repatriation; it was the province of Saskatchewan. They were the nigger in the woodpile in that particular instance.


Cyril Lloyd Francis: On a question of privilege, Mr. Chairman, if the hon. member wants to quote me he should quote me correctly. He has misquoted me twice in the last minute. One misquotation was when the hon. member said I had said people did not know what they were talking about. I never used that language. The second was, with regard to the last attempt to amend the constitution I did

not say that any particular province was the objector; I did not name any particular province in that connection.


Paul Raymond Martineau: Mr. Chairman, I can with difficulty quote the hon. member, because I do not have his text. But I did listen to him very carefully. I do not pretend to quote him, but I do think I am commenting in a fair way on his remarks. I am not going to quote him word for word; I do not want to, and he cannot force me to do so. But I think his words are open to fair comment in this house, and they will be as far as I am concerned.
The hon. member went on to say "Well, you cannot have it both ways". I agree that you cannot have it both ways; but you certainly can, if you are conscious of a malaise, which is very apparent in this country in the relations between the federal government and the provinces, and indeed a malaise in the very fibre of confederation, try to find ways and means of seeking out that malaise and eliminating it. The way to do it is certainly by a constitutional convention or, if you like, a constituent assembly; call it whatever you will, but in any case an assembly where the federal and provincial authorities and those concerned with the problem can meet and consult.
I know the objection to that is "Well, you cannot get agreement among the participants". That is obviously a very negative approach. On July 13 I spoke on this resolution and I approved of the idea, submitted by the Leader of the Opposition, of a constitutional meeting. I went further and said I thought it should be a constituent assembly. But I also said that preparations for that meeting should be made long in advance by a series of meetings at the provincial level; a meeting of specialists; by setting up a constitutional committee of the Senate and House of Commons, and by all these bodies and people getting together and preparing an agenda upon which the participants could be reasonably expected to agree. When that has been done and the assembly does take place, I have reason to believe that if we do not solve all the problems which beset confederation at least we will have made a very good start.
That is simply the attitude that we on this side of the house have taken all along. I have stated time after time that I felt confederation was a success, but that it must be improved; and the urgency to improve it is all the greater when one considers the renaissance of Quebec to which the hon. member for Carleton referred a few minutes ago.
Federal-Provincial Relations
The province of Quebec, today more than ever before, is conscious of its power and weight within confederation, and is anxious to play its full part within confederation. It is seeking ways and means whereby it can preserve its identity and at the same time progress with the rest of Canada. If thinking in such a way is being reactionary or is a threat to confederation, I am guilty of that offence, Mr. Chairman.
These are the terms in which I have always spoken. I have time and time again condemned, for instance, the attitude taken by the group on my extreme left, which attitude was again brought out by the meeting last week end in Quebec city. That group has come out very squarely for the status of an associate state and has asked that the future associate state, if it is the province of Quebec, have full control of credit, of immigration, of imports and exports. They say Quebec should also be fully responsible for the collection of its taxes.
I think if such an attitude is adopted it is simply and purely separatism, and nothing else. Whether or not they use the term, it can only lead to separatism. How can a province or a state, if you want to call it a state, be a member of a federation when at the same time the central government that speaks for the federation cannot collect any taxes for that province? There is no representation without taxation; therefore if the future associate state, that exists only in the imagination of a few on the extreme left of the chamber, is to come about you will have separatism.
I therefore condemn the attitude that was taken by the Ralliement because it is a completely hypocritical attitude. If they adopt attitudes that are separatist let them say they are separatist and they will be more respected for it. But even while adopting that attitude they are afraid to say outright that their attitude can lead to nothing but separatism.
I have heard the hon. member for Lapointe and others point out the condition of the state or colony, whatever it may be, of Puerto Rico and say that is the form of government toward which the province of Quebec should evolve. That is utter and complete nonsense, and no one in his right mind can take any other attitude in that regard. The state of Puerto Rico does not have the right to elect anyone to the United States congress. It is not represented there; it does not pay taxes, and has nothing to say about the way in which the United States is administered. It may have some local authority, but that is all.

Federal-Provincial Relations That is not the future I envisage for my province, and it is not the future I envisage for Canada as a whole.
I think the attitude of the Ralliement is not only hypocritical but is also opportunist, because its members were elected on a monetary reform ticket. The people who voted for these members did so in good faith, thinking they were backing a federal party which had some chance, as it seemed at that time, if not to attain power at least to have a substantial say in the balance of power and also to bring into effect the monetary reforms which it preached. But it broke up; the party split up into two wings and the Ralliement, seeing that no one in the province of Quebec or elsewhere would take it seriously on its platform of monetary reform, has now swerved sharply toward an extremist and separatist attitude for which it has no mandate and which certainly the bulk of the population in the province of Quebec will not follow. It has not studied the implications of that position and it has not got the capacity or the knowledge to implement it.


Mr. Belanger:: Mr. Chairman, would the hon. member allow a question?


Paul Raymond Martineau: Yes, Mr. Chairman.


Louis-Philippe-Antoine Bélanger: Mr. Chairman, the hon.
member has just stated that the monetary reform proposed by the Social Crediters cannot be accepted by anybody. Does he mean by that that the 600,000 French Canadians who voted for Social Credit are all insane?


Paul Raymond Martineau: Mr. Chairman, it is clear that the hon. member misunderstood the meaning of my remarks, because I said indeed that those who voted for Social Credit in the last general election were of good faith and sincerely believed that the Social Crediters who would be elected would endeavour to apply the monetary reform they had preached throughout the province. But instead of doing that, they split and when they saw that the chance of applying the monetary reform they had proposed was too small, they decided to turn to an extreme nationalism which is also hypocritical.


Louis-Philippe-Antoine Bélanger: Mr. Chairman, I rise on a question of privilege. The hon. member for Pontiac-Temiscamingue stated that we were not of good faith and that we did not apply our monetary doctrine. He must be intelligent enough to understand that it was impossible up to the present to impose our monetary reform, because we are not in office.


However, we did our duty, because we asked for it as often as we could.


Paul Raymond Martineau: Mr. Chairman, I think the hon. member's question of privilege is ill-founded and rather tends to start a debate.
I have certain opinions concerning the approach and the program of the Ralliement Creditiste and I am entitled to put them forward. So, I say the attitude adopted by the Ralliement creditiste in Quebec city is reactionary and contrary to the main interest of the province of Quebec and of Canada as a whole.


Mr. Chapdelaine:: Mr. Chairman, would the hon. member allow me a question? Would he tell the house whether he makes a distinction between the Social Crediters who are extremist nationalists and those who are not?


Paul Raymond Martineau: Mr. Chairman, it is clear that I must make a distinction, because I am referring to the Creditiste convention held in Quebec and called together by the Ralliement Creditiste, and the supporters of that group have nothing to do with those who support the hon. member for Red Deer (Mr. Thompson).
The members of the Ralliement Creditiste are not qualified to give leadership to the province of Quebec or to the Canadian confederation, and in adopting such an opportunist stand, they are now trying to use the cloak of nationalism to come into office either at the federal or at the provincial level.
Mr. Chairman, I think that responsible people in the province of Quebec will condemn such an attitude and will realize that they are merely dealing with opportunists.
I suggest that they should think of what is happening in the world at this time, and more particularly of the pan-African conference held at Cairo last week, or of the gigantic efforts being made in favour of the unification of Europe.


Louis-Philippe-Antoine Bélanger: On a point of order, Mr. Chairman, I do not feel the hon. member should be allowed to refer to the Ralliement Creditiste convention when we are dealing with fiscal arrangements between the federal government and the provinces. I therefore ask you to call the hon. member to order.


Mr. Fisher:: Mr. Chairman, I rise on a point of order. I believe this bill passed through a resolution stage, at which time there was a general debate. I believe the bill had a second reading stage, where there was a general debate. I believe we are now in committee on

the first clause of the bill. While I believe there is allowed a generality of debate relating specifically to the bill, I suggest that the latitude in this regard-1 am not accusing the present speaker but recent speakers-has been a bit too broad. I think the Chair should call the speakers to order and get them to deal more specifically with the bill; otherwise this rather interesting debate with all its ramifications could go on and on. I really cannot see, and this is the point of my point of order, with all due respect to the present speaker and to some of the previous speakers, what relationship their general points have with the bill in question.


Paul Raymond Martineau: Mr. Chairman, may I speak to the point of order. As the hon. member for Port Arthur has said, the debate has been broad and it would not be fair to curtail it. However, my remarks are directly related to the bill because they concern fiscal relations between the provinces and the federal government. I have spoken about co-operative federalism; I have also spoken against an attitude which is very topical and which was adopted last Sunday at Quebec city. If that attitude were to prevail it would make a mockery of the present bill, which tends to regulate fiscal relations between the central government and the provinces. That is the reason I am bringing that out at this stage, and I do so for no other reason.


The Deputy Chairman:: Shall clause 1 carry?


Paul Raymond Martineau: I thought you were going to rule on the point of order, Mr. Chairman.


Herman Maxwell Batten: I was going to say that I thought the point of order raised by the hon. member for Port Arthur was well taken. I think the debate has wandered a little far afield. While there is a connection between what the hon. member is now saying and the first clause of the bill before us, perhaps the hon. member would confine himself as closely as possible to the general terms of clause 1.


Paul Raymond Martineau: I will certainly do that, Mr. Chairman, although I think I have been confining myself rather closely to the implications of clause 1. If attitudes such as those which have been adopted by the members of the Ralliement were to prevail we would have to vote against the bill. According to these people there would be no fiscal arrangements possible at all, because if you follow their theory the imaginary associate state of the future would not be subject to taxation. That is the reason it is so pertinent to
Federal-Provincial Relations the bill to bring out what I think are false theories concerning federal-provincial relations. However, I shall abide by your ruling, Mr. Chairman, and bring these few remarks to a speedy conclusion.
I was just telling hon. members of the Ralliement that their attitude is reactionary in view of the trends throughout the world and in view of the real needs of our own country. As I said at the start, and I will say again, I believe that Canada by and large has been a happy and prosperous country under confederation, and it behooves us to try to conserve and preserve that system. But it will only be conserved and preserved, and it can only survive, if we become fully conscious of the problems which are besetting confederation, and if we have the will to solve them. And we will have the will to solve them, Mr. Chairman, if we simply recognize the basic fact of Canadian life-call it the French fact, call it the English fact, call it Quebec, call it whatever you like-the aspiration of the people of the province of Quebec to fulfil their destiny and play their full part within our nation.
Mr. Chairman, I will challenge any member of this house to attend a forum anywhere in Canada and debate that question. I send this challenge particularly to the member for Carleton who seems to come to wrong conclusions about remarks that may be made in this house. If he or anyone else is sincerely animated with a desire to make things better and more acceptable, let them participate in such a debate.
I will combat any reactionary attitude taken by the Ralliement. I will also combat the hypocritical attitude taken by the present government, as indicated by its highfalutin phrases such as "co-operative federalism". I have never heard the present government, and least of all the Minister of Finance, define what he means by co-operative federalism. He does not seem to know what it means. Every time the members of the government are invited to speak to different bodies in various provinces of the country they do so in flowing terms about this new era of cooperative federalism. To my mind their policy is neither co-operative nor federalism.
The answer to present problems is not contained in the proposals of the Ralliement. The answer is not contained in the present attitude of the government in shying away from its responsibilities in this regard. The answer lies in a statement admitting that the problem exists, and an honest endeavour to find a

Federal-Provincial Relations solution. The Prime Minister has had the courage on more than one occasion to admit that there is a problem. I applauded him on those occasions and will applaud him again. Unfortunately he has not had the determination to deal effectively with this problem. That is why we accuse the present government of a lack of determination.
The step to be taken and the course to be followed is contained in the proposals we have made in respect of constitutional assembly preceded by all the safeguards I have enumerated on previous occasions. I urge this committee to seek this solution in a broad spirit of true confederation and co-operation. If the government gives a lead we on this side will follow enthusiastically. We believe in the future of our country which we all love.


Mr.   Col@: Mr. Chairman, may I ask the hon. member a question?


Paul Raymond Martineau: Yes.


Mr. Cote (Longueuil):: If the people living in nine of the ten provinces accept the constitutionality of a certain law this government intends to pass, a law which might involve an overlapping of jurisdiction in one province, do you feel that one province should be allowed to deprive the nine provinces of the benefits of this law even though that one province receives fiscal compensation?


Paul Raymond Martineau: Mr. Chairman, the answer
should be obvious, even to the hon. member.
It seems quite clear and logical that a majority cannot infringe upon the constitutional rights of a minority, even under an agreement.


[Stage Direction]
Clause agreed to.
Clause 2 agreed to.
On clause 3-Additional grant to Newfoundland.
Mr. O'Keefe:: Mr. Chairman, in view of the importance of clause 3 to my province of Newfoundland, may I ask the minister whether clause 3 has been designed after careful consideration of term 29 of the terms of union of Canada with Newfoundland?


Walter Lockhart Gordon: Mr. Chairman, I did intend to make a remark in respect of clause 3 to clarify that point.
Clause 3 under the heading, Newfoundland grant, was inserted in this bill because the bill itself was amending the Federal-Frovin-


cial Tax-Sharing Arrangements Act, and it was felt that advantage should be taken of this fact to remove the limitation on these payments in that act to March 31, 1967.
While in opposition the present Prime Minister gave the following undertaking:
A new Liberal government will restore term 29 to the constitution, and ask the parliament of Canada to guarantee the payments to Newfoundland under term 29 so long as they are not changed by an agreement freely made between the government of Newfoundland and Canada. A Liberal government in Canada made the agreement with Newfoundland and a Liberal government will see the agreement is kept in letter and in spirit.
Neither the Prime Minister nor the government regards the present amendment as a full discharge of this undertaking. It is the intention of the government, during the life of the present parliament, to bring in a separate measure which will carry out that undertaking and which will relate it to the terms of union with Newfoundland, of which it is essentially a part.
It was however thought that since the Federal-Provincial Tax-Sharing Arrangements Act had to be amended at this time anyway, the limitation as to date should be taken out at once pending the more formal step which must be taken in order to recognize the constitutional right of Newfoundland as embodied in term 29 of the terms of union.


[Stage Direction]
Clause agreed to.
On clause 4-Change in computation of "standard individual income tax".
Mr. Cowan:: Mr. Chairman, as a member of this House of Commons from the city of Toronto in the province of Ontario I presume many think I should approach with diffidence any discussion of the fiscal tax sharing arrangements with the provinces. I wish to comment on the method of computing the tax moneys which are allocated to eight of the ten provinces, and I do so in all sincerity because I love this country of ours.
I agree with the hon. member for Digby-Annapolis-Kings, and the hon. member for Toronto-Davenport, both of whom expressed themselves on Friday, that the confederation will remain and become stronger and greater in the future. I do not believe that confederation will fall apart. I believe that only by careful examination of the fiscal arrangements between the ten provinces and the federal government can we maintain that equanimity of feeling which is much to be desired, particularly if we are to accomplish the building of this nation into a stronger and greater Canada.

I am sure we are all familiar with the proverb: The squeaky wheel gets the most grease. It would appear that some individuals are aware of that proverb. I would remind them of another: Still waters run deep. We have heard a great deal of comment and complaint about the feelings of one province being different from those of the other nine. Some people take every opportunity to unburden their mouths of any weight they may feel on their tongues.
I should like to point out that the people of my riding are not the only people in Canada who feel the formula on which these tax-sharing arrangements are based needs to be carefully scrutinized and rewritten. You have heard the hon. member for Carleton express himself today to the effect that the federal government has gone as far as it can go in respect of these tax-sharing arrangements without weakening the central authority. I should like to point out that I believe in equalization payments. I believe it is necessary for a strong central government to make sure that those areas of this nation, which do not have fiscal resources upon which they can draw to make them as strong as the strongest parts, do receive help. I do not believe that the strong and able sections of this country are entitled to fiscal payment. They are well able to look after themselves.
I would mention two episodes that occurred in Toronto. Many years ago there was a great drive to build a community hall, skating rink and gathering place in north Toronto. Thousands of people put their hearts and souls into the drive and a great deal of money was raised before the campaign was halted by the realization that the money was not reaching the end to which it had been directed by the donors. There was quite a bit of talk and comment. The drive came to a sudden stop and it took some years before the people of north Toronto recovered sufficiently to build on a smaller scale. But they are still conscious of the fact that money voluntarily given did not achieve the purpose intended because of the hands through which it passed.
Then we had the sad experience in my own riding of York-Humber of hurricane Hazel in 1954 when a great deal of damage was done and 74 lives were lost by drowning. There was a tremendous upsurge of public opinion in favour of helping those who needed help and great contributions were made. Large sums of money were raised. But is was suddenly found that a great deal of the money 20220-422
Federal-Provincial Relations was not reaching the end for which it was intended and a great freeze developed among the goodhearted people who felt the victims of hurricane Hazel should be helped. They wanted to help them but they felt that as long as there was a toll gate between them and the victims of hurricane Hazel they would allow their wellsprings of charity to dry up.
So far as fiscal arrangements are concerned I am all for aiding those areas that definitely need help, and when I state I am in favour of a change in the formula I am only repeating statements made by the hon. member for Jasper-Edson, the hon. member for Bumaby-Coquitlam and the hon. member for Medicine Hat. They emphasized that the factors being used in devising the formula for the payment of these moneys needed to be drastically overhauled. As a private member I should like to state that I agree with the comments made by the hon. member for Jasper-Edson, the hon. member for Burn-aby-Coquitlam and the hon. member for Medicine Hat in their thoughtful and thought provoking comments with regard to the manner in which provinces are judged to be wealthy and well able to extend assistance to others.
When the hon. member for Burnaby-Co-quitlam was speaking he made such statements as "I criticize the formula", "I think there are many things wrong with the formula", "there must be some pooling and some sharing of the tax revenues, particularly tax revenues which are jointly occupied by the federal and provincial governments, namely, income, corporation and inheritance taxes". So many comments were made with regard to the formula and the way in which it was devised that the Minister of Finance, who has my unbounded admiration and to whom I give 100 per cent allegiance in the difficult task he has before him, when commenting on August 7 on what the hon. member for Bumaby-Coquitlam had said, made this statement, as found on page 6651 of Hansard:
The difficulty is to find a formula with which everybody will agree. I am not prepared for a minute to say that the formulae developed in the past were perfect or that they could not be improved on. I am not prepared to say that the present formula cannot be improved upon...There are many other difficulties.. .which are contained in this formula. I do not think it is perfect. I am not pretending that it is or pretending to defend it in that respect.
I think that was spoken like a man who is faced with the problem of province after province demanding more and more money, and the hon. member for Davenport is the man who is supposed to be able to produce it.

Federal-Provincial Relations I say to hon. members that there is a limit to which the Minister of Finance can go, and the hon. member for Carleton has stated definitely that he thinks that limit has been reached. There are a few of us who think that the limit has been exceeded.
We are told that the only way we can have unity in this country is to assist the provinces in their aspirations. That is a great phrase-assist them in their aspirations. It is softer than "yield to their demands". I would point out that when children ask their father for something he has to determine his gifts to his young ones on his ability to supply them. Just because children ask and ask and ask for more and more and more is no reason for thinking that the father is able to supply, supply, supply. In answer to such demands the father tells his children: I am unable to meet your desires in that regard but I will do my best. If I cannot give you a Thunder-bird car as your own personal possession we will allow you to ride in the family car. If we cannot give you seven changes of raiment, one for each day in the week, we will at least keep the one or two suits you have in good repair.
Surely to heaven the federal government, surely to heaven the Minister of Finance- I say this without having spoken to him in advance-are entitled to say:	Curb your
aspirations, curb your requests; there is a limit to what can be done and it looks to many of us as though that limit had been reached.
The hon. member for Carleton made a direct reference to the province of Quebec. I am happy he made that reference because if I had been the first to make a direct reference to Quebec the newspapers would immediately have headlined me as a hater of Quebec, a hater of French Canadians, a hater of everything east of the Ottawa river. In the name of God, I do not know anybody in this house who is more favourably disposed to the province of Quebec than I am. My mother and father are still living at Messines 90 miles up the Gatineau. I have a married brother in Montreal. My oldest married daughter is living in Quebec city and raising four children there. I have cousins throughout the province and I have known it all my life.
When I speak about Quebec I am confining myself to factual matters because some people who endeavour to speak for the province cause a lot of umbrage in certain quarters by statements they make which cannot be founded on fact. I have here the debates of

the House of Commons for the 1963 session, volume I, May and June, 1963. I refer to pages 152 and 153 where a speech by the hon. member for lies-de-la-Madeleine is to be found. He was speaking about how hard done by his native province is and I quote him as follows:
I have before me a document which shows that there was $497 difference in 1961 in the personal income as between a resident of Ontario and a resident of Quebec; this means that in Ontario the per capita income was $1,829 while in the province of Quebec it was only $1,382, a difference of 37 per cent.
Well, Mr. Speaker, how can the citizens of the province of Quebec...be willing to accept a situation where they are at a financial disadvantage compared to the citizens of Ontario?
He went on to say:
-unless the central government.. .comes and facilitates the renovation work undertaken by the Liberal government of Quebec... Quebec shall not be able to achieve the aims which we have set forth and consequently, we shall continue to have grievances against the rest of Canada.
He did not identify the document from which he read. I have before me the document which shows a difference of $497 in 1961 between the per capita income of residents of Ontario and Quebec. The words he used were "as between a resident of Ontario and a resident of Quebec". This is the difference in the per capita income. Why this table appears in the national accounts, income and expenditures booklet put out by the dominion bureau of statistics, I will never know.
This book, under table 29 for the year 1961, shows the per capita income for Quebec is $1,382; the per capita income for Ontario is $1,829 or a difference of 37 per cent. But I ask you, why in the name of heaven should every baby at the breast, child in his cot or kid in his crib be counted in considering income of a province and a demand be made that every one of them have the same per capita income as the other provinces where the number of children is not so large?
Let me give you figures to show the position of the province of Quebec. It is not 37 per cent inferior to the province of Ontario. I have in my hand the taxation statistics published by the Department of National Revenue for the year 1961. They show you that the number of taxable returns from Quebec in 1961 was 1,122,096. The total income assessed was $4,790,503,000. The average income per taxpayer-not the number of children nor the number of babies-the average income per taxpayer in Quebec was $4,269. In Ontario, the number of taxable returns for the same year was 1,886,702. The

total income assessed was $8,486,573,000. The average income per taxpayer was $4,498. The average income in Ontario was $4,498 per taxpayer and in Quebec it was $4,269. This is a distinction of only 5.3 per cent and is a great deal different from this per capita of 37 per cent, which signifies nothing.


Joseph Julien Jean-Pierre Côté: May I ask a question? Does that include those who do not earn enough to pay income tax?


Ralph Bronson Cowan: I point out that the figures are available from the taxation statistics of the Department of National Revenue to indicate the number of people who file income tax returns but do not pay income tax because of the amount of their exemptions. These figures indicate that the province of Ontario and the province of Quebec compare very well. I went down to the Department of National Revenue and asked them about these figures for people who do not pay any income tax and who are listed in the green book. I was advised that the Department of National Revenue is very happy with the returns they are receiving from the people of Canada, those who have to pay income tax and those who do not. They advised me that many of the returns from those who do not pay income tax are sent in by people who wish to obtain refunds of income tax deducted at the source. In looking at the population statistics published by the dominion bureau of statistics, the Department of National Revenue feels that the figures shown for non-taxpaying people are quite accurate. If there is anyone who wishes to look at the taxation statistics booklet he can find the figures indicating the number of people who do not pay any income tax in any of the ten provinces. He will be interested in seeing that on an average basis Ontario and Quebec are nearly equal.
I pointed out that the average income in Ontario was $4,498 and the average income per taxpayer in Quebec was $4,269. As I said, this represents a difference of 5.3 per cent in earnings. Bearing this in mind, we come to the question of the tax on the two incomes. In Ontario, the taxpayer would pay $145, whereas in Quebec he would pay $78. There is therefore a difference of $67 in the tax paid by the two taxpayers, and the differential between the Ontario taxpayer's income and the Quebec taxpayer's income is only $162 a year or approximately $3 a week.
In order to give a more open example of what per capita income means, let us take the case of two men who are railway engineers. They belong to the same union, but one works 20220-422J
Federal-Provincial Relations in the province of Ontario and the other works in the province of Quebec. We are talking about per capita now. The engineer in Ontario and the engineer in Quebec work for the same employer, under the same agreement, at the same rates of pay. The man in Ontario exercises considerable self-control and has two children. The man in Quebec, because of his love of children, may have a larger number and he pays no income tax. Then we are told that the man in Quebec must be brought up to the same level of pay as the man in Ontario because the tax figures show there is a man in Ontario getting so much and there is no corresponding man in Quebec. I suggest to you they are already drawing the same pay, so what has the per capita to do with it? If these people wish to have that number of young, that is their own concern. I do not see why it should be thrown up in the face of the parliament of Canada that the per capita income should be made the same in the entire Dominion of Canada.


Gérard Chapdelaine: I rise on a question of privilege, Mr. Chairman. The hon. member who has the floor just said-


Herman Maxwell Batten: Is the hon. gentleman rising on a question of privilege?


Gérard Chapdelaine: Yes, Mr. Chairman.
The hon. member has just insinuated that if families in Ontario are smaller than in Quebec, it is due to the continency that is practised in Ontario. I should like to remind him that continency is not the only way to achieve that result and that there are many other means.


Ralph Bronson Cowan: I fail to see the point of privilege but you called me to order, Mr. Chairman, and I sat down.
I should like to draw your attention to a report appearing in the Montreal Gazette for August 3. It is headed, "Toronto Payroll Leads Country". If you read the short item you will find it points out that metropolitan Toronto has a civic payroll numbering 21,926 people who drew a total wage in 1963 of $98,628,583. Montreal was next with 20,680 employees and a total payroll of $97,586,964. These figures are from the dominion bureau of statistics. I thank heaven they did not get into the per capita figure. If you take the number of employees for Toronto, 21,926, and divide it into the payroll of $98,628,583,

Federal-Provincial Relations you will find a Toronto civic employee earned an average of $4,498.24; Montreal, the 20,680 employees earned an average of $4,718.90 or $220.66 more than a civic employee in Toronto.
I can see nothing wrong with those figures. Montreal civic employees are slightly better paid than those in the city of Toronto. The $220.66 figure represents about 4.9 per cent over the Toronto scale, and this is indicative of the fact that people in Montreal, Quebec, can earn just as much money as the people in the province of Ontario, in Toronto.
Let me give you another episode to show you how well paid the people of Quebec are and to get rid of this ridiculous 37 per cent differential. "Until it is overcome Quebec will never be satisfied and they shall continue to have grievances against the rest of Canada." I have in my hand the Canadian statistical review, historical summary, put out by the dominion bureau of statistics for the year 1961. Table 24 on page 35 indicates that the average weekly wage and salary for the province of Quebec was $75.33, while for the province of Ontario the average weekly wage was $81.15, a difference of 7.7 per cent. These figures were based on the year 1961. The 1962 figures have now become available and they show that the gap between Ontario and Quebec has narrowed slightly. The average wage in Quebec has gone up to $78 a week and in Ontario it has risen a little to $83.66. These figures from the dominion bureau of statistics will show how evenly the two provinces are matched, from the point of view of income, when salaries and emoluments are tabulated carefully.
Mr. Chairman, I do not believe this formula should be based on the factors now being considered. In clause 4 of the bill members will find references to total population, and the phrase "per capita" appears. I think this formula has to be changed. The Minister of Finance has said himself that it is not perfect. But if we pass this bill we are tying our hands for three years to come. I do not consider Quebec to be a have-not province. Yet we find people standing up and declaring that Quebec is one of the have-not provinces and that we must help it with equalization payments.
I have in my hand a Canadian Press dispatch sent out of Ottawa from the press gallery here on Friday of last week. It deals with the bill we are now considering and one of the sentences in this dispatch which went to every daily newspaper and every radio and television station in Canada, reads:

The arrangement would give the provinces an. extra 4 per cent share of personal income tax over the next two years. Equalization payments to poorer provinces will go up-
May I point out, as members from British Columbia have already done, that Ontario and British Columbia are the only two provinces which do not share in equalization payments. This means we have eight poorer provinces. I, for one, do not consider the province of Quebec to be a poorer province. I believe the formula has to be changed and I was happy to hear the Minister of Finance say a tax structure committee is to be set up. I sincerely hope it will be set up soon and not at some time in the distant future.
In my hand I have the annual year book for 1963 of the province of Quebec. I had to wait for a couple of weeks until I could get it from the library because the 1962 volume was the only one in stock. But I wanted to be up to date in my comments on this situation affecting what the Canadian Press calls a poorer province and what certain people call a have-not province, though how in the name of heaven you can call Quebec a have-not province when you think of the mines in the Rouyn area, or when you think of the tremendous hydro possibilities which exist there, or of the asbestos deposits, or of the tremendous pulp and paper mills they have, or of the fine seaway which extends from Montreal to the open sea, passes my comprehension. This is especially the case when I consider that we are moving the T.C.A. mechanics from Winnipeg to Montreal over a ten year period; that we are transferring the navy repair work from Halifax to Montreal; that we are moving the C.N.R. diesel repair works from London, Ontario to Montreal and that ports on the sea coast are finding their winter navigation adversely affected as a result of ice clearance on the St. Lawrence toward which the federal government pays millions of dollars.
Let me read a few comments from the annual year book of the province of Quebec for 1963. On page 2, members will find this interesting statement:
Its privileged geographical location, due to its Atlantic frontage, the St. Lawrence river and the adjoining areas without relief barriers, puts it into contact with a rich hinterland (northern Quebec), the mighty United States and the outside world.
On page 336 we find the following illuminating reference to the pulp and paper industry:
In 1961 a little over 41 per cent of all Canadian pulp and paper mills were located in Quebec and about 40 per cent of the salaries and wages in

that industry were paid to 26,455 employees in this province. These industries turned out products worth $620,710,000 in 1961, or 37.9 per cent of total Canadian production.
Federal-Provincial Relations The Deputy Chairman: Order. I must interrupt the hon. gentleman to advise him that the time allotted to him has expired.
Now listen to this from the have-not province-the province we are asked to assist in any way possible. I read from page 346 on the subject of natural resources:
In 1962 the value of mineral production in Quebec for the first time exceeded $500 million; it is expected to reach close to $520 million, an increase of 14 per cent as compared with 1961 production, amounting to $455,522,933.
Then we find the following on page 348:
During the last ten years the mining industry in Quebec also registered sharp gains with the mining of iron ore in the north since 1954, the opening of copper mines in the Gaspe peninsula in 1956, the return of copper production in the eastern townships and, finally, with the opening of zinc and copper mines at Matagami at the close of 1963 and the resultant establishment of a zinc refinery at Valleyfield.
In the second place, from past and present mining developments in Quebec it is apparent that the mining industry has been able to expand, despite all sorts of fluctuations, thanks to the diversification of the regions opened up and of the mineral substances extracted.
I am asking hon. members: Does this sound like a have-not province? Turn to page 357 where something is said with regard to hydroelectric developments in the province:
A quick glance at the past (Table 11) shows that generation of hydroelectric power in Quebec increased more than sixfold from 1930 to 1960-
Remember, I am reading from the Quebec official year book. I believe everything that is written here, but bear in mind it is the province of Quebec which wrote it. They say with regard to the fisheries-and this will be found on page 364:
If we come back to the national level, our province is the fifth in the country for quantities of fish landed and value of the catch. Quebec ranks after British Columbia, Nova Scotia, Newfoundland and New Brunswick.
On page 376 we find a very interesting statement with regard to this province which we are all asked to bring up to the level of British Columbia and Ontario.
The outlook is thus not too bleak. What is required is to make fishing methods more efficient so that our fishermen may be able to earn a decent living thereby.
I quote these passages from the year book in order to show that some of this money is going for purposes for which it is not exactly required. I could place before this committee tables which I have been able to work out with the best men-


Some hon. Members:: Go on.


Joseph Julien Jean-Pierre Côté: No; enough.


Michael Starr: I had not intended to take part in this discussion, but I will for a moment or so in order to give the hon. member the right to continue his speech after I sit down.
The hon. member has given the committee some most interesting information and I think that some of us who have not had time to compile the figures which the hon. member has been able to put together would find them most educational. For this reason I think all of us would like to see the hon. member continue.


Joseph Julien Jean-Pierre Côté: I think the hon. member's contribution to the unity of the country has been long enough, and I would hope-


Michael Starr: On a point of order. Since I have already spoken, I believe the hon. member has the right to continue.


Ralph Bronson Cowan: I think I have the right to continue in committee.
The figures which have been worked out with officials of the Department of Finance are more than interesting. Members do not need to take them down, because they will appear in Hansard. It will be found that the largesse distributed by the federal government to eight of the ten provinces by means of these equalization payments amounted in 1962-63 to something in the neighbourhood of $173 million. In 1963-64, this largesse amounted to $166 million. For 1964-65, after the conferences held in November, 1963 and in April 1964, the figure jumps to $213 million and in 1965-66 it rises to $244 million. In 1966-67 it is to be $278 million. This means that for the period of five years from 1962 to 1967 the federal government has to find the means for distributing $1,074,000,000 to eight provinces. Two provinces will not share because of the present formula that is used.
For your interest, Mr. Chairman, I would point out that the province of Quebec in the year 1962-63 received $78 million; in 1963-64 it received $69 million; in 1964-65, under the present formulas that have been worked out and which we are now being asked to vote on, its share of equalization payments will be $98 million; in 1965-66 its share of equalization payments will be $112,240,000; and in 1966-67 its share will be $127,880,000. This

Federal-Provincial Relations amounts, over the five years, to $485,120,000 of the total amount of so-called equalization payments to be distributed among the eight provinces.
Gentlemen, I think I must draw your attention to what Burke himself said-


Mr. Olson:: On a point of order, Mr. Chairman, the hon. member who is now speaking -and I enjoy hearing the results of the research he has carried out on this matter- continually refers to "eight provinces". I would like to point out to him that under the equalization payments that will be made under the formula now being proposed there are three provinces, including the province of Alberta, that will not receive a cent.


Ralph Bronson Cowan: Mr. Chairman, I appreciate the comment of the hon. member. I spoke to the Department of Finance on this very point this morning and said it looked to me, from the working papers they had given me, that three provinces would not share in these payments. I was advised that in regard to some of the payments in these years there would be three provinces not participating, but for most of the years there would only be two because of this natural resources formula doing its bit of work.
I was referring to the fact that Burke at one time said there is a limit at which forbearance ceases to be a virtue, and frankly I think our forbearance has gone far enough in this regard. I would like to give the committee the example of how the per capita angle under clause 4 can affect the payments made under the equalization formula. I trust the committee will follow me carefully when I point out that in the province of Quebec 44.3 per cent of the population is of the age of 18 years and under. It can be said that those of 18 years of age and under are the least productive of the entire population; but when you start to roll in 44.3 per cent of the population on a per capita basis, you certainly play hob with the figures.
I would point out that if you have a large number of children, when you come to make your income tax return the tax payable is very much reduced. There are many, many people who are exempt from paying income tax because of the simple fact that their exemptions remove them from the tax bracket and they are therefore not liable for tax. The little ones help them to avoid paying income tax. In this connection we can compare Ontario with Quebec, for the purposes of have and have-not ratios, on the basis of income tax receipts. If you do not pay in-

come tax because of the number of children you have, the youngsters are helping you in keeping the base down for that province. In another province, where you do not have so many children per family, you are paying income tax. That is considered a sign of wealth. Then you have the youngsters coming along and drawing the family bonus allowance, as it is called, or the family assistance allowance; and the more of them there are, the larger are the payments to the individual families. Then for the third time the children are trotted in, and we are told that on a per capita basis the wealth of Quebec is considerably less than that of other provinces. They use their children to avoid considerable income tax payments, because the exemptions for children remove the parents from the income tax rolls. The number of children increases the gap that appears to exist between the provinces when one looks at the income tax returns and the amount of tax collected. They draw more money because of the family assistance program which this Liberal government initiated, and which I support 100 per cent, and then they trot the children out the fourth time to prove that on a per capita basis the income is not as great as that of other provinces. It almost makes me think that the children are being used as apprentices of mammon.
I would point out that on the largesse that is being distributed to the eight provinces on the basis of equalization, we are bringing eight provinces to the level of two. This is not the equalization basis that has been used for the past several years. On that basis the provinces were brought up to the national level; but by altering the regulations we are adding $55 million in the year 1964-65 to the equalization payments because we are raising the equalization payments to the level of the top two provinces, instead of their being brought to the national level, which system has been in effect for the last several years. Of the $55,309,000 that will be added to the equalization payments this year, 61 per cent of the increase, or $34,130,000, goes to the province of Quebec. Next year, of course, there will be another increase, and in 1966-67 there will be the biggest increase of all, whereby the province of Quebec will draw 61 per cent of the increase between the years 1965 and 1966, and 1966 and 1967. I make the statement that this is going altogether too far. Surely we can tell this province, "We cannot pass out this kind of money. There is a limit to what the taxpayers of this country

can pay out". We must use reason and good sense in this matter.
Why do we pick the natural resources
revenues of the provinces as an indication of wealth? There are oil wells in Alberta and there are forests in British Columbia, and they have a lot of these natural resources. The way they collect the revenue from them sets them apart. If the formula read that all provinces bordering on the Saguenay river would be considered as have-not provinces, and all other provinces would be considered as have provinces, you would say things were a little too blunt. So now we have the natural resources revenue-not the natural resources. Does anybody think the natural resources of British Columbia are any greater than the natural resources of Quebec? Look at the aluminum development in the Saguenay; look at the pulp and paper development, the asbestos, the base metal mining, the gold mining developments there are in the province of Quebec. It is not the value of the natural resources that is considered in the formula; it is the amount of tax money received by the province from the natural resources.
If one province determines to tax in one way, and another province determines to tax in another, I see no reason why two provinces should be penalized in the federal held because of the manner in which they collect taxes from their natural resources. I would ask most sincerely that a change be made in this formula, and soon. A fairly good way to judge the wealth of a province was suggested the other day by the hon. member for Medicine Hat. He suggested that gasoline tax revenues would be indicative of the wealth of a province. I believe he also suggested that the revenue from liquor taxes would be a good indication of the wealth of a province, or the retail sales taxes collected in a province would be a good indication of the wealth of that province. I agree 100 per cent. Why not consider the donations made to charitable causes as an indication of the wealth of a province? In the province of Quebec, in 1962 the donations to charitable causes, as shown on income tax returns, amounted to $157 million. In the province of Ontario from which I come, the donations to charitable causes amounted to $84,560,000. What does that denote? Does it denote a have-not province, when one donates $157 million and the other $84 million? In 1962 Ontario's charitable donations amounted to .94 per cent of total income. Quebec donated 3.07 per cent of total income. You will be interested to know, Mr. Federal-Provincial Relations Chairman, that for the year 1961 Quebec donated $164,616,000 to charity and the rest of Canada donated $137,713,000. Why cannot we take that as one of the indicia of wealth?
I say to this committee that this formula needs to be worked over fast and worked over seriously. This bill which we are being asked to pass will be law for three years, unless it is amended. Therefore I suggest that it should be amended. We are now in committee stage following second reading. The proposition has been before the country for some years, but I believe the public will understand a little more how the formula is worked out from the facts and figures I have given, as well as the facts and figures put on the record by the hon. member for Medicine Hat and the hon. member for Burnaby-Coquitlam, the statement made by the hon. member for Jasper-Edson and the remarks of the hon. member for Carleton, as well as the statement of the Minister of Finance who does not consider the formula perfect. I say this formula should be worked over right away. I can see no connection whatsoever between the fertility of the forests, fields of oil, the farms and factories of British Columbia, Alberta and Ontario and the fervent fecundity of Quebec.


Mr. Otto:: Mr. Chairman, I was not going to take part in this debate but I would be the first to dissociate myself from the remarks made by my good friend from York-Humber. The figures he gave were very impressive, but the hon. member for York-Humber will acknowledge that there was a smell of vinegar in his speech which I do not believe adds anything to the unity of this nation. If I thought for a moment that any child in any province, no matter how large a family he came from, was short of clothing or food or that he could not go to school he could have 90 or 99 per cent of the budget. That is how we feel. If we are one nation, then we are one nation. If they hurt we pain. Putting the case on a monetary basis is I think absolutely a wrong attitude to adopt.
Everyone knows my feelings toward separatism. To me it is tantamount to treason. Everyone also knows that I, as would all of us in this committee, should like to see the same opportunities for every citizen and young person in this country. Adding up piles of figures and saying "I am putting the case logically" is one thing; to do it in actual fact with a feeling of reaction towards one province is not an attitude with which we in this house should associate ourselves.



G674 HOUSE OF

[Stage Direction]
Federal-Provincial Relations
Maurice Sauvé: Mr. Chairman, I listened with great care to the speech made by the hon. member tor York-Humber, and he has views which evidently we do not all share. There are a few matters which I feel need to be corrected and I shall endeavour, without going in depth into what he said, to clarify some of his assertions.
The Liberal party of Canada was elected on a platform which was made public for the campaigns of 1962 and 1963. I assume that the hon. member agreed with that platform and shared the views expressed by our leader in many instances. The proposals we have before us today which are contained in this bill are the realization of this program, and I do not see how a member of this party who stood for the party in the last election can fundamentally disagree with the program which was made public long ago. It is evident that the situation in the country is changing. This bill recognizes that some of the provinces, or all of the provinces, are now able to assume responsibilities which were previously assumed by the federal government. The purpose of this bill is to give back to the provinces taxes for provincial purposes which have been collected by the federal government, in many instances for provincial purposes.
The hon. member based his argument on a number of statistics, but I think he did not get them from the right book. I have before me the Canada Year Book, 1963-64. I do not want to go into all the details, I just want to point out to him that there are more babies in Ontario than in Quebec. At page 180 of the book table 25: "children living at home classified by age group and by province, census of 1961", shows that those under six years of age in Quebec totalled
789.000	whereas Ontario had 874,000. Between 6 and 14 years of age Quebec had
1.042.000	while Ontario had 1,111,000. These are the statistics.
The hon. member talked of the birth rate. I think he forgot to look at this book again, because the Canada Year Book 1963-64 at page 220 table 1, "summary of principal vital statistics by province, 1941, 1961", gives the birth rate for Quebec between 1941 and 1945 as 28.4 per 1,000 population, whereas in 1961 it was only 26.1, showing a decrease. In Ontario between 1941 and 1945 it averaged 19.9 and in 1961 25.3 per 1,000 population. These figures show an important increase in Ontario and quite a decrease in the province of Quebec.


Then the hon. member said that we are paying family allowances in the province of Quebec to a greater number than in the province of Ontario. Again he forgot to read this book. Page 293 of the Canada Year Book, 1963-64, published by the bureau of statistics, table 1, "family allowances statistics by provinces for the year ended March 31, 1962", shows in the column headed "Children for whom allowance paid in March", that Quebec received 1,976,667 payments whereas Ontario received 2,133,116. The hon. member also forgot to look at the old age security statistics. Had he consulted this book he might have found something rather interesting. According to page 295 of the same book, table 3, "old age security statistics by province for the year ended March 31, 1962", the number of pensioners in March in the province of Quebec was 196,827, and in Ontario 335,339. Pensions paid during the fiscal year to Quebec amounted to $131,711,372 and to Ontario $226,065,413. These are statistics which are documented in this book.
I could go on and on and discuss most of these statistics which the hon. member for York-Humber put on record. I could also quarrel with his statistics concerning taxation for the year 1962 published by the Department of National Revenue. But he forgot to look at something very important. There were 1,180,000 returns made in Quebec compared to 1,949,000 returns made in Ontario. How do these figures compare when related to the labour force? I suggest it is important to consider not only the number of returns made, but the number of people in the labour force who did not make returns.
In 1962 the Quebec labour force was 1,841,-
000.	In Ontario in that same year the labour force was 2,412,000. Although the labour force in Ontario is much larger than in Quebec, in that year there were only 463,000 people in the labour force in Ontario who did not make returns, and 661,000 people in the labour force in Quebec who did not make returns. In a previous speech I quoted these statistical figures on personal income per capita because they are an important means of comparison between provinces.
I should like to ask my hon. friend, when he discusses fiscal arrangements between the province of Quebec and the federal government and compares statistics, to look at all the statistics rather than just a few.
Thank you Mr. Chairman.


Ralph Bronson Cowan: Mr. Chairman, I should like to speak to a question of privilege. I should like to state that I am not one to accept a

Federal-Provincial Relations
lesson from the hon. member for iles-de-la- One of the main purposes of the tax struc-Madeleine. When he says that having cam- ture committee agreed to at the last federal-paigned as a Liberal I could not fundamen- provincial conference will be to sort out tally disagree with the policy of equalization and improve the various fiscal arrangements, he is 100 per cent correct. I disagree today I have suggested, in view of the work and with the changes made last November and care required to perform that task, the pro-April. I have stated that I agree with the posals now before this committee will be equalization principle, although I do not like improved. In that spirit I commend them to the formula.	the members of the committee, and hope that
,	,	, ,	. T__* j we might progress in our discussion of this
When the hon. member suggested that I said Tr 6
more money was paid to Quebec in family c ause-allowances than to Ontario he was absolutely [Translation]
incorrect. I did not make such a statement. I did say that large sums of money were being paid to Quebec in the form of family allowances. Figures were produced to indicate there are more children in Ontario than in Quebec. I never denied that fact. Ontario does not receive equalization payments. Quebec does receive them.
Mr. Chairman, I should like to correct those few statements made by the hon. member. I know how to read statistics and financial returns. I am very much indebted to the Department of Finance for its help to me in preparing the figures I used.


Walter Lockhart Gordon: Mr. Chairman, this seems to be the second time within the last few days that it has been my privilege to speak during the same afternoon as the hon. member for York-Humber and the Leader of the Opposition. I am not going to make a speech on this occasion. I am going to remind hon. members of this committee of a very pertinent statement made by the hon. member for York-Humber, when he said there is a limit at which forbearance ceases to be a virtue. I agree with that statement.
While I was very interested in the statistics contributed by several members I respectfully remind them that these statistics are not new. Anyone can work out these statistics.


Mr. Caouetle:: Mr. Chairman, it is interesting to see the wonderful unity which prevails among the members of the Liberal party when we hear the hon. member for York-Humber (Mr. Cowan) take the Minister of Forestry (Mr. Sauve) to task, for his statements to the effect that the province of Quebec was treated unfairly, and put the province of Quebec on trial, saying that it is wealthy, has natural resources, is well treated and should not get more than it does now.
Mr. Chairman, clause 4 now under consideration stipulates that additional amounts will be paid to the province of Quebec out of succession duties. The province of Quebec does not ask for special treatment from Ottawa. It demands fairness and nothing else.
If the hon. member for York-Humber wishes to make a comparison, we will consider what is happening right here, in Ottawa. Let us compare what the federal government spends in Hull, on the other side of the river, with its expenditures on this side, in Ottawa. Then, let the hon. member for York-Humber try to prove to me that Quebec is treated on the same footing as Ontario and the other provinces.
He stated that family allowances are more numerous or make for a bigger amount in Quebec than in Ontario or the other provinces, and he said that according to everybody Quebec is a "have not" province.
As I said earlier during this debate, I do not think these formulae have ever in the past been perfect. The hon. member for York-Humber was kind enough to point out that fact. I do not think this formula is perfect. I ask hon. members of this committee to realize that I am not in any way casting a reflection upon their collective capacity when I suggest a committee of this size would find it very difficult to work out a perfect solution. Any attempt to do so would be similar to an attempt on the part of 25 or 250 people to solve a problem, each one of them taking a whack at it.
We never said that Quebec was a poor, a have-not province. On the contrary, we always said that Quebec had tremendous natural wealth.
A few moments ago, when the hon. member for York-Humber made some comparisons and gave examples, he used the Noranda mine as example of the abundant wealth of the whole Rouyn-Noranda district, trying to prove that forest development was the basis of the wealth of the Canadian International Paper Company, that the pitchblende deposits brought wealth to the Aluminum Company of Canada Limited, and that some persons made

Federal-Provincial Relations enormous profits in the province of Quebec as well as in other provinces.
Now, what the hon. member did not know was that, at this very moment, 585,000 people in Quebec are in receipt of some sort of assistance payments, whether they are Quebec social security payments, unemployment insurance benefits, unemployment assistance or other social security payments.
There are in Quebec 585,000 citizens in receipt of some sort of government assistance.
Another point which must be borne in mind, is that Quebec has the greatest number of unemployed, compared with all other Canadian provinces.
The hon. member for York-Humber does not take this into account. He says that the province of Quebec is wealthy. Certainly, Quebec has great natural wealth, but there are some extremely poor French Canadians within its boundaries.
At this time, surveys are being made in the Gaspe peninsula under the ARDA program. Why? Precisely in order to give some assistance to people who are literally starving because they have not been sufficiently helped in the past.
At present ARDA is used not only in Quebec, but in other provinces, to reorganize rural establishments or to set up a new secondary industry, to help those people who at this time are neither being fairly treated nor able to make a decent living.
Mr. Chairman, the bill now before us is a first step, but it is not enough.
The matter of estates is strictly under provincial jurisdiction. Indeed, I have here before me statements made by the various provincial premiers during the federal-provincial conference of November 25, 1963. Let us for instance take the statement of Mr. Jean Lesage, premier of the province of Quebec, who said:
Since the beginning of confederation, it has been recognized that Quebec always firmly demanded respect of its jurisdiction.
That is all we claim.
With regard to tax sharing, Mr. Lesage stated:	'
Our chief and most urgent reason for demanding a new tax distribution plan at this time is the priority of provincial needs.
The purpose of tax sharing is to meet those requirements, that is to enable the provinces to dedicate themselves more fully and more efficiently to the development, if we may say so, of their human capital.
That is all we are asking for. Quebec does not need the hon. member for York-Humber for its development. Quebec can do it by 

itself providing it is given the tools. That is what is lacking.
Mr. Chairman, was it not on April 5, 1963, that Mr. Lesage stated:
In terms of fiscal powers, we are asking for 25 per cent of personal income tax, 25 per cent of corporation income taxes-in the latter case, that is about 10J per cent of the taxable income -and 100 per cent of succession duties because real estate transfers come under provincial jurisdiction.
Mr. Chairman, those taxation rights which were granted to the federal government during the war were only loaned; they were not granted forever; after the war, the federal government was to give back to the provinces their taxation rights in the field of personal and corporate income taxes.
Mr. Chairman, under this bill and more particularly under section 40, Mr. Lesage will get about 50 per cent of his requests.
I also have here a statement made by Mr. Louis J. Robichaud, premier of New Brunswick, at that same federal-provincial conference.
The government of New Brunswick never willingly accepted-
That is the statement of a Liberal provincial government.
The government of New Brunswick never willingly accepted the terms of fiscal arrangements entered into by the provinces and the federal government.
Those agreements were a step backward, and one of major importance, in the efforts being made to recognize the differences in economic level among the various provinces.
Mr. Chairman, here we have a small province, New Brunswick, recognizing as justified the claims put forth by the premier of the province of Quebec, as well as those made by the premier of British Columbia at the same federal-provincial conference.
Mr. Chairman, I do not hesitate for a moment to state at this time that the kind of comments uttered a while ago by the hon. member for York-Humber constitutes the best separatist speech I have ever heard in my life, even in the province of Quebec. We have our separatists in the city of Montreal, in the province of Quebec, but we also have others in Ontario, as I have pointed out in the past.
At the same federal-provincial conference, the premier of British Columbia, Mr. Bennett, stated:

The constitution, however, not only dictated the service responsibilities of the provincial legislatures, but to finance the necessary costs it also specified their taxation rights. One of these rghts, designated as an "exclusive power", was the use of direct taxation within the province.

The government of British Columbia is requesting exactly the same thing as the Quebec premier.
The premier of British Columbia also had this to say:

Sole provincial use of income taxes was respected by the federal government for 50 years preceding world war I. Federal entry in 1917 was explained as a temporary action in a time of national emergency. Recognition of provincial direct taxation rights was confirmed by Sir Thomas White, then federal minister of finance, who stated:
"The income tax is peculiarly within the jurisdiction of the province and is a suitable tax for the purpose of the province. .. .1 have placed no time limit upon this taxation measure; but I do suggest, and I should like this suggestion to be on Hansard, that after the war is over this taxation measure should be deliberately reviewed."

Mr. Chairman, those are the various points discussed by the premiers at the federal-provincial conference of November 1963.
We of the Ralliement Creditiste have made a stand last year for the suggestion or claims of the premier of Quebec to the effect that the personal and corporate income taxes belong to the provinces.
Moreover, as I said a while ago, succession duties come under the civil code and belong to the provinces. The priority needs of the provinces are especially felt in the fields of education, health, highways, the development of natural resources and the establishment of secondary industries. The provinces must have the financial means to do that, and the federal government is unable at the present time to give them those means.
On several occasions, we suggested that the central government should instruct the Bank of Canada to make available to the provinces the credits required for their economic development, their political organization if you wish, but especially for the satisfaction of the needs of consumers in each province. That is why the Ralliement Creditiste passed four resolutions last year.
1.	-We recommended that the control of credit should be handed back to the provinces, as far as the province of Quebec is concerned. If Ontario and the other provinces do not want to control their credit, they are free to take such a stand. We do not want to impose on others what we wish for ourselves.
2.	-We ask for the control of our immigration.
Federal-Provincial Relations
3.	-We ask for the control of our imports and exports.
4.	-We ask that the central government give back to the provinces their fiscal rights.
We will no longer hear then that the federal government is forced to initiate an equalization system; it will be for the provinces to decide which part they will give the federal government.
Starting with the provinces, from the basic principle of a sound democracy we will reach everyone and we will know where we are going.
That is why last week end in Quebec city we spoke of an associate state. We did not agree to separation measures or separatism-


Lucien Lamoureux: Order. I have been listening with great interest to the hon. member, but it seems to me that in the last few minutes he has decidedly departed from clause 4 of the bill which is now before the committee.
The hon. member will note that this is explained in the marginal note of this clause, which reads as follows:
Change in computation of "standard individual income tax".
According to the standing orders of the house, hon. members taking part in the discussion of the committee must confine themselves strictly to the matter under consideration.
I urge the hon. member for Villeneuve to keep within the ambit of the discussion under consideration.


David Réal Caouette: Mr. Chairman, I will comply with the standing orders of the house. However, I would like to draw your attention on the fact that the hon. member for York-Hum-ber was not interrupted a single time even though he spouted nonsense against the province of Quebec for nearly an hour.
Mr. Chairman, I am coming back to clause 4 of Bill No. C-lll.
It is obvious that the amount of succession duties, of which 50 per cent is given to the provinces, should belong entirely to the provinces.
The federal government should not try to make believe that it is doing a favour for the province of Quebec or for the other provinces. It should stop from fooling the public and leave their prerogatives to the provinces. The will of the provinces should be respected. When the situation is well looked after, everyone is better off.
Mr. Chairman, a few improvements will result from this clause, but thanks to whose money? The money of taxpayers from the
6678	HOUSE OF
Federal-Provincial Relations provinces concerned, which will be turned over by the federal government, but in lesser amounts, because we must keep in mind that administration costs are high in Ottawa. Therefore, it will cost much more than it would have if the matter were handed over to the provinces, as the constitution requires.
Those are the remarks I wanted to make. We have rights. We demand that those rights be respected. We are only asking for what is ours. As Maurice Duplessis used to say: the province of Quebec wants what belongs to it. Therefore, give it to us, and we shall look after the affairs of the province of Quebec without any interference from Ottawa.


Thomas Clement (Tommy) Douglas: Clause 4 in this bill which is now before us, Mr. Chairman, is really the operative clause of the bill because it sets forth the formula upon which financial assistance to the provinces is to be based. I am not going to thresh old straw by going over the arguments with reference to our criticism of this formula. However I must say that the minister's explanation of a few moments ago seemed to me to be a lame excuse. He said it was difficult to have a conference agree on a formula and that this was something which took a great deal of time. He said that it could not be done quickly. I should like to point out to the committee that we had a very good equalization formula and that, in the main, it was satisfactory except that there were many who felt it should be equalized to the top province. The Liberal party agreed with this suggestion because they put it in their program and pledged themselves to do this. Apart from that provision, the rest of the formula was eminently satisfactory.
If the government was prepared to give more money to the provinces, they had before them the very simple expedient of increasing the abatement on income tax payments, corporation tax payments and succession duty payments to the provinces. This would have increased the amount of money which the provinces would have received but it would have continued to distribute that additional amount of money on the same equalization basis which obtained heretofore, with the exception of course of equalizing to the top province.
Anyone who examines the new formula will certainly see it is not an improvement, except with regard to equalizing to the top two provinces. One cannot escape the conclusion, no matter how kindly disposed he might be, that the extraneous factors which have been
[Mr. CaouetteJ

introduced into this formula were introduced with a calculated end in view. The Minister of Forestry, when he was reprimanding the hon. member for York-Humber, reminded him he was committed to the Liberal program of equalization. It is quite true that the Liberal party is pledged to a program of equalization. Liberal literature entitled, "The Liberals Have the Answer; the Pearson Plan," contains a paragraph indicating that the provinces should receive equal revenue per head of population of the tax fields shared between the two levels of government so that all Canadians will benefit equally. The Prime Minister, speaking in the House of Commons on June 2, 1958, as recorded at page 733 of Hansard said:
So far as this party are concerned, we are pledged to equalization on the basis of the per capita yield of the three taxes in the wealthiest province.
The Liberal party is clearly on record as favouring the principle of equalization on the basis of the three shared tax fields and the factors which are now being introduced into the formula are a departure from equalization. They represent a reversal of policy. We are now departing from the equalization principle. I hope that before this clause is passed the minister will give us some further explanation with reference to two of these very fundamental changes. The first is the introduction as a factor in determining equalization payments, the revenue which a province receives from resource development.
As the minister himself pointed out, as recorded at page 5182 of Hansard, the revenue which provinces get from resources is quite varied. As he pointed out, it varies all the way from 15 cents per capita in Prince Edward Island to a high of $94.08 per capita in Alberta. As the hon. member for York-Humber pointed out, resources and resource revenue are two entirely different things. When you look at the provinces of Quebec and Ontario you find that the per capita resource revenue in the case of Quebec is $6.62 and in the case of Ontario, $6.92 as compared with British Columbia where the per capita revenue is $37.72. I am sure no person would argue that the province of British Columbia has five or six times as much resources as either Ontario or Quebec. The fact is that the revenue varies as between these different provinces because some of the older provinces in days gone by disposed of their resources, in some cases for large sums of money. They have already sold some of their capital, and having disposed of their capital they do not receive revenue from

it. The selection, therefore, of this factor in determining equalization payments was the selection of one of the most unfair factors that could possibly have been chosen.
If the government was going to take the revenues of the provinces into consideration, that is, not just the three tax fields which they have committed themselves to use as a basis for equalization payments, then they should have taken all the revenues. They should have taken into consideration liquor profits, sales taxes, motor vehicle licence fees and all the other varied sources of revenue which would have been a much fairer criteria of a province's financial position than to take the revenues from natural resources.
There are two other things that are wrong with taking into consideration the revenues from natural resources. The first is that in many instances these are non-recurring revenues. This is particularly true in the case of minerals and petroleum. The province is selling some of its capital assets when minerals are taken out of the ground or when oil and gas are drawn off. This is wealth of which the province is depriving itself. It is selling part of its capital assets and those capital assets, under this new formula, are going to be treated as current revenue.
The other serious defect with regard to treating natural resource revenue as a basis for equalization payments is that the government has overlooked the fact that these revenues are secured as a result of a very heavy provincial expenditure. This is true of provinces such as British Columbia. British Columbia has large forests but it must build access roads, conduct reforestation programs and, above all, be responsible for fire prevention and firefighting programs. If the Minister of Finance feels he really must include resource revenue, surely he ought to take into account net revenue rather than gross revenue. For the federal government to include all revenue from resources when computing these equalization payments seems to me to be grossly unfair and discriminatory against some of the provinces, particularly the provinces of British Columbia, Alberta and Saskatchewan.
There is another change in the formula which the minister has never explained to my satisfaction. Why has the additional abatement on the estate tax not been taken into the formula for equalization? On second reading, the minister said when I asked him about this: It is part of the problem of putting together a formula at the end of the day in the dying hours of a federal-provincial con-
Federal-Provincial Relations ference. I find it difficult to accept this as an explanation, because the estates tax abatement is already included in the computation of the equalization payments. The formula prior to this amendment being passed, the formula at the present time, is 18, 9 and 50- 18 percentage points on personal income tax, 9 on corporation tax and 50 on the estates tax. All the federal government had to do was to raise that 50 to 75, and the provinces would be entitled to an abatement of 75 per cent and all of it would have been included when compiling the equalization payments. Here we have the amazing spectacle of two-thirds of the abatement being included for equalization purposes and one third being left out of the equalization formula. This does not make sense. This is not something done in the dying hours of the conference for lack of knowing what to do.
The minister assured us that all the provinces are getting a little more money. Of course they are. The government would not have dared to bring in a formula which did not give all the provinces a little more money. As I said the other day, everybody is equal but some are more equal than others. By taking the additional 25 per cent abatement of estates tax out of the equalization fund, $32,170,000 of additional revenue goes to the provinces. But the provinces of Ontario and Quebec between them get more than $22 million of this in the current fiscal year. In the next fiscal year, the provinces get an additional $33,779,000 and the provinces of Ontario and Quebec get $23 million. And in the final year of the agreement, the provinces are to get an additional $35,408,000 of which the provinces of Ontario and Quebec will get $25 million. So equalization has gone out of the window as far as the distribution of the benefits of this additional 25 per cent abatement on the estates tax is concerned.
I get a little annoyed when I hear ministers rising to rebuke either their own followers or members on the other side of the house on the grounds that the government is in favour of equalization-that this is the lodestar of the Liberal party's program and its chief article of faith-at a time when we are being asked to approve a formula which is regressive, as far as equalization is concerned, with the exception that we are now equalizing to the level of the top two provinces, which is an improvement. But as far as the inclusion of revenue from resource development is concerned, and as far as leaving out the additional 25 per cent abatement on estates tax is concerned, this is a regressive measure. The



Federal-Provincial Relations two provisions I have just mentioned represent a departure from an equalization formula which had been approved by both federal and provincial governments and which is working admirably.
We cannot escape the conclusion that the only reason for making the changes suggested in this formula is to get a desired result. One need only look at the results themselves. In this fiscal year the provinces are to get an extra $87,479,000 of which the provinces of Ontario and Quebec will receive, between them, almost $58 million. Next year, out of $106 million, the provinces of Ontario and Quebec will receive some $69 million. Then, in the last year of the agreement, in those two fields, of the $125 million, Ontario and Quebec will get between them some $80 million. It may be that the federal government felt it had to make some concession to the wealthier provinces-that it had to depart from the principle of equalization in certain respects. But if this is to be done, let them not do it on the basis of a suggestion that there was difficulty in formulating an equation which would be satisfactory, for they already have a good equation. The government has changed the formula, in my opinion, because this was the best way by which to pacify those who were finding fault with the federal-provincial fiscal arrangements. This represents a serious departure from the principle of equalization.
I think the time will come when the government will regret it has set its feet along this road, because the pressure will continue for doing even greater violence to the principle of equalization. I hope the minister will give us some assurance that if he is not prepared to make some fairly serious changes in this legislation at the present time the government does intend to return to the principles of equalization when negotiations with the provinces are resumed. If it does not, let me say there is nothing which will do more to wreck confederation than for us to have in Canada some parts of the country enjoying high levels of education, welfare and health services while other parts have low incomes, inadequate services, and a feeling they have been forgotten by the federal government and the federal parliament.
I do urge the minister to recognize that this is a retrogressive formula which he has now introduced. This is a departure from the principle of equalization, and I hope he can give us some assurance that we are going to come back as quickly as possible to an ade-

quate equalization formula for federal-provincial fiscal relations.


Walter Lockhart Gordon: Mr. Chairman, the hon. member for Burnaby-Coquitlam and I have been discussing this same point for some time and it seems to me this is about the fourth round. Many of the same things have been said, and I plead guilty to making the same reply. However, I will try to use different words, so at least to that extent what I say may add something.
I cannot help disagreeing completely with my hon. friend when he suggests that this approach is regressive. If he will look at it as a package, or in total, of course it is not regressive. The very fact of equalizing up to the top two provinces is a progressive measure; it is progressive in its nature and it is progressive in its results. He suggested-


Paul Raymond Martineau: You are an optimist.


Walter Lockhart Gordon: I am sure my hon. friend meant that as a compliment, and I accept it as such. I am an optimist, and I wish we had a few more optimists around this place. The hon. member for Burnaby-Coquitlam has suggested the government has made changes in a formula, which by inference I gathered he suggested was a satisfactory and acceptable one.


Thomas Clement (Tommy) Douglas: Except in regard to equalization.


Walter Lockhart Gordon: I do not think the previous formula was perfect; I do not think it was acceptable. I think it can be improved upon, just as I think this formula can be improved upon. The previous formula left out of the computation any account of the very substantial revenues which some provinces receive from their natural resources. To suggest that in an attempt to improve any formula we should continue to exclude from the computations-to use one province as an example-the very substantial revenues which the province of Alberta receives from oil, I think is to approach the problem as if we were attacking it with dark glasses on and could not see. To my mind, anybody who suggests that Alberta is one of the have-not provinces or one of the poorer provinces is being unrealistic. Therefore in this approach it was proposed that, not the full revenues from natural resources but half of them should be taken into account. Granted, that is an arbitrary way of going at it, and I hope this tax structure committee may be able to develop a better, more acceptable formula.

But in the meantime we are taking into account one of the real facts of life in this country.
The hon. member for Burnaby-Coquitlam talked about British Columbia. I do not think there are many people in Canada, many people in British Columbia or probably any hon. members who would suggest that British Columbia is a have-not province. It has not any debt; its premier says so.


Thomas Clement (Tommy) Douglas: That does not prove anything.


Marcel Joseph Aimé Lambert: That statement is questionable.


Walter Lockhart Gordon: I do not disagree with my hon. friend from Edmonton West when he says that is a questionable statement on behalf of the premier-not on my behalf. But some satisfaction is taken in some circles in British Columbia because technically the province itself, excluding its various agencies, claims to have no debt. I have been learning from my hon. friend the Secretary of State for External Affairs.


Thomas Clement (Tommy) Douglas: I presume that assumption will be accepted by all those who believe in debt free money.


Walter Lockhart Gordon: I cannot believe there are many of those around. Seriously, Mr. Chairman, I do not think I can say very much more than I have said before. The provisions of this bill are an honest attempt to improve the situation. I do not claim they are perfect at all. I think that to get a permanent solution perhaps a step in the right direction is for the provinces and the federal government to get down and deal with this problem over a period of time, and perhaps in a more fundamental way than has been attempted in the past. That will be one of the principal functions, as I understand it, of the tax structure committee.
It is my hope that this committee can get down to the work this fall. I do not know how long it is going to take to complete, not only the examination that will be necessary but also the kind of discussion that is bound to take a long time in a committee comprising representatives of all the provinces and the federal government. I am not suggesting that this committee will be able to come up with a common solution with which all members of the committee will be equally happy; but I do hope that if the committee approaches this problem in the kind of spirit that I am sure it will use, it will be possible to come up with a formula which will be presented in due course to a federal-provincial con-
Federal-Provincial Relations ference. Then I have no doubt that formula will be debated again by the representatives of the federal and provincial governments who will be attending that conference.
In the meantime, Mr. Chairman, let me say I am not claiming that these proposals are perfection. I do suggest, though, that if we can see our way to approving these proposals, all the provinces will be better off. My hon. friend will probably say that some provinces are more equal than others, and that may be. But I do not believe myself that it is possible to arrive at the kind of solution here that I am very hopeful the tax structure committee will be able to devise, over a period of many months and perhaps a year or two. I am hoping this committee will really be able to come up with something that I do not say will work forever or be acceptable forever, but may last for the next round of perhaps five years.


Thomas Clement (Tommy) Douglas: Mr. Chairman, could I ask the minister a question before he sits down? The minister has outlined the government's thinking behind the inclusion of resource development revenue in devising the equalization formula. He has not said anything about the matter of excluding the 25 per cent additional abatement for estate tax. I want to ask him, what possible logical reason can there be for having two thirds of the revenue from the estate tax included in the equalization formula, and one third left out? It does not make sense, and I would like to know the government's rationale.


Walter Lockhart Gordon: Mr. Chairman, my hon. friend has a nice tidy, logical mind, and at times I think I have. I would say to my hon. friend that I think there is something in this point. I would also suggest to him that he might have gone farther and asked, if 75 per cent of the estate taxes were to be abated, why not go to 100 per cent and be done with it?


Marcel Joseph Aimé Lambert: It is 75 per cent of that figure.


Thomas Clement (Tommy) Douglas: I was merely asking why it was not included in the equalization formula.


Walter Lockhart Gordon: The main reason it was not included in the equalization formula, I suppose, was because if you look at the package as a whole the step of equalizing up to the top two provinces is a very progressive one. I am not suggesting that there should be a limit to progressivism, but perhaps those who developed the formula thought it should come in stages.

Federal-Provincial Relations


Marcel Joseph Aimé Lambert: May I make one comment
here. The minister struck me much like a chemistry professor who said: "I know the result I want to get so I will cook the formulas". It is not a case of working on an experiment with set formulae and then coming up with a result. This is precisely cooking the formulas to come up with the result. I think the admission is there in the rationale the minister used to explain away the problem posed by the hon. member for Bumaby-Coquitlam. I am limiting my remarks right now to this point but I intend to come back at a later hour.


Walter Lockhart Gordon: I do not think I should make any serious comment about my hon. friend's chemistry professor. It seems to me that his professor's approach to these researches was rather strange but perhaps the results were satisfactory after all, I do not know.


Lucien Lamoureux: Does the hon. member for Medicine Hat wish to ask a question?


Horace Andrew (Bud) Olson: Yes, Mr. Chairman, arising out of the statement the Minister of Finance just made. Is the reason for this 75 per cent abatement of estate tax so as to come out with a predetermined figure for the package as a whole?


Walter Lockhart Gordon: No, Mr. Chairman.


John George Diefenbaker: I join with the hon. member for Burnaby-Coquitlam regarding his criticism of this formula. It is obvious, as the hon. member for Edmonton West said when speaking originally on this matter, and again today, that what has been done constitutes a departure from, first of all, the Liberal party policy of 1962 and 1963 toward equalization up to the level of the highest province, and second, the criticisms made when we introduced the question of revenue royalties being taken into consideration in determining the income of any one province. From listening to the lecture given by the Minister of Forestry this afternoon in regard to the campaign promises of the Liberal party I could only conclude that he was completely unaware of the fact that the undertaking was that the equalization should be to the level of the top province, and that they have departed from that undertaking.
As far as the other principle concerning the consideration of royalties rather than capital assets of the provinces, their income position in that connection is being completely reversed today. I recall the criticisms of the now high commissioner to the United


Kingdom when he was in this house. He simply fumed and said that this was most unjust and unfair. Today the government are taking into consideration not only revenues but capital assets. .
I would recommend the words of the Minister of Transport to the minister, who is in the position of a teacher teaching his followers that they must not depart from the line of the Liberal party, when in fact they are. I should like to recall the words of the Minister of Transport when he spoke on this matter on September 26, 1961. In discussing the equalization formula and the question of revenue he said this, as reported at page 8949 of Hansard of that date:
Therefore they thought they would bring In some notion of taxes on natural resources. They got from the bureau of statistics some mysterious figure, and then they tossed it into the salad-
I would not call what has been produced on this occasion a salad, but I do recommend the words of the hon. member to the Minister of Finance. I think he should get together with the Minister of Transport and have him advise the house when this sudden change of viewpoint took place which brought about this monstrosity which discriminates against the provinces of British Columbia, Alberta and Saskatchewan, which is obviously designed not to bring about a fair and reasonable equalization across Canada but has particularly in view the desires and demands of one or other premiers of the provinces. This production is an obvious one and is detrimental to a united Canada. It places the provinces which I have mentioned in a secondary position and makes them subject to a computation based not on royalties but on capital assets.


Walter Lockhart Gordon: May I ask the right hon. gentleman whether he was not the one who introduced this principle?


John George Diefenbaker: Oh, then it was wrong. I say to the hon. gentleman this: Here is another example of repentance, unadmitted to this minute, and I will deal with that later.


Lucien Lamoureux: It is my duty pursuant to provisional standing order 39A, to inform hon. members that the question to be raised at 10.30 o'clock this day is the following: the hon. member for Vancouver-Kingsway, federal assistance to Olympic games team.
It being six o'clock I do now leave the chair.
At six o'clock the committee took recess.


[Stage Direction]
AFTER RECESS

The committee resumed at 8 p.m.
John George Diefenbaker: Mr. Chairman, at the time of adjournment I was referring particularly to the equalization formula that has been produced by the minister. An examination of that formula indicates that it is not based upon any known degree of common sense or logic. It has simply been brought about in order to achieve the objective of the government. Certainly the minister was not able this afternoon to explain the nature of this formula, or give the reason why the percentage arrived at should be one half of the excess over the average of the natural resources income of the various provinces. In other words, it is a formula designed to achieve a result the government had in mind.
At the same time this formula was brought about in a rush. One cannot understand it. It has all the appearances of a shotgun marriage. Certainly it was adopted under circumstances of immediate necessity consequent on the failure of the government to satisfy the provinces at the conference in Quebec. It is unfair, unjust and unscientific in every way.
In so far as British Columbia, Alberta and Saskatchewan are concerned, it places upon them a degree of inequity not in keeping with the principle that in all parts of Canada there shall be equal rights and equal responsibility. I should like the minister to give an explanation in this regard. I realize that in asking him to do that I am expecting an explanation of the unexplainable. In answer to questions asked in this connection just before the adjournment he in fact admitted the arbitrary nature of the basis upon which the determination as to equalization is to be made.
I repeat what I said earlier, that this government when in opposition stood for certain principles. It has departed from them. I am not going to repeat that which I dealt with this afternoon in this connection, except to say that it has been noticeable that the Secretary of State for External Affairs and the Minister of Transport have been absent from the house during this debate, no doubt mindful of the fact that, had they been present, quotations would have been used from the speeches they made in 1960 and 1961, which set out principles which were basically the antithesis of the policy now placed before the committee.
This afternoon I referred to a table which was placed in Hansard of July 9, 1964, being
Federal-Provincial Relations a summary of federal contributions to provinces, appendix "B" to federal-provincial conference, 1963. The minister said it was not correct. He said it was wrong. All I have to say in this regard is that I have examined it very carefully, comparing it with appendix "B", and there is no error in it anywhere. This afternoon I suggested if there was an error it must have been an error on the part of Hansard. I now say there is no such error and that the minister's statement is entirely without justification.
I should point out in this connection that this summary reveals this fact. In 1956-57 the amount of unconditional grants, conditional grants and payments for the benefit of provincial institutions amounted to $689,352,000. That was the year we came into office. In the year 1957-58 the amount was $840,536,000. For the year we left office the estimated amount of those payments was $1,900,013,000, or an increase of over $1 billion a year. I emphasize again that this is the explanation for the deficits which occurred. However, during that period of time you will recall the criticism that was made in respect of the deficits. This criticism was outspoken, uncontrolled and uncontrollable. Those who spoke with voices of criticism during those years today worship at the altar of deficits but do not have any clear explanation or justification, as we had during the period we were in office.
This afternoon I place on the record the amounts paid to the various provinces during the period we were in office, including payments for the first, last and middle years. I did that so there would be no question raised that whatever increase took place in 1957-58 was not attributable to the legislation passed in April of 1957. I omitted some provinces. In the record I have before me these particular pages were missing but I was not following the example of the government and being discriminatory against any one province by failing to mention it. As I went over the record of that conference the pages for the provinces to which I now wish to refer were not present.
For Newfoundland the total amount of conditional grants, unconditional grants and payments for the benefit of provincial institutions was $24,826 million in 1956-57. In 1957-58 the amount was $25,707 million while in the last year we were in office it was $74,993 million, or an increase of approximately $50 million a year. That is the record, for which
6684	HOUSE OF
Federal-Provincial Relations we received no thanks, but nevertheless it deserves to be placed on Hansard so that the facts will be known.
This afternoon I omitted to deal with Manitoba and Saskatchewan. I now wish to place on the record what was done for those provinces during our period in office. For Manitoba the amount was $40,121 million in 1956-57, $44,721 million in 1957-58, and the estimated amount in 1962-63 was $91,358 million, again an increase over 1957-58 of approximately $47 million.
With respect to Saskatchewan, I used to hear some of the speakers of the C.C.F. before they graduated into the N.D.P. refer to the revenues of Saskatchewan as though the federal government had given no assistance at all. Here is the record. In 1956-57 the amount was $38,450 million, in 1957-58 $45,667 million and in 1962-63 $91,343 million, or an increase of approximately $45 million over 1957-58. In other words, taking the figures for the period we were in office and repeating again what I said earlier for the purpose of dealing specifically therewith, there was an increase in 1962-63 over 1957-58 of over $1 billion.
I recall so well that when these increases were taking place those who sat on this side of the house at that time said: Why don't you do something for the provinces? But now there is a parade of virtue as the minister points out that under the new plan that has been evolved the provinces will receive approximately $250 million over a period of three years.


Walter Lockhart Gordon: Mr. Chairman, I am sure my right hon. friend would not want to refer to figures that might be misinterpreted. What I said was that three years from now the provinces would be receiving approximately $265 million more per annum-not the total for three years.


John George Diefenbaker: I thank the hon. gentleman for that correction because it is very obvious that is correct.


Walter Lockhart Gordon: I wonder whether my right hon. friend-


John George Diefenbaker: The hon. gentleman can speak later. I accept his correction.


Walter Lockhart Gordon: I thought you might like another one.


John George Diefenbaker: Pardon?


Walter Lockhart Gordon: I just wondered whether the Leader of the Opposition, who was checking


up on his previous table, would mind my pointing out an error in it.


John George Diefenbaker: When the minister speaks following me he can do so. I want him to answer some questions. I accepted the correction he made, which was an obvious slip of the tongue as I was dealing with this matter. The minister might answer this question. He says he is an optimist now and I have to say to him: Is this on the basis of his past performance? In his definition an optimist is one who when in opposition says everything is wrong and when he is in the government adopts that which was done and says that everything now is right. That is his definition and he cannot get away from it. The minister cannot get away from the fact that what he is doing here in so far as the equalization plan is concerned is a travesty of logic and is discrimination against the three provinces that have already been mentioned.
The minister said this afternoon that the table I placed on the record some weeks ago was wrong. That table was correct. It was exactly as it appeared in the record of the dominion-provincial conference and is indicative of the fact that what is taking place here is merely a stopgap designed to achieve, by increasing the amount each province receives, a reasonable degree of support because each province will receive more whether discriminated against or not.
This whole plan of equalization is a backward step on the basis of the present formula and is one that on any objective examination will, I am sure, be changed. I again emphasize the fact that there is no logic in what is being done and that what happened was that the minister sat down with his officials and said: These are the objectives we must achieve and all you have to do is shuffle this thing around to come up with a formula that will achieve the objectives we have in mind regardless of any other consequences. That is what has happened here.
The hon. member for Edmonton West analysed the effect on those provinces that dispose of their capital assets. They are being placed in an inferior position by having to have considered in arriving at the equalization payment, first, the amount they receive for the capital assets disposed of and thereafter the royalties they receive. This is unfair, this is unjust, but we are met, with the support that the minister enjoys in various parts of the house, by a formula that ought not to be accepted. The minister said: Oh, if you get 250 men together they cannot come to an agreement on matters such as this. He

does not need to place the figure that high. When he had three together that he imported the same result was achieved.


Walter Lockhart Gordon: Mr. Chairman, I was not planning to say anything at length but with the consent of the committee I should like to place on Hansard three tables that were requested by hon. members the other night. One was asked for by the hon. member for Esquimalt-Saanich showing the increase over current formula of adopting the increased individual income tax abatement but retaining the national average formula and the additional 25 per cent share of the estate tax. This is the table which gives this comparison. It is prepared with the thousands of dollars excluded in order to save space. The other two tables or the other two comparisons
Federal-Provincial Relations were requested by the hon. member for Edmonton West. The first is first estimate of payments and abatements under the Federal-Provincial Fiscal Arrangements Act 1961, for fiscal year 1964-65. The second table is first estimate of payments under the Federal-Provincial Fiscal Arrangements Act 1961 for fiscal year 1964-65 assuming implementation of proposals, that is, equalization to top two and payment or abatement of additional 25 per cent of estate tax. If I may, I should like to insert those tables in Hansard.


Lucien Lamoureux: Is it agreed that the tables referred to by the minister be printed in Hansard as part of his remarks?


Some hon. Members:: Agreed.
[Editor's note: The tables above referred to are as follows:]
[The Chairman.]
o>
INCREASE OVER CURRENT FORMULA OF ADOPTING THE INCREASED INDIVIDUAL INCOME TAX ABATEMENT BUT RETAINING THE NATIONAL AVERAGE FORMULA AND THE ADDITIONAL 25% SHARE OF THE ESTATE TAX
(in thousands of dollars)
Nfld.	P.E.I.	N.S.	N.B.	Que.	Ont.	Man.	Sask.	Alta.	B.C.	Total1. 1964-65	$	$	$	$	$	$	$	$	$	$	t(a) Additional 25% estate tax	136	36	1,348	506	8,382	14,417	1,278	546	1,601	3,920	32,1702. 1965-66	(a) Additional abatement of 2 points in the individual income tax equalized to the national average	1,302	285	2,026	1,639	10,934	23,018	2,545	3,488	5,495	50,732(b) Additional 25% estate tax	143	37	1,416	531	8,802	15,137	1,342	574	1,681	4,116	33,779Total	1,445	322	3,442	2,170	19,736	38,155	3,887	574	5,169	9,611	84,5113. 1966-67	(a) Additional abatement of 4 points in the individual income tax equalized to the national average	2,810	615	4,376	3,547	31,787	49,719	5,506	7,535	11,869	117,764(5) Additional 25% estate tax	151	39	1,486	557	9,242	15,894	1,409	603	1,765	4,322	35,468Total	2,961	654	5,862	4,104	41,029	65,613	6,915	603	9,300	16,191	153,232
s
o
ss
to
Federal-Provincial Relations
Present



FIRST ESTIMATE OF PAYMENTS AND ABATEMENTS UNDER THE FEDERAL-PROVINCIAL FISCAL ARRANGEMENTS ACT 1961

[Stage Direction]
FOR FISCAL YEAR 1964-65 (All dollar figures except per capitas in thousands of dollars)
Nfld.	P.E.I.	N.S.	N.B.	Que.	Ont.	Man.	Sask.	Alta.	B.C.	Total1.	Population 1964 est	492	108	766	621	5,570	6,554	965	936	1,440	1,731	19,183Standard taxes	$	$	$	$	$	$	$	$	$	$	$2.	Individual income tax (18%)	3,909	753	9,072	6,008	103,635	191,819	18,414	13,915	29,069	45,790	422,3843.	Corporation income tax (9%)	4,604	550	6,353	5,258	87,158	145,926	13,486	9,277	23,313	34,799	330,7044.	Estate tax (50%)	273	71	2,696	1,011	16,765	28,834	2,555	1,093	3,202	7,841	64,3415.	Total standard taxes	8,786	1,374	18,121	12,277	207,558	366,579	34,455	24,285	55,584	88,410	817,4296.	Natural Resource Revenue Gross natural resource revenue 50% of 3 yr. average	619	9	705	1,885	16,846	20,756	2,036	10,131	64,577	28,494	146,0587.	Total standard taxes and natural resource revenue	9,405	1,383	18,826	14,162	224,404	387,335	36,491	34,416	120,161	116,904	963,4878.	Total standard taxes and natural resource revenue-per capita	19.12	12.81	24.58	22.81	40.29	59.10	37.81	36.77	83.45	67.54	50.239.	Equalization a. Basic equalization Basic equalization per capita to the national average ($50.23)	31.11	37.42	25.65	27.42	9.94	12.42	13.46	1 t 	
1 110.	Basic equalization	15,306	4,041	19,648	17,028	55,366	-	11,985	12,599	-	-	135,973 ;11.	b. Guaranteed equalization Applicable to all provinces	8,576	2,381	11,655	11,312	26,296	6,534	16,855	3,648	-	1 87,25712.	Applicable to provinces below the National average	12,225	2,897	16,261	15,026	64,236	-	12,633	21,388	-	-	144,666 !13.	c. Equalization (greatest of lines 10, 11 or 12)	15,306	4,041	19,648	17,028	64,236	-	12,633	21,388	3,648	-	157,92814.	Standard taxes and equalization	24,092	5,415	37,769	29,305	271,794	366,579	47,088	45,673	59,232	88,410	975,35715.	Atlantic provinces additional grants and Newfoundland additional grant	18,500	3,500	10,500	10,500	-	-	-	-	-	-	43,000 (16.	Standard taxes, equalization, Atlantic provinces and Newfoundland additional grant	42,592	8,915	48,269	39,805	271,794	366,579	47,088	45,673	59,232	88,410	1,018,357
>
c;
[Stage Direction]


co
[Stage Direction]
o>
co
Federal-Provincial Relations
IThe Chairman.]
Proposed
FIRST ESTIMATE OF PAYMENTS UNDER THE FEDERAL-PROVINCIAL FISCAL ARRANGEMENTS ACT 1961 FOR FISCAL YEAR 1964-65 ASSUMING IMPLEMENTATION OF PROPOSALS I.E. EQUALIZATION TO TOP 2 AND PAYMENT OR ABATEMENT OF ADDITIONAL 25% OF ESTATE TAX (All dollar figures except per capitas in thousands of dollars)
Nfld.	P.E.I.	N.S.	N.B.	Que.	Ont.	Man.	Sask.	Alta.	B.C.	Total1.	Population 1964 office est	492	108	766	621	5,570	6,554	965	936	1,440	1,731	19,1832.	Standard taxes Individual income tax-18%	3,909	753	9,072	6,008	103,635	191,819	18,414	13,915	29,069	45,790	422,3843.	Corporation income tax-9%	4,604	550	6,353	5,258	87,158	145,926	13,486	9,277	23,313	34,779	330,7044.	Estate tax-50%	273	71	2,696	1,011	16,765	28,834	2,555	1,093	3,202	7,841	64,3415.	Total standard taxes	8,786	1,374	18,121	12,277	207,558	366,579	34,455	24,285	55,584	88,410	817,4296.	Total standard taxes per capita	17.86	12.72	23.66	19.77	37.26	55.93	35.70	25.95	38.60	51.07	42.617. 8.	Equalization Per capita deficiency from top 2 (S54.92)	
Basic equalization of standard taxes...	37.06 18,234	42.20 4,558	31.26 23,945	35.15 21,828	17.66 98,366	-	19.22 18,547	28.97 27.116	16.32 23,501	3.85 6,664	9. 10.	less natural resource adjustment (not to exceed line 8)	
Basic equalization	18,234	4,558	23,945	21,828	98,366	18,547	3,005 24,111	53,626	15,319	209,58911.	Guaranteed equalization (a) for all provinces	8,576	2,381	11,655	11,312	26,296	6,534	16,855	3,648	87,25712.	(b) for provinces below national average	12,225	2,897	16,261	15,026	64,236	12,633	21,388	144,66613.	Equalization payment	18,234	4,558	23,945	21,828	98,366	-	18,547	24,111	3,648	213,23714.	Standard taxes + equalization	27,020	5,932	42,066	34,105	305,924	366,579	53,002	48,396	59,232	88,410	1,030,66615.	Stabilization Stabilization applicable	20,880	4,798	33,224	25,764	245,238	316,125	42,668	42,153	56,270	75,106	862,22616.	Stabilization pavment	-	-	-	-	-	-	-	17.	Atlantic provinces additional grants + Nfld. additional grant	18,500	3,500	10,500	10,500	43,00018.	Standard taxes, equalization, stabilization, Atlantic provinces 4* Nfld. additional grants	45,520	9,432	52,566	44,605	305,924	366,579	53,002	48,396	59,232	88,410	1,073,66619.	Additional share of estate tax-25%. ..	136	36	1,348	506	8,382	14,417	1,278	546	1,601	3,920	32,17020.	Total with equalization to top 2	45,656	9,468	53,914	45,111	314,306	380,996	54,280	48,942	60,833	92,330	1,105,83621.	Total with equalization to national average	42,592	8,915	48,269	39,805	271,794	366,579	47,088	45,673	59,232	88,410	1,018,35722.	increase	3,064	553	5,645	5,306	42,512	14,417	7,192	3,269	1,601	3,920	87,479
w
[Stage Direction]


o
o
s
o
[Stage Direction]
Federal-Provincial Relations
Walter Lockhart Gordon: The only other point, and I do not want to make anything especially of it but I thought perhaps it should be noted so that mistakes might not be made in the future, concerns the table the Leader of the Opposition inserted in Hansard at page 5294. This table indicates, for example, that the totals for the year 1961 amounted to $1,336,840.


John George Diefenbaker: That is 1960-61.


Walter Lockhart Gordon: I am sure the right hon.
gentleman would wish to have it made clear that these are not the correct figures. In fact, they should read $1,336,840,000. That was the only point that I was trying to make clear to the Leader of the Opposition that somehow or other, and I say this because he made quite a bit of a remark I made this afternoon, in this case not $100 million got lost in the shuffle but something like a billion dollars. I take it it would be wise to have the record corrected for anyone who may be interested in reading this particular debate in Hansard.


John George Diefenbaker: I point out, Mr. Chairman,
that the minister made the statement this afternoon that the exhibit placed on the record on July 9 was incorrect, and that the figure should be, $1,336,840,000; that is exactly the figure that is there in both documents.


Walter Lockhart Gordon: Well, I do not want to pursue this, but the fact is it is not and I think it should be corrected.


Mr. Marcoux:: Mr. Chairman, I would not like to add to this afternoon's filibuster by the Liberal party before the passage of clause 1 of Bill No. C-lll. But I wish to associate myself with the remarks of the Minister of Forestry (Mr. Sauv6), who objected to the comments made by the hon. member for York-Humber (Mr. Cowan), lest some parliamentary correspondents of the province of Quebec indicate that no Social Credit member from the province of Quebec rose to protest.
I would like to remind the hon. member for York-Humber who compared the federal parliament to the head of a family, that in this case the father would be younger than his children, since the federal government stems from the association of various provinces instead of the provinces being creatures of the federal government. If the federal government hands back their rights to the provinces, it is because in the past, it had taken them away from the provinces.
Federal-Provincial Relations


Horace Andrew (Bud) Olson: Earlier this afternoon when the Minister of Finance replied to some of the questions that were raised immediately preceding his speech by the hon. member for Burnaby-Coquitlam, I thought I detected a note of impatience. He suggested he had already answered the same question four times. He seemed to think he had already supplied an adequate answer to the questions that were raised. So far as I am concerned, he has not as yet given any logical or sensible reason for the way in which clause 4 has been compiled.
As has been pointed out four or five times, Mr. Chairman, the Liberal party, prior to the 1963 election, was committed to setting up equalization on the basis of those taxes that are shared by the two levels of government. Now, Mr. Chairman, natural resource revenue is not a tax that is shared by two levels of government. If memory serves me correctly, and I think it does, the natural resources of this country were turned over to the provinces by the federal government in 1930. Since that time there has been no claim by the federal government on the fruits of development of those natural resources.
In addition to that, during the course of the minister's remarks he said, with respect to the 25 per cent abatement of the estate tax being excluded from the equalization formula at this time, that it did not make sense taken by itself. However, when it was included in the over-all package amendments that are in Bill No. C-lll, he seemed to think there was some justification for it. I should like to draw to your attention that if you take the over-all package amendments that are provided in Bill No. C-lll, there is even more discrimination against the provinces of British Columbia and Alberta than if you take some of the sections one at a time.
For example, clause 5 which we will be considering next provides for sales tax payments by federal crown corporations. Some of the provinces do not collect retail sales taxes.


An hon. Member:: That is two years away.


Horace Andrew (Bud) Olson: It may be two years away, but this is one of the points with which I am going to deal. Is the federal government now trying to set up such discriminatory fiscal arrangements between the two levels of government that they intend to force provincial governments to enact legislation they do not wish to enact? I am going to talk about this

Federal-Provincial Relations a good deal when we get to this provision. A clause of this type, when it is taken in the over-all concept of Bill No. C-lll, is simply going to mean there will be bigger federal sums paid to those provinces that levy the highest retail sales tax.
I am more disturbed about some of the other things the minister had to say this afternoon. He said that the arrangements contained in this bill are not perfect. He went farther and said he was not satisfied with the tax arrangements between the two levels of government prior to the introduction of this bill. He hoped that from time to time they would be improved. He has an opportunity now to amend this clause 4 to bring about equalization on the basis of the standard tax fields, rather than introduce other factors such as national resource revenue.
As far as the members from Alberta and British Columbia are concerned we are not pleading poverty when we ask for amendments to clause 4. What we are pleading for is justice. Taking such things as the revenue received from the sale of a capital asset and including them as tax revenue for the purpose of equalization is not justice. We have looked forward to the day when the government would sit down and conscientiously work out a set of principles and ground rules which would govern federal provincial fiscal arrangements, and then apply the formula in fairness to the citizens of all provinces. But in clause 4 we find a continuance or a perpetuation of some of those discriminatory provisions about which protests have been made in the past.
The question has been asked over and over again why such things as gasoline tax, liquor taxes, and so on, were not taken into consideration whereas revenue from natural resources was included. Still we have had no satisfactory answer. Surely the prosperity of a province can better be determined on the basis of such things as liquor tax revenue than by the sale of capital assets in the course of the liquidation of natural resources?
The other day the minister tried to argue that because the province of Alberta includes as revenue receipts from the sale of oil and other natural resources this was tantamount to an admission that they were taxable revenue. I could not disagree more. If the minister were familiar with some of the other ways in which the province of Alberta keeps its books he would, perhaps, find other examples of what he might consider to be abnormal practices compared with those of some of the other provinces. There is at


least another respect in which Alberta bookkeeping might be regarded as a departure from normal practice. We do not separate operating expenses from capital expenditure. It is a fact. It is a fact that every highway, every building and every capital expenditure in Alberta is treated as a current expenditure and paid for in the year in which that expenditure is incurred. Is it now to be necessary for the province to separate the bonuses, and so on, which they receive as a result of the sale of capital assets-I am thinking particularly of the oil and gas leases-and place them in a separate account as capital receipts rather than as revenue, in other words to set up two sets of books for accounting purposes so that all these things do not get into the revenue side? If discrimination of this kind is to be continued it will, in fact, constitute an intrusion upon the manner in which the government of Alberta chooses to run its affairs. There are ways round this, should it become necessary to take them. I certainly hope the Canadian government will not continue this kind of discrimination until it becomes necessary to change some of our accounting methods in order to obtain some kind of justice.
The government has still not explained why it should take into account the gross amount of revenue received from the sales of capital resources rather than the net amount derived from these sources. No provision is made for the expense of developing these resources. Instead, the gross income is taken and, as yet, there has been no explanation why this should be so.
There are one or two other things which the minister had to say this evening and upon which I should like to comment. I think he laughed a little at some of the ways in which the province of British Columbia chose to keep its accounts. He sneered, if I may use that term, though perhaps mildly, at the claim of the premier of British Columbia that the province was now debt free as far as debt held in the name of the province was concerned. The minister may laugh at that if he likes but I will tell him one of the facts of life as far as British Columbia is concerned: There is no levy on the citizens of British Columbia now, to pay debt services on any provincial debt. Whether he likes that fact of life or not, it is true, and in case he is not aware of it, let me tell him that the two provinces of Alberta and British Columbia have experienced the highest rate of growth during the last ten or 15 years of any provinces in Canada. There has been

a movement of people from all over Canada into those two provinces. This is indicative of a growing economy, and whether the minister cares to refer to it in jest or not is a matter for him to decide. Nevertheless these are the facts of life.
We cannot accept the reasons which have been given so far for producing a formula of the kind now advocated as a basis for re-arranging the agreements between the provinces for sharing tax revenue. We cannot understand why certain taxes were excluded. As a matter of fact, when we talk about standard taxes-and this phrase is used several times in the various subclauses of clause 4-it seems to me that every province in Canada levies a liquor tax and that every province levies a gasoline tax. These are taxes which could properly be included among the standard taxes. Instead, the taxes which were consistent, or reasonably consistent, from province to province were ignored and the government included such things as the gross revenue from the sale of natural resources.
As has been pointed out time and time again, and as the minister himself stated, as will be seen if we turn to page 5282 of Hansard, this natural resource revenue per capita ranges from a low of 15 cents in Prince Edward Island to a high of $94.08 in Alberta. It is becoming more and more obvious as a result of the interrogation which has been carried on while this bill has been before parliament that the amount of money which the federal government was pressured if I may use that word, into distributing to the provinces was a predetermined figure and then the formula was concocted in order to meet that figure. Why? Why increase the percentage points of abatement of succession duties or estates tax and then exempt one-third of that from the tax equalization calculations? The minister gave us a most unsatisfactory answer when he told us that though this might not seem very logical in itself it became more reasonable, or more logical, when considered in the light of the whole package. This answer is a further indication that the amount which the federal government wanted to give to each of the provinces was predetermined and that the formula was cooked up to meet this figure.
I have no desire to prolong this debate unduly. In so far as British Columbia and Alberta are concerned, we are not being treated fairly and we are pleading for some justice in the formula. The attitude of both governments has been over the years that we 20220-423
Federal-Provincial Relations are part of confederation and that it shall be an obligation on certain provinces, when their economy is buoyant, to assist other regions in the country that are perhaps lagging, and we hope lagging temporarily. But, Mr. Chairman while the two provinces have acknowledged this, we think there should be, as I have said before, a formula set down, a set of principles and a set of ground rules laid down, and these should be made to apply to all provinces.
The table the minister gave to the house on July 7, which is to be found at page 5184 of Hansard, clearly indicates that the provinces of Alberta and British Columbia, under changes in the equalization formula, when they occur next year, to 18-9-50 will receive no additional payments. The reason is the inclusion of half the natural resource revenue. When the next change comes about during the fiscal year 1965-66, the equalization formula will be changed to 19-9-50, but in that year too there will be no additional distribution of tax revenues to the two western provinces. Again, in 1966-67, when the formula is changed again to 20-9-50, there will be absolutely no increase under the equalization formula for either British Columbia or Alberta. I do not believe we can continue to reel, as I said the other day, from one temporary improvisation to another to satisfy the expedient of the day. It is not good business; it is not sound for these formulas to be based on which province can make the most noise.
We accept equalization on the basis of helping those areas in Canada that are lagging economically behind others, but we do not like to have the formula cooked to such an extent that there are serious injustices being committed, such as we see here. We would like to have the minister tell us why the liquor tax, the gasoline tax and some of these other taxes that are pretty universal across the country were ignored when the government considered provincial revenues. We would like to have a considerably better answer as to why the additional 25 points in the estate tax is not to be considered, unless this is some kind of a sop or concession to certain provinces in order to have them give in on other changes in the formula. As far as I am concerned, clause 4 is not satisfactory; it is unjust and discriminatory, and we do not believe that proceeding on this kind of basis is doing Canada any good.


Walter Lockhart Gordon: Mr. Chairman, I would just like to say a few words in reply to the re-

Federal-Provincial Relations marks of the hon. member for Medicine Hat. In the first place, I think at the beginning he said he thought he detected a note of impatience in something I might have said. If he did believe there was any impatience on my part, I can assure him that I did not feel any impatience. I am enjoying this debate.


Mr. Barnett:: Then let us keep it going for a while.


Walter Lockhart Gordon: I do not know that I would go that far. But I certainly have not felt any impatience, and if I have indicated any impatience to my hon. friend, then I apologize. He also suggested that I might have referred in jest, or even laughed-which I am sure I did not-or sneered mildly about the province of British Columbia being debt free. I can assure my hon. friend that I would not jest or laugh, and I certainly would not sneer, about such a very serious matter. I would think that if any of us as individuals, or any of the governments with which we are associated in one way or another, ever should become debt free in the real sense of that term, it would not be a matter for sneering or jesting; it would be a matter for rejoicing. I hope we will all find ourselves in that position some day.
My hon. friend raised a number of points. I think some of them have been dealt with in one way or another before. Perhaps they have not been dealt with to his complete satisfaction. I may be wrong in this, but I thought he suggested that, among other things, the revenues from gasoline taxes and liquor taxes might be some sort of a measure of the prosperity of different areas. I would hope that in the years to come we might find a better measuring stick than the amount of money the citizens of any area might feel it necessary to spend on liquor. I have said this before: I do feel that the proposal to set up this committee of the federal government and the provinces should produce, and I hope it will produce, results with regard to which there will be a general measure of agreement.
My hon. friend referred to the 25 per cent estate tax and the fact that this was not included for equalization. I think he mentioned the premier of British Columbia at one time. I dare say there are those who might have liked this extra abatement to have been included in the equalization formula. My recollection-and I may be wrong -is that the premier of British Columbia seemed to be very pleased indeed about this extra abatement. He might have liked it bet-

ter if it had been 26 per cent, or even 30 per cent. He might have liked it better if it had been included in the equalization formula. But as my hon. friend was speaking on his behalf, I thought it was only fair to say that the premier seemed to be pretty pleased, on balance, with the results.


Thomas Speakman Barnett: Mr. Chairman, I hope the minister will not think, when he sees me rise, that I am rising simply for the purpose of keeping him happy by prolonging the debate. But he may recall that I did have something to say on this question of natural resources revenue when we were on clause 1 of the bill. I, in company with the minister, have listened to a considerable discussion on this topic already today. However, it does seem to me that we may not be completely sure just what we are talking about.
I would like the minister to tell us just what, in the terms as expressed in the bill, is meant by "natural resources revenue", and who is going to interpret the bill and decide what is natural resources revenue. Is it to be determined by the Minister of Finance? Is it to be determined by a statement coming from the governments of the provinces? Just who is going to decide what is natural resources revenue? Has the minister already established a definition? What is included within the purport of this particular term? I think we may all be aware in a general way what is meant by the phrase, but I think it should be pinned down, in view of the widespread interest expressed on the subject.


Walter Lockhart Gordon: May I just answer that question. It is defined in section 2(c) of the Federal-Provincial Fiscal Arrangements Act, a section which I think was approved by the previous parliament.


Thomas Speakman Barnett: I realize that this is an amendment to an act, but could the minister indicate for the record how that definition reads, because I think it should be pinned down for the record.


Walter Lockhart Gordon: I want to make it clear that this is not an amendment. It is not something which is before us. Section 2(c) of that act reads:
"natural resources revenues", as applied to a province for a fiscal year, means the natural resources revenues for the fiscal year as shown in the table "gross general revenue" in the publication of the dominion bureau of statistics entitled "financial statistics of provincial governments";


Thomas Speakman Barnett: Further to that point, I wonder whether the minister could tell us where the

Federal-Provincial Relations dominion bureau of statistics gets the figures Mr. Gordon: Then we would have to have on which this definition is based.	another amendment.


Walter Lockhart Gordon: I understand they were obtained from the public accounts of the provinces, but I would be glad to verify that and if I am wrong in what I have said I would be glad to inform my hon. friend.


Thomas Speakman Barnett: Then I think it basically comes down to the point as to what is meant by "natural resources revenue". From what the minister has said I am given to understand it is what appears in the public accounts of the various provincial governments. I think that is important to an understanding of where we are going in this debate.


Walter Lockhart Gordon: I do not think I would want to offer a legal opinion in a matter of this kind. The section in the act is clear and I think that anything I say in amplification might lead to some misunderstanding. In fact, I think my hon. friend may have been present when this section was passed by a previous parliament.


Douglas Mason Fisher: Ask your parliamentary secretary, that great legal authority, to explain it.


Walter Lockhart Gordon: The hon. member for Port Arthur, in his usual helpful fashion, has made a suggestion which, with great respect, I am prepared to reject.


Thomas Speakman Barnett: I think this is a rather important point, particularly in view of the remarks made by the hon. member for Medicine Hat. He made some suggestions as a result of which the provinces could, if they so desired, alter their methods of bookkeeping in such a way as to alter the basis under which this formula would be applicable. The minister has already been discussing some of the ways in which the accounts of the government of the province of British Columbia are kept.


Walter Lockhart Gordon: The hon. member has made a suggestion which I cannot believe any self-respecting government of a province would resort to. As I understand him, he is suggesting that in order to avoid a formula with which we are all familiar now and which has been on the statute books for some time certain provinces might change their methods of bookkeeping so as to entitle them to larger sums than might otherwise be the case. I really do not believe that this would happen certainly under any of the administrations in power at this time.


Thomas Speakman Barnett: I am not so sure I agree with the minister on this question when he suggests that no self-respecting province-
20220-423J


Thomas Speakman Barnett: -might take this course. If the arguments advanced by the hon. member for Medicine Hat as to the basic unfairness of this proposition are correct, perhaps one should reverse the thing and say that any self-respecting government of a province would take appropriate action on behalf of the citizens of that province.


Walter Lockhart Gordon: I would think with great respect that if some of the provinces felt strongly in the way my hon. friend suggests, they would, through their representatives on the tax structure committee, put their views forward rather strenuously. I dare say they will, and I think that is the way in which this matter will probably be resolved, to the satisfaction of at least a very large majority.


Marcel Joseph Aimé Lambert: If I may make an interjection here, surely the minister is not suggesting that because of this representation by these members on the so-called taxation committee members of parliament in this province shall be precluded from making these representations. We are not the apologists for the provincial government, but we do speak for the citizens of the provinces from which we come. Surely to goodness we have the right to make this point of view known. I could not care less for the views of provincial government representatives, who may have their own points of view to put forward; but I am certainly not going to be inhibited by being prevented from expressing the point of view of the citizens of the provinces which we represent in this house.


Walter Lockhart Gordon: I completely agree with my hon. friend from Edmonton West. Not only do I think that he should not be inhibited in this fashion but I can assure him, from listening to him and other members of the committee, that there has been no indication of inhibitions anywhere. I think all hon. members of this committee should feel that their consciences are clear in this regard and I am sure no one would be entitled to make such a charge.


Thomas Speakman Barnett: If I can come back to the point I was discussing with the minister, I would agree with him to this extent, that no self-respecting provincial government would take this kind of action behind the back of the Minister of Finance for Canada. Nevertheless, I feel that in considering this legislation and the direction in which the minister is asking parliament to move we should not be
6694	HOUSE OF
Federal-Provincial Relations unaware of what might be the kind of development which could take place. By way of illustration I might point out that one of the most important natural resources of British Columbia-I am sure the Secretary of State for External Affairs, in view of the recent consideration of the Columbia river treaty, will agree with me here-is to be found in its waterpower in its streams.
It might be argued that, now that our power is controlled by a publicly-owned corporation, all of the revenues of the B.C. hydro authority are revenues from natural resources. Conceivably, if that corporation finds itself in the position of making a surplus, then any surplus revenues from that corporation might be turned over to the provincial government and become part of the natural resources revenue of the province. Conversely, the management and operation of the forests of British Columbia is conducted directly by a government department, and if this kind of approach is going to be taken in the tax sharing formula I see nothing to prevent the provincial government from deciding to set up a crown corporation to operate and manage the forest resources of British Columbia, just in the way they have set up a crown corporation to operate the water resources in the province. In that event it would appear to me that the main source of natural resources revenue in the public accounts in British Columbia today would come under a separate operating entity and would not be part of the natural resources revenue as set out in the public accounts of that province.
These to me are some of the important considerations which are involved in the introduction of this element into the equalization formula, and I for one, as I have already made clear, do not like the direction in which we are moving in this connection. This could very well lead to a great deal of unnecessary distortion of the manner in which the provincial authorities are going to decide to operate and manage the affairs of the province.
If before the debate is concluded the minister is in a position to obtain a legal opinion and answer my earlier question in connection with the basis of the argument relating to the original source of the definition of natural resource revenue as provided in the main act, of which this amendment will become a part, I would be happy to receive it. I agree with the Minister of Finance, and certainly do not expect any province deliberately to do these things without notice and behind the minis-
[Mr. Barnett.1

ter's back. I think we should be fully aware of those things which might happen as a result of what I feel is a step in the wrong direction.
Mr. Chairman, I will conclude my remarks by saying I wish the minister had agreed to leave this part of the bill out until the tax structure committee had completed its examination. Perhaps this kind of question could be referred to that committee for consideration. While the minister has admitted that this kind of change might be made in the formula at some future date after the study has been completed, it does seem to me the work of this committee would be much more simple if it was not faced with this particular problem which is the subject of the objections many of us have expressed.


Marcel Joseph Aimé Lambert: Mr. Chairman, I do not for one moment share the political views of the hon. member for Medicine Hat. Nor do I make myself, as he might try to do, an apologist for the Alberta government, whose political philosophies the hon. member for Medicine Hat might attempt to espouse. I must say however, I do have some sympathy for some of those principles he has enunciated tonight.
I apologize to the committee for repeating myself. Notwithstanding the minister's repetition of the legal definition of section 2(c) of chapter 58, of the Statutes of Canada, 1960-61, defining natural resources revenue, I find myself as a graduate of commerce, accountancy and business administration, in some difficulty in reconciling actual fact with this legal definition. I am sure the minister would find the same difficulty.
I admit at the outset that Alberta, and British Columbia to a lesser degree, may be wearing a self-fashioned hairshirt at this time. Because of their own political desires and motivations they have seen fit to lump together capital receipts and revenues in the natural resources field. The hon. member for Medicine Hat, as well as myself and others, have made a distinction in this regard. I think also the government formerly headed by the hon. member for Burnaby-Coquitlam also lumped these items together so far as natural resources were concerned.
I think these governments have committed a factual and economic blunder. I do not think they should have considered these things together. I feel there must be a clear distinction made between capital receipts and revenues from natural resources. I am sure had those governments treated receipts and revenues on different terms, and fashioned their spending programs and budgets in this way, we would not now be faced with this

problem. Had such an attitude been taken I am sure we would now have ample corroborating evidence to counter any argument put forward by the federal government.
I am the first to admit that this natural resources revenue was brought into an equalization formula in 1961 under an administration I supported. That situation does not negate the fact that I objected to it at that time. The province of Alberta at that time was the only province adversely affected. The one argument I and others could not counter had relation to the fact that under the 1957 agreement, which classified Alberta as a have-not province, which was in existence in 1958 and 1959 the provincial administration saw fit to declare dividends to the extent of $11 million or $12 million each year. The province of Alberta was receiving payments to the extent of $17 million or $18 million from the federal government at that time. This created an inexplicable position.
I remember attempting to support this situation during a discussion with my colleagues, but counter-supporting facts just were not in existence. So long as Alberta was classified as a have-not province and at the same time was declaring a preposterous dividend, there were no grounds for argument. Because of this silly political nonsense on the part of the Social Credit party in the province of Alberta we here in Ottawa, who had real grounds for argument in respect of this division between capital receipts and revenues from natural resources, lost a great deal of ground.
I should like to remind hon. members that Alberta's prosperity resulted from a rather unnatural situation. It resulted from conditions which existed during the Korean war and following the Suez crisis. Let me assure all hon. members of this house, including those from Alberta, that if conditions such as those which existed following the Suez crisis recurred, keeping in mind the fact that Alberta is presently on the eve of developing the tar sands, the revenues of the last decade could appear picayune when compared with the revenues which could accrue to the provincial administration during the forthcoming decade. This is as sure as the sun will rise tomorrow. These are economic facts. Alberta has been fortunate. I do not intend to apologize for the citizens of Alberta, but I should like to remind everyone that God placed the oil and gas under the soil of the plains, foothills and mountains of Alberta, and man found them at the appropriate time.
Federal-Provincial Relations


An hon. Member:: We are aware of that fact.


Marcel Joseph Aimé Lambert: Apparently some of the apologists of the Social Credit party feel that the prosperity resulted from a Social Credit exercise of super wisdom.


Walter Lockhart Gordon: Mr. Chairman, may I ask the hon. member a question? I thought the federal parliament had made these resources, particularly oil and gas, available to the province of Alberta.


Marcel Joseph Aimé Lambert: The minister may well refer to the agreement of 1932, which was the culmination of confederation in 1905. He must remember that he is asking us to implement clause 3 of this bill, which he says is an implementation in part of the spirit of the statute of confederation with Newfoundland in 1949.
Let us not argue about semantics. Ontario, Quebec-these provinces have had their natural resources.


Walter Lockhart Gordon: I am not complaining about it.


Marcel Joseph Aimé Lambert: Let me point out to the minister, whose knowledge of constitutional history, shall we say, may be just a little short of factual, that what happened in 1932 was merely a transfer of administration because there was a moral commitment to Saskatchewan and Alberta of the ownership of the natural resources, once they were able to take care of them. This was the implementation under a Conservative administration, may I say, of something which was due to the people of Alberta and Saskatchewan. I am not going to deny that there may be some things coming to the people of certain provinces, just as I am sure the hon. member for Yukon and the hon. member for Northwest Territories will insist that in due time certain things must come to the people of their territories. This is a part of the evolution and development of our country.
Be that as it may, I would say that in 1961 there was a singling out of the province of Alberta. The minister was not then a member, but notwithstanding what some of my colleagues may say I was aware of a certain sentiment against the so-called plutocratic province of Alberta.


Walter Lockhart Gordon: Just envy.


Marcel Joseph Aimé Lambert: There is no greater envy than economic envy, and what happened was in some part economic retaliation against the Alberta government for its nonsensical divi-

Federal-Provincial Relations dends of 1958 and 1959. To their credit I think the Social Credit administration under Premier Manning recognized that they had committed a monumental booboo and they pulled back, but it was then too late. It was instructive that at the 1961 conference Premier Manning literally confessed the error of his way. There was no great objection, and I think he recognized the retribution that was coming to his administration in this regard.
However, I am still dealing with the question of natural resource revenue. We have not heard from the minister any justification for the continuation of this lumping together of capital receipts and revenues under the natural resources classification. The hon. member for Burnaby-Coquitlam, the hon. member for Red Deer, the hon. member for Medicine Hat, others and myself have at all stages of the discussion of this bill raised this question, but the minister has been singularly silent in this regard.
I must say that as the years have progressed we have seen the effect on Alberta. This afternoon I used an expression which is quite a slangy one but very apposite: one cannot kill deader than dead. That is precisely what this formula does to Alberta, to a lesser but growing extent to British Columbia, and Saskatchewan as it develops its phosphates and gas and oil. The margin beyond the national average as envisaged under the present formula is so wide that it does not matter one iota whether you include revenue and capital receipts; but I am looking to the years ahead. I do not look forward to another Suez or another Korea, but already we see disquieting signs in the United States of mounting pressures against oil exports by western Canada to district 5, although over the years we have enjoyed quotaless entry of oil and gas. But should there be a change in the economy of the United States, then from a position of relative or absolute prosperity Alberta and British Columbia and Saskatchewan to a lesser extent are going to be suddenly faced overnight with relative bankruptcy because those provincial administrations to their misfortune, or should we say to the misfortune of the citizens of those provinces, have committed themselves to programs of expenditure on a continuing revenue basis which do in fact and have deliberately been chosen to confuse capital receipts and revenues.
What will happen if those capital receipts decline? I do not know how many trial balloons have been launched in Alberta about a sales tax to make up this deficiency because an unrealistic expenditure program, I main-


tain, has been undertaken. After all, when your jeans are full of dollars you do not have any worries, and this has been the problem of the provincial administration. It has not seen fit to recognize its relative prosperity.


Horace Andrew (Bud) Olson: May I ask the hon. gentleman a question? I wonder whether he would care to discuss the main criticism that the Alberta government has received over the years for building up such a tremendously large reserve amounting to between $400 million and $450 million at the present time?


Marcel Joseph Aimé Lambert: The reserve is very simple to explain, if I may digress for a moment. It covers the outstanding provincial debt. It covers what in British Columbia may be the equivalent of a moral responsibility on the provincial government. In British Columbia they have sloughed it off on crown corporations but there is still a provincial moral and legal responsibility. In Alberta they have lent the money to the municipalities. Look at the municipal debt load and look at the debt load of the province of Alberta as a whole. If there was a redistribution of this debt between the municipalities and the provincial government it might be a little more equitable. If the hon. member will look at the indebtedness of the people of the province of Alberta I think he will have his answer.
Be that as it may, I would say that the provinces of Alberta, British Columbia and Saskatchewan are relatively new in the natural resource field and have now been blessed by fortune as the events of the world have gone by.


An hon. Member:: And good management.


Marcel Joseph Aimé Lambert: Mr. Chairman, I have many times characterized the situation by saying that if there had been less good management it would have either been in the hands of criminals or morons. The management was that of reasonably prudent men. This I will admit, but let us not qualify it beyond that. I can tell you something about the deficiencies of the Alberta land oil policy, which is now being changed because the government has realized some of the deficiencies in its policy. I am talking about the natural resource revenue factor involved in this equalization formula. Hon. members who may not be affected by this may be a little impatient, but then unless you are being affected you have no concern. The hon. member for Burnaby-Coquitlam, the hon. member for Medicine Hat, the hon. member for Red Deer,

myself and our colleagues from the three western provinces-	t


An hon. Member:: Four.


Marcel Joseph Aimé Lambert: -three western provinces at the moment, feel that there is an injustice in the application of this natural resources factor.


Mr. Lamonlagne:: Capital punishment.


Marcel Joseph Aimé Lambert: The Secretary of State says "capital punishment". This may be the apposite term; it is certainly a capital receipts punishment. I would put it to the minister that he heed the representations of the members from these provinces in the working out of this formula.
Now, his post-predecessor-


Walter Lockhart Gordon: You mean predecessor but one?


Marcel Joseph Aimé Lambert: His predecessor but one, if I may use better grammar and I thank the minister for it, certainly would want to have these points brought out. However, we face regional influences of one kind and another, and it is always easier to pick on the fellow who has got it. These are the provinces who have it, and they are being picked on today.
The Minister of Finance was kind enough to give me a preview of the tables he put on the record today concerning the changed position of the three western provinces as a result of this natural resource factor in the equalization formula. Well, frankly, the position of the province of Alberta has not changed one iota, certainly in so far as the 2 per cent is concerned. However, I am not talking about the 2 per cent; I am talking about natural resources, and the province has gone deeper and deeper into the mire. In other words, it has been killed deader than dead, to use a slang expression. The position of British Columbia and Saskatchewan, who are much closer, shall I say, to the point of life or death, indicates that they are being carried down also.
May I once again to the point of being repetitious and perhaps a little annoying to the minister and hon. members, underline this particular point for re-examination. Do not, for goodness sake, kill one of the most golden geese you have in the national economy-and it is just that. A tax that you exact in one area comes out as costs in another. The minister, as a chartered accountant, knows that you cannot hide a tax. I do not care how you do it, it comes out in costs. This is the case
Federal-Provincial Relations with regard to the oil and gas industry. If it is one of your best export industries, if it is one of your best income tax producing industries, if it is one of your best customs revenue producing industries, if it is one of your best excise tax producing industries, do not come along and knock it on the head. I urge, therefore, and plead with the minister that he underline three times, and double three times, to his committee that they reexamine this natural resource factor because I think it is a step in the wrong direction.


Mr. Patterson:: There have been several things said this evening that have caused me to take part in this discussion. I hope the Minister of Finance will find it possible to come back very soon. No doubt he has been called out for a moment. He made a statement that he was enjoying this debate. I would not want it said that the hon. member for Fraser Valley refused to make his contribution to the happiness of a colleague in the House of Commons. I should like, therefore, to make a few observations, especially with regard to what the minister said tonight.
In the course of his reply to the hon. member for Medicine Hat regarding the financial position of British Columbia, he said that if any province reaches the state where it is debt free, in the true sense of the word, that would be a cause for rejoicing. I noticed, sir, that he inserted that little word "if". I do not believe the Minister of Finance read the editorial in the Financial Times of Friday, August 7, 1959. I believe that for his enlightenment and edification it might be interesting if we put it on the record tonight. This editorial refers to the time when the premier of British Columbia set fire to certain cancelled bonds in the interior of British Columbia. I quote:
Perhaps the showmanship on the occasion of B.C.'s bond burning last week was extravagant but the achievement was real.
When Premier W. A. C. Bennett of British Columbia, in an elaborate ritual, consigned some $70 million of cancelled bonds to the fire, thus wiping out the balance of the province's direct debt which stood at $191 million seven years ago, he accomplished something which taxpayers all over Canada wish could be done in the name of their own provinces (and of Ottawa too).
But polities creates strange moods. There has been an extraordinary amount of carping; charges of trickery have been raised and fingers are pointed at the indirect or contingent debt of the province. The critics have really made hay out of their disapproval of the Bennett claims, although they are on very poor ground indeed.
There is a difference, a very real difference, between direct and contingent debts; between debts the service of which is a direct charge on all

Federal-Provincial Relations
g&vernment revenues on the one hand, and debts which are largely, or wholly, self-sustaining occasionally even self-amortizing, such as the bonds issued by provincial power commissions, toll highway commissions and similar government agencies.
An indirect provincial debt is simply one the service of which is guaranteed by the province in the unlikely event that a power commission, etc., would default on its own obligations.
In times of generally rising government direct debts and the steady growth of interest requirements on such debts, one would have thought that B.C.'s achievement would have been greeted with serious interest. However, the fact that it was done by a government that happens to label itself "Social Credit" was enough to bring out venom and ridicule.
It is said that substantial sales taxes were needed to retire the debt. But at least these taxes did have this result. We note very high sales taxes ift other provinces (and in Ottawa) without any evidence that a similar result is even contemplated. This is one instance where emulation rather than carping is definitely in order.
X see the Minister of Finance has been able to return to the house. I hope he will take time to read this statement that has been put an the record. Even though the Minister of Finance may deny the fact, and even though some of the other critics may deny the fact, yet those in financial circles recognize the fact and acknowledge it. I think possibly a little honesty would be of value in the consideration of this matter. The Minister of Finance, replying to the suggestion made by my hon. friend from Medicine Hat that the government of Alberta might have to make some changes in its accounting procedures, said he did not believe any self-respecting government would do such a thing. May I say-perhaps I should-that no self-respecting federal government would act in the way this one is doing in this particular instance. Are we reaching a point where a federal government is continuing to crowd the western provinces into a corner every time? Then they wonder why it is we take exception to their actions and to their legislation. They did it when the premier of British Columbia asked that the utility corporations be exempted from corporation tax in the same way as crown corporations are. He was met with refusal on every hand until he was forced into the position where, in order to give the consumers a fair deal, he had to take action. This legislation appears to be following the same course. Once again the federal government is crowding us into a corner and refusing even to give a satisfactory explanation Why they are doing it. As the hon. member for Edmonton West has said, the question has been raised by members from various parts of the country but no satisfactory reason has

been given why the government, in the words of the hon. member for Medicine Hat, should have cooked up this formula which militates against the best interests of two of the western provinces and perhaps the three, as is being suggested.
The hon. member for Edmonton West says the government out there cannot take credit for the natural resources which are being developed. That is true. But I believe they can take a measure of credit for the fact that they have been developed and administered in such a way that the province has benefited from them. The same situation obtains in the province of British Columbia. We all know the problems which were faced there prior to 1952 and we know what has transpired since that time. The present government there does not take credit for the fact that the resources are available to the province, but I believe the people of the province give the government credit for seeing that they were developed and are being developed in the best interests of British Columbia.
As I said the other day, I find it difficult to understand why certain members of this house continue to downgrade their own provinces. Just the other day, the hon. member for Comox-Alberni-I am glad he is here tonight-said that the premier of British Columbia was one of the greatest separatists he knew. I would like him to prove that. I do not believe he could. I know charges are thrown around wildly without any basis in fact, and this is one of them. I should like to call attention to the report of the federal-provincial conference in 1963. The conclusion of the representations made by the province of British Columbia, as reported on page 71 reads as follows:
Certainly we offer these proposals In the interests of British Columbia but we do so confident that our proposals will help all of Canada to grow and prosper, for we, like all Canadians, are citizens first of a country and not of a province.
That does not sound like separatism. So I trust the Minister of Finance will take some of these matters under advisement, give consideration to the statements which have been made and come up at least with an answer, if not with changes in this formula so as to bring it more in line with reality.


Mr. Fleming (Okanagan-Revelsloke):: The
committee will perhaps forgive me if I do not indulge in any further exploration of the labyrinth of British Columbia debt accounting, but if I return to the clause now under

consideration, clause 4, and in particular this
provision:
(5) (a) the amount by which the average per capita natural resources revenues of the province for the three fiscal years immediately preceding the fiscal year exceed the average per capita natural resources revenues of all the provinces for the three fiscal years immediately preceding the fiscal year.
As has been indicated by other speakers in this discussion, we are seeking simply to secure from the minister some undertaking that he will consider the inequity which exists in this clause. Perhaps a provision of this general nature has existed for many years in our tax arrangements with the provinces. But it is not desirable to perpetuate this arrangement if it can be proved there is a fundamental weakness attached to it. My suggestion to the minister tonight is that there is a fundamental weakness here. I would ask him to indicate to the committee that he is prepared to accept the fact that there must be some differentiation between true natural resource income and the sale of a capital asset.
If you are gaining an income from a renewable resource-from a forest resource, for instance, which can be sustained and made to yield a continuing revenue-it can properly be regarded as income. But if you are receiving revenue resulting from the sale of an asset-gold, iron, silver, copper, any of the minerals, which cannot by any policy of management be restored; if you are obtaining revenue derived from the sale of oil or natural gas, which cannot, by any exercise of management be renewed; once it is gone, it is gone for good-an entirely different consideration arises. This is what I ask the Minister of Finance to recognize. I am sure this is what many members who have spoken over the past several days are seeking from him. Just as in the field of federal taxation capital gains are not taxed, we should not take these capital gains into account in an equalization formula, but rather we should recognize that the only income which should be taken into account under such a formula is that which is renewable and can be perpetuated. That is all I ask of the minister. I ask him to take this principle into account.
To summarize; Natural resource income is that income which derives from a resource which can be perpetuated, whereas revenue from the sale of resources which are not renewable amount to the sale of an asset and should be considered as a capital gain.


Thomas Speakman Barnett: When I heard the hon. member for Fraser Valley reading an editorial from the Financial Times I was tempted to
Federal-Provincial Relations rise on a point of order and suggest to Your Honour that the subject matter of the editorial was one which might more properly be debated in the legislature of the province of British Columbia. So I will attempt to be very brief in the comments I make lest I fall into the same error. I am really rather fond of the hon. member for Fraser Valley, and that may have been one of the reasons I refrained from rising.
I would like to point out that when the hon. member was referring to the question of contingent liabilities and whether the province of British Columbia was debt free, he conveniently mentioned only such things as revenues from crown corporations, and conveniently forgot to mention the contingent liabilities in respect of the debts of the school boards and municipalities of the province. I would just say that within the province of British Columbia there is still a good deal of difference of opinion as to some of the claims the premier of that province makes from time to time on the subject of the public debt.
In reference to the latter part of the hon. member's remarks, in which he took some umbrage at my suggestion that the premier of British Columbia exhibits separatist tendencies, I would remind the hon. member that when I made those references I quoted from the same statement to which he referred. But I find myself less concerned with the fine sounding phrases in the peroration of the submission of the premier of British Columbia than with what I consider to be the meat of the submission. At that earlier stage I pointed out that the premier's statement was to the effect-and I am quoting from page 69-that "British Columbia is opposed to federal equalization grants to the provinces. Equalization does not contribute to national harmony or efficient use of public moneys". In my own view-and I recognize this is a matter of opinion-anyone who holds those views, considering the realities of the Canadian federation, is in fact advocating a policy of separatism as I have come to understand it.
I also made reference to the fact that in my view the premier in his submission has done much as he has done before, namely attempt to distort the constitution as it is contained in the British North America Act. I did not at that time spell out my contention, but the premier in his submission makes the claim that direct taxation is assigned, under the British North America Act, as the exclusive prerogative of the provinces. I sub-

Federal-Provincial Relations mit that is a distortion of the constitution, and anyone who would attempt to do that is exhibiting the tendencies which I described as separatist. It is true that direct taxation is listed in section 92 as one of the prerogatives of the provinces; but I would like to point out that in section 91, where are set out the powers of the parliament of Canada with regard to legislation, it says, if I may quote in part:
-but not so as to restrict the generality of the foregoing terms in this section, it is hereby declared that (notwithstanding anything in this act) the exclusive legislative authority of the parliament of Canada extends to all matters coming within the classes of subjects next hereinafter enumerated-
Then No. 3 is:
The raising of money by any mode or system of taxation.
My submission is that the premier of British Columbia cannot have said these things inadvertently, considering his knowledge and experience, and he has tried to suggest in his submission something which is simply not correct as far as the constitution is concerned. I would also point out that earlier today the hon. member for Villeneuve quoted this particular statement of the premier of British Columbia in reference to the British North America Act and the powers of taxation. He quoted it with a good deal of approval as in effect bolstering the argument he was advancing in this house. I did take pains to point out to the hon. member for Villeneuve later, informally, that he should not always take at face value statements of that kind when they were made by the premier of British Columbia, because thereby he was being led into a serious error and misunderstanding with regard to our constitution. In effect the hon. member for Villeneuve was attempting to use this statement to bolster his argument in favour of the positions taken at the recent convention of the Ralliement Cre-ditiste in the province of Quebec. Therefore I think that when one finds that kind of relationship perhaps my claim of separatist tendencies, which I consider dangerous to the well-being of the Canadian federation, is not without foundation.


Horace Andrew (Bud) Olson: Mr. Chairman, a few minutes ago the Minister of Finance made a statement, with regard to which the hon. member for Fraser Valley took him to task, to the effect that no self-respecting province would change its method of bookkeeping or accounting to assist in this equalization formula. I do not believe the Minister of Finance can argue that

it may be prudent for the three western provinces to set up what might be termed a capital account. I say that because at the present time such things as sales of capital assets by auction now find their way into current revenue, in so far as the accounting that is carried on at the moment is concerned. I think this is in some ways a perfectly straightforward way of keeping these accounts. I would like to draw to the attention of the Minister of Finance-


An hon. Member:: It leads to bankruptcy.


Horace Andrew (Bud) Olson: An hon. member says it leads to bankruptcy. It certainly has led to discriminatory action in regard to equalization and taxation, as they are applied to the province of Alberta. I thank the hon. member for Edmonton West and I hope some of his colleagues in the Conservative party from the province of Alberta will follow his example in rising in the house on an occasion such as this and standing up for the people of the province of Alberta when we see this discriminatory kind of legislation before the house. I commend him for doing that and I hope, as I have said, that his other Progressive Conservative colleagues from Alberta will do the same; because all too often in this house we have seen some of the members from the province of Alberta take great delight in downgrading their province. We do not think this is proper.
To get back to the point I was trying to make with the Minister of Finance, there have been occasions when the right to develop proven oil areas, areas in which there are proven reserves, have been offered for sale in the province of Alberta. On more than one occasion this has been done by way of a bonus, or whatever you want to call it, to the tune of $10,000 per acre. In fact, in one case I remember, just the right to a lease to develop the area for a 20-year period was sold for $16,000 an acre. That is not a recurring revenue. That sale gave the right to the oil company, or the individual-whoever bought it-to develop that area over a period of time as laid down in the terms of the lease. It is not fair to consider that to be an ordinary current revenue.
The minister says that no self-respecting province would set up a capital account in which to put these kinds of funds, to separate them from recurring or ordinary current revenue. I hope the federal government are not on a course that is going to force the province of Alberta and other provinces to do this kind of thing. To get back to the point in

question, Mr. Chairman, there have been numerous representations from members in this house that the federal government ought to take into consideration such things as the sale of capital assets, net revenue from natural resources rather than gross revenue, and cost of administration. In my view that is the difference between gross and net. However, so far the minister has not given any indication that he is willing to take these things into consideration.
Let me now lay down three suggestions which in all fairness ought to be taken into consideration. First of all, natural resource revenue is not a tax shared by the two levels of government. If I understand the basic premise on which equalization is based, it is that there shall be a redistribution of the so-called standard taxes referred to a number of times in this bill. These standard taxes consist of personal income tax, corporation income tax and estate tax. These taxes are levied at the same level, or near the same level, all over Canada. These taxes are levied at nearly the same rate all over the country. In some areas where the amount of money received from these standard taxes falls below a certain level I think the equalization principle and formula is fair and just. But I do not believe that natural resource revenue ought to be included because it is not levied at the same rate in all provinces. The other provinces have the right, if they choose, to impose royalties on the production of nickel, timber and all the other minerals which are produced. But if they do not happen to choose to do that there is no sound logic in penalizing those provinces who do claim a fair and just portion of the production of natural resources and minerals in their provinces.
If the government completely rejects this proposal that natural resources revenue should be excluded, surely they should be willing to accept a differentiation between the sale of capital assets and current revenue or royalties. So far there has been no indication that they are willing to recognize that some of the money which now gets into current account in Alberta, British Columbia and Saskatchewan is in fact from the sale of a capital asset.
The third point concerns the difference between net and gross. Even though you consider only the current recurring revenue which comes from the development and exploitation of natural resources in those provinces where this current revenue has reached high levels, you must also remember that along with it have come high levels of ex-20220-424J
Federal-Provincial Relations penditure to keep these natural resources operating. It has been pointed out time and again that so far as timber is concerned the province of British Columbia in particular spends millions and millions of dollars on the protection of forests and has programs to ensure the continuity of forest production in the province. In the province of Alberta there is the oil and gas conservation board and a rather large force of administrative personnel to see to it that the natural gas and oil is developed in such a way that we will have optimum production from these reserves. To none of these three matters, which I consider fair, has the minister indicated the government will give consideration.
We think that this is unfair. So far all the minister is able to say is that there was an arbitrary figure reached of 50 per cent, which is above the national average, and he has not given any logical reason why this arbitrary figure was arrived at.
With regard to the point about the difference between gross and net, when you consider the other three so-called standard taxes -income tax, corporation tax and estate tax -outside of a very small percentage of that tax, which amount is required to meet the expenses of the personnel who collect it, it is net. Millions of dollars are spent by the provinces with natural resources revenue in order to keep the resources concerned administered. I suggest that the higher the natural resources level in a given province, there is along with it a proportionately higher level of cost to maintain these resources. We have pleaded with the minister to recognize these principles, but so far all we have had is the answer that 50 per cent was arbitrarily arrived at for no particular reason. That, in our view, is not a satisfactory answer.


[Stage Direction]
Clause agreed to.
On clause 5-Payments to provinces of amount of provincial taxes or fees in respect of fiscal years 1962 and 1963.
Marcel Joseph Aimé Lambert: Mr. Chairman, on clause 5, may I say I am sorry that the minister has not seen fit to reply to the arguments put forward by the hon. member for Medicine Hat and myself on behalf of our colleagues from the three western provinces. These are important matters. If the minister chooses to refuse to answer now I can assure him that on the next occasion he is going to have just as difficult a time, if not a more difficult time. I am not going to threaten him.


Some hon. Members:: Oh, oh.

Federal-Provincial Relations


Marcel Joseph Aimé Lambert: Well, hon. members may sit back and laugh, but let me say it is not their situation which is being affected. In fact, I might say to the average hon. member opposite who is objecting that his knowledge of the situation is somewhat less than nil.


Douglas Mason Fisher: What about Harry Hays?


Marcel Joseph Aimé Lambert: I am glad to hear the intervention from the hon. member for Port Arthur, and if the minister were present I should like to see the Minister of Agriculture stand up, because I am sure that if he were true to his constituency-and I am positive he would be-he would stand with us to a man in this regard. But I will leave it at that; the minister has not chosen to answer. We felt that a reasoned argument entitled us to a reasoned answer. We might not agree with that answer, but surely to goodness we are entitled to a reasoned answer. The minister has continued with a proposition to which a number of members have objected. Now, I am quite prepared to say that I will listen to the minister's answer without comment.


Walter Lockhart Gordon: Let us get on with clause 5.


Marcel Joseph Aimé Lambert: All right, if you want to discuss it under 5. But this is the point. A reasoned argument was put forward with regard to natural resources, and these are of the utmost concern to the three western provinces today. I wish the hon. member for Timis-kaming were here, in view of the proposed development in the Timmins area.
We have certain pronouncements on participation by the lesser developed province of Quebec. As soon as the toes there are tread upon we will hear from them. We must also consider the resources on the border between Labrador and Quebec. I am sure when those resources come within the ambit of this principle, we will hear cries of anguish from hon. members opposite who represent those areas today.
I must point out that this is a relatively new principle developed in 1961.


Some hon. Members:: Oh, oh.


Marcel Joseph Aimé Lambert: Surely the minister is not going to correct me. I have indicated time and time again that this principle came into being in 1961. I did not agree with it then. I know many other hon. members did not agree with it. This principle involved government policy. If a mistake has been made 1 am the first to admit that it was a case of mea culpa. At this time I should like hon. members to examine the situation and join


me in my feeling in regard to this principle, so that we will not have to say tomorrow this is a case of mea maxima culpa.


Lucien Lamoureux: Shall the clause carry?


Marcel Joseph Aimé Lambert: Just one moment, Mr. Chairman. Clause 5 does not carry at this time because I have several more questions I should like to ask.
An indication has been given in respect of the Crown Corporations (Provincial Taxes and Fees) Act, that this principle should apply back to 1962. I am wondering why the wording of that clause is not specific in that this principle will apply to the fiscal years of 1962-63 and 1963-64 in so far as the provinces are concerned. There is no undertaking in this legislation as to when this money shall be payable. There is no specific statement in respect of interest payable if the federal government is dilatory in its payment. Let us spell out the obligations, the faults and the remedies. Perhaps I am being too much a lawyer in determining what should be the agreement, but this is the embodiment in law of a commitment undertaken some time ago. Let us express it in clear unmistakable language.
If this principle is to apply to the period prior to the 1st of April, 1964 let us say so in clear terms. When shall these payments be made? I submit to the minister that regardless of any commitment the payments could be made in 1970 without recourse to the province.


Walter Lockhart Gordon: Mr. Chairman, in respect of this particular clause I think we are all aware of the difficulties with which the government had to deal. The government respected the commitment made by the previous administration to pay these taxes for the period beginning April 1, 1962. When we dealt with this situation we found that the crown corporations in question did not have the necessary detailed records necessary to calculate the exact sales tax that would have been payable had this legislation been put into effect in respect of that period when the commitment was made. The conclusion was reached that the Crown Corporations (Provincial Taxes and Fees) Act could only apply to the period beginning April 1,	1964.
However, the government recognized the commitment made to the provinces, and that it owed this money.
Estimates are being prepared of the amount considered to be owed. We hope to have completed these estimates at an early date. We will hand these estimates over to the prov-

inces, and hold discussions in an effort to make sure the provinces feel we are being fair in these computations. Once these negotiations have been completed the amounts will be paid. I should not like to specify the date when these amounts will be paid because I do not know when the calculations will be completed. I am not sure when we can hold discussions with the provinces. I can assure my hon. friend that these amounts will be paid as soon as possible.


Marcel Joseph Aimé Lambert: Mr. Chairman, in this regard it is conceivable that there will be legitimate grounds for disagreements on the part of the provinces and applications for ex gratia payments or adjustments in lieu of interest. We must consider the fact that this principle will apply to a period as far back as April 1, 1962.
I am sure the Minister of National Health and Welfare, who is experienced in law, will admit that it is better to be precise in this regard, and that following a determination of a terminable date the crown should agree to an estoppel date, prior to which interest is not payable. I see nothing in the way of the government choosing a relatively safe date, and I feel this date should be spelled out.


Walter Lockhart Gordon: In the first place, the Crown Corporations (Provincial Taxes and Fees) Act makes no provision for the payment of interest. I should also state it may take a full year's experience before we can arrive at calculations in respect of the amounts of taxes which will be reasonably agreeable to both the federal and provincial governments. While I am sympathetic toward the point of view expressed by the hon. member, I hesitate to suggest a specific date, because I do not know what date would be reasonably safe. I do not wish to treat these payments as such, but in a sense they are ex gratia in respect of any period prior to April 1, 1964. I think there must be a certain amount of good will on the part of the provincial governments in this regard. The federal government is going out of its way to indicate it wishes to honour a commitment which for a variety of reasons the previous government was unable to translate into legislation. I have not received any complaint from the provinces in this regard.
I believe the principles embodied in this clause will meet every point of view.


Marcel Joseph Aimé Lambert: The minister has indicated that he has not received any complaint from the provinces, but I should remind him that this legislation has only been proposed within a few short weeks.
Federal-Provincial Relations


Walter Lockhart Gordon: I forget the exact date of first reading.


An hon. Member:: First reading was given on July 13, 1964.


Walter Lockhart Gordon: I am sure my hon. friend would know, if he had my job at any time, that it does not take a province four weeks to peruse a bill that is before the House of Commons and decide whether it is satisfactory from a provincial point of view. I can make that statement to my hon. friend with some assurance.


Robert Norman Thompson: Mr. Chairman, I should like to ask the Minister of Finance a question. At the present time two provinces in Canada do not have a sales tax. Those provinces are Alberta and Manitoba. Under the proposition now before us the federal government is going to dip into its consolidated revenue fund and pay moneys to the provinces it considers it owes because of purchases by crown corporations in respect of which sales tax was not paid. Does he consider it fair to those provinces that do not have a sales tax to put them in a position where they are actually paying to the federal government money that is going to be returned to other provinces that do have a sales tax? Maybe the Minister of National Health and Welfare could help the Minister of Finance answer the question.


Walter Lockhart Gordon: We were just talking about the pension plan.


Robert Norman Thompson: This has nothing to do with pensions. This has to do with the refunding of sales taxes paid by crown corporations and the fact that justice is not being accorded to those provinces that do not have sales taxes. Does the minister consider that those provinces are getting a square deal in so far as this legislation is concerned?


Lucien Lamoureux: Shall the clause carry?


Horace Andrew (Bud) Olson: We would like to have answers to these questions.


Walter Lockhart Gordon: I will be glad to answer this question. The strong feeling was expressed by the great majority of the provinces, I do not say all, that crown corporations should pay the sales taxes levied by those provinces. This is a matter which has been under discussion for some considerable time. The previous government decided that these representations were reasonable and they committed themselves to meeting them. When the present government came into office we reviewed the situation and came to the same conclusion. Provision was made in another act

Federal-Provincial Relations altogether whereby authority was given to crown corporations to pay these sales taxes. If this was unfair or if hon. members had felt that this legislation which was passed some time ago was unreasonable, I have no doubt that complaints would have been raised when the matter was before the house at that time.
That is the point of principle. Having agreed to the principle I presume that my hon. friend is only objecting now to making it retroactive to the time that the commitment was made. If I may say so, I do not believe that this is the appropriate time to raise the question of principle involved which was settled when the Crown Corporations (Provincial Taxes and Fees) Act was passed. That has been dealt with and we are done with it. All we are doing now is to provide authority to make comparable payments from the beginning of the time when the commitment was made.


Horace Andrew (Bud) Olson: Mr. Chairman, I want to take exception to what the Minister of Finance has just said and I would refer him to page 3239 of Hansard when the Crown Corporations (Provincial Taxes and Fees) Act was passed by the House of Commons. On that occasion I took very strong exception-


Walter Lockhart Gordon: On a point of order, Mr. Chairman, I am sure the hon. member for Medicine Hat did. In fact, I remember his doing it. However, despite his representations the house decided to approve the legislation and therefore I suggest with respect that the matter is not debatable again.


Horace Andrew (Bud) Olson: Mr. Chairman, at that time I asked some questions about what the government was going to do to equalize and be fair to those provinces that do not levy a sales tax. To put the matter in its proper context I think I should read part of the statement that the Minister of Finance made in the house on July 7 last. As found on page 5186 of Hansard he said at that time:
While it was thought wrong at this time to give retroactive effect to this legislation-
The legislation for the payment of these fees.
-the government does not want the provinces to lose financially-I am referring to the bill that was passed some weeks ago-
I presume that is the bill which was passed on May 13.
-from the fact that events over which they had no control intervened in such a way as to make it impossible to carry out the original intention. It was more than an intention; it was more or less a commitment. Consequently it is proposed that an estimate be made of the taxes that would have been paid had the legislation been in effect
[Mr. Gordon.J
from April 1, 1962 to March 31, 1964 and that such estimated amounts be paid to the provinces. It will come to about $6 million in total for the two years in question.
I believe it was the parliamentary secretary who was answering for the minister on May 13 and at that time I asked him what the government was going to do about those provinces that do not levy sales taxes. I asked him if they were prepared to pay grants in lieu of such taxes on the basis of estimating the amount they would have received if they had had a sales tax in effect. I quote the question I asked at that time, as found on page 3239 of Hansard:
Has any consideration been given to making cash payments to those provinces which do not levy sales tax, in lieu of tax revenue from these corporations?
The answer of the then parliamentary secretary to the Minister of Finance, now Minister of National Revenue, was as follows:
No consideration has been given to this matter. It would be extremely difficult-
Note these words.
-to calculate how much revenue would have been realized had a sales tax been imposed-
Now the government turns a complete somersault. They said on May 13 that it would be extremely difficult to calculate the amount of tax to arrive at the amount of cash grant in lieu of such a tax, but now they come forward with clause 5 of Bill No. C-lll and say that they are going to make an estimate of the taxes that would have been paid had the legislation been in effect since April 1, 1962.
In almost every case where certain provinces have decided not to participate in the operation of some piece of federal legislation the federal government has made provision to grant them a cash payment in lieu of what the taxes might have been on the one hand, or on the other hand in other cases on the basis of how much it would have cost the federal government had the particular program been accepted and made operative in that province. We can refer, for example, to youth allowances. We can refer to the cost of loans to students. Payments are going to be made to any province that chooses to opt out and not participate with the federal government in the program. In those cases it is possible for the Minister of Finance and his department to calculate the amount of the cash grant in lieu of participation. Why is it not possible in this case where crown corporations are involved and an indirect tax out of the federal treasury? Why are

certain provinces being denied a cash grant in lieu of the taxes that they might have collected? To make the situation even worse, the government is now going to go back and make this provision retroactive for two years.
The Minister of National Revenue stated that they could not calculate what the amount would be in the case of provinces that do not levy such a sales tax now, but now the Minister of Finance says that a recapitulation is going to be made of all this potential tax revenue for the past two years as if in fact the legislation passed on May 13 had been in effect. There is more to the matter than that. What is going to happen from now on if these taxes and fees are going to be paid by crown corporations? Are directives going to be issued to crown corporations that they must make their purchases in certain provinces? If you want to take the two extremes of Alberta and Manitoba as opposed to Quebec, certainly when tenders are called-


Walter Lockhart Gordon: Mr. Chairman, surely we should stick to the subject before the committee.


Horace Andrew (Bud) Olson: I cannot believe, Mr. Chairman, that the minister is objecting to the relevancy of my remarks.


Alexander Bell Patterson: He is not enjoying them.


Horace Andrew (Bud) Olson: He may not be enjoying them, but certainly I am talking now about what is going to happen in connection with the administration of this measure. We are considering clause 5 if the minister is not aware of that. This is a matter of collecting provincial taxes from crown corporations. The point I tried to make, Mr. Chairman, was that there would be a 6 per cent difference in the amount of tenders, for example, from the province of Quebec as opposed to those from the provinces of Manitoba or Alberta. Is the federal government going to insist-


Walter Lockhart Gordon: I wonder if I might rise on a point of order, Mr. Chairman? I do not see how the question of tenders could possibly come into this matter when we are talking about a retroactive payment for two years. We are not talking now about the future or the present, we are just talking about the past. So far as I am aware, no tenders are going to be called retroactively back to 1962.


Lucien Lamoureux: It appears to the Chair that the last two or three sentences of the hon. member's remarks seem to be getting away from clause 5 which, as he knows, is the subject matter of the discussion before the
Federal-Provincial Relations committee. He knows also that in committee discussion must be strictly relevant to the clause before us. On the other hand, in so far as the Chair could judge, before those last few remarks the hon. member appeared to be relevant. I know he will keep this in mind in continuing his remarks.


Horace Andrew (Bud) Olson: I appreciate your guidance in this matter, Mr. Chairman. I point out to you, sir, that on a number of occasions in the past I have tried to get some information from the minister as to what is going to happen after federal crown corporations are required to pay provincial sales taxes. So far the minister has not said what is going to happen with respect to the discrepancy between the cost of purchasing supplies. Obviously, there is going to be a 6 per cent differential between some provinces for exactly the same article, if it is being sold for the same price. We have had no explanation from him in this respect.
I am asking him now, are there going to be directives go forward in connection with this matter to insist that crown corporations in Saskatchewan, for example, must buy their supplies in the province of Saskatchewan? Is the government going to grant a measure of tolerance to crown corporations to take care of this differential? If they do not, then Manitoba and Alberta are certainly going to be in preferred positions when it comes to tendering on supplies for crown corporations. We have had no answer so far, Mr. Chairman. I think I am dealing specifically with matters related to the payment of provincial taxes by crown corporations.


Lucien Lamoureux: It seems to the Chair that the hon. member is really talking about the operations of a provision of a prior bill. It seems to me that, even though there is a reference in this clause to the prior bill, this does not open for discussion the details of the previous legislation.


Horace Andrew (Bud) Olson: As has been pointed out to me, Mr. Chairman, we are amending that previous bill now. This previous bill was passed on May 13, as I understand it, and is now up for amendment to the extent that this provision is being made retroactive for two years. This is a major amendment, and inasmuch as that is the case surely we have the right to ask the minister questions about the practical application of this measure. I still maintain, with deference to you sir, that when we are considering a measure amending this

Federal-Provincial Relations previous bill, we should have some answers to the questions that have been asked.
There is one other thing I should like to mention, Mr. Chairman. I hope the Minister of Finance is going to answer those last two questions. I should like him to explain also what has happened to the principle that one government should not be in a position to tax another, that is one level of government should not be in a position to tax another level of government. As has been pointed out on a number of occasions, this Crown Corporations (Provincial Taxes and Fees) Act is going to allow the provinces to gain a larger share of the distribution of funds from the federal treasury by increasing provincial taxes. In many respects this is a violation of some of the concepts of equalization. The equalization formula we have been discussing contains a provision concerning payments to provinces when their level of taxation does not come up to that of other provinces. Prior to the introduction of this bill, that level was the national average. While the provisions of this clause may not be a matter of major concern in terms of absolute dollars, there is in fact a complete contradiction of that principle. As I said before, bonuses are going to be paid to those provinces that levy the highest sales taxes. I hope the Minister of Finance, even though he may not like having these questions put to him, will try to answer them so that the members of this committee can have some indication how the provision is going to be applied in practice.


[Stage Direction]
Clause agreed to.
On clause 6-Definitions.
Marcel Joseph Aimé Lambert: In so far as this clause is concerned, paragraph (a), what province to date has indicated it is not going to participate in the youth program under the Youth Allowances Act?


Walter Lockhart Gordon: The province of Quebec.


Marcel Joseph Aimé Lambert: And no others?


Walter Lockhart Gordon: No.


[Stage Direction]
Clause agreed to.
Clause 7 agreed to.
On clause 8-Regulations.
Marcel Joseph Aimé Lambert: I must register a caveat about the wording in this clause dealing with regulations which, in effect, give carte blanche to the minister to determine these regulations and the carrying into effect of the intent of the regulations. As I indicated on a previous occasion, I draw attention to this and I must

ask the minister and his colleagues to really look at this provision because, frankly, it does give carte blanche to the administration.


[Stage Direction]
Clause agreed to.
Title agreed to.
Bill reported and read the third time and passed.

Mr. Churchill:: I should like to ask the acting house leader if he is prepared now to let us know the department whose estimates will be considered on Friday?


Mr. MacNaughl:: On Friday, we will consider the estimates of the Department of Citizenship and Immigration, followed by the Department of Labour.


Stanley Howard Knowles: What are we going to do tomorrow after we finish the flag debate?


John Watson MacNaught: Tomorrow, we will resume debate on the resolution to give Canada a distinctive flag.


Gordon Minto Churchill: We have a distinctive flag now.



PROCEEDINGS ON ADJOURNMENT MOTION

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


Arnold Alexander Webster: I do not wish to take up the time of the house for very long at this late hour. However, this afternoon I asked a question on the orders of the day which I am sure was of interest to many thousands of Canadians. Since I had sent the minister notice, and since she appeared ready to answer, I thought it only fair to give her or her parliamentary secretary an opportunity to reply tonight.
My question was: "In view of the fact that Olympic trials in track and field were completed last week end in Quebec, to what extent does the federal government plan to contribute toward the cost of sending Canadian athletes to Tokyo later this year?"
There is widespread interest in all kinds of amateur sports in this country including the contests that find a place on the Olympic program. We must remember that the young people who qualify to attend the games do not represent local communities alone, or even

individual provinces. They represent Canada. When they appear in the opening parade in Tokyo, they will march as Canadian ambassadors abroad. That is why I am certain the people of this country will approve any action which the federal government may take to share the cost involved in this worthy project.


Mr. J. C. Munro (Parliamentary Secretary to Minister of National Health and Welfare):: I am sure the government shares the sentiments of the hon. member for Vancouver-Kingsway (Mr. Webster). The position at the present time is that the Canadian Olympic Association, through the fitness and amateur sports program, has requested and received $122,905 to assist in sending Canadian athletes to the 1964 Olympic games. This amount covers assistance for both the winter games in Innsbruck last January and February and
Proceedings on Adjournment Motion the summer games in Tokyo this coming October.
The number of competitors in each event is set by the board of directors of the Canadian Olympic Association in each case. The competitors themselves are selected by the sports governing body in the various Olympic sports.
It might be of interest to note that the Minister of National Health and Welfare (Miss LaMarsh) attended the Olympic trials in St. Lambert, Quebec, last Friday with the member for Longueuil (Mr. Cote), and the Prime Minister (Mr. Pearson) was there for the Saturday events. Also, Mr. Speaker, I am sure the house will be pleased to hear that the hon. member for York West (Mr. Kelly) has agreed to represent Canada officially at the Tokyo games.
Motion agreed to and the house adjourned at 10.34 p.m.

Wednesday. August 12, 1964