1964-05-12

PRIVILEGE


Mr. L. J. Pigeon (Joliefie-L'Assomplion-Monlcalm):: Mr. Speaker, I wish to raise a question of privilege affecting all hon. members.
It has to do with the lack of bilingual parliamentary reporters, especially for the committees of the house. The Laurendeau-Dunton commission should inquire about that deplorable situation existing right here in parliament before travelling all over Canada.
I then ask the Prime Minister (Mr. Pearson) to empower the Laurendeau-Dunton commission to act accordingly.
Mr. Speaker, instead of spending half a million dollars to make investigations, the government should assume its responsibilities and take positive action by providing the committees of the house with a bilingual reporter.


An hon. Member:: What did you do for six
years?


Louis-Joseph Pigeon: We had some.


Mr. Speaker:: Order. There is no question of privilege. If it is anything it is a complaint.



CITIZENSHIP DAY


Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, I should like to draw the attention of the house to an event which has particular significance to all of us in Canada at this time. I refer to the observance of Citizenship day, which will take place on Friday, May 15, and which, in some of the larger centres, serves as the climax of what has come to be known as citizenship week.
Since 1950 Citizenship day has provided a special opportunity for all Canadians to consider the advantages that we enjoy as citizens in a great and free democratic country. Perhaps even more important, it serves to remind us of the responsibilities that rest
upon us all as we strive to make Canada even stronger and more united in the years that lie ahead.
Citizenship day has not been regarded as a public holiday or an occasion for festivities. It is rather a day when special ceremonies and exercises may be conducted in our communities and schools; when we can reassess what it means to be Canadian.
As citizens of Canada we can all take pride in our evolution as an independent state; we can take pride in the role we are able to play in international affairs, and in the contributions that we have made and are making toward the maintenance of peace and security in the world.
In 1867 the British North America Act united four provinces into one federation. Confederation was an "act of faith" that grew out of compromise. The founders, English speaking and French speaking, foresaw a great new nation stretching "from sea to sea". This faith in Canada, held a hundred years ago by the fathers of confederation, has now been realized geographically. It remains for us now to realize it in every other way. As we approach Citizenship day all Canadians, whatever their traditions, languages and cultures, will wish to recall the purposes of our forebears, to create a nation broad in outlook, strong in unity and purpose, every one of whose inhabitants will be able to say with justifiable pride "I am a Canadian citizen".


Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, with the concluding words of the Prime Minister there will be general agreement. I should like to see citizenship week celebrated during the later part of the month of June, so that on July 1 we might actually celebrate our citizenship and all that it means. Certainly Canadians deserve to be made Canada conscious and Canada proud, and to have the pride of Canadians not only in our heritage but also in our destiny. Throughout the years I think it has been said of Canadians that we have been notoriously calm about our country, in lacking that spontaneous attitude of pride and expressed pride in its greatness.
When I was prime minister we endeavoured to bring about one day in the year on which Canadians might join in celebration and on July 1, 1957, and each year since then there has been the celebration on parliament hill. In addition we also provided for the changing

Citizenship Day
of the guard, a course that has brought to Canadians a pride in our country and to our visitors a knowledge of what Canada stands for, which is so necessary.
The Prime Minister said that at confederation the dream was the building of a nation from sea to sea. In my opinion that concept of one Canada is all the more necessary today than ever before.


Some hon. Members:: Hear, hear.


John George Diefenbaker: As we approach the one hundredth anniversary of our country we must not do anything which will divide Canadians into two classes. Canadians first class and Canadians second class. That is a message I believe Canadians as a whole hold dear, and rather than a message of fear they would like one of faith.


Mr. T. C. Douglas (Burnaby-Coquitlam):: Mr. Speaker, the members of this party would like to associate themselves with both the Prime Minister and the Leader of the Opposition in commending the recognition of Citizenship day and all that this implies in our rich heritage.
We hope that the celebration of citizenship week will help all of us to realize the great privilege we have in living in a country made up of people of different ethnic backgrounds and various cultures, and that we should realize what a great opportunity is ours, to live in a country which supports the ideals of freedom and justice, a land in which we have great opportunities for the flowering of the human spirit. We trust too that the celebration of citizenship week will help us realize we cannot have opportunities without responsibilities, and that this is an excellent time for all of us to think of the responsibility which is ours to build a united Canada.
We live in a shrinking world in which nations are coming closer together. On the old continent of Europe nations which have lived in a state of bitter enmity for centuries are now working out a modus vivendi. Surely if these ancient enemies can live together in a spirit of harmony we here in Canada of the two great founding races can work out our difficulties satisfactorily.
I trust that as a result of citizenship week, and of giving some thought to this problem throughout the year, we in Canada shall be able to learn to live together in a spirit of mutual understanding, mutual forbearance and mutual respect. I trust citizenship week will inspire all Canadians to work to that end.


Mr. R. N. Thompson (Red Deer):: Mr. Speaker, it is with much pleasure that we in our group join with the Prime Minister and the spokesmen for the other groups in the house to give our support to what has been
[Mr. Diefenbaker 1
said and what is represented in citizenship week, and particularly in Citizenship day on Friday. One of our greatest needs in Canada today is to realize and appreciate just what Canadian citizenship means, not only the privilege it brings to each one of us but the responsibilities it carries as well.
This means being proud to be a Canadian.
I think it would be well to pay tribute at this time to the Rotary clubs of Canada for the tremendous work they are doing in developing citizenship, and in bringing representatives from right across the country to Ottawa for citizenship week, in their program "Adventures in Citizenship". As we meet these young people, many of them from our own constituencies, I think it can be a lesson for each of us as members of parliament. Certainly it is well to remind ourselves that the privilege of being a Canadian carries with it the responsibility of acting like ones as well. As we give this witness in the international aspects of our responsibilities abroad, may it reflect back to us in every aspect of our Canadian way of life.


Mr. Real Caoueile (Villeneuve):: Mr. Speaker, we in this corner of the house gladly join with the right hon. Prime Minister (Mr. Pearson) in drawing attention to Canadian Citizenship day.
The Prime Minister stated that as Canadian citizens we could be proud indeed on many accounts. We are proud of our development as a state, but it is the independence of that state which we would like to celebrate on Citizenship day. However, when we know that we cannot make a single move without the permission of our neighbour to the south, I wonder what we can normally call an independent state.
We have often heard high sounding words on holidays or celebrations of one kind or another.
The Prime Minister also said: We can be proud of the role we can play in international affairs to maintain peace and security in the world. That is true. But, for a small nation I think we have done even more than our share in that respect. When the government tells us that to maintain peace in the Congo- that world peace which we will celebrate on Citizenship day-Canada had to disburse $12,460,000 for the upkeep of its troops in that part of the world, it forgets to add that out of that amount the United Nations owe us $6,369,000 and has no money to repay us.
Since the creation of the UNEF and up to March 31, 1964, in order to help maintain peace and security in the world, Canada has

contributed the staggering amount of $46,005,000. The UN are supposed to pay us back $15,950,000 but it does not have the money to do so.
In my opinion that is a rather substantial contribution to the cause of peace and security in the world on the part of Canada. We have nothing against that. If I mention this, it is only to give an example of the assistance we can give throughout the world for the maintenance of peace. In the light of that example, I feel it would also be necessary to ensure peace and order in Canada so that we can celebrate Canadian Citizenship day.
Whether or not confederation was an act of faith that grew out of compromise, as the Prime Minister stated, the founders, both French speaking and English speaking, envisaged the establishment of a great new nation. Now, I claim that if the other provinces besides Quebec had treated their French speaking minorities the same way we treated our English speaking minority and others, the celebration of Canadian Citizenship day would be better understood throughout the country.
However, that does not stop us from celebrating with the others that great day dedicated to confederation and Canadian citizenship.
I contend that as long as French speaking minorities in the other provinces do not enjoy the treatment given to English speaking Canadians in Quebec, there will be people, not only in Quebec but throughout the country, who will doubt the usefulness of having a Canadian Citizenship day.
In any event we hope that this Citizenship day will be understood better. To be a Canadian does not mean to be a man settled in an ivory tower, impervious to other elements of our Canadian society.
We wish for a more united and a stronger than ever Canada, as the right hon. Prime Minister said. But let us begin by taking action at home that will give us that unity which will enable all ethnical groups in our country to have a share and a place in our Canadian confederation.


Mr. Winch:: I should like to ask a question, Mr. Speaker. Under the new orders, is it only the leaders of the parties who can comment on a matter like this, or can a private member make a comment? I ask for your decision.


Mr. Speaker:: Well, it does seem to me that the business before the house is pressing and urgent. If we were to allow 265 members to make comments, even on Citizenship day, it would require a considerable amount of time.
Inquiries of the Ministry I hope in that rather disjointed answer the hon. member has received the proper interpretation.


Harold Edward Winch: I understand, then, that under these regulations once the party leaders have spoken nobody else can rise to say a word? I ask for your guidance.


Mr. Speaker:: The answer is yes.

On the orders of the day:


Harold Edward Winch: Mr. Speaker, I should like to direct a question to the Prime Minister relating to his statement about "citizenship Friday." In view of the interest of the Prime Minister in this matter I should like to ask him whether he would be prepared to ask the Department of Citizenship and Immigration why people who had been accepted for citizenship by the court over three months ago have not yet received their citizenship papers. Also I have knowledge of three members of the armed forces who after six months have not received their citizenship papers. Finally, why have they not received any answer to the various letters which have been sent to the department of citizenship? Would the Prime Minister look into this matter for Citizenship day?


Lester Bowles Pearson: Mr. Speaker, I would be glad to look into this matter at once; and if my hon. friend would give me the details of the cases he has in mind it would help me.


Harold Edward Winch: They are already in the hands of the minister.



EARTHQUAKE DAMAGE


[Stage Direction]
On the orders of the day:
John George Diefenbaker: May I direct a question to to Prime Minister relating to the situation in the Alberni valley. The occurrence took place on March 27, and six weeks have gone by. I should like to ask him whether he would cut through the red tape, the political differences and the hassle between this government and the British Columbia government and do something immediately on behalf of these people. Is the federal government going to make a contribution to the Alberni valley disaster fund?
This is an emergency matter and the people are waiting for action. They have even gone so far as to say that "the politicians should shut up; it is time to put up." I wonder if the Prime Minister would be able to give these people a message of early action.

Inquiries of the Ministry


Lester Bowles Pearson: I will ignore the out of order and offensive form in which the right hon. gentleman put his question-


Some hon. Members:: Oh, oh.


Lester Bowles Pearson: The question was put in an offensive form, but I will ignore that.


Mr. Monteith:: Conduct yourself as Prime Minister.


Lester Bowles Pearson: I would be glad to conduct myself as Prime Minister if the right hon. gentleman would ask his questions in the form in which a former prime minister should ask them.


John George Diefenbaker: Petulance is no substitute for action.


Lester Bowles Pearson: I would reply to the right hon. gentleman by telling him that he has his facts wrong. We have been trying to get from the government of British Columbia for a good many weeks details of damage without which it would not be possible for the federal government to make a decision on this matter. We have now received information-it came a few days ago-telling us the aggregate amount of the damage incurred. We have not yet received details. Nevertheless we are inclined not to wait for these details but to take action in this matter, and I hope to be able to announce tomorrow or the next day the amount of money which the federal government will be able to contribute to the victims of this disaster.


John George Diefenbaker: Now that the Prime Minister has substituted some information for petulance, may I ask him whether it is intended to make a donation to this disaster fund, aside altogether from the division of responsibility as between the federal and provincial governments?


Lester Bowles Pearson: Yes, it is the intention of the federal government to make a donation, but surely the right hon. gentleman will realize that before a decision can be made on the amount of the donation we are entitled to have all the details with regard to the damage incurred.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Hon. Michael Siarr (Ontario):: I had wished to address an urgent question to the Minister of Labour but in his absence, and since I do not know who is the acting minister, I address it to the Prime Minister. In view of the fact
that longshoremen at St. John's, Newfoundland have been on strike for almost three weeks, is the government prepared to intervene in some way to help bring about a settlement of this dispute?


Lester Bowles Pearson: I shall be glad to take up this matter with the Minister of Labour.



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Thomas Clement (Tommy) Douglas: May I ask the Prime Minister if his attention has been drawn to the fact that Mrs. C. B. Macpherson, national president of the Canadian Voice of Women, was denied entry to Holland. I understand she has since been notified she can return and that she is now planning to go back to that country. I should like to ask the Prime Minister if the government has any information why a law abiding Canadian citizen, particularly the president of a national Canadian women's organization, should be denied entry to a friendly state; and if the right hon. gentleman can tell the house whether the barring of Mrs. Macpherson and other women was requested by the NATO authorities.


Lester Bowles Pearson: The only information I have on this matter is what I read in the press. When I read that report I asked that an inquiry be made into the incident.


Thomas Clement (Tommy) Douglas: Will the Prime Minister give a report to the house when he gets this information?


Lester Bowles Pearson: Yes, I shall be glad to do that.


NUMBER OF TROOPS UNDER U.N. COMMAND
[Stage Direction]
On the orders of the day:
Hon. C. M. Drury (Acting Secretary of State for External Affairs):: Mr. Speaker, yesterday the hon. member for Oxford asked a question regarding the composition of the military force in Cyprus, and in particular the number of troops at present in the United Nations peace keeping force. That number is 6,363. The hon. member also wished to know whether any British troops had been withdrawn from Cyprus. The answer is that the total number of British troops withdrawn as of May 6 was 781.
Mr. Speaker, I have here a breakdown showing, by numbers, the military and police forces in Cyprus divided among the seven countries providing military forces and the

five countries providing police forces. With the consent of the house I would be glad to have this printed in Hansard.


Some hon. Members:: Agreed.
[Editor's note: The figures above referred to are as follows:]
Strength of UNFICYP
UNFICYP		May 6 June 6		
Austria	12	54	Canada	1098	1133	Finland	1004	1004	Ireland	636	637	Sweden	894	961	Denmark	0	976	U.K.	2719	2100	Total	6363	6865	Police Austria	33	33	Sweden	40	40	Australia	0	40	New Zealand	0	20	Denmark	0	40	Total	73	173	Grand Total	6436	7038	SOUTH VIET NAM-	-U.S. REQUEST FOR	ASSISTANCE	FROM	NATO	COUNTRIES	On the orders	of the day:	Right Hon. J.	G. Diefenbaker	(Leader	ofthe Opposition):	Mr.	Speaker,	would	the
Prime Minister say whether there is any basis of fact in a press suggestion to the effect that the United States has asked for assistance among NATO nations to meet the threatened situation in South Viet Nam? Has there been any request made to Canada in that connection, and if so would the Prime Minister take the house into his confidence and let us know exactly what is the position in this regard?


Lester Bowles Pearson: Mr. Speaker, to my knowledge no such request has been made of the Canadian government. Whether the matter has been raised today or was raised yesterday at the NATO council meeting, I have not yet had a report. The secretary of state was in Ottawa about 10 days ago and he discussed various matters with me, including the situation in Viet Nam. At that time he made no request of any kind for Canadian assistance. He did pay tribute to the work of the Canadian representative on the three power commission in Viet Nam. He said he understood that our representative on that commission was being replaced, as he had been called back to Ottawa, and he hoped that the replacement would get to Viet Nam as quickly as possible. That is the only matter which was discussed.
Inquiries of the Ministry


Mr.  R. Gordon L. Fairweaiher@Royal: Mr. Speaker, a supplementary question. I wonder whether on the return of the Secretary of State for External Affairs from the NATO ministerial meeting it would be possible to arrange an early debate on international affairs.


Lester Bowles Pearson: Mr. Speaker, I would hope so. On the estimates, perhaps; or when the Columbia river treaty matter is finished in the committee it might be possible to initiate a debate in the external affairs committee. But at one place or the other I hope we will have an early discussion.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Robert Norman Thompson: My question is directed to the Prime Minister. In view of the fact that our national holiday on Monday next ties in with citizenship week, which is this week, is it the intention of the government to make Monday a holiday for members of this house?


Lester Bowles Pearson: After discussions with representatives of the other parties during which I think agreement was reached on this matter, it has been decided to place a resolution on the order paper today which I hope will satisfy the hon. gentleman and other hon. members of the house and which does, I believe, provide for a long week end.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day;
Hon. Leon Balcer (Three Rivers):: Mr. Speaker, I should like to direct a question to the Minister of Justice.
Could the minister tell the house if it is true that criminals sentenced to the lash and held in the St. Vincent de Paul penitentiary do not have to receive that penalty, and this without the knowledge of the judges who passed the sentence.


Hon. Guy Favreau (Minisier of Justice):: Mr. Speaker, I thank my hon. friend for having given me notice of his question. Just before coming into the house I received information to the effect that sentences such as the ones which include the lash are carried out at St. Vincent de Paul, but that, in certain cases, the parole board has granted remissions, so that some sentences have not been carried out.

Inquiries of the Ministry
The sentence is always carried out unless the parole board recommends a remission.
However, I shall be pleased to obtain further details in this connection.


Léon Balcer: A supplementary question, Mr. Speaker.
Does the national parole board have the right or not to remit those penalties or to change the sentences?


Guy Favreau: As I have just said, I did not have time to inquire personally, but I shall try to obtain further information and report to the house.



URANIUM


[Stage Direction]
On the orders of the day:
David Réal Caouette: Mr. Speaker, may I put a question to the Prime Minister?
Could he tell the house whether a final decision has been taken in respect of Elliot Lake and Bancroft mines, that is will they continue to operate or will the government definitely permit that the plants which produce uranium be closed down because it has decided not to buy or stock uranium in Canada any longer?
Could the house obtain a clear answer in this connection?


Lester Bowles Pearson: In regard to stockpiling, the decision was made public in the house a week or so ago, I think, by the Minister of Trade and Commerce, who indicated that it was not the intention of the government to continue stockpiling. It will be recalled by hon. members that when the decision to stockpile was reached a year ago and announced to the house it was made perfectly clear to the house, to the country and to all the communities affected that this stockpiling would go on for one year only, and that in the course of that year efforts would be made to help the communities against the ending of stockpiling and the closing of certain mines.
Since the decision was reached not to continue stockpiling, in other words to maintain the decision arrived at a year ago, efforts have been made and are being made both to assist the mines, or some mines, to continue; also to assist the communities affected. When there is any concrete announcement to be made on this matter, and I hope it will be before long, I shall be glad to make it to the house.


Thomas Clement (Tommy) Douglas: May I ask the Prime Minister if the commitment which was made to send people from the Department of Labour into these communities to make arrangements for training and placement has been carried out?


Lester Bowles Pearson: Yes; representatives from the Department of Labour have been in the communities to that end, and other steps are being taken in connection with retraining which I hope to be able to announce shortly.


Michael Starr: I would ask the Prime Minister whether the province of Ontario has agreed to undertake this training.


Lester Bowles Pearson: We are in consultation with the government of the province of Ontario with respect to ways and means of establishing facilities which will be of help in this situation.



PUBLIC SERVICE


[Stage Direction]
On the orders of the day:
Hon. Paul Martineau (Poniiac-Temisca-mingue):: I wish to address a question to the Prime Minister. Will the government give favourable consideration to the request made by the civil service federation to the effect that special benefits be paid to the civilian employees of the Department of National Defence who will be compulsorily retired as a result of changes announced by the minister?


Lester Bowles Pearson: This whole matter is under consideration.



CANADIAN FLAG


[Stage Direction]
On the orders of the day:
Mr. Robert C. Coates (Cumberland):: I have a question for the Prime Minister. Will the right hon. gentleman give an assurance that when the design for the proposed new national flag is presented to parliament all members of this house will have a free vote, and that the defeat of the design would not be considered a vote of non-confidence in the government?


Lester Bowles Pearson: When the time comes to submit the decision of the government in this matter to the House of Commons I would hope every member of the house would vote as his conscience dictates, and that there would be no question of confidence or non-confidence in a party sense.


John George Diefenbaker: Another retreat.


Robert Carman Coates: Does the Prime Minister not feel that if members were not bound to vote along party lines their constituents could more usefully inform them of their views, and they might vote as representatives of their constituencies rather than as supporters of the Liberal party?


Mr. Speaker:: Order.


Mr. Nicholas Mandziuk (Marquelie):: Mr. Speaker, I wish to address a question to the Prime Minister on the same subject. I am under the impression that it is contrary to the usages of this house to display symbols, even the national flag of Canada, on your desk. I would like to ask the Prime Minister, because I cannot ask Your Honour, what foreign symbols or flags are displayed on the desks of some hon. members to our left?


An hon. Member:: Monstrosities.


David Réal Caouette: Mr. Speaker, I rise on a question of privilege.
A while ago the hon. member for Marquette (Mr. Mandziuk) rose on a question of
privilege as to the emblems we have on our desks this afternoon. Now, I believe the words he used were not very respectful toward the members who brought with them a miniature flag, which has certainly caught the attention of some members and which the Prime Minister (Mr. Pearson) likes very much, for he has been looking at it ever since he came into the house.
Mr. Speaker, I do not think that a member has the right to insult anyone in this house.


Robert Carman Coates: I rise on a question of privilege-


Mr. Herridge:: Mr. Speaker, I have a question supplementary to the one I could not ask.


Mr. Speaker:: Order, please. The hon. member for Cumberland has risen on a question of privilege.


Robert Carman Coates: On a question of privilege, Mr. Speaker, by order in council passed in 1945 the red ensign is Canada's national flag, and I see no reason or justification for any other symbol but that flag.


Some hon. Members:: Hear, hear.


J. Nicholas (Nick) Mandziuk: On the same question of privilege, Mr. Speaker, in reply to the hon. member-


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order, please. I cannot hear the hon. member.
Inquiries of the Ministry


J. Nicholas (Nick) Mandziuk: -until this parliament legislates the abolition of the red ensign as the national flag of Canada, we have no right to display just any rag in here.


Mr. Bell:: Three flag Jack.


Mr. Hellyer:: Same old bunch.


J. Nicholas (Nick) Mandziuk: You've said it.


Mr. Speaker:: Order, please. It seems to me that I should tell all hon. members what is the general practice in the house. It is not customary to display flags, apples, tins of honey or other things on the desks of hon. members, except perhaps flowers on the birthday of the Prime Minister or the Leader of the Opposition. On the other hand I do not think it behooves the Speaker to act as a schoolmaster on all occasions; he has plenty of opportunity without overstressing the fact. I do think it is up to all hon. members to use their own best judgment and to act in accordance with their conscience as members who have taken the oath of allegiance.


Mr. Pritiie:: On a question of privilege, Mr. Speaker, as a teacher I wish Your Honour would be more careful in your language.


Some hon. Members:: Oh, oh.


Louis-Joseph Pigeon: Mr. Speaker, I should like to direct a question to the Minister of Transport. Since the minister presided at the inauguration ceremonies of the second microwave system, would he tell the house whether he will use this communication system to sell to the Canadian people the idea of having six flags?



FINANCE


[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: Mr. Speaker, I wish to address a question to our genial and long suffering Minister of Finance on a series of meetings that have a particular fascination for me at this time. Is the government or the Bank of Canada sending a representative to a meeting of the international monetary fund which is to be held in Tokyo this fall, to receive a report on methods to deal with international gold reserves, the international liquidity position as a result of co-operation, and the increasing problem of anticipated inflation?


Mr. Speaker:: Would the hon. member put this question on the order paper.
3166	HOUSE OF
Inquiries of the Ministry



INQUIRY AS TO POSSIBLE TAX REDUCTION

[Stage Direction]
On the orders of the day:
Mr. Gerard Laprise (Chapleau):: Mr. Speaker, I should like to direct a question to the Minister of Finance. In order to stimulate the Canadian economy, does the minister intend to comply with the wish expressed by the president of the Canadian Manufacturers' Association, Mr. Roy Crabtree of Montreal, who asked recently in Calgary for a reduction of the fiscal burden similar to that applied by the United States government? In addition, I know that such is also the wish of all Canadians.


Mr. Speaker:: Order. It seems to me this is an involved question which should be put on the order paper.


Gérard Laprise: Mr. Speaker, with your leave I should like to raise this subject after ten o'clock.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. G. L. Challerton (Esquimalt-Saanich):: Mr. Speaker, I have a question for the Minister of Fisheries. Is consideration being given to legislation with regard to licence restriction or limitation for commercial fishermen on the Pacific coast?


Hon. H. J. Robichaud (Minister of Fisheries):: Mr. Speaker, although the matter has been referred to me there is no intention of taking action at this time.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. R. R. Southam (Moose Mountain):: Mr. Speaker, I would like to direct a question to the Minister of Agriculture. Is there any truth in the current statements that the government proposes to increase the interest rate on farm credit corporation loans from 5 per cent to 6 per cent?


Hon. Harry W. Hays (Minister of Agriculture):: Mr. Speaker, my estimates will be up on Friday, and at that time we shall be able to discuss this question.



CONSULTATION WITH FARM ORGANIZATIONS BEFORE DAIRY POLICY ANNOUNCEMENT

[Stage Direction]
On the orders of the day:
Mr. Clement Vincent (Nicolet-Yamaska):: Mr. Speaker, I wish to direct a question to the Minister of Agriculture. Can he tell us whether the farm organizations have been consulted before the announcement of the new farm policy was made in the house, on April 29 of this year, that is a few hours prior to the implementation of that new policy?


Harry William Hays: Yes, Mr. Speaker. I believe we met with all the farm organizations including the federation of agriculture, which comprises many of the farm organizations. Since that time we have also met with many of the people interested in manufacturing dairy products. I think we are still prepared to meet people at any time they have anything to discuss with us.


Clément Vincent: I have a supplementary question, Mr. Speaker. Could the Minister of Agriculture tell us whether he intends to make some amendments to the policy announced on April 29 last?


Harry William Hays: Mr. Speaker, I did not quite
follow that question. Would the hon. member repeat it?


Clément Vincent: Does the Minister of Agriculture intend, in view of those representations, to amend the policy announced on April 29 of this year?


Harry William Hays: No, Mr. Speaker.



EDUCATION


[Stage Direction]
On the orders of the day:
Thomas Clement (Tommy) Douglas: Mr. Speaker, may I direct a question to the Minister of Finance. In view of the fact that many students are now beginning to plan their course of studies for next year, could the minister give the house some information as to when he is likely to bring down the legislation providing for student loans?

Inquiries of the Ministry


Hon. Walter L. Gordon (Minister of Finance):: Mr. Speaker, I cannot give an exact date, but the government is anxious to proceed with this legislation as soon as we can.



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. H. A. Olson (Medicine Hat):: Mr. Speaker, I should like to ask the Minister of Transport whether he can give the house some indication of when the government will be introducing its legislation with regard to amendments to the Railway Act based on the MacPherson report. This question is rather urgent because there are a great many people who would like to appear before the committee, and they would like to have some indication as to when they should schedule this.


Hon. J. W. Pickersgill (Minister of Transport):: Mr. Speaker, notice of the resolution preceding that legislation will appear on today's notice paper. I hope we can get on with it just as quickly as the timetable of the house permits.



CANADIAN COMMERCIAL CORPORATION


[Stage Direction]
On the orders of the day:
Louis-Joseph Pigeon: Mr. Speaker, I wish to direct a question to the Minister of Industry and Minister of Defence Production, if I can have his attention. Why has he abolished the Canadian Commercial Corporation without asking permission of parliament beforehand?


Charles Mills (Bud) Drury: Mr. Speaker, the Canadian Commercial Corporation has not been abolished. [Translation]


Louis-Joseph Pigeon: Mr. Speaker, I wish to ask a supplementary question. Can the minister tell the house how it happens that he deprived Mr. Lamoureux, the chairman of that corporation, of all powers and that he makes such decisions himself, even using for patronage purposes that crown corporation which does not exist any longer for all practical purposes?



TELEVISION


[Stage Direction]
On the orders of the day:
Mr. A. D. Hales (Wellington South):: Mr. Speaker, I should like to address my question to the Minister of Transport. Could the Minister of Transport advise the house when he intends to remove the freeze that was placed upon the issuing of permits for the installation of cable television, as he announced last December 21?


John Whitney Pickersgill: Mr. Speaker, there was not a freeze, of course, on all these installations, only on certain types of them. I hope it will be possible in the next week or two to reach a decision as to what is the advisable long term course in this matter, and to advise the house as soon as a decision is reached.



PENSIONS


[Stage Direction]
On the orders of the day:
Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I have a question for the Prime Minister which is prompted by a news report I noticed this morning, which suggested that the premier of Quebec is going to consult his legislature before dealing with the question of a constitutional amendment on which the pensions legislation may be founded. Has the Prime Minister received letters from premiers of other provincial governments which suggest that they in turn will not be giving any consideration to this issue until they have consulted with their legislatures?


Lester Bowles Pearson: No, Mr. Speaker, but it is my impression that the other provincial governments have already agreed to a constitutional amendment. Whether they consulted their legislatures at the time I am not sure.


Léon Balcer: Mr. Speaker, I wonder whether the Prime Minister intends to table the answer he has received from Premier Lesage on fiscal arrangements. Apparently this letter was tabled yesterday in the Quebec house, and I wonder whether the Prime Minister is ready to table it here.


Lester Bowles Pearson: Yes, Mr. Speaker, but it was not an answer; it was a letter from the premier of Quebec, and I should like to table it

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along with my reply, which I hope will be going off this afternoon.



VETERANS AFFAIRS


[Stage Direction]
On the orders of the day:
George Louis Chatterton: Mr. Speaker, I have a question for the Minister of Veterans Affairs. Is consideration being given to amending the Veterans Land Act so as to increase loans for V.L.A. farmers in line with the proposed increases under the Farm Credit Act?


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



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[Stage Direction]
The house resumed, from Monday, May 11, consideration of the motion of Mr. Hellyer for the second reading of Bill No. C-90, to amend the National Defence Act.
Mr. Heber E. Smith (Simcoe North):: Mr. Speaker, before dealing with the matters covered in the white paper I should like to comment very briefly on the question of early retirement of officers and serving soldiers as a result of the intended reorganization. There were some things in the statements of both the minister and the associate minister which I found rather disturbing, and I hope their attitude is not a hard and fixed one.
As reported at pages 3139 and 3067 of Hansard the associate minister and the minister respectively referred to compulsory retirement and selection as though people were going to be forced out of the services against their will. Other countries have had to face this problem, and as the hon. member for Calgary North said last night no person is indispensable or irreplaceable. Therefore it would seem to me that the emphasis in this matter ought to be on election and choice rather than on selection and compulsory discharge.
In that regard I would like to cover one age group which will be particularly affected, namely those people who have had upwards of 20 years of service and are around 40 years of age. We all know it is very difficult for a person over 45 years to become employed, or to seek a new job, particularly because of their difficulties in getting into plants which have established pension plans. I am thinking particularly of warrant officers, N.C.O.'s and privates in their late thirties or early forties, who now want out of the service but are being kept in it involuntarily. Special encouragement should be given to them so they can

get out of the service and get themselves established before they reach an age where they become practically unemployable.
Yesterday the minister was answering my question about the Veterans Land Act. As I understand this act, it provides that a soldier coming within two years of the end of his normal service can make application under it and build his house. It would be a very wise provision if this were extended to cover all the people who will be voluntarily and involuntarily discharged due to the reduction in the armed forces. It would give many people some incentive to get out of service, and would probably lower the cost of the reduction of the services.
I also think-and perhaps this may have been covered by the minister yesterday-that special preferences should be given to the men who are being discharged and who wish to enter the civil service. I commend to the minister and his officials a study of some of the plans that have been used in other countries where this problem has been met. I believe they would find there are improvements which still could be made in what we are proposing to do in reducing the services.
Last year I was a member of the special committee on defence, and I welcome the reconstitution of that committee. However, I hope there is no significance in the very late start that is being made this year. It would be a great disappointment to me if I found that the committee, instead of being a committee of investigation as it was last year, is now to become a committee of justification, as I believe the Suttie committee may become. The white paper on defence was promised to us a long time ago, and at that time I made the forecast that the flowers would be blooming in the spring before we would be dealing with it. My prophecy has been borne out. I played some part in preparing the special defence committee report, and my part was chiefly directed toward making the language more understandable and removing a lot of the redundancies. If someone on the minister's staff had performed the same function with the white paper it would have been a much better white paper. I believe it was too long, confusing and contradictory, and made too much use of cliches which obscure the true meaning. In fact I venture to suggest that those who have been loudest in its praise and loudest in its condemnation have not read the document very carefully, if at all.
Many people are very confused concerning the objectives to which it may lead and, as some writers have suggested, I believe these people are only left with hope because the document itself is pretty much lacking in positive assurances as to what is going to

happen. The first 12 pages or so are substantially a recitation of history. The twelfth page starts dealing with NATO. Of course it is a self evident truth that in a country the size of Canada our defences have to be in alliances with other countries. But in the present state of affairs we wonder whether a very serious look should not be taken at, and a reappraisal made of, our role in NATO, not only in relation to its military aspects but also in relation to its other aspects, because in NATO today we find some very disturbing things.
The focus of NATO activities and worries has moved from Berlin to the Mediterranean, and we have the unhappy situation in Cyprus where two NATO partners are contending with each other with a third, the United Kingdom, intervening between them. We have the dispute between Israel and the Arab states, and while this does not directly affect NATO countries it certainly involves the United States and will involve Britain. We also have the unhappy situation in Yemen which again involves the very structure of NATO.
Having regard to the rapidly shifting positions of the various NATO countries one wonders whether we are maintaining a sufficient independence of movement and freedom of action within our forces. The end of page 12 of the white paper indicates that the government has adopted as Canadian policy the doctrine of graduated or flexible response. This is a very dubious doctrine. It is not accepted by the French. It is accepted with much reservation by some of the other NATO countries. From my experience on the defence committee I understand its chief proponents are some Americans and the Germans.
What is the doctrine of flexible response? To me it means that any attack by conventional, non-nuclear forces would be met by conventional, non-nuclear forces; that an attack by battlefield nuclear weapons would be met by similar battlefield nuclear weapons of slightly greater power, and so on. This doctrine causes doubt in a person's mind, because if you have a bigger weapon surely the attractions of the strength of that weapon are going to be irresistible and you are going to use it. It seems the doctrine is likely to accelerate very quickly into an all-out nuclear war and, to make such a doctrine workable, it means the early release of the control of nuclear weapons to battlefield commanders. If a crisis is hotting up and nuclear weapons are likely to be used, very quickly somebody is going to be authorized to use them, and this authorization would stretch down the chain of command, thus disseminating the control.
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There are various propositions propounded as to how these weapons are to be controlled, theoretically and mechanically, but I am afraid none of them are very convincing. It is frightening to think of a comparatively low ranking military commander having complete control of a nuclear weapon, however small, and in my opinion it only increases the chance of mistake, error or use in panic.
One of the great promises of the Liberal party in the 1963 election campaign was that Canada would immediately enter into negotiations to get away from using nuclear arms. To my mind the last paragraph on page 12 of the white paper obviously abandons this claim, because there it is stated that an adequate force through a wide spectrum is essential to the deterrence of war, and that we have to have the maximum flexibility and the widest possible deployment. If we are going to have the widest possible spectrum of forces, that can only mean that we are going to have nuclear weapons and are going to keep them.
On the following page of the white paper there is reference to the nuclear club, which is defined as being composed of those countries having the means to manufacture nuclear weapons. The nuclear club goes much further than that now, because if the theory of flexible response is accepted in all its aspects it obviously means that the physical control of nuclear weapons is going to be disseminated more widely, and people who do not have the means to manufacture them are going to have control over them in certain circumstances. This is a frightening possibility.
What should be our role in NATO? I hesitate to say because of the rapidly changing circumstances but there are certain things that I think are going to be forced on us. I think the first principle we should be governed by is that the forces we contribute to any alliance should as nearly as possible be self contained and completely self sufficient so that we can maintain in Canada or through the Canadian government the widest possible choice as to their use. Having regard* to the uses to which Canadian forces have been put since the end of world war II and which one can contemplate, I think that as far as possible they should be non-nuclear forces.
Too often, both within and without the forces, there are those who argue the nuclear problem from an emotional attitude. They advocate nuclear weapons because they are perhaps subconsciously affected by the emotional motive. I have seen this in newspaper editorials; our boys should have the best; our boys should not have to fight machine guns with peashooters. These people do not realize that in many circumstances nuclear

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weapons are not the best and in some circumstances can be a positive hindrance in the operation of our forces. The best example of that which comes to mind is the equipping of our brigade in Europe with Honest John nuclear rockets. We have seen demonstrations and have heard discussions concerning these weapons, and it is my opinion that instead of helping our brigade in Europe they limit its utility and effectiveness.
With regard to our forces in NATO, I think the main reasons for stationing any of our troops in Europe on a more or less permanent or semi-permanent basis are political rather than military, and in my opinion the political reasons are three. The first is the effect on the morale of our European allies by the continued stationing of Canadian and United States troops in Europe. As an aside, I also think they have a considerable economic effect in the areas in Europe where they are stationed. They constitute a rather good industry.
The second reason is the necessity of assuring the West Germans that their eastern borders will be kept intact. The third reason, perhaps one that is not much discussed but which may be more important than some of the others, is the stabilizing effect on the domestic political situation within West Germany by the stationing of British, Canadian and United States forces in that country.
So far as the defence of Canada is concerned, the white paper restates some obvious facts; namely, that our over-all defence must inevitably be linked with the United States and that NORAD, of course, is the basis of this link. I think too it is not only the politicians in the heat of election campaigns but also at times other experts who have made statements concerning the kind, size and utility of various weapons which have not been and cannot be borne out subsequently by events.
The main contribution to our defence is the radar system that extends throughout the north. I venture to suggest that the northern approaches to the United States are much better protected by the radar screens and warning system than some of the southern approaches are or might have been. As long as there is some chance of a bomber attack you will get various opinions from people. Those in the field of flying, such as the air force fighter plane pilots, tend to put the chance of a bomber attack rather high while others tend to set it much lower. It is hard to gauge the situation accurately, but as long as that threat continues I think we will have to have weapons of the class of the Bomarc and the Voodoo. It is regrettable for many reasons that the Voodoo squadron should be withdrawn from North Bay. Perhaps the Voodoos are

more useful in the defence of Canada and to world peace than the Starfighters we have in Europe.
There is one statement in the white paper which is absolutely mystifying to me. On page 14 there is reference to anti-I.C.B.M. defence, commonly known as Nike, I believe, and the statement is made that we cannot do anything about passive air defence and fall-out protection until we find out whether we are going to get an anti-I.C.B.M. weapon. It would seem to me that until we do get an effective anti-I.C.B.M. weapon great stress should be put on passive defence and fall-out protection, because if a major war were to break out when we were still not effectively defended by anti-I.C.B.M. weapons it might very well be the task of Canada to try to survive. As we would be on the periphery of the heavy attacks it might be Canada's duty to continue the thread of western civilization. I do not agree with those who say that if war breaks out the outlook will be hopeless and we should throw up our hands. As long as there are two civilized western people alive, provided they are of the appropriate sexes, I think it is our duty to try to survive, to maintain what we have and to rebuild. For that reason I think that as long as we are undefended from I.C.B.M.'s we should put greater emphasis on passive defence and survival. I hope that factor of our national defence is being taken into consideration by the Suttie committee which is now sitting, since our passive defence is largely dependant upon the militia.
The next point is again a recitation of history. The second duty of our defence forces is to occupy our land masses and the sea lane approaches to them. It is a matter of regret to me that we are reducing the physical presence of our troops in northern Canada. I feel the northern bases should be maintained by the military. There was no real saving in this change. I feel that the cost of maintaining these bases under the Department of Transport will be greater than the cost of maintaining them under the Department of National Defence. This was purely a bookkeeping entry to make the Department of National Defence look good, and I think we have lost something of our prestige.
The white paper is largely silent on the matter of patrolling our vast seacoasts and the protection of the sea lanes into Canada. I would have liked to hear something about air-sea co-operation. I would have liked to hear something about whether we would build a simplified cruiser or patrol vessel which would work in conjunction with air cover from our very fine patrol planes.

Since we are on the subject of national defence generally I should like to mention the Bobcat that was scrapped several months ago. I hope when the minister replies he will tell us how the deliveries of the M-113's are coming along; when they are going to be delivered, and how satisfactory they are. When I was last advised on the subject I understood that the Starfighter was completely unarmed and as useless as a Piper Cub for what it was doing. In fact it was more useless, because that plane was being used for training and it is a difficult plane in which to train men. I hope the minister will be able to tell us these planes have been armed and are fully operational. I hope they will not be left sitting useless on the airstrips of Europe for another six or nine months.
While dealing with the Starfighter I should like to bring up the matter of cliches and misleading phrases. This is a very good example of it. The Starfighter, I believe, is described in terms of the trade as a strike-reconnaissance plane. Now, if one looks at the Starfighter one realizes it is a low level offensive bomber. If the Department of National Defence and the people associated with it started calling a spade a spade and giving rather more accurate descriptions, even though they may be unpalatable to people who hear them, it would give us a better understanding of national defence.
The other point upon which we are waiting to hear from the minister relates to what sort of forward transport is going to be provided for our mobile brigade. What sort of forward transport is going to be provided for our brigade in Europe? Are we going to get helicopters? What type of close support plane is going to be provided for an operation such as the one in Cyprus? These are things we need to know.
Of course the white paper is largely silent on the navy. I would not want to disagree with my hon. friend from Calgary North, but there is one type of transport ship we need in small quantities. These could become the joint responsibility of the Department of National Defence and the Department of Transport and could form the nucleus of a deep sea fleet. Britain and the United States are both adopting this scheme. They are building a very fast freighter which has a limited capacity for carrying a certain number of troops. In normal times it can be used as a cargo vessel and have special devices built into it, such as a hard nose for going into difficult places. Its loading and unloading equipment is self sufficient and can be used without modern docks. I think between the Department of Transport and the Department of National Defence there ought to be an investigation of this type of vessel, because it 20220-201
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would make a modest start on a deep sea fleet. It would also provide a training base for sailors on the ocean rather than on the great lakes.
I think I have made my objections to the Suttie committee rather clear. The minister indicated yesterday that it was economics that dictated these cuts in the militia. I hope this committee will not be a committee of justification but is undertaking a real study of the problem.
I come now to a consideration of the bill itself which is the subject matter of this debate and which relates to a reorganization of the cabinet defence committee. I believe we should have a more complete explanation from the minister as to what is going to be the role of the cabinet defence committee. What is going to be the role of the defence council? How is it going to be made up? What authority is it going to have? Yesterday the minister said something that indicated it would only provide an interchange of views. Who are going to be on the defence staffs, and how are they going to be designated? It is true that some of these details cannot be given now, but I am wondering whether we are proceeding in an orderly fashion or if we have started on this reorganization to make a showing without any clear idea of what is going to come next.
I was pleased to hear that there is going to be a program analysis department. This is a completely American idea. Mr. McNamara has it and it is headed by Mr. Enthoven, who is a very distinguished mathematician. In the United States these people are called the "whiz kids", and I am wondering if their Canadian counterparts might be called "Hellyer's hellcats".
Another matter on which I should like to touch briefly is the position of the Associate Minister of National Defence. I have found the associate minister knowledgeable, competent and courteous. I do not want him to think I am trying to get him out of the job. I do not believe I would succeed in any event, because a couple of Sundays ago I was watching television and I saw the minister being interviewed by the Liberal party's favourite part time commentator, Mr. Fisher. At that time the minister indicated that he was about ready to move out of the Department of National Defence and clean up the mess in finance.


Paul Theodore Hellyer: That is not a fair interpretation.


Heber Edgar Smith: The position of associate minister has been nebulous and irregular. There is provision for three associate ministers to be appointed for six months at a time, in times of extreme emergency.

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Then, in 1953, there was some change. It was at the time of the Korean war and the government of the day brought in an amendment to the defence act to provide for an associate minister. I believe Mr. Campney had been associate minister under the old regulation and that he was then appointed under the new. Mr. St. Laurent said at that time, as recorded at page 1524 of Hansard, that the need was for an associate minister at a time of emergency, which was something less than a national emergency; he did not say, fortunately, a military emergency. After Mr. Claxton left the department I do not think any associate minister was appointed until the middle of 1957, and I think the emergency which occurred at that time was political rather than military. After the election of 1957 the office again fell into disuse and I do not think there was any appointment until late 1958 or early 1959. All this leads me to the conclusion that the abilities of the associate minister would better be employed in the discharge of another portfolio, and that it would lead to the more orderly disposition of business if we had only one Minister of National Defence.
As I have said, and as other speakers before me have said, I hope the defence committee will be given adequate time in which to study this bill and related defence matters. The steps now being contemplated are likely to have an effect for a long time. They will have wide economic repercussions in this country and their impact on the military structure cannot yet be estimated. I see in the newspapers today that some NATO countries are disturbed about the course which national defence may take, consequent upon this white paper. I hope the delay in setting up this committee does not mean we are expected to be a rubber stamp or that we will not be given sufficient opportunity to discuss the subject of defence in all its aspects.


Mr. Terry Nugent (Edmonlon-Stralhcona):: I will try to be fairly brief in talking about defence matters but I do wish to put a few of my views on the record, since I have not had an opportunity to do so for some time.
I am sure we are all agreed in this house that the only real defence of this country and, in this day and age, of any country, is the maintenance of peace. If we follow that line of thought logically, I think it is apparent that the greatest chance of maintaining peace, the greatest force we now have available for that purpose, is the United Nations. We shall therefore be protecting ourselves in the best possible way if we bend all our efforts toward building up the power and prestige of the United Nations. I suggest this is more than 
just the job of the Department of External Affairs. I believe the peace keeping role of the United Nations could be greatly expanded. The possibility of a permanent force under the control of that body contains the hope that it could some day become the only really powerful force in the world.
I suggest that the role which Canadian defence policy could best fulfil would be to make sure that our forces are so constituted that they could be most readily of use to the United Nations-that they should be so flexible and so unitized that they could be made available to that world body on an ever stronger basis as time goes on. If there were a feeling that we were proceeding along those lines there would be an atmosphere of confidence in the country. We should not take years and years to get to this stage. There is no doubt that any major conflict which might develop at this time could result in the annihilation of everyone on earth or, at least, in the complete destruction of civilization, and it is all too frighteningly possible that this could happen now. For this reason I suggest that our first line of defence is to do as speedily as we can all those things which would help build up the United Nations and bring nearer the possibility of an effective peace keeping force.
I get no feeling of security when I look at what is supposed to be the present defence policy* and even less when I regard those people in whose hands our defence policy now resides. I remember only last year the Prime Minister (Mr. Pearson), talking about the acquisition of nuclear arms, making it clear in his speeches that he thought this was a real mistake. In fact, on June 7 he made it very clear that in his view taking nuclear arms was a mistake. Yet we have got them. He admitted on June 7 that we could not get them without entering into another agreement, and there was still time to get out of signing another agreement. But hon. gentlemen opposite went ahead and made another agreement to acquire nuclear arms; in other words, they carried out a policy about which they were unhappy-a mistaken policy which they really wished to avoid. Certainly, this is no reason for placing confidence in the government.
I sometimes find a little incredible the lengths to which government spokesmen will go in an effort to persuade the people of Canada that the only reason for pursuing such a stupid defence policy is that they were committed to it. The Minister of National Defence (Mr. Hellyer), speaking at Christmastime on television, made a statement which, to me, sounded incredible, in an attempt to give some reason why we should have Bomarcs. This was when he said the

principal threat still comes from manned bombers. I thought all responsible people had reached the conclusion at least three or four years ago that the manned bomber was no longer the principal threat. All of us who were in the armed forces during the last war and who were stationed overseas can remember the V-2 rockets. We had never heard of a sputnik, but suddenly V-2 rockets aimed from a considerable distance were reaching their targets with fair accuracy. That was 20 years ago, and it is 18 years since the first atomic bomb was dropped. The combination of the two has been a preoccupation of the military planners ever since and has led to the investment of billions of dollars in scientific research and development in the intervening period.
The position, then, is that 20 years of intensive research have been spent on the development of that original V-2 rocket. Kockets have been built powerful enough to send vehicles into space and circle the moon. We now have sufficiently advanced technology to station satellites out in space and keep them there. The power of modern rockets is almost unlimited. In addition, starting a number of years ago, there have been many demonstrations of their accuracy. As to the possibilities of destruction, we have some knowledge of the size and capability of nuclear explosions. We have learned of the H-bomb, the cobalt bomb and so on which make the bombs of Hiroshima seem like toys. Yet, in the face of all this evidence, in the face of a technical capacity and power of destruction never known before, the minister appears on a national television hook-up and tells us that the manned bomber is still the principal threat. It sounds idiotic and it certainly does not give anyone in this country any confidence that the government knows what it is doing.


Paul Theodore Hellyer: It is the truth, but you would not believe it.


Terence James (Terry) Nugent: I may say it is not the first time I have heard the minister of defence make statements which were not particularly accurate. When he was in opposition he was so talkative that I am sure he covered all the ground on both sides to such an extent that today he can turn round and say he has said everything on both sides of all questions. So that he can tell us, whenever he is wrong, that he has also made a statement that is right. I imagine it is a state of mind that the Prime Minister (Mr. Pearson) is in as well. I cannot for the life of me understand why this government still persists in its policy of nuclear arms. I cannot understand why the government has not been taking some fast action to get out of the policy which the 20220-201i
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Prime Minister admits is stupid. This is incredible. I cannot understand why we have aeroplanes sitting over in Europe when I think it is by now obvious to most people that a nuclear role for the 104's is probably unsuitable. It certainly would be much more advantageous for Canada to have those aeroplanes in a dual capacity role, a conventional weapons role, whereby they would be able to take advantage of French airfields and whereby the air force itself would be useful to the United Nations if called upon by the United Nations. I think it would be much more useful if we could make that sort of progress toward building up the kind of United Nations force that we want. I cannot see that the Honest Johns equipped with nuclear weapons are doing us any good. It is obvious from the studies of the defence committee that they are not helpful to that brigade and that they should go to another unit.
I think Canadians have had to take a loss of sovereignty in order to acquire nuclear weapons, and they have not added to our defence but rather have only complicated it. With the threat always being there that a spark could set things off, I cannot emphasize too much the fact that our greatest defence is to accelerate the speed with which we can ready our armed forces, make them flexible and useful to the United Nations; to accelerate our efforts to gain for the United Nations ever greater support and power so that it will become a real peace keeping unit. I think the more we press along this line, the more vigorously are we actually engaging in the defence of Canadians.
I would hope that some time in the not too distant future the Prime Minister will make the announcement in this house that he has finally decided to keep his election promises and get Canada out of the nuclear weapons field; get nuclear weapons off Canadian soil, so we will regain our sovereignty. His statements at the United Nations with regard to a permanent peace keeping force seem to be bending in the right direction and it sounds as though he is interested in it. If this announcement is made, perhaps the people of Canada will then get the feeling that this government is interested in the defence of this country rather than in the political show they can make by dramatic announcements of the money they save. While speaking of the money being saved, Mr. Speaker, I must say I am sure most people in this country are very happy to think we can save something on defence. They would be quite happy to see defence spending cut very drastically, and I think it could be cut very drastically if we had some careful planning and a policy that precluded nuclear arms;

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a policy that envisaged Canada's best role as that of conventional forces available to the United Nations.
Mr. Speaker, I wanted to refer to just a couple of things brought out in the defence committee report of last year, because last June 7 the Prime Minister gave as one of the reasons for our taking nuclear arms the fact that we spent a billion dollars on this equipment. I think this idea has been spread around the country and the Liberals have tried to sell the idea that unless we take nuclear arms, all that money is wasted. I just wanted to point out that the evidence given before the defence committee which studied this subject-and I think the government made available to them the best information there was-does not sustain that argument in any manner. The Bomarc is more useful, they said, with a nuclear warhead, if bombers are the threat; and I say they are not. The Voodoo is more effective with a nuclear warhead, they said, but that is as far as it really goes. Its usefulness has not been demonstrated. The F-104, with some modifications, can have other than a nuclear role. So there is no justification, no honesty, to the argument that all this equipment would be wasted. I think, in fact, that we must consider the complications that arise out of our attempting to get into a nuclear role and our unsuitability for this. We must also consider the fact that many small and neutral nations in the world would have much more confidence in Canada if we were out of the nuclear field and we would be making more friends, and this is always a good line of defence.
I trust that we may in the very near future, Mr. Speaker, have our Prime Minister come into the house and confess that the government has abandoned its nuclear policy, that they are getting out of it, so they will be able to give us some honest statements on defence policy instead of political statements.


Mr. Henri Laiulippe (Complon-Fronlenac):: Mr. Speaker, the discussion of Bill No. C-90 to amend the National Defence Act gives us an opportunity to express some ideas and discuss some principles which, I think, are directly related to the general philosophy on which our governments have always based their justification, or rather, their attempts at justifying their various defence policies.
Having returned from a week end trip where, with a group of other hon. members, we visited several military establishments, it was very difficult for us not to think of the enormous amounts that have been spent on defence. I honestly wonder whether we

have not started on a wild race toward death and destruction of our civilizations.
In 1961, as well as in 1962, the defence budget in Canada was over $1.5 billion a year. And this is only for two years. If we calculate the interest at 6 per cent, which we had to pay for defence alone, it means $180 million. That is to say, in the last ten years we paid more than $1 billion in interest alone, without considering the large spending for war purposes.
I shall linger a few minutes on this point. We are in favour of passive defence. We also favour a good defence organization. We agree on acquiring all the latest instruments which exist or may yet be conceived.
But we also know that expenses for war purposes are not active capital. They produce no dividend.
We also know that our people must make enormous sacrifices for our defence to be maintained. If the general public has to make such huge sacrifices, I wonder why those who are in control of credit should not make the same sacrifices, which are imposed on the people, because all capital required for defence comes out of the taxpayer's pocket and is borrowed from high finance at interest rates which, I think, vary from 5 to 6 per cent.
Now, it is impossible for a country like Canada, with a population of about 19 million people, to keep up such expenses when these amounts can no longer be found in the taxpayers' pockets nor to be obtained by borrowing at exorbitant interest rates.
War has always existed among men. It was brought about in the course of history under all possible and imaginable excuses: conquest, right, might, honour, for God, for freedom, for civilization. There are, apparently, just and unjust wars.
Finally, in the living world, there is a universal order of which the great rule is the law of preservation of the individual. Up to now, war has only partially violated that rule, maybe not at all since the human species has managed to survive, but when the very existence of the species is jeopardized, when extermination is hanging over the species, war is violating the law of preservation of the universe.
Universe, man and the human species, have the same finality. This basic unit must be preserved and we must avoid a new war which would bring about disruption.
The conflict between capitalism and communism must be overcome and transposed to a superior plane. Inhuman to each other, both civilizations are surely not inhuman to the same degree or in the same way, but it is not

true that one represents good and the other evil. It is not true that we must necessarily choose one against the other. Any propaganda on that basis already means war. It is a mobilization of mind and spirit which leads to plain mobilization.
Capitalism may despise man but the fact remains that, in western countries, man has the freedom to protest against such contempt. No doubt this freedom is relative, but man's conscience can nevertheless make itself heard.
Even if he is penniless, a man can speak, write, express his thoughts and his rebellion, unite with other men, denounce a system and fight against it.
Freedom, up to now, has been powerless, but it may not always be so. In any event, it remains the best weapon in the hands of men.
Despised, man in the western world can voice his complaint. Despised, man in the U.S.S.R. cannot even do that, because his masters have muzzled him. But woe unto the satellite nation that would even attempt to throw off the yoke.
If we are compelled to make a choice between two civilizations, we must choose capitalism, but only as a lesser evil and for only one reason: man in the western world has a little more freedom. We still have freedom of speech, but we are under the yoke of a financial dictatorship which delays progress and prevents economic, scientific, cultural and natural development, since it even prevents human beings from being born and undermines the vital foundations of the economy.
Because of its monstrosities, the one way capitalist system has made a great number of victims. The financial dictatorship spreads more ruins and hate and it has made more victims than the most devastating war.
The conscientious objector who refuses to go to war, not because he does not want to defend his country, but simply because he will not kill, is logical when he does not admit the present system, because that system kills and treats men like animals.
That conscientious objector is infinitely more human than the herds that accept to be led to the slaughter-house. What could the masters of the world do in the face of a general conscientious objection? A first step can and must be made in that direction. Let the nonatomic nations unite to notify the others of their intention to refuse the massacre, and before that tremendous force of three billion men, unarmed but determined, and they shall not dare.
Mankind is more and more conscious of the unity of its destiny. It is not possible it
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should accept to be driven to suicide. Therefore, all men must unite to prevent it. Since we are condemned to live in peace, we must seek as a solution to organize peace. Now,, the only way to organize peace is to replace-material values by moral values, to submit all men and all nations to a basic law of respect for each and everyone.
Any analysis, an analysis of the universe, of man and of the modern world, lead to the same conclusion: to live and to survive, mankind must give onto itself that law as soon as possible. That moral law, which Social Crediters have sworn to defend, is in fact the law of respect for life and conservation of man and mankind.
It is unthinkable that the law of mankind, stated or not, written or not, is a law of destruction of man, of the species. Man will have to accept a law of conservation and respect. It will be neither superstition, nor compulsion, nor slavery; in the last report, it will be the condition of his true liberty, so dear to the human being. The building of the new world will require time, courage and perseverance, but it will be a reality only when all the protectors of society will take their true responsibilities, and will not let the life of our women, men and children be shortened in this way.
And what about the moral results? The hardships imposed on our families by unpayable debts and by the excesses of a financing system and unpayable interests that take away the normal purchasing power of families; abundance calls aloud for vengeance as Abel's blood called out against Cain, and those murders are committed at home, in this Canada of ours, in our provinces, and it does not seem to disturb the sleep of the keepers of society.
On the doors of those offices where killing orders are issued, the commandment that is violated the year round: Thou shall not kill, should be engraved. And on the doors of ministers and members of parliament who legislate for the country: Thou shall not let kill.
So, the murderer is the money system. Those who support and defend it, support and protect a murdering system, those who make it legal, make legal a murdering system, if governments make legal and support the money system which deprives human beings of the necessities of life, those governments are party to a suicidal system.
Financial dictatorship assassinates our men, our women, our children, and puts our governments into slavery. During the war, there were tears and blood, because error took the place of truth. It is the lack of charity which kills people, which leads men, brothers by nature, to fight one another, and not only on the battlefields.

National Defence Act
Thanks to technological progress, we should live in a garden of Eden; God has showered its blessings and gifts on earth and yet how many people do not have enough to live.
When science and finance work hand in hand, what can stop man? How many things can man do when financial obstacles are removed. Financial nonsense is brushed aside for war, but it is restored afterwards, and once again economic chaos prevails.
By way of solution, I would suggest to the government that there is only one thing to do, which is its bounden duty to do; to correct and revive our economy, the credit of the nation should be made available, and then we will be assured of a market for our products.
What we are now doing to create instruments of destruction might tomorrow serve to create a greatness such as the world has never known, provided we have the intelligence and ethics to recognize that there is enough for everybody in this new world.
Mr. Speaker, before ending my remarks, may I say that we are not opposed to the bill amending the National Defence Act, nor to the opportunity of voicing some ideas and discussing certain principles which, to my mind, are directly connected with the general philosophy on which our governments always based their justification, or, rather their attempts at justifying their various defence policies in the house.
Moreover, though we do not always tacitly accept the priority given to defence problems, we are ready to face those problems and to discuss them, so that possible decisions might better express the feeling of the Canadian people which we all represent here, in this house.
Yet, Mr. Speaker, I cannot but voice some anxiety with regard to the results of this bill, if it is passed. For my part, I met several veterans who expressed worries similar to mine in this respect.
Each one of us here recognizes the greatness, the value of the Canadian forces. Indeed, our soldiers have always been a credit to their country, on the beaches of Normandy as well as in the Loire valley, in the swamps of Korea or in windy Sweden. Our armed forces have never failed to do their job, and every Canadian worthy of the name can be proud of that.
The value of Canadians has been the object of many testimonials. Our soldiers have fought to safeguard freedom and democracy, which are part of the great values on which is based our way of life.
It should never be forgotten that there is no one without a beloved friend or relative
[Mr. Latulippe.l
buried in Europe. And those who did come back deserve a great deal of consideration. That is why I am particularly afraid that the changes brought about by the passing of the bill now before us will unjustly affect, in certain cases, the members of our armed forces.
With the modern equipment and the new tactics, it must truly be difficult for many of our soldiers to adjust themselves to the new military life. It is the duty of national defence officials to provide programs likely to enable our soldiers, if not to adapt themselves to new procedures, at least to adjust easily to civilian life and to the ever-changing conditions on the labour market in our country.
Mr. Speaker, there is a last point I should like to emphasize. I ask the Minister of National Defence to look closely into it, in order to take the necessary measures. I refer to the exodus of many of our young people, who after an intensive training as technicians or for some other trade in our armed forces, after the country incurred considerable expenses to enable them to have a career and learn a trade, emigrate to the United States to accept civilian jobs which are better paid than in Canada.
Mr. Speaker, I ask the minister to render justice to our veterans and to take the necessary arrangements so that every Canadian who has been a member of the armed forces, where he spent part of his life, who has ruined his health to defend Canada, be treated properly, because he certainly deserves all the advantages to which he is entitled. In fact, there should be no shabbiness when our gallant soldiers who defended us so well are concerned.


Mr. Donald Maclnnis (Cape Breton South):: Mr. Speaker, the remarks I will make will be very brief because I see no reason for repetition and many of the points I wish to stress have already been emphasized by previous speakers. Though I say I will be brief in order to avoid repetition, I also wish to point out that it is not because I concern myself with the fact that the Minister of Transport (Mr. Pickersgill) refers to anything over three minutes as a filibuster.
Quite often members have been inclined to say that because a debate may be prolonged in this house it is obstruction. This was the accusation made by one of the backbenchers on the government side just a week ago. However, I would like once again to stress the words of the Prime Minister who, on April 19, on a national television broadcast referred to the fact that so far as he was concerned the house had not done badly

in terms of work in the preceding 44 days leading up to that time. I firmly believe the house has been progressing somewhat better since then.
The white paper brought down by the minister has come in for a lot of comment. I notice he has been quite busy with the pencil when someone puts what he considers an important question. I only hope he will come up with some important answers because, as was stated by previous speakers, the white paper does not give information to the satisfaction of the house, but poses many questions that need answering. As previous speakers have said, what it contains has been pointed out on any number of occasions in the last few years. I am somewhat concerned about the attitude of the government and I have one very pointed question I wish to put to the minister, a question to which I think the house deserves an answer. I hope he will consider it important enough to take out his pencil and make a note of it. Where is the minister getting his advice? From whom is he getting it?
Very thorough briefs were presented by the three services to the special committee. The minister attended the committee meetings on a number of occasions and no doubt he has studied these briefs. But there were many questions left unanswered. I think particularly of the thoroughness of the brief presented by Admiral Rayner of the navy and the concern of the navy with regard to its future role in the defence of this country. Yet only about half a page is devoted by the minister to the navy in the white paper.
The minister has tried to leave the impression, which has caught on in most places, that tremendous savings have been achieved. In fact, on the same telecast of April 19 to which I referred the Prime Minister implied that if anybody studied the white paper he would see the economies that had been brought about. I should like to refer for a moment to what the white paper actually does say. If the Prime Minister or anybody on the government side of the house can show me where Canadian taxpayers are going to be saved any money by this move then I should like to know where it is. The white paper states:
The total savings to be effected as a result of such reductions will make available funds for capital equipment purchases, and eventually make possible more equitable distribution of the defence dollar between equipment and housekeeping costs. Sufficient savings should accrue from unification to permit a goal of 25 per cent of the budget to be devoted to capital equipment being realized in the years ahead.
As previous speakers have indicated, this is a matter of taking money out of one pocket
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and putting it in another, and there is no merit in the statement of the Prime Minister on the television broadcast of April 19 that integration is going to bring about economy. There has been much said about integration and since answers have not been forthcoming I assume that the minister looks upon integration as simply a matter of putting everybody in the same uniform. Up to now this is about the only clearcut explanation we have had. Everybody will be wearing the same uniform. But there has been no explanation whatsoever as to the method by which integration is going to be brought about.
Speaking of integration, I would point out that the question of the necessity for two ministers with defence portfolios has been brought up. Previous speakers have indicated that they have no wish to see the Minister of National Defence (Mr. Hellyer) replaced by the Associate Minister of National Defence (Mr. Cardin) or vice-versa. However, I will be a little more specific and a little more blunt. I have heard it said by servicemen and by some Liberal backbenchers and others, and I firmly go along with it, that the background of the Associate Minister of National Defence qualifies him to take over as minister, that this would do away with the necessity of two portfolios in the defence department and that integration should start at that level. When the question of unification and integration was brought before the committee-Mr. Speaker, I would respectfully ask you to remind the Minister of Veterans Affairs (Mr. Teillet) that you have recognized me and that I have the floor. If he has something to say on the subject of national defence I am sure everybody on this side of the house would appreciate hearing him speak when his turn comes. In the meantime, since I have been recognized, I ask the hon. member to abide by the procedure followed in the house and to rise and make his remarks when the time allotted to me has expired.
Once again I emphasize that it has been said in certain quarters that the background of the Associate Minister of National Defence qualifies him far better for the position of minister than the hasty boy who now holds that office. When I say "hasty" I am not reflecting in any way on his ability to drive a motorcycle, but I do point out that the minister has been very hasty on other occasions. When he was in opposition he saw fit to rush things. He rushed them to the point where we could read his views in the newspapers before he had actually uttered them.
He seems to be following the same trend in the integration of the forces. His policy is rush, rush, rush, with no plans and no answers for the questions that will develop

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in such an undertaking. Integration has taken place in the upper echelons of the government. We only have to look at the Department of Agriculture to see it is being done. We also see it is not working out very well there, so possibly the minister should take a second look at what is going on there and then make a thorough study of integration and unification of the services before he rushes headlong into this matter.
The minister who today professes to be saving Canadian taxpayers $100 million is the same gentleman who only a few short years ago wanted millions of dollars spent on the Avro Arrow for the sake of establishing a Canadian air speed record. Of course, when he spoke in those days he spoke, as the original natives of the country used to say, with a forked tongue. Why do I say that? I entered into no obligation not to bring up this matter and the minister will recall the occasion. This same minister is fully aware of the fact that the government of which he was a member decided that the Avro Arrow was to be cancelled. This was a decision taken by the St. Laurent government of which he was a member, and this evidence was brought out by General Charles Foulkes.


Paul Theodore Hellyer: On a question of privilege, Mr. Speaker, that allegation is not true. It is without any foundation whatsoever. I deny it categorically. The subject was never considered by the government before the election of 1957.


Malcolm MacInnis: Mr. Speaker, the rules provide that I have to accept the minister's word. But this only proves something else. When the general was testifying before the defence committee and made that statement the minister failed to tell him at that time that it was a lie. It is all right to get up in the house on a question of privilege and say this is not so and that it never took place. Why did the minister not get up and tell General Foulkes, who I understand was once reaching for a Liberal nomination, that his statement that the government of Mr. St. Laurent had decided to cancel the Avro Arrow but to postpone it because of the election was not true? Why did the minister not deny it at that time? Instead he gets up in the House of Commons on a question of privilege and denies what I have said, but he did not take the opportunity to deny it when the general was before the committee. He also never took the opportunity to deny the press reports of the general's statement, but he rises here on a question of privilege and says it is not so. I said before, Mr. Speaker, that the rules dictate I have to accept his word but I do so only because of the rules.
I have referred to the haste of the minister in announcing his integration policy. I have

referred to the submissions made by the representatives of the three services when they were before the defence committee. I point out to the minister that when the representatives of the services were questioned on the matter of integration, they were all of one opinion. It is recognized by all hon. members that one of the touchiest operations the government has in the defence department is to satisfy the demands made by the three services. This was quite clearly brought out in the committee. It was felt by all members of the upper echelon who appeared before the defence committee that possibly the unification of the services would stop this competition that goes on amongst the three services. They said, and at the time I believe everyone agreed or at least there was no denial of it, that this would be the effect.
However, what does the white paper say on this matter of eliminating competition amongst the services? I believe the word "jealousy" was used at that time. I refer to page 19 of the white paper, the third paragraph, where I read:
The sailors will press for more ships, the soldiers for more tanks and the airmen for more planes. This is as natural as breathing. Competition will not be lost but it will be contained at the service level.
The fact remains that the understanding we received was that unification of the services would eliminate competition. In the white paper the minister now claims that competition will be contained at the service level. Nevertheless, the sailors will press for more ships, the airmen for more planes and the soldiers for more tanks. The understanding given to us was that the reason the services would go along with partial integration was that it would eliminate this competition. This causes us to ask once again, where is the minister getting his advice? Who is advising him? I am quite sure from what has been said previously that the service chiefs have not had their way. Here again we get back to the basic fact that competition has been contained possibly at the service level.
I should like to say one more word on the matter of the approach of the Minister of National Defence (Mr. Hellyer). As was stated by the previous speaker for this party, reference has been made to the nuclear role Canada has played and the reason this government undertook it. Reference was made also to the fact the Prime Minister (Mr. Pearson) considered it stupid; but the Minister of National Defence has taken so many different positions that no matter what is said in this argument he can say he said the same thing earlier. I would ask him to bear in mind that his own party has been breaking

promises. Although we had a newspaper advertisement here outlining the party's promises to a community, the Prime Minister denied them and the result has been that the community involved has just gone down the drain. The promise meant nothing.
The Liberals were going to renegotiate out of the nuclear role. I am not saying for one moment that the Canadian forces should not have the latest and best equipment available.
I do say the Liberals led the people of Canada to believe they were going to honour the commitments made by the previous government, and then renegotiate out of the nuclear role. Here we have the Bomarc sites in Canada armed with nuclear warheads, and they were not armed with nuclear warheads two weeks before the United States cancelled two of the six bases. There were supposed to be 32 bases constructed, but six were built. The moment Canada armed herself with nuclear warheads, the United States announced that two of these bases would be cancelled. I do not care whether the minister says it is the Bomarc A or the Bomarc B, the fact is the United States considered they were good enough to put into operation; but the moment Canada armed herself with nuclear warheads the United States cancelled two of these bases. In other words, we are filling in for them.
I feel it is about time this government finally realized there are a few election promises that they should carry out. As I have said, the minister has raced headlong into many problems. We have seen examples of this before. If the minister wishes to deny a statement made by General Foulkes, I would invite him to do what the Minister of Transport (Mr. Pickersgill) did, that is impose himself on the C.B.C. and tell the nation that General Foulkes lied before the committee. In essence, this is what the minister is saying when he denies what General Foulkes said. He may as well go out and tell the nation that the man lied. I probably should go a little deeper into this question, but when I consider this is the Minister of National Defence who, on occasion, has asked us to forget what he has said about national defence, I ask the minister how he can expect this nation to reply upon anything he has to say.


Mr. Deputy Speaker:: Order; it being five o'clock the house will now proceed to the consideration of private members' business, namely public bills and private bills.



PRIVATE BILLS


[Stage Direction]
Bill No. S-12, respecting Allstate Insurance Company of Canada-Mr. Ryan.
Bank of Canada Act

Mr. J. E. Lloyd (for Mr. Regan) moved: the second reading of Bill No. S-15, to incorporate Evangeline Savings and Mortgage Company.
He said: Mr. Speaker, this bill is for the incorporation of a loan company which, in all respects, will be governed by the Loan Companies Act. It has significance because the company is being organized by a group of Nova Scotians with the purpose of providing an opportunity for people in that province to participate more actively in this important field. It is expected also that the new company, because of its local ownership and knowledge of the province, will be able to engage locally in areas not presently covered by other companies. In particular, the need exists for more mortgage lending in the smaller centres of Nova Scotia and in the rural areas. It is the hope that this service can be extended by the proposed company.
The group of organizers of the company is headed by Mr. G. Gordon F. Hughes, a successful businessman in Windsor, Nova Scotia, and the other incorporators are well known in the province. It is not proper on moving second reading to enter upon any detailed discussion of the affairs of the proposed company but, of course this information will be available at the committee stage.


[Stage Direction]
Motion agreed to, bill read the second time and referred to the standing committee on banking and commerce.


Mr. Maurice Cote (Chicoutimi) moved: the second reading of Bill No. C-24, to amend the Bank of Canada Act (reserve).

He said: Mr. Speaker, Bill No. C-24 I am introducing today is a bill to amend:
1. Subsection (2) of section 23 of the Bank of Canada Act is amended by deleting the word "and" at the end of paragraph (b) thereof, by adding the word "and" at the end of paragraph (c) and the following paragraph immediately after the said paragraph (c):
(d) The lawful currency of any other country whatsoever, whether or not the same is convertible into gold, provided that the total value of all such currencies held does not exceed five hundred million dollars. The quantity of any such currency or currencies that may be so held, and the valuation thereof, shall be subject to such regulations as the governor general in council shall from time to time prescribe.
Under section 23, the bank is permitted to hold certain categories of foreign exchange

Bank of Canada Act
as a reserve against its note and deposit liabilities. These are primarily U.S. dollars and pounds sterling, and other currencies convertible at a fixed price into gold. As a matter of fact, the amount held in that way by the Bank of Canada was $49,906,875 in pounds sterling, and United States dollars, and $252,030 in other currencies, that is a total of $50,158,905 in foreign currencies.
However, a developing world shortage of gold and convertible currencies particularly in the hands of nations which offer potential markets for Canadian exports, is proving a hindrance to Canada's overseas trade. This amendment would accordingly permit, within certain well defined limits, the Bank of Canada to accept non-convertible local currencies as part of its foreign exchange reserves. In this way, Canadian sales on foreign markets could be made for local currencies and the foreign currencies so acquired could be made available either for purchase of foreign products, or for investment in or aid to the countries concerned.
I have found justification for this bill precisely in the speech from the throne of the twenty sixth parliament, as shown on page 6 of Hansard for May 16, 1963, where I find the following statement:
It Is equally important to pursue active policies for the economic development of the newer nations, for the expansion of trade in primary commodities at reasonably stable prices, and for the improvement of international payments.
At the present time, our international payments balance is a constant nightmare for the Minister of Finance (Mr. Gordon) and at the same time it makes our foreign trade subject to constant restrictions.
Furthermore, in the speech from the throne published on February 18, 1964, I read on page 2 this sentence:
My ministers will negotiate for the expansion of markets for Canadian exports through the liberalization of world trade.
So, we have there a means of liberalizing these exchanges.
How many countries in the world would like to do business with us on an equal footing? For what they want is not charity. One of the more serious problems in the world today is that production is wrongly divided, wrongly distributed, in an international circuit bristling with national selfishness, taxes, customs, in a tenacious and mercantile confusion between needs for consumer goods and capital goods, the whole linked by a debt-greedy monetary system.
In short, it is a blockade applied to international trade through the obligation of using only convertible currency.
At the present time, our unfavourable balance is partially corrected because the [Mr. Cote (Chicoutimi) .J
government decided to trust communist countries and to sell them wheat amounting to hundreds of millions of dollars.
But we could also do a lot more business with a great number of other countries.
In fact, on July 2, 1963, the Minister of Finance stated, and I quote:
Canada suffers of chronic deficits in its current account payments with other countries and that the only means of reducing such chronic deficits is to diversify our exchanges and to increase the number of our clients.
On the other hand, the Minister of Trade and Commerce (Mr. Sharp) stated on July 5, 1963, as recorded on page 1901 of Hansard:
I am also aware of the great difficulties of doing business in those countries-
The discussion was about South America.
-and about the importance therefore of having credit facilities to enable those countries to go on purchasing goods from abroad.
Already our country allows long term credit to several foreign countries because we trust them. Why not, then, trust their currency?
This is the core of the problem, and the proposed amendment will make possible an advantageous deblocking, since it will result in thousands of new positions in our Canadian businesses through an increase in our exports.
International trade in itself is only a barter of products. The part played by money is only incidental. After all, once the exchange has taken place, we find that what the countries exchanged were goods and services. The balance of payments expresses and summarizes this trading. Money is only a medium and its intervention tends to balance operations.
In order to attain the objective of Bill No. C-24 parity has to be established between the currencies of the various countries with which we conclude agreements. Parity does not mean the par of exchange as in foreign exchange dealings. Between two nations, there is parity of exchange, when the rates are similar on both markets, when, for instance, the French franc is bought with Canadian dollars at the same price as when Canadian dollars are bought with French francs. There is parity when the exchange rate on both markets is expressed by the same figures.
Mr. Speaker, I find the spirit of this legislation again in the Havana charter, which was signed by the representatives of 56 countries-with the exception of Russia-after discussions that lasted from November 21, 1947 to March 24, 1948, to develop international trade by ridding it as much as possible from all barriers paralysing the international exchange of goods.
On the other hand, the Quebec he Soleil, of April 10, 1963, published the following:

Great Britain and the European countries begin to ask for a monetary reform in order to relieve the dollar from international pressures, to eliminate the dangers which threaten that currency, as well as the inadequacies of the present international payments system.
I know some large firms which are capable of exporting 80 per cent of their production in 140 different countries by accepting the currency of the nations concerned, and who are developing a considerable business. The fact that private firms can do business in this way, by accepting the currency of foreign countries, indicates that such transactions are easy and that the Bank of Canada would have no difficulty in doing so.
On May 31, 1963, Mr. Reginald Maudling, the British chancellor of the exchequer, announced that an Anglo-American agreement had just been signed between Great Britain and the United States, agreeing to mutually accept their currencies, which meant a barter agreement to reinforce the value of the dollar and the pound on the international market. Under that agreement, the central banks of the two countries agreed to grant each other credit for $500 million.
Therefore, besides the exchange operations through the international monetary fund, we shall have a free sector which will liberalize our trade. One of the most knowledgeable economists in the world, Mr. Jacques Rueff, president of the Institut de France, and former deputy governor of the Banque de France, who has just been made a member of the academie frangaise, stated last year that:
The whole monetary system of the free world was based on a heresyand recently wrote in his "Discourse on credit", page 49:
I regret that the main purpose of the discussions which marked the Vienna session of the international monetary fund, in September 1961 was to extend the existence, therefore the damages, of the gold standard and that they practically completely ignored the only real problem, which is to do away with it.
The strangest thing in the present Bank of Canada Act is that only currencies convertible in gold are accepted, when those currencies are never really converted into gold.
On February 25, 1964, I put question No. 184 on the order paper of the house in order to know the amount of foreign currencies convertible into gold which was in fact converted into gold during the last five years, and from what countries came those currencies. It took almost two months and a half before I received an answer, and that answer was so involved that in fact it did not answer the question I had put.
20220-202i
Bank of Canada Act
The gold standard for international trade
is a joke, because there is no actual movement of gold from one country to the other. Gold certificates are used, and they are just as good.
For instance, we recently exported locomotives to Mexico and Brazil, by providing a federal loan guaranteed by the governments of those countries. And they will have to pay us in U.S. dollars. But we buy coffee from Brazil and pineapples from Mexico and, because of our requirements, they also demand U.S. dollars. However, there is never an exchange of bank notes, but only bank transfers. And yet, Brazil and Mexico do not issue U.S. credit. Neither does Canada.
It is easy to understand why the main countries, including ours, have a deficit position with the United States. It is the cause of the blockade of international trade.
I should like to quote a resolution introduced by the Brazilian delegation at the 51st interparliamentary conference held in Brasilia, Brazil, where I had the honour to represent Canada in October 1962. It reads as follows:
That they should give a stimulus to the development of international trade, even through the adoption of a policy of commercial relations with every nation, in order to enable the producing countries to sell their products directly to the consuming markets.
Mr. Speaker, before 1940, our Canadian paper money was convertible into gold and, since then, that paper money has become nonconvertible. Does that mean that Canadians have lost confidence in their money? The same thing applies on the international level. The non-convertible currency of a foreign country is just as good as a convertible currency. The fiduciary currency circulating in most countries of the world is non-convertible, the same as ours. Its value is based solely on the confidence people have in it. The money we have now may be defined as a claim to social assets. It is purchasing power liberated either by the public authorities or the bank issuing it.
Before closing, Mr. Speaker, I should like to refer to a statement made yesterday morning by the Minister of Trade and Commerce, a statement which is so much in accord with this measure that I shall take it upon myself to quote it. Here it is:
First, the trade negotiations committee has recognized explicitly that Canada is a country with such a commercial and economic structure that negotiations restricted to a simple formula of uniform tariff reductions would not produce mutual advantages.
It is quite clear, Mr. Speaker. And even if we would now succeed in reducing tariff barriers, if we do not accept foreign currency, how can we sell to other countries,

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since, as I said earlier, we always ask for American dollars? I hope finally that the government will not try to kill this bill which would promote the development of Canadian economy and would enable us, in addition, to cope with part of the unemployment, owing to the great economic activity which could be induced by our exports abroad.


David Réal Caouette: Mr. Speaker, I have appreciated what the hon. member for Chicoutimi (Mr. Cote) had to say concerning the responsibilities of the Bank of Canada.
The explanatory note concerning Bill No. C-24, the object of which is to amend section 23 of the Bank of Canada Act, stipulates that the Bank of Canada should hold only a reserve of 25 per cent against its outstanding notes and deposit liabilities, whether in gold, in foreign bills of exchange, or in foreign securities.
If I refer to the 1962 Canada Year Book, and more particularly to the chapter concerning the Bank of Canada, which is repeated each year, I find on page 1089 the following:
Section 23 of the Bank of Canada Act provides that the Bank shall maintain a reserve of gold equal to not less than 25 per cent of its outstanding notes and deposit liabilities. This requirement was suspended in 1940 when, under the terms of the exchange fund order, the bank's gold holdings were transferred to the exchange fund account to form part of Canada's official gold and United States dollar reserves.
In other words, that means gold held by the Bank of Canada in 1940 was transferred to the United States dollar reserves.
And I continue:
The Currency, Mint and Exchange Fund Act passed in 1952 provides that, notwithstanding section 23 of the Bank of Canada Act, the Bank of Canada is not required to maintain a 'minimum or fixed ratio of gold or foreign exchange to its liabilities unless the governor in council prescribes otherwise.
All this means that monetary control in Canada was, in fact, transferred to the Americans in 1940, and further, that we are now unable to make our own decisions, in short, that at this point, we are not even able to effect a commercial transaction with any other country without being duly authorized by the United States.
Mr. Speaker, there are some countries in the world which never believed in the myth of gold as a reserve or monetary basis. It is difficult for us to do business with them today, precisely because of the monetary control of the United States over Canada.
I refer to the regulations of the Bank of Canada, and, on page 1089 of the Canada Year Book for 1962, we find this:
The bank may accept deposits that do not bear interest from the government of Canada, the government of any province, any chartered bank
[Mr. C5te (Chicoutimi) .1
or any bank to which the Quebec Savings Bank Act applies. The bank does not accept deposits from individuals and does not compete with the chartered banks in commercial banking fields.
The matter is probably not exactly related to the question of gold reserves, but it, nevertheless, raises certain questions which the Minister of Finance will some day have to answer.
Indeed, why does the Bank of Canada pay no interest to the Canadian government, while charging the government some? Why should the bank not pay any interest to the provinces, when they have to pay interest to the bank? Why this absolute control on the economic life of a nation like ours, which needs to proceed with its development?
The purpose of Bill No. C-24 is to amend that part of the act which maintains the Bank of Canada under foreign control.
We cannot accept such a control over the Bank of Canada, because it is essential that our country transact business with other countries of the free world, whether or not there is gold.
Gold does not increase the value of the dollar or currency of any country in the world. What gives value to a currency is a country's production.
It is the production of goods and services that counts for any country, and when Americans or others tried to have us believe that gold was essential to do business with each other, they lied barefacedly and they definitely misled us.
Mr. Speaker, it is about time that the Bank of Canada Act be amended in order to make it more efficient, not only with regard to our foreign trade, to our trade or industrial relations with the other countries of the world, but also to make it more flexible, so that Canadians may develop their country and have a better organized production, allowing Canada to put on the international market Canadian products which will be a credit to our country, in short, to give to our monetary system the necessary flexibility.
Mr. Speaker, the suggested amendment is along those lines. There will be also other amendments with regard to the Bank of Canada in order to make it more efficient, more suited to the economic situation, and also to place it at the service of the whole Canadian population, at the service of physical possibilities that we have to make Canada greater and more prosperous, and able to co-operate further with the other nations of the world.


John Edward Lloyd: Mr. Speaker, despite the rather vehemently and strongly worded assertions of the previous speaker on

the subject of amending the Bank of Canada Act, I must say that I can find no justification for the conclusions he has drawn. I believe that in Canada we have the framework, the backbone if you like, of one of the soundest banking systems in the world. I agree that nothing is perfect, and no organization which this government at Ottawa attempts to establish will ever attain perfection. There is constant need for improvement. But when you attack the fundamental principle upon which the system rests, thereby irresponsibly destroying confidence in something which is good, then you invite severe and direct response to such an attack.


David Réal Caouette: You do not even understand it. You don't know what you are talking about.


John Edward Lloyd: It is obvious, Mr. Speaker, that the irresponsibility extends to the point where the advocate of such a policy as that now before the house would even deny those who disagree with him the right to offer some kind of comprehensive answer-and he shall get it.
As explained by the hon. member for Chicoutimi (Mr. Cote), this bill proposes that the Bank of Canada should be able to hold the currency of other countries, and particularly countries in need of financial assistance. It is also proposed that the Bank of Canada will accept the currencies of these countries up to half a billion dollars.
There has been nothing offered to the house by way of explanation as to where the half billion dollars will come from. To the hon. gentleman who just said that I did not know what I was speaking about, may I ask him to share with me an examination of the balance sheet of the Bank of Canada, and to take a good hard look at it. If he does he will find that the Bank of Canada, at the end of 1963, held government of Canada securities to the extent of over $3 billion.
Mr. Speaker, I invite the same respect for my remarks as I gave hon. members of the house when they were speaking. To the hon. gentleman who had so much to say in criticism, and who is so quick to accuse others of not knowing what they are talking about,
I ask does he realize that in order to provide this half a billion dollars, under existing arrangements the Bank of Canada would have to liquidate a half billion dollars of Canadian government securities, and to that extent dry up from the Canadian economy a half billion dollars of purchasing power with its resulting downward effect on the purchasing power of Canadians?
If you read the balance sheet of the Bank of Canada you can see how it operates. The bank obtains its capital from its true shareholders, being the government of Canada. It
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receives it in the form of deposits of the chartered banks of Canada and, in addition, it has in circulation to the general public over $2 billion as at the end of 1963. If this serves no other purpose but to illustrate that we do know what we are talking about, at least it is that much to the good, and I hope the hon. gentleman who offers this criticism will himself be able to say so after this debate.
If you take a look at the operating statement of the Bank of Canada you will find that its income from investments in 1963 totalled $127 million, and that these investments are mostly government of Canada bonds. You will find that the expenses of operating the bank were only $10 million, and the net amount paid to the Receiver General of Canada was $116 million. To the extent then that this reduces the investments in government of Canada bonds held by the-Bank of Canada, it reduces the earnings of the Bank of Canada, and therefore it reduces the revenues of the Receiver General of Canada by that amount. To make this up he has got to find it by way of taxes or other ways.
I am sure the hon. gentleman has gone through this exercise on many occasions, and that he is fully aware that except for the $10 million of expenses that appears in the Bank of Canada's statement for operating expenses, the government of Canada borrows from those who hold notes some $2 billion at a mere expense of $10 million a year. If, on the other hand, you take these investments in government of Canada bonds and you proceed to invest them in currencies, convertible or not, of other countries, which are noninterest bearing, you thereby reduce the income of the government of Canada by that amount, and it has to make it up in some other way.
Furthermore, the Bank of Canada must in turn liquidate half a billion dollars of its government of Canada securities to be able to invest in these proposed currencies, and what it invests in these currencies dries up' the savings of Canadians to that extent. It subtracts from the credit capability of the Canadian banking system to that extent, and with the multiplier effect on the economy, the bill would have the opposite effect to what it proposes to do. This is the shocking fact you have to face when you sum up the claims made by hon. gentlemen opposite, namely that it will do the opposite to what is proposed.
We should not forget that the Bank of Canada has a function to perform in managing the debt of the country and in maintaining stability of the value of our dollar. There are no two ways about that; but the bank does not

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perform the function of providing financial aid to foreign countries. This is done by the external affairs department of the Canadian government, and when we propose foreign aid to stimulate a development in another country we bring it to the house for an appropriation of funds. This must be done if we want to have democratic responsibility retained in House of Commons, unless you want to give it away to some department.


An hon. Member:: Oh, oh.


John Edward Lloyd: I suppose the hon. gentleman opposite must have read that famous dissertation of a Dutch delegate when speaking to an American delegate at Bretton Woods, when he said it is better to have loaned and lost than not to have loaned at all. Perhaps it is on that kind of philosophy that this bill is based, but there is no need for us to take such a chance.
The international monetary fund provides a means for expediting the need for exchange of countries that are developing, if they have any capability at all. Second, we have the world bank, and its purpose is to assist those countries in need of capital financing. The world bank is supported by the leading nations of the world, in fact practically by all the nations of the world with any financing ability at all.
As one writer put it, the record of the world bank, or the international bank for reconstruction and development, is one of quiet
success.
It has contributed modestly to the flow of international investment since the war and the volume of its transactions is increasing. Its loans, totalling $5,181 million, have made a contribution towards alleviating the dollar shortage.
It seems to me it would be more desirable to focus attention on this mechanism, through which to work and try to encourage improvement in the operations of this international banking system, rather than introduce some tinkering with the value of the Canadian dollar.
Its loans, totalling $5,181 million, have made a contribution towards alleviating the dollar shortage and have enabled a considerable number of projects in small and backward countries to be undertaken which, because they are only indirectly productive or profitable, would not have been undertaken without the bank's aid. It has become a specialized institution to deal with such projects and its usefulness cannot be judged solely by the statistical record of its loan operations. A notable feature of the bank is that it has gamed the respect and confidence of business and financial interests, being itself run as a business by bankers in close collaboration with Wall street and financial interests throughout the world.


Mr. Marcoux:: Would the hon. member give the name of the book he is quoting, and also the name of the author?


John Edward Lloyd: The book from which I just quoted at page 240 is a work by W. M. Scammell, entitled "International Monetary Policy", published by the MacMillan company, 1962. I believe that is the information the hon. member requests. I might say that an extensive reading of this work might prove useful to the questioner. Incidentally, some of the other quotations were made from Mr. Rasminsky's presentation to the royal commission on banking, in which he set forth the fact that the Bank of Canada is not responsible for the operation of Canada's foreign exchange control funds. Since 1939 this has been the direct responsibility of government, and decisions regarding the determination of the exchange rate and the conduct of official foreign exchange operations are government decisions.
To abandon the facilities available to us through the international monetary fund, to ignore the world bank and to abandon the device of special votes of parliament for foreign aid programs when they are needed- to ignore all these things and then propose that we could do them all through an amendment to the Bank Act whereby we would take the non-convertible currencies of other countries would in my opinion simply destroy all the common sense in international finance that we have managed to achieve since the end of world war II.


Maurice Côté: Would the hon. member allow me to ask him a question?
If he listened to me well, he must know that I did not say that we must repudiate our agreements with the international monetary fund; I said that parallel to the international monetary fund we would set up a free zone.
My words should not be twisted; I think that the hon. member is getting away from the matter under consideration.


Mr. Dupuis:: That is not a question, it is a clarifying statement.


An hon. Member:: He does not know what he is talking about.


John Edward Lloyd: You will recall that there were two spokesmen on that subject, the hon. member for Chicoutimi (Mr. Cote) and the hon. member for Villeneuve (Mr. Caouette). The hon. member for Villeneuve was the one I said was most vehement and most extravagant in his condemnation of the existing banking system. In all fairness I would also say to the hon. member for Chicoutimi that he distinguished himself from

the hon. member for Villeneuve by the reasonableness of some of the observations he made.
My criticism is mainly directed toward the spokesman who attempted to defend the bill of the hon. member for Chicoutimi with far more extravagant exaggeration than one would hope would ever be expressed in this house. There was a wealth of generalization, unfounded on any sound hypotheses and certainly not based on anything that one could accept as valid. The hon. member for Chicoutimi, who introduced the bill, did confine himself to an explanation that it would supplement the efforts of the world bank, the efforts of the international monetary fund and the foreign aid programs of the government of Canada. But I must say to him in all fairness that it will not supplement those efforts. If anything it would hinder them, unfortunately, for the reasons I have given.
In short, the Bank of Canada would have to sell government of Canada securities to provide the funds with which to produce the half billion dollars. There is no doubt about that. It would have to sell government of Canada securities to provide the funds and in so doing it would dry up savings in Canada for that purpose and divert them from the Canadian economy. When you consider the multiplying effect of such a transaction the objective of the bill would not be attained. On the contrary, you would lessen the capability to give assistance through federal aid programs by way of appropriations made by this house and by way of assistance to the international monetary fund and to the world bank. I believe that the motives of the promoter of the bill are certainly to be highly commended but the method he has chosen is highly impractical and would, indeed, worsen rather than ease the situation.


Horace Andrew (Bud) Olson: Mr. Speaker, I had not intended to speak on the bill because I wanted it to come to a vote, but the previous speaker has distorted and misconstrued its intent so badly that I think I should take about three minutes to attempt to remove some of the confusion from his mind with respect to what its intent is. I think he misses the point completely when he talks about the Bank of Canada having to sell other securities in order to have as part of its reserves the currencies of other countries. Surely there is a valid argument that can be made for changing the law so that Canada is not obliged to accept only the currencies of the United States and the United Kingdom or gold.
The suggestion made by the hon. member for Chicoutimi (Mr. Cote) that the Bank of
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Canada could hold for exchange purposes an amount not exceeding $500 million in other currencies surely would expedite trade so that we could deal directly with these countries. At the present time some other agency must be employed. Their currencies must be converted to the currency of the United States or the United Kingdom. We think that Canada has reached a position in the world today where we should be able to deal directly through the medium of their currencies and ours. This is the point that the hon. member for Chicoutimi was trying to make. Considering the volume of Canada's trade with all these other countries in the world, he put a reasonable limit on the amount, and surely the hon. member for Halifax (Mr. Lloyd) should accept and recognize the intent of the bill without trying to draw an interpretation that was not intended at all.


Mr. Jean Chretien (St. Maurice-Lafleche):: Mr. Speaker, some hon. members are grumbling because I want to talk about the Bank of Canada. Of course, in the last 14 months, I have heard quite a number of them talk about that same subject without knowing anything about it and I suppose that after hearing the hon. member for Halifax (Mr. Lloyd), they will realize that if there are, on this side of the house, members who talk about the Bank of Canada, it is because they are familiar with the matter under consideration.


An hon. Member:: We have been studying it for the last 14 months.


Joseph Jacques Jean Chrétien: Bill No. C-24 introduced by the hon. member for Chicoutimi (Mr. Cote) proposes to amend the Bank of Canada Act. In short, the hon. member for Chicoutimi would like to change the definition of the words "foreign currency" in order to allow the Bank of Canada to hold non-convertible foreign currencies.
In short, this change means that the Bank of Canada will hold local currency which will allow it to deal only on the markets of the countries concerned. In my opinion, this would have no practical value since Canadian currency is now in great demand on international markets. Anyhow, why change our Canadian money for foreign currencies of lesser value.
Moreover, according to the statement made by the Secretary of State for External Affairs (Mr. Martin) on November 14, 1963, the purpose of the Canadian policy is to help those countries to purchase in Canada by giving them funds to make the necessary transactions. I wonder then what would be the practical purpose of the measure introduced

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by the hon. member for Chicoutimi, since we now offer these countries the funds they need to make transactions with us.
From the technical point of view, the bill is useless since section 23 of the Bank of Canada Act is not in force at present, because section 25 (2) of the Currency, Mint and Exchange Fund Act, chapter 315 of the Revised Statutes of Canada, provides that the Bank of Canada is not required to maintain a minimum reserve of gold and foreign exchange and suspends the application of section 23.
Obviously my hon. friends opposite are somewhat annoyed to see that I can deal with this question because for months they told the electors of Quebec that it was useless to understand the meaning of this since, they said, the important thing is to print money and that is what we are going to do.
However, the Porter commission which has just completed its hearings has examined those problems thoroughly and has made recommendations, especially in chapter 15 of its report.
Now, before introducing any bill I think that our hon. friends should examine the report of the Porter commission. I have begun to study this voluminous report; of course, it is not easy, but as I am a responsible member I am reading this book completely before talking about it in a decisive manner.
The first impressions I get from this report lead me to believe that it is a very conservative one, in that it does not favour sufficient intervention from the state into those financial fields.
At the present time, if we want Canada to maintain its particular identity, the government will have to take its responsibilities as regards the banking and financial institutions and not leave everything to free enterprise as the Porter commission seems to suggest.
Another point struck me when I read the Porter commission report, a point which was also commented by the press. It is the fact that the commission did not concern itself enough with the constitutional implications of its recommendations. We are already reading in the press that certain recommendations will create problems-


Mr. Coie (Chicoutimi):: Mr. Speaker, I rise on a point of order. We are not considering the Porter commission but Bill No. C-24. Consequently, I would ask the hon. member for St. Maurice-Lafleche to revert to the subject under consideration.


Joseph Jacques Jean Chrétien: Now, Mr. Speaker, I think it is quite in order to speak of the Porter

commission, because it had been asked by the previous government to look into banking problems in Canada.
We are now discussing the problems of the Bank of Canada and if my remarks are out of order, I wonder when they will be in order, since I am now speaking about a matter dealing with bank problems in Canada.


Mr. Rondeau:: Mr. Speaker, I should like to direct a question to the hon. member. Could he explain to the house why the recommendations set forth by the royal commission on banking appointed in 1944 have not yet been put into practice? If we have to wait that long to put into practice the recommendations of the Porter commission, it will certainly take considerable time for the Liberal party to implement them.


Joseph Jacques Jean Chrétien: I am pleased to answer this question of the hon. member for Shefford. A commission can make recommendations that the government may find unacceptable. And when we have responsible government like the one we then had, it is possible that it decided not to accept them in the political climate that prevailed at the time.
The last commission which studied the problem was the MacMillan commission and, unless I am mistaken, it did so in 1933, not in 1944. At any rate, Mr. Speaker, I feel that the bill introduced by the hon. member for Chicoutimi-


Clément Vincent: Would the hon. member allow me a question? In the few minutes remaining before the bill is put to a vote, could the hon. member for St. Maurice-Lafleche explain why his party supported Social Credit on the question of interest free and exchange free money?


Joseph Jacques Jean Chrétien: The point is that I was not in the house when that proposal was made. However, even suggestions made by members of the opposition may be considered acceptable at times, and if it was deemed acceptable at that time-


Yvon Dupuis: No, that is false.


Joseph Jacques Jean Chrétien: Maybe, but unfortunately, I was not here at the time; I stood as a candidate in 1963 only. Evidently, our people understood that the policy of free money was not very serious and they decided to re-elect as they used to, a Liberal member.
Anyhow, I commend the hon. member for Chicoutimi for having considered that question. He made a serious speech. I do not agree with his conclusions, but I find there is a great contrast-I regret the hon. member for Villeneuve (Mr. Caouette) is not in his seat-between the seriousness of his speech and the usual idle talk of the hon.

member for Villeneuve. You will agree I would have made my speech, even in the presence of the hon. member for Villeneuve, for I suppose that everyone in the house has listened to the speeches made by him, when he wants to revolutionize everything and "start the money press rolling."


Gilbert F. Rondeau: Could the hon. member tell me when the hon. member for Villeneuve said to "start the money press rolling"?


Joseph Jacques Jean Chrétien: All over the province of Quebec, during the election campaigns of 1962 and 1963.


Gilbert F. Rondeau: I wish to tell the house- [Text]


The Acting Speaker (Mr. Batten):: Order; I think it might be just as well if hon. members returned to a discussion of the bill before the house.


Joseph Jacques Jean Chrétien: Hence, Mr. Speaker, I think that, at the present time, the bill moved by the hon. member for Chicoutimi will not attain the very praiseworthy objectives it was meant to achieve. We have at present a Canadian currency with a fairly good value on the international market and the Bank of Canada Act and other related acts provide that the bank shall hold foreign currencies. We are holding here monetary securities other than Canadian securities, in this case American and British securities, because the pound sterling and the American dollar, just like the Canadian dollar, are very stable securities on the money market, and I think it is quite reasonable that we should hold, in the Bank of Canada, the best monetary securities on the market.
But if, at any time, other securities are more stable than the American dollar or the pound sterling, then it would be in our interest to amend the Bank of Canada Act so as to authorize the bank to hold securities other than the ones held at present.
Mr. Speaker, may I call it six o'clock? [Text]


The Acting Speaker (Mr. Batten):: It being six o'clock, the hour for consideration of private members' business has now expired.



BUSINESS OF THE HOUSE

The Acting Speaker (Mr. Batten):: It is my
duty, pursuant to provisional standing order 39A, to inform the house that the questions to be raised at ten o'clock this day are as follows:
The hon. member for Joliette-L'Assomption-Montcalm, the exact duties of the Secretary of
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State; the hon. member for Brome-Missis-quoi, the establishment of a secretariat for federal-provincial relations; the hon. member for Prince Edward-Lennox, cheese, inquiry as to export assistance.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.


[Stage Direction]
The house resumed consideration of the motion of Mr. Hellyer for the second reading of Bill No. C-90, to amend the National Defence Act.
Mr. Deputy Speaker:: Is the house ready for the question? I must caution the house that if the minister speaks at this time he will close the debate.


Paul Theodore Hellyer: The Associate Minister of National Defence has already dealt with some of the questions raised by hon. gentlemen opposite. Tonight I should like to take this opportunity to deal briefly with a number of other questions which have been raised and elaborate on them a little.
Both the hon. member for Edmonton West (Mr. Lambert) and the hon. member for Winnipeg South Centre (Mr. Churchill) were critical of the fact that I limited my opening remarks to the terms of the bill now before the house rather than give a general review of defence matters. While in no way limiting the range of debate as far as hon. members are concerned, I considered that since a detailed statement on defence policy was contained in the white paper tabled less than two months ago, sufficient background was available and that any comments from me would have been repetitious in the circumstances.
The hon. member for Calgary North (Mr. Harkness) raised some general objections to the white paper. He said it was too generalized, that it lacked detail and that the first few pages contained little that is new. Well, the first part is a historical review. It was put in deliberately to give some of the background leading up to the changes in policy which we now propose for the decade that lies ahead. The balance of the paper is devoted to a general statement of policy-a general outline of the structure proposed by the government for the coming decade. Allegations have been made that white papers in the past have contained too much detail

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and too little about general policy-that too much space was devoted to lists of equipment and statistics and not enough to the outlining of future policy. I thought there was some validity in those allegations and for that reason in preparing a policy document we decided that the most important content of the present white paper must be the portion devoted to policy, and that once the policy had been laid down the staff work could go forward on the basis of that policy. The statistics relating to hardware and so on could be produced-as soon as the detailed staff work has gone forward on the basis of the general requirements as laid down in the white paper. This seems to me to be a proper and logical way in which to proceed-first, the general policy and then the details based on that policy.
The hon. member for Calgary North referred to the sheet which accompanied the publication of the white paper listing highlights, including the fact that there were a number of Glassco commission recommendations to be implemented. He asked what those recommendations were. Apart from the integration of the forces and increased responsibilities for the deputy minister as outlined in the white paper, many of these additional recommendations are in fact now being implemented, including the re-organization of the information services of the armed forces for the purpose of cutting down the total number of people involved and thus promoting economy, the preparation of estimates on the basis of programs of activity rather than on the basis of standard objects of expenditure, and so on. This, too, was mentioned in the section of the white paper which the hon. member found some difficulty in interpreting. I cannot at this time list in detail the various actions being taken by the department with regard to finance, personnel management, purchasing and supply, but I can assure the hon. member that the progress we have made is considerable.
The hon. gentleman said that two of the words used in the white paper, "flexibility" and "mobility", are old words which have been used on many occasions before. I agree they have been used on both sides of the house. What we need to do now is to get on with the action to provide the mobility and the flexibility to allow our forces to cope quickly and adequately with any situation which may require their attention anywhere in the world.
The hon. member seemed confused between the unification of the high command and the integration of the armed services. The white paper makes the point crystal clear on page 19. It says this:

...the integration of the armed forces of Canada under a single chief of defence staff and a single defence staff.. .will be the first step toward a single unified defence force for Canada.
I think it follows logically that once the high command has been unified and once the armed forces of Canada are organized on a functional basis rather than along traditional service lines the complete integration of the armed services will follow as a natural evolution from this change in organization. There will, of course, always be soldiers, sailors and airmen. We may also, some day in the future, have spacemen. But the duplication between two or more of the traditional forces is increasing and the overlapping is increasing; there are at the present time dozens of similar trades required by two or more of the armed forces of Canada, and there will be savings, and there will be economies and there will be a better use of manpower, once the forces have been organized on a functional basis, more particularly as integration proceeds.
The hon. member said an artillery officer could not command a destroyer. That may be so, but I suspect that an artillery officer might find himself quite at home with a naval gun after a brief familiarization period. Certainly many of the basic skills involved are the same. I think there should be no doubt left in anyone's mind as to what is intended: This unification of the command of the three armed forces is, as stated in the white paper, intended to be the first step toward a single unified defence force for Canada.
The question of civil control has been raised. Two or three hon. gentlemen have referred to the article by Brigadier Malone. I can assure the house that there is no problem in this respect. There will in fact be much better civil control in the future than has been possible in the past. The single defence staff will present its findings to the minister through the defence council, and before they are considered by the defence council they will be analysed fully by the appropriate section of the deputy minister's staff; that is, all proposals involving policy or the expenditure of public funds will be analysed by the civilian staff before they are considered by the defence council and before decisions are taken in respect of them. In addition, by using the defence council as-if I may use this term-a cabinet of the Department of National Defence, it will be possible to get a complete and full expression of opinion from both the senior civil advisers and the senior military advisers, so that all of the best opinion, advice and information available will be discussed and considered before decisions are taken. This will

permit, I believe, a more thorough examination of policy and of projects than has been possible in the past. It will permit a stronger civil control than has been the case, and it will also permit a better civilian direction in the sense that it will be possible to implement more closely defence policy as laid down by the government.
The hon. member for Greenwood (Mr. Brewin) as usual made a very interesting contribution to the debate, and I appreciate his remark that his party will support Bill No. C-90. His main subject, however, was related to NATO strategy and his opposition to tactical nuclear weapons being employed in Europe. He suggested-and he can correct me if I am wrong-that more reliance should be placed on strategic nuclear weapons. There I disagree, since I consider that too much reliance on strategic nuclear weapons poses a far greater threat to peace.


Mr. Brewin:: Mr. Speaker, could I ask the minister a question? The minister has suggested that I should correct him if he is wrong. I should like to correct him right now, if I am in order in so doing.


Paul Theodore Hellyer: I stand corrected, Mr. Speaker, because I remember what the hon. member said. He suggested that reliance, for example, should be placed on Polaris seaborne missiles as an alternative to tactical nuclear weapons on the central front in Europe. Is that not correct?


Francis Andrew Brewin: Mr. Speaker, the minister is now asking me a question. What I suggested was that the strike reconnaissance role could be more effectively carried out by Polaris weapons on submarines which were not vulnerable, rather than by strike reconnaissance aircraft, as at the present time.


Paul Theodore Hellyer: That is exactly what I
thought the hon. gentleman had said.


Francis Andrew Brewin: It is the same type of weapon.


Paul Theodore Hellyer: It is with that, Mr. Speaker, that I would like to take issue, because first of all there is a difference in scale between seaborne or submarine Polaris missiles, for example, which are clearly in the strategic category, and tactical weapons such as those carried by tactical aircraft in the strike role.


Francis Andrew Brewin: Mr. Speaker, would the minister permit one other question? Does he not agree that the distinction between strategic and tactical weapons lies in the target, and if the target is a military one it can be properly defined as a tactical weapon; if, on the other hand, the target is behind the lines,
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as it were, civilians, cities, industries, and so on, then it becomes a strategic weapon at that stage?


Paul Theodore Hellyer: I agree that this is a distinction.
I think the hon. gentleman should know, however, that the difference in degree of accuracy between seaborne and submarine-borne missiles such as he suggests, and those which would be carried by strike aircraft, makes all the difference in this case between strategic weapons and tactical weapons. Whereas a tactical strike aircraft can deliver with almost unbelievable precision its bomb or lethal load, whatever it is, to a military target, you could not possibly take that sort of a chance with a shipborne or submarine-borne Polaris missile, where the degree of accuracy is not adequate to permit its being used against a military target that happened to be, for example, in proximity to some urban or built-up area. There is quite a real and sharp distinction between these two systems. It is for this reason that I think considerable reliance must be put on tactical weapons as against strategic weapons, because strategic weapons are a weapons system of last resort. They are, in fact, directly related to the doctrine of massive retaliation which the hon. gentleman rejects.


Francis Andrew Brewin: Hear, hear.


Paul Theodore Hellyer: The choices, if one relies solely on strategic weapons, are surrender or annihilation, and surely this is not what the hon. member really wants. The advantage of having tactical nuclear weapons is to provide a deterrence at a lower threshold than strategic retaliation. The NATO alliance does not have sufficient strength to deter aggression on the central front without tactical nuclear weapons. If our object is to deter war, we must face the reality of the situation. A greater reliance on strategic weapons would be the most dangerous and most provocative strategy that we could in fact employ.
In so far as Canada's contribution is concerned, we have already indicated in the white paper that the strike role will be reduced substantially in the years ahead. We have also decided to give our aircraft a second, non-nuclear capability. This gives the squadrons a greater flexibility under a wider variety of circumstances. This is directly in line with the policy set out a year ago. The hon. gentleman has mentioned several times what he refers to as intervention forces. In my opinion that is exactly what we are building up. Our forces are to be highly trained, mobile and flexible intervention forces, and I cannot really draw any distinction between the intervention forces that the hon. member suggests and those that are proposed in the

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white paper on defence. X think it is a question of semantics. If there is a distinction, I would like to know what it is, because I am not familiar with any distinction which might be in the mind of the hon. gentleman. He does not suggest that we should withdraw all our troops from Europe. What does he suggest as an alternative that we should do with those of our forces in Europe which are there for training, or other purposes, as part of our intervention forces? If he can suggest anything more practical and useful than what they are doing now, I think he has a responsibility to do so.
The question was raised on the other side of the house this afternoon as to the distinction between strike and reconnaissance roles. I may say that it was the previous government which put the strike and reconnaissance roles together as a single entity. In the white paper we tried to clear up this anomaly and be more precise by defining them as strike roles and reconnaissance roles, because in fact they are different and should be divided. The CF-104's which we have in Europe are now to be employed both in the strike and in the reconnaissance roles.


Mr. Willoughby:: And bombing.


Paul Theodore Hellyer: The strike role, as we have often said, is a bombing role; there has been no question about that. I think this distinction should have been made long ago so as to avoid some of the confusion which has arisen in the minds of some people.
In respect to the suggestion of the hon. member for Vancouver East (Mr. Winch), may I say that what we have proposed at the present time is really a change which is designed to solve what was in fact for us a problem. It had previously been the plan to have some reconnaissance aircraft in each squadron. Under the new arrangement we are concentrating the six squadrons in the strike role in Germany and concentrating all of the aircraft which are engaged in the reconnaissance role in the two squadrons in France. In addition, as I have already said, all of these eight squadrons will have a second non-nuclear attack role. This is not a perfect solution but it is the best one we could devise in the present circumstances.
I appreciate the remarks of the hon. member for Fraser Valley (Mr. Patterson), who in general supported the purpose of Bill No. C-90 and stressed the need for a strong, modern and completely mobile and efficient force.
The hon. member for Megantic (Mr. Lan-glois) gave his qualified support for the bill, but perhaps I might correct one part of his statement. He referred to the main headquarters being in Colorado Springs, and that the 
naming of a chief of the main headquarters would not alter the fact that this headquarters was outside Canada. Actually the headquarters at Colorado Springs is the joint command for North American air defence. The headquarters of the Canadian armed forces is, of course, in Ottawa. It is true that the deputy commander at NORAD is a Canadian. It is also correct that after many years of distinguished service Air Marshal Slemon is retiring shortly from this position, to be replaced by another distinguished Canadian, Air Marshal Dunlap, the present chief of the air staff.
The hon. member for Megantic (Mr. Langlois) also made certain allegations with regard to television repairs being carried out by service personnel of R.C.A.F. station, Uplands, in Ottawa. I do not in any way underestimate the seriousness of his charges, but I am sure that he will understand that if such charges are to be investigated more specific details will be required. I should therefore like to ask him if he would communicate with my office and furnish specific details to support his allegations. I can assure him that if he does so a thorough investigation will be made.
The hon. member for Hastings South (Mr. Temple) referred to remarks made by the hon. member for Greenwood (Mr. Brewin) as to the percentage of the defence budget allocated to capital expenditures. The hon. member for Greenwood quoted from the report of the special committee to the effect that in the year 1963-64, 23 per cent of the budget was for new equipment. However, as the hon. member for Hastings South pointed out, this figure of 23 per cent did not relate solely to capital expenditures. The committee rightly said that 77 per cent of the total budget for 1963-64 is allocated for operations and maintenance, but the balance of 23 per cent includes not only equipment, but construction, NATO infrastructure and industrial applied research as set forth in the tables printed in the committee's report. The correct figure for equipment is approximately 13 per cent for this year, and it is this figure that we are out to correct in reducing headquarters strength and the consequent operation and maintenance costs.
The hon. member for Lake St. John (Mr. Lessard) made reference to expenditures by NATO countries on defence, and in particular referred to the average of 8 per cent of the national budget of NATO members devoted to this purpose. He then went on to say that this compared to 25 per cent of the national budget spent by Canada. I think the hon. gentleman is confusing two things here, since in the former case it relates to the percentage

of the gross national product, while in the latter, in so far as Canada is concerned, the figure of 25 per cent is with regard to the annual financial budget at the federal level. To relate Canada's contribution to the 8 per cent of the gross national product of NATO countries, the figure given to the committee on defence for Canada was 5.1 per cent, placing Canada a shade below the middle of the scale among NATO nations.
The hon. member for York-Sunbury (Mr. MacRae) made reference to two questions which he had on the order paper concerning what are known as "Nudets". These are nuclear detection and reporting stations. His question asked whether there were any of these units presently being constructed in Canada, and the answer given on the order paper was in the negative. He then referred to an article in the Saturday Evening Post of December, 1963 by Stewart Alsop, in which it was stated that a Nudets system was being built at 52 sites in the United States and southern Canada. May I say that in view of the wording of the question by the hon. member we had no alternative but to give the answer as stated, since in fact no such units were presently being constructed in Canada. However, I should like to assist the hon. member in any way I can in this regard.
First of all, this Nudets system referred to by Mr. Alsop does not relate to Canada. What has been done here is that in June, 1960 the government approved the construction of a number of nuclear detonation and reporting posts, known as N.R.P.'s around several target cities in Canada. A total of 25 such reporting posts were constructed under this program, with the Canadian army being the construction authority, at a total cost of $150,000. The United States Nudets system is designed for a similar purpose but is a far more sophisticated one than the Canadian reporting posts, and although there has been some suggestion that it would be advantageous to locate some United States Nudets in Canada, no such arrangement has been agreed to.
A number of general questions have been asked about our peace keeping operations in Cyprus. I know that the Secretary of State for External Affairs (Mr. Martin) will wish to make a statement following his return to Ottawa and I will leave discussion of this most important subject until then. One question which I should like to deal with, however, is this: Why was a French speaking unit sent to Cyprus? The reason is this. Le premier bataillon du royal vingt-deuxieme Regiment was for three years up to and including the time of the Cyprus crisis the stand-by battalion for UN requirements. In addition it was considered to be one of the
National Defence Act
best fighting units in the world. To deny this excellent unit its right to represent Canada would have been an injustice to the unit and to Canada.
One other question was raised with respect to peace keeping operations, and this was the suggestion that we do what some of the Scandinavian countries are now doing in putting together a special force for peace keeping operations. May I remind hon. gentlemen that at the present time all of the Canadian armed forces are on active service, and any part of the Canadian armed forces can be used for United Nations or other activities at any time. This does not require special legislation as is being proposed in one or two other countries.
We have forces available. We have used them on various occasions, and it is possible to use them on very short notice because they are trained and equipped for a wide variety of activities.


Mr. Lambert:: May I ask the minister in this connection, why did he and his colleagues require a resolution of this house to send a force to Cyprus?


Paul Theodore Hellyer: Actually, Mr. Speaker, a
resolution was required because of an undertaking on the part of the government to get such a resolution from parliament. It was a question of regard for the sovereign power of this House of Commons, something which my hon. friend raises from time to time.


Norman Platt Lambert: The minister knows it could have been done easier in two other ways.


Paul Theodore Hellyer: The hon. member for Lake St. John (Mr. Lessard) raised the problem of the relationship of defence expenditures to industry, particularly in so far as they would be affected by disarmament. I can assure my hon. friend that there is no fear in this regard, and if he can achieve a multilateral arms control we will be happy to grapple with the economic consequences.
The most serious charge that has been laid is the suggestion that our defence capability has been steadily reduced. This suggestion is simply not true. One by one, our defence systems which were not operational are becoming operational. Our air defence system is far more effective than it was a year ago. As soon as the Genie rockets are available for our interceptor squadrons there will be another qualitative jump in effectiveness.
Six squadrons of our air division will soon become operational, and the two reconnaissance squadrons a few months later.
The acquisition of the M-113 armoured personnel carrier will dramatically increase the effectiveness and survivability of the

National Defence Act
Canadian army, and the brigade group in particular. This acquisition was long overdue. The first vehicles will be available later this year, and production in quantity will be available early next year. The acquisition of additional Caribou and Hercules aircraft increase substantially our flexibility and capability in air movements.
The navy's antisubmarine capability has never been higher, and the early paying off of some world war II ships in order to make additional funds available for new equipment is a forward move. There has been steady improvement in the capability of all arms and this improvement will continue in the months ahead.
No, Mr. Speaker, the white paper was not a publicity stunt. It is a broad policy chart for the next decade. It sets the foundation for the detailed planning and staff work which must go forward. It relates defence policy to foreign policy, and prescribes roles suited to the Canadian experience and personality. It predicts an organization which will permit the implementation of a coordinated, mobile and flexible force. It puts Canada in a position of leadership in military organization.
It is a good paper. This bill is a tool required to get on with the job. It is worthy of the support of this house.


Mr. Winkler:: The minister has suggested approximate times when some of the weapons will be available. Is it the government's intention to acquire these immediately they become available, or in what period of time thereafter?


Paul Theodore Hellyer: Would the hon. gentleman say which weapons?


Eric Alfred Winkler: In the last few words of the minister's statement he suggested that a year from now such and such would be available, particularly for the air force. Is the government going to acquire these immediately they become available?


Paul Theodore Hellyer: Everything I have referred to is already ordered and on its way. The M-113, for example, the contracts have been let, the first models will be available this year and the balance of the production run early in the new year. This will provide the mobility and protection required for the brigade group overseas. It is similar with the aircraft. I think the Caribou are almost immediately available and some may have been delivered. The delivery of the Hercules aircraft will start about year's end and continue through the early part of next year. All of these things I have referred to are firm decisions which are already in the works and which should

provide a considerably increased capability in the very near future.


Eric Alfred Winkler: In regard to the acquisition of a nuclear capability could the minister say when this might become available for our current air force?


Paul Theodore Hellyer: Well, Mr. Speaker, I expect that both the air division overseas in the strike role and the air defence squadrons in Canada will be operational this year.


Mr. MacEwan:: I have just a short question for the minister. I did not hear all his speech and I may have missed his reference to this matter. Can he advise the house if there will be any naval shipbuilding program brought forward during this fiscal year?


Paul Theodore Hellyer: As my hon. friend knows, the reconversion program to improve greatly the capability of the existing destroyer escorts is going ahead, and the study on the cost effectiveness of the anti-submarine system is due for completion in July. As soon as that is completed, I would hope we could get to the question of deciding on our future shipbuilding requirements as expeditiously as possible, and then let the orders as soon as possible after that.


Eric Alfred Winkler: Supplementary to the question I asked before, can the minister say is there any current plan to negotiate out of the present arrangements with the United States government in regard to nuclear capability or supply?


Paul Theodore Hellyer: I do not quite understand the hon. gentleman's question. If he is referring to the air defence squadrons and the Bomarc squadrons, there is no plan to change these commitments in the immediate future. This is all set out in the white paper, and they will be used as long as required. The future effectiveness of the anti-bomber systems is to be reviewed in the light of developing circumstances. That too is set out in the white paper and I recommend to my hon. friend that he take it home with him and study it this evening.


Eric Alfred Winkler: I have.


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


Some hon. Members:: On division.
Motion agreed to on division, bill read the second time and referred to the special committee on defence.


Paul Theodore Hellyer: Mr. Speaker, would you put the
yeas and nays on that question now?


Mr. Churchill:: Too late.


Paul Theodore Hellyer: The hon. gentleman said on division.


Mr. Deputy Speaker:: Well, it was carried on division.



FINANCE


Guy Favreau: that the house go into com-mitte to consider the following resolution:
That it is expedient to introduce a measure to provide for the payment of certain provincial taxes and fees by crown corporations on or after the 1st day of April, 1964.
Motion agreed to and the house went into committee, Mr. Lamoureux in the chair.


Mr. Benson:: 
Norman Platt Lambert: Mr. Chairman, the statement by the parliamentary secretary has given us some information as to the ambit of this measure in connection with which I might advise hon. members that negotiations and proposals therefor were initiated some years ago by the former administration. It was definitely proposed at that time that this would be carried out. As a matter of fact, I believe a measure appeared on the order paper in 1962.
There is one matter about which the parliamentary secretary might give us some information. Is there any information about the extent of the exemptions from sales tax that are granted to the provinces for the construction of hospitals, child caring institutions and one or two other similar types of institutions, if my memory serves me correctly, where refunds are made as a result of special circumstances? Is it the estimate of the Department of Finance that the two amounts will roughly balance? Is it expected that the amount to be paid by crown corporations under the federal government by way of provincial sales tax will more or less equal the amount now paid by the provinces under the federal sales tax levy?
This is a relatively simple measure. I know it will cure a lot of ill will that has existed. There was definitely a rub. I do not know

Crown Corporation Taxes whether the measure may lead to some sort of sales tax havens in this country. There are two provinces which do not have sales taxes at the present time and it may be that crown corporations will suddenly begin to do their business primarily in those two provinces. I do not know whether the provinces will then start, as some may suggest, to impose tariff barriers. Just what are we going to get out of this? There are still means whereby this measure can be circumvented, although it may be that the provinces will come to some agreement about sales tax equalization or there will be some method devised whereby purchases destined to another province will be subject to sales tax even though there is no sales tax within the province of destination. In any event, Mr. Chairman, we will be interested in seeing the bill and it is the conclusion of the official opposition that we will support this resolution.


Edgar John Benson: Mr. Chairman, perhaps it would be best if I were to deal with the questions raised by each speaker as we move along. We could perhaps facilitate consideration of the resolution in this manner. The hon. member for Edmonton West has raised the question whether or not the amount of sales tax crown corporations operated by the federal government will pay the provinces will balance with what is paid by the provincial agencies to the federal government.
I really do not think any figures are available in this regard. What we are doing in this resolution and in the bill which will be submitted to the house in due course is to achieve a balance as between the two senior levels of governments. Thus the present situation can continue whereby provincial departments are free of federal sales tax, and federal departments are free of provincial sales tax. On the other hand, the present situation where crown corporations and agencies of the provinces are bearing the federal sales tax but federal corporations are not paying the provincial sales tax will be changed. The result will be that crown corporations controlled by the federal government will be treated by the provinces in the same way as we treat corporations controlled by the provinces.
I do not think that the other question the hon. member raised with regard to tax havens is a very serious problem, because I really do not see this government or any federal government locating or carrying on the business of a crown corporation in a particular province in order to save the amount of sales tax that might be involved. I might at this point mention the fact that one can take the alternative view that all crown corporations,


whether operated by the provinces or the federal government, should be excluded from the sales tax.
I do not believe this is really a fair view to take, in that many of these crown corporations are actively competing with ordinary business organizations, and therefore I believe that crown corporations operating on this basis should have their financial result comparable to ordinary business concerns which are carrying on the same kind of business.


Thomas Clement (Tommy) Douglas: The legislation which has been outlined by the parliamentary secretary to the Minister of Finance has been long overdue. There have been very strong feelings for years on the part of provincial governments that they have been required to pay federal sales taxes and many other federal imposts, whereas the federal government has not paid provincial sales taxes or gasoline taxes. What I think has been even more irritating has been the fact that the federal government has not even paid truck or car licence fees. Truck and car licence fees are not taxes in the ordinary sense, but they are a charge for using public thoroughfares. Heavy vehicles doing damage to the roads make no contribution either through gasoline taxes or through car and truck licence fees, and this has really caused a great deal of feeling. It is a matter which has been discussed at every federal-provincial conference that I recall since 1945, and probably was discussed long before that.
I am very glad that the government has decided to introduce legislation to make it possible for certain crown corporations to pay provincial sales taxes, gasoline taxes and car licence fees. When we have a look at the schedules, we will have a better opportunity to ascertain what crown corporations are affected and which ones have been exempted. I feel the day is coming when all government departments, as well as crown corporations, ought to pay taxes to both the federal and provincial governments. I believe this would be a much fairer thing for everyone concerned. I know many of the provincial governments feel strongly, for instance, about the fact that military equipment, which is extremely hard on highways when moving over provincial and municipal roads, makes no contribution whatever towards the maintenance of those roads. However this is another question which will be dealt with in due course.
At the present time the government is taking the first important step towards rectifying what is felt to be a very serious injustice in respect of federal-provincial relations. I am sure that most of the provincial governments will be delighted with the introduction of this legislation. They will feel

that they are now going to get some revenue to which they are entitled for the services which they give. This will place them on an equal basis with the federal government.
The other point which I feel has to be recognized is that, with the passage of time, there is more intervention by governments in the economy of the country. In spite of all the talk about pure free enterprise, the fact is that every government in Canada, federal and provincial, is doing a great deal more about public ownership than was done 30 years ago. I think this trend will tend to increase rather than diminish. If governments are going to go into business of any kind, either on a federal-provincial basis or on a shared basis with private corporations, then those crown corporations and government business enterprises should pay the same taxes as are paid by private companies to put them on a fair and equitable basis. I think the fact the federal government is going to pay these taxes now will place them on all fours with private companies, and will make crown corporations much more welcome to provincial governments than they have been in the past, when provincial governments felt they were going to supply all the services and were not going to get any of the revenue to which they were entitled. I congratulate the parliamentary secretary upon the introduction of this legislation on behalf of the government, and the members of this party will support it.


Edgar John Benson: I should like to deal with one or two questions raised by the hon. member for Burnaby-Coquitlam. I am very pleased to learn he is supporting the government in respect of this particular piece of legislation. He mentioned the question of truck and car licences. They are included in this piece of legislation and we will be paying truck and car licences.


Thomas Clement (Tommy) Douglas: But only for crown corporations.


Edgar John Benson: For crown corporations; I should like to point out also that in the schedule which will appear when the bill comes along, very soon I hope, all crown corporations are included except those that are really considered to be departments of the federal government.
With regard to whether or not all departments of federal and provincial governments should pay sales taxes to one another, I might say this question is under consideration at each of the provincial conferences that comes along. There has been no unanimity to date amongst the provinces as to whether they would like to see legislation to this effect.
Crown Corporation Taxes [Translation]


Desmond Morton Code: Mr. Chairman, in the name of our group, I would like to say that we are favourable to this resolution providing for payment of some provincial fees and taxes by crown corporations, which up to now, were exempt from such dues. In so doing, I perhaps behave a little more nicely than people have towards my bill this afternoon; however, I should emphasize that it is indeed a return of rights to the provinces.
This is perhaps a consequence of the last federal-provincial conference and even perhaps of the previous one, and of the firm attitude taken by the government of the province of Quebec-which I want to congratulate on this occasion-and it may be due to one of the leaders of that government, Mr. Levesque, who advocates for Quebec the status of an associate state. In fact, all provincial states are associate states, and I share such opinion.
The parliamentary secretary to the Minister of Finance (Mr. Benson) spoke about reciprocity between federal and provincial taxes. I hope these fees and taxes remitted by crown corporations will be higher than those already paid by the provinces. I do not know how much provincial corporations paid up to now: we may perhaps know it some day.
I am glad to see that institutions like the industrial development bank and the Bank of Canada will pay their share of taxes in the various provinces. I hope that, before too long, a branch of the Bank of Canada will be established in Chicoutimi, and will pay taxes to the province of Quebec.
It appears from all this that, in the long run, it is always the taxpayer who has to pay the taxes because, whether or not they come from the provincial government, it is still the Canadian people who have to pay the taxes, when they are overtaxed and despoiled, as I have explained before. I hope that one day we shall see the end of this formula which crushes the Canadian taxpayer more and more.


Edgar John Benson: If I may deal with each of the hon. members' questions as they arise, the hon. member for Chicoutimi raised the question of whether or not this legislation is the result of the strong position Quebec took in the last federal-provincial conference. I should like to assure him that it is not. This matter has been under consideration by the federal government for a number of years and this is the first opportunity which the present government has had to bring this bill forward; we have done so as soon as we could.
It is virtually impossible to tell exactly what taxes have been borne by provincial

Crown Corporation Taxes agencies and corporations in the past because the federal sales tax is a tax imposed at the manufacturers level and is included in the price of goods acquired by the provincial agencies. It is therefore not feasible for the federal government to calculate what share of our total sales tax revenue is borne by provincial agencies and corporations.
The hon. member raised the question of the Bank of Canada. I can assure him that although the Bank of Canada is included in the schedule, the present bill will not affect that institution because the Bank of Canada has already been paying all of these taxes. It is included in the schedule so that we may have all the crown corporations on the same basis.
The hon. member also raised a question with respect to the tax burden imposed on individuals. I really do not believe that this particular legislation affects the total tax burden on individuals. It allows the crown corporations owned by the federal government to make payments to the provinces of moneys which the provinces would otherwise have to raise from their own citizens by means of various taxes.


David Réal Caouette: Mr. Chairman, this resolution tells us very little about the provisions which will be contained in the bill, because we have been given only piecemeal information about what the Minister of Finance intends to put in the legislation.
The hon. member for Edmonton West (Mr. Lambert) told us that this matter had been well thought out and that it had been started by the previous government. On the other hand, the parliamentary secretary claims that plans to that effect were already being made way back in 1950, 1952 and 1957.
One thing is certain. In spite of the fact that the parliamentary secretary claims that the payment of taxes to provincial governments will not necessarily bring about an increase of federal taxes, this proposal will be costly for the taxpayers because the crown corporations involved all have deficits, whether it be the C.N.R., Air Canada-


Norman Platt Lambert: It is not true.


David Réal Caouette: -or Polymer. All government agencies show deficits, and who but the Canadian taxpayer will have to foot the bill.
The secretary to the minister cannot make me believe that raising duties or taxes paid to the provinces will not somehow raise general taxes, because the bureaucracy will need new employees and will have increased expenditures, and that will solve absolutely nothing.

It makes no difference whether the matter was raised at a federal-provincial conference, at another conference, or not at all.
Mr. Chairman, I think that what should have been proposed to the house is exemption from sales tax for organized or public bodies, such as municipalities and school boards.
Last year, there have been, in every field, claims from various parochial organizations, with regard to the purchase of church equipment, for which federal and provincial sales taxes had been charged. For various obscure considerations-in some cases of a political nature-the sales tax is not collected, and I am asking why? I know that the law provides for the sales tax to be paid by every organization.
To my mind, the resolution put forward should not so much state that the federal government will pay the provinces a sales tax, but that the provinces, the municipalities, the school boards will be exempt. Then, considerable amounts would be saved and the whole population would benefit, while people would not be forced to pay higher taxes, at this time, when they have not the means of doing so.


Edgar John Benson: Perhaps I could deal briefly with the matters raised by the hon. member for Villeneuve. He pointed out that up to now he has been given no particulars about the contents of this bill. I can assure him that if we move quickly through the resolution stage he will very soon be able to look at the bill itself which is prepared and ready for him to examine.
The hon. member also said, erroneously I think, that all these crown corporations operate at a deficit. Thinking, offhand, of the 27 corporations involved here I could mention a number of them which operate at a profit and which do very well. For example, there is the Bank of Canada, Canadian Overseas Telecommunications, Central Mortgage and Housing Corporation, Eldorado Mining and Refining, industrial development bank and Polymer Corporation. Then, T.C.A. showed a profit last year. These are names which occur to me, without looking at the financial statements of all the crown corporations.
The hon. member spoke in favour of the abolition of all sales taxes and of a general redistribution of tax revenue in the country, but I do not think these questions come within the scope of the particular bill we are now discussing. We are merely trying to create a situation of equality between federally-owned crown corporations and those which operate as agencies of the provincial governments.

(Translation]


Clément Vincent: Mr. Chairman, I would have a tew words to say and a question to ask the parliamentary secretary to the Minister of Finance.
First of all, I must say that I support without reservation the legislation providing that certain dues and taxes be paid by crown corporations to the provincial governments. However, I would like to hear from the parliamentary secretary that this would not be a Greek gift, for, at this time the crown corporations are asked, and even forced, to pay provincial taxes. Now, next year the federal government should not say to the provinces: The crown corporations are paying taxes to the provinces and the provincial corporations will have to pay taxes from now on to the federal government.


An hon. Member:: They do.


Clément Vincent: I would like to have the parliamentary secretary tell the house that the government does not intend to do that, because there are in the provinces of Quebec and Ontario, corporations like Quebec hydro which do not pay taxes on corporation income.


Edgar John Benson: In reply to the hon. member for Nicolet-Yamaska I would point out that at present there is no imposition of tax involved in this legislation. It is not the intention of the federal government through this legislation or in any other way to my knowledge, to impose any additional tax on agencies of the provinces. The position has been that the provincial crown corporations or agencies have been paying the federal sales tax because it is included in the prices charged to them for goods and services by their suppliers, whereas federally owned crown corporations were not paying corresponding provincial taxes. This piece of legislation is merely intended to enable the crown corporations which are not paying the sales tax, the gasoline tax and motor vehicle licence fees to pay those taxes to the provinces.
Resolution reported and concurred in.
Mr. Favreau (for Mr. Gordon) thereupon moved for leave to introduce Bill No. C-95, respecting the payment of certain provincial taxes and fees by crown corporations.
Motion agreed to and bill read the first time.
Judges Act



JUDGES ACT AND EXCHEQUER COURT ACT


Guy Favreau: that the house go into committee to consider the following resolution:
That it is expedient to introduce a measure to amend the Judges Act and the Exchequer Court Act to authorize the appointment of, and the provision of salary for, one additional judge of the Exchequer Court of Canada.
Motion agreed to and the house went into committee, Mr. Batten in the chair.


Guy Favreau: Mr. Chairman, the present resolution precedes a bill the purpose of which is to appoint an additional puisne judge to the exchequer court. The object of this bill is also to amend the Judges Act so as to authorize the provision of salary for this additional judge.
It will be remembered that during the last session the house passed a piece of legislation which appears as chapter 10 of the 1963 Statutes of Canada, the short title of which is as follows:
Dissolution and Annulment of Marriages Act.
It will also be remembered that the purpose of this act is to authorize the Senate to dissolve a marriage by means of a simple resolution, in the cases where parliament dissolved marriages in the past. This legislation also makes it possible for parliament to review the resolution which provides for the dissolution of a marriage.
The bill which will follow this resolution seeks simply the authorization to confer on an additional judge of the exchequer court the powers of the divorce commissioner, an officer of the Senate whose appointment is provided for in chapter 10, as I said a moment ago, and who holds office at the present time.
In other words-and that was the objective of the house in passing chapter 10-it is important, as long as that matter of divorce remains in the hands of the legislative body- in this case, the Senate-that it be disposed of in the most objective, the most judicious and, I would say, the most "judicial" way possible.
It is important also, Mr. Chairman, that the man entrusted with this exacting mission, full of responsibilities, should see his prestige recognized by having the status of a judge of a superior court.
What the proposed legislation wants to do is to enable the Speaker of the Senate to appoint one of the judges of the exchequer

Judges Act
court to perform, in the future, all the commissioner's functions as provided for under chapter 10 of the statutes of 1963.
I also want to point out to the house that this legislation will not change in any way the effect and scope of chapter 10 I have just mentioned and will not give the exchequer court jurisdiction in divorce matters; this jurisdiction will remain solely in the hands of the Senate and the functions of the judge of the exchequer court who will have thus been appointed by the Speaker of the Senate will just have to hear witnesses, get evidence and report to the Senate in exactly the same way as the present commissioner.
Mr. Chairman, I think it should be noted that, besides the prestige given to the function and the guarantee that legal experience will be brought to the examination of the evidence, there will be the additional advantage that, in case of death, inability to act or illness on the part of the commissioner, it will be quite easy to replace him. All the Speaker of the Senate will have to do will be to designate, among the other judges of the exchequer court, one who will take over the duties of the commissioner.
I respectfully submit once again that this legislation will in no way change what the house decided during the last session, that it adds prestige to the function and that it facilitates, in case of illness or some other impediment, the temporary or permanent replacement of the official who will thereby be responsible for hearing the evidence and for reporting to the Senate.


Louis-Joseph Pigeon: Mr. Chairman, I wish to thank the Minister of Justice for his explanations about this resolution.
Everybody knows that the provinces of Quebec and Newfoundland are the only ones without divorce courts under their jurisdiction and that it is the Senate and the House of Commons which have always dealt with divorce cases from both provinces.
I should like to ask the following question of the minister: As a matter of courtesy, did he consult the provincial as well as the religious authorities of both provinces concerned about the appointment of an exchequer court judge who will look after their divorce cases?
The minister knows that the province of Quebec especially is jealous of its jurisdictions and privileges, that it is very touchy on this subject and, even though the minister gave the necessary assurances, it would not want this to be a means, not right now maybe, but in a few years from now, to force those two provinces to establish divorce courts.
I should also like to ask the minister whether this bill is entirely consistent with the Canadian constitution, that is, if under the

constitution, the government is obliged to-consult the provincial authorities of Newfoundland and Quebec. I would also ask him if, as a matter of courtesy, he consulted the religious authorities of those two provinces who are firmly against any extension or change in the procedure to be followed in divorces originating in those two provinces but coming under federal jurisdiction?


Guy Favreau: Mr. Chairman, I think that the hon. member's question is well put and I am grateful to him for having asked it.
Having taken part in the drawing up of that legislation, whose last clause was agreed to not at the very last minute but on the last day of the previous session, I can assure the hon. member, and the house also, that we made the consultations, at least the unofficial ones, which we felt were necessary.
The fact remains, however, that under the legislation which was passed and which is chapter 10 of the statutes of 1963, jurisdiction is again held solely by parliament, or rather by one of the two houses, that is the Senate, with some kind of right of appeal to parliament, that is the House of Commons and the Senate.
There were some difficulties in the wording of the bill, in the sense that the judge, to the extent where he will exercise his responsibilities, will be an official of the Senate, responsible to, if you like, the high officials of the Senate or rather to the Senate itself.
The hon. member for Joliette-L'Assomption-Montcalm like all other hon. members interested in that matter may rest assured that we are quite conscious that at present, as regards divorce cases coming from Quebec and Newfoundland, jurisdiction is assumed by parliament alone.
If there is ever some talk of establishing- I am not predicting or announcing that- divorce courts, I think, as Minister of Justice, that one of the essential conditions would be to consult with the provincial governments of Quebec and Newfoundland and also with the religious authorities who, under the circumstances, may be interested.


Louis-Joseph Pigeon: Mr. Chairman, if you will allow me, I should like to ask the minister one last question. Could the minister categorically state in this house that this bill is not in any way contrary to the Canadian constitution?


Guy Favreau: Mr. Chairman, I shall reply, but always with this reserve and in expressing this fear that maybe, in so doing, I would give a legal opinion, but if I am asked for my personal opinion, not as Minister of Justice, but rather as a citizen and a lawyer from one of the provinces affected, I must say that in my heart and soul, I am

satisfied that the bill which will follow this resolution, if it is accepted, does not at all infringe upon the constitution.


Mr. Peters:: Mr. Chairman, we are again happy to be able to support this bill, and we do so for several reasons. In my study of the field I would think that the former speaker had little to worry about because the constitution is clear on this matter of marriage and divorce. In the constitution it is stated that the federal government shall be responsible for marriage and divorce, and solely responsible. When a provincial government becomes involved with these matters it must pass legislation which endorses the legislation of the federal government.
It seems to me that the Senate was very unfair a year ago in refusing to pass a similar resolution, to be followed by a bill, to make the commissioner an exchequer court judge. I say this because of the fact that the Senate has had, or had at the time, the opportunity to examine the functions of this particular official and how they should be conducted. They have, of course, now had more time and are probably in a better position to assess the situation and allay any fears which they had. The Senate reports will indicate that by April 20 there had been introduced 218 resolutions, and to my knowledge none of them was rejected in any particular, or certainly on any major point. The Senate divorce committee have felt that none of the resolutions had been handled in a way in which they would not have been happy to handle them, had the law remained as it was in the past.
I believe that this present resolution is absolutely necessary, and for several reasons. First of all, we have asked the commissioner, who is a man of great legal knowledge, of good reputation and diligence, to accept an office which is a new one, and which would be objected to, it was felt in many quarters. He has accepted this office at the cost of his law practice. Therefore I believe he should receive the assurances and the pension which go with the office of an exchequer court judge because of the duty which he is performing, as well as in view of the fact that under present circumstances he might find himself without a job, should there be a change of government. This might not come about and we hope it does not; but in the past other officials who were commissioners and appointed by one government were not always maintained in their office by the succeeding government. In this case it would mean a severe loss, and I do not think we should ask anybody to assume this responsibility on this basis.
Judges Act
I should like to go a little further than the minister went, because it is my hope that when exchequer court sees fit to allow one of its members to act as a commissioner of divorce under the control of parliament and outside of the normal legal jurisdiction exercised by the exchequer court this would allow for a rotation system. I say that because I can see nothing worse than sentencing a man of the intelligence of the present commissioner to 15 or 20 years of hearing divorce cases four days a week at the rate of eight a day. This seems to me to be a sentence we should impose on no individual. I should like to see us arrive at a system which would allow for a rotation in the Senate, or at least a spelling off of the duties involved from time to time. It may be that as time goes by his duties may not require such an arduous schedule and that the exchequer court will be the beneficiary of this commissioner, and he will be able to handle other matters. It would also mean that in case of death of the commissioner it would be very easy to replace him with another commissioner under the same type of arrangement at the request of parliament.
Therefore, for these reasons I believe the house should give favourable consideration to this resolution. I hope the government has conferred with some of their confreres in the other place and that this bill will get speedy passage there as well. I am happy to note that because the former leader of the other place could not pass a similar measure we now have a new leader, and I hope the situation has improved. I believe this is a forward step. I have watched the operations of the commissioner. It is a new field. I have discussed on a number of occasions some of the problems which he has and I find that these problems are not much different from those we faced ourselves. I think this is an opportunity for parliament, and should be an opportunity for parliament, to examine the operations of that office periodically, at which time we should be prepared to make further recommendations in the whole field of matrimony and divorce.


Guy Marcoux: Mr. Chairman, I wish to say a few words only on the resolution under consideration. It is understood that there is no question of discussing chapter 10 of the statutes of 1963, since it was passed last year.
I think that it is a good thing that the commissioner concerned be a judge or becomes a judge of the exchequer court, and that, for the various reasons given a minute ago by the Minister of Justice (Mr. Favreau).

Judges Act
In my opinion also, the hon. member lor Timiskaming (Mr. Peters) put forth worthwhile arguments in favour of the commissioner being a judge of the exchequer court.
I think this is also the view of the members of our party.
Mr. Chairman, as I do not wish to take any more time, I should just like to know whether the additional judge will be the divorce commissioner, whether any of the present judges of the exchequer court may at times be appointed divorce commissioner or whether the Speaker of the Senate may freely choose one or the other according to circumstances or the recommendations made to him by the government or the Senate committee.
Be that as it may, I feel that the efficient application of the provisions of chapter 10 of the statutes of 1963 requires that the commissioner be a judge of the exchequer court. If it ever becomes necessary to change the procedure for the granting of divorces, the question could be examined at the proper time but, for now, I share the opinion expressed by the Minister of Justice.


Guy Favreau: Mr. Chairman, to answer the question raised by the hon. member for Quebec-Montmorency (Mr. Marcoux), I think that it would be somehow concealing things from the house not to admit that to our mind, the first one appointed to that post will be the present commissioner.
With regard to the supplementary question asked by the hon. member, I must say that it is quite clear that under any circumstances, the Speaker of the Senate will always be able to designate another judge from the exchequer court to complete a role already begun, or if one may say so, to help accelerate the pace when disposing of the cases.
Moreover, there may be several motives which will prevent the first designated judge from sitting on certain occasions, and the proposed substitution will constitute an additional advantage, already noted by the hon. member for Quebec-Montmorency, by avoiding any hiatus or undue delay in divorce cases, under the present act.


Gilbert F. Rondeau: A few words only, Mr. Chairman, to say that we are supporting the resolution to appoint another judge from the exchequer court to hear divorce cases.
Some hon. members have aired their views earlier today with regard to the province of Quebec. Indeed, it is a well-known fact the people at home are pleased about the questions and problems of divorce having been referred to the federal authorities, as the provincial authorities do not want to have anything to do with them. This being so, it

must be admitted that the federal government should assume its responsibilities. That is the obvious reason for which the house is now considering the resolution, and when we shall have the bill itself before us, we shall certainly be better informed than we are now.
Now, if one day the province of Quebec feels aggrieved, if certain problems should crop up which the provincial authorities would like to solve in a way other than that already decided by the federal government for the future, I believe Quebec will always be entitled to make representations in due course. But from now until then, we should not worry too much, since the province of Quebec is being freed, one way or the other, from its responsibilities, especially in the field of divorce.
Consequently, Mr. Chairman, we support the resolution, because we know there are presently many divorce cases which should be heard. We want in no way to delay the business of the house, because we know we must expedite things and help the Senate committee to which are presently entrusted divorce problems and which wants help through the appointment of an additional judge of the exchequer court. This is why we support in principle the resolution under study, pending the possibility of discussing shortly the substance matter of the bill.

Resolution reported and concurred in.
Mr. Favreau thereupon moved for leave to introduce Bill No. C-96, to amend the Judges Act and the Exchequer Court Act.
Motion agreed to and bill read the first time.


Mr. Depuiy Speaker:: When shall the said bill be read a second time?


Guy Favreau: Mr. Speaker, I may tell hon. members that although the bill has not been circulated they may take my word for it that it is verbatim, with not one iota of change from the text of Bill No. C-133 which was adopted by this house on December 21, 1963. In the light of that statement maybe the house would give unanimous consent and agree to second reading now, so that it could go as quickly as possible to the Senate.


Gordon Minto Churchill: We would like to accommodate the house leader, but under the circumstances we are doing very well.


An hon. Member:: Obstruction.


Gordon Minto Churchill: Our expectation tonight is that we might pass the amendments to the Estate Tax Act, and go on with this bill tomorrow.


Mr. Deputy Speaker:: When shall the said bill be read a second time-next sitting of the house? Agreed.



ESTATE TAX ACT

Walter Lockhart Gordon: the second reading of Bill No. C-94, to amend the Estate Tax Act.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Lamoureux in the chair.
On clause 1.
Edgar John Benson: Mr. Chairman, at the resolution stage I gave a rather full explanation of the resolution which is enacted in this particular bill. There are five main parts to the resolution and to the changes that we are proposing in this bill.
The first of these is that the estate tax will now be reduced by 75 per cent in provinces that levy their own succession duty, as was agreed at the federal-provincial conference here in Ottawa last year, provided they do not choose to take a payment equivalent to the additional 25 per cent instead. The second main point with respect to this bill is an amendment whereby the limit of $1,500 of funds which are available to beneficiaries from any one bank account is increased to $2,500. The third is a proposal that certain settlements under the Quebec civil code be treated similar to settlements of the same kind in the other provinces of Canada. The resolution stated this fact and it is enacted in the legislation.
The fourth point was that dispositions of community property in the province of Quebec be treated in the same way as they are treated by the succession duty act in the province of Quebec. The final item was to close a loophole with respect to a single premium annuity coupled with a life insurance policy whereby certain individuals, taking advantage of the provisions of the Estate Tax Act as it existed, were evading estate tax.


Norman Platt Lambert: Mr. Chairman, there are a couple of omissions in the statement by the parliamentary secretary. If we look further into the bill we see there is also a clause dealing with penalties about which we have not heard anything. I should like to have an explanation of that clause. I am referring to clause 4 on page 5 of the bill. If the parliamentary secretary will consult his adviser I think he will be able to come up with the reasons why this change is being introduced.
I should like a full explanation because my experience with taxing statutes is that we have to be extremely careful about the
Estate Tax Act
penalty sections. Too often because of a sort of administrative zeal we get rather wide, sweeping provisions concerning penalties. Even as a result of innocent omissions or quite inadvertent errors in returns by taxpayers it is proposed that, notwithstanding bona fides on their part, they shall be subject to penalties for filing the wrong type of return. I must say I object to this. I think that very definitely there should be penalties where there is intent to deceive or conceal, but where the action by the taxpayer has been inadvertent I say it is wrong to impose additional penalties for failure to include certain things in returns. In my view this applies not only to the Estate Tax Act but to other taxing statutes which come under the jurisdiction of the Department of National Revenue.
I should also like to get some explanation, for the record in any event, with regard to why the amendment contained in clause 2 was included. I realize it must have come about as the result of some hard case where a really bona fide gift to charity was made with a right of encroachment and yet it was not possible to get renunciation in time before the death of the person who had the right of encroachment. I am not going to say too much about this provision included in the act. I have objected in the past that I thought that within certain limits there should be a right of encroachment on some of these gifts to charities, and that they should still be deemed to be gifts to charities perhaps to the extent that the encroachment was limited to a certain sum or a certain percentage of the charity.
I do not think it is quite fair to leave a widow for instance, to make a gift to a charity at a certain specified time, because she may be in necessitous circumstances or there may be a dependant child who will become subject to some misfortune and might have the right to encroach, and once that is cleared away that the gift be turned over to the charity and therefore become exempt from the estate tax.
Otherwise we have had a rather full explanation at the resolution stage. I presume that only time and experience will tell whether the language of these amendments will carry out the intent. I know that lawyers can engage in some very fine hair splitting on these matters and I certainly do not wish to comment on the language. I think it is reasonably straightforward, or as straightforward as language can be in a taxing statute. But I should like to have explanations as to the penalties and other matters.


Edgar John Benson: Mr. Chairman, if I may deal with the questions raised by the hon. member

Estate Tax Act
for Edmonton West, first of all I say thank goodness I am not a lawyer and therefore I cannot enter into legal arguments with him with respect to the wording, and whether or not it will carry out the intention as stated in the resolution which was discussed at some length. Clause 4 on page 5 was not included in the resolution and, as mentioned by the hon. member for Edmonton West, it is a penalty clause. It is a clause which is similar to section 56(2) of the Income Tax Act and it is designed to prevent gross negligence in the filing of returns with respect to estate tax. Perhaps I should read the wording of the clause into the record. It reads as follows:
Every person who, knowingly, or under circumstances amounting to gross negligence in the carrying out of any duty or obligation imposed by or under this act, has made, or has participated in, assented to or acquiesced in the making of, a statement or omission in a return, statement or answer filed or made as required by or under this act or a regulation, as a result of which the tax that would have been payable if the tax had been assessed on the basis of the information provided in the return, statement or answer is less than the tax payable, is liable to a penalty of 25 per cent of the amount by which the tax that would so have been payable is less than the tax payable.
The intention of this clause is not to penalize the person who has innocently made a mistake or omitted something in filing a return. Anyone who prepares an estate tax return can inadvertently omit something. But just as section 56(2) of the Income Tax Act is designed to penalize those people who knowingly try to avoid paying the tax legally due to the Receiver General of Canada, so this section is inserted in the Estate Tax Act to provide similar penalties so as to prevent people from committing what really is fraud with respect to their taxes.
The other question raised had to do with clause 2 of the bill, and here I might perhaps quote an example. Let us take the example where a charitable gift is made by the husband with power to the widow to encroach and the widow does not renounce this gift within two years but dies within the two years without renouncing the right. The law will nevertheless allow a deduction in respect of the gift to the charity made by the deceased husband. It is a relieving provision in the act, and it is a beneficial amendment to the beneficiaries of the particular estate.


Norman Platt Lambert: I am glad the parliamentary secretary has referred to sections 56 and 54(2) of the Income Tax Act. I know at the time these changes were made some years ago I was particularly insistent myself that in the framing of those sections they be limited directly to fraudulent intent or gross negligence. The original intention had been to

include negligence, and of course we must never have that.


[Stage Direction]
Clause agreed to.
Clauses 2 to 6 inclusive agreed to.
Title agreed to.
Bill reported.
Mr. Deputy Speaker:: When shall the said bill be read a third time? Now by leave?


Some hon. Members:: Agreed.


Walter Lockhart Gordon: the third reading of the bill.
Motion agreed to and bill read the third time and passed.



BUSINESS OF THE HOUSE

Gordon Minto Churchill: I think we should now call it ten o'clock and have the business announced for the rest of the week.


Guy Favreau: Mr. Speaker, beginning tomorrow we will proceed with second reading and committee stage of the bill to amend the Income Tax Act. We will then proceed with the resolution preceding the bill to amend the Bank Act and the Quebec Savings Bank Act, to extend by one year the authority of the banks to do business in Canada. Then, we will take the resolution preceding the bill to amend the National Housing Act, following which we will deal with the resolution preceding the bill to amend the Export Credits Insurance Act, which will be followed by the resolution preceding the bill to amend the Farm Credit Act.
I may tell the house that it is the intention of the government that on Friday we will continue with the estimates of the Department of Agriculture.


Gordon Minto Churchill: Would you not want to take the second reading of the crown corporation bill and the exchequer court bill tomorrow?


Guy Favreau: Yes, and this goes to prove that I am not an egoist. I thank the hon. member for reminding me of my own bill to amend the Exchequer Court Act. We will proceed with second reading of that bill and the second reading of the bill authorizing crown corporations to pay certain provincial fees and taxes.


Gordon Minto Churchill: Those two bills will be taken first, and then the others that you announced?


Guy Favreau: Yes, thank you.



PROCEEDINGS ON ADJOURNMENT MOTION

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

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


Mr. Deputy Speaker:: In accordance with provisional standing order 39A, a motion to adjourn the house is deemed to have been made and seconded at this time. Therefore, the question is that this house do now adjourn. The hon. member for Joliette-L'Assomption-Montcalm.


Louis-Joseph Pigeon: Mr. Speaker, on April 28, I asked the Prime Minister a question that I shall repeat today in order to get a reply.
As the Minister of Justice (Mr. Favreau) was chosen by the Prime Minister as lieutenant of the Quebec Liberals, could the Prime Minister tell the house what will from now on be the exact duties of the hon. member for Outremont-St. Jean (Mr. Lamon-tagne) in that field?
Mr. Speaker, the recent appointment of the Minister of Justice (Mr. Favreau) as lieutenant of the Quebec Liberals is in my humble opinion, an insult to the Secretary of State (Mr. Lamontagne) who, as everyone knows, has devoted himself so much to his party, especially while his party was in opposition, because he was the one who was deciding his party's centralizing policy.
Well, Mr. Speaker, it seems that the Minister of Justice stands as an official lieutenant of the Quebec Liberals and that the Secretary of State stands as a non-official one; moreover, according to comments made by certain newspapermen-


Mr. Prud'homme:: Is it Mr. Balcer who wrote that?


Louis-Joseph Pigeon: The Minister of Forestry (Mr. Sauve) stands as a semi-non-official lieutenant.


Rémi Paul: Did Mr. Balcer say that?


Louis-Joseph Pigeon: Mr. Speaker, I rise on a point of order. I should like you to ask the hon. member for St. Denis to be more polite in the house and to stand up whenever he wishes to ask a question.
Besides, he is not even in his seat. He should learn the rules of the house before interrupting.
When the Prime Minister appointed the Minister of Justice, the Quebec people thought they had finally an official spokesman for the claims and rights of Quebec. But the Prime Minister preferred the theory of co-operative federalism to that of autonomy. Everyone knows what Mr. Rene Levesque, minister of 20220-203
Proceedings on Adjournment Motion natural resources, thinks of it because not long ago he disallowed co-operative federalism, saying that it was a sort of plaster on a wooden leg.
The Minister of Justice disappointed the province of Quebec when he advised the Quebec people to stop claiming their rights and talk rather of their responsibilities.
The people of Quebec are grumbling more and more since the Minister of Justice told his compatriots to stop talking about their rights and to think only of their obligations. As I said a moment ago, you have only to read over what Mr. Rene Levesque thinks of the theory of this new Quebec leader.


Rémi Paul: That is Mr. Balcer.


Louis-Joseph Pigeon: Such being the case, Mr. Speaker, we do not know what to think. The people of the province of Quebec are without a spokesman at this time, because you have the Secretary of State, who seems to have more power than the others, the Minister of Justice, who refuses to take his responsibilities, and the minister of forests, who said recently, in front of witnesses, that he was the one chiefly responsible for the masterful agreements reached with the province of Quebec.
We would greatly appreciate an answer, and we regret that the Prime Minister is not in the house now to furnish it himself.
I would at least ask one of the two parliamentary secretaries to do it. If need be, I grant them permission to share the three minutes to try and give us an adequate reply so that we may finally know what the situation is.


Rémi Paul: Demagogy.


Yvon Dupuis: Mr. Speaker, we have just heard the hon. member for Joliette-L'Assomption-Mont-calm (Mr. Pigeon)-the inevitable member for Joliette-L'Assomption-Montcalm-who spoke of official leader, non-official leader, semi-non-official leader and, who-and it is a habit with him-tried to confuse things which are indeed quite clear in the minds of all the people in the province of Quebec.
Instead of speaking of men of the calibre of the person who holds the position of Secretary of State today and of men of the calibre of the person who is Minister of Justice-


Louis-Joseph Pigeon: Minister of Forestry.


Yvon Dupuis: -I would advise the hon. member for Joliette-L'Assomption-Montcalm to think of the precarious future of Sir Georges Etienne Balcer.
Mr. Speaker, to impress further the hon. member for Joliette-L'Assomption-Montcalm who is surely blind I will tell him that since
3204	HOUSE OF COMMONS
Proceedings on Adjournment Motion the Liberals came to power the function of Secretary of State has become one of the most important in the federal administration. I will remind him-


Louis-Joseph Pigeon: That is a compliment-


Yvon Dupuis: I have the floor.
I should like to remind him that during the Conservative administration the secretary of state had very limited responsibilities and that when Mr. Dorion was secretary of state this was said to him at the time his estimates were being considered: Stay in your office and sit tight, Dick Bell win answer for you.
Things have somewhat changed since then.


Louis-Joseph Pigeon: It is the Minister of Transport who is piloting the redistribution bill.


Yvon Dupuis: I will explain to the hon. member for Joliette-L'Assomption-Montcalm the duties of the present Secretary of State who is a French Canadian from Quebec and who does honour to his province and to his country.
The Secretary of State is the keeper of the great seal and Registrar General of Canada; he is responsible for Canada's official documents and is entrusted with the application of the Companies Act. He must answer for the national printing bureau and acts as official election reporting officer before the house. In addition, he must look after copyrights, trade marks and patents. The bureau for translations comes under him-


Mr. Deputy Speaker:: Order, I regret to have to interrupt the minister-


Yvon Dupuis: Mr. Speaker, may I point out that the hon. member for Joliette-L'Assomption-Montcalm was saved by the bell.



DOMINION-PROVINCIAL RELATIONS    INQUIRY AS TO ESTABLISHMENT OF SECRETARIAT

Mr. Heward Grafftey (Brome-Missisquoi):: Mr. Speaker, the other day I put a question to the Minister of Justice based on a few words I had heard in the morning before the afternoon sitting.
The question I directed to the minister was as follows:
Did the minister say yesterday in Montreal that the federal government has set up in the privy council office a secretariat which will look after federal provincial relations?
The minister answered:
Mr. Speaker, I do not usually interpret my speeches but for more security I shall be pleased to send a dopy thereof to the hon. member.
Mr. Speaker, first of all, I want to point out that I have not asked for an interpreta-

tion; I merely asked for an answer and I hope that the minister, this evening, will understand my feelings in those circumstances.
On the other hand, Mr. Speaker, I have read the speech of the minister in both official languages of this country.

And having asked the minister if he had declared in Montreal the day before I posed the question whether or not he said the government had established a secretariat for federal-provincial affairs under the direction of the Prime Minister in the privy council offices, I then looked at the minister's speech, and I quote from his speech in Montreal in which he said:
In this respect I deem it a source of great hopes that a federal-provincial affairs secretariat is now established-
And I underline the words "is now established"
__within the privy council office under the
jurisdiction and direction of the right hon. Prime Minister.
I asked the question because today, as always, federal provincial relations are of great importance. Having read the minister's speech I then made an inquiry in the privy council offices, and what did I find? I found that one official in that office is, today, responsible for federal-provincial relations. This official is already occupied as an assistant secretary to the cabinet; therefore he can only devote a small part of his time to important questions of federal-provincial relations.
Mr. Speaker, along with other hon. members in this house, when I think of a secretariat for federal-provincial affairs, I think of a more sophisticated type of secretariat, the type that we might find in the resources field; a fully staffed secretariat, not reporting to one member government but to the council of ministers. The minister says the federal government has established a secretariat for federal-provincial affairs. No wonder he did not want to answer my question. What do I find? I find there is one part time official under the right hon. Prime Minister's direction in the privy council offices. No wonder Mr. Rene Levesque in the province of Quebec is becoming disillusioned by the spirit of co-operative federalism displayed by the federal government, whose centralizers persist in talking about co-operative federalism but do not practice what they preach. Again I say, Mr. Speaker, that upon investigation after the minister's declaration in Montreal, I find there is only one part-time official working on federal-provincial affairs in the privy council

offices. The minister says the federal government has established a secretariat for federal-provincial affairs, and I have quoted from his speech.
Today federal-provincial relations in Canada are worse than they have ever been before in the history of our country. We must improve co-ordinating bodies. I have suggested time and time again the immediate establishment of a secretariat for federal-provincial affairs at the Prime Minister's and premiers' level. I am not arguing the case for provincial rights or more centralization; I am only underlining the need for consultation. The minister states that a secretariat has been established, but in fact one has not been established. When will this government learn its lesson? Its whole economic program has foundered on the rocks, because they talk of consultation and sophisticated consultative bodies but do absolutely nothing about it. No wonder people like Mr. Levesque think that co-operative federalism is just a myth that will not work. He must realize that here in the government the centralizers have surrounded the Prime Minister and they do not mean what they say about co-operative federalism. How else could the minister have said that a secretariat has been established when, again I repeat, only one part-time official is working on the problem. I say again, Mr. Speaker, that the government must put this problem-


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


Mr. Jack Davis (Parliamentary Secretary to Prime Minister):: Mr. Speaker, as is well known, the present government attaches great importance to federal-provincial relations. One way to facilitate these relations is to establish a joint secretariat. This matter was raised at the earliest possible moment; it was raised at the November meeting with the provinces here in Ottawa, and it was discussed again at the recent federal-provincial conference in Quebec city. There it was felt that this matter should be approached a step at a time; each province should set up its own group. The Prime Minister indicated at that time that the federal government would also establish its own secretariat immediately. It has now been done, and a small unit comprised of several full time officials-


William Heward Grafftey: That is wrong. There is one part-time official.


John (Jack) Davis: and known as the provincial relations secretariat is being formed in the privy council office. It reports to the Prime Minister himself. This new secretariat, in 20220-203i
12, 1964	3205
Proceedings on Adjournment Motion addition to advising the Prime Minister, will perform a co-ordinating and servicing role, not an executive one or an operational one. It will not displace such units as are responsible for those aspects of federal-provincial relations which fall clearly within the jurisdiction of the different departments.
I have here, Mr. Speaker, the terms of reference of this unit and I will simply skim through them. They are as follows:
1.	To keep in touch with, review, and bring to the attention of the Prime Minister, ministers or departments any aspects or implications of present or proposed government policies which would be of interest or concern to the governments of the provinces:
2.	To participate in departmental or interdepartmental consultations and studies;
3.	To provide a point of co-ordination and information on activities of the various federal government departments responsible for particular aspects of federal-provincial relations;
4.	To provide a central point of contact to the provinces;
5.	To assist in federal-provincial consultation and negotiations, as directed by the Prime Minister from time to time;
6.	To provide a secretariat for cabinet and interdepartmental committees on federal-provincial relations; and
7.	In relation to federal-provincial conferences:
(a)	to co-ordinate preparations and to provide the secretariat for federal-provincial conferences;
(b)	to develop procedures, in consultation with other departments concerned;
(c)	to attend ministerial or other federal-provincial conferences;
(d)	to assist other departments in respect of other arrangements and preparations for federal-provincial conferences and meetings.
It is hoped, Mr. Speaker, that the provinces individually will make similar arrangements. The province of Quebec established a department of federal-provincial affairs in 1960.


Mr. Deputy Speaker:: Order. I must interrupt the parliamentary secretary as his time has expired.



AGRICULTURE


Mr. A. D. Alkenbrack (Prince Edward-Lennox):: Mr. Speaker, the reason I rise this evening is owing to the incident yesterday with regard to a question asked on agriculture. I see the Minister of Agriculture is not in the chamber, being I suppose unavoidably absent, but I note that his parliamentary secretary, the hon. member for Peel, is present and I will direct my remarks to him.
The question reads as follows, as reported at page 3117 of Hansard:
With regard to his change in policy whereby the Minister of Agriculture has withdrawn the 30 cent subsidy paid by the government to the producers of cheese milk, will it now become compulsory and statutory that the cheese factories pay the cheese milk producers the 30 cents per
3206	HOUSE OF
Proceedings on Adjournment Motion hundredweight, since the government now proposes to pay the cheese factories a subsidy of 3.6 cents per pound for first grade cheddar cheese?
When that announcement was made by the Minister of Agriculture on April 29 that was the first thought which came to my mind, representing the interests of the cheese milk producers in my area. This also applies to similar areas of production represented by members of this house. This is a matter about which the government should be alarmed. That is why I asked in my question why the government does not make this compulsory and statutory so as to ensure that the farmer will still receive the same amount of subsidy, and therefore the same price, for his 100 pounds of milk as he did under the former administration and under the measures followed thus far by this government.
I am asking this question for further reasons. First of all, a factory which produces the average grade, which runs from 75 to 85 per cent No. 1 cheddar cheese, will receive 3.6 cents for the first grade. This would enable the factories to pay the farmer-and mathematics must rule in this case-scarcely 25 cents a hundred bonus for his milk, because only a part of the milk purchased is producing No. 1 cheese.
If they continue to pay the farmer 30 cents the factory would then be losing money on this arrangement. Second, a factory retailing ungraded cheddar cheese-and we have them in this country, particularly in eastern Canada-is not helped to receive the 3.6 cents per pound from the government because its cheese is not graded, and so this factory cannot pay the farmer any bonus for his milk. Therefore the change of policy announced by the minister indicates to me that he is leaving the farmer high and dry.
The minister says to the cheese factory: "We will pay you 3.6 cents per pound for all the No. 1 cheese you can produce, and you pay the farmer whatever deal you can make with him." That is the interpretation which is being placed on the minister's announcement.
The cheese industry is as nearly competitive with all other facets of the dairy industry as it has ever been, and many of the other interests in this industry would like to see cheese cheaper. Many of these other interests in the dairy industry would like to see cheese selling at a lower price. There is this friction between these interests in the industry, and cheese should not be used as a barometer nor as a lever. Once the government abandons one good measure of assistance, the cheese-milk producer and the small cheese factory sink that much more into oblivion, and this cannot be allowed to happen.


If I have any more minutes left, Mr. Speaker, I would like to speak of the cheese subsidy which has been so successfully employed to build up our export business in the last couple of years. One thing we should remember in our export policy is that high production and high prices very seldom coincide. For the last four years, total exports of cheese have increased and prices have advanced four cents per pound. This is a most unusual condition in the marketing of any type of merchandise. Removal or reduction of the export subsidy could adversely affect this trend.
Also, in respect of a small section of our dairy industry-and I refer to the Ontario cheese producers association, this section of the dairy industry which is still farmer controlled-the Canadian cheese marketing board has done a good job in the exporting of cheese, and it is only because it has done a good job that their supports are endangered and may be reduced. On the other hand, if they had not done a good job it is possible a seven cents subsidy might be required at the present time to export surplus cheese.
Larger production of cheese has been forecast for Canada during 1964, and to throw this production on the English market at a higher cost would jeopardize the future of the export business. The export subsidy is only on that part of cheese production that is exported, but the subsidy on butter is for the total production. The export subsidy as it exists at present must be maintained.


Mr. B. S. Beer (Parliamentary Secretary to Minister of Agriculture):: Mr. Speaker, it is my opinion that the hon. member introduced two questions, the first being as to why the government does not make it statutory that the assistance of 3.6 cents per pound on cheese now being paid be paid direct to the producer. I suppose I would be justified in saying it would be a matter of government policy as to whether or not it would become statutory and, if it were to become statutory, it would be announced in due course.
In defence of the policy that has been announced, which indicates we will pay 3.6 cents on No. 1 cheddar cheese, it must be understood that you get approximately nine pounds of cheese out of 100 pounds of milk. If you multiply 3.6 by 9 you find it comes to something like 32.4 cents per 100 pounds of milk. This was more than was paid last year, so in fact nothing was taken away from the farmers. The assistance to the milk producers has always been paid through the milk suppliers, and this assistance will be paid by the distributors in exactly the same way.
The hon. member has also raised a question with regard to export assistance on cheese. I

think I should make it clear that this was never intended to be a subsidy on the export of cheese, but rather government assistance for the export of cheese which would enable our exporters to compete on foreign markets from the point of view of price. I have a statement to present at this time.
Up until 1961 export assistance was not paid on cheddar cheese. Rather the board, when the price of cheese dropped to the support level, took physical possession of the cheese and then or later, depending upon market conditions, offered it for export or to the domestic market at what was considered to be the best price obtainable. The difference between the support level and the price at which the board offered it for export could be considered to be the measure of export as-
12, 1964
Proceedings on Adjournment Motion sistance. At the same time the Ontario cheese producers marketing board was subsidizing cheese into Great Britain through the use of funds provided by a levy of 1 cent per pound on all cheese marketed in Ontario.
In 1961 the level of Canadian cheddar cheese prices in Great Britain was such that the Ontario cheese producers marketing board was having difficulty financing, with its own resources, the export of cheese. The agricultural stabilization board then owned fairly large quantities of cheese bought under the support program.


Mr. Deputy Speaker:: Order. I have to interrupt the hon. member as his time has expired.
Motion agreed to and the house adjourned at 10.24 p.m.

Wednesday, May 13, 1964