1964-04-27

Hon. Harry W. Hays (Minister of Agriculture):: Mr. Speaker, I wish to rise on a question of personal privilege concerning unfounded statements made about me and my department by the hon. member for Yukon on Friday last. I want to state as follows. There is no Mr. McKay who works in the Department of Agriculture in Edmonton. No official of the Department of Agriculture approached any member of Purity Dairies concerning any contract.


Mr. Erik Nielsen (Yukon):: Mr. Speaker, in reply to the minister's question of privilege, I feel he should have raised it on his estimates. It does not seem to me to be a question of privilege, but quite apart from that-


Mr. Speaker:: Order. We are debating this matter. Has the hon. member any material matter to contribute? It seems to me that questions of privilege should be quite restrictively interpreted.


Erik Nielsen: I submit that Your Honour should rule whether or not the matter raised by the minister is a question of privilege. The point I wish to submit is that the minister has not heard all the representations I wish to make about this matter, and it may very well prove to be the case that Mr. McKay was an employee of the department between the dates that I intend to submit to the minister when his estimates come up again. I would ask Your Honour to rule whether or not the minister has raised a question of privilege.


Mr. Speaker:: It seems to me this is opening up a field for argument and complaint. The minister made a statement which has not been contradicted in the house, and I am therefore prepared to accept that statement unless there is other evidence produced which has not been produced today. I suggest to the hon. member for Yukon that at another time, on another occasion, on estimates or when some other opportunity is presented, he can make his case if he has one.


Erik Nielsen: May I raise a question of order?


Mr. Speaker:: I wonder whether the hon. member would do that later.


Erik Nielsen: Mr. Speaker, may I now rise on a question of order with respect to the so-called question of privilege raised by the Minister of Agriculture, and refer Your Honour to page 2125 of Hansard for Tuesday, April 14 last, where Your Honour handed down a ruling with respect to a question of privilege I raised on April 13. On April 14, as recorded at that page, Your Honour said:
The hon. member, who is a student of parliamentary procedure, when he rose to speak yesterday had just heard a statement from the Chair to the effect that members should not raise so-called questions of privilege on matters which should be dealt with as personal explanations or corrections, either in the debates or the proceedings of the house, and that questions of privilege ought rarely to come up in parliament.
I request Your Honour to apply the rules, as I am sure Your Honour will in all fairness, to all members of the house, and rule on the so-called question of privilege that the minister purported to raise just a moment ago.


Mr. Speaker:: In the circumstances I have not had the opportunity of studying the matter. After due consultation it has been brought to my notice that Beauchesne, citation 127(3), reads as follows:
When a statement is made affecting an hon. member, which he denies, Mr. Speaker thinks that the house will feel that the hon. member has a right to make an explanation on a personal matter. He will not exceed an explanation of the particular matter.
It seems to me the minister made such a statement today, and I do not see that any question of privilege arises at this time.



STATEMENT BY MR. SPEAKER ON QUESTION OF MEMBER FOR KOOTENAY WEST

Mr. Speaker:: If hon. members will give me a few minutes I have a statement to make. Unfortunately it is rather lengthy, but I have to make it; the question raised by the hon. member for Kootenay West was rather long and required detailed investigation.
On Wednesday, April 22, the hon. member for Kootenay West rose on a question of privilege based on the fact that in his opinion certain statements made by one H. L. Keen-leyside in the press were a challenge to the ancient rights and privileges of members of parliament. He referred to the fact that Mr. HOUSE OF COMMONS
Question of Privilege
Keenleyside had objected to attacks made on senior officials, and he added that his point of privilege was based on a letter appearing in the Ottawa Citizen on Tuesday, April 21, 1964 entitled "Attacks on Public Servants in the House are Deplored", in which the writer restated at much greater length the substance of the statement made before the external affairs committee. The hon. member then said "It is obvious that H. L. Keenleyside's remarks are directed at me".
Having stated his point of privilege, the hon. member for Kootenay West proceeded to produce evidence in support of it. According to the hon. member the questions at issue are:
1.	Whether a member of the Commons may freely and constitutionally comment, in the house or in a committee thereof, upon the conduct of any person in the public service in so far as that conduct relates to such person's official duties; and
2.	Whether any person may criticize a member for so commenting and not be in contempt of the house.
The hon. member for Kootenay West has furnished me with a long memorandum giving the answers to these questions as contained in certain resolutions of the House of Commons of the United Kingdom on the 26th February, 1701. He also refers to the B.N.A. Act, the Senate and House of Commons Act, the Inquiries Act and the Civil Service Act.
As stated by the hon. member earlier, he ended his argument by moving a motion which reads as follows:
That this house reaffirms the constitutional practice and validity of the privilege, right and obligation of its members to fully discuss or debate the actions or statements of any public servant of Canada, where, in the discretion of any member of this house, such a course is determined by such member, which constitutional privilege and obligation has been established over centuries of British parliamentary custom.
It will be noted that the hon. member does not ask the house to decide whether or not there is a prima facie case of privilege. Neither does he ask that the subject matter of the prima facie case of privilege, if there is one, be referred to the committee on privileges and elections. Nor does he, after tabling the newspaper, ask that the editor thereof and the author of the letter, Mr. Keenleyside, be cited at the bar of the house to be subsequently imprisoned, punished by admonition or reprimanded, as has happened in the United Kingdom and in Canada.
There are certain precedents in Canada which I might simply mention for the record, amongst them the Elie Tasse case in 1873, the Cinq-Mars case in 1906 and the Miller case in 1913. I suppose the typical case is that of Cinq-Mars who, having been heard at the bar, was censored by Mr. Speaker, as will
IMr. Speaker.]
be found on page 377 of the Journals of the House of Commons of 1906.
The motion moved by the member for Kootenay West reaffirming that the constitutional privilege of the house of discussing or debating the actions or statements of public servants has been established over centuries of parliamentary custom will be agreed to by all hon. members, but it does not appear to be the proper motion to make as it is simply a declaration of opinion.
That it is contrary to the privileges of the house to publish any libels reflecting on the members has always been recognized, although the procedures as late as 1760 were certainly quite different from the procedures of the twentieth century. For instance, in England the earlier reporters were positively prohibited from reporting speeches made in parliament. A number of prohibitions were set out during the seventeenth century, a typical one being the resolution of March 22, 1642, proclaiming that "whatsoever person shall print any act or passage of this house, without the particular licence of this house, shall be reputed a high contemner and breaker of the privilege of parliament, and be punished accordingly."
Even 85 years later, that is in 1727, Edward Cave and Robert Raikes were, by order of the house, committed to prison for publishing reports in the Gloucester Journal and were kept in custody for several days, only being released after expressing contrition for their offence and paying heavy fines. This, however, is only to show that there have been certain changes which have taken place since the numerous precedents of the year 1701 quoted in the hon. member's memorandum.
Coming back now to the questions at issue and the motion at the end of the question of privilege, there does not seem to me to be a direct and logical sequence. For instance, the second question asked is whether any person may criticize a member for so commenting and not be in contempt of the house, and the motion which the house is asked to adopt is simply in very general terms affirming certain privileges which are declared to exist.
In a book entitled "An Encyclopaedia of Parliament" by Norman Wilding and Philip Laundy, I find the following at pages 455-56, under the heading "Breach of Privilege":
Both houses of parliament claim the right to punish offences which violate their privileges, whether committed by a member or an outsider, and whether directed against an individual or against the house collectively. Certain other offences against the authority and dignity of parliament, whilst not breaches of specific privileges, are also punishable and, more correctly called contempts. It has become the custom, however, to refer to all such offences as breaches of privilege.

The acts which constitute breaches of privilege are many and are dealt with exhaustively in Erskine May (chap. 8). Anson summarizes them as disrespect to any members of the house, as such, by a person not being a member; disrespect to the house collectively, whether committed by a member or any other.. .Disrespect to a member includes attempts to threaten or intimidate him, any libel concerning his conduct in the house and the offering of a bribe...
Here are four cases from Hansard which may have a certain bearing on the present case:
(1)	1914, February 2, page 343:


Mr. Speaker;: That is scarcely to be regarded as a question of privilege, because it does not refer to the hon. gentleman's conduct, nor to his rights and privileges in the house.
(2)	1915, April 8, page 2189:
Sir Wilfrid Laurier rose to a question of privilege on statements in a leaflet published by the Federal Press Agency, Ottawa, and said the statements in it were false and a malignant libel and slander.


Mr. Speaker:: I beg to say from the Chair that, while I would not regard this as a matter of privilege according to my understanding of privilege, it is quite proper that the right hon. gentleman should draw attention to this leaflet as he has done and deny it if he wishes to do so.
(3)	1915, April 15, p. 2461: Question of privilege over newspaper statement denied by Mr. Glass.


Mr. Speaker:: With reference to the practice
which seems to be somewhat prevalent of late, of reading newspaper articles in the House as a question of privilege, I wish to say that it is not a question of privilege, and cannot by any stretch of the imagination be properly regarded as privilege. All the same, it is the right of an hon. member to refer to such statements and to contradict them.
(4)	1916, Feb. 3, p. 555: In this case, Mr. Burnham complained of an article in the Toronto Star as incorrectly reporting him:


Mr. Speaker:: I may inform the hon. member and the house that my attention was called this morning to the article referred to, and I can only say that it is certainly unjust; I need not say more to the hon. member for Peterborough. If this report was sent to the paper in question by a member of the press gallery, I think it is his duty to apologize, and to do justice to the hon. member for Peterborough.
To end this statement I would have to say that either the newspaper article refers to the hon. member's conduct and is a libel thereon, or it is not such a libel. If this newspaper article is a libel on the conduct of the hon. gentleman, the motion now before the house does not appear to me as if it would bring a remedy. On the other hand, if there is no libel on the hon. gentleman then it is not a question of privilege. It is, therefore, evident from what I have said that the proposition of the hon. gentleman cannot be recognized as a question of privilege.
The motion that he has asked the house to adopt is in the nature of a substantive motion which would have to appear on the orders of the day after 48 hours' notice under the heading private members' notices of motion to be dealt with when called, in its proper
Statement by Mr. Speaker turn and at the proper time. There is no rule or precedent that would justify the adoption of such a motion following the publication of an article or a letter in a newspaper.
However, there is no doubt that it was quite proper for the hon. gentleman to bring this matter to the attention of the house and to reaffirm the privileges, rights and obligations of its members, and by doing so, he has served the purpose that he had in mind.


Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, I have listened with great interest to the statement you have made and I move, seconded by the hon. member for Skeena (Mr. Howard):
That the statement made this day by Mr. Speaker, and the subject matter of the question of privilege on which it was based, be referred to the committee on privileges and elections for consideration and report.


Mr. Speaker:: If I may recall to the attention of the hon. member for Kootenay West, I devoted several minutes and at least five pages of text trying to prove or at least to render the decision that there was no point of privilege. That being so, it is impossible for me to receive this motion at this time.



STATEMENT BY MR. SPEAKER ON QUESTION OF MEMBER FOR LABELLE

Mr. Speaker:: Before calling for orders of the day I should like to give an opinion. Last Friday, April 24, 1964, as recorded at page 2660 of the French edition of Hansard, and at page 2536 of the English edition, the hon. member for Labelle (Mr. Girouard) asked the following question:


Mr. Gerard Girouard (Labelle):: Mr. Speaker, I should like to direct my question to the Prime Minister. It has been reported by all information media that Mr. Keith Davey, chief Liberal organizer, has stated that I had been rejected by the Liberal party.
I am asking the Prime Minister whether, to his knowledge, I have ever offered my services to the Liberal party?

On the two subsequent pages of Hansard it will be seen that the Chair expressed the view that the foregoing question was not relating to public affairs and, since it was completely out of order, could not be raised after ten o'clock on the adjournment of the house. Interventions were made by certain members, more particularly with regard to the interpretation of provisional standing order 39, subsection 5, in relation to the admissibility of a notice given by a member to raise during adjournment proceedings the subject matter of a question ruled out of order. The Chair then stated that in order

Statement by Mr. Speaker to ensure complete consideration and impartiality the matter would be studied during the week end.
My view on this point is as follows:
1.	Provisional standing order 39 (5) authorizes a member to give notice of his intention to raise the subject matter of his question on two occasions; (a) when he is not satisfied with the answer given; and (b) when he is told by the Speaker that his question is not urgent.
2.	It seems obvious to me that a question must be in order on the two occasions where notice may be given pursuant to provisional standing order 39 (5). In the first instance, I fail to see how a minister may answer any question at all unless the Chair is of the opinion that the question is in order and may be asked. In the second instance, when a member is told by the Speaker that his question is not urgent it is to be assumed that the question is in order but not sufficiently urgent to be asked before the orders of the day are proceeded with.
3.	Looking at the broader aspect of the problem it has been taken into consideration that, not knowing beforehand the gist of the question, it is only after the question has been asked that the Speaker is in a position to decide whether or not it is in order. It has also to be taken into consideration that to debate the subject matter of some of the questions ruled out of order would come into conflict with our rules of debate, as, for instance, when a question is asked on a matter which is not within the purview of our parliament or is sub judice, or reflects upon a vote of the house. I do not think it is reasonable to conclude that a member may ask questions on any matter under the sun, and when told by the Chair that a specific one is out of order he be permitted, merely by giving notice, to discuss after ten o'clock a subject matter which may not be permitted by our rules of debate. This in my view would lead to the conclusion that we are establishing two sets of rules of debate, one applicable before and the other after ten o'clock.
4.	With regard to the question asked last Friday by the hon. member for Labelle, reference must be made to subparagraph 1 of paragraph 7 of the report of the committee on procedure and organization, presented on April 15 last and concurred in by the house. It reads as follows:
Questions asked prior to orders of the day should be governed by the provisions of standing order 39	(1).
Under standing order 39	(1) questions
seeking information from ministers of the crown are permitted when relating to public affairs. Our practice in this regard is similar to that of the British house and has many

times been stated by prior Speakers when intervening during the question periods. I wish to refer here to May's sixteenth edition as to the meaning of the words "public affairs" in relation to questions addressed to ministers. It is stated as follows at page 356:
Questions addressed to ministers should relate to public affairs with which they are officially concerned, to proceedings pending in parliament or to matters of administration for which they are responsible.
5.	In the light of what I have just said I see no good reason for modifying my decision of last Friday concerning the question asked by the hon. member for Labelle as to the question being out of order, and I must come to the conclusion that a notice of intention to raise after ten o'clock the subject matter of a question ruled out of order is therefore inadmissable.


Gérard Girouard: Mr. Speaker, I rise on a question of privilege.
Last Friday, as reported on page 2538 of Hansard, the hon. member for Bonaventure (Mr. Bechard) interrupted the debate to insinuate that my recent decision was due to political bargaining on my part.
The remark of the hon. member for Bonaventure could have passed for a joke, but the hon. member forgot that wit is the mother of humour.
I shall therefore take a few minutes in order to clear myself of the charge made against my integrity by the hon. member for Bonaventure. At the risk of disappointing members of the press gallery, I have decided not to mention the dates, places and names of certain Liberal members involved, because I refuse to become an accomplice of the chief Liberal organizer who would have allowed me to reflect on the political reputation of certain friends whose only mistake was to show their sincerity in this matter.
About two months ago I met publicly four Liberal members in Hull. In reply to one of their questions concerning my political future, I replied that I was quite decided to join the ranks of the Conservative party. At that very moment a Liberal member got up to make a phone call. When he returned to our table, he strongly insisted that I take no decision without having met Keith Davey, the chief Liberal organizer.
I replied that my decision was final, that the organizers of my riding wanted me to be a Conservative and that such a meeting would probably be useless.
However, urged by my colleagues I agreed to receive in my office-you understand, in my office-the power behind the Liberal party. Another telephone call from a member

of parliament and the meeting was set for the next morning. At eleven o'clock the next morning I received a telephone call asking me to go to the office of a Liberal member because it would have been embarrassing for Mr. Davey to be seen entering my office.
I went to that office but my first words to Mr. Davey were to confirm my intention of joining the Conservative party. I told him that if I had come to the meeting, it was only to please my friends.
Mr. Davey was rather suggesting at that moment that I join the ranks of the Liberal party. He said he would take care of the defeated Liberal candidate and as for unsatisfied Liberal organizers, I would only have to change them.
The benefits: a party in power and a fat electoral fund for the next election.
Mr. Davey suggested that I ponder those proposals.
A week later a Liberal member of parliament belonging to that same group approached me to tell me that he was very sorry but the Prime Minister (Mr. Pearson) had asked his chief organizer to cease all pressure because he, the Prime Minister, was afraid to lose the regular support of the Social Credit party if he ever stole members from that party.
Mr. Speaker, I have never asked to join the ranks of the Liberal party and, as far as I know, none of my former colleagues have ever made such a request either.



On the orders of the day:


Mr. D. M. Fisher (Port Arthur):: Mr. Speaker, I should like to ask the Prime Minister a question arising out of the statement of privilege made by the hon. member for Labelle. Would the Prime Minister consider making a motion to have this matter referred to the standing committee on privileges and elections in view of the seriousness of the charge implicit in the statement?


Right Hon. L. B. Pearson (Prime Minister):: No, Mr. Speaker, I do not think any useful purpose would be served in following that course.
Mr. Stanley Knowles (Winnipeg North
Centre): Mr. Speaker, I rise on a question of privilege. I should like to enter a caveat, because after we have had a chance to read what was contained in the statement made by the hon. member for Labelle, some of us may want to raise a question of privilege tomorrow and move the kind of motion that was just suggested.
Questions



WATER RESOURCES


Hon. Arthur Laing (Minister of Northern Affairs and National Resources):: I should like permission of the house to table the appendix volume to the final report of the Fraser river board on flood control and hydroelectric development in the Fraser river basin. Hon. members will recall that I tabled the final report of this board on March 10, but at that time the appendix volume was not available.



TABLING OF TEXT OF SPECIAL ARRANGEMENTS WITH U.K. RESPECTING CANADIAN FLOUR

Hon. Mitchell Sharp (Minister of Trade and Commerce):: On April 16 I made available to the house details of an exchange of letters between the Canadian government and the British government relating to the new British production and import policy for cereals. I now ask leave of the house to table the text of the special arrangements for Canadian wheat flour to which I referred at that time.


Mr. Speaker:: Does the house grant leave?


Some hon. Members:: Agreed.



QUESTIONS

[Stage Direction]
(Questions answered orally are indicated by an asterisk.)


Mr. Coaies: Is the figure, 25.8 per cent of the gross national product, the correct percentage of total taxes collected by all levels of the government in Canada in 1961, as stated by Hon. Walter L. Gordon to a meeting in Edmonton of January 28, 1964?


Mr. Benson:: This was the figure calculated by the organization for economic co-operation and development on a basis comparable with figures for the United States, the United Kingdom, and other member countries. This basis differs in some details from that normally used by the dominion bureau of statistics in regard to Canada, but is considered better for the purposes of international comparison such as that made in the statement mentioned.



AMENDMENT OF CONSTITUTION

Mr. Brewin: 1.	What steps are contemplated by the government in regard to vesting in Canada the power to amend the Canadian constitution?
2.	Is it proposed to reconvene the conference of attorneys general to consider this question?
3.	Is it proposed to call any other conference or conferences to deal with this question?

Questions
4.	Is it proposed to consult experts in constitutional law as suggested by the association of Canadian law teachers?
5.	Is it proposed to invite representations from interested persons in respect to proposed changes in the Canadian constitution?
6.	Is it proposed to hold public hearings at which submissions and representations in respect to the amending procedure and changes in the constitution might be offered?


Mr. Favreau:: The intentions of the government will be made known in due course.



CONSTITUTIONAL BILL OF RIGHTS

Mr. Brewin: 1.	Has the government given consideration to incorporating in the Canadian constitution (The British North America Act) a bill of rights or statement of fundamental principles and individual rights upon which Canadian confederation is based and which would be binding upon both parliament and the legislatures?
2.	If so, what steps does the government contemplate by way of preliminary conferences or consultations in order to prepare for such a constitutional bill of rights?


Guy Favreau: The intentions of the government will be made known in due course.



INDIAN ACT REVISION

Mr. Aiken: 1.	When was work commenced on the revision of the Indian Act?
2.	What progress has been made thereon?
3.	Will consultations be held with Indian bands before the revision is completed and, if so, what will be the nature of such consultations and when will they be held?
4.	Was it the intention of the government to introduce the revised act as a bill at the 1963 session of parliament and hold the consultations in the summer and autumn of 1963 and if so, why was this intention departed from?


Mr. Badanai:: 1, 2, 3 and 4. The Indian Act has been under continuous review since 1951 and amendments were made in 1953, 1956, 1958, 1960 and 1961. Following the tabling and the final report of the joint committee of the Senate and House of Commons on Indian affairs, July 8, 1961, which contained many recommendations with legislative implications, a more detailed review was carried out. This review indicated that notwithstanding the amendments made in the years above mentioned the conditions and requirements of the Indians were changing to such an extent that a further revision of the Indian Act would be desirable and preliminary drafting of possible amendments was commenced.
In addition to suggesting certain legislative changes another major recommendation of
the joint committee on Indian affairs was the holding of a federal-provincial conference in respect to the extension of services to Indians. At the federal-provincial conference held last November it was decided that a ministerial conference on Indian affairs should be held. A ministerial conference is now being planned and may well give rise to changes in both federal and provincial legislation. The changes that might be required, however, will not become apparent until after the conference and discussions have been developed further. In the meantime, review of the Indian Act is proceeding as quickly as sound and thorough consideration will permit with the objective of proceeding with such amendments as may be required. As announced in the house on December 14, 1963, it is the intention to follow the procedure adopted in 1951 and repeated in 1955 of consulting fully with the Indians before the legislation is passed. The exact nature or time of the consultations has not yet been determined.



PREVENTIVE DETENTION SENTENCES

Mr. Howard: 1.	Since January 1, 1963, has any application for a sentence of preventive detention been made under section 660 of the Criminal Code and, if so, for each month since that time what was, by province (a) the age of each individual (b) the number known to be narcotic addicts (c) the total number (d) the number of sentences so imposed (e) the number of applications still pending (f) the number of dismissals?
2.	With respect to each individual, what were the three separate and independent occasions upon which he had been convicted of an indictable offence, and for which he was liable to imprisonment for five years or more?
3.	By provinces, how many persons are presently serving a sentence of preventive detention, and how many of these have been so detained for (a) one year (b) two years (c) three years (d) four years (e) five years (f) six years (g) seven years (h) eight years (i) nine years (j) ten years (k) 11 years (1) 12 years (m) 13 years (n) 14 years (o) 15 years?
4.	How many persons who have been sentenced to preventive detention have been paroled after serving of that sentence (a) one year (b) two years (c) three years (d) four years (e) five years (f) six years (g) seven years (h) eight years (i) nine years (j) ten years (k) 11 years (1) 12 years (m) 13 years (n) 14 years (o) 15 years and, how many have violated that parole?


Guy Favreau: 1 and 2. The administration of justice is the responsibility of the provinces. Therefore the information requested is not available.

Questions
3.
Detained			
for	N.B.	Que.	Ont.
Less than			
1 year	2	2	31 year	1	32 years	1	33 years	2	2	14 years	1	15 years	1	6 years	7 years	28 years	1	39 years	110 years	211 years	12 years	13 years	114 years	15 years	Total	7	6	20One inmate	confined	provincial	mentalMan.	Sask.	B.C.	Total2	9	181	4	94	81	1	2	92	41	3	51*	2	31	31	1	62	1	1	51	1	41	1	21	1	21NilNil9	11	26	79
hospital since April, 1959.
4. (a) one year, none; (b) two years, none; (c) three years, none; (d) four years, none-(e) five years, 3; (f) six years, 1; (g) seven years, 12; (h) eight years, 16; (i) nine years, o, (j) ten years, 3; (k) eleven years, 6; (1) twelve years, none; (m) thirteen years, none; (n) fourteen years, none; (o) fifteen years, none.
Of a total of 49 so paroled, 14 have violated their paroles.



APPOINTMENT OF COUNTY COURT JUDGE, PICTOU, N.S.

Mr. MacEwan: When can an announcement be expected as to the appointment of a county court judge for the Pictou-Cumberland areas of Nova Scotia?


Guy Favreau: The appointment is under consideration and will be announced shortly.



IMMIGRANTS FROM ALGERIA

Mr. Coales: How many applications from Algerian repatriates have been approved and how many have entered Canada since Algeria became an independent nation?


Hubert Badanai: No statistics were kept prior to January, 1963, showing the number of visas issued to French citizens who previously lived in Algeria. Since that time there is a record of 114 visas having been granted to such persons. It is probable that many who applied for admission just before or following Algerian independence received visas before the
department began to record such figures. They would therefore be in addition to the 114 recorded.
Regarding the numbers who have actually come forward to Canada I would first like to explain that French citizens with previous residence in Algeria have not been set apart or distinguished from other citizens of France in the department's statistics on immigrant arrivals. However it has been determined that during 1962 and 1963, 114 French citizens who claimed Algeria to be their country of last permanent residence, were landed in Canada. Most of these people could likely be classified as falling within the group in which the hon. member is interested. This does not mean that others have not come forward. Any former resident of Algeria of French nationality who returned to France and lived there for more than one year prior to migration would be included with other French citizens who claimed France as their country of last permanent residence. There is no way of identifying how many of these people might be involved.



WOMEN'S PRISON INMATES

Mr. Fairweather: What was the total, by provinces, as at March 13, 1964, of inmates of the prison for women at Kingston?


Guy Favreau: The total, by provinces, as at March 13, 1964, of inmates of the prison for women at Kingston is:

Questions
Northwest Territories	1
Yukon	1
British Columbia	45
Alberta	12
Saskatchewan	2
Manitoba	4
Ontario	46
Quebec	5
New Brunswick	2
Total	118



SUPREME COURT REFERENCE RESPECTING INDIANS

Mr. Matheson: Has the government given consideration to the expediency of submitting a reference to the Supreme Court of Canada on the following question, namely:
"Does the power of the federal government over Indians as stated in item 24 of section 91 of the British North America Act extend to such ancillary matters as education and welfare"?


Guy Favreau: So far as the Department of Justice is concerned, no.



REVIEW OF CHARLES HEATHMAN CASE

Mr. Marcoux: Has the Minister of Justice reviewed the case of Charles Heathman of British Columbia and, if so, does he intend to take any action in the matter?


Guy Favreau: The Minister of Justice has not reviewed this case because the matter does not come within the jurisdiction of the Department of Justice.



P.F.A.A. AND P.F.R.A. EXPENDITURES-C.B.C. EMPLOYEES

Mr. Horner (Acadia): 1.	How	much	money	has	been	spent	under
P.F.A.A. in the past ten years?
2.	How	much	money	has	been	spent	under
P.F.A.A. in Alberta in the past ten years, and how much in special areas districts Nos. 2 and 3?
3.	How	much	money	has	been	spent	under
P.F.R.A. in special areas districts Nos. 2 and 3 over the past ten years?
4.	What assistance on feed grain was given to residents in special areas districts 2 and 3 over the past ten years?
5.	When was the most recent study of the Red Deer diversion scheme by P.F.R.A.?
6.	What was the total number employed by the C.B.C. in 1958 and 1963, what number of these are employed with administration and what number for the production of programs?
7.	What was the total number of programming hours on radio and television for 1958 and 1963?


Mr. Lamoniagne:: I am informed by the Department of Agriculture as follows:
1.	For the ten crop years ending July 31, 1963 total P.F.A.A. payments amounted to $186,875,834.85.
2.	For the ten crop years ending July 31, 1963, P.F.A.A. payments were as follows: Alberta, $50,428,941; special area No. 1, $2,590,154.13; special area No. 2, $3,367,341.20.

3.	Expenditures under P.F.R.A. in special areas districts Nos. 2 and 3, over the past ten years have amounted to $492,179.72.
4.	Federal financial assistance on feed has covered fodder and not feed grain. The federal contribution to these shared-cost programs in Alberta has been $167,061 over the past ten years with no details available as to expenditures by area within the province.
5.	The most recent study conducted by P.F.R.A. on the Red Deer diversion scheme was in 1958.
I am informed by the Canadian Broadcasting Corporation as follows:
6.	Staff statistics as at March 31, 1958 were 6,262 and at March 31, 1963, were 7,520. Breakdowns of these figures are not maintained identifying those employed in administration opposed to those engaged in the production of programs.
Perhaps one means of providing this requested breakdown would be found from an analysis of the financial information in the appropriate annual reports of the corporation. As shown in the 1958-59 and 1962-63 reports, administrative and general services plus management and central services amount to 8.1 per cent and 9.2 per cent of the total expenditures in the respective years. The staff in these areas will closely approximate these financial allocations.
7.	The total number of programming hours on C.B.C. owned stations were:
Radio	Television
1958	161,116	29,7521963	236,197	58,766
N.B. Hours of program transmission of low power radio transmitters, and unattended television rebroadcasting stations not included in these calculations.



* PENITENTIARY CONSTRUCTION, ST. PIE DE BAGOT, QUE.

Mr. Ricard: At about what date will the construction of the penitentiary be undertaken on the site purchased for this purpose in the parish of St. Pie de Bagot?


Mr. Macdonald:: There are no immediate plans for the construction of a penitentiary to be undertaken on this site.



REPLICA OF SILVER DART PLANE

Mr. Muir (Cape Breton: North and Victoria):
Is the replica of the Silver Dart now on display at the national aviation museum and, if not (a) for what reason (b) where is the replica of the Silver Dart?


Maurice Lamontagne: No. (a) In accordance with established policy, the aircraft displays at the

aviation museum are rotated periodically; the Silver Dart was on display for a period of two years ending in early July, 1963, (b) it is now in storage at the aviation museum storage depot on Industrial avenue in south Ottawa.



ALGERIAN IMMIGRANTS

Mr. Caouelle: 1.	Since Algeria obtained independence, has the Department of Citizenship and Immigration or any other federal department received application from Algerians wishing to settle in Canada?
2.	If so. how many applications have been approved and how many Algerian immigrants have settled in Canada since that date or will come to Canada?
3.	In what areas will these immigrants settle or have they settled?
4.	What is the occupation of these immigrants?
5.	Have these immigrants received special assistance to establish themselves in Canada and, if so, what is the nature of the assistance provided them by (a) the government of France (b) the federal government (c) crown agencies (d) the provincial governments?
6.	Was any help given in the form of gifts, loans or advances of any kind, and on what conditions?
7.	If no such assistance is given, is the government negotiating with other governmental authorities in the matter of the coming of these immigrants and, if so, what is the nature of these negotiations, who is taking part in them and what progress has been made?


Hubert Badanai: In providing information in response to the hon. member's question, it has been assumed from the text of his question as a whole that by using the term Algerians in part 1, he is referring to citizens of France who were formerly residents of Algeria as opposed to citizens of Algeria. Also it should be explained that French citizens who previously lived in Algeria, but who have now returned to France, have not been set apart or distinguished from other French citizens in the department's statistics on immigrant arrivals. With these two observations the following are the answers to the hon. member's question.
1.	Yes.
2.	No statistics were kept prior to January, 1963, showing the number of visas issued to French citizens who formerly resided in Algeria. Since that time, there is a record of 114 visas having been granted to such persons. It is probable that many who applied for admission just before or following Algerian independence received visas before the department began to record such figures. They would therefore be in addition to the 114 recorded.
Regarding arrivals, as indicated in my preliminary remarks the department has no way of determining precisely how many of these people have come to Canada. However it has been determined that during 1962 and 1963, 114 French citizens who claimed Algeria to be their country of last permanent residence
Questions
were admitted as landed immigrants. Most of these people could likely be classified as falling within the group in which the hon. member is interested. This does not mean that others have not come forward. Any former resident of Algeria of French nationality who returned to France and lived there for more than one year prior to migration would be included with other French citizens who came from France. There is no way of identifying how many of these people might be involved. There is also no way of determining how many more may eventually come to Canada.
3 and 4. For the reasons already mentioned, no figures are available to indicate the destinations or occupations of those who have already come to Canada. In line with the department's normal policy, these immigrants would be free to choose their own destination in Canada having regard to opportunities for their successful establishment in their particular vocations or professions. As far as occupations are concerned, there is every indication that these people represent a fairly wide cross section of skills, trades and professions.
5, 6 and 7. As far as the Department of Citizenship and Immigration is aware, no special assistance, gifts, loans or advances have been extended to any of these people who have already arrived in Canada. Those measures of assistance provided by the Department of Citizenship and Immigration have been the same as those offered to any other newcomer to Canada and would consist of such things as help in locating employment and accommodation where necessary, counsel and advice as to their establishment here and so forth. However some discussions have been held by Caandian federal and provincial officials and representatives of the French government concerning the possible movement to Canada of a group of French farmers who previously resided in Algeria. These discussions are still continuing and it is too early as yet to say just when and if a group of these people may come to Canada and under what arrangements. Undoubtedly the Minister of Citizenship and Immigration will make an appropriate announcement if and when final arrangements are completed.



HIGHEST PAID CIVIL SERVANTS

Mr. Mather: What are the salaries of the 13 highest paid federal government civil service officials?


Edgar John Benson: Three receive $27,000;	11
receive $25,000.



CONVERSION TO FRENCH OF RADIO STATION CJBC

Mr. Howe (Wellinglon-: Huron):
1.	What procedure was decided upon by the consultative committee composed of five members from

Questions
the board of broadcast governors and five C.B.C. officials who were to meet in the month of January in connection with the proposed changeover of Toronto radio station CJBC into a French language outlet?
2.	When was this change over to be completed?
3.	What will be the cost to the C.B.C. for this conversion of CJBC from an English to a French speaking station?


Maurice Lamontagne: I am informed by the board of broadcast governors and the Canadian Broadcasting Corporation as follows:
1.	No procedures were decided upon.
2.	October 1, 1964.
3.	The conversion of CJBC to a French language station will require no additional operating or capital funds.



* CREATION OF MONEY BY CHARTERED BANKS

Mr. Cole (Chicoutimi): 1.	Do chartered banks create money on the basis of bank notes they receive directly from the Bank of Canada or on the basis of bank notes which are deposited by individuals?
2.	With what money do the chartered banks buy their notes from the Bank of Canada?


Edgar John Benson: When a customer deposits Bank of Canada notes for credit to his account in a chartered bank, there is an increase in the total deposit liabilities of that bank and, on the asset side, a corresponding increase in its cash reserves, which consist of its holdings of Bank of Canada notes and its deposit at the Bank of Canada. When a chartered bank obtains Bank of Canada notes from the Bank of Canada, payment is made for them by drawing on its deposit account at the Bank of Canada so that this transaction does not produce any increase in the chartered bank's cash reserves or in its deposit liabilities.



MUNICIPAL LOAN APPLICATIONS, MANITOBA

Mr. Stefanson: 1.	How many applications have been received under the municipal loan fund up to the present time in the province of Manitoba?
2.	How many of these have been approved?
3.	What is the total amount of these loans?
4.	What municipal corporations have had loans approved and what is the amount of each loan?


Edgar John Benson: 1. Three as at April 7, 1964.
2.	Three.
3.	$323,973.
4.	City of Brandon, $136,640; city of Portage la Prairie, $87,333; rural municipality of Fort Garry, $100,000.



FLOOD CONTROL PROJECT, WILLOW AND STIMSON CREEKS, ALBERTA

Mr. Horner (Acadia): 1.	When was the agreement signed by the Minister of Agriculture for the construction of the $700,000 project for the chain of lakes to control flooding of the Willow and Stimson creeks?

2.	Under what branch of the Department of Agriculture would this project come (a) ARDA or (b) P.F.R.A.?
3.	Was the project requested by the provincial government or the municipal government, and will either the provincial or municipal governments make any financial contribution towards the project?
4.	When were the initial investigation and feasibility studies of the project first commenced?
5.	What land area will this project provide stock watering facilities for, and what is the approximate number of livestock in the area?


Harry William Hays: 1. There has been no special agreement signed for the construction of the chain of lakes project. The construction will be carried out under the terms of the 1963 agreement with the province of Alberta respecting P.F.R.A. projects in this province.
2.	P.F.R.A.
3.	The government of Alberta requested the construction of the project, and there is no sharing of costs with either the provincial or municipal governments.
4.	1941.
5.	An area of approximately 80 square miles, having a total livestock population at present of 10,300 cattle, 230 horses and 935 sheep, will benefit from the construction of this project. In addition to providing an assured water supply for livestock, it will also increase the carrying capacity of ranches along Willow creek and Stimson creek by providing an additional 2,000 acres on Willow creek and 250 acres on Stimson creek for irrigation for forage. The reservoir will also protect against flooding along both creeks, which has been serious in periods of heavy rainfall and assure adequate supplies of water for the towns of Nanton, Claresholm, Stavely, Granum and Nolan.



REQUEST FOR P.F.R.A. OFFICE, PORTAGE LA PRAIRIE, MAN.

Mr. Enns: Will the Department of Agriculture give consideration toward establishing a P.F.R.A. regional office in Portage la Prairie, Manitoba, to better meet the increasing need for service under P.F.R.A. in the central Manitoba area?


Harry William Hays: Yes. This matter is now under consideration.



* COMMITTEE STUDY OF TIED SALES TO SERVICE STATIONS

Mr. Priilie: 1.	Is an interdepartmental committee studying the recommendations of the restrictive trade practices commission concerning amendments to the Combines Investigation Act to control the practice of tied sales imposed upon service stations by petroleum companies and, if so, when did this study by the committee begin?
2.	Does the government plan to introduce legislation on this subject at this session?


Donald Stovel Macdonald: 1. My predecessor has already informed the house that this matter was under study by an interdepartmental committee. It commenced its work in March, 1963 and has now provided me with its views of the matters that we referred to it.
2.	I am at present discussing the whole matter with my officials and any decision as to legislation will be made known in the proper way.



MENTAL HOSPITAL GRANTS TO QUEBEC

Mr. Langlois: 1.	What grants in respect of mental hospitals were made by the federal government to the province of Quebec in 1960, 1961, 1962, and 1963?
2.	What control does the federal government have over the use of these grants?


Miss LaMarsh:: 1. Under the national health grants, the following funds were made available for mental hospitals in the province of Quebec during the fiscal years 1960-64: 196061, $1,411,814; 1961-62, $2,206,271; 1962-63, $1,738,213; 1963-64, $1,576,599 (estimated).
2.	Under the terms of the annual order in council, the latest of which is P.C. 1963-15/428, the provinces submit projects for federal assistance on behalf of health programs planned and operated under provincial supervision and control. Federal treasury officers receive auditable statements of expenditures which are reimbursed by federal assistance paid to the provinces.



PAROLE OFFICERS EMPLOYED BY JUSTICE DEPARTMENT

Mr. Orlikow: 1.	How many parole officers are employed by the Department of Justice, and what is their jurisdiction?
2.	How many of these are trained social workers?
3.	How many are university graduates in the social sciences?
4.	Does the department make provisions for bursaries for the training of more parole officers and, if so, how many bursaries and for how much?


Guy Favreau: 1. Forty seven. The jurisdiction of those employed in the field offices is geographically limited to specified areas and the duties include the direct interviewing of applicants for parole; the direct or indirect supervision of persons on parole and the maintenance of liaison with crown authorities.
Generally speaking, the jurisdiction of parole officers employed at headquarters is geographically limited to a specified area and their duties include the assembly of data necessary to the study of parole cases; the preparation of summaries, based on the data assembled, for consideration by the national parole board and the performance of incidental duties.
2.	Eighteen.
27. 1964	2589
Questions
3.	Thirteen.
4.	No.



TRAINING GRANTS FOR SOCIAL WORK

Mr. Orlikow: 1.	How much money has been allocated under the welfare training grants to help pay for the education of people desiring to improve their qualifications in the field of social work?
2.	How many people are now at recognized professional schools under the provisions of these grants?
3.	What are the amounts of the bursaries provided?
4.	Has any money been allocated for research projects in the field of social service?
5.	Have any plans been developed for research into appropriate use of sub-professional staff in the field of social welfare?


Julia Verlyn (Judy) LaMarsh: 1. Of the $500,000 made available under the program in 1963-64, $130,648 was provided in awards to persons taking graduate social work training in schools of social work.
2. 126.
3.	Awards are made in four ways.
Bursaries and training grants are paid
through the provinces, with the province making the award in the amount it considers suitable and the federal government sharing, in the case of bursaries, up to a maximum of $1,500 plus $500 dependant's allowance yearly, and in the case of training grants up to $4,000 plus $500 dependant's allowance yearly. Necessary travel costs are also paid. Bursaries are provided to assist students who wish to take graduate training in social work, and training grants to assist persons employed in welfare who have been granted educational leave to take similar training.
Scholarships are awarded by the federal government to students of outstanding ability entering social work, and are in the amount of $2,000 annually. Fellowships are awarded by the federal government to persons accepted for doctoral studies and are in the amount of $4,000 plus a $500 dependant allowance annually. Necessary travel costs are also paid.
4.	In 1963-64 $74,979 was provided for welfare research projects. In 1964-65 $100,000 will be made available for the same purpose.
5.	In 1963-64 $25,676 was made available to the commission on education and personnel of the Canadian welfare council for a research project on the utilization of personnel. The purpose of this study is to determine how needed welfare manpower resources, both professional and non-professional, can be more effectively classified, developed, and deployed to provide needed social services within existing and future organizational patterns of welfare services. A renewal request has been received for 1964-65.

Questions



CONSTRUCTION OF PENITENTIARY, NORTHUMBERLAND CONSTITUENCY

Mr. Sienson: 1.	Is the Department of Justice contemplating the construction of a penitentiary in the constituency of Northumberland and, if so (a) what is the estimated cost (b) when will tenders be out for bid (c) how many buildings will the penitentiary comprise?
2.	Would the Department of Justice look into the possibility of breaking this tender down into four or five individual contracts or tenders so that local contractors or subcontractors could see their way clear to bidding?


Mr. Deschatelets:: 1. Yes, (a) $6,500,000. Cb) It is hoped to call tenders in July 1964. (c) Twenty.
2. The Department of Public Works will call tenders and it would not be possible to break a tender down into separate contracts and still maintain the required co-ordination of construction. The water treatment plant will likely be tendered separately.



HELICOPTER OPERATION, PRINCE RUPERT, B.C.

Mr. Howard: 1.	With respect to the helicopter at Prince Rupert, B.C. what percentage of time has it been operational since being stationed there?
2.	In an emergency such as that occasioned by an air-sea rescue operation, what notice is required before the said helicopter can be airborne?


Mr. Pickersgill:: 1. The helicopter has been operational in excess of 50 per cent of time.
2. (a) Should the emergency arise during normal working hours the helicopter could be airborne within minutes, (b) For emergencies arising during holidays or week ends approximately one hour's notice would be required.
supplementary and special allowances,



ARMED FORCES OVERSEAS

Mr. Coales: 1.	What is the schedule of supplementary allowances and United Nations special allowances available to military personnel serving in Cyprus?
2.	What is the schedule of supplementary allowances and United Nations special allowances available to military personnel serving in the Congo, Gaza strip, New Guinea, Indo-China and Pakistan?
3.	What is the schedule of supplementary allowances available to military personnel serving in Soest, Germany?


Mr. Cardin:: The answer to this question is as follows:
1. A special allowance of $69 per month is paid to all ranks serving in Cyprus. Foreign allowance is the same as that paid to all members of the armed forces while serving outside of Canada for a period in excess of 30 days, namely, brigadier (or equivalent), $49.50; colonel, $37.50; lieutenant colonel, $27; major, $24; captain, $18; lieutenant, $16.50; warrant officer I, $16.50; warrant officer II, $15; staff sergeant, $15; sergeant, $12; corporal, $9; private, $9.

2	and 3. There has been no change in the schedule of allowances available to military personnel serving in the areas designated from that which appears in volume II of the public accounts of Canada for the fiscal year ended March 31, 1963, section 20, pages 23-25.



FEDERAL BUILDING, NEW GLASGOW, N.S.- LANDSCAPING

Mr. MacEwan: Is it the intention of the government to carry out landscaping and improvements to the area surrounding the new federal building at New Glasgow, Nova Scotia, during the year 1964-65 and, if so, what are the details of these improvements?


Jean-Paul Deschatelets: No landscaping or improvements are planned at this location during the 1964-65 fiscal year.



RAIL INSTALLATIONS, PIER &quot;c&quot;, PICTOU, N.S.

Mr. MacEwan: Is it the intention of the government to carry out rail installations on new pier "C" at Pictou, Nova Scotia, during the year 1964-65?


Jean-Paul Deschatelets: It is not the intention of the Department of Public Works to carry out rail installations on new pier "C" at Pictou, Nova Scotia, during the year 1964-65.
The question of installation of rail lines on pier "C" at Pictou, Nova Scotia, is the responsibility of the Canadian National Railway. In considering the design for the construction of the wharf, the Department of Public Works made provision for installation of single lines on each side of the structure by leaving indentations in the concrete deck.
The railway company have placed rails on the south side, extending just past the outer end of the warehouse. The remaining indentations have been filled with oiled sand topped with asphalt to remove the hazard of open indentations to vehicular traffic on the structure. This filler material can be easily removed should additional rails be provided.



EXTERNAL AFFAIRS HEADQUARTERS BUILDING

["Does the Minister of Fisheries intend to introduce legislation within a week to impose a twelve mile fishing limit off the coast of Canada, and, if so, would he indicate whether ships belonging to countries which traditionally fished waters close to Canada would be allowed to operate between the three mile and nine mile boundaries?\nAnswer: Legislation to establish a twelve mile fishing limit is expected to be introduced within a few days.\nAs indicated in the Prime Minister's statement on June 4, 1963, full account is being taken of the interests of the countries affected and discussions are now proceeding with such countries with the view of reaching mutually satisfactory arrangements."]
Jean-Paul Deschatelets: Yes, (a) yes; (b) yes.



Mr. Cote (Chicoutimi): 1.	Is there a meteorological station with fulltime personnel In the Chicoutimi district and, if so, where is it situated?
2.	What is the cost of operating the station?
3.	Are there any unremunerated meteorological
observers?


John Whitney Pickersgill: 1. Yes, there is a meteorological station with full-time personnel at R.C.A.F. station Bagotville. The professional staff at this meteorological station is provided by the Department of Transport and the observing staff by the Royal Canadian Air Force.
2.	The portion of operating costs paid by Department of Transport is approximately $22,000 annually.
3.	The meteorological observers are service personnel.


* UNEMPLOYMENT INSURANCE RECIPIENTS
Mr. Ricard: How many Canadians were receiving unemployment insurance benefits on March 21, 1964?


Mr. Byrne:: There is no figure available of the number of persons receiving unemployment insurance benefits on any particular date or in any month. The number of active claimants, that is the number of persons claiming benefit in Canada at 31 March, 1964 was 597,250. These figures are available on a monthly basis only and those for March are the latest.


HOSPITAL TREATMENT OF VETERANS
Mr. Harley: What proportion of patients in D.V.A. hospitals could be treated in other than active-treatment hospitals?


Mr. Teillei:: Approximately 70 per cent.
^ESKIMOS AT CHURCHILL, MAN.


Mr. Granger: 1.	Are there any Eskimos living at Churchill,
Manitoba?
2.	Are these Eskimos deemed to be Indians and therefore under federal jurisdiction?
3.	Do the Eskimo children attend school?
4.	If so, who established the school and under what legislative authority?
5.	Is the school subject to the laws of Canada or the laws of Manitoba?


Mr. Turner:: 1. Yes.
2. This question as worded requests a legal opinion. Services for Eskimos are provided by the federal government under section 5 (b) of the Northern Affairs and National Resources Act and the relevant parliamentary appropriations.
Questions
3.	Yes.
4.	Department of National Defence in cooperation with the government of Manitoba; the Manitoba schools act.
5.	The school was established and is administered in compliance with provisions of the Manitoba schools act.


* ADDITIONAL ASSISTANCE FOR ESKIMOS AND INDIANS IN LABRADOR
Mr. Granger: 1.	Between June 21, 1957, and April 22, 1963, did the Minister of Northern Affairs and National Resources receive any communication requesting additional federal assistance for the Indians and/or Eskimos in Labrador and, if so, on what dates?
2.	What reply was given to any such request for assistance?


John Napier Turner: 1. Yes. Departmental files contain copies of letters dated March 26, 1959, January 20, 1960, April 28, 1960, December 29, 1960 and January 31, 1961.
2. The replies indicated that this matter was under consideration.


WATER LEVEL, LAKE NIPISSING
Mr. Aiken: 1.	Who controls the dam at the outlet of lake Nipissing in the province of Ontario?
2.	What policy is followed in determining the water level of this lake?
3.	What is the present water level as compared to 1963 and 1962?


Jean-Paul Deschatelets: 1. Department of Public Works.
2.	The department is responsible for the control of the level of the lake between elevation 642.0 and 642.5 during the navigation season. This, however, depends largely on the amount of water entering the lake. During the late fall and winter the lake is partially emptied in order to receive the increased inflow during the following spring freshet.
3.	The water level on April 23, 1964, was 641.3. On the same date in 1963 it was 640.5 and, on the same date in 1962 it was 639.9.


TENDERS FOR BUOYS, TRANSPORT DEPARTMENT
Mr. MacEwan: 1.	Were tenders called for buoys for the Department of Transport under tender No. B-12284 and B-12285?
2.	If so, what were the amounts of the tenders for each contract and the names of the tenderers?
3.	To whom were the individual contracts awarded?
4.	Was each contract awarded to the lowest tenderer and, if not, for what reason?


John Whitney Pickersgill: 1. Tender for buoys for marine services in the maritimes was called by the Department of Transport under tender No. 8B-6029 (references B-12284 and B-12285 refer rather to Department of Transport purchase orders).

	Questions	
2. Tender amount Firm		Remarks
$56,678	Steel and Engine Products Ltd.,	Quoted on all 16 items
	Liverpool, N.S. Northern Machine Works Ltd.,	Quoted on only 14
55,550		
	Bathurst, N.B.	items, other 2 items estimated total
		
		$7,580.
69,177	Ocean Steel & Construction Ltd., Saint John, N.B. H. K. Morrison & Sons Ltd.,	Quoted on all items
7,580		
	Mount Uniacke, N.S.	Quoted on only 2 items
17,061	Ferguson Industries Ltd., Pictou, N.S.	Quoted on only 3 items.
3.	Individual contracts were awarded to: Steel and Engine Products Ltd., Liverpool, N.S.; Ocean Steel and Construction Ltd., Saint John, N.B.
4.	Each contract was awarded to the lowest over-all tenderer.


* SOCIAL INSURANCE NUMBERS FOR M.P.'S
Mr. Knowles: Is it possible for members of the House of Commons to apply for social insurance numbers and, if so, how?


James Allen (Jim) Byrne: Yes. The unemployment insurance commission has made arrangements with the Clerk of the House of Commons which will permit members of parliament to fill out an application form for a social insurance number.
Members will receive an application form in the mail from the Clerk which they may fill out and return to his office. A social insurance number will be issued in due course.


* PRESS CONFERENCE, PRIME MINISTER'S OFFICE, APRIL 17
Mr. Lambert: 1.	Was a press conference convened for Friday evening April 17 at the Prime Minister's office or at the office of any official on the Prime Minister's staff?
2.	Did the Prime Minister attend this press conference and, if not, who did on his behalf?
3.	Was attendance by reporters and commentators at this press conference by limited invitations or was there a general invitation extended to the members of the parliamentary press gallery to attend the press conference?
4.	If invitations were of a limited number, what was this number and what were the criteria used to determine what reporters should be invited?
5.	What was the nature of the press conference and what principal subjects were disclosed or discussed?


Mr. Davis:: 1. There was no press conference, but Mr. R. O'Hagan, of the Prime Minister's staff, invited some newspaper reporters to his office for an informal meeting.
2. The meeting was also attended by Mr. T. Kent of the Prime Minister's office.
3	and 4. The number of reporters attending, by invitation, was ten. They were re-
[Mr. Pickersgill.l
porters who had previously asked Mr. O'Hagan a good many background questions about the pension negotiations; these questions had not been answered because the negotiations were in progress.
5.	The topic discussed was the speculation which had been published in the press while the negotiations were in progress. No information was given which had not already appeared in speculative form.


Some hon. Members:: Oh, oh.


John (Jack) Davis: The officials indicated which speculations it would be misleading for the reporters to pursue in the two days remaining before the Prime Minister's announcement of April 20.


TWELVE MILE FISHING LIMIT
Mr. Crouse: Does the Minister of Fisheries intend to introduce legislation within a week to impose a twelve mile fishing limit off the coast of Canada, and, if so, would he indicate whether ships belonging to countries which traditionally fished waters close to Canada would be allowed to operate between the three mile and nine mile boundaries?
Answer: Legislation to establish a twelve mile fishing limit is expected to be introduced within a few days.
As indicated in the Prime Minister's statement on June 4, 1963, full account is being taken of the interests of the countries affected and discussions are now proceeding with such countries with the view of reaching mutually satisfactory arrangements.



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, I should like to ask the Prime Minister whether in the last few days there has been an acceleration of the guerrilla attacks or interference with members of the United Nations force, with

particular reference to the Canadian contingent. Also, what representations were made by the secretary general of the United Nations in regard to these attacks? Furthermore, would the Prime Minister say what is the result, if any, of any representations that have been made by our acting high commissioner in Cyprus to President Makarios?


Lester Bowles Pearson: Mr. Speaker, I will ask the Secretary of State for External Affairs, who has been in close touch with these matters, to deal with my right hon. friend's question.


Hon. Paul Martin (Secretary of Stale for External Affairs):: Mr. Speaker, the Canadian high commissioner accredited to Cyprus has been in touch with the government of Cyprus, including the vice president of that country. The military activity between the two groups over the past few days has been discussed between the Canadian ambassador at the United Nations and officers of the secretariat. The secretary general is in Paris today, and I believe that the mediator will be in touch with him before too long. I saw the secretary general on Friday last when some of these matters were discussed.
The United Nations force commander reports that the situation has now been steadied somewhat. General Gyani has on behalf of the force made strenuous representations to both sides to take immediate action to stop the fighting. The United Nations force has of course, not been involved in these incidents except for the patrol activities of the United Nations force.
The co-operation of both sides is being assiduously sought, and that co-operation is essential for the kind of stability we all would like to see on this strife torn island. But I may say that, in spite of the current difficulty, the presence of the United Nations force has prevented wholesale civil war on the island. It has prevented, up until this time, outside intervention, and it has made it possible for the United Nations mediator to begin his search for a solution. The commander of the force has been criticized by sections of the population on the island, but I want to say that the Canadian government and the other governments participating in the force have great confidence in General Gyani in the very difficult operation which he has the responsibility for directing.


John George Diefenbaker: Mr. Speaker, I would ask the minister to answer the question I asked earlier. Has there not been an acceleration of interference in the last few days? The minister said in the course of his remarks that as a result of the United Nations force, external
Inquiries of the Ministry intervention had been prevented. Whose intervention did he have in mind in that connection?


Mr.   Marlin@Essex Easl: Mr. Speaker, I am sure the right hon. gentleman knows what I had in mind. This is a very difficult operation and one has got to choose one's words carefully unless one wants to add to the turmoil and the difficulty. When I say that, I am not suggesting that the right hon. gentleman does not share my concern and caution, but I am sure he will not mind if I remind him of the need for care.


John George Diefenbaker: Mr. Speaker, I would also remind the hon. gentleman of something else, in question form. Does he not consider that the statement he has continually repeated with regard to what the United Nations force has done to date has not been borne out completely by the facts?


Mr.   Marlin@Essex Easl: Mr. Speaker, if it were not for the fact that my right hon. friend has had very considerable experience in these matters, particularly with regard to the Congo, I would not in my reply make the appeal I am now making to him. I am sure he will recognize that if it were not for the United Nations intervention the situation at this time on the island would be much more difficult, and it is my duty to remind the house of this fact.


Mr. T. C. Douglas (Burnaby-Coquillam):: supplementary question, Mr. Speaker. 1 am sure all hon. members recognize the difficulty of the situation that obtains in Cyprus, and we have no desire at all to make it more difficult. I should like to ask the minister about the report to the effect that a Canadian armoured car was fired upon by certain Cypriots. The story is that the firing ceased as soon as those responsible were informed of the fact that it was occupied by United Nations troops.
I should like to ask the minister first of all if the report is accurate. If it is, what is the reason that the armoured car was not properly and clearly marked? Is the minister taking any steps to see that in future vehicles used will be clearly marked so that someone will not be killed merely because of the absence of proper markings on these vehicles?


Paul Joseph James Martin: Mr. Speaker, as soon as I have more precise information on which I can rely, I shall be glad to give it to the house and to my hon. friend. I hope that will be tomorrow.


CYPRUS-PERIOD OF SERVICE OF CANADIAN TROOPS
[Stage Direction]
On the orders of the day:
Mr. L. J. Pigeon (Jolieile-L'Assomplion-Montcalm):: I should like to address a question in French to the deputy prime minister.
2594	HOUSE OF
Inquiries of the Ministry [Translation]
I should have liked to know whether the secretary general of the United Nations has asked Canada to extend the stay in Cyprus of its troops beyond three months, and whether it is the minister's intention to consult again the Canadian parliament in order to authorize that extension?


Paul Joseph James Martin: Mr. Speaker, with regard to the first part of the question I would say that, under our parliamentary government in Canada there is no deputy prime minister. In the particular situation, Canada seems to be very happy and secure in the office and in the person of the present Prime Minister.

As far as the second part of the question is concerned, I must inform my hon. friend that I answered that question a few days ago.


Mr. Heward Grafftey (Brome-Missisquoi):: May I ask a supplementary question; and before I pose my supplementary question I should like to make it clear that I am asking the question only as it relates to public business and government affairs. I should like to ask the Prime Minister if he would inform this house specifically what is entailed in the new position of the Minister of Justice, and how it affects government and public business.


Lester Bowles Pearson: This is a matter that affects the Liberal party, and I am delighted to announce to the house that my hon. friend the Minister of Justice is now the leader of the Liberal caucus in our party.


Some hon. Members:: Oh, oh.


Lester Bowles Pearson: I should have said for the province of Quebec, Mr. Speaker.


An hon. Member:: It makes a difference.


Hon. Paul Martineau (Poniiac-Temiscamin-gue):: May I ask a supplementary question. In view of the new position given to the Minister of Justice, will the Prime Minister be making him his seatmate in this house?


Lester Bowles Pearson: He is already as close to me as he can get.


Mr. Howard:: Well, it is good to know that somebody is trying to lead the Liberal party.


VIET NAM-POSSIBLE RESULT OF U.S. POLICY
[Stage Direction]
On the orders of the day:
Herbert Wilfred Herridge: Mr. Speaker, I wish to address a question to the


Secretary of State for External Affairs. In view of the statement made by Senator Morse of the United States Senate that the United States, under the leadership of defence secretary McNamara, is fighting an illegal and unwise war in Viet Nam, and the growing criticism of the actions of the United States in that area, has the government of Canada expressed its concern to the government of the United States as to the possibility of their actions provoking greater conflict in the Far East as a consequence of recent reported developments?


Mr. Speaker:: Order. In spite of the great interest in and importance of this question, would the hon. gentleman put it on the order paper; because it probably requires a detailed and certainly a lengthy answer.


Herbert Wilfred Herridge: I should like to place it on the order paper for debate at ten o'clock.



PENSIONS


[Stage Direction]
On the orders of the day:
Hon. Michael Starr (Ontario):: Mr. Speaker, I should like to address a question to the Prime Minister. In view of the apparent delay in the implementation of the Canada pension plan, will he refer the details of the plan to the national economic council for their study and their views on what further improvements can be made in it?


Lester Bowles Pearson: Mr. Speaker, subject to further consideration which I will be glad to give to my hon. friend's question, my first reaction is that such a course would not be helpful and that it might delay implementation of the plan for too great a time.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Mr. Gilles Gregoire (Lapointe):: Mr. Speaker, I should have liked to direct a question to the Minister of Labour, but in his absence I shall direct it to his parliamentary secretary.
Did the minister receive, during the week end, a request from the Quebec minister of municipal affairs and the association of mayors and municipalities of the Saguenay-Lake St. John area for an extension of the winter works program past April 30?


James Allen (Jim) Byrne: Mr. Speaker, in the absence of the Minister of Labour may I say that I will bring this question to his attention for consideration tomorrow.



CONSIDERATION OF REPORT &quot;EMPLOYMENT AND MANPOWER UTILIZATION IN NEW BRUNSWICK&quot;

[Stage Direction]
On the orders of the day:
Mr. Thomas M. Bell (Saint John-Albert):: Mr. Speaker, I have a question for the parliamentary secretary to the Minister of Labour. Will the report entitled "Employment and Manpower Utilization in New Brunswick" be made available to those interested here in Ottawa and, at the same time, will the government state what it plans to do about this very revealing document which shows the urgent need for jobs in New Brunswick?


James Allen (Jim) Byrne: I will bring this important question to the attention of the minister when he arrives this afternoon.



UNEMPLOYMENT INSURANCE


[Stage Direction]
On the orders of the day:
Mr. Lloyd R. Crouse (Queens-Lunenburg):: Mr. Speaker, I had a question for the Minister of Labour but in his absence I shall direct it to the Prime Minister. In view of the fact that some 597,000 people are drawing benefits from the unemployment insurance fund while the dominion bureau of statistics lists some 475,000 people as unemployed, will the Prime Minister investigate this matter and inform the house if some 125,000 people are drawing benefits while fully employed?


Lester Bowles Pearson: I will be glad to bring this matter to the attention of the minister.



FISHERIES


[Stage Direction]
On the orders of the day:
Frank Howard: On Thursday last I asked the Minister of Fisheries about a proposed third meeting of the north Pacific fisheries commission. At that time the minister indicated the date had not been set and, if I could paraphrase the minister's remarks, he indicated that it would be held at the earliest possible moment. Over the week end I received a copy of The Fisherman for April 17, in which the deputy minister, Dr.
Inquiries of the Ministry Needier, is reported as having told a committee of the fishermen's union that north Pacific fisheries treaty negotiations would likely take place next summer, possibly in July. I wonder if the minister can indicate whether that is the earliest date possible to which he referred the other day.


Hon. H. J. Robichaud (Minister of Fisheries):: I want to assure the hon. member we are just as anxious as he is to have this third meeting of the parties involved in the north Pacific treaty so that we can arrive at a final and decisive agreement. No definite date has yet been set, although we are trying to have the Japanese government accept a date in July.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Mr. Maurice Cote (Chicoutimi):: Mr. Speaker, may I direct a question to the Minister of Justice?
Would the minister inform the house if the communist party is legally recognized as such in Canada, in view of the fact that it submitted a brief to the royal commission on banking?


Guy Favreau: Mr. Speaker, I feel that the answer to that question is known by all and I wonder if, by answering it, I would not be giving once again a legal opinion. On the other hand, if I had to give such an opinion, I would say no, it is not a legal party.


Mr. R. W. Pritlie (Burnaby-Richmond):: would like to ask the Minister of Justice to clarify his previous answer to the hon. member for Chicoutimi. I think the translator may have misinterpreted him by saying the communist party is illegal.


Guy Favreau: It is not an illegal party.



FINANCE


[Stage Direction]
On the orders of the day:
William Heward Grafftey: I should like to address a question to the Minister of Finance and ask him if it is the intention of the government to introduce measures to implement some or all of the recommendations contained in the report of the royal commission on banking and finance.

Inquiries of the Ministry


Hon. Waller L. Gordon (Minister of Finance):: Mr. Speaker, I do not believe hon. members would wish me to comment in any way on the very detailed and extensive report that was tabled in the house on Friday. It will be given the most careful consideration by the government, and those sections of it or all of it that the government may wish to recommend to the house in the form of legislation will be brought forward at the proper time.



PROCEDURE RESPECTING REFUNDS OF SALES TAX

[Stage Direction]
On the orders of the day:
Mr. J. E. Pascoe (Moose Jaw-Lake Centre):: Mr. Speaker, I have a question for the Acting Minister of National Revenue. I have here a letter from a constituent complaining about the difficult procedure involved in applying for a refund of the 8 per cent tax on building materials in cases where such a refund is allowable. Has the minister received similar complaints and, if he has, is his department considering revising the method of refund application to make it less difficult for small contractors to supply the necessary information?


Hon. G. J. Mcllrailh (Acting Minister of National Revenue):: I presume the hon. member's question has reference to the refunds obtainable in connection with educational institutions?


James Ernest Pascoe: Yes.


George James McIlraith: If that is so I have not received any complaints that I can recall, but we have been looking into this subject and the procedures for obtaining refunds have been changed. New procedures either have been announced in the last day or so or will be announced in a very short time.



DEVELOPMENT OF UNIFORM STANDARDS OF SECURITIES LEGISLATION

[Stage Direction]
On the orders of the day:
Mr.  R. Gordon L. Fairweather@Royal: Mr. Speaker, I have a question for the Minister of Justice. I wonder whether the minister would consider convening a conference of appropriate provincial ministers to assist-and here I quote the royal commission on banking and finance:
-to encourage the development of high and uniform standards of security legislation and regulation in Canada?


Guy Favreau: Mr. Speaker, this of course is a matter of government policy, but I would be pleased to consider the hon. member's question.
[Mr. Grafftey.)



POLICY RESPECTING U.S. INVESTMENT IN CANADA

[Stage Direction]
On the orders of the day:
Mr. Guy Marcoux (Quebec-Montmorency):: Mr. Speaker, I wish to direct a question to the Minister of Finance. Does he intend to change the Canadian policy respecting American investments despite the opinion and the warnings given Saturday by Mr. George Ball, under secretary of state of the United States?


Mr. Speaker:: I wonder whether the hon. member would put this question on the order paper. It is very important, but it would probably require a long and detailed answer.


Thomas Clement (Tommy) Douglas: May I ask a supplementary question which does not require detail. Is the Minister of Finance asking for clarification of the statement made by Mr. Ball, as to whether it reflects the opinion of the United States government?


Walter Lockhart Gordon: Mr. Ball did use some expressions which I would describe as being on the vigorous side, but I think perhaps hon. members would be interested in a sentence in his speech which was used to introduce the subject. He said:
Canadian policy is firmly committed to the preservation of an independent and separate national economy. As far as the United States is concerned this is a decision of the Canadian government and of the Canadian people. It is a decision we respect.
I do not think I need add anything to that.


John George Diefenbaker: In view of the fact that the minister has chosen to read from a document which is, apparently, the speech in question, would he not now table that document so the rest of us can see whether the context actually accords with the particular selective portion which the hon. gentleman has drawn to the attention of the house?


Mr. Speaker:: Would the hon. minister table the document from which he was reading?


Walter Lockhart Gordon: Yes, Mr. Speaker.


Thomas Clement (Tommy) Douglas: May I still ask the Minister of Finance to reply to my supplementary question. Are any representations being made to the United States government to see whether the criticism of this policy which Mr. Ball embarked upon represents the views of the United States government?


Walter Lockhart Gordon: We are having a meeting on Wednesday and I, for one, would be most surprised if this subject were not given a good airing.


Mr. A. B. Patterson (Fraser Valley):: I should like to raise a question with regard to the procedure we are now following. The question asked by the hon. member for Quebec-Mont-morency was ruled out of order, or at least he was requested to put it on the order paper. Now supplementary questions are being answered on the same subject.


Mr. Speaker:: I should like to say that I was a little surprised, but pleased, that the Minister of Finance had a short statement to make. I felt I had done a slight injustice to the hon. member for Quebec-Montmorency. In reparation for the damage done, if he has any supplementary question he would like to ask, now is the time to put it.


Guy Marcoux: I wish to repeat the question I asked him a few minutes ago.


Walter Lockhart Gordon: If I have not made it clear I would like to do so. There is no thought or intention of changing Canadian policy on this matter.



INQUIRY AS TO REVISION OF BANK ACT

[Stage Direction]
On the orders of the day:
Mr. G. W. Baldwin (Peace River):: I have a question for the Minister of Finance supplementary to the one asked by the hon. member for Brome-Missisquoi. Now that the report of the royal commission on banking and finance has been filed, is the government still of a mind to proceed with a one year extension of the existing Bank Act rather than consider the decennial revision which normally would come into effect this year?


Walter Lockhart Gordon: The government intends to proceed with the reference which is on the order paper relating to a one year extension. Otherwise the Bank Act would have to be revised and the whole proceedings completed before June 30. In view of the importance of this royal commission report I think all interested parties should have an opportunity to study it and make their representations before the revision of the Bank Act is completed.


Gerald William Baldwin: A further supplementary
question. In view of the fact that there is to be this delay in making the decennial revision, is the government of the view that the applications for new bank charters now pending should await the decennial revision?
20220-165J
Inquiries of the Ministry


Walter Lockhart Gordon: Some of these applications are presently before the Senate committee on banking and commerce and I think it would be inappropriate for me to comment on how that committee should operate.



REQUEST FOR RECONSIDERATION OF LONG TERM CONTRACTS

[Stage Direction]
On the orders of the day:
Thomas Clement (Tommy) Douglas: I should like to direct a question to the Minister of Trade and Commerce. In view of the fact that three sugar refineries in Montreal have just announced an increase of 30 cents per hundred pounds in the price of sugar, is the minister prepared to review his consideration concerning the negotiating of long term agreements on sugar imported into this country for the protection of the Canadian consumer?


Mr. Speaker:: Will the hon. member put this question on the order paper? It requires a rather lengthy and detailed answer, it seems to me.


Thomas Clement (Tommy) Douglas: Then may I ask the Minister of Justice a question which is of more pressing importance. In view of the fact that three refineries have simultaneously announced this increase, is the restrictive trade practices branch looking into the matter to see if there is collusion in the matter of raising prices simultaneously?


Guy Favreau: Mr. Speaker, the answer to this question involves the principle concerning all questions relating to investigations being made or work under way by the restrictive trade practices commission or the director of investigation and research. The policy has been stated in this house in the past, and it is to the effect that it is not the practice to state whether, in a given case with regard to given individuals or corporations, any investigation is or is not under way. I believe public policy would dictate that the same answer be given at the moment.



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Guy Favreau: should like now to answer a question put to me on April 22 by the hon. member for Bow River. The question was:
In the report prepared by counsel with regard to the investigation of certain officers of the S.I.U., was there a recommendation made with regard to McLaughlin, who is about to ascend to the presidency of the S.I.U., that he too be prosecuted as was Mr. Banks?
2598	HOUSE OF
Inquiries of the Ministry
The answer is as follows. No recommendation was made by counsel to prosecute McLaughlin for any offence, except that of conspiring with Banks and others to persuade seamen to absent themselves from their duties on their ships, contrary to section 268 of the Canada Shipping Act. The action relates to the occasion of a demonstration in Ottawa in October, 1963. Mr. McLaughlin has been so charged.


Mr. Eldon M. Woolliams (Bow River):: May
I ask a supplementary question. I wonder if the minister would mind disclosing to the house on what date McLaughlin was charged?


Guy Favreau: This, including the contents of the charge referred to, is a matter which is presently sub judice. I do not believe, under paragraph 2(d) of the new order regulating the procedure of the house, any further comment would be in order. But if it is only the actual date of the charge that my hon. friend is looking for, I do not believe this would be comment, and in respect to this I will undertake to give it.


Michael Starr: Mr. Speaker, I have a supplementary question for the Minister of Transport on the same subject. Can the minister advise us when he expects to bring in amendments to the Canada Shipping Act and the St. Lawrence Seaway Act, as recommended by Mr. Justice Norris?


John Whitney Pickersgill: No, sir, I cannot advise the house of that because the matter is still under consideration by an interdepartmental committee and, as the former minister of labour would of course surmise, the primary interest in this matter is in the Department of Labour and not in my department.


Michael Starr: As a further supplementary question, when does the minister anticipate the work of the interdepartmental committee will be finished to the point where amendments can be introduced to both acts?


John Whitney Pickersgill: Not being a lawyer, like the hon. gentleman, I would hate to predict how long it would take the lawyers to say what kind of legislation would be appropriate in the circumstances.


Michael Starr: Mr. Speaker, I rise on a question of privilege. After careful consideration of the words used by the Minister of Transport concerning his and my professions in life, I must immediately set the record straight; and if there is any indication that the Minister of Transport said that I was a lawyer I must categorically deny that.


John Whitney Pickersgill: Mr. Speaker, I was seeking to imply that neither of us was.



SHIPPING


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, the question of the low water levels on the great lakes is causing continuing concern which has become greater in the last two or three days. Some three weeks ago I endeavoured to ascertain what was being done and whether communications had taken place between Canada and the United States. I now ask the Prime Minister what communications have passed between the two countries in this regard as to action to be taken; has the international joint commission been in session in this regard in the last few days; and what recommendations has it made to meet this matter of transcendent importance to navigation and also to tourist camps and the like on the great lakes?


Lester Bowles Pearson: Mr. Speaker, I do not know whether there have been any developments on this very important matter since my reply a few days ago, when I tabled the report of the international joint commission, but I will look into the matter and see if there have been such developments. This is something we should take up, and will take up, at the Canada-United States ministerial meeting which opens on Wednesday.


John George Diefenbaker: In that connection, while the Prime Minister will not indicate in detail what he intends to do, is it his purpose to bring about a joint effort between the United States and Canada to meet this problem, which is a most serious one and one that requires immediate attention?


Lester Bowles Pearson: It is certainly most serious, Mr. Speaker, and it does require international co-operation. We hope we can secure that kind of co-operation to deal with it.



INCOME TAX


[Stage Direction]
On the orders of the day:
Mr. A. D. Hales (Wellington South):: Mr. Speaker, my question is directed to the Acting Minister of National Revenue. Does the minister propose to amend the Income Tax Act to clear up the apparent anomaly that exists in the school allowance tax exemption as between Quebec and the other nine provinces, with respect to the parents of children aged 16 to 17 years?


George James McIlraith: Mr. Speaker, that being a matter having to do with the legislation, it would not come within the responsibility of the Minister of National Revenue.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Mr. Jack A. Irvine (London):: Mr. Speaker, I have a question for the Minister of Transport. I would like to ask the minister when I might expect answers to questions 205, 206 and 207 of February 26? This is the 61st day of decision for these questions.


John Whitney Pickersgill: As soon as the answers are ready, sir.


John George Diefenbaker: Well, Mr. Speaker, I realize that, as you have stated, one cannot rise on a question of privilege excepting within limitations, but the record shows questions going back to February 20, questions Nos. 109, 118, 135 and so on, questions that can be answered and should be answered. In addition, starred questions that have not been answered for days constitute a matter that deserves the attention of the house. I do not know who is acting as Secretary of State today-


John Whitney Pickersgill: I am.


John George Diefenbaker: -but I would ask him to look over these questions because the delay has gone beyond what could be achieved except by inattention.


John Whitney Pickersgill: That will be done, sir; and I think, as was said by the Secretary of State the other day, if the right hon. gentleman would compare our record in answering questions with that when he was in office, he would find it has been a much better record and, what is more, this government does not make questions orders for returns merely to get them off the order paper so they may be buried for months and years.


John George Diefenbaker: I rise immediately to answer that and point out that there are ten questions from last session not answered, passed as orders for returns, because one or two of them will be embarrassing to the government.



AIR TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a question
Inquiries of the Ministry to the Minister of Transport. Does the government now have a policy with respect to air travel between Canada and the United States? If so, will this policy be presented to parliament at an early date?


Some hon. Members:: Order paper.


Mr. Speaker:: I think I should explain that the question is not asking for details of policy.


John Whitney Pickersgill: I think the matter is very clear. It was announced in the newspapers, and I believe also in the house, that negotiations for certain changes in the bilateral arrangements are going on. They started today.


Mr. Gene Rheaume (Northwest Territories):: As a supplementary question, can the minister announce the regional air carriers' policy which we have been waiting for, for months?


John Whitney Pickersgill: Whenever the policy has been devised.


Stanley Howard Knowles: My question to the minister was when will he announce any policy of this nature in the house. It is not good enough to see it in the newspapers.


John Whitney Pickersgill: Mr. Speaker, I would say the hon. gentleman is rather mixed up in his terms. There is no question of a policy. The policy on which we are operating in our negotiations with the United States is to get the maximum advantage for Canada. What we are seeking to do is renegotiate these bilaterals in a fashion that we hope will be more equitable to Canada. When any agreement is reached it will be announced in the house, but I would hate to anticipate the agreement before it is reached.



EDUCATION


[Stage Direction]
On the orders of the day:
Mr. J. Chester MacRae (York-Sunbury):: My question is directed to the Prime Minister. Because of the deep interest felt by many thousands of young Canadians in the student loan plan, and in view of the promised ten thousand scholarships and the urgency of legislation in this field, would the Prime Minister indicate whether we can expect that this measure will be brought up for consideration in the immediate future?


Lester Bowles Pearson: The first part of the question will be dealt with very shortly, I hope, as soon as the arrangements have been completed with the provinces so they can carry out their part of the policy. As to the second part of the

Inquiries of the Ministry question, legislation is not likely to be possible this session, but this is still part of our platform for action.



PROPOSED PROHIBITION OF IMPORT INTO NEW YORK STATE

[Stage Direction]
On the orders of the day:
Mitchell William Sharp: At the beginning of March I was asked some questions about legislation in New York state which would have had the effect of prohibiting sales of Canadian bread in that state. In order to clear the record I wish to inform the house that Governor Rockefeller has vetoed the bill.



NATIONAL CAPITAL COMMISSION


[Stage Direction]
On the orders of the day:
Mr. Robert Muir (Cape Breton North and Victoria):: I have a question for the Minister of Public Works in reference to the announcement made over the week end of appointments to the national capital commission. I note that the minister is not present, and in his absence may I direct the question to the acting minister. Would the hon. gentleman advise us whether the appointment of Mrs. Margaret F. Norris of Truro was made on the basis of qualifications or whether it was because of the fact that she was president of the Nova Scotia Liberal association from 1959 to 1962, according to the Ottawa Journal, and that she is also a defeated Liberal candidate?


Mr. Speaker:: Order. It does strike me that this question, though interesting, certainly is not exactly urgent.



INQUIRY OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Mr. Marcel Lessard (Lake St. John):: Mr. Speaker, I should like to direct a question to the Minister of Justice. Could he confirm the statement he made yesterday to the effect that he would be the government's chief spokesman to federal members from Quebec and not the spokesman for Quebec federal members within his government? Is that what he said in the presence of newspapermen, as reported here, in he Devoir?


Guy Favreau: The Prime Minister answered that question a while ago in reply to one put to him by the hon. member for Pontiac-Temiscamingue (Mr. Martineau).



LOTTERIES


[Stage Direction]
On the orders of the day:
Louis-Joseph Pigeon: Mr. Speaker, I should like to direct a question to the Minister of Justice to see whether he has any influence.
Considering the distinct promise made by several Liberal candidates from the province of Quebec during the last election campaign, does the minister intend to amend the criminal code to allow the provinces who want to, to have lotteries or sweepstakes?


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


Louis-Joseph Pigeon: I want to discuss this at ten o'clock next Thursday.



WAYS AND MEANS

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

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Income Tax Act and to provide among other things:
1.	That for the 1964 and subsequent taxation years the deduction from income granted in respect of certain tuition fees be extended to include tuition fees paid by a taxpayer who is a student, whether or not he is a full time student, to an educational institution in Canada
(a)	that is a university, college or other educational institution providing courses at a postsecondary school level,
(b)	that is a school operated by or on behalf of Her Majesty in right of Canada or a province, a municipality in Canada, or a municipal or public body performing a function of government in Canada,
(c)	that is a high school or secondary school providing courses leading to a secondary school certificate or diploma that is a requirement for entrance to a college or university, or
(d)	that is certified by the Minister of Labour to be an educational institution by which courses are conducted that provide or improve the qualification of a person for employment or for the carrying on of a business or profession,
if the tuition fees paid by the taxpayer for the year exceed $25.
2.	That for the 1964 and subsequent taxation years a dependant in respect of whom a taxpayer may deduct an amount not exceeding $550 in computing his taxable income shall include a taxpayer's brother or sister who was 21 years of age or over and in full time attendance at a school or university.
3.	That the period commencing on December 5, 1963 within which a new manufacturing or processing business must have commenced manufacturing or processing in reasonable commercial quantities in a designated area in order to obtain a certificate for the purposes of section 71A of the act be extended to March 31, 1967.
4.	That for the 1964 and subsequent taxation years in determining whether 95 per cent of the

assets used in a business were new and situated in a designated area, for purposes of establishing under section 71A of the act that a person was carrying on the business in a designated area, the value of the assets shall be their fair market value notwithstanding that such value may be different from their capital cost.
5.	That where at a time when an area was a designated area a business has been certified to be a new manufacturing or processing business, or an application has been made in writing to the Minister of Industry by a taxpayer in respect of a business that upon the fulfilment of specified conditions would be certified to be a new manufacturing or processing business in the designated area, that area, notwithstanding that it may no longer be a designated area, shall for the purpose of the application of section 71A of the act to that particular business continue to be a designated area.
6.	That for the 1962 and subsequent taxation years a taxpayer may deduct in computing income all expenditures of a current nature for scientific research carried on outside Canada that are expenditures made in the year
(a)	for scientific research related to the taxpayer's business directly undertaken by or on behalf of the taxpayer, or
(b)	to an approved association, university, college, research institute or other similar institution to be used for scientific research related to the taxpayer's business.
7.	That	for	the	1964	and	subsequent taxation
years a taxpayer may deduct in computing income amounts expended by him in relation to an objection to an assessment or an appeal from an assessment and shall include in computing income any costs recovered in respect thereof.
8.	That	for	the	1964	and	subsequent taxation
years a taxpayer may deduct in computing income an amount paid in the year or in a previous year since 1962 as a contribution to or under a registered pension fund or plan in respect of services rendered by him in past years while he was a contributor even if he also deducts an amount as a contribution in respect of services rendered by him in past years while he was not a contributor, but the maximum amount deductible in a year in respect of past services while he was a contributor shall not exceed $1,500 minus the aggregate of the amounts deducted in the year in respect of services rendered by him in the year and in respect of services rendered by him previous to the year while he was not a contributor.
9.	That for the 1964 and subsequent taxation years the period of 60 days from the end of a year within which an employer may pay an amount to or under a registered pension fund or plan in respect of services rendered by his employees be increased to 120 days.
10.	That for the 1964 and subsequent taxation years it be made clear that any amount received by an employer upon the winding up or reorganization of a pension fund or plan shall be included in his income.
11.	That for the 1964 and subsequent taxation years subsection (3) of section 12 of the act, which provides rules concerning an outlay or expenses payable by a taxpayer to a person with whom he was not dealing at arm's length, be amended so that a taxpayer who at the end of his taxation year has a liability that
(a)	arose in respect of a non-arm's length transaction,
(b)	was deductible in computing his income, and
(c)	has been outstanding for two years following the end of the taxation year in which it accrued must include in income for the third year after it accrued an amount equal to the liability, unless
Income Tax Act
the debtor and creditor sign and file an agreement in which they elect to have their taxes computed as though the debt had been paid and replaced by a loan on the first day of that third year.
12.	That the 20 per cent rate of tax payable by a non-resident person on dividends paid or credited to him after 1964 by a corporation resident in Canada that does not have a degree of Canadian ownership be reduced to 15 per cent, and that in consequence thereof:
(a)	Part IID of the act imposing a tax equal to 5 per cent of certain dividends paid by a corporation that does not have a degree of Canadian ownership be repealed;
(b)	the 20 per cent rate of tax imposed by part IIIA of the act on income earned after 1964 by a non-resident corporation carrying on business in Canada be reduced to 15 per cent; and
(c)	the 20 per cent rate of tax imposed on the taxable income earned after 1964 by a non-resident-owned investment corporation be reduced to 15 per cent.
13.	That for the 1964 and subsequent taxation years, where a taxpayer has disposed of his interest in a partnership, such part of the consideration as is reasonable in the circumstances shall be deemed to be proceeds of disposition of depreciable property of the taxpayer used in the partnership business.
14.	That for the 1964 taxation year the amount deductible in computing taxable income in respect of a dependant child who was over 15 and under 18 years of age at the end of the year shall not exceed $470 if an allowance was paid under the Family Allowances Act in respect of the child for any month after the month in which he attained the age of 16 years.
15.	That for the 1965 and subsequent taxation years, a child shall be regarded as a child qualified for family allowance for any year at the end of which he was over 15 and under 18 years of age, if an allowance under the Family Allowances Act was paid in the year in respect of that child after the month in which he attained the age of 16 years.
16.	That with regard to the definition of degree of Canadian ownership in section 139A of the said act, the said measure provide as follows:
"(1) Subparagraph (ii) of paragraph (a) of subsection (1) of section 139A of the said act is repealed and the following substituted therefor:
"(ii) either
(A)	not less than 25 per cent of the issued and outstanding shares of the corporation having full voting rights under all circumstances were owned by one or more individuals resident in Canada, one or more corporations controlled in Canada or a combination thereof, and equity shares representing in the aggregate not less than 25 per cent of that part of the paid-up capital of the corporation that was represented by all the issued and outstanding equity shares of the corporation were owned by one or more individuals resident in Canada, one or more corporations controlled in Canada, or a combination thereof, or
(B)	a class or classes of shares of the corporation having full voting rights under all circumstances were listed on a prescribed stock exchange in Canada, and it is established in prescribed manner that no one non-resident person and no one corporation that did not comply with clause (A) of this subparagraph owned more than 75 per cent of the issued and outstanding shares of the corporation having full voting rights under all circumstances, alone or in combination with any other person related to such non-resident person or such
[Stage Direction]
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corporation at any time within the period within the meaning of subsection (5a) or (5b) of section 139, and a class or classes of equity shares of the corporation representing in the aggregate not less than 50 per cent of that part of the paid up capital of the corporation that was represented by all the issued and outstanding equity shares of the corporation were listed on a prescribed stock exchange in Canada, and it is established in prescribed manner that no one non-resident person and no one corporation that did not comply with clause (A) of this subparagraph owned equity shares representing in the aggregate more than 75 per cent of that part of the paid up capital of the corporation that was presented by all the issued and outstanding equity shares of the corporation, alone or in combination with any other person related to such non-resident person or such corporation at any time within the period within the meaning of subsection (5a) or (5b) of section 139, and"
(2)	Subsection (1) of section 139A of the said act is further amended by striking out the word "or" at the end of paragraph (a) thereof, by repealing paragraph (b) thereof and by substituting therefor the following paragraphs:
"(b) the corporation complied with the conditions specified in subparagraphs (i) and (iii) of paragraph (a) and was a subsidiary wholly-owned corporation subsidiary to a corporation that throughout the sixty day period complied with the conditions specified in paragraph (a) or (c); or
(c)	the corporation complied with the conditions specified in subparagraphs (i) and (iii) of paragraph (a) and was a subsidiary controlled corporation
(i)	having issued and outstanding equity shares none of which were owned by a person other than
(A)	the corporation to which it was subsidiary,
(B)	a non-resident person not related to the corporation to which it was subsidiary,
(C)	an individual resident in Canada, or
(D)	a corporation controlled in Canada, and
(ii)	subsidiary to a corporation that throughout the sixty day period complied with the conditions specified in paragraph (a) or (b)."
(3)	Paragraphs (a) and (b) of subsection (2) of section 139A of the said act are repealed and the following substituted therefor:
"(a) a corporation that has share capital is not controlled in Canada at a particular time unless at that time the corporation is resident in Canada, and more than 50 per cent of its issued and outstanding shares having full voting rights under all circumstances, and shares representing in the aggregate more than 50 per cent of its paid up capital are owned by
(i)	individuals resident in Canada,
(ii)	corporations resident in Canada with respect to each of which (A) more than 50 per cent of the issued shares having full voting rights under all circumstances, and
(B) shares representing in the aggregate more than 50 per cent of the paid up capital
are owned by individuals resident in Canada, or
(iii)	any combination of individuals or corporations described in subparagraph (i) or (ii);
(b) where
(i)	a non-resident person,
(ii)	a corporation that does not have a degree of Canadian ownership, or
(iii)	a corporation that is related to a nonresident person within the meaning of subsection (5a) or (5b) of section 139
has a right under a contract in equity or otherwise either immediately or in the future and either absolutely or contingently, to, or to acquire, equity shares in a corporation, those shares shall

(iv)	unless the right is contingent upon an event that it is not reasonable to expect to occur within a reasonable time, or
(v)	unless the right is such that a reasonable man concerned only with the value of the shares would not exercise it,
be deemed
(vi)	to be owned by the person who has the right,
(vii)	to be owned by a non-resident person, where the person who has the right is a corporation described in subparagraph (ii) or (iii) and
(viii)	where the shares are unissued,
(A)	to be issued and outstanding, and
(B)	to have a paid up capital value, with respect to each share, equal to
1.	the par value, where the shares have a par value,
2.	the amount that would be paid with respect to each share to exercise the right under the terms of the contract, where the shares have no par value and amount is specified in the contract, or
3.	the market value at the end of the relevant sixty day period of a share of the class of shares of that corporation that is most closely similar to that share, where the shares have no par value and no amount is specified in the contract,
and any other person who actually owns the shares in respect of which that right exists shall be deemed not to own those shares."
(4)	Subsection (2) of section 139A of the said act is further amended by striking out the word "and" at the end of paragraph (c) thereof and by adding thereto the following paragraphs:
"(e) "equity share" means
(i)	a share, the owner of which has, as owner thereof, a right
(A)	to a dividend, and
(B)	to a part of the surplus of the corporation after repayment of capital, upon the redemption of the share, a reduction of the capital of the corporation or the winding up of the corporation, as great as the right of the owner of any other share of the corporation, when the magnitude of the right in each case is expressed as a rate based on the paid up capital value of the share to which the right relates, and
(ii)	a share, the owner of which has, as owner thereof, a right
(A)	to a dividend, after a dividend at a rate not in excess of 8 per cent per annum has been paid to the owners of shares of a class other than the class to which that share belongs, and
(B)	to a part of the surplus of the corporation after repayment of capital, upon the redemption of the share, a reduction of the capital of the corporation or the winding up of the corporation, after a payment of a part of the surplus at a rate not in excess of 10 per cent has been made to the owners of shares of a class other than the class to which that share belongs, as great as the right of the owner of any other share of the corporation, when the magnitude of the right in each case is expressed as a rate based, on the paid up capital value of the share to which the right relates; and
(f) "paid up capital value" with reference to a share, means
(i)	in the case of an unissued share that is deemed by paragraph (b) to be issued and outstanding, the amount determined under clause (B) of subparagraph (viii) of that paragraph, and
(ii) in any other case, an amount equal to the paid up capital of the corporation that is represented by the shares of the class to which that

share belongs divided by the number of shares of that class that are in fact issued and outstanding."
(5)	In the case of a taaxtion year commencing before January 1, 1965, of a corporation that would have had a degree of Canadian ownership in the 1964 taxation year if section 139A of the said act had not been amended by this act, that portion of subsection (1) of section 139A of the said act, as amended by this act, that precedes paragraph (a) thereof shall, if the corporation elects in prescribed manner before January 1, 1965, be read as follows:
"139A. (1) For the purposes of this act, a corporation has a degree of Canadian ownership in a taxation year if throughout any sixty day period commencing after March 16, 1964 and ending before January 1, 1965"
(6)	This section is applicable to the 1964 and subsequent taxation years."
and for the purpose of determining whether a corporation had a degree of Canadian ownership for the purposes of paragraph (b) of subsection (la) of section 106 the the said act, section 139A of the said act shall
(a)	in relation to any dividend declared on or before March 16, 1964 be read as if it had not been amended by the said measure, and
(b)	in relation to any dividend declared after March 16, 19S4 be read as amended by the said measure.
Walter Lockhart Gordon: Before the committee begins to consider the income tax resolution in detail I think it might be helpful if I were to give an outline of the proposals before us. It may be helpful if I do so in some detail in order to provide members of the committee with a general understanding of what is involved. I shall, of course, be glad to go into more extended detail on any particular item when the time comes. However, as much of this resolution is highly technical, a broad, general description at the beginning may be helpful.
Although there is only one income tax resolution, it is divided into 16 paragraphs, and it has been customary in the past for the committee to consider each paragraph in turn. Of the 16 paragraphs, nine propose relieving amendments, one is partly relieving, four propose legislation to correct the law where it has been found to have unintended results, and two paragraphs might be described as consequential since they relate to the proposed extension of the payment of family allowances.
Under the proposed new arrangement with the provinces announced by the Prime Minister on April 20, the room made available for the provinces to impose their own income tax on individuals without increasing the total tax load from that source will be increased for the 1965 and the 1966 taxation years. Provision for this should be made in this year's amendments to the Income Tax Act. Therefore when the committee reaches the end of paragraph 16 I shall propose an amendment to add a paragraph 17 to the resolution to increase the relevant deduction 20220-166
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from federal individual income tax otherwise payable, from 19 per cent to 21 per cent for 1965, and from 20 per cent to 24 per cent for 1966. The bill to be introduced after this resolution has been considered by the committee will, as usual, contain a number of additional amendments most of which will be of a technical or drafting nature.
I should perhaps mention one relieving amendment of some general interest which is planned for the bill but which is not described in the resolution. This is an amendment to provide that payments made by the Federal Republic of Germany as compensation to victims of nazi persecution who are now living in Canada shall be exempt from Canadian income tax. The payments referred to are those which are also exempt from tax by Germany. The details of this exemption will be provided when the bill is introduced.
The first paragraph of the resolution proposes that the deduction in computing income now allowed for tuition fees paid by full time students be extended to allow part time students to deduct tuition fees paid to an educational institution in Canada. A large number of people in Canada take classes at night to obtain a matriculation certificate or a university degree. Many of the teachers in our schools take courses during the summer vacation period to improve their teaching qualifications. A large number of our young people take courses in business colleges or in vocational training schools to equip themselves for employment. Tuition fees must be paid for this instruction, but these courses are not usually of sufficient duration to qualify the participant as a full time student. It is hoped that the proposed change to allow a deduction for tuition fees paid by part time students will encourage and help more Canadians to acquire the training and skills which are more and more demanded in our increasingly complex economy.
The second paragraph of the resolution is also related to the pursuit of education. It proposes that a taxpayer be allowed to claim his brother or sister as a dependant for income tax purposes, even when the brother or sister is 21 years of age or over, if he or she is in full time attendance at school or university. At present a taxpayer may claim his adult brother or sister as a dependant only if he or she is dependent by reason of mental or physical infirmity.
The third, fourth and fifth paragraphs of the resolution deal with the program of tax incentives for new manufacturing or processing businesses in designated areas of slower growth. The act now provides an exemption from income tax for the income earned by a new manufacturing or processing business in

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a designated area during the first 36 months after it commences commercial operations. At present such businesses have to commence commercial operations within the 24 month period that started on December 5, 1963. It is proposed to amend the act to extend this period so that it will run from December 5, 1963 to March 31, 1967. This extension will give larger developments in designated areas a more reasonable chance to complete their capital construction programs and to commence commercial operations within the time limit. I may say to hon. members of the committee that I was impressed with representations made to the effect that the previous time limit of 24 months was too short. With the proposed change the government is very hopeful that these incentives will result in some important developments being undertaken in designated areas; that is, in places where they can do the most good in providing needed jobs.
It was also announced in the budget speech that the privilege of writing off new manufacturing machinery acquired for use by a new manufacturing or processing business in a designated area at the accelerated rate of 50 per cent will be continued with respect to machinery acquired up until April 1, 1967. The accelerated rate of 20 per cent for writing off new buildings will also continue to apply to new buildings acquired in designated areas until April 1, 1967. This extension of the capital cost allowance provisions will be made by changes in the income tax regulations and does not require amendments to the act.
On the subject of capital cost allowance regulations, it will be recalled that the budget speech also announced an increase in the rate of allowance for heavy mobile machinery used to excavate or move earth or rock for use in compacting road building materials. The amendment to the income tax regulations to increase the rate of capital cost allowance on such machinery from 30 per cent to 50 per cent has now been passed. The change in the legislation concerning designated areas, proposed by paragraph 4 of the resolution, is a technical amendment to the rules for determining if a new business is being carried on in a designated area.
The change proposed by paragraph 5 is intended to deal with the situation which would arise if an area which is now a designated area should cease to become designated because it no longer needs the benefit of special tax concessions. The proposed amendment will provide that where a taxpayer has commenced, or made plans to commence, a new manufacturing or processing business in an area during the time when it was designated, that area shall be deemed

to continue to be a designated area for purposes of the application of the act to that particular business. The purpose of this amendment is to make sure that taxpayers who have taken steps to avail themselves of the tax benefits offered in designated areas shall not lose any of those benefits if an area should cease to be designated.
In paragraph 6 a change is proposed concerning scientific research. It is proposed that the act be amended to make it clear that expenditures of a current nature for scientific research carried on outside Canada shall be deductible if the research is related to the taxpayer's business. This amendment is intended to restore a deduction which existed before 1962, but which was removed by a change in the wording of the law in that year. For many years companies in Canada have made payments to their parent companies abroad, or to other non-residents, for the right to share in the results of research and development programs carried on outside Canada. These long-standing arrangements under which Canadian companies have obtained the results of research carried on abroad have provided Canadian industry with valuable processes, techniques and knowhow, and denial of the right to deduct payments for this information would restrict this flow of information with detrimental results for the Canadian economy. The proposed amendment will not change the incentive provided in the act for increased research in Canada. Taxpayers will continue to be allowed to deduct 150 per cent of the amount by which their research expenditures in Canada exceed their expenditures in a base period.
Paragraph 7 proposes legislation to allow a taxpayer to deduct amounts spent by him in connection with preparing a notice of objection to a tax assessment or in appealing a tax assessment to the tax appeal board or a court.
Paragraphs 8, 9 and 10 propose changes concerning registered pension plans. The first of these is a somewhat technical amendment to the rules concerning the deduction of amounts contributed into registered pension plans. The purpose of this amendment is to cover situations where members of a pension plan who were contributors under the plan for some past years, and were not contributors in some other past years, now want to make lump sum or annual contributions into the plan in respect of those past years.
Under the amendment proposed in paragraph 9 an employer will have 120 days instead of the present 60 days after the end of his taxation year to make his payment to a pension plan for his employees. This is

intended to give employers who base part of their contributions upon yearly profits a longer time in which to ascertain those profits. The amendment to pension plan legislation proposed under paragraph 10 is to close a possible loophole. It has been made necessary because it was held in a recent court decision that a refund of contributions from a pension plan to an employer did not constitute income in his hands.
Paragraph 11 will not be of wide general interest because it refers to a special situation which sometimes arises between a taxpayer and another person with whom he is not dealing at arm's length. A new set of rules is proposed to deal with the case where such a taxpayer, who keeps his accounts on an accrual basis, owes an amount, such as interest, but has not actually paid this amount in the year he deducts it for income tax purposes. The amendment will prevent unintended advantages being received by some taxpayers but it will also be relieving in certain other cases.
The amendment proposed by paragraph 12 will result in the rate of non-resident withholding tax on certain dividends paid after December 31, 1964, remaining at 15 per cent. Other changes which are consequential upon retaining the 15 per cent rate of tax on dividends paid by a corporation that does not have a degree of Canadian ownership are also proposed.
In paragraph 13 an amendment is proposed to make clear that where a partner sells his interest in a partnership and this interest includes depreciable property the appropriate part of the amount he receives as selling price shall be deemed to be received on account of the disposal of the depreciable property. This amendment will make it possible to apply to usual rules related to capital cost allowances in such circumstances.
Paragraphs 14 and 15 are consequential upon the plan to continue family allowances to children who are 16 and 17 years of age and who are continuing their education. The Income Tax Act provides that the amount of $300 is deductible for dependant children qualified for family allowances and $550 for dependants not qualified for family allowances. The budget speech announced the government's plan to amend the Family Allowances Act so that children aged 16 and 17 may be registered to receive family allowances starting in 1964; but since it will take some time to introduce this legislation and establish the administrative machinery the allowances are not likely to be available before the end of the summer. Since only three or four payments are likely to be available in 1964 it is not planned to make the full reduction from $550 to $300 in the 20220-1661
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amount that may be deducted for children aged 16 or 17 in respect of whom family allowances are paid in 1964. The reduction proposed is only about one third of the difference between $550 and $300, or $80. This leaves a deduction of $470 for dependent children aged 16 or 17 in respect of whom new allowances are received in 1964.
For 1965 and subsequent years the definition of a child qualified for family allowance is to be amended to include a child who is 16 or 17 years of age at the end of the year if an allowance under the Family Allowances Act is paid in respect of the child in the year for any month after the month in which the child becomes 16 years of age.
Paragraph 16, which is long and complicated, is designed to tighten section 139A of the act which defines when a corporation has a degree of Canadian ownership. As usually happens with legislation that breaks new ground, loopholes were discovered in the definition contained in the amendments that were passed last fall. A great deal of time and effort has gone into the drafting of the revised definition with the object of plugging the existing loopholes and making it quite clear that the incentives offered will be available only to those foreign-controlled companies that make equity shares available to Canadians.
Since March 16 when the resolution was made public I have had conversations with a number of tax practitioners, both accountants and lawyers, who have made a number of helpful suggestions for further changes of a minor character. These will be incorporated in the bill.
I have already mentioned that a paragraph 17 will be proposed, when we reach that point, to provide increased abatements of the federal income tax on individuals in accordance with the recently announced arrangements with the provinces.
All of these proposed amendments are recommended to the committee to assist education, to extend incentives for the development of designated areas, to carry out announced policies and to improve the provisions of the act. I shall be glad to explain each paragraph in more detail as the committee considers each in turn.


Mr. Nowlan:: Mr. Chairman, I am sure the committee has listened with a great deal of interest to the statement made by the minister, in which he reviewed very briefly the individual sections comprising the group which we have before us. I am not sure what should be our procedure. I remember a year ago we were held strictly to dealing with each resolution in turn. Frankly, that is all I propose to do in discussing any of them this afternoon,

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but I presume that it is open to us to wander somewhat over the whole field because of the fact that some of them are interrelated, as the minister stated. Some of them deal with education, others with various facets which are actually quite closely connected, and I think it would enable full discussion in committee and would probably shorten the proceedings if we were to refer to more than one at any one time. As far as I am concerned, at the moment I intend only to deal with the first section which is before us.
I wonder if I might make a suggestion to the minister. The minister has said-as a matter of fact, he mentioned it to me casually on Friday evening-that he is proposing to bring in an amendment to one of the existing sections dealing with abatement. I quite realize he does not want to move it at this time but when we come to the proposed paragraph 17 I think it will facilitate discussion to have had the amendment placed before us now, so that we can give consideration to it in the interim rather than having to deal with it for the first time when we come to the last paragraph, and perhaps having to hold up the passage of the resolution until we have had a chance to consider the amendment. I suggest to the minister that perhaps he should do that.
As the minister has said, the first paragraph deals with assistance to education, and I am quite sure the committee will welcome any move in this direction. This broadens the policy which was introduced into the Income Tax Act in 1961, I think, by which we provided for the deduction of tuition fees of university students. This provision goes further and covers the four classes 'set out in the four subsections here, all of which I think are highly desirable.
As the minister said, these deductions will be particularly beneficial to part time students, to students taking courses in the now greatly enlarged technical and vocational training schools which have been established and are growing so rapidly, to students who are attending night school and to students who are attending summer school. I was interested in reading in one of the Toronto papers, after the minister brought forward the resolution, the fact that in the schools of Toronto, a city in which the minister has more than an academic interest I presume, there were 4,700 students taking part time courses in the wintertime and 7,700 students taking summer school courses at the University of Toronto and York University, I assume. This is a very substantial number and they will receive some measure of assistance through the proposal now before us.

There are so many facets of the educational problem which one could discuss, but this is not the time to discuss them in detail. However, I have noticed statements issued by some of the school and university authorities in Toronto referring to summer training and the assistance given to teachers and college graduates in better preparing themselves for the teaching profession. This is certainly something that is highly desirable. All of these things are good. We have been told about extended family allowances. There has been talk about a student loan fund. This matter is not before us now but I presume it will be at some future date. There are various procedures suggested for the assistance of education and the assistance of students, and this is all to the good in so far as the individual is concerned.
But the problem goes much deeper than that, of course. We not only have to provide assistance to students who wish to go to university or other schools. The problem, of course is more acute in the case of universities. We also have to provide teachers and accommodation for the students and teachers. In looking at a national magazine over the week end I was intrigued to read that at one university in the United States, not one of the largest by a long shot, there were 5,900 applications for entrance into university in the past year and the university was only able to accept 1,100 out of 5,900 applications. This shows something of the pressure on universities and schools not only in the United States but also in Canada.
As I said, the time to discuss these matters is not on this particular resolution, but when the minister's estimates are before the house later this session and we are dealing with university grants and methods of assistance to universities I give the minister fair notice that I hope he will be prepared to discuss these matters at some length. I think this is one of the most pressing problems with which the minister and the nation are confronted, and as much as we approve of the individual items of assistance which are before us, they are really only scratching the surface-except for their help to individuals-of the problem in the nation as a whole and a great deal more attention has to be given to the educational problem in the immediate future.
As I said, Mr. Chairman, and I am sure I speak for the whole committee, no one could help but agree that the steps proposed in paragraph 1 are helpful and desirable and ones which I think will commend themselves to the favourable consideration of the committee. I notice that the deduction for tuition fees only applies if the amount is over $25. If the amount is $26 does that mean that the

student will be able to deduct the full $26 or only the excess over $25? Although it is not exactly relevant to this paragraph it is relevant to the problem of assistance to students, and I wonder whether the minister could tell the committee now when he proposes to deal with the matter of university student loans, a measure which was mentioned in the speech from the throne and has been forecast by the Prime Minister and the minister himself. Perhaps he could advise us of that when he is dealing with this paragraph.


Walter Lockhart Gordon: Mr. Chairman, I would be glad to answer those two questions now if that is agreeable.


The Chairman:: Order. To give effect to the suggestion made by the hon. member for Digby-Annapolis-Kings and in view of the fact that the minister has referred to a proposed amendment, and considering also that the amendment can only refer to the resolution itself rather than to a specific paragraph, perhaps it might be a good idea to have the proposed amendment moved now.


George James McIlraith: I move the following amendment:
That the Income Tax Act resolution be amended by adding thereto the following paragraph:
"17. That the income tax otherwise payable by an individual in respect of income earned in a province of Canada be reduced by
(a)	21 per cent for the 1965 taxation year, rather than 19 per cent, and
(b)	24 per cent for the 1966 taxation year, rather than 20 per cent."


Walter Lockhart Gordon: With regard to the two specific questions, Mr. Chairman, may I say there is always a problem, I suppose, in working out any amendments to the Income Tax Act as to how far you go for complete equity and precision and what you do about an excess of complexity in the administration of the law. It is proposed that any fees of $25 or less be disallowed and any fees of $26 or over be allowed in full. I quite agree that this is not perfection, but I am sure that if we reach that perfection we will arrive at a tax law that the ordinary person cannot understand. One of my colleagues said today -I hope I will not be pressed to divulge the name-that the preparation of his income tax return was beyond him and he called upon me for help as an ex-practitioner in this field. However, I was never able to make out my own so I cannot help other people.


An hon. Member:: It is a simpler form this year.


Walter Lockhart Gordon: Well, with every amendment the forms become less simple. The other question my hon. friend asked was when the legislation would be introduced respecting
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student loans. This will be introduced separately and obviously will not be a part of these proposed amendments. We are working on that legislation. I cannot promise a particular date, but I certainly think they should be introduced as early as possible.


Mr. Cameron (Nanaimo-Cowichan-The Islands):: I certainly am in agreement with the hon. member for Digby-Annapolis-Kings in his expression of satisfaction with regard to these student allowances. However, they do seem to me to be rather meagre. There is one point on which I had hoped the minister might have some new ideas and that is with regard to the provision of an allowance for textbooks. They constitute a very heavy burden on students in the course of their education. While the deduction on account of fees is certainly to be commended, it would seem to me it should include all the costs of their educational courses.
I find it difficult to understand why the minister should confine this sort of allowance to students, when there are other sections of the community that suffer from the same sort of disability for which they get no compensation at all. I have in mind, for instance, the heavy expenses some groups of workers have to incur in order to earn their livelihood. I have in mind particularly those engaged in the logging industry in my own constituency, where they have to buy extremely expensive clothing and footwear for which they get no allowance whatever in connection with income tax. This seems to me to be a legitimate expense incurred by the necessity of the way they earn their livelihood. I should like to see some idea of that type going all through the income tax provisions.
In so far as the allowance for students is concerned, I was disturbed not long ago to note a comment in the newspapers, whether correct or not I do not know, from the premier of Quebec to the effect that these allowances were an invasion of provincial rights. I have no means of knowing whether or not the federal government is taking any note of this view, but I would suggest to the government this provision is an arrangement being made between the government of Canada and Canadian citizens wherever they may live. It is no business of any provincial government. I hope the government will not accept the position taken by the premier of Quebec because I think it would be another dangerous step toward the disintegration of our central, national authority.
I should like to turn for a few moments, Mr. Chairman, to some of the other paragraphs, in the resolution, namely paragraph 4.

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I should like the minister to give some explanation of the method that will be used to determine effectively when a new business started.


William Heward Grafftey: I rise on a point of order, Mr. Chairman; perhaps you could clarify now whether this is the procedure we are going to follow or whether we are going to take the resolution paragraph by paragraph?


Colin Cameron: It was my understanding the whole of the resolution was before us, but I am subject to correction.


Lucien Lamoureux: The hon. member for
Nanaimo-Cowichan-The Islands is correct. At the moment, the whole resolution is before the committee and if later, in the course of discussion, there were unanimous consent to study the resolution paragraph by paragraph, we could do it. At the moment, we are considering the whole resolution.


Colin Cameron: This was my understanding, Mr. Chairman. I wonder if the minister could explain to us later just how he is going to distinguish between a genuine new enterprise starting in a designated area and a wholly owned subsidiary of a well established company which is starting business in this area?
I should like some elaboration of section 5 with regard to the provisions for particular companies making application for tax exemption in federally designated areas, and being in a position to take advantage of the tax exemption at a later date after the designation has been removed. I should like to know, in the first place, how long a period is to be allowed for such an application before a person commences operation in the designated area? If he is permitted to wait perhaps for several years until there is a proper economic climate in that area to determine whether it is going to be profitable for him to start a particular business, it seems to me we are defeating the intention of this amendment, in that companies may very well take advantage of this provision unless there is some rather clearly defined limit. There may be some time elapse before they start a new enterprise.
In so far as section 6 is concerned, I am sure most people will welcome this encouragement to research in Canada. Again, I have a question to raise. What is the particular definition of research that is to be used? Is it to be basic research or is a company to be permitted to have a deduction for what would be classed as technical or specific research designed to produce some development that later may be patented, thereby reserving to this particular company all the benefits of

this research for which it had received this tax exemption. It would seem to be most important that we should know that. I would suspect a large part of industrial research that is undertaken would fall into the category of development or process that could later be patented, and the returns from it be channelled into the coffers of one company. I believe the purpose of such an amendment would be to encourage research from which the whole community could benefit.
Under section 12, Mr. Chairman, it would be interesting to know exactly what was the cause of the reduction from 20 per cent to 15 per cent? What was the purpose that was sought to be served by that action? Perhaps later on the minister will be able to enlighten us.
In the following sections we have a provision to the effect that where a taxpayer has disposed of his interest in a partnership, such part of the consideration as is reasonable in the circumstances shall be deemed to be proceeds of disposition-I am always a little bit uneasy when I see such terms as "reasonable" or "adequate" in legislation. I wonder if the minister would be able to tell us what yardstick, what consideration, is to be used to determine whether or not such a proportion is reasonable? These are some of the questions that should arise now, Mr. Chairman. While one could discuss the whole basis of our income tax policies under this resolution, I do not propose to do so today, except to put in again a little plug for the consideration of a capital gains tax in Canada. Beyond that, Mr. Chairman, I am prepared to wait until we discuss the items in greater detail under the minister's estimates.


Mr. Olson:: I agree, Mr. Chairman, with the suggestion of the hon. member for Digby-Annapolis-Kings and the hon. member for Nanaimo-Cowichan-The Islands, that while the whole resolution is before us it would probably expedite our discussion if we took it one paragraph at a time. For that reason, I only want to spend three or four minutes to draw to the minister's attention one or two things about which he may wish to move amendments when we come to the particular paragraph concerned.
So far as paragraph 1 is concerned, I just wish to say we add our support to this matter of being able to deduct the cost of tuition fees from income tax. It is something that is justified, but we believe it is only a step in the right direction because there are still some very serious injustices concerning things that are actually deductible from taxable income. This is particularly true when applied to people who have spent a lot of time to acquire an education, which becomes the tool by which they earn their income. So far as

postgraduate studies are concerned, we think there would be every justification for including as deductions from taxable income some of the other expenses involved when a person must go away from home, in addition to the actual amount paid for tuition fees.
I am not clear what will happen under paragraphs 14 and 15 in the event that Premier Lesage manages to make arrangements with the federal government to take a cash consideration instead of having these family allowances paid direct by the federal government to children aged 16 and 17 years in the province of Quebec. We do not know whether Premier Lesage is going to refuse these payments. We know there have been some negotiations between the federal government and the Quebec provincial government, and it would be reasonably safe to say these negotiations covered the matter of family allowances.
If these discussions culminate in an agreement whereby there is a payment to the Quebec provincial government, in lieu of making these payments direct to the children, then it would be necessary to have another amendment to the Income Tax Act to equate the final results of this kind of arrangement for the people in the other provinces. I am sure the minister would agree it would be an injustice if a deduction of $550 were allowed for children age 16 and 17 years in the province of Quebec and only $300 for children in the same age group in the other provinces of Canada, while at the same time there was a payment out of the federal treasury to the Quebec provincial government matching the aggregate amount of these allowances.
Perhaps the minister intends to move an appropriate amendment, or it may be a stage has not been reached in the negotiations so that an announcement can be made regarding the final arrangements. Other than that, we are willing to follow the course outlined by the speakers on behalf of the two other parties, to take each paragraph in turn and confine our remarks to it.


Gilles Grégoire: Mr. Chairman, when I rise to discuss taxes, I am always reminded of that story of the seven year old boy who got lost in the Quebec income tax offices and the tax inspectors, looking for that child's mother, were shouting all over the place: whose $300 deduction is this? That is to show you a little Mr. Chairman, the turn of mind of those tax inspectors, of those people who only think in terms of an act, in terms of the greatest zeal they can display.
Income Tax Act
Last year, when the same budget resolutions came before us, I remember very clearly mentioning to the Minister of Finance (Mr. Gordon) that the drafters of that legislation-in the first place, let us consider it, if you will, from the literary point of view-that the drafting of that legislation especially the one coming from the Department of Finance, was complicated and exceedingly long, and most of the time incomprehensible, even for those who are responsible for the administration of the Income Tax Act. They just cannot make it out, so we can expect they will administer it somewhat at random.
For instance, if we take paragraph 16, we have a whole page, commencing on page 6 and ending on page 7, a whole page where there is not even one period. In short, there is only one sentence covering a whole page.
Mr. Chairman, I suggest it is almost a world record to be able to write a one-page sentence. When we start reading it, we come across right and left incidentals and once we have read it-imagine-we wonder how that amendment to the act can be fully understood by the officials of the various income tax offices all across the country.
The act itself is complicated in its wording, its subject matter, its sources of reference and its numbering.
Is it any wonder then that it is misinterpreted in various income tax offices throughout Canada? Is it any wonder also that it brings about unfair treatment for taxpayers and that they often have good cause to complain about income tax inspectors or assessors?
There is one office in particular about which I would like to talk this afternoon. It is located in the Quebec district. I am singling it out because it is probably the one with which I deal most often, since I get a great number of complaints about it.
My constituency comes within the purview of the Quebec income tax office. In that office discriminatory and arbitrary decisions are taken, dictatorial decisions are taken without any inquiries or examination of any kind, and when the taxpayer is not satisfied, he is told: Put in a complaint, put in an appeal, or come and see us in Quebec city.
The Quebec district office is 135 miles away from my constituency, so you can well imagine how difficult it is for an ordinary worker who earns his living by the day, to go to the Quebec city office during business hours.
I would like to mention one of those cases to illustrate how this act we are voting today can be outrageously applied in the province of Quebec.


The Deputy Chairman:: Order. I fear the hon. gentleman is moving away from the

Income Tax Act
resolution before the committee. I think he is discussing the administration of the Income Tax Act rather than the terms of the resolution now before us. I would prefer it if he would remain with the resolution that is before the committee.


Paul Raymond Martineau: Mr. Chairman, on this point of order, we are now on an income tax resolution, and it was stated before Your Honour took the chair that the resolution was in a general way before the committee. Its wording starts:
That it is expedient to introduce a measure to amend the Income Tax Act and to provide among other thingscertain specific things. It is the whole gist of the resolution and of the amendment of the Income Tax Act that is before the committee, and I would therefore submit it is strictly pertinent to the discussion to mention the way the act is administered; and that is what the hon. member for Lapointe is doing. I would respectfully submit he is within the rules in bringing up these matters.


Gilles Grégoire: Mr. Chairman, on the point of order, I should like to point out that I only made preliminary remarks on the wording of the act, on the manner in which it is written, on the manner in which it is divided into paragraphs, and in regard to its phraseology. It is to illustrate how badly this text is worded that I speak of the doings of the income tax inspectors which are ridiculous and arbitrary, because the very act we wish to pass is badly written. For example I can quote a sentence, that is section 16, which I would challenge you to read and tell me, within an hour, its exact meaning.
You will realize, then, that tax inspectors are unable to understand-that is the point I wish to make-and why it is that their interpretation is wrong. It is precisely because the legislation is poorly written. This is, in addition to the arguments put forth by the hon. member for Pontiac-Temiscamingue (Mr. Martineau), another point I want to make before we approve such poorly written legislation and I want to show you the disastrous effects of this poorly written text which does not make sense.


Horace Andrew (Bud) Olson: On the point of order, Mr. Chairman, I must agree with the hon. member for Pontiac-Temiscamingue that since the resolution before us deals with amendments to the Income Tax Act the hon. member who has the floor has a right to make some suggestions about the administration of the act, both as it stands and also, perhaps, in anticipation of certain problems which he thinks
[The Deputy Chairman.]
are likely to arise with respect to the administration of some of these amendments which are before us, now-and, of course, the whole of the resolution is before us, not just parts of it.


Herman Maxwell Batten: I should like to point out to hon. members on this point of order that we have a resolution before us from the Department of Finance and that the administration of the Income Tax Act is a responsibility of the Department of National Revenue. While hon. members are free to make any comments they wish regarding the Income Tax Act, these will only be in order provided they are related to the resolution before us. I have no intention in the world of restricting debate but I think it would be wise if, in our remarks, we were to relate those observations to the resolution which is now before us even though they might concern the administration of the act.


Gilles Grégoire: Mr. Chairman, I shall right away relate remarks to the resolution before us by saying that the doings of the officials of the tax department depend on the way this text is drafted, which makes it hard to understand.
For instance, I have here a rather incomprehensible case namely the case of charity receipts. In the case I have here, the department wrote to the taxpayer after his tax return had been accepted: Your charity receipts have been cut by such an amount. No investigation was made, despite the fact that the legislation we want to pass provides that if the person supplied charity receipts-that is written into the act-the amount can be deducted from the tax, provided the total receipts do not exceed 10 per cent of the salary. But inspectors do not understand that or they want to make a show of zeal to get a promotion, and that to the prejudice of taxpayers.
Inspectors write to the taxpayer and say: After investigation, we have decided to cut from $400 to $300 the amount you claim as charitable donations. The taxpayer wonders why and says: Well, I supplied the charity receipts, I am entitled to that under the act and you refuse it to me. The inspector replies: An investigation was made and we are not going to change our minds.
That is where the taxpayer writes to us and puts the matter in our hands. I have a briefcase full of problems like that, but I should like to state only a few.
Then we write to the Quebec income tax office and ask: Why did you cut down the allowance for charitable donations of this taxpayer? The taxation division replies a

little more intelligently and decently, saying: After inquiry, it has been deemed advisable to cut the allowance for charitable donations; however, if the taxpayer can account for his receipts, they will be accepted. But the taxpayer has already accounted for his receipts, since they were duly signed, in most cases by the parish priest, who is an honourable and respected person. They are signed by the parish priest who is told to warrant them. Then the parish priest has to write to the taxation division officials and tell them: I am surprised that you question the receipt I gave for income tax purposes. Especially, when this happens in such a whimsical way.
The parish priest often has to send two letters to the income tax officials, who then reply: All right, since you have accounted for your receipts, we shall accept them.
But then, consider all the steps that were required: a letter from the taxpayer to the income tax division, a letter from the taxpayer to his member of parliament, a letter of the member to the taxpayer, a letter of the member to the income tax division, another visit of the taxpayer to the parish priest, and then, another letter from the parish priest to the income tax division, and the department's reply to the taxpayer informing him that his receipts were justified, and all this for a $9.25 difference in the income tax assessment. This must have cost the government from $100 to $125, because the receipts for charitable donations were not accepted.
Why not accept these receipts if they are in due form? We have received a pile of letters from taxpayers who were dissatisfied.
I then decided to meet the income tax director. I was very well received but afterwards he did exactly the opposite of what he had promised me he would do. I said to the income tax director: When, in your opinion, charitable donation receipts are too high and you decide on an investigation, at least make a complete one. That is a legal requirement. Investigations by the income tax division cannot be complete as long as the investigators have not paid a visit to the taxpayer.
Some parish priests have told me that such visits are made no more than an hour before the evening rosary at the church, because the officials come from Quebec city and wish their stay in the Lake St. John area to be as short as possible. They arrive at any hour of the morning, afternoon or evening and say "We have prepared a list; give us the following information." The vicar is thus forced to do the investigation for the income tax officials. If he has signed a receipt for such and such
Income Tax Act
a person he must give the information on the spot and say: I do not know-
To allow people to act in such a way under that legislation is paramount to discrimination against the general public.


Herman Maxwell Batten: I am sorry to interrupt the hon. member again but it seems to me he is discussing the administration of the Income Tax Act, which is a responsibility of the Department of National Revenue. Up to this point he has not related his remarks to the resolution which is before us. I hope the hon. member will do that.


Gilles Grégoire: Mr. Chairman, once again I shall relate my remarks to the resolution. The relation between what I have to say and the resolution under consideration at this time is that the legislation before us is incomplete, that it lacks simplicity and is very difficult to understand for income tax inspectors and assessors. As a matter of fact, it is because they do not understand the act that such cases as those I have mentioned can happen.
By submitting specific cases to the Ministers of Finance and National Revenue, I hope to prove that they should introduce better prepared pieces of legislation than the one this house is discussing today if they want auditors to understand the provisions of the act.
That is the relevancy between what I say and the cases I quoted. I suggest those cases are so clear that they deserve consideration because it is a very important matter.
As a matter of fact, when legislation is passed and its provisions are ill applied or misinterpreted, we have a responsibility to see to it that justice is done to our electors who are the victims of the legislation we pass in this house.
This is, in my view, the relation between my remarks and the legislation we are called upon to vote.
It is a fine thing to ask us to pass legislation, but if they are improperly drafted and if most taxpayers complain about it because they cannot understand such legislation or make anything out of the intricacies of the law, we have a responsibility to say: do not bring forward any more budget resolutions or legislation with respect to income tax which are so drafted but see to it that the officials and the taxpayers can understand them.
I would suggest, Mr. Chairman, that I have related my observations to the matter now before us and that I may go on.
Mr. Chairman, in the cases I mentioned, justice was finally rendered to certain indi-

Income Tax Act
viduals but only after a lengthy exchange of correspondence between the income tax department and the taxpayer, the parish priest and the member of parliament.
But if the inspector or the assessor had considered only what was asked for, if we had passed simpler, easier to understand, more explicit legislation, then we would not have faced such problems.
I have another case to illustrate very well what I am saying. It is the case of a taxpayer who said he was not allowed to deduct 75 per cent of his car expenditures because it was alleged that he did not have to use his car in his work. In the letter, the name of the assessor is mentioned. He is a Mr. Gingras. That man's name is often referred to in the letters received.
The taxpayer wrote to me as follows: I was a little tired after travelling more than 160 miles the day the inspector came in to my office. He came from Quebec city, and, as I said a while ago, he tried to get his work done as fast as possible.
And the taxpayer went on: although my day's work was done, and I had travelled 160 miles and seen several customers, the inspector barged into my office very rudely, asking me a thousand and one questions, accusing me of all kinds of things. I spoke to him a bit harshly, and then the inspector said to the secretary, and I have the name here, Mr. Gingras, that he would make me pay dearly for this lack of respect for a tax assessor.
Mr. Chairman, if we do not pass a law to bring those people to their senses, what is the use of our present legislation, apart from getting taxpayers into trouble?
Mr. Chairman, it is intended to have paid dearly any lack of respect for a tax assessor with whom it is impossible to discuss problems, who considers that we are all thieves and treats everyone accordingly.
Such are the legislative measures that we are being asked to pass in this house. The taxpayer also tells me: As I knew that my tax returns were legal, I did not worry much about this investigator who, in order to have his revenge gave me a new assessment for two years, and claimed $245.91 from me.
Mr. Chairman, this taxpayer unfortunately came to see me much too late, because had I known about that, I might have been able to put this Mr. Gingras in his place before today. The taxpayer handed me the letter so that I might use it.
He also tells me that when he received that $245.91 claim, instead of seeing a lawyer, which would probably have cost him twice as much, he offered to pay this amount at the rate of $25 per month. But Mr. Gingras was

up to his tricks again, and told the taxpayer that he had to pay the amount within a certain period of time.
That is another example showing how Quebec income tax officers act.
And I think that we are right when we ask for an investigation on the actions of these little dictators.
Another taxpayer writes me to ask where he stands. As a matter of fact, he is wondering if he will have to go to the income tax office in Quebec to swear that he actually gave so much to charities.
Mr. Chairman, those are somewhat extraordinary things. When it is said that an investigation was made, in most cases, there was none. In my opinion, there should be an investigation about the actions of those inspectors.
We ask only that an investigation be made when it is intended to reduce the amounts claimed by the taxpayers for charitable donations. The least they can do is for the officers and assessors to call on the taxpayers. In so doing, they may see both sides of the picture, they may obtain both versions. We also ask that they behave politely and not by saying: "We are above you, you are a gang of thieves."
Let them conduct their investigation politely when they refuse to accept the statements submitted. The investigation is not to be made in the income tax office; what we ask for is that the assessors or auditors visit the taxpayers themselves, instead of asking the taxpayers to go to the office. The Quebec district taxation office is located 135 miles from Jon-quiere and 175 miles from Mistassini, which is in the constituency of my colleague from Roberval (Mr. Gauthier). In most cases, the officers tell the taxpayers: "If you are not satisfied, come to see us in Quebec city or lodge an appeal against our decision."
Mr. Chairman, I think if it is intended to pass legislation with respect to income tax, it must be drafted clearly and precisely, so that everybody may understand it. It is already hard enough to have to pay income tax. In fact, I believe the government grabs a sufficient share of the taxpayers' salary, it already digs deep enough into our pockets without entrusting the job to a bunch of rude and impertinent employees. Indeed, taxpayers have reason to complain, because their word always seems to be questioned with regard to receipts for charitable donations.
That is the situation in which everybody finds himself. We should keep in mind that a priest's or minister's task is not to give receipts. That is hardly his function. But if the taxpayer has no receipt from his parish priest, he has to pay taxes, even on the money he gave charitable institutions. It seems that

the parish priest is expected to do the work of a civil servant. When he signs a receipt, it seems that he sets everybody against himself: the taxpayer, the income tax department, everybody.
Mr. Chairman, the act is ill-conceived, and especially, the provision relating to receipts for charitable donations.
And today, we are asked to approve further income tax legislation. I think that if the minister wants to amend the Income Tax Act, he should amend the provision with regard to charitable donations, which is a source of trouble for each and every one of us. At least, we, in our district, receive a great number of complaints, and I suggest that the act be amended, instead of putting everybody in a difficult situation and abetting an existing trend, which is to incite people to cheat on their income tax return. I admit that there are some people who cheat, or try to cheat, but it is precisely that clause concerning charitable donation receipts, which encourages people to cheat or to obtain as many charitable donations receipts as possible from their parish priest, who is unwilling to make enemies. It may happen that a parish priest gives a receipt for an amount higher than the taxpayer's charities. But he does not have to squabble with his parishioners just to please the director of the income tax office or the inspector. Therefore, let us change the act. We have already made a suggestion along that line. I repeat it today and I ask the minister to move that amendment himself. In view of the fact that we are dealing with budget resolutions, I am ready to help him draft an amendment for which he will have all the merit and credit in Quebec. Let him move an amendment to the effect that-


Herman Maxwell Batten: Order. It being five o'clock and in order to permit the house to proceed to the consideration of private members' business, it is my duty to now leave the chair.


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


SHIPPING
Thomas Miller Bell: That, in the opinion of this house, the government should consider the advisability of reviving the Canadian merchant marine.
Merchant Marine
He said: Mr. Speaker, this subject of a merchant marine has come before parliament on numerous occasions since world war II.
I hope to submit this afternoon that there are even more compelling reasons now for the government to revive, in the words of my motion, the Canadian merchant marine. In going over the previous debates one will find that perhaps the greatest champion of this cause in the house was the former minister of external affairs, Mr. Howard Green. When I came into the house it was my pleasure and honour to support a plea which he made on May 13, 1954, for the merchant marine. The reasons that we made that plea at that time still hold true today, and as I say I think are even more compelling. The ironical twist, Mr. Speaker, is that at that time, 1954, there were over 100 merchant ships. Today we have one Canadian-registered, deep sea vessel.
The arguments for this proposal were four in number. First of all there was the matter of defence; second, shipbuilding; then that of trained seamen; and fourth, the question of trade. I should like to deal with these four matters in light of present-day circumstances.
As far as defence is concerned, Mr. Speaker, while our commitments have changed somewhat we are still in the business of naval escorting. If we have no merchant ships to escort, then what will our navy do in time of war? I seriously suggest, Mr. Speaker, that the experience of the last war when we pooled our merchant ships should be a lesson to us at the present time. We sat down at the bargaining table, but those who had the ships could of course bargain the best and have their say. The piper plays the tune, as it were, and those who do not have a merchant fleet to back up their words at the conference table lose out.
Another argument made quite frequently is that today we need more air transport than naval transport. I suggest that this may be true in the first instance, but a recent article in the magazine "Crowsnest", April issue, demonstrates very clearly that while air transport may be required for our combat-readied troops, we have to follow up with naval transport immediately afterwards to supply materials and even fuel for the aircraft. So I think from a military prestige standpoint we can still justify the need for a merchant marine.
Then reference was made in the previous debate, as I said, to shipbuilding. A very interesting brief was presented to the federal cabinet recently by the shipyard workers of Canada, in which they pointed out in clearcut fashion the present need for a merchant marine. They said that if we did not need our

Merchant Marine
own ships, then we should not be in the shipbuilding business. Canadian ownership would assist the shipbuilding yards to a degree unprecedented in our history. They further pointed out that with the scrapping of the frigate program the yards are in a serious transformation stage, and the $400 or $500 million which was released by the cut in naval expenditures could be used to assist the construction of a Canadian merchant marine.
Then there is the question of trained seamen. We all know the difficulties which we encountered during the last war through the lack of trained seamen. I suggest that we in this nation need to look to the future. We had over 7,000 trained seamen in 1945; now there are less than 100. The sea would be a worthwhile occupation for Canadian youth to follow. They would know where they fit into the future, and this could be part of a naval or merchant marine program. We do train seamen for the Canadian coastguard service and for Department of Transport vessels on the northern service, and this training could be tied in with that for a privately-owned merchant marine.
The last point of significance which was made in the debate ten years ago still has validity today, and I suggest it is even more convincing. It concerns the matter of trade.
We are trading to an increasing extent. Our exports are going up all the time. Recently we saw an example of our need for a merchant marine in that our wheat has been shipped both to China and Russia in the bottoms of ships of other countries. This is why it is imperative that we move now to establish a merchant marine, because there is a great demand for the movement of bulk cargoes.
Two tables numbered I and IX which appeared in the brief submitted by the shipyard workers show, first of all, world and Canadian export trade as a percentage, as extracted from the marine engineering log, and second, the extent of foreign ships participating in the handling of Canadian overseas trade. These tables are in both French and English, but I would ask permission, Mr. Speaker, to have both these short tables which are extracted from official government records printed in Hansard in English at this point in the debate.


Mr. Deputy Speaker:: Has the hon. member unanimous consent to have these tables printed in Hansard?


Some hon. Members:: Agreed.
[Editor's note: Tables referred to above are as follows:]


TABLE I
[Stage Direction]
World and Canadian export trade (Billions of Dollars)
1957	1958	1959	1960	1961	1962World	99.8	95.2	100.9	112.7	117.7	123.5Canada	4.9	4.9	5.2	5.4	5.9	6.4Canada's percentage of world exports	4.9	5.2	5.2	4.8	5.0	5.2
Source: Marine Engineering Log, 22nd Annual Review, June 1963.

[Stage Direction]
Extent of foreign ship participation in the handling of Canada's overseas trade (excl. U.S.)
Total dry cargo carried (exports and imports) in mil-	1947	1950	1953	1958	1959	1960	1961lions of tons -Percentage Carried By:	16.3	15.3	24.8	27.1	29.5	33.1	36.6American flag ships	19.9	5.1	2.8	1.5	2.1	1.4	1.3Liberian flag	-	-	3.1	11.8	14.7	9.4	9.1United Kingdom flag	45.2	48.8	34.0	32.2	29.1	30.3	24.3Canadian flag	20.2	9.9	4.3	.2	.03	.2	.2Norwegian flag	3.4	11.5	13.5	15.8	19.8	19.6	17.8Japanese flag	-	-	3.8	6.5	5.3	5.4	5.6Greek flag	-	3.7	6.1	9.8	9.0	9.5	11.8German flag Source: Canadian Maritime	Commission: 15th	3.8 and 16 th	2.1 3.5 Annual Reports.	7.2	9.3
Thomas Miller Bell: Another example, Mr. Speaker, to illustrate the need for a Canadian merchant marine in the sphere of trade, is illustrated by recommendations made at the United Nations conference on trade and development. This was an extensive conference held in Geneva on March 25. One of the recommendations has particular significance, and it is as follows:
5. Ocean transport costs being so important to the trade of developing countries, they should be encouraged where feasible to set up their own merchant marines-when they do, it must be understood that they will have to indulge in the practice of "flag discrimination" to protect these fledgling enterprises.
Having examined the reasons for having a merchant marine it might be worth while to take a moment merely to outline what has taken place since 1945 to show where Canada has fallen down. You will recall, Mr. Speaker, that after the second world war it was the policy of many of the smaller countries and states, such as Liberia and Panama, to provide a "flag of convenience", or to become what are called flag countries. This is a method of registration of a ship by a shipowner so as to escape tax liability in his country of origin. In many countries these shipowners suffered such a tax burden that they were forced to register their ships in countries like Panama or Liberia. As a consequence most countries took steps, through various methods such as tax concessions, subsidies or mortgages, to make it possible for their own shipowners to register ships at home and compete with these smaller nations. In other words, they placed their own shipowners in a competitive position. But Canada failed to do this, and for the life of me I cannot understand why we allowed our merchant fleet to dwindle since 1945 almost to the point of non-existence.
There is no sense in reviewing the history of the matter. Various proposals have been put forward from time to time. I am sure there are many recommendations and briefs which have been put before the Department of Transport and other departments which are worth while, and could form the basis of any shipbuilding scheme. I know from personal experience some of the difficulties of a fully socialized plan of ship operation, and I for one would have no part in any state ownership scheme which might be put forward. We all know the difficulties experienced by Canadian National Steamships, who were running ships to the West Indies.
I should first like to make the suggestion that whatever is done should be done now. There is enough authority and power in the Canadian Maritime Commission Act and regulations for us to carry out any method
Merchant Marine
we may have in mind to deal with this important matter. It is only necessary, as I suggested, to put our shipping industry in a position to be able to compete with those of other countries.
The second important thing to remember is that, whether this is done by government mortgage, by tax concessions or other forms of assistance, it must be long term to be fair to all-shipowners, seamen, shipyard workers and even the Canadian people. It may be necessary to go even further and to restrict our exports and imports, if possible, to Canadian bottoms as has been done by the United States. But let us be fair to everyone. Let us be long term in our suggestions and recommendations and let us not have a tragic abandonment of our merchant marine as we had in 1945.
I do not wish to speak long. I suggest that these are the advantages of a revived Canadian owned, operated and manned deep sea merchant marine. First of all, it would give new opportunities to thousands of young Canadians who would follow the sea as a lifetime profession. Second, it would stimulate Canadian shipbuilding in the tough, competitive world of today. Third, it would bring new dollars to our economy and reduce our balance of payments problems. Instead of sharing present shipowners' revenues outside of Canada, the earnings would all be distributed within our own economy. Fourth, it would give Canada greater control over import and export traffic. It would stabilize our shipping costs and bring us into the picture in chartering, insurance and even the direction of shipping. Fifth, it would provide greater prestige and bargaining power in trade negotiations with the newly developing countries. Last, it would mean that we would have available, having in mind present defence commitments, a merchant fleet for both the supply and transport of troops.
Canada is a vast and complex country. Because of our geography we have found it necessary from time to time to subsidize many of our services in the transportation field. Because of our sparse population we have also found it necessary to come forward with assistance on occasion to agriculture and some of our other basic industries. We have one of the longest and most rugged coastlines in the world, and it certainly is not wrong to think that we should assist in some way a Canadian owned merchant fleet that would bring us closer to the sea.
It would have a very healthy effect on our people. In my opinion we have become too insular in Canada. We are controlled from central Canada, and we seem to forget the wholesome sea is at our gates. We are, to put

Merchant Marine
it bluntly, a nation of landlubbers. A small investment such as I suggest, which would only amount to $3 million a year for about 25 ships, would once and for all enable us to take our place as a great trading nation with our own ships, our own seamen and the other supporting industrial services.
Let us have a decision now instead of waiting another 25 years. I do not know whether this matter should be referred to a committee. Possibly the railways and shipping committee could gather information that could be of great assistance in helping the government to make a decision. It might be that the matter could be referred to the banking and commerce committee. I think everybody agrees on the need of reviving our merchant marine. It is a matter of deciding the best financial method of doing so. I know that the Minister of Transport (Mr. Pickersgill) has many duties. His portfolio is a most diverse one. He cannot hope to cope with all his problems overnight, but he should try to direct his attention to one matter at a time. The former minister of transport, the hon. member for Three Rivers (Mr. Balcer), in a commend-ably statesmanlike fashion dealt with shipbuilding. He brought forward the subsidy plan which enabled us to build our coastal ships, and this helped the industry for a considerable period. I suggest to the Minister of Transport that he should act at once by taking the matter of reviving our merchant marine under immediate consideration, and come forward with a program that will benefit the entire economy.


Mr. Reynald Guay (Levis):: Mr. Speaker, I am very glad to have this opportunity to take part in the present debate, especially to deal with the establishment of a merchant marine, a project which I think would be feasible and economical in a country such as ours.
Many people today talk about small industries and say that, in Canada, we should establish and promote the establishment of small industries. That is true, but before doing that, we should keep and try to improve those we already have. I feel the time has come to examine the possibility of establishing a merchant marine. There are several good reasons for such a project, and here are the main ones: 1. Canada is one of the largest exporters in the world, but its exports to countries other than the United States are carried in ships of foreign registry.
2. A Canadian merchant marine would open many markets to Canadian shipyards, both for shipbuilding and repairs, and at the same time it would put our Canadian labour force to work on the equipment required for those ships.

3.	Canadian shipyards having no merchant marine to supply and serve in Canada labour under a serious handicap.
4.	The earnings of the Canadian merchant marine would reduce our balance of payments.
Present conditions, although quite unfavourable to the development of a Canadian oceangoing fleet, are not necessarily permanent, and this matter should be examined from time to time, as technical changes occur.
The application of automation to shipping is increasing from day to day. This could lessen the dispute about the wages of Canadian seamen abroad and enable to diversify our operations in the future.
I now take the liberty, Mr. Speaker, of referring to the brief submitted by the national trade union and the Canadian Congress of Labour to the cabinet; there are very few countries which have a more direct interest in shipping than Canada. Almost 16 per cent of our gross national product of $40.4 billion, that is $6.4 billion, is derived from exports. From 1957 to 1962, our exports accounted for 5 per cent of total world exports. Except for the world trade in oil, considering only the shipping trade of solid goods, Canada's share is even higher: 9.6 per cent in 1961.
In the face of such a situation, the condition of our merchant marine is disastrous: we only have one trading ship under Canadian registry the SS Federal Pioneer, of 10,000 tons built during the war. Such a situation cannot prevail without definitely being prejudicial to our commercial position in the world.
This is more pitiful since Canada has a shipping tradition of which it can be proud. After 1867, our country ranked fourth among the countries having a merchant marine. As shipbuilders, we ranked third during the second world war, immediately after the United States and Great Britain.
A modern merchant marine would guarantee to our country the development of our external trade and actively contribute to increase our exports.
It would provide jobs for thousands of Canadians. It would bring about the technical development of an important segment of our heavy industry. It would bring additional revenue to several related industries and to various localities. Finally, it would soon contribute to solve one of our main economic problems: The chronic imbalance of our international payments. We have the required capital, as well as the human and material resources available. At this stage, the federal government should reach a prompt decision.
Canadian shipments to foreign countries have reached 60.3 million tons in 1962, or a 12 per cent increase compared to the previous year. This rising trend is being maintained.

For the first five months of 1963, there is a 6 per cent increase, compared to the corresponding period in 1962.
Iron ore comes first with 24.3 million tons, followed by wheat (9 million tons), gypsum (4.1 million tons), lumber and timber (3 million tons).
Those three types of shipments totalled 22.1 million tons. The transportation of those three products alone required a fleet of 40 ships of 25,000 tons each, at the rate of two trips a month.
During 1963, the total volume of shipments handled in Canadian ports was higher than in any previous year and exceeded by 8 per cent the record reached in 1961.
According to 28th annual report of the national harbours board tabled in parliament by the Hon. J. W. Pickersgill, Minister of Transport, who is responsible for the board, those ports have known an unprecedented activity as well as a record operating income.
Such increased activity prevailed in all the harbours coming under the board which administers the Halifax, St. John's, Chicoutimi, Quebec, Three Rivers, Montreal, Churchill and Vancouver harbours as well as the grain elevators in Prescott and Port Col-borne.
Mr. Speaker, shipping has topped all previous records. The Canadian national harbours have handled a surplus of 66 million tons of freight, namely a 10 per cent increase above the 1962 volume.
Exports have increased by nearly 24 per cent compared to last year, when imports remained about the same as in 1962. Domestic traffic, upon arrival, increased by 12 per cent and domestic traffic, upon departure, by nearly 1 per cent.
In addition to that, Mr. Speaker:
1.	It is not surprising that shipyards are specialized plants which must rely on the skills patiently acquired by steelworkers, welders, coppersmiths, electricians, carpenters, cabinet-makers, modelmakers, riggers, tinsmiths and others.
Such skills must be kept continuously occupied in shipbuilding, if we want to avoid that such a mine of talents be wasted and scattered. Shipyards are tottering when such skills remain idle. They make headway and spread economic development throughout the country when farsighted maritime nations see to it that their expert teams work at their main job, building and repairing ships.
2.	In the near future, a steel industry will be established in Quebec, which will increase considerably our needs with regard to water transportation.
3.	There was a considerable increase in winter navigation on the St. Lawrence river,
Merchant Marine
according to the report published in March 1964 by the board of industry and commerce of Metropolitan Quebec Inc., whose main object is to supply the industry and trade of the economic region of Quebec with a supplementary service that might contribute to their development.
I take the liberty of quoting a few figures from the newspaper Le Soleil:
Statistics on shipbuilding up to 1961 have just been released. The number of shipyard workers dropped from 18,577 in 1957 to 14,848 in 1961. Quebec had the largest labour force, that is 8,005 in 1957 and 6,168 in 1961, next came British Columbia with employment figures of 5,001 and 2,946 workers, respectively...
In 1961, the gross value of production amounted to $136,629,459, Quebec getting $61,262,965 of it. Most orders are placed by the federal government.
In closing, Mr. Speaker, I say that the government should take steps to stabilize employment in our shipyards and I think that it could do it best by setting up a merchant marine as soon as possible. I suggest, therefore, that the motion be referred to a committee for study.
In short, here are a few most urgent recommendations that I wish to submit to the government.
1.	That jurisdiction over the coastal trade be extended to the Belle Isle strait, Newfoundland being a Canadian province.
2.	That the ships be built, repaired and registered in Canada and have their home ports here.
3.	That the 33J per cent subsidies be covered by permanent legislation and not by orders in council, as at the present time.
4.	That shipyards be regulated by federal legislation, mainly for the following reasons:
(a)	60 per cent of shipbuilding involve contracts with the federal government.
(b)	The inspection is carried out by the federal government.
(c)	Shipbuilding is a national industry.
(d)	The abovementioned subsidies are granted by the federal government. Hence shipping will be covered by federal legislation on coastal trade and licences will be delivered by the Department of Transport.
5.	That a shipbuilding commission be set up to regulate Canadian shipyards. The commission could establish equitable plans for each area. In brief, for such a study, I respectfully suggest that the government should set up a parliamentary committee on coastal shipping in order that the recommendations made in the 1957 report be implemented.


Maurice Côté: Mr. Speaker, as member for a riding bordering on the majestic Saguenay, one of the most beautiful rivers in the world, it is natural that

Merchant Marine
I should be keenly interested in the establishment of a merchant marine and harbour improvements.
Our area is fortunate in that private undertakings have been able to organize themselves and establish their own shipping industry, because we would have been deprived altogether along that line. There is, for instance the Saguenay Terminal, which has its home port in Port Alfred and owns a sizeable fleet, that is about 100 ships which bring in raw materials from South America and Africa and export products manufactured in the Saguenay area, especially paper and aluminium.
That is not enough, however, and it does not meet present needs not only in my district but throughout the country. It must be remembered that shipbuilding was the first industry of its kind in Canada. If you read the economic history of our country you will see that the first industry established here was a shipyard. We have the advantage of being almost surrounded by water; we have oceans at the north, east and west and the majestic St. Lawrence and the great lakes to the south. However, we have no merchant marine to ply those waters. That is truly amazing on the part of a country with a population of nearly 20 million people.
We have shipyards and I know that the hon. member for Levis (Mr. Guay) is keenly interested in this matter. He may have strong arguments but I should like to stress one point, the financial element. In spite of the numerous arguments he invoked, the member failed to show the need for shipbuilding. Indeed, the saddest point of all is that the government does not have the funds at present to build ships.
It is faced with the following problem: the people are overtaxed and still we are being asked for money for shipbuilding.
Here, I would like to congratulate the hon. member for Saint John-Albert (Mr. Bell) for having raised this question of major importance for the Canadian economy. However, if concrete proposals enabling us to build ships are not brought down, all efforts will be of no avail. In fact, we have the necessary materials and labour, and we have well organized shipyards, but the funniest part of it all is that we lack the money. By the way, what is money? In itself, it is merely a means of acquiring property. Some economists call it a certificate to get goods.
As potential, we have the Bank of Canada, which is the people's bank, the nation's bank, and we are not using that potential, that power which could capitalize this country's assets. We could, considering that point of view, create thousands of new jobs in this

country, we could train our young people and we would become much more interested, as our economy would be more prosperous.
On the other hand, if we consider the way money is being spent on social assistance- millions are being spent annually on social assistance of some kind-we cannot but conclude that instead of distributing money for nothing, it would be better to use it to build ships in which to carry our products to other countries and to bring back those products we need.
When we look upon small countries, such as Norway and Sweden and many others that have large fleets, we surely have cause for reflection. I often see in Chicoutimi harbour ships which come all the way from Sweden or Norway. As a matter of fact, it is on account of these ships coming in from far away countries that we benefit from a number of Canadians of foreign origin who are now assimilated to the French Canadians but whose origin is Norwegian, Swedish, even Finnish. These sailors discovered that we have a magnificent country, liked it, and have remained with us.
It has been established that shipping by waterway from Canada to foreign countries has increased considerably in 1962, that is, by 12 per cent.
Now that we want to extend Canada's export markets, perspectives seem tremendous. In the course of this week, and according to what I was told, I will probably have the opportunity, of introducing my Bill No. C-24, an Act to amend the Bank of Canada Act. If the house sees fit to pass that bill, we will then be able to increase our exports considerably and we will have to build a fleet of ships to sail the seven seas; we will then be able to do business with all those countries enjoying a relatively stable economy, a relatively stable government, from whom we could accept non convertible currencies. We may then also be able to increase our exports considerably.
Keeping all those countries in mind, Mr. Speaker, I would like to say in conclusion that Canada, after all, is an exporting country. The same can be said of my own Saguenay region, because if it were not for our exports nobody could earn a living there. All the industries of my region export 90, 95 and even 98 per cent of their production.
It is also the case with most of our large Canadian industries. Therefore, shipbuilding is of the utmost importance, but let us, by all means, open our eyes and see where we can obtain capital. A merchant marine will not be built by overtaxing people, but by tapping available sources of funds. We have the advantage of having the report of the royal commission on banking and finance. I

did not have the time to look it over personally to see whether it contained concrete solutions to boost our economy. However, let us not forget that conditions now are not what they were 50 or 100 years ago. Times have changed and we have to take that evolution into account. When we can monetize our own improvements, we will be able to monetize the Canadian potential, to monetize, in the long run, our national resources, but, in order to do that, it is imperative that we build a merchant marine.
The financial system has changed and we can consider ourselves in a position to benefit from our wealth; from Canada's potential and from our natural resources. To achieve this goal, we must without fail set up a merchant marine of which Canada would be proud and which would allow the country to assert itself when we have a flag worthy of our country.


Mr. Robert Beaule (Quebec East):: Mr. Speaker, the bill now under consideration is a very important one. It is a pity that it was not introduced by the member for Saint John-Albert (Mr. Bell) when his party was on the other side of the house. When the hon. members belong to the party in power, they seem to remain idle, but when they are in the opposition, they become very aggressive.
In 1962, in connection with coastal shipping in Canada, the volume of goods carried in the inland waters of the St. Lawrence including the great lakes reached 43,375,648 tons. Ninety seven English ships not registered in Canada and three foreign ones engaged in coastal shipping with a temporary licence issued by the Minister of Transport were in operation in 1962.
Five million, 8 hundred and 99 thousand, 9 hundred tons, that is 13.6 per cent of the total coasting trade for 1962, have been shipped on vessels registered outside Canada. During the same year, such vessels carried: all British Columbia timber to harbours of eastern Canada; 94 per cent of limestone from Colborne to Clarkson; 90 per cent of ilmenite from Havre St-Pierre to Sorel; about 87 per cent of gypsum from Little Narrows to Montreal; over 50 per cent of iron ore from Wabana to Sydney; 65 per cent of the coal shipped from Sydney; 44 per cent of the iron ore shipped from Seven Islands.
That gives you an idea of the importance for our merchant marine, namely ships registered and built in Canada, to see that they possess the exclusive right of an inshore freight service or at least in the St. Lawrence inland waters.
It would also assist greatly the Canadian shipyards which, this way, could get contracts
Merchant Marine
for the construction of boats which undertake exclusively that inshore service.
Our shipyards play a great part in the economic life of the Quebec area. They are among the most important employers, giving work to a great number of workers and specialized technicians who all receive salaries ranging among the highest in the Quebec area.
In addition, shipbuilding benefits the entire Canadian economy. The greater part of the materials used in shipbuilding are manufactured and processed in Canada. Steel, engines, electrical equipment and interior decorating materials are mostly manufactured in Canada and their manufacture provides jobs to a great number of Canadian workers whose earnings benefit the whole of our economy.
The hon. member for Three Rivers, minister of transport in the previous government, announced on May 12, 1961 that the Canadian government intended to introduce a legislation which would restrict coastal shipping to ships registered in Canada. On November 12, 1962, the hon. member reaffirmed his government's intention to amend the legislation so as to give effect to that proposal from May 12, 1961.
On June 13, 1963, the President of the Privy Council, who was minister of transport during the last session, has stated anew that the present government still intends to amend the legislation in order to reserve the coastal trade for Canadian ships.
Many foreign ships, including those of the United States, Australia, Italy, France, Greece and Western Germany reserve the coastal trade for ships flying the flag of their respective country.
Canada is fully justified to pass such a measure, for is could help greatly the economy and give employment to workers that could build ships as well as to crews of ships flying the Canadian flag.
About 15 days ago, the national federation of metallurgy submitted to the federal cabinet a brief asking that a Canadian merchant marine be set up. That brief contained a letter from the late Hon. Ian A. Mackenzie, former minister of veterans affairs-it goes back to June 4, 1945, that is 20 years ago- addressed to the Vancouver shipyard workers:
On behalf of the Canadian government, I wish to express to you Canada's appreciation for your contribution to victory. The workers of British Columbia, using new techniques acquired since the beginning of the war, built ships totalling three million tons: 53 warships, 231 transport ships-for a total cost of $500 million, half of which was paid in salaries locally; 65 ships are under construction. When you started, 90 per cent of the materials were imported. At the present time, 90 per cent are Canadian made, and this ensures the continued existence of our shipbuilding industry.
Thanks to your competence, your zeal and your energy, in other words, thanks to you, workers, Vancouver's maritime industry is unparalleled from the point of view both of equality and production

Merchant Marine
Canada is grateful to you and assure you that your competence and your skills will be necessary for future tasks-
And here, Mr. Speaker, is the most important part of the letter written 20 years ago:
Let us not repeat past mistakes. The present government believes that Canada's shipbuilding industry is here to stay.
The navy and the merchant marine you have built up will be retained and developed. The ships you have built will transport Canadian products to the four comers of the world thus creating employment and opportunities for Canadian workers.
The present government has set forth and is now carrying out policies to ensure employment and to expand our trade in the post-war era. Your skill will be needed in the shipyards and in the new industries which will be set up through our expanding trade.
The government which has prepared and launched this vast shipbuilding program in Vancouver requests your help to carry out the projects it has devised to ensure that you are employed in the trades in which you have become so highly skilled.
Sincerely yours,
Ian A. Mackenzie,
Minister of Veterans' Affairs.
Mr. Speaker, that letter was written 20 years ago. It is being said that the present government has prepared plans which it is now carrying out, but I believe that those plans were put aboard a destroyer and that they sank to the bottom of the ocean.
Now, on page 6 of that brief, one can find the following lines:
That state of affairs is all the more distressing since Canada has a maritime tradition she can be rightly proud of. During the years following 1867, this country came fourth among the countries having a merchant marine. We came third as shipbuilders during the last war, next to the United States and Great Britain.
What is possible during war time is also feasible during peacetime for constructive purposes. The setting up of a modem merchant marine would guarantee the expansion of our foreign trade and would contribute actively to the increase of our exports. It would provide employment to thousands of Canadians and bring about the technical renovation of a major sector of our heavy industry. It would provide additional revenue to several related industries and to various localities. Finally, it would provide a prompt solution to one of our major economic problems, that is the chronic deficit of our balance of international payments.
And the same brief continues as follows:
We have at our disposal the capital and the human and material resources we need. At this stage, the federal government must make a decision, and it must act right now.
A while ago, I noticed that the hon. member for Levis (Mr. Guay) mentioned goods such as iron ore, wheat and lumber, whose shipping alone would keep going a fleet of 40 ships.

And again, in the same brief, the shipping of iron ore, wheat and lumber is mentioned. Here is what it says:
These three types of shiploads make a total of 22.1 million tons. The shipping alone of these three kinds of goods would require a fleet of 40 ships of 25,000 tons each, at the rate of two trips monthly.
Mr. Speaker, I think that this is an area which should not be disregarded by hon. members.
I also congratulate the hon. member for Levis for having supported the resolution. I think that the time has come for the government to act.
Mr. Speaker, putting the merchant marine back into service in Canada is a necessity for our Canadian economy. The coastal trade for instance should be more important in Canada than in any other country, considering our geographical position, and the great extent of our coastal and interior waters.
The great lakes, are, after all, inland seas. The coastal trade helps to train sailors and shipowners. If the existing legislation is maintained, which tolerates an almost disloyal competition, and forces our shipowners, whose vessels engage in the coastal trade, to struggle under exceptionally difficult conditions, they will be unable to stand up to that competition, and a crisis will ensue which will be difficult for Canada to overcome.
Our coastal waters could very well be invaded by ships registered anywhere in the commonwealth, except in Canada.
That is why it is high time for Canada to have her own merchant navy. This could also keep that shipping revenue in Canada, which would help maintain a favourable balance of payments in our international trade.


Mr. Harold E. Winch (Vancouver East):: Over the years I have always been in favour of Canada having a merchant marine. I am therefore very much in support of the principle of the motion which is now before us.
However, this is one of the most complicated matters with which we could be asked to deal. A great many of us remember the time when Canada did have a merchant marine, and a good one. Because of government policy, or perhaps because of competition, we lost our merchant fleet. Therefore, when we consider in principle building another one we should take into consideration the reasons why we lost our merchant marine, and the difficulties which would face the establishment of a new one. There is the question of the cost of the ships and of the existence of a profitable contractual basis for shipowners, shipbuilders and the union. There is the question of the standardization of costs in the

operation. There are so many imponderables that this is a matter which could not be discussed in one hour in this house.
My only purpose in rising is to say that I have always been in favour of the re-establishment of a Canadian merchant marine. I believe that as an export nation and with the shore line we have on the Atlantic, the Pacific and the great lakes, we are required to have a merchant marine; but I also believe that in order to make certain that we bring into being a new merchant marine of the most modern, efficient and functional nature, it requires a great deal of study and will require commitments by those who build and those who operate. Therefore, sir, I most certainly hope that in the furtherance of the principle and the belief that we should have a merchant marine, this motion will be referred to a committee of the House of Commons for a full and continuing study, with a report being brought back to the house.


Mr. J. E. Lloyd (Halifax):: Mr. Speaker, with the wording of the notice of motion before us, one cannot quarrel in any respect, depending of course on how one may interpret it. It says:
That, in the opinion of this house, the government should consider the advisability of reviving the Canadian merchant marine.
In a general sense I say that Canada needs to keep itself informed in any field of economic activity, whether it be in the production of goods, the production of services or in the utilization of its skills in the production of ships for the carrier trade of the world. Canada lives today in a state of international economic circumstances that challenges our imagination as to what course we should choose for the future. Indeed, there is very little in the past to guide us except to remind us of events that may have been happy ones, or sometimes unhappy ones. Our shipbuilders learned their skills in the past. We have inherited this ability to construct ships in Canada that were much needed, sorely needed indeed, a few years ago during world war II, as they were also needed in world war I. So that when you approach the reasons why a nation should undertake to promote a particular economic activity, you find very often reasons for undertaking such proposals that do not appear on the surface when you first examine the question. I have heard some say quickly, and with apparent good reason and common sense, that if we build a merchant fleet, man it and endeavour to develop cargoes for these ships to the international ports of the world, we may very well lose some of our export trade because those foreign countries who derive foreign exchange from the
Merchant Marine
carrier trade will not have the wherewithal with which to purchase our particular goods. This is a superficial argument and I think that when very close examination is given to it, it will not stand up in this age of multilateral trade and great strivings to bring nations of the world into freer relationships in trading, the production of their goods and services with each other.
What we are looking for throughout the world, with the exploding population that we have, is an expansion of production to meet the total world needs, and no longer can we hide our heads in the sand, like the ostrich, and hope that world events will not touch us. It is inevitable that they will. It seems to me that in our pursuit of national economic goals, which we are told by those who are skilful in these fields are full employment, price stability, maximum multilateral trade and steady growth of our national production-these are the standard words that are used-surely we must, through education and experience, also remember that a great asset which we have is the skill of our people in the production of goods, and one of those great skills is the production of ships. I think that Canada would indeed suffer greatly, if it has not already suffered, by its unwillingness to at least make some degree of investment in the maintenance of a merchant marine.
There is no doubt whatsoever that to all of us in the Atlantic provinces and many others it seems that Canada should not exist without ships of this nation traversing the oceans of the world. We have long believed this was part of our development in the first place. Sir Samuel Cunard thought so many years ago, and he was able to meet the competition in those days. Surely to goodness we can find for ourselves some share of the carrier service internationally in this year 1964, and carrying on in the future. I subscribe to the view that a Canadian merchant navy will provide a splendid opportunity for young Canadians to have a career in the trading services, as the hon. member for Saint John-Albert (Mr. Bell) pointed out a short time ago.
I believe that the maintenance of our skills in shipbuilding will be required by Canada to hold its place in the changing pattern of international trade and commerce. I believe, also, that we need to utilize all our capabilities in the field of production and should be ready to meet with a very flexible capability any changes that are bound to occur. In the past decade the rebuilt and modernized economies of other countries have become increasingly vigorous and imaginative. Those countries I believe have managed to obtain for

Income Tax Act
themselves a share of the international carrier trade, and even without it they would still have maintained their trading patterns with Canada.


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



BUSINESS OF THE HOUSE

Mr. Deputy Speaker:: It is my duty, pursuant to provisional standing order 39A to inform the house that the following questions to be raised at ten o'clock this day are as follows: Mr. Howard (Skeena), the regulations respecting government wharves; Mr. Herridge (Kootenay West), activities of the United States in Viet Nam; Mr. Douglas (Burnaby-Coquitlam), increase in the price of sugar.
The house will resume the business interrupted at five o'clock.



WAYS AND MEANS

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

[Stage Direction]
Resolved, that it is expedient to introduce a measure to amend the Income Tax Act and to provide among other things:
1.	That for the 1964 and subsequent taxation years the deduction from income granted in respect of certain tuition fees be extended to include tuition fees paid by a taxpayer who is a student, whether or not he is a full time student, to an educational institution in Canada
(a)	that is a university, college or other educational institution providing courses at a postsecondary school level,
(b)	that is a school operated by or on behalf of Her Majesty in right of Canada or a province, a municipality in Canada, or a municipal or public body performing a function of government in Canada,
(c)	that is a high school or secondary school providing courses leading to a secondary school certificate or diploma that is a requirement for entrance to a college or university, or
(d)	that is certified by the Minister of Labour to be an educational institution by which courses are conducted that provide or improve the qualifications of a person for employment or for the carrying on of a business or profession,
if the tuition fees paid by the taxpayer for the year exceed $25.
2.	That for the 1964 and subsequent taxation years a dependant in respect of whom a taxpayer may deduct an amount not exceeding $550 in computing his taxable income shall include a taxpayer's brother or sister who was 21 years of age or over and in full time attendance at a school or university.
3.	That the period commencing on December 5, 1963 within which a new manufacturing or processing business must have commenced manufacturing or processing in reasonable commercial quantities in a designated area in order to obtain a certificate for the purposes of section 71A of the act be extended to March 31, 1967.
4.	That for the 1964 and subsequent taxation years in determining whether 95 per cent of the assets used in a business were new and situated

in a designated area, for purposes of establishing under section 71A of the act that a person was carrying on the business in a designated area, the value of the assets shall be their fair market value notwithstanding that such value may be different from their capital cost.
5.	That where at a time when an area was a designated area a business has been certified to be a new manufacturing or processing business, or an application has been made in writing to the Minister of Industry by a taxpayer in respect of a business that upon the fulfilment of specified conditions would be certified to be a new manufacturing or processing business in the designated area, that area, notwithstanding that it may no longer be a designated area, shall for the purpose of the application of section 71A of the act to that particular business continue to be a designated area.
6.	That for the 1962 and subsequent taxation years a taxpayer may deduct in computing income all expenditures of a current nature for scientific research carried on outside Canada that are expenditures made in the year
(a) for scientific research related to the taxpayer's business directly undertaken by or on behalf of the taxpayer, or
(b)	to an approved association, university, college, research institute or other similar institution to be used for scientific research related to the taxpayer's business.
7. That for the 1964 and subsequent taxation years a taxpayer may deduct in computing income amounts expended by him in relation to an objection to an assessment or an appeal from an assessment and shall include in computing income any costs recovered in respect thereof.
8.	That for the 1964 and subsequent taxation years a taxpayer may deduct in computing income an amount paid in the year or in a previous year since 1962 as a contribution to or under a registered pension fund or plan in respect of services rendered by him in past years while he was a contributor even if he also deducts an amount as a contribution in respect of services rendered by him in past years while he was not a contributor, but the maximum amount deductible in a year in respect of past services while he was a contributor shall not exceed $1,500 minus the aggregate of the amounts deducted in the year in respect of services rendered by him in the year and in respect of services rendered by him previous to the year while he was not a contributor.
9.	That for the 1964 and subsequent taxation years the period of 60 days from the end of a year within which an employer may pay an amount to or under a registered pension fund or plan in respect of services rendered by his employees be increased to 120 days.
10.	That for the 1964 and subsequent taxation years it be made clear that any amount received by an employer upon the winding up or reorganization of a pension fund or plan shall be included in his income.
11.	That for the 1964 and subsequent taxation years subsection (3) of section 12 of the act, which provides rules concerning an outlay or expense payable by a taxpayer to a person with whom he was not dealing at arm's length, be amended so that a taxpayer who at the end of his taxation year has a liability that
(a)	arose in respect of a non-arm's length transaction,
(b)	was deductible in computing his income, and
(c)	has been outstanding for two years following the end of the taxation year in which it accrued must include in income for the third year after it accrued an amount equal to the liability, unless

the debtor and creditor sign and file an agreement in which they elect to have their taxes computed as though the debt had been paid and replaced by a loan on the first day of that third year.
12.	That the 20 per cent rate of tax payable by a non-resident person on dividends paid or credited to him after 1964 by a corporation resident in Canada that does not have a degree of Canadian ownership be reduced to 15 per cent, and that in consequence thereof:
(a)	Part IID of the act imposing a tax equal to 5 per cent of certain dividends paid by a corporation that does not have a degree of Canadian ownership be repealed;
(b)	the 20 per cent rate of tax imposed by Part IIIA of the act on income earned after 1964 by a non-resident corporation carrying on business in Canada be reduced to 15 per cent; and
(c)	the 20 per cent rate of tax imposed on the taxable income earned after 1964 by a non-resident-owned investment corporation be reduced to 15 per cent.
13.	That for the 1964 and subsequent taxation years, where a taxpayer has disposed of his interest in a partnership, such part of the consideration as is reasonable in the circumstances shall be deemed to be proceeds of disposition of depreciable property of the taxpayer used in the partnership business.
14.	That for the 1964 taxation year the amount deductible in computing taxable income in respect of a dependant child who was over 15 and under 18 years of age at the end of the year shall not exceed $470 if an allowance was paid under the Family Allowances Act in respect of the child for any month after the month in which he attained the age of 16 years.
15.	That for the 1965 and subsequent taxation years, a child shall be regarded as a child qualified for family allowance for any year at the end of which he was over 15 and under 18 years of age, if an allowance under the Family Allowances Act was paid in the year in respect of that child after the month in which he attained the age of 16 years.
16.	That with regard to the definition of degree of Canadian ownership in section 139A of the said Act, the said measure provide as follows;
"(1) Subparagraph (ii) of paragraph (a) of subsection (1) of section 139A of the said Act is repealed and the following substituted therefor;
"(ii) either
(A)	not less than 25 per cent of the issued and outstanding shares of the corporation having full voting rights under all circumstances were owned by one or more individuals resident in Canada, one or more corporations controlled in Canada or a combination thereof, and equity shares representing in the aggregate not less than 25 per cent of that part of the paid up capital of the corporation that was represented by all the issued and outstanding equity shares of the corporation were owned by one or more individuals resident in Canada, one or more corporations controlled in Canada, or a combination thereof, or
(B)	a class or classes of shares of the corporation having full voting rights under all circumstances were listed on a prescribed stock exchange in Canada, and it is established in prescribed manner that no one non-resident person and no one corporation that did not comply with clause (A) of this subparagraph owned more than 75 per cent of the issued and outstanding shares of the corporation having full voting rights under all circumstances, alone or in combination with any other person related to such non-resident person or such corporation at any time within the period within the meaning of subsection (5a) or (5b) of section
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139, and a class or classes of equity shares of the corporation representing in the aggregate not less than 50 per cent of that part of the paid up capital of the corporation that was represented by all the issued and outstanding equity shares of the corporation were listed on a prescribed stock exchange in Canada, and it is established in prescribed manner that no one non-resident person and no one corporation that did not comply with clause (A) of this subparagraph owned equity shares representing in the aggregate more than 75 per cent of that part of the paid up capital of the corporation that was represented by all the issued and outstanding equity shares of the corporation, alone or in combination with any other person related to such nonresident person or such corporation at any time within the period within the meaning of subsection (5a) or (5b) of section 139, and''
(2)	Subsection (1) of section 139A of the said act is further amended by striking out the word "or" at the end of paragraph (a) thereof, by repealing paragraph (b) thereof and by substituting therefor the following paragraphs:
"(b) the corporation complied with the conditions specified in subparagraphs (i) and (iii) of paragraph (a) and was a subsidiary wholly-owned corporation subsidiary to a corporation that throughout the sixty day period complied with the conditions specified in paragraph (a) or (c); or
(c)	the corporation complied with the conditions specified in subparagraphs (i) and (iii) of paragraph (a) and was a subsidiary controlled corporation
(i)	having issued and outstanding equity shares none of which were owned by a person other than
(A)	the corporation to which it was subsidiary,
(B)	a non-resident person not related to the corporation to which it was subsidiary,
(C)	an individual resident in Canada, or
(D)	a corporation controlled in Canada, and
(ii)	subsidiary to a corporation that throughout the sixty-day period complied with the conditions specified in paragraph (a) or (b)."
(3)	Paragraphs (a) and (b) of subsection (2) of section 139A of the said act are repealed and the following substituted therefor:
"(a) a corporation that has share capital is not controlled in Canada at a particular time unless at that time the corporation is resident in Canada, and more than 50 per cent of its issued and outstanding shares having full voting rights under all circumstances, and shares representing in the aggregate more than 50 per cent of its paid up capital are owned by
(i)	individuals resident in Canada,
(ii)	corporations resident in Canada with respect to each of which
(A)	more than 50 per cent of the issued shares having full voting rights under all circumstances, and
(B)	shares representing in the aggregate more than 50 per cent of the paid up capital
are owned by individuals resident in Canada, or
(iii)	any combination of individuals or corporations described in subparagraph (i) or (ii);
(b) where
(i)	a non-resident person,
(ii)	a corporation that does not have a degree of Canadian ownership, or
(iii)	a corporation that is related to a nonresident person within the meaning of subsection (5a) or (5b) of section 139
has a right under a contract in equity or otherwise either immediately or in the future and either absolutely or contingently, to, or to acquire, equity shares in a corporation, those shares shall
[Stage Direction]
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(iv)	unless the right is contingent upon an event that it is not reasonable to expect to occur within a reasonable time, or
(v)	unless the right is such that a reasonable man concerned only with the value of the shares would not exercise it.
be deemed
(vi)	to be owned by the person who has the right.
(vii)	to be owned by a non-resident person, where the person who has the right is a corporation described in subparagraph (ii) or (iii), and
(viii)	where the shares are unissued,
(A)	to be issued and outstanding, and
(B)	to have a paid-up capital value, with respect to each share, equal to
1.	the par value, where the shares have a par value,
2.	the amount that would be paid with respect to each share to exercise the right under the terms of the contract, where the shares have no par value and an amount is specified in the contract, or
3.	the market value at the end of the relevant sixty day period of a share of the class of shares of that corporation that is most closely similar to that share, where the shares have no par value and no amount is specified in the contract,
and any other person who actually owns the shares in respect of which that right exists shall be deemed not to own those shares."
(4)	Subsection (2) of section 139A of the said act is further amended by striking out the word "and" at the end of paragraph (c) thereof and by adding thereto the following paragraphs:
"(e) "equity share" means
(i)	a share, the owner of which has, as owner thereof, a right
(A)	to a dividend, and
(B)	to a part of the surplus of the coropora-tion after repayment of capital, upon the redemption of the share, a reduction of the capital of the corporation or the winding-up of the corporation, as great as the right of the owner of any other share of the corporation, when the magnitude of the right in each case is expressed as a rate based on the paid-up capital value of the share to which the right relates, and
(ii)	a share, the owner of which has, as owner thereof, a right
(A)	to a dividend, after a dividend at a rate not in excess of 8 per cent per annum has been paid to the owners of shares of a class other than the class to which that share belongs, and
(B)	to a part of the surplus of the corporation after repayment of capital, upon the redemption of the share, a reduction of the capital of the corporation or the winding-up of the corporation, after a payment of a part of the surplus at a rate not in excess of 10 per cent has been made to the owners of shares of a class other than the class to which that share belongs,
as great as the right of the owner of any other share of the corporation, when the magnitude of the right in each case is expressed as a rate based on the paid-up capital value of the share to which the right relates; and
(f) "paid-up capital value" with reference to a share, means
(i)	in the case of an unissued share that is deemed by paragraph (b) to be issued and outstanding, the amount determined under clause (B) of subparagraph (viii) of that paragraph, and
(ii)	in any other case, an amount equal to the paid-up capital of the corporation that is represented by the shares of the class to which that share belongs divided by the number of shares of that class that are in fact issued and outstanding."
(5)	In the case of a taxation year commencing before January 1, 1965, of a corporation that would

have had a degree of Canadian ownership in the 1964 taxation years if section 139A of the said act had not been amended by this act, that portion of subsection (1) of section 139A of the said act, as amended by this act, that precedes paragraph (a) thereof shall, if the corporation elects in prescribed manner before January 1,	1965, be
read as follows:
"139A. (1) For the purposes of this act, a corporation has a degree of Canadian ownership in a taxation year if throughout any sixty-day period commencing after March 16,	1964 and ending
before January 1, 1965"
(6)	This section is applicable to the 1964 and subsequent taxation years."
and for the purpose of determining whether a corporation had a degree of Canadian ownership for the purposes of paragraph (b) of subsection (la) of section 106 of the said act, section 139A of the said act shall
(a)	in relation to any dividend declared on or before March 16, 1964 be read as if it had not been amended by the said measure, and
(b)	in relation to any dividend declared after March 16, 1964 be read as amended by the said measure.
At six o'clock the committee took recess.

AFTER RECESS

The committee resumed at 8 p.m.
Gilles Grégoire: Mr. Chairman, in starting my remarks tonight perhaps you will allow me to offer congratulations to the hon. member for York West (Mr. Kelly), who made a great effort and played so well to assist his team in winning the Stanley cup. I think he deserves to be congratulated because he is a gentleman on the ice, as well as a very good player.

Mr. Chairman, at the close of my remarks this afternoon, I referred to a necessary change in the Income Tax Act, especially with regard to receipts for charitable donations, which may be included in the income tax return for deduction purposes.
This act needs to be changed and I believe everybody here will agree. Efforts must be made to amend this part of the Income Tax Act, but until the said act is amended, it seems to me rather strict recommendations; should be made to the Quebec taxation officers in order that they themselves may be the first to respect the legislation we voted in this house, and that they stop harassing; the taxpayers as they do at the present time.
We already have a suggestion to amend this legislation and it should be included in the budget resolutions. Here is this suggestion: For the first $3,000 taxable income, there should be an automatic deduction of 10 per cent for charitable donations, without, receipts being required; for the next $2,000*

or $3,000, the percentage may be 1\ per cent, and for the next $1,000 or $2,000, it may be reduced to 5 per cent.
In the case of the companies, this measure would not be as necessary since unit payments of each company are higher than those of individuals and these companies are in a better position-they have accountants, a bookkeeping service specializing in taxation settlements-to meet these Income Tax Act provisions.
But in the case of individuals, it is urgent to amend the act. We must put an end to the violation of the law, as I have shown this afternoon by striking and typical cases, by officials of the tax department and especially to unsatisfactory investigations, where the taxpayers are not consulted and are often treated with scorn.
Mr. Chairman, we are ready to pass amendments to the tax act, especially in order to cut taxes. But we think that those amendments are also needed and we ask the minister to deal with them as soon as possible.
After the study in committee of those resolutions, a bill will be put before us in order that we may pass it. In my opinion, the minister should make an effort so that when the bill on budget resolutions is introduced this year, the Income Tax Act will be amended in order to allow a standard reduction for charity purposes for all taxpayers, without having to supply receipts. We would thus eliminate the continuous complaints that we now receive. May I tell you, Mr. Chairman, that we receive every week dozens of complaints from taxpayers about the discriminatory and dictatorial ways of tax inspectors and assessors.
May the Minister of Finance and the Minister of National Revenue make an effort as soon as possible to improve this legislation accordingly.


Walter Lockhart Gordon: Mr. Chairman, I might clear up one or two points which have been raised, mainly on paragraph 1, because I think it would be easier to answer some of the other questions relating to the following paragraphs when we come to them. The hon. member for Nanaimo-Cowichan-The Islands, in discussing the proposed exemption for students' fees, raised the question of textbooks, and also various other items of expense incurred by certain individuals in the process of earning their income. This is one of the questions which I have no doubt- in fact I am sure-is being studied carefully by the royal commission on taxation. It is a very difficult and complicated question, and it seemed to me that as the report of the commission will be available some time this
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fall we should wait until we receive it, before reaching a conclusion on that particular point.
The hon. member for Lapointe has dealt with a question which is not covered by these resolutions, but with the indulgence of the committee perhaps I might be allowed to make a brief comment with regard to it. He has talked about the difficult question of deductions for charitable donations and the difficulties which the administration of this problem has caused both in his province and in other provinces of Canada. This matter was raised at some length and in some detail by various hon. members last fall, and I can assure all hon. members that since then I have given considerable thought and consideration to this problem. I discussed it on many occasions with our late colleague, the then minister of national revenue, who was very concerned to see that this difficulty is resolved. However, as I said in my budget speech, we came to the conclusion that with the resources at our disposal and with the time available I was not prepared to make a recommendation which I felt would meet all of the difficulties which had been raised.
Therefore the matter was referred specifically and directly to the royal commission on taxation, and the chairman was asked, with the advantages of his not inconsiderable research staff and the special qualifications of the members of his commission, whether he would address himself to this particular problem and give us his commission's best judgment on how to resolve it. As I said when the budget was brought down, that is where the matter stands. It has certainly not been ignored by the government; we are taking it seriously, but we think we should take advantage of the machinery which is now available and which will not always be available- because the commission expects to wind up its operations this fall-to make a careful study of this question.
I can assure the hon. member for Lapointe that his point concerning the administration of individual income tax offices was one which was carefully noted by the previous minister of national revenue, and I can assure him that his remarks will be equally noted and seriously considered by the present minister. Further than that I do not think I should go; it would be straying away from the resolution which is before us. I think I have answered the questions that have been raised so far with regard to paragraph 1, and perhaps I might deal with the others when we come to the respective paragraphs.


Paul Raymond Martineau: Mr. Chairman, before getting into the crux of the subject I should like to follow the example of the hon. member for

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Lapointe and congratulate the hon. member for York West upon his fine performance on Saturday night. I am sure you will not rule me out of order, Mr. Chairman, because we are on the income tax resolution, and as I understand the hon. member is getting some kind of subsidy amounting to about $4,000 it might be interesting to know whether this sum is taxable. I do not know whether the minister would care to comment on that. Regardless of whether or not it is taxable, I think the hon. member deserves to be congratulated. He earned all he got and a lot more, and in making these remarks I believe I am reflecting the sentiments of the whole house.

Mr. Chairman, since we are discussing the budget resolution concerning the Income Tax Act, it is in order to make certain comments on taxation. The resolution was set forth in the following terms:
Resolved that it is expedient to introduce a measure to amend the Income Tax Act-
To legislate some specific things, among others.
I feel I must urge the minister at this time to consider the pressing need for a reduction of taxes in general and especially personal income tax which, in the opinion of many of our country's economists, has reached a level which is beyond all reason and might be called confiscatory.
I know that the minister may answer me as he did before. He will say that he cannot, at this stage, consider reducing taxes because a commission is now studying the whole Canadian taxation system and nothing can be changed in the system until that commission has submitted its report.
It may well be, Mr. Chairman, that after the commission has presented its report, the minister will then take that opportunity, in order to continue to temporize, to say that the report must now be fully considered.
You can see where that will lead us. It will lead us to a long period of inaction and stagnation. For it is a recognized fact that the fiscal and taxation structure in our country is precluding those very results the minister is hoping for, that is, an expansion of the economy and the economic activity in this country.
The Minister of Finance might say that the members on this side of the House do not seem to agree on the advisability of reducing taxes. As a matter of fact, the minister did say that-he even attempted to make me contradict my colleague, the hon. member for Digby-Annapolis-Kings (Mr. Nowlan), by saying that he was against a reduction of taxes while others like myself, had spoken in favour of a certain reduction.

Well, I think that the Minister of Finance is attempting to spread confusion unduly as regards this question, which is however very clear. The former minister of finance, the hon. member for Digby-Annapolis-Kings, did say at a certain time, during one of our party's conventions, that he was against a particular reduction, that is to a resolution which would compel our party, once it would become the government, for it will soon be in power again, to reduce taxes in a particular sector and by a certain amount.
Such a stand is logical, of course, as we cannot-and the Minister of Finance will agree-impose specific measures on a minister of finance, who should be entirely free to determine what taxes that should be reduced, which ones should be maintained and which ones should be repealed. We all agree on that point but we, on this side of the house, sincerely feel that in general taxes should be reduced immediately.
If we take that attitude it is because we believe in fiscal responsibility. The minister may claim that, regardless of what some people say, American taxpayers are more heavily assessed than their Canadian counterparts. Such a contention must be examined closely and distinctions have to be made. A Canadian financial paper, the Financial Post of Toronto has made a proper comparison between American and Canadian taxpayers.
Mr. Chairman, I hope you will not call me to order because, as I said at the outset of my remarks, we are considering the Income Tax Act and the amendments to be made to it. And we say that these amendments must tend to reduce taxes, so as to make it possible for the Canadian industry to shake off its shackles, which is impossible as long as the government will not assume energetically its responsibilities in that field.
As I was saying, the United States did not wait for the findings of a commission of inquiry or a similar commission to cut taxes substantially. That cut will range between $11 and $12 billion. You must admit that a cut of $11.5 billion is quite extraordinary. Such a step was taken because the United States realized that it was the only way to step up the economic expansion and, if need be, to free the capital needed to increase consumption and the industrial, commercial and financial activity of the country in general.
It could be done, because they knew at the same time how to take strong measures in order to reduce government expenditures. That is the reason why, and the minister is quite aware of it, in the current United States budget, a $3 billion cut in government expenditures has been forecast. But here, what do we do? It is stated with an emotion which

I do not think is genuine or certainly with an obvious lack of logic, that economic activity must be stepped up.
However, taxation deprives the taxpayers of gains they could have reinvested in production. In fact, it is like an octopus reaching with its arms in every direction and devouring anything that gets in its way. The government increases its control over everybody's income by its fiscal policy. Thus, the Minister of Finance has to collect the necessary revenue in order to pay the increasing governmental expenditures. His attitude is surely inconsistent. If he does not believe me, he only has to consider the financial reports throughout the country and the editorials in newspapers such as the Financial Post and the Financial Times. Every responsible paper in the country does not hesitate to show in very strong terms the inconsistency of the minister's attitude and, at the same time, of the government's position.
I shall refer again to the example of two average taxpayers, one living in Canada, and the other in the United States, both earning a salary of $10,000 a year. What is the situation of both taxpayers in the federal taxation field? The American will pay $1,799 in federal income tax while the Canadian taxpayer will pay $1,664. This means that mathematically, as far as figures are concerned the American wage earner has a net income of $8,201 and the Canadian wage earner a net income of $8,336, that is the Canadian will get about $135 more than the American wage earner, after deduction of the federal income tax.
But such is not the real situation. It must be remembered that in general, wages in United States are much higher than in Canada for similar jobs or trades. When the average American wage earner gets $10,000 per year to perform a certain type of work, his Canadian counterpart who does the same work, according to the data compiled by the Financial Post of March 21, 1964, gets only $7,500. So there is a wide difference between the salary of the American taxpayer, whether he is a plumber, an electrician or an unskilled labourer, and that of the Canadian taxpayer. Before income tax deductions, there is already a difference of $2,500 in salary and, after tax deduction, the average American still has $8,201 but the Canadian only has $6,462 left. In other words, Mr. Chairman, the Canadian taxpayer doing the same kind of work as the American taxpayer gets about $2,000 less than his counterpart.
And the disparity is still wider because the American is paid in American dollars, which is normal; while the Canadian is paid in Canadian dollars which are at a discount;
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therefore when the American taxpayer receives $8,857, the Canadian taxpayer receives only $6,462. Then the gap is about $2,400. And one must also consider that American dollars have more purchasing power than Canadian dollars. It is generally agreed that the American taxpayer pays less for consumer goods than the Canadian taxpayer.
Therefore, Canadian taxpayers are clearly at a disadvantage compared with the Americans. And yet, the minister draws a comparison with the American taxpayer to deprive the poor Canadian taxpayers of the income tax cut they clearly need. In so doing he does not seem to consider the greater need we have in Canada for capital, that is, for savings. How could the Canadian taxpayer save money when every dollar he could normally put aside is taken or confiscated so to speak, by income tax? What does such a situation lead to?
As a result, the economic and industrial development of Canada is seriously set back because Canadians simply cannot afford to save the capital required for investment.
It is all very well for the minister to travel across the country and deliver great speeches on the need for Canada to control its industry. Those are fine statements of intent but it would be much more important for the minister to give the Canadian people the financial means to save and invest those savings in Canadian productive industries. Otherwise, we will unavoidably have complete foreign control over our industry. Unfortunately, there is no other outcome for the stand taken by the minister on that matter.
That is where the minister will lead us, and this would be a result we would all deplore.
At this stage where this budget resolution respecting Income Tax Act is being discussed, I believe the Minister of Finance, who is the high priest of finance in Canada, should not try to find excuses-it is too late now that he has assumed the duties of Minister of Finance-but legislate or at least introduce in this parliament legislation to follow through or make possible the objectives which he said were his and which seemed to him so easy to reach when he sat on the opposition side.
Mr. Chairman, I shall have the opportunity, when we consider the various articles of this last resolution to ask pertinent questions of the minister.
For instance, as regards article No. 1, I wish the minister would tell us how much this provision would cost the federal treasury.
Moreover, I would like the minister to give us, if he has them at hand, the figures indicating the total number of persons to be affected by this reduction granted for tuition

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fees. We support this measure for we believe it is a means through which the federal government can, without interfering in the field of teaching and education, a strictly provincial field, help by an abatement the person who wishes to improve his education. However, we wish we knew how much this will cost the Canadian treasury. We would also like to know how many persons will benefit.
Another question which comes to my mind is which body or agency will decide whether such and such a course will benefit from the deduction. In fact, the clause states:
-the deduction from income granted in respect of certain tuition fees be extended to include tuition fees paid by a taxpayer who is a student, whether or not he is a full time student, to an educational institution in Canada.
I, therefore, ask the minister to tell us who, in the federal government will define what he means by "an educational institution in Canada"?
I also find that paragraph (d) of clause 1 defines an educational institution in Canada as follows:
-that is certified by the Minister of Labour to be an educational institution by which courses are conducted that provide or improve the qualifications of a person for employment or for the carrying on of a business or profession.
That is, to my mind, giving up to a point the Minister of Labour (Mr. MacEachen) some control over education. If we look more closely at the situation, it will be realized that practically any course may be described as providing or improving the qualifications of a person for employment. Indeed, even a classical course, in the terms devoted to literature or the humanities, or similar things, may very well be put forward as helping people improve their knowledge and general training, and increase their chances of securing more remunerative and responsible employment.
Therefore, I would say that the provision should be extended not only to courses recognized by the Minister of Labour, but also to courses which could be recognized by agencies coming under the provincial departments of public education or the secretary of the province which has no department of public education; I think the provisions of section 1(d) are on the one hand too restrictive and on the other they are not restrictive enough if the Minister of Labour can decide what courses are eligible under the special provisions of that section.
No doubt the Minister of Finance will clear up the matter and assure us that the federal government has no underlying intention of interfering in a strictly provincial field.
As far as the $25 limit concerning the deduction for tuition fees is concerned, I feel
[Mr. Martlneau.l
that it is not appropriate; providing that a taxpayer has paid tuition fees, he should be entitled to a full deduction for income tax purposes.
Mr. Chairman, those are the few remarks I wanted to make concerning the Income Tax Act in general -and more particularly with regard to paragraph 1. I would be pleased if the minister would give me the proper answers as I am particularly anxious to get them.


Mr. Cardiff:: I wonder if the minister could tell us why it is that changes are made each year in the income tax return forms? Each year they have different wording that has the same meaning, but it confuses a lot of people. Surely it is not necessary to change forms each year.


Walter Lockhart Gordon: I think the hon. member has a good point and possibly the Department of National Revenue, when it is striving for perfection, strives a little hard on occasion. The trouble is that as we change the law from year to year in parliament we complicate the lives of people who draw up these forms, as well as the lives of the people who have to pay the taxes. On behalf of the Acting Minister of National Revenue I can assure my hon. friend that his officials do the best they can. Perhaps it would be better if the form were not changed every year, and I will put the suggestion to the minister.


Lewis Elston Cardiff: The forms should be in the simplest language possible, so that people may understand it. It may be all very well for people with good education; but a lot of people who have to make out these forms and pay income tax do not have much education, and the result is that they have to get the services of a chartered accountant to assist them in completing the forms.


Mr. Rynard:: Mr. Chairman, I would like to make a few comments on paragraph 1 with regard to education. I think the minister has recognized that education is a very important thing in Canada today, and we have only to look at a few figures to realize how expensive it is.
Automation has made education a national necessity for our survival. Over the past three years our elementary and secondary school population have more than doubled, while our total population only increased by a little over 14 per cent. During the same period our educational expenses increased by 382 per cent. Very careful note should be taken of this, and also of the fact that during the same period of time these expenses represented an increase from 2.5 per cent to almost 5 per cent of our gross national product.

In a period of five years enrolment in universities increased from 86,000 to over 141,000, and this pace will increase more and more.
I feel that education must be national in scope. Indeed, this was recognized by the federal government when we built vocational schools, or rather when we assisted provinces to build vocational schools and paid three-quarters of the cost of building and equipping them. As a matter of fact, the previous Conservative government spent over $300 million on a crash program to train young men and women in readiness for automation. I should like to say to the minister that education imposes a very heavy burden on the municipalities. Around 50 per cent of the municipal tax dollar today goes into education and I should like to suggest to the minister that this 50 per cent should be allowed as an exemption. I think this is important because 70 per cent of the taxpayers in municipalities have incomes of $4,000 or less.
I know that part time and full time students are to be allowed exemptions if the fee is $25 or over. I am a little puzzled about paragraph 2, which reads:
That for the 1964 and subsequent taxation years a dependant in respect of whom a taxpayer may deduct an amount not exceeding $550 in computing his taxable income shall include a taxpayer's brother or sister who was 21 years of age or over and in full time attendance at a school or university.
I should like to ask the minister why this does not apply to a father or a mother of those dependants-or does it? I am not clear of the amounts. It would look as it if did not apply to a father, a mother, or even a widow-would the minister state present exemptions.
Then I should like to go on to another clause, and ask if the minister intends to allow professional people such as lawyers, dentists and doctors exemptions in respect of postgraduate courses which do not lead to a degree. I should like to ask the minister another question: What is the position of those who are taking agricultural courses, sometimes of short duration, which do not lead to a degree. Are they to be allowed the same exemption? Then I am wondering about equipment. Does this apply to a trade school and, if it does, will the students be allowed exemptions in respect of the tools and equipment it may be necessary for them to buy to take the courses. This is an important point. I am also wondering whether any provision has been made for those in the rural areas who have to travel 20 or 30 miles to take this training. Is this travelling to be allowed as an exemption? It is much harder for a fellow who has to get transportation in order to attend a night school to take his course.
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Another thing I wish to comment on is the baby bonus. I want to congratulate the minister on paying this up to the ages of 16 and 17 but I am wondering why he quit before they got out of high school. If these two ages of 16 and 17 are sound, and I agree with the minister it is certainly sound to allow a boy or girl to continue his or her education for those years, it is equally sound to help them finish their course because their earning power will be much higher and they will become a much greater asset to the country. I should like the minister to explain this or reconsider it in the future so that we may carry them over high school, because it does increase their earning power and it comes back as an asset to the country.


Alfred Dryden Hales: Before making a few observations on paragraphs 3, 4 and 5 of the resolution I wish to say that we seem to be getting into a more confused and complicated state of taxation all the time. Each year it is becoming more and more difficult to make out our income tax, and it has even got to the position where we have to hire auditors to do the work. I think all one can say of the amendments which the minister brought up last year and is bringing up this year is that they have provided a great deal of work for auditors throughout the country, and we shall have to hire more auditors if we are going to keep up with this. There is nothing in this resolution offering any hope of lower taxes. It is a resolution to a coat-tail budget. The United States introduced reductions in taxation. Any economic upsurge there will spill over into this country and the minister will reap some of the benefit. Therefore, he felt, it was not necessary for him to make those reductions.
Last fall he increased our income tax by 1 per cent in the old age pension section and stepped it up to a maximum of $120. So we see no reduction. We see increases. This is the situation we are confronted with. I propose to confine my remarks to paragraphs 3, 4 and 5 which have to do with changes in the regulations appertaining to the designated areas. I can only surmise that these changes were brought in because it has been a flop. I am speaking of the proposals as far as bringing industries to these areas is concerned. A question appeared on the order paper the other day asking how many industries have been attracted by the designated areas legislation brought in by the Liberal government, and we were told there were some 34. I think there were 35 areas designated in the whole of Canada, so we have less than one per designated area established under this new legislation of the Liberal government.

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I should be ruled out of order, I am sure, if I were to attempt to deal with the question of designated areas. I certainly hope that at some time when the estimates of the Department of Industry come before the committee we shall be able to debate the designation of these areas. We have legislation. It was brought about under that act last fall and now we are asked in paragraph 3 to extend the benefits to industries locating in designated areas. We are asked to extend these for four years from December 5, 1963 to March 31, 1967. As I said at the beginning, this seems to be put in here to attract these industries because the former provisions were not palatable enough. So they are saying: Let us extend this for another four years and see if we cannot attract more industries into these areas. Therefore, the country as a whole is being asked to extend this for four years. I would say we would approve this in principle, but we would not approve the basis upon which these areas are designated.
So we go on to paragraph 4. In paragraph 4 the government is asking us to change section 71A of the act whereby, as I understand it-and I hope the minister will correct me if I am wrong-the machinery that is used by a company located in a designated area, under the act as it now stands, has to be 95 per cent new equipment. Now they are asking us to change the act so that this machinery shall be valued at the fair market value; in other words, they are going to make it possible to use second hand machinery. This makes it possible for an industry to move from a town into a designated area and use second hand machinery. They would be able to remove the machinery they are using, start up in one of these areas and reap the benefits of the incentives set up in the act.
I would like to bring to the attention of the Minister of Industry and the Minister of Finance what they had to say about this matter on November 7 last. At that time there was some discussion as to the value of such machinery and whether it should be new or second hand. As reported at page 4496 of Hansard, the Minister of Industry said:
I suggest this is what is most likely to happen if the present legislation is amended so as to allow the advantages of accelerated depreciation and income tax incentives in respect of second hand or used machinery. It is precisely to avoid the likelihood of businesses which, rather than expanding and creating new operations, merely shift their scene of operation from one area to another that we need this provision.
That is why this provision was put in, as I see it, that the machinery should be 95 per cent new if you are going into one of these designated areas. Now they are asking us to put on it a fair market value. What is a fair

market value? I presume they mean that if a machine is listed in a company's books as having an actual cash value of, say $15,000, if it was sold on the market that day and brought $5,000, that would be its fair market value and they would be able to use this machinery in moving into a designated area. The Minister of Finance was down in Windsor last November and was asked a question down there concerning this matter. The gentleman asking him the question said:
Could you give me a quick clarification of the significance of "new" in this context? If I just change the name of my business but I continue to do the same as before, does this mean it is new?
Mr. Gordon replied:
No, but if you form a subsidiary and you build a great big plant next door, it is new.
That question and answer, quoted to the Minister of Finance by an hon. member, drew from the minister the answer:
With new equipment.
As I understand it, this very situation exists at the present time in the city of Galt. I am sorry the hon. member for Waterloo South is not here. As the house knows, he has been sick for some time, and I am sure we wish him a speedy recovery. In the city of Galt an industry has been operating for a few years; they are going to pack up and move over to Brantford, and as I understand it they can now take the second hand machinery they have and qualify for the incentives outlined in paragraph 4.
Paragraph 5 is just a matter of continuity. As the minister explained earlier, an area that is now in existence as a designated area, should it cease to be a designated area the plants or industries situated there can continue and reap the benefits under which they went into that area. So they are asking us, under paragraph 5, to grant continuity of the act respecting incentives for operating in designated areas.
Mr. Chairman, I think this covers what I wanted to say on these three paragraphs, 3, 4 and 5. I say again in conclusion what I said at the beginning. It would appear to me that this legislation concerning designated areas has not been successful, and so these changes are brought about in order to make it work a little better and in the hope that it might be successful. I am sorry that we cannot talk about the way in which these areas are designated, but this we will have a chance to do when the industry act is before us for consideration, or perhaps the estimates of the Department of Industry.


Mr. Rapp:: Mr. Chairman, I am interested in paragraph No. 2, under which in respect of a brother or sister a taxpayer is allowed to deduct an amount not exceeding $550 if

his brother or sister is a student. I would like to bring to the attention of the minister the fact that $550 deductible from your income tax in respect of a student who lives in the city where the institution or university is situated, is fair and the amount is reasonable; but when a student from the country has to attend school or university in a city his expenses are much higher. These expenses have to cover board and lodging and travelling. I think those who supply the money for this education should be able to deduct at least double that amount; that is, $1,100.
Another thing that I think should be taken into consideration is this. When students have finished their college education and continue their training in hospitals as interns, their parents are not allowed any greater deduction in tax, although this internship is part of their training and involves extra expenses. It is true that some of these students are receiving a certain amount of remuneration, but this far from covers their expenses while they are interns in hospital. I think the minister should take this matter into consideration because, as I said, many students have finished their studies and have received their degrees, but they must serve a period of internship in hospital before they are granted their certificate to practise medicine. I think this is a hardship which many, many parents have to bear in regard to such tuition fees and expenses. Although, as I said before, they are granted a certain allowance which is deductible from income tax, nevertheless this is much less than the cost involved during the period of internship. I would like to bring this matter to the attention of the minister and would ask him to give it his serious consideration.


William Heward Grafftey: On paragraph 2, Mr. Chairman, I would just like to ask the minister whether this paragraph would include legally adopted individuals, legally adopted brothers or sisters, or children in general.


Walter Lockhart Gordon: I am sure it would include a legally adopted child, but I do not think you can legally adopt a brother.


Mr. Horner (Acadia):: Mr. Chairman, just one or two points on paragraph 1 before it is passed. This paragraph deals with aid to those who are taxable and are receiving higher education. I am thinking particularly of a person who is not earning a taxable income but who is still having his education paid for by his parents. I believe his parents cannot claim the cost of his tuition as an exemption. I suggest that the minister and his department give serious consideration to making such a provision in the case of parents
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who are bearing the cost of their children's education, their children in turn, for one reason or another, not earning a taxable income.
In the past few years we have made great strides with the establishment of vocational schools. Efforts have been made to raise the standards of education, as well as the standards of labour generally throughout the country. I think provision should also be made in this clause for students who are going to these vocational schools to cover the cost of the tools of their trade, which are really part and parcel of their tuition. Such has long been the case for farmers and people in other professions, who can write off as a capital cost allowance the tools which help them to derive their income. While we are making provision for students to acquire tools to attend vocational school, we should also make similar provision for mechanics, who after they graduate from vocational school go out and earn their living, to write off their tools as a capital cost allowance. In a world which is fast automating and becoming highly mechanized we must be prepared to make provision for these people training in our vocational schools prior to their entry into society. We must give them an equal footing with the other professions. In some cases, such as mechanics, X-ray technicians, and so on, costly tools are required.
The minister should give, however, some thought to the suggestion that parents be allowed to write off their children's tuition fees, and also that vocational school students and mechanics should likewise be able to write off the cost of their tools as an expense incurred in the earning of their income.


Marcel Lessard: Mr. Chairman, I have one or two questions for the Minister of Finance concerning paragraph 2 which mentions a $550 yearly deduction for a brother or a sister who attends university Would the same deduction be allowed in the case of a brother-in-law or a sister-in-law, that is the brother or the sister of the taxpayer's spouse? Let us say that my wife's brother or sister attends university and stays at my place. Would I be entitled to a deduction, even though they are not my own brother and sister?
I ask that question because such cases are not uncommon and are bound to occur again. It would be most interesting to know whether the deduction would be allowed in such instances.


Walter Lockhart Gordon: Mr. Chairman, I wonder
whether I can just answer that question.

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Under section 139(9) (b) and (c) a brother includes a brother-in-law, and a sister includes a sister-in-law.


Marcel Lessard: Mr. Chairman, I have a second question about designated areas.
Could a plant now located and operating in a designated area, which would like to expand by adding a new building and would keep on producing along the same lines, but would invest $10 or $12 million in a new plant, benefit from the tax incentives offered by the act?


Walter Lockhart Gordon: Well, I think this has more to do with some legislation which was taken up last year; but if they form a new subsidiary the answer would be yes.


Mr. Nasserden:: There is one question I should like to ask with regard to subparagraph (c). Does this include private schools, or tuition fees paid to private schools?


Walter Lockhart Gordon: Yes, Mr. Chairman.


William Heward Grafftey: Mr. Chairman, in my remarks relating to adopted children I think I was a little vague. I fully realize you cannot adopt a brother or that you cannot adopt a sister; what I really meant, and I hope I will make myself clear this time, is this. If my parents adopted a child with whom I was brought up, this provision would apply in the case of such legally adopted child adopted by my blood parents, so to speak, whether the child were a boy or a girl. Am I correct in that assumption?


Walter Lockhart Gordon: This question would require a legal opinion from an accountant, Mr. Chairman, which would be quite improper. I just do not know the answer to that question.


[Stage Direction]
Paragraph agreed to.
Paragraph 2 agreed to.
On paragraph 3.
George Clyde Nowlan: Mr. Chairman, we are running a little rapidly here and there are one or two matters to be discussed with regard to incentives, although I do not think we need take too much time at the moment. Some of these sections are very much interrelated and others are not; but paragraph 3, as the minister said this afternoon, extends the time in which an application can be made, which I think is a very desirable step to take. I wonder whether the minister has any information as to the number of applications there are, not before him but before the Minister of Industry? Are we extending the time because there are so many applications that 
we need more time to process them, or are we extending the time in order to get more applications? Perhaps the minister can tell us how many applications have been considered up to the present time.


Walter Lockhart Gordon: My information is that there are about 40 up to the present time. I had a number of representations in the weeks before the budget on behalf of fairly large companies to the effect that they were considering proceeding with new mills or other operations in some of these areas, but because they were such large projects it was impossible to get them into operation within a period of 24 months. Therefore they felt they would not be able to proceed with them. Although I was not given a promise, I was certainly given to understand that if this committee or this house felt that this incentive could be extended to give these larger concerns a little more time, we would see some pretty interesting results.


George Clyde Nowlan: Do I understand then that we have had 40 applications under the type of incentives which the minister brought in last year in this budget; and if so, how many of these 40 have been processed, and what is the situation at the moment?


Walter Lockhart Gordon: Perhaps I might make a somewhat more extensive answer. I am informed that 150 proposals for new businesses have been discussed with the area development agency. Of these over 40 companies have formally indicated they are going ahead with projects to be located in 14 of the 35 designated areas. Capital investments of over $90 million creating 5,000 new jobs are involved. I see that the Minister of Industry is here so if what I am about to say is incorrect I hope he will check me. Indications are that the Minister of Industry will shortly be asked to certify new businesses representing well over $100 million in further capital investment and providing for over 3,000 new manufacturing and processing jobs at the outset.
If my hon. friend is interested, these applications cover the following fields of industry: Food and beverages, rubber, textiles, clothing, wood products, pulp and paper, primary metals, metal fabrication, machinery, transportation equipment, electrical apparatus, non-metallic minerals and chemicals.


George Clyde Nowlan: Could the minister give us the geographical areas involved in these applications? I do not want them by counties but how many are there, for instance, in the Atlantic provinces and how many in Ontario, Quebec and the west?


Walter Lockhart Gordon: The Minister of Industry informs me that an answer was given today

and will appear in Hansard for today. I do not have the answer before me.


George Clyde Nowlan: I should like to ask one other question. The figures that the minister has given us are estimates of what might be spent if all of these projects are approved and the industries go ahead. As I recall it, the minister said that at the moment there are 40 which have actually been processed. In that 40 how much is involved?


Mr. Drury:: Perhaps I might make clear that the terms "application" and "processed" really do not have too much validity. A company or firm which establishes a new enterprise in a designated area and comes into commercial operations within the required period is entitled, provided it meets certain conditions in respect of unused machinery to the value of 95 per cent and getting into operation within the required period, to the income tax incentive, and it does not depend on the approval of an application to the Department of Industry. So it is quite possible that there are a number of firms which have undertaken the establishment of new industries and have not yet informed the department. I can think of one by way of example, a very large textile operation which is being established in St. Jean, Quebec. The company had a sod turning ceremony and made an announcement of what they were going to do, and when, but prior to this taking place no information was furnished to the Department of Industry. No application was made because they do not have to apply. They merely have to enter into commercial operation, have the requisite amount of new machinery and get a certificate from the minister to this effect and they qualify.


George Clyde Nowlan: Did that textile industry move from some area to a designated area, or was it a new industry created in that area?


Charles Mills (Bud) Drury: This is brand new.


Michael Starr: I think the minister has been most vague in this respect. At least I am unable to get from his remarks the information that I think we are all desirous of obtaining. We want to know how successful the incentive program has been in the establishment of new industries in designated areas. Surely the minister must know how many of these industries have now commenced operations in these areas and have applied for the incentive benefits. I think the minister could be more precise. Surely he can tell us if there are four or five industries, where they have settled and whether they have already applied and will be receiving the benefits of the incentives. This is the information we would like to have. I realize that many industries may be writing and asking for more
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particulars in the hope that they may be able to do this, but surely the minister can tell us that there are so many industries which have now established themselves in designated areas and have applied for the incentives, and will be receiving them when that time arrives.


Charles Mills (Bud) Drury: May I point out to the hon. member that this program was only broached last July and became effective last November. Therefore it is perhaps a little unreasonable to assume that very many substantial industries would have established themselves in this short time. As the Minister of Finance has just indicated, some 40 companies have formally indicated that they intend to comply with the law and avail themselves of the benefits. These 40 industries in 14 of the 35 designated areas are planning capital investments in excess of $90 million and will involve in excess of 5,000 new jobs when in operation. They have not yet completed this and will not, indeed, for some time.


Michael Starr: I realize the minister has repeated that possibly at least 40 industries have asked for information on this matter, but they have not established themselves.


Charles Mills (Bud) Drury: I said that 40 have formally signified their intention of establishing. They have not been asking for information. They have formally signified their intention of establishing.


Michael Starr: In an answer last week, I think, to a written question placed on the order paper by the hon. member for Peterborough the minister replied if I am correct, and I stand to be corrected, that there were 34 industries. Will the minister tell us now how many have been actually established? Has there been one, have there been four or has there been none?


Charles Mills (Bud) Drury: I do not think that there is one that has come into commercial operations yet.


Alfred Dryden Hales: Will the minister not say that Magnetic Metals situated in Brantford is one?


Charles Mills (Bud) Drury: I do not think Magnetic Metals is in commercial operation.


Mr. MacEwan:: With relation to the order paper question of the hon. member for Wel-lington-Huron, which was answered by the Minister of Industry, I note that the minister sets out that in New Brunswick there are two and in Nova Scotia three of these 34 industries. As this is a high unemployment area I wonder whether the minister could now tell us the areas of Nova Scotia and the areas of New Brunswick where these five out of the 34 industries are going to be located?

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Charles Mills (Bud) Drury: I have not got that information here. I will be glad to get it and provide it tomorrow.


Mr. More:: I should like to ask the minister if he has had any complaints from Saskatchewan that this legislation is discriminatory and is seriously handicapping the efforts of the province to diversify by bringing more industry into the province?


Walter Lockhart Gordon: No, Mr. Chairman, I do not think I have had complaints from Saskatchewan, or for that matter from any other province.


Alfred Dryden Hales: Would the minister enlarge on paragraph 4 a little more with regard to what is meant by fair market value?


Lucien Lamoureux: Do I take it we have completed discussion of paragraph 3?


George Clyde Nowlan: Mr. Chairman, I believe the Minister of Industry said he would be providing the answers to some questions tomorrow and I think there was an order paper question answered, but we have not got the answer before us. Subject to being able to review these answers I think it would be perfectly agreeable to the committee to proceed, provided we can ask for further information with respect to the details as to paragraph 3 and, in fact, paragraphs 4 and 5 as well.


Lucien Lamoureux: I am wondering if the committee might not get into difficulty. I do not know what the intention of hon. members is and how many paragraphs will be passed tonight but perhaps we can-


George Clyde Nowlan: Mr. Chairman, perhaps we could let paragraphs 3, 4 and 5 stand until we get further information. I do not think it will take us very long to dispose of them tomorrow, but we understand that a question on the order paper was answered today and we do not have the answer in front of us. The Minister of Industry has told us he will have definite information tomorrow afternoon. I am sure hon. members of the committee would like to know the areas in which these industries have been established. I think we might make more progress if we allowed these matters to stand.
I should like the minister's comment also with regard to the effect of this incentive. I do not want to get into an argument but it has been reported in the press I believe that the Minister of Transport, speaking about the Atlantic provinces development board, stated there had been an application made by the Nova Scotia government for grants from the Atlantic provinces development board for direct capital assistance to industry. This is not the place to argue the matter, Mr. Chairman,

but I am prepared to enter into an argument at any time with the Minister of Finance or the Minister of Industry that these direct grants are much more useful than the incentives which we have before us. I hope we can allow these matters to stand and discuss them tomorrow. If the committee is prepared to move on, speaking only for the official opposition, then we are prepared to move to other items and get the information on these items tomorrow.


Lucien Lamoureux: Is it agreed?


Some hon. Members:: Agreed.
Paragraphs 3, 4 and 5 stand.
On paragraph 6.


William Heward Grafftey: I should like to make some very general remarks on paragraph 6, Mr. Chairman. Did the Minister of Finance receive any representations relating to this paragraph in so far as it may affect or accelerate the so-called brain drain from Canada? Did bodies like the national research council make any representations relating to the paragraph and the adverse effect it might have in creating a situation whereby Canadian scientists would go to the United States? Could the minister assure us that we recognize that companies are allowed, as he explained this provision, to write off 150 per cent of the expenses relating to research done in Canada?
We are told this paragraph is going to permit a write-off for research done outside of Canada. Will this lessen the attractiveness for companies doing research in Canada? Does the minister feel this will in any way discourage Canadian companies from doing a fair amount of their research within this country?


Walter Lockhart Gordon: This will not affect the incentive of the 150 per cent write-off in any way at all. There were a number of companies who made the complaint, not about the high level of brain drain, but the low level of taxes they would have to pay. They thought perhaps when the 150 per cent write-off provision was drafted and introduced a year or two ago, it had been drafted in such a way that people who had normal expenses in connection with research they had been carrying on outside the country for many years, and which could not be translated into Canada, were being discriminated against. They made a good case. It is recommended that they should be able to carry on as before and claim their expenses, just as they are entitled to claim any other expenses if, as it says here, they are of a nature related to scientific research which is related to the taxpayer's business.


George Clyde Nowlan: The minister is quite certain that expenditures made outside the country were deductible prior to the amendment of 1962?


Walter Lockhart Gordon: Yes, Mr. Chairman.


George Clyde Nowlan: I have not checked the authorities, and I accept the statement of the minister with regard to that. My understanding was that was not the case, but possibly it was changed when we brought in the incentives, and deductions for expenditures made outside the country were disallowed. My understanding of the thing was that they were not allowed unless they were made in Canada.
As I have said before, there was a very good reason for the government giving those incentives. I know there were some who took a rather dim view of it, but the government took the responsibility for this action and I think the government was right, despite the criticism of some people who had to deal with the matter. We were faced with a situation, as the minister well knows, of a continuous drain of our experts and our professional people who were attracted to the south. It was felt at that time by giving this inducement, this incentive, industry would build up a body of technical people here in Canada, who would, otherwise, be attracted to the United States or elsewhere. How successful we were, I do not know, but certainly an effort was made in that direction.
I certainly understand the feelings of some people with regard to this matter. After I spoke about it during the budget debate, and criticized it, I received one or two letters from good friends of mine pointing out very forcibly the fact that I was being unfair in the attitude I took, and that certainly they should be allowed this deduction. I am not going to debate that too strenuously tonight. We are torn between two desires, to build up a scientific and technical organization within Canada, and at the same time be fair to corporations which have, for one reason or another, to go outside of this country to have their research work done. It is a matter of choice, and the minister has decided that the act should be amended to provide for these expenditures. He has taken us back to 1962, apparently, when this was first changed. I am not quarrelling with it, but I register a caveat because I am not quite sure if we have the technical organization here. Except in special circumstances, I think the research work should be done here. The very thing we were trying to avoid was having the research work done outside of Canada when it could be done here.
As I have said, it is a technical problem, and one which is involved. I am not going to spend more time discussing it. I am glad to see the incentive is still being kept. I think that really is worth while. I hope that Canadian corporations will continue to take 20220-168
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advantage of that rather than have research work done somewhere else, in view of the fact these expenses are deductible.


William Heward Grafftey: The hon. member who has just spoken, Mr. Chairman, has only too well underlined the real need in Canada today to build up scientific research, to engage in scientific research within our own borders. I should like to make this remark especially, that all hon. members consider to what a great degree our manufacturing establishments in Canada are owned by parent firms across the border. If we do not insist on policing this provision very well, that this write-off can only be granted for scientific research done in Canada, I think we are going to get into serious trouble. I should like an assurance from the minister that this provision is going to be very closely policed to make sure that 100 per cent of these writeoffs will apply to research activity which obviously cannot be carried out within Canada at the present time or the foreseeable future. Otherwise, I think we would be running into serious danger of encouraging an exodus of our scientific brains to the United States, something which I think all hon. members recognize is highly undesirable.


John (Jack) Henry Horner: On paragraph 6, I am not sure whether this means research by an institute for a group of individuals, or for an individual. Could it be research by an individual on behalf of himself?


Walter Lockhart Gordon: These are expenditures which, in the main, have been made by Canadian subsidiary companies to their parent companies or to research organizations in other countries. It is mainly corporations that are concerned. In the past they were just treated as expenditures and, as I understand it, allowed as expenditures. Nobody raised a question as to what kind of expenditures they were.


George Clyde Nowlan: Would they be subject to withholding tax?


Walter Lockhart Gordon: I doubt it very much. There was not a withholding tax in those days. When the amendment came in and there was particular reference to scientific research, they started to get disallowed, and understandably complained as they were in the nature of expenditures which bring pretty valuable information and know-how to Canada.


John (Jack) Henry Horner: I am thinking of a medical clinic, or group of doctors working together. Could they send one doctor to university or an institute to do research, and write this off as an expense?

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Walter Lockhart Gordon: If a clinic or group of doctors in partnership are paying one of their number, in some form or another, a salary or something like it, and they decide it is in their collective interest to send him off some place to do research, and he comes back and they get the benefit of it, I think that would be considered an expense in the earning of the income. But when you get down to this sort of question, they involve legal opinions of a very technical kind. I think this would be the case, but I hope the lawyers in the committee will not think I am moving in on their territory, because that is a very dangerous thing for an accountant to do.


John (Jack) Henry Horner: Could one doctor do it-undertake research to improve himself when it is particularly related to the taxpayer's business? Could he improve himself with a postgraduate course and charge that off as research expense?


Walter Lockhart Gordon: I would think that unlikely, because if he were away long enough he would not have income here to pay tax on.


John (Jack) Henry Horner: That is not a good enough excuse. We will leave it to the doctor's patients to decide whether or not he has a practice to come back to. It cannot be slid off that easily. The paragraph says:
-in computing income all expenditures of a current nature...
(b) to an approved association, university, college, research institute or other similar institution to be used for scientific research related to the taxpayer's business.
This is a serious question and I do not want it sloughed off lightly by saying he will not have any patients left. I am thinking particularly of a medical man.


An hon. Member:: Or a lawyer.


John (Jack) Henry Horner: Well, a medical man is what I am thinking of right now. There are many fields of research in medicine, and doctors must keep abreast of them. The minister has referred to a group of doctors who form a clinic and work as a unit, but I am asking whether a doctor can take a month's leave of absence, or two months from his practice, to do research on a given subject, such as the heart, cancer or leukemia, and write that off as a research expense?


Walter Lockhart Gordon: We are getting into a distinction between a capital expenditure and a current expenditure. This is very difficult, and I am not going to be able to give a yes or no answer. If there are a group of doctors who send one man off, and they are continuing to receive income so that there is something to deduct it from, I should think they could deduct that expenditure from their collective income. However, if one doctor does it, and
[Mr. Horner (Acadia) .1
even if he went for a couple of months and he has income to deduct it from, I would think there is a good chance the department would rule this was a capital expenditure on his part. I cannot give a definitive answer on that. Perhaps we could call on the ex-minister of national revenue, who held that position for many years, and possibly his opinion would be as good as any.


George Clyde Nowlan: We are dealing with a general resolution here. There will be a bill before us shortly, an income tax bill, in which the details will be spelled out, and I would suggest at that time that the minister be prepared to answer these questions so far as he can, bearing in mind the fact that the Department of National Revenue always takes a very dim view of anybody making a ruling in advance. My colleague from Queens-Lunen-burg wants to know if he sends a trawler out scouting for new fishing grounds, and if that can be described as scientific research, could he deduct that expense? The hon. member for Acadia and others will have many more questions to ask when the bill is before us, and I suggest that the minister be prepared to deal with their questions then.


Walter Lockhart Gordon: I think the hon. member has demonstrated very well how he was such a success as minister of national revenue.


William Heward Grafftey: When the bill comes before us I hope there will be something in it to indicate that a company, let us say company X, controlled in the United States and doing business in Canada, and which is now carrying on research activities in Canada, will not transfer those activities to the United States just to take advantage of this provision, particularly when these research activities can be undertaken in Canada.
The minister was quite right in saying this law is the same as it was before. I shall certainly take his word for that, but I believe it is immaterial because today we are faced with the problem of keeping our scientific research institutions and our better scientific brains in Canada. I would like to see some indication that the advantage which is being given will not make it attractive to carry on research activities in the United States which can now be carried on in Canada.
However, where it is patently obvious that a research activity is of such a scale that it could only be carried on in the United States, then there should be such a beneficial clause. Without taking any more time of the committee I would like to point out what could be a very serious problem in closing this gap, and I hope it will not make it too attractive for companies to move research establishments over the border.


Alfred Dryden Hales: I think the government is asking us to pass a resolution here that we will regret the day we pass it. As I understand it, a United States subsidiary operating in Canada and doing research work here in Canada would now have a great temptation to cease that research and do it in the parent office in the United States.


Walter Lockhart Gordon: May I try to explain that, and also to answer the question put by the hon. member tor Brome-Missisquoi. Under the law at present, any Canadian company has a great incentive to do its research work in Canada. If it does its research work in Canada it is allowed to charge off against its income for tax purposes 150 per cent of the expense of research-not just 100 per cent, but 150 per cent; that is, 150 per cent of the increase. If it continues to do what has been done over the years-pay someone in the United States or in Britain or in some other country for access to the kind of research it could not get anywhere else; I cannot imagine that it would be making the payments otherwise-then over the years it has been allowed to deduct those expenditures for tax purposes. This stopped in 1962 because of the wording of the amendment at that time and the way in which it was interpreted by the tax officers.
The purpose of this amendment is to put things back where they were prior to 1962, as far as the regular, historical, traditional expenditures for technical services and so on are concerned. We did not change in any way the special incentive which was introduced in 1962 to encourage people to do more research in Canada. The incentive is there. It is merely being suggested that the penalty should be removed.
Paragraph 6 agreed to.
On paragraph 7.


Paul Raymond Martineau: Paragraph 7, I think in the terms in which it is couched, is an amazing disposition. I think probably as a lawyer I should not attack this provision at all because if ever I move out of this place and go back into practice I may be able to make a few dollars out of it.


An hon. Member:: You won't need to, with your majority.


Paul Raymond Martineau: That is a wise observation. If I was not afraid of being ruled out of order I would say I have excellent prospects of at least doubling my majority.
In any event this is the provision which is of interest to a number of us around here and I think the minister should give us some details of the manner in which it will operate. Of course, the gist of it is that if a taxpayer 20220-1684
Income Tax Act
appeals an assessment he may in the following taxation year, I imagine, deduct any expenditures that he has incurred either in filing the opposition or in registering an appeal from an assessment. But what comes to my mind is this: Does the minister intend to put a ceiling on the amount of expenditure which may be incurred in filing an opposition or making an appeal.
Seeing the provision of this section, if a taxpayer is in a position where he must file an appeal or oppose an assessment, because of the very generous disposition of the minister he will engage the best legal lights in the country to take up his case. That is understandable. But as the minister, no doubt, knows, not all lawyers charge the same fees. The services of some are expensive and in other cases their services are more expensive; so it can be expected that the taxpayer might resort to the best legal talent and therefore the highest fees of the land. They might run into thousands of dollars. In such a case will the department foot the taxpayer's bill? If so, I think the lawyers are going to have a field day. Will these costs that are being allowed be on a client-solicitor basis or will they be costs to be taxed according to a tariff?
I think this paragraph is lacking in the way it is drafted, because there is no mention at all as to the nature of the costs that may be deductible or whether a tariff will be established or not-if a bill of costs will be submitted to a taxation authority or if taxation by the board of appeal clerk, or some officer in the board of appeal, will be conclusive evidence of the real cost incurred by the taxpayer and, if so, whether the Minister of National Revenue will have any discretion at all in allowing or disallowing the claim for deductions because of legal costs to fight an assessment.
Another thought that comes to my mind is that this provision will certainly give rise in my opinion to a considerable interest in the number of formal oppositions and appeals, and this may throw an extra burden on the board of appeals. I think this is a good moment to think of the functions which that board fulfils and to renew a request which has been made by others on this side of the house on various occasions to make this board a fully fledged court, with permanency of tenure and so on. If you are going to give to that board the responsibility that it exercises at present and also the added burden with which it will be faced, the government might well consider the feasibility of converting the board into a court. That, I think, would also result perhaps in a better administration of this board and in better results from the important functions it is performing.

Income Tax Act
Another question I should like to ask in regard to this paragraph is whether or not the minister envisages the payment of the cost of filing an appeal from the formal opposition. Does it include legal costs which may have been incurred by the taxpayer for advice as to whether or not an appeal should be undertaken, and does it also include costs that may be incurred after the judgment, for instance, with regard to services rendered in connection with making arrangements for the service of a debt for tax? Will it also apply to expenses incurred by the taxpayer at higher levels, in the exchequer court and the supreme court? This is new law and as such it certainly opens a door to a large number of questions and possibilities and maybe even loopholes. This present paragraph is very incomplete and, as the hon. member for Digby-Annapolis-Kings said a few minutes ago in regard to paragraph 6, we will be anticipating the bill with a great deal of interest; and also, I imagine, the amendments to the Income Tax Act that are foreseen by paragraph 7 will be looked at very closely to ascertain just how far the minister intends to go with this new and rather revolutionary policy that he is introducing at this time.


Mr, Nowlan:: Mr. Chairman, before the minister replies I would like to support what the hon. member for Pontiac-Temiscamingue has said. I cannot for the life of me understand this paragraph, because we are not only dealing with appeals, as the hon. member said, on which possibly there is a tariff. There is, certainly, when you get to the exchequer court. I am not sure whether there is a tariff before the income tax appeal board; I do not think there is, but there could be. But when it comes to filing an objection, without becoming overemphatic I can say that one files an objection almost every time from any assessment. Sometimes it is simply a matter of scribbling out a letter of some kind; sometimes it is a very involved objection. There is no tariff, there is no provision in the act, as I understand, to provide for this.
Far be it from me to prevent lawyers or accountants earning by the sweat of their brow, as they always have, their fees. They are underpaid all the time, of course, as both the minister and I would agree with respect to both professions; but I cannot for the life of me see how you are going to provide for reductions for the filing of objections. The assessment may be for $1 million and you may come from Wolfville, Vancouver or Toronto, as I am sure the minister did in the days when he was practicing, and go into the office of the deputy minister and discuss the matter. There is all this matter of solicitor and client, or you may have an objection to 
a farmer's income tax, or anybody else's income tax, as far as that is concerned, for $100, $500 or whatever it may be.
On what basis are you going to be able to charge for filing this objection? I will tell the minister what in my opinion this is going to do. Every lawyer in the country and every chartered accountant who happens to have a spare five minutes on his hands is going to sit down and draft a notice of objection, and the income tax appeal board-which is swamped now by appeals; at least, it was; there were appointments made and they may be more up to date, but I am quite sure they are not caught up-will have to deal with these objections. This is going to encourage the filing of appeals, and I am sure that if the minister by any chance happened to be attending a reception one night-I will not say a cocktail party, because that language is hardly acceptable in the House of Commons -or one of these gatherings, say an embassy function somewhere, at which members of the income tax appeal board happened to be gathered, if he could hear their language with respect to what this paragraph might do -this is only guesswork on my part, you will understand, Mr. Chairman-and their opinion as to what they think this paragraph might do in increasing the appeal load, he might have different views on this subject. I do not know whether this has been recommended by the barristers association or by a joint committee of chartered accountants and lawyers-if it is, it is remarkably well sponsored-but I would suggest to the minister that he should take a very, very careful look at this paragraph. Certainly when the act is brought down it will have to be dealt with very, very carefully.


Paul Raymond Martineau: Mr. Chairman, just before the minister answers that question, perhaps he would also take note of the last part of this paragraph:
-shall Include in computing income any costs recovered in respect thereof.
It seems to me that by adding that provision they are robbing Peter to pay Paul, or vice versa, because on the one hand they say the costs are deductible and on the other hand they say that if costs are recovered they must be added to income. That leaves the taxpayer right in the middle, and nothing is given.
Another point I should like to raise is that with regard to any costs recovered, generally the costs are taxable, not in regard to the client or the party involved in the litigation, but they are taxable costs that go directly to the lawyer who has been employed in the

case, and that is an attorney of record. Therefore I cannot see how it can be that the taxpayer can recover costs on his own. Perhaps the minister would elucidate that particular point, together with the others that were raised.


Walter Lockhart Gordon: Mr. Chairman, in his first statement on this point the hon. member for Pon-tiac-Temiscamingue seemed to be fearful that as a result of this provision various clients, not of his, would transfer all their work to what he called-I do not remember the expression, but the first class lawyers.


Paul Raymond Martineau: Legal lights.


Walter Lockhart Gordon: Legal lights, yes. I would not be so brave as to suggest that there was such a thing as a second class lawyer.


George Clyde Nowlan: Sometimes our light is hidden under a bushel.


Walter Lockhart Gordon: I am quite confident that if the hon. member does not double his vote in the next election, he will find he has plenty of business of this type. I would remind him that section 12(2) of the act provides:
In computing income, no deduction shall be made in respect of an outlay or expense otherwise deductible except to the extent that the outlay or expense was reasonable in the circumstances.
If any professional man should charge a fee that was unreasonable-and I would hope this would not happen-then it would remain with the Department of National Revenue to disallow it.


George Clyde Nowlan: Who is going to act as taxing master?


Walter Lockhart Gordon: In practice, as I suspect hon. members know, the real check on anybody charging too much is the company or the client. I cannot believe that any reasonable client would allow his tax consultant to charge him twice as much as he should because he only has to pay half of it. But this was a submission made by the Canadian Chamber of Commerce, and I believe others, over a period of years. I do not feel very strongly about it; I am not in professional practice. I think it is something, though, that is reasonable; and we should remember that whoever receives these fees will have to pay tax on them, so as far as the crown is concerned it is about six of one and half a dozen of the other.


Lucien Lamoureux: Shall we go to paragraph
8?


George Clyde Nowlan: No, Mr. Chairman. We are not going through paragraph 8 tonight. We will go to paragraph 9 and hold 8. Some of us want to be here tomorrow for paragraph 8, but we are prepared to go to paragraph 9.
27, 1964	2639
Proceedings on Adjournment Motion


Lucien Lamoureux: Shall we proceed to paragraph 9?


Some hon. Members:: Ten o'clock.


Paul Raymond Martineau: With regard to paragraph 7, Mr. Chairman, I think the minister could overnight look at some of the questions asked, because I do not think his answer was quite complete. Therefore I would call it ten o'clock on paragraph 7.
Progress reported.



BUSINESS OF THE HOUSE

Mr. Churchill:: Mr. Speaker, before you go on may I ask what is the business for the rest of the week?


Mr. MacNaughl:: Mr. Speaker, I regret I am unable to announce the business for the rest of the week. Tomorrow we shall continue with the discussion on this resolution, and if it is finished we will go on with the Customs Tariff resolution and then the Estate Tax Act resolution.



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.



TRANSPORT


Mr. Deputy Speaker:: The first question is from the hon. member for Skeena regarding regulations respecting government wharves.


Frank Howard: Mr. Speaker, my concern with these particular regulations, which are promulgated under the Government Harbours and Piers Act, is the manner in which charges are levied and their effect on fishermen. I refer in particular to the different effect of those regulations on fishermen on the east coast of Canada as compared with fishermen on the west coast. What I hope to accomplish is to pose to the minister the thought that they apply inequitably; that charges will be levied against fishermen on the west coast for the use of wharves and floats which will not be levied against fishermen on the east coast.
The reason for this is both with respect to the wording of the regulations themselves
2640	HOUSE OF
Proceedings on Adjournment Motion and also with respect to the past attitude of the Department of Public Works in providing facilities for fishermen. The regulations prior to their change in January of this year used to read as follows. Rather than quote the regulations I should like to quote an extract from a copy of a letter written by Mr. J. H. W. Cavey, who is chief of the harbours and property division, to a Mr. G. W. Nickerson of the city of Prince Rupert. In his letter there is this quotation:
"No side wharfage is payable in respect to (a) Canadian fishing vessels during the first 48 hours at any wharf, (b) Canadian fishing vessels at any time at wharves other than those specified by the minister".
That is the end of the quotation from the regulations.
Then Mr. Cavey indicates the effect of these regulations was as follows:
Under these regulations fishing vessels were exempted at practically all public wharves and floats.
Then the amended regulations came into effect. I do not intend to read in any detail from a press release which I have before me, except to say that one of the reasons for bringing the new changes into effect was aimed at improving the regulations and providing for more efficient wharf administration. The fact of the matter is that under the new regulations as well as under the old-particularly now because charges will be levied for the use of wharves-the Department of Public Works has not provided what we call floats on the east coast but they have on the west coast. As a consequence charges for side wharfage will not be applied to fishermen on the east coast, because they only use wharves on the east coast for the purpose of unloading fish or for loading supplies. Fishermen on the west coast do that as well, but in addition floats have been built at which the fishermen tie up.
Usually because of the insistence of the Department of Fisheries with regard to the curtailment of the fishing week, fishermen find themselves tied up at floats for periods of two, three or four days a week. Perhaps in this coming fishing season it will be for as long as five days a week that fishermen will have to tie up at floats, rather than be out fishing for salmon, owing to the stringent restrictions imposed by the Department of Fisheries. As a consequence fishermen on the west coast will have to pay under the regulations side wharfage rates for the use of the floats, whereas the fishermen on the east coast will not. This, of course, raises the hackles of any bona fide fisherman or even the fisherman who fishes one or two days a week, because it does smack of discrimination of a sort. Fishermen are going to have a


difficult enough time on the west coast without having to pay charges for the use of floats.
In the second instance, while the press release stated that the regulations were to provide for more efficient wharf administration I submit they will not, because in the city of Prince Rupert there is a plan under way for the federal government to lease the float facilities to somebody else. In all likelihood this will be the city of Prince Rupert which will operate the floats. All that will happen will be that the city of Prince Rupert will be charging fishermen for the use of these floats and will be spending the money in two ways, first to pay the fee to the federal government under the lease agreement and, second, to employ up to eight watchmen who will in fact be toll collectors. Nothing will be accomplished in the way of providing any additional services to the fishermen or in providing efficient wharf administration, as the press release accompanying the regulations stated would be the case.
There are so many implications involved in this action and objections to it that time does not permit me to go into them in great detail, but I would point out one simple thing to the minister. At many of these floats boats tie up one beside the other, three or four or maybe five deep. Let us say for the sake of argument that some Friday night the watchman or toll collector comes down to these floats. If that watchman expects to extract the same side wharfage fee from the fishermen who ties up alongside the float as from the fisherman who has to tie up fourth or fifth boat out, he has got another think coming; and in the process of collecting the fees he may very well wind up in the water. The fishermen at home are disturbed and upset about this system.
Second, do the regulations mean that if a fisherman pays side wharfage fees for, say, a period of a month he is then permitted to tie up his boat to any float anywhere in British Columbia? I notice you are rising, Mr. Speaker, so my time must be nearing an end. I appreciate the opportunity of placing this very important matter before the house and the minister and I say sincerely to the minister: Will you please amend the regulations and put them back the way they were prior to the change in January of this year? The fishermen will be happy and they will have more money in their pockets.


John Whitney Pickersgill: Mr. Speaker, I think perhaps I should start out by saying that while I can understand the feeling of a fisherman or indeed of anyone else who did not have to pay a service charge before and is asked to pay

one, there is in fact no discrimination whatsoever in the regulations, and 1 think the hon. member himself indicated that. They apply absolutely equally on the east coast and on the west coast. The appearance of discrimination is because of the entirely different conditions, which I think the hon. member outlined pretty fairly.
I must say I do not have any great familiarity with these floats on the west coast.
I have never examined them. However, it is quite true that either on the east coast or the west coast there are no side wharfage charges for commercial fishermen provided they are simply unloading or loading their vessels, and are not tied up for more than a certain length of time. On the east coast there are no floats provided at all, to the best of my knowledge, for fishermen to park their boats, if one may put it that way, or to tie them up, whereas on the west coast apparently the taxpayers have provided very considerable facilities which have been used partly by commercial fishermen.
Information has been given to me which is perhaps not as true of Prince Rupert as it may be of some other places on the west coast, and this may perhaps be the reason why it is that the main complaint so far has come from Prince Rupert.
I am told that many of these floats are used by sports fishermen or by the owners of pleasure craft. I do not believe there would be many hon. members who would argue that taxpayers should be expected to provide wharfage for that kind of vessel at public expense. If these wharves had been used exclusively by commercial fishermen, I am quite sure there would have been no thought whatever that it would not have been worth while.
I cannot go into much detail on this matter because I only have three minutes. I cannot go into much detail for another reason, namely that these regulations were made at a time when I was not the minister, nor was I here to discuss them. However, I shall look into them.


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



EXTERNAL AFFAIRS


Herbert Wilfred Herridge: Mr. Speaker, I asked the question of the Secretary of State for External Affairs with regard to the situation in Viet Nam because there is great concern over the possibility of very early and dangerous developments there which may involve us and others as well. There has been a proposal by the United States to increase its forces and to increase
Proceedings on Adjournment Motion its direct participation in what Senator Morse has described as an illegal and unwise war. Some years ago we were told the United States had observers there. Then, they had advisers, but here we have a senator of the United States admitting that this is a war.
The second reason we are concerned at the invitation on the part of the United States to other countries to participate in these forces outside the United Nations, is that we take the strongest objection to this unilateral action on the part of the United States or any other countries associated with them. Then again, we were most dissatisfied with the brief, uninforming and unsatisfactory answer given to a question asked by our leader a day or so ago by the Prime Minister with regard to this problem. He said, in brief, that no request had been made. Surely, Mr. Speaker, a serious situation like this developing in that part of the world would warrant the Prime Minister of this country at least giving the house some statement as to the government's policy or attitude toward this unfortunate development. We believe that the government should make a clear and definite statement of policy with regard to its attitude toward the Viet Nam situation and recent developments.
This is a very serious question which has a great potential for danger to the rest of the world and should be referred to the United Nations. We most definitely oppose this unilateral action by the United States and other countries, as suggested. We believe that this situation should be handled as a result of a reference to the United Nations for a peace keeping force under the United Nations, under the rule of law that we are doing so much to try and develop in the world today. I hope the parliamentary secretary will deal with this question and leave us more satisfied with his answer than we were with the Prime Minister's answer to our leader a day or so ago.


Mr. Stanley Haidasz (Parliamentary Secretary to Secretary of State for External Affairs):: I should like to apologize to the hon. member for Kootenay West because the Secretary of State for External Affairs is unavoidably absent from Ottawa tonight.
I am sure he would have welcomed the opportunity to answer the hon. member, had it been possible to do so. I am also sure that the hon. member for Kootenay West understands my position, and that for this reason I am unable to take a stand different from the one which my minister took earlier this afternoon.


Herbert Wilfred Herridge: Could I ask the parliamentary secretary a question?
2642	HOUSE OF
Proceedings on Adjournment Motion


Mr. Deputy Speaker:: Order. I do not think that the amended order under which we operate at this time allows for additional questions, supplementary questions, or debate of any kind.


REQUEST FOR RECONSIDERATION OF LONG TERM CONTRACTS
Thomas Clement (Tommy) Douglas: 
but I would like to know, first of all, in view of this very substantial increase in the price of sugar, is the minister prepared to reexamine the feasibility of entering into long term agreements for the purchase of sugar so that the Canadian housewife can escape these drastic and periodic fluctuations in price?
Is the minister prepared to look into the possibility of removing the tariff behind which the sugar industry enjoys great protection in Canada, and the removal of which would compel it to look again at these price increases? Also, although it does not come under the minister, I think the government has a duty to tell us whether or not it is concerned about the fact that three companies, on the same day, all announce they are going to increase the price by 30 cents per 100 pounds. If this does not look like collusion and agreement, I do not know what does. These are the three main sugar companies.
I do not need to remind the house that on June 15, 1963, three sugar companies were found guilty in the courts after a prosecution initiated by the restrictive trade practices branch, and on March 8, 1963, I believe it was, they were fined $25,000 each for entering into agreements harmful to the consumers of Canada. I think we have a right to know whether the government is concerned about this matter and whether they are looking into it. I think the housewives of Canada would like to know from the minister whether he is prepared to do something and what he is prepared to do. They want to know if he will continue to do what he has done for the last 12 months namely, nothing, or whether he has at last formulated some policy to deal with this problem.


Mitchell William Sharp: 
Thomas Clement (Tommy) Douglas: She was earning the grant the government gives her.


Mitchell William Sharp: I really think that is most unfair to the lady. I am sure she spoke with the full authority of all those fine women who form her association.
May I answer specifically the questions put to me. The hon. member asked: "Is the minister prepared to re-examine the feasibility-" and so on. Well, I am of the opinion that it would be unwise at the moment to
Proceedings on Adjournment Motion enter into long term agreements with commonwealth suppliers or any other suppliers. If one looks at the futures prices to which the hon. gentleman referred, they still show a steep decline in price between now and December. I may say, parenthetically to the hon. member, that when we were holding the discussions with the commonwealth suppliers earlier it was clear that no contract we might enter into could become effective for some months, so I did not think then it would be wise to embark on such arrangements and I still feel it would be better to wait until the market has settled down before we commit ourselves to any long term contract which would oblige Canadian consumers to pay higher prices in the long run.


Mr. Deputy Speaker:: I am sorry to interrupt the hon. minister, but his time has expired.
Under the provisions of provisional standing order 39A this house stands adjourned until tomorrow at 2.30 in the afternoon.
Motion agreed to and the house adjourned at 10.25 p.m.

Tuesday, April 28, 1964