1964-07-09

[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, I would like to ask the Secretary of State for External Affairs whether a contribution is going to be made by the other nations within the United Nations in connection with Canada's further participation in the Cyprus force for an additional period of time. As I understand it, Canada and the United Kingdom are the only two nations which are making their contributions fully and voluntarily. What is being done in this connection to ensure, to put it mildly, that Canada is not a kind of Santa Claus in these peace keeping operations?


Hon. Paul  Marlin@Secretary of Slate for External Affairs: Voluntary contributions
have been made by a number of states, notably by the United Kingdom and the United States. Canada is not the only country which has undertaken to pay her own expenses. Ireland is in that category. With regard to the three month period, both Canada and Ireland have taken the position that if the financial situation in the United Nations should become such that reimbursement could take place, we would expect that there should be reimbursement.


John George Diefenbaker: Would the minister say what other nation is contributing its force and paying the cost of that force, other than the United Kingdom?


Mr. Martin (Essex East):: I said that in addition there were Ireland and Canada. Other countries are receiving assistance out of the voluntary fund.


John George Diefenbaker: Was there any particular reason why Canada should have been placed in this beneficent position?


Paul Joseph James Martin: Well, if we had not taken this position, in the first place
I am sure there might not have been a United Nations force. In addition, we felt the fact that we had to pay for the air lift both going and coming must and should be regarded as a contribution, as well, to the voluntary fund.


John George Diefenbaker: The argument the minister makes is accepted, but it does not apply to the second period, the additional period. What has been done in recent weeks to assure that other nations will provide the necessary funds, or at least a portion of the funds, to meet the cost of the Canadian force there?


Paul Joseph James Martin: As I said, in the first three months assistance was given by the United States and some other countries, providing enough money to pay for the operation of the force; subject, of course, to the undertakings and commitments made by Canada, Ireland and, as the right hon. gentleman says, the United Kingdom.
With regard to the second three month period, there have been further contributions made by a number of the original contributing states. When the question of a renewal of the mandate was considered the financial aspect of the problem was examined, and it would not have been possible for a renewal to take place if the participating countries had not proceeded on the basis established previously.
As I stated in this house, it is regrettable that other states in the United Nations have not recognized their obligations under the charter and made the contributions which membership in the organization involves. However, because other countries have refused to live up to their obligations, that is no reason, as I am sure the right hon. gentleman would agree, why Canada should be delinquent with regard to its commitment.


Mr. Raymond Langlois (Meganlic):: Mr. Speaker, I should like to direct a supplementary question to the Acting Prime Minister.
Can he confirm or deny the article published in L'Action Catholique this morning according to which the United States has delivered CF-104 jets manufactured in Canada to Cypriots and Greeks during this last crisis?

Inquiries oj the Ministry


Mr.   Marlin@Essex East: I think, Mr. Speaker-


Mr. Speaker:: Order. Under the standing orders given to me a question should not inquire whether statements made in a newspaper are correct.


Raymond Langlois: I am not asking whether the newspaper is correct. I am asking the government whether this is correct.


Hon. Paul Hellyer (Minisler of National Defence):: In respect oi that question, Mr. Speaker, the answer was given by me in the house on May 13 and can be found at page 3213 of Hansard for that day.


Mr. T. C. Douglas (Burnaby-Coquiilam):: Mr. Speaker, I want to direct a similar question to the Secretary of State for External Affairs, as to whether he has any knowledge of the truth of the statement that Canadian made CF-104 jet fighter-bombers have been delivered by the United States to both Greece and Turkey during the period of the trouble in Cyprus. Has he any information from the United States government to that effect?


Mr.   Marlin@Essex Easl: Mr. Speaker, I would not want to answer that question as to what other countries have done without further consideration. I can say that under the mutual aid program to NATO countries, in which Canada participates, the government of this country, shortly after the United Nations force was established, suspended any possible mutual aid assistance to Greece and Turkey for an indefinite period.


Thomas Clement (Tommy) Douglas: A supplementary question, Mr. Speaker. As I recall it, Canada contributed some $50 million to this program. I would like to ask the Secretary of State for External Affairs whether Canada was consulted before any of these planes were delivered to Greece or Turkey, if in fact they were delivered. Since Canada was a major contributor, surely the Canadian government did not allow these planes to be delivered without consultation with and consent by the Canadian government?


Mr.   Marlin@Essex Easl: I would like to give that question consideration.



MALAYSIA


[Stage Direction]
On the orders of the day:
Mr. R. N. Thompson (Red Deer):: Mr. Speaker, my question is directed to the

Secretary of State for External Affairs and concerns the rapidly deteriorating condition in Malaysia. Since the announcement today by the chief minister of Sarawak that 1,000 Chinese communists have crossed to Indonesia, and the appeal that comes from the prime minister of Malaysia, as well as the response from the prime ministers of Australia and New Zealand, does the Canadian government intend to offer some assistance to this important part of the commonwealth in southeast Asia?


Hon. Paul  Marlin@Secrelary of Slale for Exlernal Affairs: My hon. friend will remember raising this question on June 25, when he interrogated the Prime Minister. My hon. friend the hon. member for Kootenay West gave me notice this morning of his intention to ask a question along those lines. This matter of Canadian interest in Malaysia is currently under discussion in London, and we look forward within a very few days to the visit to Ottawa of the prime minister of Malaysia. Beyond that at this moment I cannot go.


Mr. Speaker:: The hon. member for Kootenay West.
Mr. Her ridge: The Acting Prime Minister has answered my question.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Hon. Michael Slarr (Ontario):: Mr. Speaker, I would like to address a question to the Minister of Agriculture and ask him whether he would dispel the fears of the Ontario association of agricultural societies by assuring them that the government has no intention of completely cancelling out the grants to class A and class B fairs, which have been suspended for a period of two years.


Hon. Harry W. Hays (Minisler of Agriculture):: Mr. Speaker, I have been in consultation with the executive of the A fairs in this connection; I have also discussed grants with the B fairs executive. I will be meeting them again in the not too far distant future. We have some plans that we would like to discuss with them. We have at the moment a pilot project in so far as livestock exhibits are

concerned, basing them on utility values; and we also have some plans which we think will do an even better job than the old grants did for the fairs since 1947, and which have now been suspended since 1962.


Mr. A. D. Hales (Wellington South):: A supplementary question, Mr. Speaker. Could the Minister of Agriculture state whether the capital grants will be continued to the A and B fairs?


Harry William Hays: I suggested to them at the time we were running this pilot project that as soon as it was completed, after the London exhibition, we would like to have the executives of both the B fairs and the A fairs and the exhibitors see us and we would discuss the whole program of grants, prize money, and so on, in so far as exhibitions are concerned. Until such time as this project has been completed, no grants will be considered.


Mr. L. E. Cardiff (Huron):: I should like to direct a supplementary question to the Minister of Agriculture with regard to the fall fairs. Does he not think it is a little late for the government to formulate a policy with respect to this important item?


Harry William Hays: Mr. Speaker, I suppose the hon. gentleman is referring to the capital grants which have been suspended, as the hon. member knows, since June of 1962. We have honoured the $3,000 per year for fairs, and there has been no change there. There are many requests for capital grants, but we think with the program we are planning now, if the pilot project is successful, we will be able to do something that the 128 exhibitions in Canada have long needed. We think these fairs are no longer just agricultural societies for agricultural purposes but they are cultural centres. Many of these smaller fairs are asking for $30,000 when they should get $200,000, and that is what we are thinking of.



SASKATCHEWAN


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, first may I say to the Minister of Agriculture that we are glad to see him back after his enforced absence. I am sorry I could not join in partaking of some of that "beelzebub" that he dispensed at the party before the stampede. If I haven't the right word, I certainly have the right sentiment in describing it.
Inquiries of the Ministry


Paul Joseph James Martin: It was a good party.


John George Diefenbaker: I would like to ask the minister whether following his discussions with the provincial government in Regina he is now prepared to accede to the suggestion made by the opposition that action be taken similar to that which was applied during, I think it was, 1961 and 1962, when as the result of drought assistance was given to farmers and cattle raisers in the way of feed, fodder and the like, so no precipitate action would be taken on their part to get rid of their herds at tumbling prices.


Harry William Hays: Mr. Speaker, I should like to preface my remarks to the right hon. gentleman so far as the sillabub was concerned by saying that we missed him. I got his letter expressing regret, but I am sure he would have enjoyed the drink very much.


Some hon. Members:: Oh, oh.


John George Diefenbaker: That is not the way I
heard it.


Paul Joseph James Martin: Mr. Speaker, on a question of privilege, as one of those not invited to this party may I express great envy at the invitation extended to my right hon. friend.


John George Diefenbaker: Mr. Speaker, in this very friendly atmosphere may I be allowed to say that I would have been frightened away from it, having regard to the newspaper description given of the minister of defence, which indicated that he looked confused after he partook.


Paul Theodore Hellyer: Mr. Speaker, if there was any such expression on my face it was only due to my attempt to emulate that of the right hon. gentleman when he was there in 1958.


Thomas Clement (Tommy) Douglas: Mr. Speaker, may I be allowed to comment that I thought the minister of defence looked confused before he participated.


Harry William Hays: Now, Mr. Speaker, getting down to the real drought, I might say that this situation is serious. Only one who has been through several dry years on a farm can really appreciate it. Yesterday morning I left Regina shortly before seven and travelled north to Melfort, where this condition starts in Saskatchewan. Although the area around Melfort is fairly good, as you proceed to Prince Albert, a short distance before you
5236	HOUSE OF
Inquiries of the Ministry get there is where they are having the greatest difficulty.


Some hon. Members:: Oh, oh.


Harry William Hays: I mean with the drought. We travelled some 500 miles, and I am sure everyone feels very sorry for those people because there are many crops which have not received one drop of rain since they were seeded, and there are many areas where there has been no germination. The Prairie Farm Assistance Act will help those people, of course, but this is also a livestock area. Some farmers have no hay and their pastures are almost depleted.
After conferring with the Saskatchewan cabinet I suggested that we would provide space on some of our P.F.R.A. pastures if the farmers would like to move their cattle to those areas where there is feed. We would also like to help so far as moving feed to cattle is concerned. The Saskatchewan government will be forwarding a proposal in the next few days, so I can assure the right hon. gentleman that we are doing something in this regard. We are going one step further, in fact, and in the case of people who are financing their crops through the Farm Credit Corporation-and there are many in this area-if they come and see our supervisors we will be glad to forgo their payments which are due and tack them on to the end of the agreement in another year.


Thomas Clement (Tommy) Douglas: A supplementary question, Mr. Speaker, with reference to the drought in northern Saskatchewan. Has the federal government indicated to the government of Saskatchewan its willingness to do what was done previously by federal governments, namely pay half the freight assistance for moving feed into the drought area by rail; second, pay up to a certain number of cents per mile per ton for moving feed that is trucked into the area; and third, is the federal government also prepared to pay a part of the cost of the hay and feed in order to keep the figure at an amount which the drought stricken farmers will be able to meet?


Harry William Hays: Mr. Speaker, in the first instance the provinces will have to initiate a program so far as help is concerned. I have assured the province of Manitoba through the minister of agriculture and Saskatchewan cabinet that we are prepared to participate in the plans they put forward, which I cannot disclose until they send them to me officially.


Thomas Clement (Tommy) Douglas: A supplementary question, Mr. Speaker. I am asking the minister a specific question. I am not asking him whether he offered to participate. I am asking him what specific things he has indicated to the governments of Saskatchewan and Manitoba the federal government is prepared to do in the event that they are asked for assistance.


Harry William Hays: As far as that is concerned, I do not think I can add anything to what I have already said. They must first initiate the programs in which they want us to participate. I have discussed these programs with them and with the cabinet, and we are prepared to do the things they want us to do.


Mr. Gilbert Rondeau (Shefford):: Mr. Speaker, in view of the fact that the Minister of Agriculture has expressed his intention of giving farmers affected by drought conditions more time to repay their farm loans, could he not apply the same policy to Quebec farmers whose crops are a complete failure and who depend on them to make a living? I refer to apple growers and strawberry producers.


Harry William Hays: Mr. Speaker, 1 dispatched a letter this morning to the minister of agriculture of Quebec offering him the same consideration.


Mr. Speaker:: Order. I wonder whether I could have some indication of how many sup-plementaries there are. The hon. member for Mackenzie.


Mr. S. J. Korchinski (Mackenzie):: Mr. Speaker, I should like to direct a supplementary question to the Minister of Agriculture, and in so doing I will give him the opportunity to initiate something on his own. I wonder if the minister would indicate to the house whether he is prepared to introduce immediately amendments to the Farm Improvement Loans Act so that cash can be made available to farmers immediately if they require it to purchase fodder.


Harry William Hays: Mr. Speaker, although this is under the Department of Finance, I would suppose that the amendments to the Farm Improvement Loans Act will be on the order paper within the next two or three days, and if the house leader could be assured that they would be passed in an hour I am sure he would be glad to bring them forward.


Mr. Pierre-Andre Boutin (Dorchester):: Mr. Speaker, since the Minister of Agriculture is going to all sorts of trouble to visit western farmers who are having a hard time, I should like to ask him if he would care to take the same trouble to visit eastern farmers who are up against a crop failure, this spring, especially as regards maple syrup.


Harry William Hays: Mr. Speaker, according to my agenda I am leaving for eastern Canada on July 21.


Mr. P. V. Noble (Grey North):: May I ask
a supplementary question of the Minister of Agriculture. I am wondering if he would give also consideration to assisting those farmers in Ontario who have been suffering from drought. I am sending him a letter tomorrow which will indicate the circumstances.


Harry William Hays: I have no report yet from the minister of agriculture for Ontario.


Mr. L. J. Pigeon (Jolielte-L'Assomplion-Montcalm):: Mr. Speaker I should like to ask a supplementary question?
Since tobacco growers in the Joliette area have suffered losses of $1 million caused by strong winds lately, does the Minister of Agriculture intend to help pay for those damages if the province of Quebec submits an official claim?


Harry William Hays: Mr. Speaker, the minister of agriculture for Quebec has not indicated this problem to me as yet.


Mr. Nicholas Mandziuk (Marquette):: Mr. Speaker, may I address a question to the Minister of Northern Affairs and National Resources. In view of drought conditions in northern and central Manitoba and the anticipated shortage of fodder and hay, would he give consideration to issuing special permits to cut hay in Riding Mountain national park, something which was done several years ago under conditions very much like those of this year? I may add that I have received a number of letters and petitions which I could quote to the minister. I hope he will give this matter his urgent attention.


Hon. Arthur Laing (Minister of Northern Affairs and National Resources):: Mr. Speaker, we are fully aware of that and have had
Inquiries of the Ministry applications from a number of people. It would appear that in the past permits have been granted, and some practices grew up that were not of the best. We are certainly going to be very careful that this does not arise again. We have permitted some grazing in the park, and we have told the superintendent to use his own discretion in respect of the apparent need of those making applications to him.


J. Nicholas (Nick) Mandziuk: On a point of order, and just to correct the impression the minister has given the house, there are people who have been grazing their cattle in the park for years and years and years. There have been people who have received annual permits to cut hay in the park. What I am seeking are special permits for needy farmers; and I may say I have not heard of any abuses during past experience.



FEED GRAIN FOR EASTERN FARMERS


[Stage Direction]
On the orders of the day:
Raymond Langlois: I have
a supplementary question for the Minister of Agriculture. I am sorry he has had so many questions today, but that is probably because he was absent for a few days. Can the minister tell me the position with regard to negotiations concerning feed grains for the province of Quebec, about which I asked him last November? Will he consider looking into this problem in an attempt to find a solution for the eastern farmers?


Hon. Maurice Sauve (Minister of Forestry):: Some questions were put to me yesterday concerning feed grain. I replied that we were now preparing a program and that, next week probably, I would be in a position to announce the payment of transportation charges for feed grain in all the provinces of eastern Canada.
While I am on my feet I should like to answer the following question asked yesterday by the hon. member for Nicolet-Yamaska (Mr. Vincent):
-whether, besides general agreements signed by the ten provinces in October 1962, the federal government concluded agreements with the province of Quebec in 1962?
The answer is yes, with regard to general agreements, and no for the other agreements which were almost all signed in January 1963.
5238	HOUSE OF
Inquiries of the Ministry
Mr. Clemen! Vincent (Nicolet-Yamaska):
Could the minister say whether on December 6, 1962, the federal government and the province of Quebec signed an agreement under ARDA to carry out a $185,000 survey in the riding of Megantic? Apparently such an agreement was signed on December 6, 1962.


Maurice Sauvé: Mr. Speaker, that is not the question the hon. member asked me yesterday. If he had phrased it differently I could have given him a reply.


Mr. Vincent:: I asked the minister if, in addition to the general agreements signed with the ten provinces in October 1962, a supplementary arrangement was made that year? If I remember well, on December 6, 1962, the federal government and the province of Quebec signed such an agreement with a view to carrying out a survey in the riding of Megantic.


Maurice Sauvé: Well, Mr. Speaker, we do not agree on the meaning of the terms. In our opinion an arrangement is an agreement entered into between the federal government and a province, while the hon. member is now dealing with a proposal submitted by the province of Quebec for approval by the federal government under ARDA.
In any case, I will consider the matter raised by the hon. member.

Yesterday the hon. member for Qu'Appelle asked if I would make clear the requests of the province of Quebec concerning the extension of shared programs with the federal government.
At the last federal-provincial conference the Quebec government indicated clearly that it wanted to maintain the agreements on ARDA that were signed between Quebec and the federal government. ARDA is one of the joint programs they felt was excellent. While I was in Mont Joli during the week end with the minister of agriculture, Mr. Courcy, he did not mention specifically that Quebec would remain in ARDA, but in his prepared text it is clearly indicated that this is their intention. In answer to a question of mine he replied that Quebec was very satisfied with the ARDA program, as it was a program in a field of joint federal-provincial jurisdiction.


Mr. Real Caouette (Villeneuve):: Mr. Speaker, may I put a question to the Minister of Agriculture?
As the minister knows very well, on the basis of the subsidies paid out, transportation of feed grain in eastern Canada, that is in the province of Quebec, costs $5 a ton in the Montreal district and $6.20 in the northwest part of the province, including Abitibi and Temiscamingue, even though the grain passes right in front of our doorstep to reach Montreal. Does the minister intend to take appropriate steps and pay the same subsidies in Abitibi and Temiscamingue so that transportation of feed grain in those areas will not be more costly than in the southern part of the province?


Maurice Sauvé: Mr. Speaker, I stated yesterday in reply to a question an hon. member put to me, that next week I intended to announce a decision concerning the payment of trucking charges for feed grain in all eastern Canada, as shown at page 5206, right hand column, of Hansard.


David Réal Caouette: I put a question to the Minister of Agriculture and it is the Minister of Forestry who replies that next week he will have an answer for us. Can the minister tell us now what steps have been taken to put us, from Quebec or eastern Canada, on the same footing as the others?


Maurice Sauvé: Mr. Speaker, the hon. member should know that since March 5 I am the minister responsible for the subsidy policy concerning the transportation of feed grain. The civil service commission has made public the appointment of a director of the feed grain administration and next week I shall announce the policy respecting the payment of trucking charges for feed grain in all areas of the six eastern provinces of Canada.


Mr. Speaker:: Order, please. I should like to call to the attention of hon. members that the question period has now lasted 64 minutes. I am wondering whether we could not get on with the business before the house.


Raymond Langlois: I thank the Minister of Forestry for the information he has given us. There has been so much activity in the house that his appointment passed unnoticed.


Maurice Sauvé: I wish to protest against the words of the hon. member. I am convinced that he does not mean what he said.
Everybody knows that when no announcements are made in the house regarding new policies, this does not mean that nothing is being done.
When I stated that next week I would announce a new policy in respect to the payment of trucking charges for feed grain, it is precisely because some spade work had been done; indeed, this achievement is the result of two months work. I wish the hon. member would give credit where credit is due.


Raymond Langlois: I am glad to do that and to thank the minister for the work that has been done. I was not aware of the situation.



INQUIRY RESPECTING FREE DISTRIBUTION TO SCHOOLS

[Stage Direction]
On the orders of the day:
Mr. R. A. Webb (Hasiings-Fronienac):: Mr. Speaker, I too would like to direct a question to the Minister of Agriculture. I am sure you appreciate, sir, that we have to ask these questions when we have the opportunity of catching the minister in the house. Mr. Speaker, I would like to ask the minister if it is the government's intention to introduce legislation at this session to implement the program of providing free milk to schools, as promised in the throne speech?


Harry William Hays: In reply to this question, Mr. Speaker, the hon. member might be surprised to learn that in Canada the consumption of milk is probably the second highest in the world. Now, due to the very buoyant economy of Canada, most children have so much milk before they get to school that we can't get any more milk into them.


Mr. E. Nasserden (Rosfhern):: Mr. Speaker, I have a supplementary question for the Minister of Agriculture. I wonder whether he would indicate to us how soon the government will be prepared to present legislation to provide for free milk for students.


Harry William Hays: Mr. Speaker, I have discussed this with all the ministers of agriculture in Canada. We have discussed the matter with many of the people who are interested, but many of the ministers think this is a program which, as I suggested before, due to the state of the economy we should wait a little while before pursuing any further.
Inquiries of the Ministry



THE SENATE


[Stage Direction]
On the orders of the day:
Hon. J. W. Monleith (Perth):: I should like to ask a question of the Acting Prime Minister. In view of the fact that the government pressed for immediate passage of the defence bill last Monday and the youth allowance bill last Tuesday so these measures could be implemented immediately, could the Acting Prime Minister say when the other place will next meet so these bills can pass and receive royal assent?


Hon. Paul  Marlin@Acting Prime Minister: Mr. Speaker, I shall be glad to give my hon. friend an answer before six o'clock.


Jay Waldo Monteith: May I ask a supplementary question. Does the Acting Prime Minister not think that, because of the urgency of these bills, the government is being very negligent?


Paul Joseph James Martin: My hon. friend would not expect, on a day when we are all so agreeable with one another, that I would take opportunities to disagree with him. However, on the last point I must. I do agree that these matters are very important and the quicker they can be put into effect the better it will be. I assure my hon. friend that in this spirit of understanding we will do what we can.


Hon. Marcel Lambert (Edmonton West):: Will the Acting Prime Minister not agree that next Wednesday, July 15, is the date on which the other house is to be convened? Is this in the spirit of urgency?


Mr. Churchill:: It is in the newspaper; he will find it.


Paul Joseph James Martin: I want to inform my hon. friend that my unofficial newspaper, the Ottawa Journal, informs me that the Senate has been recalled for Wednesday next.


Gordon Minto Churchill: Mr. Speaker, I have a question for the Acting Prime Minister. I wonder whether he would get authority to summon the Senate in order to get on with the business of the country. I base my question on a statement made on Monday by the Minister of National Defence disclosing a very difficult set of circumstances. He said:
-every day that goes by now without the bill being passed aggravates the situation which exists at national defence headquarters.

Inquiries of the Ministry
That was in respect of morale. He went on to say:
It not only aggravates the situation in respect of morale at national defence headquarters but it results in the postponement of potential savings involving tens of thousands of dollars.
I ask the Acting Prime Minister, should not immediate action be taken in order to correct this situation?


Paul Joseph James Martin: Mr. Speaker, since the question was put a few moments ago I have sent a note to my colleague, the leader of the government in the other place. I hope to see him before too long.



FRASER RIVER-FEDERAL PARTICIPATION IN DEVELOPMENT

[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: should like to direct a question to the Minister of Northern Affairs and National Resources. Has the minister any information he can give the house with respect to the announcement of Premier Bennett of British Columbia that his government intends to proceed with the development of the hydro potential of the Fraser river, and expects the federal government's financial assistance to this end?


Mr. Speaker:: Important as that question may be, I wonder if the hon. member would put it on the order paper?


Herbert Wilfred Herridge: May I, with all respect for your ruling, Mr. Speaker, say that there is a measure of immediacy about this question?


Mr. Speaker:: Under the circumstances the hon. member has the opportunity to raise the matter at 10.30, and he can still put it on the order paper.


Mr. Fisher:: That is pretty late for him. EDUCATION



STUDENT LOANS


[Stage Direction]
On the orders of the day:
Hon. Leon Balcer (Three Rivers):: Mr. Speaker, I should like to direct a question to the Secretary of State. Could he tell the house whether he was made aware of the joint releases issued by student associations of the universities of Montreal, Laval, Sherbrooke and of classical colleges and teachers' colleges of the province of Quebec, in which

students expressed their complete disagreement with the bill concerning federal loans to university students because they consider them as an infringement of a strictly provincial jurisdiction, that is education?


Hon. Maurice Lamonlagne (Secretary of State):: Mr. Speaker, I think that when the hon. member reads the bill, which will probably be on the order paper next week, he will realize himself that all prerogatives and rights of the provinces are entirely respected.


Louis-Joseph Pigeon: Is that co-operative federalism? [Text]


Thomas Clement (Tommy) Douglas: May we ask the minister when we will see the bill? We have been waiting a long time.


Maurice Lamontagne: I would hope the hon. member would refer his question to the house leader.


Thomas Clement (Tommy) Douglas: May I ask the house leader when we will see the legislation dealing with student loans?


Hon. Guy Favreau (Minister of Justice):: am sorry, Mr. Speaker, I did not get the question fully, but I think I heard the words "student loans". If the question is in relation to student loans legislation I may say that the resolution will be on the order paper at the very beginning of next week.


Thomas Clement (Tommy) Douglas: On a point of order, Mr. Speaker, apropos the answer just given by the Minister of Justice, on Tuesday the Acting Prime Minister told us that the student loans legislation would be placed on the order paper about Friday of this week. Now the Minister of Justice says that he hopes it will be early next week. The government has been telling us about the great necessity to get on with this legislation, yet we are still waiting for the government to bring it down and we have been given no opportunity to study it. We are beginning to wonder what all the talk about the opposition holding up government progress means when the government has not yet laid this legislation before the house.
I want to ask the Minister of Justice what is the reason for this delay on legislation which the government announced in the speech from the throne and which we are still waiting to see, and which we were told would be available at the end of this week.


Paul Joseph James Martin: Mr. Speaker, if there is any difficulty in the matter I must accept responsibility. My hon. friend is right. I did say that I thought it

would be on the order paper on Friday. I think I said on Friday but, as the Minister of Justice has said, it will be on Monday, and if my hon. friend will extend the blame to where it belongs, that is to the statement I made. I thought it would be about Friday but it will be on Monday.


Mr. Heward Graffiey (Brome-Missisquoi):: Mr. Speaker, I would like to ask a supplementary question.


Mr. Speaker:: Order. A supplementary question on what?


William Heward Grafftey: Regarding loans to students, Mr. Speaker.


Mr. Speaker:: Very well.


William Heward Grafftey: Mr. Speaker, I should like to put my question to the Secretary of State. Is the delay due to the fact that the government failed to get in touch with the provinces?


Maurice Lamontagne: Mr. Speaker, I am sorry, but I did not hear the hon. member's question.


William Heward Grafftey: Mr. Speaker, I will repeat my question. Has the government communicated with the provinces concerning the students' loan bill?


Louis-Joseph Pigeon: Since education comes under the jurisdiction of the provinces.


Maurice Lamontagne: Mr. Speaker, the responsibility for introducing this bill to the house is not mine and I think this question should be directed to the Minister of Finance.


Hon. Waller L. Gordon (Minister of Finance):: Mr. Speaker, perhaps I might be permitted to answer the question. There was a very satisfactory and co-operative meeting between officials of the federal and provincial governments on this matter on Monday of this week. The legislation will be presented at the very beginning of next week.


Thomas Clement (Tommy) Douglas: May I ask the minister, when the government gave notice of this legislation in the speech from the throne had it then made any contact with the provincial governments regarding whatever arrangements had to be worked out with them?


Walter Lockhart Gordon: Mr. Speaker, there have been conversations going on about this legislation
Inquiries of the Ministry for some time. The meeting I referred to that took place on Monday was the final one.


Mr. Erik Nielsen (Yukon):: I have a question for the Minister of Finance with respect to the meeting which was held with him last Monday regarding student loans. Could the minister inform the house whether all provinces were represented at that meeting?


Walter Lockhart Gordon: I was not at the meeting, Mr. Speaker, but I am informed that all provinces were represented.



SHIPPING


[Stage Direction]
On the orders of the day:
Mr. G. H. Aiken (Parry Sound-Muskoka):: Mr. Speaker, I have a question for the Minister of Northern Affairs and National Resources. In view of the aid being granted to drought stricken farmers, is the government planning any aid for drought stricken tourist operators on lake Huron?


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


Gordon Harvey Aiken: Mr. Speaker, I absolutely fail to understand where there is a difference between drought stricken farmers and drought stricken tourist operators. These tourist operators have not asked for help in a generation. They are now in urgent need, and I do not see why we are greeted with silence when we ask questions on an urgent situation like this.



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
Mr. Barry Mather (New Westminster):: Mr. Speaker, I have a question I intended to ask the Minister of Labour. In his absence I understand it should be directed to the Minister of National Health and Welfare and with your permission, sir, I would like to do that. Having in mind the fact that this afternoon a lockout or walkout has closed the daily press of Toronto, and the fact that a million readers are affected, may I ask if the minister is aware of the situation, and would the department be willing to use its good offices in this matter?

Inquiries of the Ministry


Hon. Judy V. LaMarsh (Acting Minister of Labour):: Mr. Speaker, I was informed, when I received notice of this question, that this is a matter for the provincial authorities. The situation is apparently under control and is being watched carefully by Mr. Rowntree, the Ontario minister of labour. According to newspaper reports the minister met with the parties yesterday and is continuing to do so.



ROYAL CANADIAN MOUNTED POLICE


[Stage Direction]
On the orders of the day:
Mr. David Orlikow (Winnipeg North):: Mr. Speaker, may I direct a question to the Minister of Justice and ask whether he has any statement to make on the truth of the charges regarding wire tapping by the R.C.M.P. in Toronto.


Guy Favreau: Mr. Speaker, this charge is denied.


David Orlikow: As a supplementary question, would the government give consideration to allowing time for discussion of Bill No. C-103, proposed by the hon. member for Brant-Haldimand, dealing with the question of wire tapping, or will the government bring forward its own legislation on this matter?


Guy Favreau: Mr. Speaker, we shall have to look into that question.


Thomas Clement (Tommy) Douglas: As a supplementary question, when the Minister of Justice says this charge is denied is he referring to the denial of Assistant Commissioner Lemieux, or is the minister himself making this denial after having personally investigated the charges?


Guy Favreau: I have communicated with the authorities in this regard and it is as a result of my conversation with them that I denied the charge.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Would the Minister of Industry tell the house whether he has yet been in receipt of a communication from the corporation of the city of Vancouver in connection with the Kitsilano property, and particularly whether the corporation takes a strong stand


against any fragmentation of this property and turning any of it over to the C.B.C.?


Hon. C. M. Drury (Minister of Industry):: Apart from the telegram to which reference was made in the house yesterday, I am informed that Crown Assets Disposal Corporation has not yet received any proposal from the city of Vancouver.


John George Diefenbaker: And has no communication been received by the minister?


Charles Mills (Bud) Drury: No, Mr. Speaker.



REQUEST FOR IMPROVED QUARTERS FOR INTERPRETERS

[Stage Direction]
On the orders of the day:
David Réal Caouette: Mr. Speaker, I wish to direct to the Secretary of State a question which I also consider as a question of privilege.
According to my information, the interpreters of the house, who translate from English into French and vice versa, do not have air conditioning in the booths where they must stay between 40 and 50 minutes at a time, a situation for which the Secretary of State is directly responsible.
We raised this question some time ago, but the Secretary of State did not know what to answer. Today, is he ready to tell us that those employees will be treated like human beings and not like beasts of burden, as has been the case up to the present, that is in this year 1964?
I am asking the question and I make it a question of privilege.


Maurice Lamontagne: Mr. Speaker, I must say to the hon. member that I am not responsible for the working conditions in the house.


David Réal Caouette: Mr. Speaker, I wish to put a supplementary question.


Mr. Speaker:: Would the hon. member put his question in writing and pass it to the Speaker?


David Réal Caouette: Mr. Speaker, I should like to ask a supplementary question.
I am told that you are not responsible for that situation as far as the interpreters are concerned and that the Secretary of State is directly involved in that matter.

I wish to know-and the house too I am sure-whose responsibility it is to treat these civil servants decently when they have to work for hours and hours in almost unbearable, and certainly unreasonable, conditions. [Text]


Mr. Speaker:: In order to settle this matter, which is in the nature of a complaint rather than a question of privilege, may I say that the Speaker is, I understand, responsible for the physical arrangements of the house. The Secretary of State is responsible for the salaries.


David Réal Caouette: Would you assure me that the Speaker intends to look after these matters?


Mr. Speaker:: Would the hon. member put his request in writing?


David Réal Caouette: Right.


Mr. W. B. Nesbitt (Oxford):: A supplementary question directed to the parliamentary secretary to the Minister of Public Works in the absence of the minister. Is the hon. member aware that last year I raised this matter and I was assured, as I recall, by the Minister of Public Works that during the recess last fall this matter would be attended to. I wonder whether plans have yet been drawn up. Perhaps the parliamentary secretary would take this question as notice and let us know.


Mr. G. Roy McWilliam (Parliamentary Secretary to Minister of Public Works):: In the
unavoidable absence of the minister, I will take that question as notice.



BILINGUAL QUALIFICATIONS OF DIRECTOR OF LEGISLATIVE SERVICES

[Stage Direction]
On the orders of the day:
Mr. Maurice Cote (Chicoutimi):: Mr. Speaker, I should like to direct a question to the Secretary of State, who is the minister responsible for this matter.
Considering that Mr. Small, whose appointment has been announced recently, speaks only one language because he did not have time to study French, will consideration be given to grant him leave in order that he may learn French, as I do not think he is qualified to take the direction of the French journals, debates, references and index? [Text]


Mr. Speaker:: Would the hon. member write a letter in the usual way, as provided for in our standing orders.
Inquiries of the Ministry [Translation]


Mr. Gerard Girouard (Labelle):: Mr. Speaker,
I rise on a point of order. At the time the establishment of the position of director of legislative services was announced in the house, Your Honour said that this was a matter of interest to all hon. members.
Would it not be possible to know why all hon. members cannot get information at the same time on the fact that Mr. Small is a unilingual official and why one must ask for such information in writing?


Mr. Speaker:: This is the same question. The hon. member should know-and if he does not know I will tell him-that the proper way is to address a letter to the Speaker and he will get a detailed reply.



THE CANADIAN ECONOMY


[Stage Direction]
On the orders of the day:
Gordon Harvey Aiken: I wish to direct a question to the Minister of Finance. Does the government expect to make an announcement shortly concerning measures to hold down the spiralling cost of living?


Walter Lockhart Gordon: I question the allegation contained in the hon. member's inquiry. When the government has an announcement to make it will make it in the normal and proper way.


Gordon Harvey Aiken: May I address a supplementary question to the whole cabinet. When are we going to get answers to some of our questions?



BROADCASTING


[Stage Direction]
On the orders of the day:
Douglas Mason Fisher: I should like to direct a question to the Minister of Transport arising out of the recent annual report of the board of broadcast governors. What are the minister's feelings regarding the recommendations for legislation and regulatory changes affecting community antenna television?


Hon. J. W. Pickersgill (Minister of Transport):: I hope it will be possible in the very near future to make a statement on this matter.
5244	HOUSE OF
Inquiries of the Ministry


Douglas Mason Fisher: A supplementary question. Are these recommendations the consequence of any discussions with the minister and his officials?


John Whitney Pickersgill: If I may say so, with due respect, I think that is a somewhat extraordinary question to be asked in parliament. It is assumed that ministers have officials in order to consult with them, and it is also assumed that ministers take responsibility for what they do in this house. When I have a statement to make, if I make it I will take responsibility for it.


Douglas Mason Fisher: The hon. gentleman did not hear the last part of my question. I should like to know whether the recommendations of the board of broadcast governors were arrived at after consultation with the minister and his officials. The reason I ask this is because they hardly square with some of the previous statements made by the minister.


John Whitney Pickersgill: I suggest the hon. gentleman should read the statement which was tabled in this house some time ago. I think it speaks for itself.



OIL-REPORTED U.S. INTENTION TO RESTRICT IMPORTS

[Stage Direction]
On the orders of the day:
Mr. H. A. Olson (Medicine Hat):: I should like to address a question to the Minister of Trade and Commerce. It arises out of action taken by the independent petroleum association of America in asking the department of the interior for urgent action to reduce oil imports by 200,000 barrels of petroleum a day. Has Canada made any representations with respect to this matter, or have we been informed that we will be exempt from these import restrictions as has been the case in the past?


Hon. Mitchell Sharp (Minister of Trade and Commerce):: The energy board and I have spent a great deal of time defending Canada's interest in the export of petroleum. The item which appeared in the newspaper, and to which the hon. member has referred, should not come to him as any great surprise. Certainly it will be no surprise to anyone familiar with the situation. There has been very strong pressure in the United States to reduce imports, and I think we have been relatively successful in resisting it.
[Mr. Piekersgill.l



GIFT OF CATTLE TO SOVIET UNION

[Stage Direction]
On the orders of the day:
J. Nicholas (Nick) Mandziuk: I wish to address a question to the Minister of Agriculture and ask him what was the reason for making a gift of a number of cows to the Soviet union, and to whom were they sent?


Harry William Hays: I paved the way personally for the export of Holstein cattle to 22 countries of the world by giving them two or three and enabling them to see the job those cattle could do. In the Soviet union I was down at a place called Krasnodar where they were milking 800 cows, and it seemed to me that one of our cows would do the work of three of theirs. I said we would be prepared to give them three head to prove our point and I hope, as a result, we shall open up a market there which will be of benefit to all Canadians.


Some hon. Members:: Hear, hear.



TOBACCO


[Stage Direction]
On the orders of the day:
Louis-Joseph Pigeon: Mr. Speaker, I wish to direct a question to the Minister of Trade and Commerce.
Since about a year and a half the St. Jacques tobacco co-operative, in the county of Montcalm, has more than a million pounds of unsold cigar tobacco; what does the minister intend to do in order to sell that surplus either on the Canadian market or on the foreign market?


David Réal Caouette: Make cigarettes with it. [Text]


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



HOUSING


[Stage Direction]
On the orders of the day:
Mr. Robert Beaule (Quebec East):: Mr. Speaker, I should like to direct a question to the Minister of Labour, but in his absence I will direct it to the Minister of National Health and Welfare. Does the minister share the view of the contractors' association that the $500 bonus for building houses in winter

is the direct cause of the slowing down of business as far as the building trade is concerned, at the present time?


Julia Verlyn (Judy) LaMarsh: I am afraid I did not hear the first part of the question. I will have to take it as notice and refer it to the Department of Labour when I have had an opportunity to study it.



WATER RESOURCES


[Stage Direction]
On the orders of the day:
Mr. T. S. Barnett (Comox-Alberni):: Mr. Speaker, I have a question for the Minister of Northern Affairs and National Resources. I would like to ask him whether the government of Canada has been requested by the government of British Columbia to participate in implementing the report of the Fraser river basin board.


Arthur Laing: Mr. Speaker, all I know at the present moment is what was contained in the press reports and other reports I have received pertaining to the statement made by Premier Bennett in British Columbia yesterday morning. I think on April 17 I informed the house that I had written the minister concerned in the province of British Columbia, Hon. Mr. Williston, after the tabling of the Fraser river report, suggesting that we should meet with a view to implementing certain aspects of the report.
He was good enough to come to Ottawa a few days later. We had discussions in respect of phase 1 of the report, which involved the strengthening of the Fraser river dikes. This was the first priority of the board having regard to the cost benefit studies, and this would involve a cost of about $4.9 million. Mr. Williston undertook to engage the requisite engineers and report back to us. He also indicated to us that he would be making application under the provisions of the Canada Water Conservation Assistance Act.
This is certainly stage 1 of the report. I rather think the statement made by the premier of British Columbia yesterday arises out of the fortunate deliverance of the Fraser valley from flood as a result of the recent winter in the province of British Columbia. Had all the forces of nature been ranged against us we would have had a flood there this last spring; and many of the forces of
Inquiries of the Ministry nature were ranged against us. But I think when Premier Bennett says he is making application for 50 per cent of the cost of phase 2, which involves damming the McGregor, the Clearwater and the Cariboo rivers-


William Heward Grafftey: His precise writer is away on holiday.


Arthur Laing: -he must be aware that the provisions of the Canada Water Conservation Act provide for a participation by the federal government of 37J per cent only, and that where power is derived there is a markdown in the amount of federal assistance to allow for the value of power. I think the premier is aware of all these factors.


Some hon. Members:: Hear, hear.


William Heward Grafftey: Brevity.


Mr. Speaker:: Order, please.



INDUSTRY


[Stage Direction]
On the orders of the day:
Raymond Langlois: Mr. Speaker, I should like to direct a question to the Minister of Industry-I have asked him already this week a similar question-concerning the establishment, in the province of Quebec, of the Peugeot and Renault companies as well as their negotiations with that province in that respect.
Could the minister inform us of the result of these negotiations with the provincial government up to now?


Charles Mills (Bud) Drury: No, Mr. Speaker.


Raymond Langlois: A supplementary question, Mr. Speaker. Can the minister give us the approximate date when he might be able to give us an explanation or information in that respect?


Charles Mills (Bud) Drury: No, Mr. Speaker.



CITIZENSHIP AND IMMIGRATION


[Stage Direction]
On the orders of the day:
Hon. Rene Tremblay (Minister of Citizenship and Immigration):: Mr. Speaker, yesterday the hon. member for Simcoe East was
5246	HOUSE OF
Territorial Sea and Fishing Zones kind enough to draw to my notice a newspaper article regarding Mr. Dick Fouts, of Vancouver, described as an all-star defensive end with the B.C. Lions. According to the article, Mr. Fouts' view was that his potential for Canadian citizenship as of July 14 was a factor which should be considered in his present salary negotiations with his football team.
I have read the newspaper item, as the hon. member suggested, but I do not feel that it would be appropriate for me to single out this particular applicant for citizenship for admonition only on the basis of the newspaper report, which may be an oversimplification or an abbreviation of his comments on his feeling toward Canadian citizenship.
The citizenship of any country is a valued and treasured thing, and I think it appropriate for me to say, as minister, that I am in full agreement with the views of the hon. member for Simcoe East on the value of Canadian citizenship.
Perhaps I need only say further that any applicant for Canadian citizenship must meet the statutory requirements and satisfy a court that he is a fit and proper person to become a Canadian citizen, with an adequate knowledge of the responsibilities and privileges of Canadian citizenship and the intention of having his place of domicile permanently in Canada. If Mr. Fouts can satisfy these requirements I know we would all wish to offer him the congratulations which we accord to other applicants in the same circumstances.


Mr. P. B. Rynard (Simcoe East):: Mr. Speaker, I wonder whether the minister would check on this matter and see whether this is a fact. I did not understand him to say he would do so. I think this is worth investigating and should be investigated.


René Tremblay: Usually, Mr. Speaker, although a minister can comment on facts reported to the house by a member, it is not the responsibility of the minister to disclose what he is told or to say whether a newspaper report is correct.



TERRITORIAL SEA AND FISHING ZONES


Paul Joseph James Martin: the third reading of Bill No. S-17, respecting the territorial sea and fishing zones of Canada.


Marcel Joseph Aimé Lambert: Mr. Speaker, I have just one question. I should


like to ask the Minister of Fisheries why a question which I had on the order paper for April 27 concerning this legislation was not answered until June 10, in view of the fact that this legislation was being brought forward for discussion in the house. Then I asked a further question of which notice was given on June 30 concerning this particular matter, which question has not yet been answered.
If the minister is in a position to answer all the matters concerning this bill, surely those questions should have been answered by now. I must say I did find it rather reprehensible on the part of his department to withhold the answer to question No. 880 from April 27 to June 10, when the bill was then in committee, as this question should have been answered prior to discussion of this legislation in the house.
The second question I have asked and which I think the minister should be able to answer is No. 1,397, which is as follows:
1.	What is the nature of the declaration made by the Minister of Fisheries with respect to the increased activities of European fishermen, as a result of the modernization of harbour and other facilities for fishermen on the islands of St. Pierre and Miquelon?
2.	Have negotiations been entered into between Canada and the six nations of the common market with respect to fishing rights and/or the activities of fishermen of those nations?
3.	Has the government of Canada received protests from any of the governments of the common market nations either on an informal or formal basis?
That question was based on newspaper reports that the minister had made a declaration, and that particularly the French government authorities were most concerned over his declaration. If this legislation envisages closing off the gulf of St. Lawrence, just how are these new port facilities to be affected and how are the fishermen from these nations to be affected by the intent of the government's legislation?


Hon. H. J. Robichaud (Minister of Fisheries):: Mr. Speaker, the answer to question No. 1,397 is ready and is being sent to the parliamentary secretary responsible for bringing the answers before the house. The report referred to by the hon. member is completely false, and arose from a statement I was supposed to have made before the committee on marine and fisheries. As I say, the report was false and the Canadian ambassador in Paris was notified accordingly.
Motion agreed to and bill read the third time and passed.



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

[Stage Direction]
The house resumed, from Tuesday, July 7, consideration in committee of the following resolution-Mr. Gordon-Mr. Lamoureux in the chair:
That it is expedient to introduce a measure to provide for the revision of certain fiscal arrangements with the provinces and to provide adjustments of fiscal arrangements and taxation provisions consequential upon the provision of youth allowances to parents resident in certain provinces.
John George Diefenbaker: Mr. Chairman, in speaking on this resolution I intend to traverse generally the position of dominion-provincial relations in recent years, to deal with the various courses of action that were taken to meet the needs of the provinces to an ever increasing extent and, before I conclude, to make certain suggestions relative to courses of action which we in the opposition believe should be taken.
I commence by referring to the expeditious way in which legislation has received the attention of the house during the last few days. Indeed, this has been the first opportunity the house has had to deal with legislative matters or resolutions necessary for the welfare of the country, and you will have noticed in this regard, Mr. Chairman, that in every way the opposition, joining in the need for examination and maintaining its rights to scrutinize carefully and criticize where necessary, has expeditiously given passage to these measures.
It is of more than passing interest that the government has revealed itself again today as not having its legislative program ready despite the fact that many of these matters were included in the speech from the throne. With the possible exception of the flag question, which only in the month of June became one of transcendent importance, these other matters have been before the government since February; yet we find today that a matter as important as loans to students, which was one of those things which were to receive attention during those momentous 60 days of decision, is not yet ready. Furthermore, we learned that while we gave passage to the defence bill following careful examination, as well as one or two other matters of legislation, the government, which enjoys an overwhelming majority in the other place, has not seen fit to have the other place sitting so these matters, major in the viewpoint of the government, would not be delayed.
Federal-Provincial Relations
All of this is indicative of a state of mind. Events of recent days, not excluding the resolution now before the house, are indicative of a determination on the part of the government to have an election at an early date. These questions are brought up, but ever and anon we are informed that over us, as a portent of the possibility of a vacation, hangs the sword of Damocles, if I may borrow that allusion, should we fail to do what the government wants. Measures such as redistribution are left in cold storage. This is all most interesting; and when we realize something of the degree to which the press favourable to the government keeps referring to the opposition denying the passage of legislation, it all looks to me like an excuse in anticipation.
This resolution is important. It represents a further step in the field of dominion-provincial relations. Its design and purpose, I take it, are to bring to our country a greater degree of unity. I think all of us as Canadians are most anxious to do all we can to bring about unity within our country. Yet it is passing strange that three years before Canada will celebrate the one hundredth anniversary of confederation too few Canadians have knowledge of the history and the traditions of this country, of the meaning of the federal system. Only the other day it came to my notice that while in other countries those who were the fathers of their countries are remembered and recalled, few Canadians, even in this house, would be able to name more than a few fathers of confederation if asked to do so. I am not placing myself in any higher category, but if we had an i.q. test in this connection I do not think the House of Commons would be able to achieve a higher degree of favourable marks than the average Canadian.
Strange it seems that we in our country do not look at our past and our traditions. Strange it seems that when one looks at the Canadian Almanac, the Parliamentary Guide, the Canada Year Book and the Encyclopaedia Britannica there is no reference in any of them to the names and the persons of the fathers of confederation. I hope that in so far as the parliamentary red book is concerned, that will be rectified, and in any other publications of the government of Canada. It shows on our part a lack of appreciation of the spiritual values of our nation. I entered into a competition with myself in this regard to name the fathers of confederation, and I did not get too far along the road after I had brought to mind those who from time
5248	HOUSE OF
Federal-Provincial Relations to time receive consistent reference. All of this indicates the need of something being done to bring about a strengthening of our confederation through knowledge and through an appreciation of history.
The resolution placed before the house by the minister is one that I am sure will receive close examination. It is of interest to note that the minister in his palmy days of authoring dreamed of the day when deficits would be no more, when the halcyon days of Liberalism would return, to use his own words, and deficits would be at an end. Since the Minister of Finance has been in office we know now that deficits can be respectable, deficits can be worthy of commendation, provided they represent deficits incurred by a government of which one is a member.
The minister is in this position; that on the basis of the lost revenue consequent on this resolution being passed and the legislation based thereon translated into law, he must act. In the United States taxes are being cut and the economy is being advanced and accelerated. We in Canada, following the acceleration in the United States have, in the backwash, necessarily been carried along as a result of the expansion in the economy there. The minister must inevitably, whenever he brings in another budget, increase taxation in Canada. Income taxation is bound to go up. This is another reason why the government is looking for an excuse for an election. Being a diplomatic group, they do not want to do anything that might cause ill feeling in this nation.
A moment ago, sir, I mentioned the economy in the United States. I read from the New York Times of June 28:
Economy of the United States sets a record for first half. Boom continues through its fortieth month for longest peacetime surge since world war II.
We said the boom was under way when they were in opposition, and those who sit on the treasury benches today said there was no boom. Now they admit we are in the fortieth boom month in Canada; the minister himself admitted that. In the United States, however, it is predicted that there will be clear sailing for another nine months and thereafter no one can predict. All these things, taken together with the attitude of this government from day to day, indicate that if they can gallop without appearing to do so, to hold an election, they will do just that, and endeavour to blame the opposition.
I again emphasize this. Bring on your legislation. Just as an aside I may say that the Minister of Agriculture and those associated


with him in the first 60 days were going to give milk to all the school children in Canada. Where has it gone? Where has that promise gone? It is just another one. They promised 10,000 scholarships. Where are those scholarships? They would make an idea attractive for another election. Even an hon. member like the Secretary of State for External Affairs, who is completely removed from political considerations at all times, would see the advantages in this, the possible use of the same promise twice. This is a cynical attitude taken by some, but not those on this side of the house.
Now, sir, what about these fiscal arrangements? Well, it is of interest to follow them. The course in this regard has been equally uncertain as in so many other cases. They advanced their ideas. Several federal-provincial conferences were held. The premiers gathered. Naturally they wanted a larger share of the tax dollar because they could not discharge their responsibilities under the constitutional distribution of powers. They did not get very much until things started to move. One or the other of the premiers said that action was going to be taken. At the last federal-provincial conference there was set up a committee for an in-depth examination of our general fiscal situation as between the federal government and the provinces.
Then the criticism came. The government decided not to wait for the expert advice they would have received in that connection. The first two conferences indicated a lack of imagination since this government came into office; a lack of preparation and a lack of purpose; changing goals in mid conference and a lack of definite proposals so there had not been sufficient preliminary study. There was uncertainty; one day on and another day off. Finally, after this year's conference, there was strong criticism of the government of Canada. Then, suddenly, there was recognition by the government that some action should be taken.
When we came into office we said we would assure the provinces a larger share of the tax dollar, and we did so. I intend to refer to that in particular. The necessity for this resulted from the fact that the previous government had failed to discharge its responsibilities to the provinces. They had left Canada in such confusion and annoyance, that even those who ordinarily were members of the Liberal fold were critical.
I think of the tradition of the Atlantic provinces before we came into office in 1957. The hon. member for Victoria-Carleton was

premier of New Brunswick. He saw the situation there. He took strong objection to the lack of action. Someone might say he was prejudiced. Well, what did the premier of Newfoundland say? On June 25, 1955, when speaking at St. Andrews-by-the-Sea, he threatened-that is Premier Joseph Smallwood-to lead Newfoundland out of confederation unless the federal government stopped discriminating against the four Atlantic provinces, including his own. Even he could not stomach the failure of the government to act. He said this:
Before we become second class citizens of Canada we will show the other maritime provinces how to get out of confederation.
This is very much like what is being said today about the union jack, sir; a second flag for Canada, which is what Mr. Smallwood demanded. Then I should like to bring this to the attention of the non-political members sitting opposite:
The federal government has made miserable proposals-
This was the government of Mr. St. Laurent.
-of sharing the cost in surveys of the wealth of timber, hydro power and minerals. We have gone ahead on our own and since confederation have spent $23 million to help build new industries.
If conferation was not to recognize the right of all Canadians to some equality in living standards and opportunity, Newfoundland and the maritimes might as well be declared game preserves for the holidays of Canadians from more prosperous provinces.
I am sure the Minister of Justice has not heard that before. It is an amazing revelation from a sycophant of Liberalism. That was the position. Furthermore he said-and you understand, Mr. Chairman, I dislike placing these words on the record but I have to do it in order to establish the position of affairs when we came into office:
I am ashamed and angry to say it, but the altogether stupid, bungling, inadequate effort of great Canada to assist the Atlantic fishing industry, (which is potentially almost as valuable in dollars and cents and much more valuable in numbers of families that can be supported than the oil industry of Alberta) is a reproach to a great and progressive country.
I could go on and quote further statements on his part, but I am simply pointing out the generalizations in a statement from a completely unprejudiced source so far as the Liberal party was concerned, as to the serious state of Canadian confederation when we assumed office.
We acted immediately. There was an agreement in effect, beginning April 1, 1957 which
Federal-Provincial Relations would have continued for a period of five years. It had been signed and agreed to by all the provinces. We said it was unfair, that the 10 per cent share of personal income tax that was made available to the provinces was insufficient, and we brought in legislation to increase that share from 10 per cent to 13 per cent.
We gave proof of recognition of the financial problems resting on municipalities, by greatly increasing conditional and unconditional payments and abatements during our period of office, and I am going to refer to the record of the federal-provincial conference of 1963 in that connection. We maintained the equalization principle and made it more equitable. I recall so well that during the last election, and in 1962, the Liberal party said it would bring about equalization on the basis of the highest province. It is another of the promises made recklessly which it has failed to follow.
Here is what another author, now on the front bench of the Liberal government, had to say, and I refer to the Minister of Transport in the book entitled "The Liberal Party." At page 125 he says this:
At the national Liberal convention of 1958 the party pledged itself to alter the basis of equalization payments so that the revenues of all provinces from income taxes and succession duties would be brought up to the level of the province having the highest per capita revenue. This principle was reaffirmed at the national Liberal rally in 1961. Actually the difference in equalization payments between taking the highest province and taking the top two provinces as a standard is not very great but it is felt that basing payments on the highest province is sounder in principle.
The Prime Minister also made a similar statement. Over and over again that was basic, but in the resolution now before us that principle is permanently put in cold storage and completely evaded.
The equalization plan set out in this resolution is unfair to provinces with above average resources. That matter will be dealt with by other hon. members. We made it possible for the provinces to impose their own income tax with the federal government collecting it without charge. We took into consideration fiscal needs of the Atlantic provinces and made provision for grants of $25 million per year, later increased to $35 million per year. We did these things in order to strengthen the basic principles of confederation, to assure the maintenance of the federal system, and the independence of provincial governments.
I am now going to refer to the results of that action on our part. I am going to refer to the changes that took place and the tremendous degree to which we added to the

Federal-Provincial Relations financial resources of the provinces in so many fields. I reiterate what I have said before, that if we had not increased the share of the provinces-if we had carried out the agreement of 1957, beginning on April 1 that year, as prepared by the previous Liberal government and accepted by the provinces-[DOT] we would never have had a deficit in any year we were in office. I want to emphasize that point. Apparently the Secretary of State for External Affairs has not read the record, Otherwise the wry face he just exhibited would not have been occasioned by what I said. I suggest that he read appendix B of the federal-provincial conference of 1963 so that he will have the facts available.
I am going to ask leave of the committee to have placed on Hansard the official table so that the facts will be clearly shown relating to the summary of federal contributions to the provinces and certain payments to institutions from 1956-57 until 1962-63, because I am dealing with the period that we were in office. This is in appendix B, the official appendix to this document issued by the government of Canada; and in addition, the amounts that were paid in unconditional and conditional grants to all the provinces of Canada during the period I have mentioned, the period that we were in office and the year before. I am asking leave of the committee to place these on Hansard.


The Chairman:: Does the right hon. Leader of the Opposition wish these figures to be in Hansard as part of his speech?


John George Diefenbaker: Just as an appendix.


Lucien Lamoureux: My understanding is that it might be better if we obtained leave of the house with the Speaker in the chair at six o'clock. This is what is normally done and I think that is what the committee would want to do, so that at six o'clock we would agree that these figures would be included as an appendix to Hansard.


Walter Lockhart Gordon: I am sure all hon. members on this side would be perfectly happy to have these tables included, either as part of the right hon. gentleman's speech or as an appendix.


Lucien Lamoureux: If that is agreed among all members I am sure there will be no difficulty.
[Editor's note: For tables above referred to see appendix.]


John George Diefenbaker: I am glad of that courtesy on the part of the Minister of Finance. It will, of course, be very beneficial in reducing the


length of the observations I would have to make if it were necessary to read the record in this regard.
I should like to refer to some of these fields of endeavour in which we so greatly increased the amount of federal expenditure going to the provinces. I refer to the field of vocational training. We brought about a program of vocational and technical training whose cost in 1961-62 amounted to $35,921,000 and $206 million in 1962-63. We increased greatly the amount of assistance to highways for resource development. My hon. friend from Yukon and my hon. friend from Mackenzie will recall what was done in this connection. In the field of municipal winter works, which had not previously been in existence, we spent during the last year we were in office some $27.29 million.
To summarize the increase in the amounts we made available to the provinces, unconditional grants in 1956-57 totalled $552,653 million. In 1962-63 they amounted to $991,526 million. In order to be entirely fair I also intend to give the figures for 1958 and 1959, because some changes were made just before we came to office. The amount of such payments in unconditional grants in 1958-59 was $744,622 million. In other words, even accepting those figures as applicable to the government which I had the honour to lead, the increase during our period of office in this connection alone amounted to some $228 million.
Then in the field of conditional grants- agriculture, health, hospital insurance, welfare, fitness and amateur sport and so on-* the amount paid to the provinces in 1957-58 was $144,844 million. In 1958-59 it was $248,356, and in the last year we were in office it was $842,348 million. In other words there was an increase of approximately $698 million. Add those together, and I say again, at no time would there have been a deficit but for these extra payments, one of which was in the field of hospital insurance. The previous government had placed the legislation on the statute books, but we had to finance it. That financing in 1962-63-which the previous government had nothing to worry about because all it did was to have the legislation passed-amounted to $336 million.
These are things which need to be clearly set out. When the Minister of Finance was writing his book, all this was simple. All you had to do was elect a Liberal government and all would be well financially in this nation, and deficits would be as dead as the dodo. There is no thought of that today. The

promises of 1962-63 have gone the way of milk for school children.
The statistics tell the story of what we did to achieve reasonable opportunity for the provinces. What about agricultural assistance? Assistance in this field when we came into office amounted to $938,000. It went up until in 1959-60 it amounted to $6,729,000. Then it went down to $5,174,000 in 1961-62 and to $3,279,000 in 1962-63. But there were tremendous expenditures in this connection during the intervening years in other fields such as P.F.A.A., P.F.R.A. and the like.
I believe this; that one of the major reasons behind the attitude of separatism of which one hears in this country is not a matter of political consideration but results from the failure of this government to act on behalf of eastern agriculture. Several hon. members have been pressing for action in this connection but nothing has been done to meet the problems of eastern agriculture. My hon. friend from Qu'Appelle, when he was minister of agriculture, brought about legislation to set up ARDA. I will be perfectly frank. When the plan was first placed before some of us we wondered how it could be made effective. He made it effective. This government has not acted. This government has failed to use ARDA in the provinces of Ontario and Quebec in areas where productivity is not sufficient for a fair and proper return to farmers there. And when I read the other day that 10,000 or 18,000 farmers in the province of Quebec-


An hon. Member:: Sixteen thousand.


John George Diefenbaker: All right; call it the medium figure. Whatever the number was, that many farmers could not be wrong. There is reason in what they are advocating. My hon. friend from St. Hyacinthe-Bagot has dealt with this question over and over again and placed the needs of his province before the house and the country, as has the hon. member for Nicolet-Yamaska and, of course, my hon. friend from Joliette-L'Assomption-Montcalm, who has never been backward in the manner in which he has pressed for action with regard to the needs of agriculture in his area.
If this government would raise the standard of eastern agriculture, for which it must assume responsibility, and follow courses similar to those which raised the standards in western Canada, a great change might be accomplished. When we came to office, as far as western Canada was concerned it was 20220-333
Federal-Provincial Relations just another of those forgotten areas and the reason was simply this; that the Liberal party had reached the conclusion that the west would vote Liberal no matter how they were treated here. Hon. members opposite have the same view about some other parts of Canada today. One of the things needed to strengthen confederation and bring about new confidence is action under ARDA and in other areas of agriculture to which reference will be made by other speakers in this debate. I am convinced of that. Constitutional matters dominate the thinking of some people; whereas the people as a whole are affected by economic conditions. Certainly agriculture, not only in Quebec and Ontario but also in the maritimes, needs a new approach and far more consideration than it has been receiving during the last 15 months.
What is the substance of the resolution introduced by the minister? I am afraid that it is simply more tinkering with the problem. The divisions of confederation, or the cracks in the structure-I do not believe they are great, but they are becoming more significant
cannot be repaired by papering them over. That is what is being done here. In other words the action perhaps effective for the moment in so far as the provinces are concerned, will not solve the major problem of confederation.
When we were in office we had a number of conferences. I will deal with them when we come to second reading. I have already pointed out that our plan was to strengthen confederation, to open our northern areas and resource areas outside the ordinary ambit of provincial opportunity or ability to develop. We made available $7i million to each and every province for this purpose. We brought in programs of which I have already spoken; winter works, vocational training in order to strengthen and extend opportunities for individuals. We met the immediate problem by a tremendous increase
in amounts available to the provinces_________
amounts that when read into the record must be regarded as eye-opening.
I am not going to review at this time in particular what we did, but I want to generalize to this extent. When we came into office the provincial governments received 10 per cent of the income tax, 9 per cent of corporation tax and 50 per cent of succession duties. We immediately raised the 9 per cent to 13 per cent. On January 1, I960, we made available 1 per cent of the corporation tax to the province of Quebec in lieu

Federal-Provincial Relations of university grants. In addition, on January 1, 1962, we increased the 13 per cent to 16 per cent for income tax, with an accelerating 1 per cent for every year.
When the present government came into office, with the agreements we had put into effect in 1963 the share of the provincial governments was 17 per cent; in 1964 it is 18 per cent. We made available hundreds of millions of dollars to the provinces which otherwise they would not have received. I am not going to say that we ever received regard or appreciation for this. The Minister of Finance will find out, that having been done, it will not be remembered. These are things that are forgotten. I am sure the hon. member for Burnaby-Coquitlam, with his many years of experience as premier of one of our provinces, will agree with me that you never get any thanks for what you did. It is as old as the days of Senator Clay. I am sure the Minister of Finance has read very thoroughly the history of that period from 1830 to 1850 in the United States, and those great debates of Webster, Clay and Calhoun. Clay once went to somebody and said, "I hope you are supporting me this time". This was back in 1832. He said, "I have fixed up your uncle with a post office, and I have made provision for your father with a pension". He was referring to a pension arising out of the war of 1812. The reply was, "Oh, yes; you did all this, Senator Clay. But what are you going to do now?" The question was, not what he had done but what he would do. The minister will find that out when he has had as much experience in public life as he had in private business.


Walter Lockhart Gordon: There isn't enough time left for me.


John George Diefenbaker: And, I hope, with great success in public life. These things will be accepted and within hours, or days, or months, human nature being what it is, the provinces will say, "But what are you going to do next? This is all very fine; we have these things now-but what are you going to do?" That brings me to the larger field as to what courses should be taken now. I have already pointed out that during our period of office we brought the provinces to a new plateau of fiscal capability to enable them the better to deal with their constitutional responsibilities. With the additional hundreds of millions of dollars we provided, they were able to embark on new and far reaching programs in education, highways and resource management.

We did something more. We did away with the tax rental plan. So long as the tax rental plan was in effect, the provinces were in a subservient and subordinate position. In other words, we reversed the 20 years' centralization trend toward a unitary state in Canada. We freed the provinces from the strait-jacket to which they had been confined by years of centralization. We raised the revenues of all provinces to new heights. We brought into effect an evolutionary process, new programs and policies under joint responsibility heretofore incapable of being financed. Our purpose, our aim, our determination was to return to the principles and spirit of the British North America Act; to strengthen the fabric of confederation-above all, to assure that in co-operation with the provinces we would guarantee all Canadians, regardless of their postal address or regional economic differences, reasonable economic equality.
Dealing with this question in the house on September 27, 1961, I said:
We are going to restore as far as it is possible the inherent principles of the constitution.
I had been pointing out that they had been departed from.
The then Minister of Transport as he is now, was in the house. Certainly when the King administration started to move in the direction of centralization, followed by the St. Laurent administration, no one ever expected that those pathways of experiment in wartime would become the highways of peace. But they did.
I was interrupted by the present Minister of Transport in these words:
There were no deficits in our day.
No, there were not. There was no reason for deficits because the provinces were being starved. We increased social security payments by approximately 46 per cent during our period of office. We made vast developments in agriculture and industry. But I repeat if it had not been for our concern for confederation, there would have been no deficits.
Speaking on that occasion, September 27, 1961, I said that we had restored the inherent principles of the constitution, which was something we undertook to do. I said that we were ending centralization and putting in its place co-operation within the principles of the constitution. Hon. gentlemen opposite talk today about co-operative federalism. All I can say is that the translation of co-operative federalism into action has denied every basic principle of confederation, Co-operatior

can only come through consultation; and in too many cases this government has consulted after making a decision to take a certain course regardless of the attitude of the provinces.
We determined to bring to Canada the capacity to amend our own constitution. So many people say today that the constitution has to be amended in regard to certain matters and this after 97 years of experience. But in those important portions of the constitution as embodied in the British North America Act, sections 91 and 92, changes cannot take place without the unanimous consent of each and every province. It is so easy to talk about it; but let us remember, Mr. Chairman, that rights of religion and education are inviolable and unchangeable. The division of responsibilities between the federal parliament and provincial legislatures cannot be changed by the simple exigencies of the government of Canada or by the action of one or more provinces.
I read so frequently of great speeches made outside the House of Commons about what is going to be done to bring about a new constitution. It is, if I may use a colloquialism, eyewash to say that the constitution which we have we Will hold, but that the changes which we want will be made on the basis of the desires of one, two or three provinces. That cannot be done. These changes can only come into effect by general and unanimous agreement.
I realize, as did the minister in his statement the other day, how complex this matter is and how difficult is the problem of dominion-provincial relations. It was easy when in opposition for those who now sit opposite to make those statements. But they have found that it is difficult to pound out on the anvil of experience the theories so airily announced during the election campaigns.
Today I am looking at the whole picture of the kind of Canada which I see; not a picture of a series of sovereign states, but of one Canada maintaining the constitutional rights which are the essence of confederation; the equal partnership of those of English and French origin who brought about confederation within our country.
I do not see in that respect, a Canada far removed from the Canada of Cartier and Macdonald. Read the debates, Mr. Chairman, of 1864, 1865 and 1866. Those men faced a tremendous challenge and they met it in cooperation. They did not dream of a Canada bifurcated or multiplicated-if that word can be used-divided and uncertain. They envisaged a central government which could 20220-333i
Federal-Provincial Relations discharge its responsibilities. They thought of provincial legislatures which would be able to maintain within their limits and territorial boundaries the things dear to those areas and provinces.
Those who say that simply by wishing you can erase the past have not absorbed history. It is easy to say those things. In my boyhood in western Canada the farmers used to talk of separating western Canada from the rest. They said: "We should be removed. Our markets are north and south. We pay a tremendous price for the tariff policy of the country as a whole". Those voices were stilled by the calmness of the leaders of that time. I recall very well an occasion in 1957 when I spoke in one of the maritime provinces at a large meeting. I was dealing with conditions existing at the time and I received a very friendly reception. But I was followed by a former premier of Prince Edward Island, Dr. MacMillan. He thanked me, but his thanks extended into maritime rights, and by the time he was through that audience was ready to fight, so aroused they were by the injustices of confederation. Leaders in the maritimes have taken strong stands, but they have always come back to one thing, that we stand together as one nation, one Canada. If we start breaking up the country into segments we destroy not only the hopes of the fathers of confederation, but our hope that we will be able to hand on to those that follow a Canada worthy of the heritage which is ours.
What are some of the things that can be done in this connection? The time has come to convene a conference of representatives of the federal and provincial governments of this nation representing the various parties in all of the provinces, to examine the whole field of Canadian confederation-not a conference lasting two days, but a conference in which, in a spirit of Canadian co-operation and pride, they will meet together and endeavour through discussion and consultation to arrive at decisions regarding the future of this nation. Can it be done? If it cannot be done, then the hopes of amendments of an important nature to our constitution have ceased to exist.
Sir John A. Macdonald, who having regard to the contribution he made to confederation has not been remembered as he should be as the father of his country, a designation given him by no less a great Canadian leader than Sir Wilfrid Laurier, said during the last years of his life:
I have no accord with the desire expressed in some quarters that by any mode whatever there

Federal-Provincial Relations should be an attempt made to oppress one language or to render it inferior to the other. I believe it would be impossible if it were tried and it would be foolish and wicked if it were possible.
That has been the stand of Conservative leaders through succeeding generations, and Liberal leaders too. The agreements relating to this partnership, found in section 133 of the British North America Act, and sections 91 and 92, to which I have already referred, jurisdiction over education, are the very bedrock of confederation.
Such a conference will be able to do what no royal commission can do. A royal commission can sit, hear and ultimately recommend but finally the matter must come to the representatives of the federal parliament and the provincial legislatures.
We sought to repatriate the constitution when we were in office. We had a number of conferences and we had almost achieved success when two provinces had reservations with regard to certain sections, and we did not achieve repatriation. The issue was not the basis of amendments to the constitution but simply to bring the constitution to Canada.
I hear people talking about the symbols of a nation. How many of them realize that we are the only country in the British family of nations or the commonwealth of today that cannot amend its own constitution? We tried to do so. We went a long way in that direction in a desire to conciliate without loss of principle, but without success in achieving repatriation. Such a conference could suggest ways and means of repatriating the constitution. It could also make recommendations as to a national flag and the other symbols of national sovereignty. There would be representatives there of all the political parties and they would not meet in the glare of publicity. As the hon. member for Burnaby-Coquitlam knows, whenever we were behind closed doors in dominion-provincial conferences we made a great deal more progress than when we were under the glare of publicity. That is human nature. We went to work there. Let this conference meet in that way. Can you tell me any other way in which success can be achieved?
I have studied this question. There is no portion of the constitutional debates since 1762 that I have not read. What has Canada achieved? The Minister of Justice knows. It was the first country within what is the commonwealth of today to have freedom of religion, not by our own action but by the action of the British parliament. It was the first one to abolish slavery, the first one to
IMr. Diefenbaker.]
give a Jewish person the opportunity to serve as a result of legislation passed in Lower Canada. Canada was the first country in what is now the commonwealth to bring about responsible government which made possible the commonwealth of today. The Lafontaines and the Baldwins, these men saw Canada as a great nation, one nation. Cartier said it over and over again. He said, "I can accept no other proposition", while demanding, as did Laurier many times, that there should be full partnership.
Sir, this conference would examine the whole position of biculturalism and bilingualism. I have endeavoured to think of what other course could be taken that would bring Canadians together. I do not know what it is. I do not want to see us separated and divided. Why can we not, in the spirit of the fathers of confederation, meet in such a conference?
I recall the 26th of February, 1963, when I received the honour of the freedom of the city of London in that historic place, the Guildhall, an honour that I deeply appreciated. Only a few days before I went over there I found for the first time that the Constitutional Act, which was an amendment of the Quebec Act, was introduced on that very day in 1792. There was history, there was tradition, there was something of the pride of achievement. To my left was the great monument of William Pitt, the younger. On that day, the 26th of February, 1792, in the parliament of the United Kingdom a debate took place regarding French-English relations in the Canada of that time. Read that debate. It is the most thrilling debate you can read. William Pitt, the younger, Charles James Fox, Edmund Burke and Sheridan, too, said, we are going to build in North America a country where two races will live side by side in amity and co-operation. It is very interesting when one looks back in this way. You recall other things. You recall the famous quarrel between Burke and Fox which took place on that occasion. They were great friends, but they never spoke again. It was all over the question of whether the legislative council of Upper and Lower Canada should be hereditary, as a peerage. Two of them said, let us have a peerage in Canada; let us not just appoint members of the legislative council for life; let us have a peerage. I think it was Fox who said if we had had a peerage in the 13 colonies in 1776, those 13 colonies would still be with us. Burke took the opposite stand. They separated. Read that debate;

it is one of the most thrilling expositions of the relationships between races.
Sir, the whole field of federal-provincial relations should be looked into on a long term basis. The provinces must be placed in a position where they can fully discharge their responsibilities. If you simply hand a little more from time to time to the provinces, all you are doing is postponing the day when more is requested. Human nature is the same for groups as for individuals. If we get so much today, then we say we will try to get a little more tomorrow, so on you go with the problem and it is never solved. As more and more revenues are passed to the provinces-unless responsibilities are being passed on-the more serious becomes the situation for the federal authority. This is the reason why many believe there should be a constitutional realignment of responsibilities.
Now, that is one field. I should like to refer to another field which arises directly out of provincial jurisdiction, and that is the field of urban improvement. The municipalities are the creatures of the provincial legislatures and are responsible to them for their existence and fiscal powers. With the extent to which more and more Canadians are moving into the great cities, with the vast changes, the splurge as it were in the suburban areas, is it not appropriate that such a conference should give consideration, in co-operation, to providing for a national policy for urban development and renewal? A co-ordinated policy is beyond the means of the urban areas and, beyond the means of the provinces. Urban renewal is a national problem today. It is a national problem, just as it was in the days when the forebears of the Minister of Trade and Commerce went into western Canada. The opening of western Canada was a national problem. It has changed now. Today they find themselves in a position where the days of the pioneer are past. Today, in so far as the urban areas of our country are concerned, we as a nation need to do some constitutional pioneering. It will require agreement, it will require consultation between federal and provincial authorities. However it is something that will have to be met. This sprawling urban and suburban complex that has developed in all parts of our country, as in the United States, is one of the greatest problems we face.
There are many members here who have had municipal experience. They know how tremendous is the challenge of this problem.
Federal-Provincial Relations This is another matter to which consideration should be given by such a conference. I say to the Minister of Finance-I know he has that diffidence that a minister of finance must possess in not allowing any of us to anticipate any fiscal changes in advance-that one of the first steps that should be taken in our country in that connection, aside from this conference, is that young couples should be encouraged to own their own homes and that effective consideration must be given to allowing deductible items from taxable income. I am referring in particular to municipal taxes on homes. These are things that will benefit national development in our cities.
There should be set up a department of urban affairs to co-ordinate the various activities of Central Mortgage and Housing Corporation and other agencies dealing with urban aspects, such as housing, sewage loans and the financing of industrial development. It has been done in the United Kingdom. There of course there is a unitary state. We must here act in co-operation and consultation. What about urban decay, responsible in a large measure for juvenile delinquency, parks and recreation areas, the social improvements that are necessary for this nation, rapid transit systems to relieve traffic congestion, the throughways that are essential to the conduct of commercial affairs? I could go on. After all, we are approaching the centennial of confederation, and this is a massive problem. This is one that will require a concerted approach on a nation-wide scale with federal-provincial co-operation following full consultation.
Finally, sir, I return to agriculture in eastern Canada. If we are to meet the demands, the proper demands of the people, many of the criticisms and attitudes which would lead to separatism will be avoided by action in assuring that farmers in eastern Canada, the maritimes and elsewhere shall have a reasonable share of the national income.


Thomas Clement (Tommy) Douglas: Mr. Chairman, this legislation to amend the federal-provincial tax sharing arrangements is extremely important. It is important because fiscal matters are at the root of much of the federal-provincial bickering and rancour that has taken place from time to time ever since confederation.
Sometimes it is suggested that federal and provincial governments do not get along because they happen to be of different political parties and because there are personalities involved, but if one examines the record he finds this is not true, that irrespective of

Federal-Provincial Relations the political party in office at a particular time, in a province or in Ottawa, these differences continue to exist because they are based on the need for money on the part of the provinces.
I think it was Chick Sales who once said that when a fellow says it isn't the money, it's the principle of the thing-it's the money. That has been true with federal-provincial relations. Many of the difficulties that are put forth are really superficial, and the basic differences are fiscal. The fact is that the provinces are faced with growing responsibilities. The responsibilities given to them under the British North America Act have grown in geometric progression throughout the years and the revenues available to the provinces to discharge those responsibilities have not grown proportionately.
We have come to the time in confederation when the federal government must either assume some of those responsibilities or it must make a larger share of the tax revenues available to the provinces so that they can do the job which has constitutionally been allocated to them. I want to point out that even with all the additional revenue which the federal government has made available to the provinces, that even with the legislation which is now before us put into effect, the provinces will still get only about 30 per cent of the revenue from the shared tax fields and the federal government will get 70 per cent. This still leaves the provinces with a relatively small share of this vast tax revenue that is available to finance government services in Canada.
I suggest, Mr. Chairman, that this is Canada's No. 1 problem. The right hon. Leader of the Opposition has made a useful suggestion in putting forth the idea of a federal-provincial conference, one which would be held for a considerable period of time and on which there would be a great deal of preliminary work, so that we can work out some division of fields of tax revenue or reallocation of responsibilities, so that we do not have this constant haggling between the federal and provincial governments.
If we neglect this matter the strain and the stress on confederation will continue and could eventually destroy confederation. If I may paraphrase Santayana, he said something like this, that those who are unwilling to learn the lessons of history are condemned to repeat its mistakes. Unless we in this parliament are prepared to see the trend in federal-provincial relations and try to grapple with the problem head on, then I am convinced that some very difficult days lie ahead for confederation.

I have a very limited time, Mr. Chairman, and therefore I am going to apply myself only to the proposed amendments arising out of the two federal-provincial conferences, the one held in November 1963 and the one held in April of this year. Let me deal first with the proposals arising out of the November conference. They can be divided mainly into three parts.
First of all, the federal government is prepared to equalize the revenue from the standard tax rates up to the average of the two top provinces. I hasten at once to say that this is an improvement over what we have had before, when the equalization formula only brought the provinces up to the national average. Certainly the average of the top two is better than the national average, but I cannot forbear pointing out that this is not what the Liberal party promised just about 15 months ago. What it promised was that it would equalize up to the highest province in Canada.
I could give many quotations. Already the Leader of the Opposition has quoted from the book, "The Liberal Party", by the Minister of Transport, in which he said:
At the national Liberal convention of 1958, the party pledged itself to alter the basis of equalization payments so that the revenues of all provinces from income taxes and succession duties would be brought up to the level of the province having the highest per capita revenue.
I point out that the booklet called, "The Liberals Have the Answer"-they may have the answer but it is a little slow in coming through-stated:
The Liberal party.. .believes that, in order to ensure a basic equality of provincial services between all parts of Canada, all provinces should receive an equal revenue per head of population from the tax fields shared between the two levels of government so that all Canadian citizens will benefit equally.
I remind the committee that the Prime Minister himself, opening the conference last November, said in his statement, at page 14:
It is well known that my colleagues and I prefer to see equalization paid up to the level, not of the average of all the provinces as parliament enacted in 1961, but up to the level of the highest.
That is quite specific.
Why would the government equalize to the two top provinces? I say quite categorically that this was a matter of cooking a formula to get the kind of results it wanted rather than adopting the formula to which it had committed itself, a formula that would have treated all the provinces equally and justly.
The second change which this legislation is proposing is that from now on part of the

revenue from natural resources will be taken into account in computing equalization payments. It is to be based on one half of the amount by which natural resource revenue on a per capita basis exceeds the national average. Again this is not in keeping with the commitments made by the Liberal party when it was seeking office.
I can refer to many quotations but I just refer to the Prime Minister's own statement in this house on June 2, 1958, as recorded at page 733 of Hansard for the date:
Not only Is the principle important, but the application of that principle is even more important. On what basis are equalization payments going to be made?
As far as this party is concerned we are pledged to equalization on the basis of the per capita yield of the three taxes in the wealthiest province.
There is nothing there about taking into consideration natural resources revenue. I wish to ask the government, why is this particular source of revenue taken into account when computing equalization payments. Why is this chosen as a criterion? There is no suggestion that gasoline tax revenue or revenue from automobile licences or sales tax or liquor revenues should be included. Why select this one field? Again, this was the best way to cook the books in order to get the result the government wanted. What they are doing thereby is to penalize those provinces which are making the maximum use of their resources and seeking to get the maximum revenue from them.
Resource revenue, I would point out, does not represent clear gain. The provinces which derive revenue from their resources have to spend large sums of money on the development and conservation of those resources. If this is to be taken into consideration, then the revenue considered ought to be net revenue, if it is considered at all.
In addition, as one hon. member has just pointed out, what is involved is the sale of a capital asset-the sale of something which is not necessarily recurring. Moreover, the present formula bestows a great benefit on those provinces which have already sold their capital assets and disposed of their resources. The provinces adversely affected by this legislation are provinces such as Alberta, Saskatchewan and British Columbia. The older provinces which have disposed of their assets in many cases, are those who will benefit. Just make a comparison. The revenue on a per capita basis from natural resources in Ontario is $6.91. In Saskatchewan it is $22.57 and in British Columbia it is $33.72. Does any person in his right mind contend
Federal-Provincial Relations that in the province of Ontario with its vast mining complex and its great timber industry, $6.91 per capita represents the economic value of the natural resources? Of course it does not. Putting natural resource revenue into the formula for computing equalization payments is discriminating against the more recently developed provinces and is working hardship upon them.
The interesting thing is this. When we come to the third amendment, the government turns a complete somersault. The third proposal is that the abatement for succession duties will be raised from 50 per cent to 75 per cent. That is fine, I agree with that. But the government says that this increased abatement will not be considered for equalization purposes. The first 50 per cent is to be taken into account for equalization purposes, but not the additional 25 per cent. Will the minister tell this committee why natural resource revenue will be taken into consideration in computing equalization payments but succession duty revenue will not be taken into consideration. As a matter of fact there is more reason to take into account succession duty revenue which, although it is paid in a province, is levied in many cases on wealth which has been earned all over Canada, whereas revenue which comes from natural resources comes as a result of the investment and the efforts of the province itself. If the federal government wants to include natural resources in computing equalization payments they should certainly have included the increased succession duty abatement.
In my opinion if ever there was a case of cooking a formula so as to get a specific result, this is it. Instead of starting out, as their own program dictated, to work out a formula which would be fair to all the provinces on some reasonable basis, the federal government, far from equalizing to the highest province, has equalized to the two top provinces, then goes on to bring in an entirely extraneous factor-the revenue from resource development-and then, to make doubly sure that they get the result they want, say the additional 25 per cent abatement on succession duty will not be taken into consideration when computing equalization. I have attended a good many federal-provincial conferences and I have seen some of the fiscal experts set up a goal and then work out a formula which would get them what they sought. But I have never seen it done so clumsily and so blatantly as in this case. This represents in my opinion sheer discrimination.
I see it is five o'clock.

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Lucien Lamoureux: It being five o'clock it is my duty to leave the chair in order that the house may proceed to the consideration of private members' business.


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



BANKING AND COMMERCE


Mr. L. T. Pennell (Parliamentary Secretary to Minister of Finance):: I wonder if I might have the unanimous consent of the house to revert to routine proceedings in order to file two innocuous reports from the banking and commerce committee relating to a change of names?


Mr. Deputy Speaker:: Is that agreeable?


Some hon. Members:: Agreed.


Lawrence T. Pennell: Then I have the honour to present the fifth and sixth reports of the standing committee on banking and commerce, in English and French.



MOTIONS FOR PAPERS


[Stage Direction]
The house resumed from Thursday, July 2, consideration of the motion (Mr. Orlikow):
That an order of the house do issue for a copy of all government statements and directives to government departments during the past year regarding security procedures and investigations.
Mr. D. S. Macdonald (Parliamentary Secretary to Minister of Justice):: At the conclusion of the debate last week I made some reference to the defence of Canada regulations and particularly to the suggestion made by certain hon. members opposite that the procedure which should be followed in these security matters should resemble the procedure outlined in those regulations.
I thought it would be useful to investigate that suggestion further and having done so, and particularly having talked to one of the gentlemen responsible for enforcing these regulations, I find that contrary to what has been suggested time again in this house the procedure followed under those regulations was not a judicial procedure. It was essentially the same as the Prime Minister put forward in his speech of October 25. It was a procedure set up entirely within the administration. Hon.

members can confirm this themselves by examining the regulations. The advisory committees set up in those circumstances were set up solely for the purpose of advising the minister with respect to internment proceedings. They were not a court of record. There was no right of appeal. The proceedings were not within reach of the prerogative writs. In particular, there was no right to confront crown witnesses, and only such evidence was made available as the committee in its discretion thought desirable.
In particular I would like to emphasize that there was no right, as I think has been suggested from time to time, on behalf of people who might be affected by that type of order, to confront witnesses or examine evidence presented on behalf of the crown. Quite the contrary: the only right individuals had in that particular case was to learn of the allegations made against them on behalf of the crown in the most general terms.
The hon. member for Winnipeg North last week took exception to my suggestion that he had proposed the confrontation of witnesses in this proceeding. I find, on examining the record, that I was mistaken and his intervention was quite correct. Rather, the suggestion that witnesses should be confronted, that it should be possible for a person affected by this tribunal to examine those witnesses in a proceeding resembling a court of law, was made by his leader, the hon. member for Burnaby-Coquitlam (Mr. Douglas) and more particularly in a speech he made in this house on June 3, 1963, which may be found at page 593 of Hansard for that date.
I would point out, as has been pointed out before with regard to this type of case, that in view of the counter-espionage type of structure, the security structure, which is involved, it would be most deleterious and would have a very serious effect on the security measures which are taken on behalf of all the people of Canada to submit the investigations and reports of the security officials to a legal type cross-examination.
I think it would be most useful to reemphasize to the house, in connection with this question, the basic function of the security screening in this particular type of case. I would remind the house, first, that the interests of Canadians generally require that certain state secrets be shielded from unfriendly eyes. Unhappily we had an incident in recent months which came very close to this chamber, indicating that representatives of foreign powers continue to

engage in operations to obtain access to Canadian state secrets. Second, Mr. Speaker, I would point out that the best and surest shield for our state secrets is by entrusting them to servants of unimpeachable loyalty, servants who are free from any pressures either of family, personal background or ideology which could possibly result from time to time in a conflict with such loyalty. Particularly I would point out and would ask the house to bear in mind that the determination of this question as to the loyalty or non-loyalty, the reliability or non-reliability of any particular servant is a very difficult matter. This is not only so from the very essence of the subject matter, but also from the fact that those who with unfriendly design are seeking access to our secrets will take elaborate precautions to conceal their intent; and even more so, those people who may have personal weaknesses but are otherwise loyal-weaknesses which make them particularly subject to exploitation by the unscrupulous-will take very careful precautions to conceal those weaknesses. We must bear in mind that secrets are one species of state property of a particularly sensitive nature. By their very nature, their exposure to the public spoils them. They are not like the stone of Scone or the crown jewels which, if stolen, can be recovered and restored undamaged. Once they are made available to the public, once they are made available to unfriendly eyes, their very distinctive characteristic of property is lost. They are at once so precious and so sensitive a form of state property that we have had to adopt, and in fact all civilized democratic countries have had to adopt, very special measures in respect of their defence.
In particular, in respect of measures required to protect security we have had to abandon, at least in part, some of the concepts of fair procedure and open trial which we normally use in our legal proceedings. One of the great experts on jurisprudence has pointed out that the three watchwords of justice and the rule of law in a democratic state are openness, fairness and impartiality. As I have mentioned, by the very nature of the material, openness or exposure to publicity is one thing that is not possible in security questions. I have also pointed out that impartiality in this case is somewhat difficult, because who can be impartial with the security of the country at stake? It is obviously necessary for an onus to lie in favour of the crown with regard to those who would have access to its secrets. But I do think we 20220-334
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can continue to require the observation of principles of fairness in connection with these security provisions, and I think these principles of fairness can aptly be given effect to and carried out under the procedure proposed by the Prime Minister on October 25.
In closing, Mr. Speaker, I would like to set out in point form the procedure which will be followed and which has been followed in connection with these security procedures since the Prime Minister's announcement last fall. First, where an employee is in the situation that his reliability has been put in doubt, he has the right to be told that his reliability is subject to doubt and he has the right to learn, so far as it is possible from a security standpoint, the reasons for such doubt. Second, he will have the opportunity to give his side of the particular case, to frame his own case, in respect of the allegations which are made against him. Third, he will be entitled to a second hearing by the head of the agency which is responsbile for his work, and if the decision remains unfavourable, the case will be submitted to a board of review made up of senior civil servants who have not been previously directly involved in the particular case.
The protection of state security is, as I have said, a matter of critical importance. One cannot assure people who may be adversely affected by security screening procedures that they will work in every instance, because after all, being of human creation these procedures are necessarily fallible. It is my submission to the house that the measures proposed by this government to the house do apply a high degree of fairness. It is for this reason, and because of the confidential nature of the document involved, that I would request the hon. member for Winnipeg North, or his colleagues on his behalf, to withdraw his request for the exposure of this particular document.


Thomas Clement (Tommy) Douglas: Mr. Speaker, could I ask the hon. member a question before he sits down? Could he elaborate a little more this appeal to the board made up of senior civil servants? Does the person whose reliability is in doubt have the opportunity to appear personally, with counsel; or do they merely review the written documents having to do with the case?


Donald Stovel Macdonald: This has been more eloquently stated by the Prime Minister, Mr. Speaker; but I would point out to the hon. member that he will have the right to appear before this particular board and put his best case forward. It is also my understanding

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that he will have the benefit of counsel in defending himself in what is essentially not a legal proceeding but one in which considerations of a legal character may arise.


Thomas Clement (Tommy) Douglas: The hon. member said "he will have". Do I assume that he has now, under this directive?


Donald Stovel Macdonald: Yes, Mr. Speaker, I think the hon. member can take it that I am speaking not only of the future, but of the present and what dates back to October 25, in what I have said.


Mr. Andrew Brewin (Greenwood):: Mr. Speaker, I do not suppose anybody in this house could disagree with the general observations of the parliamentary secretary who has just spoken with regard to the importance of security or, indeed, the desirability of the safeguards for the individual which he says are incorporated in the procedure. But it is my respectful submission to the house that these observations entirely miss the point that is before the house in this motion, which is whether or not the government will disclose to the members of the house the form of procedure which has been decided upon by the government as the security procedure which is to affect those many thousands of people whose whole livelihood and security may be at stake in this important matter.
I urge upon all members of the house, although not too many of them are here at the moment, the acceptance of this particular motion, because I suggest a basic principle is involved which has been overlooked in what we have heard to date. I would put this basic principle in this way: Is the right of parliament to scrutinize the nature of the security procedures affecting the employment and the firing of thousands of government employees to be defeated by hocus-pocus or gobbledygook about the need to keep secret even the procedure by which an aggrieved employee can vindicate his right to his livelihood, and to his reputation, upon which his livelihood depends?
Let me remind the house of the background to this matter. Last year after a number of very disturbing incidents resulting in the dismissal of some persons from the services and other persons employed in the public service on security grounds-which grounds turned out to be completely unfounded-the Prime Minister (Mr. Pearson) gave an assurance that new security procedures were being devised which would give an employee or a prospective employee the opportunity of resolving any doubt as to his or her being

a security risk, and second, would enable a second look to be taken by what might be described as an internal tribunal. The minister of justice of that day, Hon. Lionel Chevrier, assured the house that the "new and carefully devised procedures will improve our measures and give new assurance to individual employees". Note, Mr. Speaker, the words "assurance to individual employees".
In the debate last Thursday two facts emerged. First of all, it was stated that the proposed new procedures have been incorporated in a single directive; so that we have an existing document which incorporates these so-called new procedures, which give an assurance to the employees concerned and also to the members of this house. Second, that the terms of this document-and this is on the record in a formal answer given to the hon. member for Winnipeg North (Mr. Orli-kow)-have been communicated to all government departments.
The return given went on to say that the government does not regard it as customary to inform employees or their associations of its terms, or to table a document of this type in the house. In other words, Mr. Speaker, after giving an assurance to parliament that the government will take steps to correct inadequate security procedures, it then refuses to give to the house the steps which it has taken. It proffers assurances to employees and then refuses to tell the employees what are the assurances.
What is the good, Mr. Speaker, of telling us that there are adequate procedures if we are not to see them written down in black and white, and if the house is to be denied knowledge of them? I go so far as to say that this is a ridiculous situation and a serious affront to parliament. Are we not to be entrusted even with a statement on the principles upon which those affected in these so-called security cases are to have their rights determined, to whom they are to apply, and what the nature of the procedure, or the appeal if it be an appeal, may happen to be? If that is the case I suggest, as I said before, that it is an affront to parliament.
The Minister of Justice (Mr. Favreau) asks us to draw a veil of secrecy over the whole matter. Like some high priest of the modern age he mumbles the word "security" and we are then supposed to be satisfied. There is no one in the house, Mr. Speaker, who is asking that the means by which this security information is gathered be publicly revealed. However, there are some things I should like

to know. For instance, I would be interested in knowing the type of questionnaire used to pry into the private lives of would-be employees of the government. I would be interested in knowing whether electronic or so-called "bugging" devices or wire tapping is used in this regard. In the United States a special government information subcommittee of the committee on government operations is inquiring into this very matter of which I have been speaking, to determine whether the right means are used. But is this parliament to be more security conscious even than the congress of the United States of America? My point, Mr. Speaker, once more, is that we are not inquiring as to the means by which information is secured.


Donald Stovel Macdonald: Mr. Speaker, would the hon. member permit a question at this point, because it may be somewhat germane to his case. The Minister of Justice indicated in his statement last week that the particular document which this motion asks for contains material which, in itself, would be prejudicial to this particular means of gaining information. The hon. member is saying, on the one hand, that he does not want to expose this means, but on the other hand he is insisting on having the document. Does he not think that that is a reasonable explanation for its non-disclosure? I would ask him that question, Mr. Speaker.


Francis Andrew Brewin: Surely, Mr. Speaker, in setting out the rights of employees to a hearing, the type of hearing they may have and the type of particulars to be given, this sort of document is the sort which I assume the Prime Minister was talking about when he gave assurances to the house that this new procedure would be developed and would be embodied in some form of directive, if not regulation. We are told that there is a directive. I do not know whether incorporated in this directive for some reason unknown to me is some mysterious disclosure as to the source of the information which should not be made available. That may be so. If it is so, a very simple solution suggests itself, and that is that a proper directive be prepared and made available to the members of this house. If the Minister of Justice or the parliamentary secretary had said: "In our directive incorporated in certain procedural rules which deal with these matters there is unfortunately highly confidential information which should be made known only to heads of government departments", that is one thing. But no; we are told that the whole 20220-334*
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procedure has been set out in a single directive, that it is available to all government departments, but is to be denied to parliament. The information cannot be so terribly confidential or secret, or surely it would not be made available as a departmental document to various persons in the departments.
If the parliamentary secretary can say that there is or there will be a suitable document prepared setting out the rules which affect those who are dismissed, or those who seek employment but are denied it on security grounds, and such promise were made, I am sure the hon. member for Winnipeg North would be happy to hear it and I think this motion might well be withdrawn. But no such suggestion has been made and we are pressing this matter.
I said that we are not seeking the source of the security information, nor are we asking for the disclosure of the evidence upon which decisions are made. All we are asking is that the written rules of procedure enacted for the protection of employees or those who would be employees be disclosed to the house and to those whom they affect. How do we know otherwise that the rules are adequate or fair, or that they take account of the rights of individuals? How can we as individual members of parliament advise those who are concerned with these matters? I have always been under the impression that one of the basic duties of a member of parliament, indeed of parliament itself, was to protect the rights of individuals against injustice. How can we carry out this vital task if we are not to know even the procedural rules under which bureaucracy is working its will in regard to these people?
The government calls itself a Liberal government. Perhaps I have had a misunderstanding of the meaning of the word "liberal". I thought the word "liberal" connoted a concern with the rights of the individual, but perhaps we will be told, as in the cases of immigrants, that they have no rights. Immigrants are daily subjected to farcical hearings where they are not informed of the objections to their entry, and we are told they are without rights. I wonder whether that argument will be applied here. Is it to be said of the 205,000 civil servants, the 121,000 or more people employed in government corporations, the 123,000 or more people in the armed services, that once the word "security" is mentioned their livelihood, their reputations, can be blasted and they are not told anything about it or even the procedure by which they can have the allegation checked?

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In my view there is nothing more serious than that a person's reputation and his livelihood can be dealt with by these secret procedures, of which we are not to know the details. I would have thought that a Liberal government worthy of the name would disregard the sort of timorous hocus-pocus we hear from time to time that tells us that parliament itself is to be denied information as to procedures which affect the livelihood and reputation of a tremendously large group of civil servants and other Canadians.
In the United States, which is not known for being unduly tender to people when security is concerned, they have a directive in this regard. The number of it escapes me at the moment although I have it somewhere. It is a specific directive dealing with this matter. Does anybody think that in the British House of Commons the government can get away with saying: We have devised some security procedures but we are not going to tell you what they are; we are not going to put them in writing for you. We will make some general statements and you must satisfy yourselves with that. I do not believe a government would last very long in that country if it adopted that sort of attitude.
I appeal to the government to change its mind. They will have time to do so because I imagine that this debate will not conclude today. I sincerely hope that if the government does not change its mind and make available to the house at least in outline form the security procedures which it says it has devised, including the new ones which it says fill the gaps that existed before, parliament will show enough self-respect to compel the government to do so.


Mr. G. W. Baldwin (Peace River):: Mr. Speaker, I will not have too much to say. I had thought I would be in another room. I was about to say "in another place" but probably those are not the right words to use today. So the pearls of wisdom which I propose to cast before the members of the government will not be as lengthy as they would have been otherwise, or as the government feared they might have been.
After listening to the tail end of the argument made by the parliamentary secretary and after reading what took place in the debate on July 2, I am reminded that the government's attitude in this matter is reminiscent of a Roman emperor, not the one who fiddled, although that allusion might well apply too in some respects, but the Roman emperor who, being compelled by custom and by law to make his laws public, saw

that they were printed upon stone tablets but then had the tablets set up so high that nobody could read them. I think that pretty well exemplifies the attitude of the government in this connection.
If I may go back to the initiation of this debate by the hon. member for Winnipeg North (Mr. Orlikow), as found on page 4954 of Hansard he quotes what the Prime Minister said on October 25 when this matter was first discussed. I am not going to quarrel so much with the refusal of the government to disclose all of the facts which are related in the first paragraph of the quotation, although some fault can be found with their failure to disclose at least a part of them. However, the second paragraph deals with the rules of what is in effect, I submit, an appeal and I take exception to what is set out there.
True enough, the Minister of Justice (Mr. Favreau) indicated that this was an administrative matter. Certainly so far as security directives are concerned the government has a very grave responsibility and I would be the first one to deny that they must be compelled to produce all of the directives they issue with regard to the question of security. But once it becomes apparent that an individual employee may be subject to dismissal in so far as his status and job are concerned, a very important aspect of his life, and the matter then becomes the subject of scrutiny by a board, my submission is that even though the board may be an administrative board this is in effect a quasi-judicial proceeding. The administrative aspect is dissolved into a judicial consideration. This is a review, an appeal, and when there is a discretion to be exercised it must and should be exercised in a judicial way.
This has been said over and over again not only in the courts but by political philosophers. A discretionary right exercised by a review board with respect to any matter affecting the government should be exercised in a judicial way. How can it be exercised in a judicial way if the person who is the subject of the inquiry is not made aware of the procedures which will be adopted, the basis of the charge against him and provided with an adequate opportunity to meet that charge and to present his side of the story? With great deference to the views expressed by the Minister of Justice and his parliamentary secretary, I submit with respect to at least the second part of the proposed new procedures outlined by the Prime Minister

that the government has no real justification in refusing to disclose the detail of these directives.
Having said that, I would point out that there are ways by which this house could be put in a position to consider the matter. It is a very important matter and it might well be that it could be submitted to a committee in camera. The hon. member for Greenwood (Mr. Brewin) said this might involve hundreds, possibly thousands of people before this procedure faded into something completely different. Why not let the matter be discussed in a committee in camera so the government might have the benefit of the views and suggestions of hon. members in this house who, having been invested with the confidence of the people of this country, should have an opportunity in this way of communicating their suggestions to the government.
I am sure that the members of the government would be the last ones to suggest that they had reached perfection in a matter of this kind. This is a very small, timorous step in a direction in which they should have taken brave and bold action many years before. Having in mind the fact that there will be advances, I think, there will be changes and improvements, I would think it would be the part of wisdom for a government to discuss the matter perhaps in a standing committee or a special committee established for the purpose at an in camera sitting.
I suggest that, as a first step, the government might give serious consideration to placing before such a committee all the relevant facts and documentary evidence in regard to what has been done to implement what the Prime Minister indicated would be done by way of establishing appeal procedure. I do not need to stop there. I think the hon. member for Greenwood dealt with this as well. I quite appreciate the fact that the government would be in violation of its duty if it did disclose certain aspects of its directives. Surely however it is competent for them to examine, with great care, everything which is comprised within the documents in respect of which the hon. member has asked for production. They could set to one side those which they feel should not be made available at this time because of the security practices which are involved. With regard to the others, they could provide the documents themselves or a very carefully detailed analysis, so that those people who may be involved will know precisely what they will be called upon to contend with if there should be an occasion
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for a government employee to meet with this appeal tribunal.
After all, Mr. Speaker, I think that nothing less than that would be worthy of the judicial system which has reached its flower in this country. One of the proudest boasts, I think, of our democratic system is the judicial function. I repeat there will be a judicial function which this committee, even though it is termed an administrative committee, will be exercising because it will be reviewing a decision already made. I see no reason why, under those conditions, the details and circumstances under which this review will be made should not be made available so that this house would be able to assess and evaluate the sufficiency of these directives. Then, an individual whose position might be in danger may, at the appropriate time, have an opportunity to meet the charges against him, to know the circumstances under which he will be permitted to defend himself. He could appear or be represented by counsel, knowing in advance what he will be called upon to meet. I suggest that anything less than that will not be carrying out the true spirit of the judicial system of this country.


Mr. Joseph Macaluso (Hamilton West):: Mr. Speaker, I have listened with great interest during the last two days to the manner in which this matter has been debated. I was somewhat surprised by the remarks of the hon. member who just spoke when he said that the administrative body which the Prime Minister on October 25, 1963, said would be set up would be exercising a judicial function. I do not find this to be so. I do not feel that an administrative tribunal, such as the one that has been set up, will be exercising a judicial function. The mere fact the hon. member says that because some tribunal is reviewing a person's rights or some complaint they are thereby exercising a judicial function, is not correct in my opinion.
There is no question I think, Mr. Speaker, but that everyone in this house is concerned with the rights of individuals. Every member of every party is concerned and to say that, as the hon. member for Greenwood (Mr. Brewin) did, one who calls himself a Liberal is more concerned, is not stating a fact.


David Orlikow: The Liberals are less concerned.


Joseph Angelo Macaluso: I do not believe that because one is called a Liberal makes him more concerned about the rights of individuals than the member of any other party. Any member who believes in human justice believes in the

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rights of individuals. The hon. member for Winnipeg North (Mr. Orlikow) who is interrupting should be concerned because he has been doing a great deal of work in this field.
I find that the contributions to this debate seem to be really canned speeches left over from October 25, 1963.1 could not gather from the debate that there was any complaint or allegation that the proposal set out in the Prime Minister's statement of October 25, 1963 had not been carried into effect. The complaint we have been hearing is that we are not seeing, in black and white, that these directives are, in fact, being carried out. In my opinion, this is more or less an attack on the integrity of the Prime Minister by believing the head of a government, who is really primarily responsible for the security of the country, should be saying something in this house that he has not followed through.
It has been stated by the Minister of Justice (Mr. Favreau) that the directives did go out.


David Orlikow: That is because you have heard so much.


Joseph Angelo Macaluso: You may question me after I have finished.
I have been one, along with the hon. member for Greenwood, who has been quite concerned with the question of security when it deals with immigration cases. I think the investigation of an applicant who wants to become a landed immigrant is somewhat different from an investigation relating to the security of the country itself. I was quite interested in hearing the hon. member for Greenwood asking today, and I think these are his words, what good is it to tell us the new procedures if we cannot see them in black and white? I believe he went on to say this was an affront to parliament. I am one who disagrees with this completely. I think that the statement of October 25, 1963, is as full as any statement possibly could be about the new procedures that were to be incorporated.
Many of the speakers have asked, what are those procedures? Time and time again the Prime Minister, the former minister of justice and the parliamentary secretary to the Minister of Justice, have put on the record what the new procedures are to be. Even the hon. member for Burnaby-Coquitlam (Mr. Douglas) put on the record on July 2 what those new procedures were to be. It is very interesting to note that in his speech of July 2, with regard to the first of the new procedures, he said that meets the first objection. I gather he meant by that that this met the first objection

of the hon. member's party. Then he went on to quote the second new requirement and said:
That was the second thing we wanted. We wanted a quasi judicial board of review. We did not get a quasi judicial board of review; we got an administrative board of review made up of deputy ministers.
Then the important words are these:
We are willing to settle for that as an experiment.
It seems to me, Mr. Speaker, that the hon. member and others of his party are not prepared to follow up their words and their own assurance that they were willing to settle for this new procedure to be tried out as an experiment. As the hon. member for Peace River said, nobody is perfect in these matters, especially not those dealing with security.
Here is a new procedure set forward, and it was rightly brought forward as a result of complaints made in this house by members of the New Democratic party. I compliment them on this; but this was before October 25, 1963. To date now we have not had any more such complaints, and I hope none ever comes forward again. I also hope that they at least will follow the words of their leader when he says:
We are willing to settle for that as an experiment.
1	believe there is no logical argument to the motion we are now discussing. As it appears on the order paper it reads:
That an order of the house do issue for a copy of all government statements and directives to government departments during the past year regarding security procedures and investigations.
On July 2 the Minister of Justice (Mr. Favreau) stated there was only one directive which went out to government departments. That was also stated in answer to the question put on the order paper by the hon. member for Winnipeg North (Mr. Orlikow). That question read:
1.	Has the new policy regarding security investigations promised by the Prime Minister last session been established and, if not, how long will it be before it is ready?
2.	If it has been completed and approved, have its terms been made known to the employees of the government and their associations?
3.	Will a copy of the policy and its regulations be tabled in the house?
The answer to that question was given as follows on May 25 last:
1. Yes.
2	and 3. The terms have been formally communicated to all government departments and organizations-

I would assume from that that they have been communicated to the senior officers of those departments, but I do not believe that because you communicate a new security procedure to the heads of government departments, who will be directly involved in the new procedure, this means that it should be made known to the public, or even to members of this house no matter how much we may wish to have it so.
The answer continued:
It is not customary to send directives such as this to employees or associations, nor are administrative directives normally tabled in the House of Commons.
The hon. member for Winnipeg North was not satisfied with that answer and as a result we are having this debate on his motion today.
As recorded at page 4957 of Hansard for July 2 last the Minister of Justice stated that one directive had been sent to government departments during the past year regarding security procedure and investigation. He said:
There has been only one such directive, Mr. Speaker, and after the most careful consideration the government has decided that it must, in the public interest, decline to accept the motion to provide a copy of the directive.
Let us look at the precedent, or so-called precedent or alleged precedent, put forward in this house on October 25, 1963, by the hon. member for Greenwood (Mr. Brewin). I may say the parliamentary secretary to the Minister of Justice (Mr. Macdonald) answered that in his speech somewhat earlier, but at page 4051 of Hansard for October 25 the hon. member for Greenwood is recorded as saying:
The Prime Minister has given reasons why the government decided not to have a quasi judicial tribunal, and I acknowledge at once that the ordinary method of appeal and trial is not suitable to the determination of security cases where it is impossible to confront the person affected with all the information. But, Mr. Chairman, I know of a precedent which was adopted in wartime and which I suggest could and should have been adopted here. During the war the minister of justice, acting under the powers conferred by the War Measures Act and the defence of Canada regulations, found it necessary to intern quite a large number of individuals, sometimes on a mere suspicion.
I agree with that statement.
After public representation it was found possible to set up a tribunal, which was not a tribunal of civil servants or department heads or within the structure of government, but included, as I recall it, a member of the judiciary-
-that was the present county court judge, His Honour Judge Forsyth of Toronto-
-who was free, and bound to be free, from the necessity to consider the internal or depart-
Motions for Papers
mental matters and who was able to apply a clear judicial judgment to the problems which came before him.
In the light of reading the defence of Canada regulations and the War Measures Act, and also being informed of His Honour Judge Forsyth's statements, I can say the hon. member for Greenwood is wrong, that Judge Forsyth was not applying a judicial judgment to those appeals from people interned. The people interned were interned under section 21 of the defence of Canada regulations, and 30 days thereafter there was a formal procedure by which they could appeal their internment, by which they could come before this tribunal or administrative body, whatever you want to call it, and there they were told to a certain degree in general terms why they were interned.
They were not confronted by the person or persons who whispered some words, or informed on them, whether on sound grounds or unsound grounds-


Francis Andrew Brewin: Would the hon. member permit a question? Is the hon. member aware that under the proceedings to review internment that he is referring to, a code, as it were, a form of procedure was specifically spelled out requiring particulars to be given, and setting up the types of notice procedure and so on by which hearings were to be undertaken?


Joseph Angelo Macaluso: That is exactly what I stated, that there was a formal procedure by which the person interned could appeal his internment. I did not detail what the formal procedure was.


Francis Andrew Brewin: Then one further question; if in wartime security reasons were not so severe that the interned person could not be given some sort of a fair procedure for appeal, which was set out in detail, does the hon. member believe in peacetime that the many, many civil servants who may lose their jobs or reputations are not entitled to the same consideration?


Joseph Angelo Macaluso: I do not agree with the statement made by the hon. member for Greenwood, that in wartime there were specific details given to those people who were interned. I know to the contrary from personal experience in that regard that this was not the case. It was most difficult, if not impossible, to find out why some of these people were there, although it is known many were interned because some person or persons did not like them. We know this is a fact. I say

Motions for Papers
I feel quite concerned about this matter because they did not have proper appeals. They were not informed in detail as to why they were interned. I said they were told in general terms.


David Orlikow: But you are not concerned now.


Joseph Angelo Macaluso: I say these administrative bodies were not rendering any judicial decisions. There were no cross-examinations and those interned were not confronted by the persons who lodged complaints against them. Therefore when the hon. member for Greenwood asks why a similar quasi-judicial tribunal cannot be set up in peacetime I answer that there was no quasi-judicial tribunal at that time.


David Orlikow: What is there now?


Joseph Angelo Macaluso: The hon. member for Winnipeg North asks what is there now. For one who speaks so much in this house and says he reads Hansard so much, I ask him again to read the statement of the Prime Minister on October 25, 1963, and also what the former minister of justice said at that time, because in those statements it is set out in detail. His own leader set it out on July 2. Perhaps he might read Hansard again. I do not have time to do it for him now. I should like to refer to some of the words used by the Leader of the Opposition (Mr. Diefenbaker) on October 25, 1963 as reported on pages 4048 and 4049:
The matter under discussion is one of the most difficult problems that faces a government today. It is understandable why the Prime Minister should have made a statement this evening as to the policy of the government, for the responsibility of national security rests primarily on the Prime Minister.
These are words with which I agree and with which many people agree. The right hon. gentleman carries on with regard to the office of prime minister by saying:
He cannot put his responsibility off on somebody else. He in his person has the custody of our survival and of our security.
I agree with those remarks. The Prime Minister of this country is responsible for the security of this country as no other person is, and as far as I am concerned, after reading the statement made by the Prime Minister on October 25 and the interjections made by the hon. member for Winnipeg North (Mr. Orlikow) it seems to me the hon. member for Winnipeg North is not interested in what was contained in that statement; he does not believe there has been such a directive issued.


David Orlikow: That is right.


Joseph Angelo Macaluso: The hon. member says "that is right". He does not believe there is such a directive.


David Orlikow: I want to see it.


Joseph Angelo Macaluso: Here is a member of the House of Commons who does not believe that the man who is responsible for the security of this nation-


David Orlikow: I just want to see it.


Joseph Angelo Macaluso: Well, you cannot change the minds of those who do not wish to have them changed. You cannot change the minds of those who are so blind-


Gerald William Baldwin: May I ask the hon. member a question? I did not ask it earlier because it was not my intention to create the impression that this body was a judicial body. But does he not feel that despite the fact this tribunal will be composed of administrative officials, once it has been clothed with powers authorizing it to review findings or decisions which affect the rights of an individual, that it might then be considered as exercising a judicial function and should exercise that function in a judicial way?


Joseph Angelo Macaluso: Perhaps when I said it would not be exercising a judicial function I was speaking only in a limited sense. In a way, the hon. member is right; it is exercising a judicial function by reviewing some evidence which is before it, but the committee does not hand down a judicial judgment in a true sense because the evidence before it is not the same as evidence which would be given before a judicial tribunal. Here we have an administrative tribunal made up of deputy ministers of various government departments. They will be able to bring before them, as I understand it, the person who has been charged, and I think this should be done. I doubt very much whether he will be confronted by the person who has charged him. In this sense this is not judicial evidence. It is perhaps a play of words; we are not at odds. But my feeling is this: let us try out this new procedure. If it does not work, then surely we can devise another which does work.


Mr. R. W. Prittie (Burnaby-Richmond):: The millenium in security procedures was not reached on October 25, 1963. I have a particular case in mind which was brought to my attention since this motion was put on the order paper. It involves a young man working for the Department of Transport in

my own riding, whose employment is affected at the present time. His case has been taken up by the British Columbia civil liberties association and they have had correspondence with the Minister of Transport about it. I should like to quote first of all from a letter dated May 28 sent to the Minister of Transport by Mr. William H. Deverell, executive secretary of the British Columbia civil liberties association. It says, in part:
The employee in question objects to answering certain questions relating to his in-laws-such as birthplace, birth dates, last address while living, date of death, as well as place and date of birth of his wife. Basically, the questions relate to information of which he has no personal knowledge and he feels it is an unfair requirement of holding his position that he seek Information about persons other than himself.
In reply to this letter the Minister of Transport mentioned the statement made by the Prime Minister in the house on October 25, 1963 and the statement made by the Minister of Justice (Mr. Favreau). I wish to quote from the statement by the Prime Minister as set out in this letter because I intend to refer to it later.
The granting or the denial of a security clearance is an administrative matter, one of managerial responsibility. In making a decision that an applicant or employee may not safely be given access to secret and confidential information, the head of a department or of an agency is not denying an individual a right. No person, of course has a right to see official secrets. The department head is merely exercising the judgment he is expected to apply on the basis of all the information available to him In the way that any sensible person would exercise such judgment in hiring a secretary, a cashier, a lawyer or a doctor, ensuring that such person could be trusted with his property, his private business or his physical health.
I wish to refer later to this part of the statement referring to the hiring of a secretary, a cashier, a lawyer or a doctor in private life or private business. Later, the minister in his letter, quoting the Minister of Justice, had this to say:
In the first instance, such employees are asked to provide certain basic information about themselves and about close relatives who may influence them or cause them to be influenced in a manner which would bear on their loyalty or reliability.
It seems to me that the government goes far beyond the ordinary practice followed by anyone hiring a cashier, or a doctor, or a secretary as set out in the Prime Minister's statement. It seems to me that employers are not too interested in information concerning a man's relatives. In fact, it may be illegal for them to ask for such information. However, in connection with government security
Federal-Provincial Relations procedures questions are asked about a great many relatives and this seems to presume too much upon the influence which one relative may have over another. If a man comes from a big family he might be in a very bad position. I have nine or ten live aunts and uncles as well as 26 or more first cousins. I cannot count how many second cousins, nephews, and nieces I have. Surely, the government does not need information about all these people. Last year a case was brought up by the hon. member for Nanaimo-Cowichan-The Islands (Mr. Cameron) involving a young man who had been released from the navy because it was thought an uncle of his had been a communist at one time. Later, it was shown there had been a case of mistaken identity. I ask the question: What if his uncle had been a communist? Is this young man to be condemned forever because of that?
May I call it six o'clock?



BUSINESS OF THE HOUSE

The Acting Speaker (Mr. Batten):: The hour appointed for the consideration of private members' business having expired, it is my duty, pursuant to provisional standing order 39A to inform the house that the questions to be raised at ten thirty o'clock this evening are as follows:
The hon. member for Yukon (Mr. Nielsen), request for steps to preserve historical articles; the hon. member for Nicolet-Yamaska (Mr. Vincent), agriculture, Quebec, proceedings respecting application of ARDA program; the hon. member for Joliette-L'Assomption-Montcalm (Mr. Pigeon), trade, cigar tobacco surplus products.
The house will now resume the business interrupted at five o'clock.



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

[Stage Direction]
The house resumed consideration in committee of the following resolution-Mr. Gordon-Mr. Batten in the chair:
That it is expedient to introduce a measure to provide for the revision of certain fiscal arrangements with the provinces and to provide adjustments of fiscal arrangements and taxation provisions consequential upon the provision of youth allowances to parents resident in certain provinces.
At six o'clock the committee took recess.
[Stage Direction]
Federal-Provincial Relations

AFTER RECESS

The committee resumed at 8 p.m.
Thomas Clement (Tommy) Douglas: Mr. Chairman, when this debate was adjourned at five o'clock I was criticizing the proposed changes in the federal-provincial tax sharing arrangements.
I was criticizing these changes on the ground that they were not designed to bring about greater equalization or equity but that instead the formula was being distorted in order to bring about a desired result. I think this is fully confirmed if one looks at the table which the minister placed on Hansard at page 5184. One sees for instance the changes which arose out of the November, 1963 conference and the effect they will have in the revenue of the provinces in 1964. The provinces will get an additional $87.4 million, of which the province of Quebec will get $42.5 million, or almost half. Next year, out of $106.6 million the province of Quebec will get $54.4 million, or more than one half of the total.
There are other anomalies in this distribution of revenue to the provinces. For instance, if one takes the three prairie provinces, which in terms of per capita personal income are almost identical, one finds that under this formula in the present fiscal year Manitoba gets $7.1 million, Saskatchewan $3.2 million, and Alberta $1.6 million. If you take a comparison of the two provinces which have very close to an equal per capita personal income, namely Ontario and British Columbia, you find that Ontario gets $14.4 million and British Columbia $3.9 million. In other words, Mr. Chairman, I am saying that the federal government, in trying to get a settlement at the November conference, departed from the principle of equalization and sought to rig the formula so as to help those provinces that seemed to be most in need of being pacified.
I am not suggesting for a moment that the province of Quebec is getting too much. I am suggesting that there are other provinces that are getting too little. The province of Quebec has a very serious financial problem; in fact it has two very serious financial problems. One which is not commonly recognized is that outside of the Atlantic provinces Quebec is the only province in Canada that year after year has a per capita personal income below the national average. This should be kept in mind. It might be of interest if I just gave to the committee the per capita personal income by provinces for 1962: Newfoundland, $972; Prince Edward Island,
[The Acting Speaker 
$1,009; Nova Scotia, $1,245; New Brunswick, $1,107; Quebec, $1,417; Ontario, $1,938; Manitoba, $1,696; Saskatchewan, $1,690; Alberta, $1,687; British Columbia, $1,896. The average per capita income across Canada was $1,658. So that Quebec has a financial problem; she 'is one of the provinces that is below the national average, and has been consistently year after year. But I point out that all the Atlantic provinces are also below the national average and are much further down than is the province of Quebec.


Louis-Joseph Pigeon: I am not so sure.


Thomas Clement (Tommy) Douglas: I have just given the figures to my hon. friend. It is very clear that they are lower than Quebec; yet this formula does not benefit them to the extent that it benefits the province of Quebec. The Atlantic provinces have been the forgotten provinces in working out this formula.
The other problem which the province of Quebec has is that this province has now launched upon a large program of social capital expenditure. Quebec has lagged behind in the supplying of schools, hospitals and other social capital programs. Now these programs are coming at a time when the costs are higher than they would have been had they been undertaken 20 years ago. Therefore I recognize that the federal government should do something to help the province of Quebec; but I am submitting that these two problems which face the province of Quebec should be dealt with first of all by having a fiscal need grant for all the provinces. We already have it in the form of the Atlantic provinces adjustment grant. I support that program; I advocated it for years before it was introduced. I think that some formula of assistance to the provinces on the basis of fiscal need should apply to any province whose per capita income is below the national average. This would help Quebec-


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


Thomas Clement (Tommy) Douglas: Yes.


Gilles Grégoire: I heard the hon. member say that Ottawa should help Quebec. I do not know whether the hon. member is aware that only two provinces pay more taxes to Ottawa than they receive in a year. They are Ontario and Quebec; and Quebec pays $800 million more in taxes.


An hon. Member:: No.


Thomas Clement (Tommy) Douglas: Mr. Chairman, there will be plenty of time to argue this out later. How-

[DOT]ever, I think my hon. friend is talking absolute nonsense when he makes that statement.


Gilles Grégoire: These are figures published by the government.


Thomas Clement (Tommy) Douglas: My hon. friend will get the chance to make a speech later on. If he can substantiate that statement, we will be glad to hear him.


An hon. Member:: He is talking about corporation taxes.


Thomas Clement (Tommy) Douglas: Yes, he is talking about corporation taxes.


Gilles Grégoire: No; all taxes together.


Thomas Clement (Tommy) Douglas: If the hon. gentleman can substantiate that statement, I will be glad to hear it. It is useless just making a statement without substantiation-


Gilles Grégoire: These figures are published by the government.


Thomas Clement (Tommy) Douglas: -because my recollection is that he has made a lot of statements from time to time that could not be substantiated. The point I am making, Mr. Chairman, is that the way to help Quebec is first by having a fiscal need adjustment grant which will be applicable to Quebec or any other province whose per capita income is below the national average.
The second is by the federal government's having a social capital program to help provinces who have particular need for social capital. The way not to do it is to rig the equalization formula and distort it in the manner which has been adopted. I think this has been an unfortunate action on the part of the government.
The second matter I wanted to deal with in the very limited time I have left is the proposals which are arising out of the April conference. The minister said that this proposal to give to the provinces a 2 per cent additional abatement of personal income tax in the fiscal years 1965-66 and 1966-67 came out of the April conference. Personally, Mr. Chairman, I doubt that very much. I think it came out of the federal government's desire to get a settlement on the Canada pension plan. Certainly no such proposal was put before the provincial governments at the conference in April. The significant point is that the provinces are always placed in the position of Oliver Twist: they keep asking for more and the federal government always says there isn't any more. Then when the
Federal-Provincial Relations provinces find some way of putting a pistol to the head of the federal government they find more.
Just to see how the shares in the three tax fields have grown since 1952, let me point out that at that time the formula was 10-9-50. Then it went up, as the Leader of the Opposition said. His government raised it, first to 13-10-50, and then later on to 16-10-50, with the personal income tax abatement going up one percentage point per year for four years. Now with these two additional percentage points in the last two years of the present agreement, it means it will go up to 24 per cent. There are 24 percentage points of abatement for personal income tax, 9 per cent for corporation tax and 75 per cent for succession duties. This is a tremendous increase. But every time that it has been gouged out of the federal government; the provinces almost had to resort to a form of blackmail in order to get it.
I certainly support the government in granting this additional 2 per cent abatement of personal income tax for the last two years of the agreement, but I do not think it was offered voluntarily. I think that this is the price which the federal government has paid in order to get agreement on the Canada pension plan. I do not want to indulge in recriminations; but the point I am making is that if we are going to have satisfactory federal-provincial relations, and if we are going to put this country on a sound basis, the federal government has to approach this problem, not on the basis of how little it can get away with but on the basis of how much it can do in order to help the provincial governments, and through them the municipalities, to grapple with the financial problems which confront them.
I know, Mr. Chairman, what the minister will say. He will remind us of the problems which the federal government has and that it is facing a deficit. I do not care about the deficit problems of the federal government. In the first place, as the minister himself pointed out in his budget address, there is a difference between the traditional budgetary bookkeeping and the national economic accounts. If one looks at Hansard for Monday, March 16, and at page 29 of the white paper, the minister himself tabled statistics to show the difference between the national economic account for Canada and the traditional budgetary bookkeeping. What, Mr. Chairman, do we find? We find that in 1963, particularly for the last quarter when the economy was beginning to gather momentum, whereas the

Federal-Provincial Relations traditional budgetary bookkeeping showed us a deficit of $115 million, the national economic account showed a surplus of $47 million. In other words, when the minister or anyone else takes refuge in the fact that we may have deficits, he is resorting to the old type of budgetary bookkeeping. When we look at the national economic account we realize that, as the economy gathers momentum and we increase productivity and the gross national product, these deficits will disappear.
If the minister really believes, as he has said repeatedly, that our economy is going to grow and expand, then I do not think we have to worry about deficits. I think the government can afford to be much more generous to the provinces than they have been. I think they can afford, for instance, as I suggested a few moments ago, to increase the Atlantic provinces adjustment grant. Because the Atlantic provinces are the Cinderellas of confederation and the rest of Canada has not done fairly by them.
I think that the principle of a fiscal need adjustment grant should be extended across Canada. It would apply to Quebec. It would not apply to the other provinces in a normal period. Right now, for instance, there is the threat of a drought in Saskatchewan which could extend into Manitoba. There could be years in which the per capita income of a given province might drop below national average, and if we had a fiscal adjustment grant in those years that province would have a claim on the federal treasury.


Lucien Lamoureux: Order. I must interrupt the hon. member, whose time has expired unless the committee wishes him to complete his remarks.


Some hon. Members:: Agreed.


Thomas Clement (Tommy) Douglas: Mr. Chairman, I thank the committee for their generosity and I will take only a moment or two more. It seems to me that this is the kind of approach which would gain the support and the confidence of the provinces of Canada. Instead of sitting around a table and cutting up a small pie, haggling over how much will go to the provinces and how much will go to the federal government, we should try to think in terms of an expanding economy, of a larger pie to be divided up, and recognize that the principle of equalization must be based not on a rigged formula but on the basis of fiscal need; that those provinces which are most in need ought to get the largest share of these equalization payments. I grant you that so far as the

province from which I come is concerned it is unlikely that it would ever qualify.


Walter Lockhart Gordon: Which one, B.C. or Saskatchewan?


Thomas Clement (Tommy) Douglas: I am talking now of British Columbia. I represent a constituency in British Columbia. But other provinces in Canada which might be affected by drought or some economic catastrophe would benefit, and from Quebec to the Atlantic ocean every one of the provinces would benefit year after year. It is only on the basis of this kind of equalization, this business of sharing one another's burden, being each other's keeper, that we are going to build the kind of co-operative federalism which has any meaning. Otherwise co-operative federalism is sheer window dressing. It is merely a matter of indulging in eulogistic phrases unless it actually means sharing with those provinces who, for one reason or another, are less fortunate than other provinces. I think that is the basis upon which federal-provincial fiscal agreements must be negotiated.
There are two other matters which I wish to touch on very briefly. First of all, I support wholeheartedly the government's decision to continue the Newfoundland transitional grant which was supposed to expire on March 31, 1967. That expiry date has been wiped out, which is as it should be. I support the decision completely. I also support the idea of entering into an agreement with any province which is supplying youth allowances by giving to such a province a 3 per cent abatement on personal income tax and then making an adjustment at the end of the year so that the province gets back what it has actually spent. I see no objection whatsoever to that and I think that in this case the federal government has worked out what ought to be a very satisfactory arrangement. If the province of Quebec is happier with that kind of arrangement than having the federal government handle youth allowances, I do not see why any of us should object. They are not getting anything to which they are not entitled and it is equitable and fair all round.
There is one other point I want to make. I have said repeatedly in the house, and I am not going to elaborate now because I may want to say something about it when the bill is before the house, that this house ought to be concerned, and I am sure it is, about the danger of stripping the federal government of the fiscal powers which it needs to combat either inflation or deflation, to maintain economic stability and to promote economic

growth and full employment. Control of fiscal policy is one of the Keynesian techniques which any government has to retain if it is going to meet the problems of economic fluctuation. As the federal government parts with some of its taxing powers it loses this control.
What is the answer? I do not think the answer is for the federal government to take back these powers from the provinces, but I think the Porter commission put its finger on this at pages 519 to 521 of its report when it said that the time had come in Canada for the federal and provincial governments to coordinate and direct their fiscal policies.
I was very glad to see that Professor K. W. Taylor, who is special adviser to the privy council office and who was formerly deputy minister of finance, had this to say when he spoke to the 17th tax conference sponsored by the Canadian tax foundation in November last in Vancouver:
The subject of my paper is the federal budgetary process, but I do want to emphasize in these prefatory remarks that the size and patterns of provincial and municipal revenues and expenditures have an important bearing on both national and regional economic development and that these levels of government should carefully appraise the economic implications of their fiscal policies both in their own interest and in the national interest.
He went on to say:
Five years ago at a federal-provincial conference Saskatchewan suggested that there should be a regular annual meeting of federal and provincial finance ministers to review economic prospects and exchange views on appropriate fiscal policies: and two years ago Mr. Gerin-Lajoie, here in Vancouver suggested regular federal-provincial consultation to co-ordinate matters of national interest and priority. I am sure we can agree that there would be considerable merit in promoting co-ordination of federal and provincial fiscal policies.
The point I want to make is just this, that we must be very careful not to so diffuse fiscal policy in this country that Canada cannot effectively cope with either an economic depression or a period of inflation. I hope the Minister of Finance is giving some thought to the possibility of annual meetings of the Minister of Finance and the provincial treasurers with the idea of co-ordinating their respective budgets so that fiscal policies will not be purely a federal matter but a federal-provincial matter. Otherwise I think that federal and provincial budgets can cancel each other out. They could bring about economic conflicts. They could have serious repercussions for our economy, and I think this is one of the steps that could be taken to make more effective and more efficient
Federal-Provincial Relations federal-provincial co-ordination in this field of fiscal relations.


Robert Norman Thompson: Mr. Chairman, the resolution before the committee tonight is one of urgent and extreme importance, important to some provinces for what it contains, important to other provinces for what it does not contain. The entire policy of the federal government regarding federal-provincial fiscal arrangements has been and continues to be disappointing. While there has been a great deal of talk with particular emphasis on cooperative federalism, the government to date has done nothing much more than to yield to the pressures of the day, particularly as they come from some of the larger provinces, and has failed completely to come to grips with the fundamental issue which must be resolved before there ever can be any solution to the federal-provincial fiscal problem.
At the very heart of the fiscal arrangements problem is the basic problem of debt, and I am speaking strictly of federal government debt and provincial government debt. At the present time the provincial and the federal governments together, not to mention the municipal and local governments, are spending approximately $1 billion more than they are able to collect from their revenue sources. It seems to me that it does not really matter how we juggle the dividing of these tax deficit problems between us because basically, the cold, hard fact remains that in the end there just is not sufficient income to meet the demands for public services at the present time. To overlook and bypass this basic problem is simply not to face up to realities.
The federal government is seemingly content to hide behind blinkers in the belief that somehow everything will turn out all right. This attitude and philosophy is preventing it from projecting any alternative solution or facing simple facts as they are. What is urgently needed in our economy today is nothing more or less than a strong position of leadership, and I am speaking particularly now of fiscal leadership, to bring in those financial policies that will let the logical expansion of our country go forward in such a way that the tremendous wealth that is ours can equitably be shared not only by governments but by Canadian citizens themselves. We simply do not have this financial and fiscal leadership at this time. This applies to the federal government's own policies and certainly applies to the policies for which it is responsible that relate to the provinces. Unless something is done to satisfy permanently
5272	HOUSE OF COMMONS
Federal-Provincial Relations the problems we face in a more satisfactory way, what I am afraid will happen is that the provinces, provincial policies and provincial needs are simply going to polarize further than they have up to now, and instead of our uniting into a stronger nation where we would have the ideal situation of what one might call co-operative federalism we are going to be fragmented still more than we are at the present time. This applies particularly to the realm of fiscal arrangements between the federal government and the provinces.
In the minister's March budget speech he forecast a deficit for the current fiscal year of some $455 million according to what he said, as found on page 5185 of Hansard, is the traditional method of accounting. I was intrigued by those words, "traditional method of accounting". I wonder what the minister actually meant. Then I go on further and I read these words in the statement he made to the house the other evening:
Obviously there must be limits beyond which the federal government cannot go without endangering its own financial position.
What does he mean by traditional bookkeeping? What does he mean by limits beyond which the federal government cannot go?
I should like at this point to pose several basic questions to the minister to which I have not been able to get satisfactory answers in the house, and I have not seen any record where the minister has given the answers in any other place. First of all, to what extent has the Bank of Canada purchased government bonds? What is the average length of time that these bonds are likely to be held before maturity or before they are sold? How many of these bonds are likely to be held until they do mature? How much money is actually paid to the Bank of Canada in interest on these bonds which the Bank of Canada holds? What portion of these charges is returned, this accruement of interest charges on government bonds held by the Bank of Canada, to the consolidated revenue fund? Based on the replies which I think it is the obligation of the minister to give us to these questions, is it not true that the volume of spending must be governed by the inflationary pressures that exist in the economy?
This leads on to another logical question that relates to the present use that is being made of the Bank of Canada so far as government bonds are concerned. I should like to hear the minister say why a branch of

the Bank of Canada in the form of a municipal development bank with low charge rates based on actual administration costs, could not be a very desirable change in his own fiscal requirements. I am sure if he can use the Bank of Canada as I have reason to believe he is using it at the present time for the purposes that he is, there is no reason at all why there could not be established as part of the Bank of Canada a municipal development bank which would meet the capital development needs of the provinces and of the municipalities. On this basis, we would be decreasing some of these fixed costs to the extent that certainly the fiscal problems that the provincial governments face at this time would be much easier than they are.
I realize that many of the expenditures which the government faces are fixed expenditures and it is almost impossible to reduce them. On the other hand, 15 per cent of our budget tax dollar is being paid today for interest charges on the national debt. If the government were not facing this tremendous drain of expenditure for this purpose, if the Bank of Canada through such a bank, shall we say, as the municipal development bank, could eliminate much of this unnecessary expenditure, and then certainly there would be more money not only for the federal government itself but also to share out with the provinces. Then, I would suggest that the facilities of the private banking system would be contracted in making such credit available. If it is true that the Bank of Canada is holding much of the national debt at the present time, the real problem then in Canada is not deficits, it is instead a matter of controlling inflation.
Now, without spending too much of the short time that is at my disposal with regard to some of these basic, fundamental changes in financial policy which could ease the overall fiscal burden, I do want to emphasize the fact that you can only make X dollars go so far. You can cut the pie in any way you want, in as many pieces as you want or with as complicated a formula as you want, but there are still only so many dollars to deal with. It is on this basis we have to face up to this very important problem.
Now, coming to this question of equalization and the chart which the minister tabled the other night when he made his remarks. It is very interesting to note when you look over how equalization affects the different provinces, that two provinces which will have no benefit whatever from this present arrangement for equalization are Alberta and

British Columbia. As I was studying this situation this afternoon, a strange thought came into my mind, at least it may seem strange to the minister, Mr. Chairman, but it is not so strange to me. The best way for him to settle the problem he faces so far as equalization is concerned, is to go out and help get a Social Credit government elected in all of the rest of the provinces, and then he would not have any problem.
Actually, what is happening-


Walter Lockhart Gordon: That'll be the day.


Robert Norman Thompson: The minister says, "That'll be the day." What he is doing is penalizing certain aggressive policies which are meeting the needs of these provinces, and penalizing the people of these provinces because they have a government that is facing up on this basis. The minister is robbing from them to pay others simply because this policy of equalization is antiquated and certainly not equitable. If you carry these obvious facts through, it seems to me, Mr. Chairman, that the policy we have at the present time can at the best be seen to be something that is merely doctoring over the symptoms, instead of getting to the root cause of the disease itself.
There are four basic facts which I want to impress upon the minister tonight as far as inequality is concerned in the present fiscal arrangements as they affect some of the provinces. These points probably overlap in some instances on some of those raised by the previous speaker. Certainly, it affects in a most serious way those newer provinces which have gone forward in a more efficient and effective way in the development of their resources and their economies and at this time is placing them in a very inequitable position.
First of all, I should like to mention the question of hospitalization. In the province of Alberta, the hospitalization insurance scheme does not depend upon prepaid premiums nor is it dependant upon a sales tax which is levied for that particular purpose. Instead, the hospitalization insurance scheme uses the principle of a deterrent, where actually as they need the services the citizens themselves contribute a small amount to cover part of the cost of hospitalization. In the over-all effect, this probably produces one of the most economic and satisfactory hospitalization insurance schemes in the whole country. It works on this simple basis. When a person is admitted to hospital he pays a sum of from $1.50 to $2 for a certain
Federal-Provincial Relations number of days, beyond which the service is completely free. This initial co-insurance principle has about the same effect as the deductible clause does in an automobile insurance policy. Instead of paying the entire cost of insurance, this cost saving goes right back to the individual who uses it most and prevents a runaway so far as costs are concerned.
Now, under the present arrangement with the federal government, 25 per cent of the hospital costs are paid to the province on a per capita basis. Another 25 per cent is paid on an over-all cost basis, but in Alberta where this co-insurance is in effect and where there is, in other words, a deterrent deductible principle at work, this amount which in the past five years has amounted to something like $7 million is deducted from this cost factor, and thus federal government does not carry its share of the hospital insurance expenditures that it does in other provinces. The province of Alberta has tried to get the federal government to recognize this principle, but they refuse. They say they are in favour of a principle where hospitalization is available to everyone without any cost. Well, such a thing does not happen because you cannot get something for nothing. Somebody somewhere has to pay for it. The principle here is simple and it brings about a more satisfactory end result. Making hospital service available to everybody, which we all agree is a social responsibility today, is a fine thing but our federal government in its policies is completely unfair to the provincial government that brings such a practical policy. In other words, you are just driving yourself deeper into the net that is going one day to draw the string tight, so far as any hope of operating within our ability to pay is concerned; I think this is unfair.
Another thing that is extremely inequitable so far as government policies are concerned relates to the corporation tax charged on privately owned public utilities. One may say this is not very much because there are very few utilities left which are privately owned, but under the policies followed by this and previous governments we are simply driving our utilities into the arms of public ownership. In some places it may be necessary for this to take place, but I think we should preserve our privately owned and operated utilities wherever we can, particularly wherever they are operating efficiently and economically.

Federal-Provincial Relations
Because the federal government refuses to recognize this principle it means that citizens in provinces like Alberta, and in one or two others where there are privately owned utilities are paying a tax that citizens in other parts of Canada, where utilities are publicly owned, do not have to pay. It is true that approximately 50 per cent of this tax is refunded to the provinces. It is difficult to determine the exact amount since it is included with the tax rental payments, but in the province of Alberta it amounts to something like $9 million. At least this was true in 1962-63, although I do not have the exact figures for last year. However they were approximately the same.
The question can be asked, where do you stop such a policy? Is it to apply to all utilities or only electric utilities? Well, the principle is there. If we really believe we must preserve and reserve private enterprise wherever it will function effectively, even in the field of utilities, then we must admit that we are through these backward and inequitable policies driving ourselves into the arms of the very thing the government says it does not want. This is like paying lip service to something and at the same time backing into it.
Another inequitable situation which has arisen in the last few months, and which was brought out rather clearly in the statement of the minister the other night, relates to the question of the payment of sales tax by crown corporations to the provinces in which these crown corporations operate. Perhaps the principle is right, that crown corporations should not be exempted from paying the tax which other enterprises have to pay. That is a basically correct premise, but what about this principle as it applies at present to those provinces that do not have sales taxes? There is no sales tax in two provinces, Manitoba and Alberta, and so those governments are being placed in an inequitable position, so far as the amount of money is concerned that the government is turning back to them in comparison with the other provinces.
Perhaps to some this might not be such a strong argument for the future, but here the government, according to the statement made the other night, is going to pay this amount of money retroactive for the last two years. On this basis two provinces are being placed in a very inequitable position. It seems to me such policies are not only unfair but they cannot be condoned, and what bothers me is that the government does not seem to be

concerned. At least it shows no indication of wanting to do something about the problem.
Another factor which has already been dealt with to some extent tonight is the resource factor in tax sharing. At the present time 50 per cent of the provinces' resource income is deducted in calculating the provincial average income. How the government can justify this kind of policy is something that is very difficult to understand. Before the basis of the agreement was altered, so far as the method of equalization payments is concerned, it entitled the province of Alberta to $23.5 million last year, but the introduction of the resource factor reduced that to $3.6 million.
In this matter of natural resource income, something which is very important to consider is that it is not just the income that comes from natural resource development itself but that which comes from sale of resource capital assets. What is happening here is that those provinces which have been in the past or are presently willing to sell their natural resources away for a pittance, are today reaping the advantage of this present policy. This is certainly unfair, particularly to the western provinces, and it will be unfair to some other provinces as they undertake more resource development.
The per capita income from natural resources in the province of Ontario in the fiscal year 1962-63 amounted to something over $5. Many of the provinces to the west had a far greater per capita income than this. In fact Alberta had a $97 per capita resource income. As a result this policy is penalizing these provinces. An example which the hon. member for Timmins brought up the other night is that the processing of the ore from Timmins is planned for North Carolina in the United States. The same thing is happening with Quebec iron ore deposits. Instead of the provinces where these resources are located benefiting from the processing, we are shipping the resource material out, and then we are taking away money from those provinces which make a more practical use of their resources in order to make up the loss to the citizens of these provinces I have mentioned. To me this seems to be completely unfair and this is one aspect of the federal-provincial arrangements which must be adjusted.
Why does the federal government insist on using national resource revenues when calculating equalization payments? We have not had an answer from the minister to this

question, and I would remind him that it is basically unfair.
Coming back to the question of equalization, there are two basic principles which the government has enunciated over and over again. We have heard them in this house and we have heard them from public platforms when government ministers have spoken. The first is that the provinces must have the right to administer their own affairs, and the second is that all provinces must be treated equally.
It is one thing to pay lip service to these basic, fundamental principles; it is another to put them into practice. It is this discrepancy between what is stated to be government policy and the working out of government policy that is causing so much dissatisfaction among the provinces.
Dealing with the question of the present arrangement, so far as tax sharing is concerned I would very much like to use the balance of my time to speak about several of the basic reforms that the minister ought to be introducing in his own policies. But I do not have too much hope that he will ever bring in these reforms because I do not see any evidence of them, either in what he says or in the policies being placed before us. Instead I want to talk for a little about what might be done as far as better arrangements under the present set up are concerned in order to adjust some of the inequities I have been speaking about. The premier of the province of Alberta after studying this equalization question has made a proposition which I think would be much more fair to all the provinces. It recognizes the fact that most provincial governments, as well as the federal government, are operating at a deficit and that in the over-all picture these deficits amount to a very large sum. The alternative equalization policy proposed involves four steps. First, the government of Canada in consultation with the provincial governments would agree on acceptable national standards of services in the fields of public health, public welfare and, perhaps a little later on, in the field of education. Certainly it will not be possible in the days which are ahead to polarize activities in all these different fields into ten different compartments.
Much is being said about our responsibility in the field of health at the present time. It is not so much a question of arguing what our responsibilities are as it is of working out how these responsibilities can be discharged in the most effective fashion on a basis which the people of Canada can afford.
Federal-Provincial Relations The second step in this Alberta proposal would be to appraise the per capita cost of providing these basic services in each of the fields to which I have referred-to set up across Canada the basic standards we want in health, public welfare and those aspects of education in which the federal government may have some responsibility to assist with financially. Then it could be worked out what the anticipated cost of all these services to be on a per capita basis. Once this has been done, we come to the third stage-the creation of a joint federal-provincial fund sufficient to meet this cost. This would mean abolishing entirely the present system of federal and provincial government income tax and corporation tax as it is known today. It would mean abolishing the present federal and provincial sales taxes as they exist today. In place of the present tax arrangements a joint federal-provincial income tax would be established together with a joint federal-provincial corporation tax and a joint federal-provincial sales tax. When I say "joint" I am not implying this is something the federal government would take and then redistribute according to some plan of its own, but to save the cost of administration it would all be collected by the federal government and then divided up again on a per capita basis to meet the needs of the provinces in providing these basic welfare standards. The joint sales tax could take the form of a national retail turnover tax which, besides being simpler to operate, would avoid the inequities inherent in the present federal sales tax imposed at manufacturers' level, and the complicated^ nature of the retail sales taxes which are imposed in most provinces. Also into this fund should go all the revenue produced by succession duties. The idea is that the revenue from these three joint taxes and succession duties would be sufficient to pay on a per capita basis the agreed minimum standard of services in the fields of public health and public welfare across the whole national scene.


Lucien Lamoureux: I regret to interrupt the hon. member but his time has expired. The committee may of course permit him to continue.


Some hon. Members:: Agreed.


Robert Norman Thompson: Thank you very much. My remaining remarks will be brief.
There may be those who will say this proposal involves a surrender of provincial rights. However, we must realize it is not

Federal-Provincial Relations good enough for us to talk about being Canadians and then, over and above that, to talk about our being maritimers or westerners or French or English. We had better lace the fact that if we are to be a nation we must accept the principle that we need a strong federal government. We can never be a nation without that. On the other hand we want to have provincial governments which can pay their way and meet their responsibilities under our constitutional responsibilities. We are reaching a point where we can no longer talk about policies compartmentalized into so many different units, destroying the very fibre which is necessary to make a nation.
A great deal has been said by some members of this house to the effect that their provinces pay more than they get back in return. Let me call attention to the example of my own province. In 1962 the federal government collected from the province of Alberta approximately $320 million. In return the provincial government received through grants, joint projects and shared programs, approximately $90 million. In other words it cost in the neighbourhood of $230 million for the citizens of Alberta to belong to Canada. Is that wrong? I do not think it is. In return for the benefits received for being part of the nation of Canada we should be happy and willing to make such a contribution. On the other hand, if we expect our citizens to adopt the attitude toward our nation which we think they should be taking as citizens, the federal government must come forward with fiscal policies which are fair to the provinces, the municipal governments and the individuals concerned. I dislike hearing words to the effect-and we hear them more and more often-that we are Quebeckers or maritimers, or English, or westerners first and Canadians second. This is not the way in which to build a nation which will survive in the years ahead.
To sum up my remarks briefly I would say, therefore, that the building of a strong Canada and the development of an effective federal government which will at the same time permit strong provincial governments to exist as well, able to bear the responsibilities allotted to them, will depend in great measure on what is done in this sphere of fiscal relations. It is not enough to continue to patch up something which has failed to work to the satisfaction of the provinces, something which is causing division across the nation, something which is unfair, something which is harming the way of life we agree Canadians should support. Indeed, in what seems at first


glance to be a harmless and innocent resolution, we have before us here a problem which will deeply affect the future and the wellbeing of our nation.


Gilles Grégoire: Mr. Chairman, one would be led to believe that our economic system is behaving at present like the St. Lawrence river in front of Quebec city, where the tide rises and falls beautifully. The same thing is happening today in the fiscal field.
At times we have seen the federal government seizing hold of almost all the sources of income, even at the expense of provincial rights and, at the present time, we can see that this same federal tide is gradually ebbing away from the fiscal field, making way more and more for the provincial governments.
Mr. Chairman, I think that the Leader of the Opposition (Mr. Diefenbaker) was right when he said this afternoon that politics is rather thankless. Demands are made by the provinces and by the people, and when the government grants anything, they soon forget and ask for more.
Well, the Minister of Finance can expect the same thing to recur. He must be aware that Quebec will not be content with 24 per cent of personal or corporate income tax, or 75 per cent of estate taxes. Quebec will surely ask for more than it has already received. And even if the province offers no thanks, it will not be ungrateful, because those sources of income had been guaranteed by the Canadian constitution and were taken away from the province.
The provinces have jurisdiction over direct taxation, and the federal government at the time of the war, encroached upon this field and took over those sources of income. After having made what he calls arrangements with the provinces, he withdraws quietly, gradually and hesitantly, and at times does not even want to do so. The Minister of Finance can hardly expect appreciation if his predecessors decided to impinge upon provincial rights.
When the provinces claim what is constitutionally their own, it is because the constitution has been too often violated, more particularly in the taxation field. Today, we realize that there is general dissatisfaction with regard to the constitution, and people want to revise the constitution, adjusting it to modern times, and to the priority needs of a vast and many-cultured country like Canada.

Mr. Chairman, before dealing with the bill itself, I must admit that I was surprised a short while ago-and I think it is the first time I heard such a statement on his part- to hear the hon. member for Red Deer (Mr. Thompson) advocate a system of joint income tax together with a joint sales tax. Of course these taxes would be collected by the federal government and redistributed on a per head pro rata basis to each province. This would work in the same way, as when the father of a family gives $2, $5, $10 a week to his son, and when the boy does not do well, or misbehaves, his weekly allowance is cut off. The same thing would apply to the provinces.
What surprised me most, was to see the hon. member for Red Deer trying to have the social allowances financed by such a tax, when the Social Credit members always advocated that social allowances were not to be financed by taxation, but by new credit represented by the increase in the country's wealth, in the real wealth and resources which may exist therein.
I was listening to the hon. member for Burnaby-Coquitlam (Mr. Douglas), touching lightly on the topic of debts, stating that it was a good thing to get into debt, that it was liable to develop the economy.
On the contrary, I believe that indebtedness does not help to develop the economy in a country, but brings about crises which future generations have to bear, such as economic depression, inflation, deflation and the unemployment which prevails today.
It is because previous generations got into debt that the federal government has to pay this year $1,080 million in interest only on its debt. Second, it is for that reason that there is an outflow every year of $1,200 million going to foreign countries to pay profits, dividends and interests earned because the Canadians themselves turned up their sleeves to develop their country.
That is what you get for running into debt. That is the result of getting into debt. It could perhaps be compared to a blood transfusion given on the battlefield to a soldier who, nevertheless, will need an operation. Or it could be compared to the man who just had a heart attack; if he is given a shot in the heart, he can be revived for a few minutes, but, after a short while, everything will have to be done over again. Now, old debts are the direct cause of the financial crisis we are facing today.
Federal-Provincial Relations
We borrow money to build a bridge. But when the cost of the bridge in material and labour is paid, including the fees of the engineers and architects, we still have to pay the finance controllers twice that amount in interest, while those people have not dug one shovelful of earth or sunk one nail into that bridge. Over a period of thirty years, the interest doubles the cost, after the materials and labour have already been paid for a first time. That is what is entailed by continual borrowing.
If you borrow $1,000 you have to pay back $2,000. When the people who create and control credit lend $1,000, they claim $2,000 and $3,000 in return.
In fact, Aristotle, the greatest of all Greek philosophers and perhaps the greatest of all times said that money does not reproduce itself naturally, that it does not procreate. When you borrow $1,000 from a source of credit, you should not be expected to pay back $2,000 because money does not reproduce itself naturally, it does not procreate. Money will bear fruit only when man gets into the picture to exercise his control and create new money. When a finance controller creates $1,000 to lend that amount to the government, the latter does not create another amount of $1,000 even though the total repayment will be $2,000.
I wonder how it is that a socialist such as the hon. member for Burnaby-Coquitlam could accept that the government financing be done by private enterprise.
How does it happen that socialism, represented in this house by the hon. member for Burnaby-Coquitlam, could suggest that some individuals, some large trusts, some big financial interests he denounces by his speech but supports by his suggestions, finance what should be sovereign, that is the government.
How does it come about that it is an accepted fact that some rich individuals pocket tremendous benefits-$1 billion 80 million this year only in interest-at the expense of the government? Does that mean that financial interests, those who create money, bankers have more power than the government? If the Minister of Finance (Mr. Gordon) and the hon. member for Burnaby-Coquitlam admit that, I think they should be ashamed of it, since they are members of a government that accepts that a few powerful individuals who have the privilege of creating money should have even more power than the government.
Mr. Chairman, we cannot accept the fact that a few individuals, enjoying extraordinary

Federal-Provincial Relations privileges, make millions of dollars at the expense of the sovereign state of Canada and of public bodies.
A few moments ago I heard the hon. member for Burnaby-Coquitlam say that economy had to be developed. I agree that economy must be developed. But which sector of the economy?
Economy is a general term. If we wish to develop a general field, we must first of all go into its specifications. One always proceeds from the particular to the general when generalizing, because there are three fields in the economic sector: production, exchange of goods and consumption. Now which of those three fields needs to be developed and improved in order to expand the Canadian economy?
Is it production? Complaints are made because warehouses are overflowing. We deplore the fact that warehouses of co-operatives are full of butter which has to be converted into butter oil in order to be sold abroad, because there is a surplus. In Quebec, certain shoe manufacturers can only keep their employees working three or four hours daily. Why? Because they have too many shoes in stock. The same situation applies to clothing manufacturers. House builders complain that construction is decreasing. Why? Because demand is decreasing.
We can produce in quantity and in quality more than is necessary and I challenge anybody in this house to prove otherwise. We are able to produce in quantity and in quality enough to feed, lodge, dress, in brief meet all the needs of Canadians and of the people in South America. Thanks to its production potential, Canada can be at the present time the granary of the world.
If there are complaints, it is not because we do not produce enough, but because we are unable to sell our production. As a matter of fact, just go and ask farmers who leave their farms because they cannot sell their products, whether they can produce. Such is not the problem.
If, at the time of Louis XIV, somebody had told a shoemaker who used to cut the hide, to sew and polish the shoes and to sell them himself, that in 1964 two men and a machine would be able to make a hundred pairs of shoes per hour, but that the problem would be how to sell them, I think that the shoemaker of the 17 th century would have thought: they are crazy if they cannot sell the shoes. I need a great deal of time to make them, but when the time has come to sell them, there is no problem at all.
[Mr. Gregoire.l
Three hundred or 400 years ago, there was a production problem in Canada, but this is no longer the case. There is nothing wrong today in Canada with the production sector: it is in the sector of the exchange of products that there is something wrong. No means have been found to find a market for or to distribute products, in brief to channel the production to the consumers who need it. We can only do a part of the job, but not the rest.
It is somewhat like the Quebec bridge, a tourist attraction. Thirty years ago, considering the slow speed of automobiles and the fact that there were not too many on the road, the Quebec bridge did not have to be very wide. However, as the speed and the number of cars increased, we said: Automobiles should get across faster, so the bridge was widened.
The same thing can be said about our economy. On one side of the ditch you have the producer and on the other side the consumer, but the bridge connecting the two, that is the monetary system, is not wide enough for all products to go from one side to the other. There is only one solution and that is to widen the bridge between the two. But our economists have not yet realized it; they are still advocating the system of 1800, the monetary system which was in force at the time of Napoleon. They have not understood the modernization of the means of production. Science has developed automation to a point where it is creating problems-


Lucien Lamoureux: For a few minutes, I have been listening with great interest to the hon. member, and I am asking him whether he would be kind enough to tell me in what way his remarks, at the present time, refer to the resolution which is now before the committee and which deals with fiscal arrangements between the federal and provincial governments.


Gilles Grégoire: It is easy to make the connection, Mr. Chairman. The Minister of Finance claims that he will settle everything with taxes. That is why he is bringing in fiscal arrangements, in other words, that is why he is keeping taxes.
On this side we claim that taxes will settle nothing at all. That is crystal clear, Mr. Chairman. You can see for yourself at the end of the year that the amount taken out of your salary as taxes does not settle the problem. On the contrary, it makes you poorer. It is the same thing for all those who are here.
We say that taxes will not settle the problem, but another monetary system.

The Minister of Finance introduces fiscal legislation. We say to him: Look elsewhere to settle the problem. It seems to me that, by proposing another solution to the Minister of Finance, I am remaining within the limits of the subject, since I am helping him to solve his problems.
Mr. Chairman, see what is happening at the present time. We hear about fiscal arrangements between the federal and provincial governments. In other words, the Minister of Finance in Ottawa and the minister of finance in the province of Quebec or the province of Ontario will quarrel to know which one will take the largest amount out of the citizens' pockets. That is the stake.
We say: Do not go and get more, it is not the way the problem facing Canadians and Canada is going to be settled but rather by trying to put more money into the Canadian people's pockets so that they may buy what is produced in Canada.
It is simple, Mr. Chairman, and I believe that my remarks were related to the subject matter of the resolution.
Mr. Chairman, what is the result of levying taxes? The purchasing power of the people is further reduced, they cannot buy the Canadian production, which triggers an economic crisis. Instead of levying further taxes, let us expand our monetary system in accordance with our capabilities and the wealth of our country. Then, we shall be able to put an end to the crises confronting us.
We seem to overlook one thing, and that is that taxes make one poorer, while debt-free credit makes one richer.
A while ago, I heard the hon. member for Burnaby-Coquitlam expounding an idea dear to the heart of the Minister of Finance -they must have studied their economic system at the same school-when he said: the central government must control taxation to be in a position to deal with major inflation and deflation crises. Well, Mr. Chairman, I maintain that taxes have never brought about inflation or deflation, that is to say, they never succeeded in controlling or providing a cure for inflation or deflation. On the contrary, they brought about inflation, the devaluation of the dollar, and deflation, by increasing prices.
When the Minister of Finance imposed a new 11 per cent tax on building materials, we saw building costs rise, at least as regards the purchase of materials, by 11 per cent. Therefore, prices have gone up and this is called inflation.
Federal-Provincial Relations
Who caused inflation in that case? It is not Social Crediters, because they did not impose any taxes, but rather the Minister of Finance. Afterwards, the Minister of Finance and the Minister without Portfolio, who is not here tonight, cry out: Social Credit means inflation. They are the ones who bring about inflation, however, by increasing prices with their taxes.
At the present time, 46 cents out of every dollar spent or earned represent taxes, that is the total of federal, provincial, municipal and school board taxes. This means that prices are increased by 46 per cent because of taxes.
That is what we call inflation, Mr. Chairman. Yet, there are those who claim that by controlling taxes you can control inflation. That is not so; it is only if you control the fiscal system and reduce taxes that you can cause prices to go down. Taxes boost prices and devaluate the currency.
Mr. Chairman, there should be no more quarrels in Canada as to who should get the largest share of taxes; instead, we should strive to set up a new monetary system which would make more sense, be more logical and be based on the realities, the potential and the wealth of the country. When Canada has such a monetary system, that is a system which takes into account not only figures but also the realities, the potential and the natural resources of the country, it will be able to face any crisis.
We never had any genuine depressions in Canada. The 1929-39 and the 1957-58 depressions were not genuine. They were intended by man and by finance, and they were borne by the government, because our governments did not know better.
There was no shortage of goods; potatoes were still growing in fields, industries were operating, means of transport were still existing and developing; businesses were going on more numerous than ever; labour was more abundant than ever; there was no shortage of means of production, of transportation, of sale or of publicity. There was only one single depression: The depression of purchasing power.
Canadians were ready to work in industries to produce the necessary goods but, at the same time, they could not buy their products. Such was the depression which we had, a depression intended by man to make purchasing power scarce in spite of an abundance of goods and wealth.
To be rational, a monetary system should be able to meet all the country's require-

Federal-Provincial Relations ments and develop all its possibilities, without our having to call upon the monetary system of other countries.
We should have in Canada a monetary system capable of satisfying all Canadian needs, without being obliged to ask for credit from other countries.
Instead of raising taxes, of quarrelling over who is going to tax more than the other, instead of increasing taxes, we should see to it that consumers have enough purchasing power to buy what is being produced. That is simple, is it not?


Mr. Knowles:: I wonder whether the hon. member would permit a question?


Gilles Grégoire: Certainly.


Stanley Howard Knowles: In view of the hon. member's criticism of taxation as a method of raising money to meet social needs, would he explain the question which is on the order paper in the name of his leader, the hon. member for Villeneuve, question No. 824, in which he asks what it would cost to pay old age pensions of $100 or $150 a month at age 65 or at age 70 and then asks this question:
By what percentage would Income tax and corporation taxes have to be increased in order to cover these expenditures each year?
Is the hon. member for Villeneuve indulging in some sort of heresy?


Gilles Grégoire: Mr. Chairman, it is easy to answer that question. The hon. member for Villeneuve was intelligent enough to realize that until we occupy the treasury benches, and I am sure it will not be long, we must try to-


Stanley Howard Knowles: But the present Minister of Finance voted for the hon. member's kind of money when he was on this side of the house.


Gilles Grégoire: I know, but he was only talking at that time, with no action. That is the difference.

In fact, the hon. member for Villeneuve realizes that as long as the government will not make up its mind to apply the monetary system of Social Credit, it will have to levy taxes and the hon. member for Villeneuve would at least cope with the most urgent needs, that is, see to it that our older citizens receive an adequate pension earlier because we now realize that when that pension is granted at 70, it is too late.


When the Social Credit come into power -and it will not be long, I can assure the hon. member for Winnipeg North Centre- it will then adopt social security measures which are not based on taxes but on the natural resources of the country.
Instead of paying $1,080 million per year of interest to a few bankers who issue Canadian money, we shall see to it to give this money to our older people in old age pensions. Instead of paying $1,080 million every year in profits, dividends or interests to New York, Chicago, London, Paris or Brussels investors who live comfortably in their own country from the development of our natural resources, a Social Credit government will see to it that this money is paid in Canada, paid to Canadian children as family allowances, scholarships and school allowances. This will be much more logical than what is going on at present.
I think that a government which allows the product of the work and sweat of the Canadian people to go and enrich people from other nations instead of turning it over to the young mothers of our Canadian families, to our senior citizens who need it for medical purposes, I say that the government should be ashamed and that it is disgraceful on its part. The Minister of Finance may be a good accountant but he does not know how to reckon when it comes to meeting the needs of our Canadian families and our elderly people.
It is a shame, it is ridiculous and illogical. This is the most stupid type of administration, when we see that people who have never lifted a shovelful of dirt in our mines, make profits. Why? Because those people enjoy privileges.
All they have to do is to take their pen, create money and lend it to the government for the development of our natural resources. Why could the government not do that? Why could the government not do what some bankers are doing elsewhere?
But, I am asking the socialists who want the state to dominate and control the economy of the country, why are you accepting the fact that a few individuals control the most important sector of our economy, that is the financial or monetary system? I admit, of course, that the government, through the Bank of Canada, controls legal money. The government is still having "Bank of Canada" printed on the bills; they still have the picture of the Queen on them and are signed by the governor of the Bank of Canada-

[Text]	'


Stanley Howard Knowles: Will the hon. member table the document from which he is quoting?


Gilles Grégoire: I will send a photostat.

But the other 92 per cent of the money in circulation in Canada is controlled, not by the government, but by the Canadian chartered banks which, under the law, have the privilege of creating 92 per cent of the money when they have 8 per cent of legal reserves.
The hon. member for Winnipeg North Centre seems to be satisfied with such a situation. Yet, I know that the socialist party once enacted legislation to nationalize the banks. If they nationalize credit at the same time, that is fine; that will be a lesser evil because it is not pens, offices and bank buildings that must be nationalized but a lot more than that. It is the privilege to create credit and control its volume, the most important and far reaching privilege in the world. When one controls credit in a country, one also controls production. That is easy to understand, it seems to me.
Instead of taking that privilege away from them and turning it to the advantage of the Canadian people, the Minister of Finance- [Text]


Stanley Howard Knowles: That is what was said by Mackenzie King.


Gilles Grégoire: Right Hon. Mackenzie
King changed the small five cent coin for the large nickel. That is all he did, and that was his answer for the improvement of the monetary system.
In 1934 and 1935, when hon. Mr. Bennett and his friends were in office, they established the Bank of Canada that took over the control of 8 per cent of the currency, whereas the other 92 per cent remained and still are in the hands of a few bankers. That is the most powerful privilege, and we leave it to them without a word.
If, instead of always taxing the people, the Minister of Finance took that privilege away from a few individuals, he would have a much greater source of income than what he gets from taxes. He could increase family allowances without even increasing taxes. It would be the same for old age pensions. But no, the Minister of Finance keeps on with the old system. He reminds me of people who stick to an old monetary system going back, as I said a while ago, to the Napoleonic era. Indeed, he reminds me of a farmer coming to Ottawa with his ox, his cart, and a cord of wood.
Federal-Provincial Relations The first thing he sees on arriving in Ottawa, like in all other municipalities, is a sign with the words: Speed 30 miles. The farmer then turns back, saying to his ox: Come on fellow, you are unable to do that.


Lucien Lamoureux: I regret to interrupt the hon. member but his speaking time is up, unless he has the unanimous consent of the committee to carry on his remarks.


Some hon. Members:: Yes.


Some hon. Members:: No.


Gilles Grégoire: Mr. Chairman, I will be finished in three minutes-


An hon. Member:: Very well.


Louis-Joseph Pigeon: Provided it is three minutes only.


Gilles Grégoire: Mr. Chairman, I remind you, and even if the hon. member for Joliette-L'Assomption-Montcalm insists on saying no, in which case I would resume my seat, and will say nothing else-but I want to remind you that the hon. member for Burnaby-Coquitlam (Mr. Douglas) and Red Deer (Mr. Thompson) also had the privilege of carrying on without anyone begrudging them three more minutes, and we were the first to agree that they should carry on their remarks.


Lucien Lamoureux: The hon. member will admit that if previous speakers carried on their remarks after their time was up, they did so with the unanimous consent of the committee. Of course, the Chair is at the entire disposal and service of the committee, and if he has the unanimous consent, the hon. member will be allowed to carry on his remarks.


Louis-Joseph Pigeon: Yes.


An hon. Member:: No.


Lucien Lamoureux: Order. The hon. member has not the unanimous consent.


Gilles Grégoire: Who said no, Mr. Chairman? I did not hear a single "no".


Lucien Lamoureux: Has the hon. member the unanimous consent of the house?


Some hon. Members:: Yes.


Mr. Ricard:: Mr. Chairman, I objected to the hon. member keeping on with his remarks for the simple and only reason that we have been listening for at least half an hour to an absolutely irrelevant speech. That is the reason why I object to his continuing to speak in the same vein.
5282	HOUSE OF
Federal-Provincial Relations


Gilles Grégoire: Mr. Chairman, as I must have the unanimous consent of the committee to keep on with my remarks, which I did not get, I will resume my seat. However, I would point out to the hon. member for St. Hya-cinthe-Bagot that it is mean on his part, when the other parties have had the privilege to continue their remarks. In the circumstances, I shall say no more rather than continue to speak to numbskulls like the hon. member for St. Hyacinthe-Bagot.
I would as soon resume my seat than to speak before empty heads.


J.-H.-Théogène Ricard: Mr. Chairman, I rise on a question of privilege. I appreciate that-


Gilles Grégoire: Let him speak, he has nothing else to say.


J.-H.-Théogène Ricard: -the argument of the hon. member was so weak, he had to resort to insults. That is peculiar to him, anyhow.


Lucien Lamoureux: Order.


Gilles Grégoire: My remarks must have been to the point because the hon. member has shown a meanness which he did not show anyone else.


Lucien Lamoureux: The hon. member for
Edmonton West.


Mr. Lamberi:: Mr. Chairman, I always enjoy listening to the hon. member for Lapointe because it offers an exercise in seeing just where he might be relevant. Tonight I think he mentioned the name of the Leader of the Opposition, the name of the hon. member for Burnaby-Coquitlam, the hon. member for Red Deer and the Minister of Finance, but not once did he refer to the resolution or its contents. The resolution which is before us tonight is much like an iceberg, but I do not know that the Minister of Finance has that much sang-froid. If you look at the resolution on the order paper it is a simple thing but one which certainly covers much more than is indicated on the surface. We found this to our surprise the other night.
I was particularly interested in seeing the casual attitude the government adopted in putting this resolution in the order of business that had to be dealt with on the basis of urgency before a certain time. At that time the government did not disclose just how much this resolution covered. Certainly this is not in keeping with the urgency of business, when we realize that this afternoon it was disclosed the other house will


not be called together until July 15. I should like to underline the remarks of the hon. member for Winnipeg South Centre when he was referring to the great concern of the Minister of National Defence about the passage of a certain bill on Monday night, and then we find it will not even come up for consideration in the other place for nine days. I believe, therefore, we must look at this matter with some care.
When the minister began his remarks the other night he came rather close to launching himself as he did on his first budget, but fortunately the hon. member for Ontario brought him back down to earth. The minister mentioned that there was closer consultation in the past year with the provinces, and I would say to him there was closer consultation with the provinces whether or not the government wanted it. We recall the rather hurried conference with the provinces with regard to the municipal loan fund that ran into a blank wall last autumn. Then we have the Canada pension plan, the first version, discussed in November when other matters were discussed with the provinces. This conference was resumed on March 31. Then we had that famous or infamous rump conference, when we understand that some ministers were going in by one door and others were going out by the back door, the one party not knowing the other party had been there before them.
This resolution covers at least seven items. The first is an increase by 25 per cent in the share of the estate tax. This was the result of the conference on November 26 last. Then there is an increase in the abatement on personal income tax by 2 per cent each year for the fiscal years 1965-66 and 1966-67, bringing the new formula up to 24-9-75. Now the equalization is to take into account this abatement, but as the hon. member for Burnaby-Coquitlam indicated this afternoon we would like to know from the Minister of Finance why the 25 per cent increase in the estate tax is not included in the equalization computation.
Then the third item was the one year option for determination of equalization rental applicable in the provinces of Saskatchewan, Manitoba and British Columbia for the years 1957 to 1961-62. This is giving statutory enactment to a practice that has been in existence. Then there is the item dealing with what this administration considers to be the legal interpretation of term 29 of the terms of union with Newfoundland. The former minister of finance announced

that the sum of $8 million would be payable to the end of 1967, that it was a terminable provision. This present administration could do nothing else but satisfy the protestations and the stand taken by the Minister of Transport when he was in opposition. Otherwise it would have been a complete reversal in thinking. I do not believe this government felt it could reverse itself once more because it has done so much of this in the last 15 months. Then the fifth item concerns provincial taxes that have been payable by crown corporations, and there is a payment to be made in lieu of two years collection of taxes by the provinces under this particular provision. I think this is quite fair. In making this provision for the provinces to gain these funds there certainly was a commitment by the previous administration. However, as the hon. member for Red Deer indicated tonight, it still does not remove the sort of odd position that the provinces of Alberta and Manitoba find themselves in, since they have no sales tax.
The sixth item is a 3 per cent abatement of personal income tax in connection with youth allowances, and the seventh is the equalization payments up to the level of the top two provinces, subject to the natural resource revenue deduction.
I thought the minister made a rather plaintive justification of his stand with regard to deficits, and it is very interesting to see him take this position. If we go back over a few years, we had a continuous litany of criticism from his colleagues when they were in opposition, concerning the deficits incurred by the previous administration. This afternoon the Leader of the Opposition indicated quite clearly how those deficits came about, and if it had not been for the greatly increased payments to the provinces, whether by outright grants or conditional grants, there could easily not have been any deficits. The Leader of the Opposition referred to these payments, but I would particularly refer to one item, the Hospital Insurance and Diagnostic Services Act.
In 1957 when the Conservatives took over, this act was on the statute books, but frankly it was a dead horse. There was a provision, if t recall aright, that before the scheme could become operative six provinces, or a combination of provinces having a majority of the population of Canada, had to sign agreements with the government of Canada. We know what the result was. Certainly the Secretary of State for External Affairs, who had been the former minister of national health 20220-335
Federal-Provincial Relations and welfare, could readily see his greatly vaunted piece of legislation was going to remain inactive on the statute books unless certain changes were made.
Those changes were made and soon we had agreements with all the provinces. Today the cost to the crown of Canada under that act is approaching the $400 million mark, and this is something that is not recognized by a lot of those people who comment on federal deficits, and what the administration of this part of government means.
I fully realize and agree with the Minister of Finance on the limited scope he has in dealing with deficits. Now he has recognized, by the action he and his government have taken, that there will be deficits, and that each time there is an increase in payments to the provinces the deficits are going to mount and mount. There is no magical way out of it. Certainly the growth in the gross national product on a standard taxation scale is not going to take care not only of the deficit that has been incurred but also of every future occasion on which the Minister of Finance may be forced to give way more and more.
The Minister of Finance has recognized this principle and therefore put to naught all of the criticisms mouthed by everyone on this side of the chamber in those years, criticisms that the deficits were due to maladministration by the previous government.
1	have always thought there was a great deal of hypocrisy in what was said at that time. The minister was part and parcel of that when he was over on this side and he went through that one great exhibition of voting for debt free money. The minister is going to have to increase taxes or he is going to have to go along with the principle that if he is to give more funds to the provinces he will have to shed responsibilities. He cannot get away from it if he tries for a balanced budget or a reduced deficit.
Let me now comment on the various items that appear in this resolution. I, along with the hon. member for Burnaby-Coquitlam, would like to know why the 25 per cent increase in the estate tax provision was not included in this equalization formula? I rather suspect that again this was part of the tailoring of the end product, that the government wanted to achieve a certain result and it whittled away here and there, and adjusted and patched until it got what it wanted.
So far as the second item is concerned, the
2	per cent increase in the abatement for the

Federal-Provincial Relations I am talking on behalf of all those other provinces who may be thus affected.
We get a completely disproportionate picture with Alberta, which can use these funds just as much as anybody else, and is told, "Oh, well; you have had those resources. You are developing them now, so you are going to be penalized." I think this is wholly wrong. I would like the minister in his reply on this proposal to give us a table showing the effect of the 1961 formula of the 50 per cent of the three year average of natural resources revenue, and how the present and proposed formula is and will be affecting the provinces, because I am sure there are some rather startling changes. I want to know, how does it affect British Columbia, Alberta and Saskatchewan particularly, because I think they are the ones that are getting hurt.
I would also reiterate the remarks made by the hon. member for Red Deer with regard to the Hospital Insurance and Diagnostic Services Act and the deterrent fee. I would also put in a special plea, as I have in previous years, with regard to the province of Alberta and the income tax that is levied on public utilities. I think this is a straight discrimination against a number of companies within one province and it is absolutely unfair even for a new utility to start out facing income tax in competition with a publicly owned utility that does not pay income tax.
In conclusion I would say that the Leader of the Opposition this afternoon put forward certain proposals for a complete fully-fledged conference of dominion and provincial representatives to discuss the realignment of responsibilities with regard to duties and the tax fields that must be allocated to fulfil those responsibilities. I think this is highly overdue and I would say, as did the Leader of the Opposition, that this should not be a two or three-day conference; they must be full-blown, well worked up proposals, because our biggest problems today in the relationships between the federal government and the provinces are in the economic field. So many of our ills, in those parts of the country where there is some unrest, stem from economic conditions and the other factors are merely side factors which unfortunately spill over and blur the picture.
We will be looking forward to seeing what actual legislation the minister intends to bring forward, but I would like to have, in particular, the breakdown with respect to this natural resources revenue and how it will

affect the provinces, compared with the 1961 formula.


Lucien Lamoureux: The hon. member for
Queens (Mr. Macquarrie).


Some hon. Members:: Hear, hear.


Mr. Macquarrie:: Mr. Chairman, I thank my colleagues for their kindness. I am happy to have an opportunity to say a few words in this, what has been up to now, most interesting debate; a debate of good humour, good sense and much good thought. It is a vital subject, that of fiscal relations between the provinces and the central government. I was tremendously impressed by the far reaching, very sound suggestions made by the Leader of the Opposition this afternoon in dealing with this important matter at this very important time. I think he wisely invited us to look to our history. Certainly we Canadians have never been overly interested in our history. Heaven knows, we have not glamourized it. We have seemed to avoid, until recently, very much emotionalism about any symbol of history in so far as our own background is concerned. We are far behind the United States in this regard. I suppose, I, almost instinctively would, like Pavlov's dog, salute the American flag if I ever entered an American classroom, since I was so well indoctrinated on how to regard the flag when I spent a year at school there many years ago. I think of George Washington's certain characteristics, for these too were well ingrained in those who studied in that country.
At this late hour I am not going as far as the Leader of the Opposition in any historic recital, but if we are talking about confederation we want to start at the beginning. That would bring us to the very place I have the honour to represent in this chamber, the birthplace of confederation, the city of Charlottetown, the place where the great idea was bom. I am happy that in recent years we have had some of our Canadian scholars direct their attention to this important conference, which was not fully reported through any such reportorial device as Hansard. Professors Creighton, Waite and Whitelaw have written interesting, interpretive, very fine works on this important stage in our development. It was essential in 1864 to draw together, to shake off some of the smallness of provincialism of an earlier stage. It was necessary to rise out of a sea of troubles; some of them were political troubles, some social troubles, and a great many were economic. A quotation which the hon. member for Burnaby-Coquitlam made this afternoon was extremely

apt, when he said that when you heard a man say that he did not care for the money, it was the principle of the thing, it was really the money that he cared about.
There were long haggles in 1864 both in Charlottetown and Quebec, and in the three years between 1864 and 1867, about fiscal relations, money and the tax dollar, where it would come from and where it would go. This so-called rigid constitution of ours-I realize the British North America Act is only part of our constitution-has never been very rigid at all when it comes to financial matters. If you look at the document today you will find it is extremely different from what it was in earlier days. There have been encroachments, as they are called, by one government against another, although as was pointed out this afternoon not always has the extension of the dominion regime in the fiscal field been an encroachment. So often economic and social problems have become so vast that no level of government lower than the national one can cope with them. One thinks of what happened in the 1930's with regard to unemployment where the lower levels of government sought to deal with this blight on the life of our society.
I should like to say to the members of this committee that we in Prince Edward Island are this year very historically minded. We are celebrating the Charlottetown conference and we hope all hon. members will come and see the cradle of confederation. In fact, we have a rather ornate new cradle which has been built with direct assistance from all provincial governments and the dominion government-the fathers of confederation memorial building. We regard this as a valuable and agreeable exercise in cooperative federalism and we would like everyone to see it.
I remember in my first speech which I ventured to make in this chamber trying to lay aside the base canard that the people of Prince Edward Island in 1864 were very casual about the confederation conference. I knew that concept was wrong, and now we find the historians and archivists discovering that this was not the case at all. Indeed the fathers of confederation were well received, wined and dined; and even George Brown, who seemed to be regarded as a teetotaller in other parts of the country apparently shook off that characteristic in Prince Edward Island. The Canadians were well regarded and treated with respect.


Mr. Crouse:: Did they have any sillabub?
Federal-Provincial Relations


Heath Nelson Macquarrie: Well, whatever it was it was bubbling. In response to this hospitality the Canadians took over the conference, and the rest is a matter of history.
But they had many difficulties then, and no federation in the world has been without them. The host province found them so difficult that they had to stay out for quite a while. New Brunswick voted itself out and then voted itself back again. Nova Scotia tried to get out before 1867. They tried very hard to get out in 1867 and sent 19 members to the House of Commons, all but one of whom pledged to come to Ottawa to take the province out of confederation. I mention this because there are some among us in Canada who believe that the stresses and strains on confederation seem to belong only to this particular era. The Nova Scotians tried again in 1886 and elected a premier who would repeal, not prohibition but confederation. But he did not do this, and 10 years later he came up here and occupied the post of minister of finance in the Laurier government. No doubt that was an improvement in his status.
Even British Columbia, reluctant to enter, was anxious to leave. The Leader of the Opposition referred today to the confederation debates, and I am delighted that the queen's printer has again printed these in a handy volume. I find that some of the speeches made then are inspiring and some are not. Apparently many of the newspapermen, as omniscient then as their successors are now, were scornful of the level of debate and critical of the lack of accomplishment in the old legislature of Canada which in 1865 discussed this great question of confederation.
In Professor Waite's volume of selections from the confederation debates he writes about the evening in which the motion was passed, and there is something so Canadian about it all. He said:
A violent snowstorm descended upon Quebec during the last days of the debate. The final day was March 10, and the debate went on into the small hours of the morning of Saturday, March 11. A vast lobby of members were waiting to vote; unable to endure any more confederation talk, they had eaten and drunk everything the house restaurant and bar could supply, and were lying about the ante-rooms and corridors of the house, impatient for the division bell.
It rang at last at 4.15 a.m., and the members crowded into the chamber. The division on the main motion was 91-33. It was a huge vote: of a house of 130 members, 124 responded-
As the Speaker left the chair members ingloriously indulged themselves in raucous cheering and singing; then, upon the early dawn of a clear,

Federal-Provincial Relations
quiet morning, they trooped wearily home to their lodgings. The convent bell across the St. Charles river was ringing five o'clock.
Yet those debates, if at times indicating that some members were less than enthusiastic, did indicate the desire to grapple realistically with the tremendous problems which united such a diverse group of people and political communities involved.
Since I started with Prince Edward Island as the historic origin of confederation I should like to come back to that province in the contemporary scene, not because it is the most important province-which it is-but because I think it represents a test case in this whole field of dominion-provincial relations. It is the smallest province. It is the one with the narrowest tax base. It has no oil, no gold, no copper and no uranium, even if you could sell uranium nowadays. The proportion of our budget which comes from dominion funds is higher than that of any other province. If I look to the statement of revenue and expenditure for the year ended March 31, 1963 I find that out of a total listing of ordinary revenue of $22,227,000, from the government of Canada comes the amount of $12,892,000. Therefore we must look to Ottawa, not primarily for spiritual leadership but for mundane and pragmatic reasons which are coldly fiscal. For many years we looked, but little saw and less received.
The story of Prince Edward Island's relations with Ottawa is a long one and one surrounded with much intensity, bitterness and immense disappointment. When the Leader of the Opposition today referred to that doughty warrior, the great premier of the 1930's, Dr. MacMillan, he very fully and fairly caught the spirit of our province. Later leaders like Mr. Matheson, the former Liberal premier, expressed themselves very candidly. As Mr. Matheson said, the St. Laurent government did not give us half a deal. There comes to every community, as often in the lives of individuals, a new era, a period of great satisfaction, a period of new opportunities. For us this came in 1957.
We who had been disappointed so long, we who had been troubled about the economic viability of our provincial communities, found that the government elected in June of 1957 moved not only with generosity but with alacrity, and in a matter of months we received through the Atlantic provinces adjustment grants funds greater than we had ever received before and increasing the total of our Ottawa contributions to unprecedented heights.


I know that the Minister of Agriculture believes that statistics are for losers and I will be very sparing in the use of statistics. But one thing which is written large in Prince Edward Island is the contrast between the figure I shall quote for 1956-57 and that for 1962-63 in unconditional and conditional grants from Ottawa to Prince Edward Island. In the year 1956-57 the figure was $5,048,000 and after six years of Conservative administration the figure was $15,035,000, an increase of 300 per cent.
What has that meant to our small province? You have only to go there to see new roads, to see new schools, and if you were one of those who lived in that province you would sense a spirit of optimism, a new feeling of possibilities engendered and fostered by a new attitude in Ottawa and furthered by one of the truly dynamic and great provincial leaders that we have in this country, Premier Shaw.
What is the situation today? I look at the figures of the present Minister of Finance and in the table on page 5184 of Hansard, a part of his interesting statement the other night, I see that out of the first $87,479,000 under the proposed changes in the equalization formula and increased tax abatement my province will receive the princely sum of $553,000. One could say that Prince Edward Island was the Cinderella at that conference, but you would get no ball out of $553,000 nowadays. Rather our province was the Oliver Twist asking for a little more.
In stage two of these new levels of largesse I note that out of $106,662,000 Prince Edward Island squeaks out $678,000. The picture does not improve as I go down the page adding subtotal to subtotal because I find that out of $264,973,000 after the April, 1964 proposals, our province receives $1,621,000. This is most disturbing. We cannot threaten. We cannot coerce by saying that you will lose all the seats in Prince Edward Island. We do not have 75 or 83 or 85 seats. We have only four. But I will say to the Minister of Finance that no matter how sophisticated his formula, whether it is achieved before or after the event, no formula will work in this country which does not have as its essential ingredient a recognition of the tax ability and fiscal needs of the provincial communities making up this country. This is the essence of cooperative federalism.
Premier Matheson was very right when he said in 1957 that the province of Prince Edward Island would disapprove of any financial

arrangement based purely on theoretical calculations designed to meet only one purpose and not the actual financial requirements of the provincial governments. I quote Premier Matheson because of what he said about the former government prior to 1957. I agree with him. He was quite right. They did not give the province half a deal, and I am sorry that the government now in office has seen fit in this instance to revert to the former bad practices.
It is not at all a new thought that the country cannot be strong, cannot be prosperous, if there are parts of it suffering grevious inequalities, unable to provide services for their people at a level comparable to that of other regions in the country. As the late Mr. Norman McLeod Rogers once said, "A federation defeats its primary purpose if through its constitutional arrangements or through policies instituted by the national government it accomplishes the gradual debilitation of one or more of the provincial comunities of which it is composed". Unless some injection of a recognition of fiscal need and fiscal ability is brought to bear, I say to the Minister of Finance that the province of Prince Edward Island will be in a very precarious position. It is my duty to present this case to him and it is his responsibility to make provision for the weakest and the smallest in confederation, his fancy formulae to the contrary notwithstanding.
This is a principle which was well recognized not only in utterances but in action by the government which preceded the government across the way. The then prime minister, the present Leader of the Opposition, opened the dominion-provincial conference in November, 1957. Apparently November was not such a bad month that year although it was a pretty rough one last year. At that time he said:
We believe that this federation cannot thrive in a climate of glaring disparities in levels and standards of service and development as between the several provinces from Newfoundland to British Columbia.
He said that; he believed that. He and his government acted upon it, and not only the Atlantic provinces went forward but no single province suffered as a result of new justice to the Atlantic region and to the other have-not provinces. This is leadership. This is cooperative federalism. This is the kind of responsible leadership we seek, that we call for. We cannot threaten. We can appeal for justice. We can appeal for a special look at the province of Prince Edward Island and
Business of the House at the Atlantic region generally. It seems to me that, of all, we are the ones to suffer most in this particular dispensation. I hesitate to use any word dealing with dispensing because there was so little dispensed, but I think that grammatically it is correct. We want a recognition of the needs of our provinces. This is a great country. Someone has said that no matter how bad the government the country is going along not too badly, and for that we are thankful. I think Canada will survive. I think it will flourish. I think that in a few years time it may perhaps take an extra spurt ahead.
However, we do not want to be left behind. The maritimes did not come into confederation because they loved Ottawa. In fact, what they thought of Ottawa is well recorded by Joseph Howe. They did not come in without making a sacrifice. No federation is made without sacrifice. It is, indeed, in the realm of sacrifice that we made our contribution. From the common strength of a united, prosperous country, we ask justice, we ask consideration of our problems and we point the present government to the clear pattern of its predecessor. They do not have to go back into dusty tomes. They do not have to call in consultants from Toronto or anywhere else. They can look at the record of the former government. They will see what can be done to strengthen confederation, to strengthen this part of confederation which most needs assistance.


Lucien Lamoureux: Shall the resolution carry? [Translation]


Mr. Marlineau:: Mr. Chairman, may I call
it 10.30?

Progress reported.



BUSINESS OF THE HOUSE

Gordon Minto Churchill: May I inquire about the business for tomorrow and Monday?


Mr. MacNaughi:: Mr. Speaker, tomorrow the first item of business will be consideration of two items in the supplementary estimates, namely national defence, 56a and finance, L17a. If these items are approved by the committee, the house will be asked to approve the consequential resolution and pass the various stages of the bill in connection therewith. Then, we will consider main estimates, the departments of agriculture, public works and post office, in that order.
On Monday we will go ahead with the resolution we were discussing this evening.

Proceedings on Adjournment Motion PROCEEDINGS ON ADJOURNMENT MOTION
(Subject matter of questions debated under adjournment motion.)
A motion to adjourn the house under provisional standing order 39A deemed to have been moved:



NORTHERN AFFAIRS


Erik Nielsen: Mr. Speaker, just before 10.30 I was speaking with the minister of northern affairs, who I see is not in the house at the moment, so I must presume his parliamentary secretary has been asked to reply to the question I raised last Wednesday. I tried to ask on Wednesday what action the minister or his department was taking with regard to some 100 telegrams which had been sent to him by individuals and organizations in Whitehorse with regard to the preservation of one of the old river steamers there which is being retained as an article of national historic importance.
It might interest the minister to know that the Whitehorse chamber of commerce, through their own initiative and a committee set up thereunder, raised sqme $6,500 from the merchants and others in Whitehorse for the purpose of establishing the Robert Service park. By their own initiative, the citizens have converted this area into what is now an extremely attractive area for tourists, an ever increasingly important industry not only in Whitehorse but throughout the Yukon and elsewhere in Canada. The same group intends to devote their efforts now to restoring the steamer Klondike, if the minister and the federal government will approve the removal of it from its present site in the area which is just above the Robert Campbell bridge in Whitehorse.
The minister knows there was money in the estimates, just before the government changed, providing for the removal of these items of national historic interest, and that it is the intention eventually to establish this area as a park area in the city of Whitehorse. I believe the deputy minister has informed the Whitehorse chamber of commerce that the target date for establishing this park and the removal of the steamers is 1967, but it has been suggested by the chamber of commerce and other interested parties in city of Whitehorse that this is too late because, if the steamer were moved now by the government, in accordance with the plans made just previous to the change of government, then this

very enterprising group, who merit a lot of credit, would be able to commence work on it immediately because they have just about finished their project on the Robert Service park.
Another suggestion made is that the $6,500 they raised should be restored to them so that they will have a sort of revolving fund for working capital. The minister is aware that there is a plan and provision is made in the estimates where 50 per cent of the costs of construction of camp grounds and picnic sites is borne by the federal government and 50 per cent by the territorial government, yet these enterprising citizens raised these funds on their own and established this park. Therefore there is greater justification in providing these citizens with the revolving fund for which they ask. It will be spent next on the restoration of the streamer Klondike, which will take this burden away from the federal government, a burden to which it was committed prior to the change of government.
The evidence of the concern of the citizens of Whitehorse and the Yukon generally is very apparent in the number of telegrams that have been forwarded to the minister and his officials. I would suggest that very serious and favourable consideration be given to the request that has been made of the minister, and that he might be in a position this evening to advise the people of Whitehorse and the Yukon generally, through the medium of his answer to my question, that he will be acting upon it soon, and acting upon it favourably.


Mr. J. N. Turner (Parliamentary Secretary to Minister of Northern Affairs and National Resources):: Mr. Speaker, when we heard the question of the hon. member for Yukon (Mr. Nielsen) yesterday, it was posed in general terms about 100 telegrams from individuals and others in the Yukon concerning the preservation of historic articles of national importance.
The minister and myself, having travelled widely in the Yukon and knowing how many articles there are of national historic interest in so many quarters of the Yukon-in Dawson city and in Whitehorse itself-from the tenor of the question we were not aware at the time what the hon. member was driving at. Of course we had received telegrams concerning the boat in Whitehorse, and I am glad to see now that the hon. member has himself done some research and reduced the general question to a specific plea this evening.


Erik Nielsen: Did you receive 100 telegrams about anything else?


John Napier Turner: We have constant correspondence with the Yukon on a number of subjects. I might say in connection with the restoration of this boat, one of the three boats which were donated to the people of the Yukon and the people of Canada in 1960, our western regional engineer, Mr. Tom Fenton, is today in Whitehorse looking over the situation.
I know that the hon. member for Yukon represents a resourceful people. Only two weeks ago when I visited the flood areas in Dawson city and Mayo I found them to be people who wanted to stand on their own feet and were quite able within their own resources to support themselves. I know they would want to arrange a method whereby they could share the cost of the proposed territorial park with the federal government and thereby the people of Canada as a whole.
This government, as was the case with the former administration, is willing and anxious to restore that boat. I would remind all the people of Whitehorse and of the Yukon that they should let the government know what their plans are for the development of the park. This commitment to the people of Whitehorse, limited as it is to the restoration of the boat, is the same commitment as the earlier administration made-no more and no less. We are in constant communication with the chamber of commerce of Whitehorse and look forward to their proposals for sharing the cost of the development of a territorial park against which the government would contribute the cost of restoring the boat.



AGRICULTURE


Clément Vincent: Mr. Speaker, yesterday, Wednesday July 8, the hon. member for Joliette-L'Assomption-Montcalm (Mr. Pigeon) directed the following question to the government:
-whether the government intends to introduce, during the first part of the session, in case we have a vacation, legislation to reduce the cost of feed grains for eastern farmers, in view of the fact that Quebec's agriculture is going to the dogs?
The Minister of Forestry (Mr. Sauve) replied to this question, as can be seen on page 5206 of Hansard:
Mr. Speaker, you might allow me to reply and say that we are now considering the matter. I think that next week, we will probably be in a position to announce a decision concerning the payment of trucking charges for feed grains, for all farmers in eastern Canada.
9, 1964
Proceedings on Adjournment Motion
In that connection, I directed the following question to the Minister of Forestry:
Mr. Speaker, I should like to direct a supplementary question to the Minister of Forestry. Can he tell the house whether the studies in progress at present include the suggestion made by the Canadian Federation of Agriculture and the Catholic farmers union, regarding the setting up of a feed grain agency for eastern Canada?
Mr. Speaker, this government has been in office for 15 months already. Last year, on this side of the house, with the support of the agricultural organizations in the country, we called for the establishment of a feed grain agency for eastern Canada.
The government agreed that the agricultural committee would meet to consider this question. The committee sat until December 1963, on the understanding that it would resume its proceedings the moment the present session started.
Today is July 9, 1964, and the proceedings of the committee on agriculture, as regards feed grain, have not yet resumed. That is why I asked the Minister of Forestry, who is now responsible for the feed grain policy in eastern Canada, whether the current survey concerned the establishment of that agency, as requested for so long by the farmers and the agricultural organizations, as well as by several members of the house.
I would therefore appreciate it if the Minister of Forestry would tell the house, and also the farmers in eastern Canada, what progress has been made with that survey and whether the present government intends to set up, as suggested, a feed grain agency for eastern Canada.


Maurice Sauvé: Mr. Speaker, on August 22, 1963, the Minister of Agriculture (Mr. Hays) announced that from October 15, 1963 to April 15, 1964, the government would pay accumulated storage charges with regard to western grain stored in authorized elevators in eastern Canada. This was the first concrete step to help eastern farmers with regard to feed grains.
At the beginning of last year's session, the committee on agriculture devoted several sittings to the problem of feed grains and, at the time of the adjournment, it was asked that the problem be again referred to the committee.
On June 24, the house passed a motion to refer to the standing committee on agriculture and colonization matters relating to the prices of feed grains.
Because the committee showed a great interest in the study of the problem concerning

Proceedings on Adjournment Motion the setting up of a feed grain agency, we thought that it would be wise that it should carry on with that work and that study in order to submit its recommendations as soon as possible.
I do not think that any legislation will be announced before the house adjourns for the summer recess since the Prime Minister (Mr. Pearson) has already explained clearly the government legislative program before resuming the flag debate. However, I said in the house yesterday that I thought it would be possible, probably next week, to announce a new policy regarding the payment of transportation costs, by truck, of feed grain to all parts of the eastern Canadian provinces as well as those of British Columbia.
It is well known that feed grains are delivered to ports along the St. Lawrence and the Atlantic and are shipped afterwards by railway cars. Now, I think that I will be in a position to announce that this grain may be shipped by trucks which will be subsidized to standardize the cost of feed grains everywhere in eastern Canada.
It will be an extremely interesting piece of legislation made possible by the civil service commission's appointment of Mr. Benoit Lavigne to the position of administrator of assistance to feed grain transportation, within the Department of Forestry, which was made public on June 13.
As the house knows, on March 5 I was entrusted with the application of that policy and I immediately asked the civil service commission to appoint a director. Since his appointment was announced on June 13, Mr. Lavigne, an economist in agricultural science from Wisconsin University, has been working for us in Ottawa where he has already prepared a brief and an order in council concerning the payment of trucking costs.


Mr. Deputy Speaker:: Order. I regret to interrupt the minister but his time is up.



TRADE-TOBACCO-STEPS TO DISPOSE OF SURPLUS

Louis-Joseph Pigeon: Mr. Speaker, since about 18 months, the tobacco farm co-operative corporation of the Joliette region, St. Jacques, county of Montcalm, has a surplus of 1 million pounds of unsold cigar tobacco. What does the Minister of Trade and Commerce intend to do to sell that tobacco surplus, particularly on foreign markets? The co-operative bought that tobacco and paid the farmers. The only way to protect cigar tobacco growers
of the province of Quebec resides in the revision of the Customs Tariff to partly control the imports of cigar tobacco of the kinds which can be grown in the province of Quebec.
Mr. Speaker, at this stage of my remarks, may I call the attention of the house to the fact that for the province of Quebec, the cigar industry is very important. Over 95 per cent of the cigars made in Canada are made in Quebec. It is estimated that manufacturers pay annually more over $5 million in salaries. Besides, the treasury of the province levies over $650,000 in taxes on the sale of cigars.
Besides those advantages-


John Napier Turner: Mr. Speaker, could the hon. member identify the document he is reading from?


Louis-Joseph Pigeon: Mr. Speaker, I shall do so at
the end of my remarks.


John Napier Turner: We are enormously interested in that.


Louis-Joseph Pigeon: Mr. Speaker, I suggest to the hon. member that he be patient.
Besides those advantages which contribute to the prosperity of the nation, the central government gets annual receipts estimated at $6 million from the cigar industry made up approximately as follows: $1 million in excise duties; $3 million in excise tax; $2 million in sales tax. To these amounts must be added the customs duties collected on imported tobacco, about which we have no information.
These figures are published in a brief which was presented this morning to the standing committee on agriculture and colonization by the societe cooperative agricole de Saint-Jacques.
Mr. Speaker, I should also like to quote some extracts from another brief which was presented to the federal government:
Custom duties. These duties are applicable to imported tobacco bought mainly from the United States and Cuba. They are 12j cents per pound for unstemmed leaves and 20 cents for stemmed leaves, that is leaves without the middle rib.
It should be noted here that there is a trend towards a gradual decrease in tariffs, as shown in the following table:
Changes in the Customs Tariff-Tobacco, unmanufactured (for cigars)
Year	Unstemmed lb (pound) Stemmed (lb)
1936-Budget	$0.40
1948-January	1	0.20
1951-June 6	0.15
1956-June 30	$.121



$0.60 0.30 0.22J 0.20

[Stage Direction]
We may add that the tariff with regard to other types of tobacco (N.O.P.) has not changed since 1948, being limited to $0.20 a pound for unstemmed tobacco leaves.
Mr. Speaker, it is high time that at the next GATT meeting in Geneva, the Minister of Trade and Commerce should stress the precarious position of our cigar tobacco growers in the province of Quebec, so as to obtain a tariff increase against this kind of tobacco, which we are able to produce in Canada. Indeed, I think we might be well advised to increase the tariff to 40 cents a pound, in order to protect cigar tobacco growers whose contribution to the Canadian economy is quite substantial. Moreover, the cigar industry is pouring millions of dollars, not only in salaries, but in taxes into the coffers of the governments, federal and provincial.
Mr. Jean-Luc Pepin (Parliamentary Secretary to Minister of Trade and Commerce):: Mr. Speaker, despite the eloquence of the hon. member for Joliette-L'Assomption-Mont-calm, and the depth of the arguments to support his case, it nevertheless remains that there are still many obscure spots in the picture he painted for us.
We may wonder, for instance, whether the problem he pointed out is new, or how long it has been with us? Is there an endemic or epidemic over production in his riding? One can also wonder if representations have been made. He mentioned one or two, but we would like to know to whom they were made.
I am also told that in the hon. member's riding, cigar tobacco is usually bought from the St. Jacques co-operative by Canadian manufacturers and that growers are normally satisfied to produce the quantity required by those manufacturers.
One may wonder then what could have happened. Those are matters, Mr. Speaker, that I shall be only too glad to discuss with the hon. member.


Louis-Joseph Pigeon: No, right here in this house.


Jean-Luc Pepin: This afternoon I consulted the officials of the Department of Trade and
9. 1S64	5293
Proceedings on Adjournment Motion Commerce and, to their knowledge, nobody ever heard of that problem.


Louis-Joseph Pigeon: It is time that you hear about it.


Jean-Luc Pepin: Perhaps someone should tell us about it.
Two very important Canadian buyers have been consulted by one of our officials and they were very surprised to hear the report.
The hon. member suggests an increase in the customs tariff. I need not remind him that this is a Conservative answer. I need not remind him either-at least according to my information-that the problem existed already when the Conservative government was in office.


Louis-Joseph Pigeon: There was no surplus three years ago.


Jean-Luc Pepin: There was no surplus? Those circumstances are rather unusual.
Anyhow, if there is an injustice the hon. member will have to bring it to the attention of the Robertson committee, which is responsible for investigating these problems in order to work out a Canadian policy for the Geneva conference.
That being said, Mr. Speaker, the department is ready to help tobacco growers. I shall personally see the hon. member for Joliette-L'Assomption-Montcalm and we shall invite the president of the co-operative to meet the experts of the department.
For constitutional reasons cherished by the hon. member, I do not think that we may discuss the possibility of selling in the province of Quebec, since it would be an interference in a field of provincial responsibility, but it is possible to consider the situation as far as exports are concerned.


Mr. Deputy Speaker:: The time of the hon. member is up.

Motion agreed to and the house adjourned at 11 p.m.
20220-336J



APPENDIX


[Stage Direction]
Appendix "B" to Federal-Provincial Conference, 1963
[Stage Direction]
1956-57
[Stage Direction]
1957-58
[Stage Direction]
1958-59
[Stage Direction]
1959-60
[Stage Direction]
1960-61
[Stage Direction]
1961-62
[Stage Direction]
Preliminary Estimates 1962-63 1963-64
[Stage Direction]
Total
[Stage Direction]
A. Unconditional grants 1. Statutory subsidies
[Stage Direction]
20,571
[Stage Direction]
20,571
[Stage Direction]
20,571
[Stage Direction]
20,748
[Stage Direction]
20,689
[Stage Direction]
23,530
[Stage Direction]
23,530
[Stage Direction]
23,586
[Stage Direction]
173,796
[Stage Direction]
2.
[Stage Direction]
lax abatements (estimated, excludes abatement to Quebec re university grants)
[Stage Direction]
157,281
[Stage Direction]
278,964
[Stage Direction]
277,616
[Stage Direction]
319,830
[Stage Direction]
311,449
[Stage Direction]
327,199
[Stage Direction]
716,328
[Stage Direction]
751,259
[Stage Direction]
3,139,926
[Stage Direction]
3.
[Stage Direction]
Tax rentals*1)
[Stage Direction]
365,938
[Stage Direction]
213,868
[Stage Direction]
249,039
[Stage Direction]
279,730
[Stage Direction]
288,663
[Stage Direction]
312,562
[Stage Direction]
9,088
[Stage Direction]
1,718,887
[Stage Direction]
4.
[Stage Direction]
Equalization
[Stage Direction]
-
[Stage Direction]
135,978
[Stage Direction]
143,438
[Stage Direction]
182,985
[Stage Direction]
189,655
[Stage Direction]
164,734
[Stage Direction]
176,643
[Stage Direction]
152,883
[Stage Direction]
1,146,316
[Stage Direction]
5.
[Stage Direction]
Stabilization
[Stage Direction]
-
[Stage Direction]
3,458
[Stage Direction]
5,676
[Stage Direction]
-2,315
[Stage Direction]
2,327
[Stage Direction]
3,143
[Stage Direction]
-3,691
[Stage Direction]
8,598
[Stage Direction]
G.
[Stage Direction]
50% share of federal estate tax
[Stage Direction]
-
[Stage Direction]
-
[Stage Direction]
16,628
[Stage Direction]
9,965
[Stage Direction]
26,593
[Stage Direction]
7.
[Stage Direction]
50% share of income tax on power utilities
[Stage Direction]
6,613
[Stage Direction]
7,360
[Stage Direction]
8,682
[Stage Direction]
4,753
[Stage Direction]
4,226
[Stage Direction]
6,397
[Stage Direction]
10,000
[Stage Direction]
8,450
[Stage Direction]
56,481
[Stage Direction]
8.
[Stage Direction]
Atlantic provinces adjustment grants. ..
[Stage Direction]
-
[Stage Direction]
-
[Stage Direction]
25,000
[Stage Direction]
25,000
[Stage Direction]
25,000
[Stage Direction]
25,000
[Stage Direction]
35,000
[Stage Direction]
35,000
[Stage Direction]
170,000
[Stage Direction]
9.
[Stage Direction]
Iransitional grant (Nfld.)
[Stage Direction]
2,250
[Stage Direction]
1,400
[Stage Direction]
1,050
[Stage Direction]
700
[Stage Direction]
350
[Stage Direction]
5,750
[Stage Direction]
10.
[Stage Direction]
Nfld. additional grant
[Stage Direction]
-
[Stage Direction]
-
[Stage Direction]
13,550
[Stage Direction]
7,300
[Stage Direction]
7,650
[Stage Direction]
8,000
[Stage Direction]
8,000
[Stage Direction]
8,000
[Stage Direction]
52,500
[Stage Direction]
Sub-total
[Stage Direction]
552,653
[Stage Direction]
661,599
[Stage Direction]
744,622
[Stage Direction]
838,731
[Stage Direction]
850,009
[Stage Direction]
870,565
[Stage Direction]
991,526
[Stage Direction]
989,143
[Stage Direction]
6,498,848
[Stage Direction]
B. Conditional grants 1. Agriculture
[Stage Direction]
938
[Stage Direction]
1,037
[Stage Direction]
1,864
[Stage Direction]
6,729
[Stage Direction]
3,788
[Stage Direction]
5,174
[Stage Direction]
3,279
[Stage Direction]
9,677
[Stage Direction]
32,486
[Stage Direction]
2.
[Stage Direction]
Health
[Stage Direction]
36,438
[Stage Direction]
34,596
[Stage Direction]
45,909
[Stage Direction]
45,975
[Stage Direction]
47,942
[Stage Direction]
48,951
[Stage Direction]
50,900
[Stage Direction]
51,211
[Stage Direction]
361,922
[Stage Direction]
3.
[Stage Direction]
Hospital insurance
[Stage Direction]
-
[Stage Direction]
-
[Stage Direction]
54,708
[Stage Direction]
150,593
[Stage Direction]
188,938
[Stage Direction]
283,209
[Stage Direction]
336,000
[Stage Direction]
383,900
[Stage Direction]
1,397,348
[Stage Direction]
4.
[Stage Direction]
Welfare
[Stage Direction]
38,353
[Stage Direction]
48,149
[Stage Direction]
74,072
[Stage Direction]
90,860
[Stage Direction]
102,790
[Stage Direction]
143,507
[Stage Direction]
159,042
[Stage Direction]
173,672
[Stage Direction]
830,445
[Stage Direction]
5.
[Stage Direction]
Fitness and amateur sport
[Stage Direction]
-
[Stage Direction]
-
[Stage Direction]
-
[Stage Direction]
-
[Stage Direction]
-
[Stage Direction]
322
[Stage Direction]
929
[Stage Direction]
1,251
[Stage Direction]
6.
[Stage Direction]
Vocational training, etc
[Stage Direction]
4,668
[Stage Direction]
4,765
[Stage Direction]
8,057
[Stage Direction]
8,371
[Stage Direction]
8,668
[Stage Direction]
35,921
[Stage Direction]
206,572
[Stage Direction]
156,604
[Stage Direction]
433,626
[Stage Direction]
7.
[Stage Direction]
Highways and transportation
[Stage Direction]
26,909
[Stage Direction]
50,943
[Stage Direction]
53,669
[Stage Direction]
56,834
[Stage Direction]
54,228
[Stage Direction]
40,873
[Stage Direction]
29,335
[Stage Direction]
51,805
[Stage Direction]
364,596
[Stage Direction]
8.
[Stage Direction]
Resource development
[Stage Direction]
2,717
[Stage Direction]
4,314
[Stage Direction]
8,741
[Stage Direction]
15,266
[Stage Direction]
17,916
[Stage Direction]
21,472
[Stage Direction]
24,203
[Stage Direction]
26,330
[Stage Direction]
120,959
[Stage Direction]
9.
[Stage Direction]
Civil defence
[Stage Direction]
814
[Stage Direction]
968
[Stage Direction]
1,025
[Stage Direction]
1,563
[Stage Direction]
2,245
[Stage Direction]
3,079
[Stage Direction]
5,405
[Stage Direction]
5,300
[Stage Direction]
20,399
[Stage Direction]
1 .
[Stage Direction]
Municipal winter works
[Stage Direction]
-
[Stage Direction]
-
[Stage Direction]
249
[Stage Direction]
6,584
[Stage Direction]
8,908
[Stage Direction]
24,249
[Stage Direction]
27,290
[Stage Direction]
29,530
[Stage Direction]
96,810
[Stage Direction]
11.
[Stage Direction]
Other
[Stage Direction]
137
[Stage Direction]
72
[Stage Direction]
62
[Stage Direction]
62
[Stage Direction]
100
[Stage Direction]
7
[Stage Direction]
-
[Stage Direction]
2,000
[Stage Direction]
2,440
[Stage Direction]
Sub-total
[Stage Direction]
110,974
[Stage Direction]
144,844
[Stage Direction]
248,356
[Stage Direction]
382,837
[Stage Direction]
435,523
[Stage Direction]
606,442
[Stage Direction]
842,348
[Stage Direction]
890,958
[Stage Direction]
3,662,282
[Stage Direction]
C. Payments for the benefit of provincial institutions 1. University grants (including net value abatement to Quebec)
[Stage Direction]
16,049
[Stage Direction]
16,558
[Stage Direction]
25,524
[Stage Direction]
26,112
[Stage Direction]
26,708
[Stage Direction]
27,249
[Stage Direction]
37,062
[Stage Direction]
37,722
[Stage Direction]
212,984
[Stage Direction]
2.
[Stage Direction]
Grants to municipalities in lieu of taxes on federal property
[Stage Direction]
9,676
[Stage Direction]
17,535
[Stage Direction]
21,852
[Stage Direction]
22,551
[Stage Direction]
24,600
[Stage Direction]
24,888
[Stage Direction]
29,077
[Stage Direction]
28,579
[Stage Direction]
178,758
[Stage Direction]
Sub-total
[Stage Direction]
25,725
[Stage Direction]
34,093
[Stage Direction]
47,376
[Stage Direction]
48,663
[Stage Direction]
51,308
[Stage Direction]
52,137
[Stage Direction]
66,139
[Stage Direction]
66,301
[Stage Direction]
391,742
[Stage Direction]
TOTAL
[Stage Direction]
689,352
[Stage Direction]
840,536
[Stage Direction]
1,040,354
[Stage Direction]
1,270,231
[Stage Direction]
1,336,840
[Stage Direction]
1,529,144
[Stage Direction]
1,900,013
[Stage Direction]
1,946,402
[Stage Direction]
10,552,872
[Stage Direction]
(1) The recovery of the overpayments under the 1952 agreement for the fiscal years 1957-58 to 19G1-62 has not been deducted from the tax rental payments for these provinces: Newfoundland $102,315 per annum; Prince Edward Island $228,221 per annum; New Brunswick $182,201 per annum; Manitoba $209,938 per annum and Saskatchewan $304,180 per annum.
5294	HOUSE OF COMMONS
[Stage Direction]
Friday, July 10, 1964