1964-03-16

THE LATE HON. J. R. GARLAND

Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, it is my hard and indeed melancholy duty to inform the house officially of the passing of one of our parliamentary colleagues who was, I think, a friend of us all; Jack Garland, the Minister of National Revenue. He was a man who was young in years but a veteran in service to his community and his country, having been a member of this house now for more than 14 years.
Jack Garland was the last person I saw on Friday night as I was walking down the corridor to go home, and the last word I had with him was to receive from him an assurance that he thought he had found a way of helping some householders who were in difficulty over their mortgages in a Central Mortgage and Housing Corporation housing project. This was typical of him, because he was always trying to help people.
I think the best evidence of the quality of a man is his reputation among those with whom he has lived, and any visitor to North Bay would have learned at once how Jack Garland met that test, how he was regarded in his own community with warmth, admiration and affection by everyone. He had earned and won their deep respect, and that feeling of admiration and respect was,
I think, shared by every member on all sides of this house, because we were all his friends.
As a member of the house he was courteous and painstaking in the discharge of his duties. As a ministerial colleague he was quietly competent, firm but conciliatory, with the good judgment and the common sense that had made him successful in business. Mr. Speaker, he was a big man in every sense of the word and he was a good man in every sense of the word. He was a gentle man and he was a gentleman, generous and kind, and we shall miss him sorely.
I send, Mr. Speaker, our heartfelt sympathy to his mother and father who survive him, and above all to his wife, who shared his life so fully and devotedly and who is now bearing such a heavy burden of grief. We send her our deep and heartfelt sympathy as well as our prayers at this sad time for her.


Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, it seems strange that two of the younger members of the house should be the first to be taken in the present parliament.
Jack Garland was indeed a friend to everyone. He enjoyed the respect of all members regardless of their party affiliations. He gave the same attention to the requests of those who disagreed with him as he did to those who politically agreed with him. As the Prime Minister has stated, he was here for 14 years, and during that time he built for himself a reputation as a kind, gentlemanly person, a man whom all of us were proud to call a friend. I could repeat the eulogy of the Prime Minister in toto. I simply say that, in the words he used he epitomized the views of Her Majesty's loyal opposition.
To the widow and to his parents goes the sympathy of this house in their bereavement. Parliament was a better place because of his presence. Of no one can more be said.


Mr. T. C. Douglas (Burnaby-Coquitlam):: All of us were shocked and saddened by the news of the death of Hon. J. R. Garland, Minister of National Revenue. It is a sad occasion when any man is cut off in the prime of life, but it is especially so when that man is of the calibre of Jack Garland. He was one of the most popular ministers in the government. His friendliness and sincerity impressed all of us. We admired him for the efficient and conscientious manner in which he discharged the responsibilities of his office.
I am sure many hon. members have had the experience of raising some matter in the house pertaining to the Department of National Revenue or to the Central Mortgage and Housing Corporation, only to receive a phone call in a few hours and hear a warm, friendly voice saying "This is Jack Garland. I am calling you to tell you what we are doing about the matter you raised in the house." Any irritation one might have felt melted away in the presence of this kindly man who was so clearly doing a job and doing it well.
The House of Commons will be the poorer for his passing. We mourn him as one we could ill afford to lose, and one whose contribution to the public life of Canada merits our admiration and commendation. The members of the New Democratic party extend to his wife and relatives, to his constituents

The Late J. R. Garland and to his colleagues in the government our deepest sympathy at the great loss which they have sustained. We too feel we have lost a good friend and a worthy colleague.


Mr. R. N. Thompson (Red Deer):: We join with the Prime Minister, with the Leader of the Opposition and with the leader of the New Democratic party in expressing our sorrow and our regret at the passing of John Garland.
Certainly all that has been said is true and characteristic of this man. I would say personally that it has been worth being here just to have known him. He was a big man, a big man in every sense of the word, too; entitled to be called a gentleman, a man whose heart reached out to the welfare and need of others.
Two things that happened in the last few days will mark my memory of him. One was a conversation just outside the doors of the chamber where we stopped to speak about a problem, and I am sure he had many similar problems brought to his attention. After he had explained his position we talked a little about his health, and he assured me that he was physically well and enjoying the heavy responsibilities of the difficult position of Minister of National Revenue. The other was to open my mail this morning and find a letter from him, which must have been signed on Friday afternoon before his passing, and to be thus reminded again of how faithful and careful he was in discharging his responsibilities.
Personally and on behalf of the members of the Social Credit party I extend our sympathy to his widow, to his parents and to the Prime Minister and each member of his party in the untimely passing of one of the most distinguished members of the house. All of us consider it something to be proud of to have been counted as one of his friends and to have been associated with him.


Mr. Real Caouette (Villeneuve):: Mr. Speaker, the sudden and untimely death of the Hon. John Richard Garland took everybody by surprise. We all got to know him in this house and, for my part, I had known him since 1949.
Mr. Garland was still relatively young and his passing came as quite a shock to us all, both in this house and outside. In the federal cabinet he headed a department which is not too popular in Canada and yet he had gained for himself the reputation of being a man of integrity and a hard worker. As the leaders of the other groups in this house have just said, I think all hon. members always enjoyed meeting him and talking with him, because

he was obliging and dealt squarely with problems we brought to him.
To his father, his mother, his wife, his whole family and his electors in Nipissing, we extend our most sincere sympathy. We truly regret that he will no longer be with us.


Mr. J. J. Greene (Renfrew South):: Mr. Speaker, Jack Garland was out of the Ottawa valley. As is our traditional tragedy, he left the valley to seek a livelihood. The people of the north took him to their hearts, and their gain was our great loss. On behalf of myself and my people I offer to Mrs. Garland and his loved ones our condolences. Jack Garland was of a rare and singular breed of men. He was by nature, by inclination and in practice a gentleman. We, his friends of the valley and all of us here, shall miss him.



PRIVILEGE


Mr. Gilles Gregoire (Lapointe):: Mr. Speaker, I rise on a question of privilege.
I move, seconded by the hon. member for Villeneuve (Mr. Caouette):
That in view of the unacceptable actions of the Deputy Speaker, the hon. member for Stormont, during the sitting on Friday, March 13, 1964, from 8 to 10 p.m.-
1.	In transgressing a standing order of the house which requires that unanimous consent be given to waive the obligation for two days' notice of the presentation of a resolution prescribed by standing order 41;
2.	In transgressing standing order 42 of the house which requires that the member who presents a motion of urgency, with the unanimous consent of the house, without notice thereof as required in standing order 41, must previously explain the urgency of the same; and
3.	In depriving certain members of the house of a right and privilege recognized by the standing order;
For these reasons, be it resolved that the Deputy Speaker no longer has the confidence of this house.


Mr. Speaker:: I may say that the Chair is considerably surprised by this motion, but it is not my place to make any further comments along that line. However, I have to determine now whether or not there is a question of privilege. I have not the slightest difficulty in arriving at the conclusion there

is no question of privilege. If there is anything it would be a point of order, which must be taken at the time, against certain proceedings which took place in the house.
I have read the debate of Friday afternoon to which this relates, and it seems to me that a clear exposition was given by the hon. member for Winnipeg North Centre at page 922 of Hansard, with which the Deputy Speaker agreed. If I need any more authority-


Some hon. Members:: Oh, oh.


Mr. Speaker:: -I was referring to the Deputy Speaker-I would refer hon. members to Beauchesne's fourth edition, citation 70, subsection 4, which reads as follows:
A point of order against procedure must be raised promptly and before the question has passed to a stage at which the objection would be out of place.
It seems to me, therefore, it is self evident that under the circumstances there is no question of privilege.


Gilles Grégoire: Mr. Speaker, If I am to be
allowed to introduce that motion, I think it should be done today, according to subsection 3 of Beauchesne's citation 72 which states:

If a member wishes to challenge the action or conduct of the Speaker on any matter other than an appeal from his decision, he must proceed by giving two days' notice of a motion on the subject and by bringing the matter up as a separate question, except, of course, if it be a question of privilege, when it may be taken up as such.

Mr. Speaker, I am therefore giving two days' notice of a motion to be introduced in the house. I believe I did so just as you were calling the motions, and I gave two days' notice in order that the matter be considered.
Subsection (4) of the same citation 72 actually mentions that on June 14, 1956, Hon. George Drew, then leader of the opposition, moved a similar motion and that the Speaker put it to the house. It was a motion of censure regarding the Speaker's behaviour at that time, and the motion I am moving today also concerns the behaviour of the Deputy Speaker last Friday evening.



VETERANS AFFAIRS


Hon. Roger Teillet (Minister of Veterans Affairs):: Mr. Speaker, a few weeks ago I promised to make a statement with reference
Statement on Veterans Hospitals to the treatment services of the Department of Veterans Affairs. I have the statement here. It is a rather long one, and if I could have the permission of the house to have it printed as an appendix to Hansard it would save time. It is three foolscap pages long and it would take me seven or eight minutes to read it.


Mr. Speaker:: Is it agreed?
Right Hon. J. G. Diefenbaker (Leader of the
Opposition): Mr. Speaker, I think this is a very bad practice. It may take seven or eight minutes, but we should not have placed on the record a statement made by the minister which, if not agreed with by any hon. members, would not be open to challenge. While it may take time, and this may not be the appropriate time for it, none the less I register strong objection against this course. To follow it would be simply to make the House of Commons a place in which governmental statements could be made, and hon. members could only ascertain afterward what they were by reading Hansard.


Mr. Speaker:: Is it the desire of hon. members that the statement should now be read?


Some hon. Members:: Agreed.


Roger-Joseph Teillet: On February 25 last, in reply to a question by the hon. member for Burn-aby-Coquitlam, I promised to make a statement to the house regarding the future of the Colonel Belcher hospital in Calgary as soon as the government was in a position to be specific on the action it intended to take in this regard. The interest shown both inside and outside the house concerning the future of the hospitals operated by the Department of Veterans Affairs is such that I think a general statement at this time could do much to clear misunderstandings and remove misgivings.
No one is more conscious than the government of the magnitude of the debt we owe to those thousands of Canadians who were prepared to sacrifice their lives to preserve the integrity and way of life of Canadians. Many thousands of these men never came home. For those there is nothing of a tangible nature we can do except perpetuate their memory and make provision for their widows and children. But for those who did return, many of them mentally or physically crippled for life, there is a lot that can be done. Indeed, a lot has been done. The body of legislation collectively known as the veterans charter, designed to rehabilitate returning servicemen back into civilian life, has been remarkably successful.
Not the least of these tangible expressions of gratitude are the treatment services of various kinds that have been made available to disabled veterans. Veterans hospitals have

Statement on Veterans Hospitals come to mean different things to different people. They were originally designed to assist in the over-all project of rehabilitation back into civilian life, and to provide a continuing source of treatment for service incurred disabilities. With the passage of years, and as space became available, the facilities have come to be used more and more by veterans without service connected disabilities, particularly by those who qualified for treatment on the basis of indigency. This was a praiseworthy activity and one which would gladly be continued, were it not for the fact that the nature of the patient load on our hospitals today is beginning to threaten our ability to provide the kind of treatment which the war disabled veteran is entitled to receive.
I think we might profit by casting a quick glance at what happened to veterans hospitals between the end of world war I in 1918 and the beginning of world war II in 1939. As many hon. members will remember, our veterans hospitals progressively deteriorated until, during the last few years before the outbreak of world war II, they had earned a deservedly unenviable reputation.
This was due to a number of different causes. Undoubtedly the most important of these was that as the years went by the nature of the patient load in these institutions shifted from one which was predominantly active to one made up, in the main, of veterans suffering from chronic illnesses for which little could constructively be done, or who were too aged and feeble to look after themselves. In short, the complex of our hospitals had gradually changed from a series of well equipped institutions staffed by energetic and competent groups of men and women to a series of rest homes with obsolescent facilities and to which it became virtually impossible to attract high calibre medical specialists and nursing staff.
We must profit by that lesson and not repeat that mistake. The standard of treatment provided by the department in its hospitals since the end of world war II has been extremely high. It is my earnest desire, as it is that of my colleagues and, I am sure, of all hon. members that this should continue to be so. However, the likelihood of our being able to maintain this high standard as the nature of the patient load changes is becoming more and more problematical. Veterans hospitals are now used mainly for the accommodation of older veterans-and many of us are reaching that stage-with long term, chronic ailments which generally speaking are not a result of their military service.
As a consequence of the changing nature of this patient population, recruitment problems are becoming alarmingly acute, particu-
[Mr. Teillet.l
larly in the nursing classes. We are coming dangerously close to the unhappy situation which prevailed in veterans hospitals just prior to world war II. Indeed, had it not been for the sense of dedication of the really first class group of men and women who staff our institutions, we probably would have witnessed by now the beginning of a disintegration in the quality of the medical service provided to our veterans. This must not be allow to happen because, in the final analysis, the one thing we must ensure at all costs is that those veterans who were disabled as a result of service to this country should be provided at all times with the best medical care this country can muster.
At this time the best way-indeed, the only way-to maintain this kind of excellence is to make the treatment of veterans an integral part of a larger, more active, more on-going operation; in other words, to incorporate the treatment of veterans into treatment programs devised for members of the general community. If this is not done the professional stimulus that is essential to the fostering and maintenance of first class medical service will be lacking, with the obvious result that the veteran will be the loser.
Despite many suggestions to the contrary, the federal government cannot and should not become involved in the operation of general community hospitals. Consequently the only practical solution to the very real problem we face is to enter into agreements with suitable agencies to take over the operational control of veterans hospitals. These would then become general community hospitals, in which the department could purchase the service it must provide.
At this point I would like to make it unequivocally and emphatically clear that no such agreements will be entered into by the government unless certain sine qua non conditions are met. These conditions, three in number, are as follows: First, accommodation for the treatment of service connected disabilities among veterans must be immediately available at all times, and treatment must be provided in accordance with standards prescribed by the Department of Veterans Affairs. Second, community institutions of acceptable standards must be available to look after the work load created by other classes of veterans, which means that such veterans will be able to obtain treatment in their own communities, near their own friends and families. Finally, satisfactory arrangements must be made for the continued employment of professional and other staffs now serving in our institutions.

From what I have said up to this point it will be clear where the best interests of disabled veterans lie. It so happens that by serving the best interest of the veterans in this fashion the department will, at the same time, be able to lend valuable assistance in relieving the shortage of active hospital beds which is becoming apparent in some of the metropolitan areas in Canada. It would be folly, to say the least, not to make our hospital facilities available to the non-veteran population where the need is so great, when this can be done while not only maintaining but also improving the quality of treatment services provided to our veterans.
The question of timing is of great importance. Our hospitals are still first class institutions; their staffs are still of first class quality. We are in a better position now than we will be a few years from now to ensure the kind of conditions we think essential in any transfer. Moreover, many communities need active treatment facilities now, as is borne out by the fact that discussions which have recently taken place have all been initiated by authorities other than federal. I am sure informed observers of the situation will agree, keeping in mind the best interests of veterans as well as the hospital needs of the community at large, that the most propitious time to make such arrangements is sooner rather than later, provided the three essential conditions referred to earlier can be met.
It is therefore the view of this government that the operational control of veterans hospitals should be transferred to non-federal agencies at times, in places, and under conditions which will best protect the standards of care to which veterans are entitled.
In conclusion I would like to refer to a number of allegations which have recently been made to the effect that the government had changed its policy on treatment services for veterans. Nothing, of course, could be further from the truth. The government's policy can be stated quite simply and quite clearly. That policy has been, is today and shall continue to be that the government is determined to spare no effort to provide the best possible medical service for our veterans within the framework of statutes enacted by this parliament. If, in order to achieve that end, the methods employed to provide such medical services must be changed, then change there shall be. But whatever happens, our ex-servicemen and the Canadian people generally can rest assured that we shall employ every legitimate means at our disposal to carry out that policy to its fullest extent.
I feel confident that no member of this house would have it any other way. I feel equally confident that the Royal Canadian
Statement on Veterans Hospitals Legion and other responsible veterans organizations would not have it any other way. Certainly this government would not have it any other way.


Hon. Gordon Churchill (Winnipeg South Centre):: Mr. Speaker, I am sure this announcement will be received with dismay by veterans and their relatives across this country. I think this is a complete reversal of the policy followed for so many years by successive governments in the care of the veterans of this country, whether they are veterans of the first world war, the second world war or the Korean war.
I am rather shocked at some of the phraseology used in his document. It is the first time it has ever been brought to my attention that the veterans hospitals "during the last few years before the outbreak of world war II had earned a deservedly unenviable reputation". This is a shocking condemnation of veterans hospitals, which have had a high reputation for over 40 years; and it is a condemnation of the activity of former Liberal governments to express the position in terms of that nature.
But the main factor that emerges from this statement by the minister is that the policy in existence for so many years is now going to be changed. Changed at whose wish, or by whose whim? This is not the wish of the veterans in this country.


Some hon. Members:: Hear, hear.


Gordon Minto Churchill: It is at the whim of the Liberal government.


An hon. Member:: Empire builders.


Gordon Minto Churchill: The stand that our party took when we first read the summary in the Glassco commission report that there might be some change in the veterans hospitals was "Hands off the veterans hospitals". We continue to take that stand. I am surprised that the Minister of Veterans Affairs should consider that veterans other than those who have disabilities resulting from warfare are not also possibly suffering from war experiences and war exposure. Not every man who served overseas was wounded visibly. My experience with veterans of two world wars shows that there are a great many men who have been suffering all these years from the strain of active service. They may not show that by the loss of a limb or some physical disability, but the strain is there.
I am very much disappointed that the government should at this stage, with this haste, declare that it is going to change the situation with regard to the veterans hospitals across Canada. This is a matter which should have been considered very thoroughly by

Statement on Veterans Hospitals the standing committee on veterans affairs of this house. It is before that body that the veterans organizations should come and present their case. The standing committee on veterans affairs should visit our veterans hospitals in Canada and see the situation for themselves. A hasty program like this is an insult to the veterans of Canada.


Thomas Clement (Tommy) Douglas: Mr. Speaker, I do not think this is a political question.


Some hon. Members:: Hear, hear.


Thomas Clement (Tommy) Douglas: I am sure it has been under study for some time by the medical director of D.V.A., even before the present government came into office. Therefore it should be looked at dispassionately and in the light of the best interests of the veterans whom these hospitals were designed to serve.
I think one must face the fact that there are some problems which the government has with reference to veterans hospitals. Increasingly they are becoming less and less active treatment centres and more and more centres for treating chronic illness; but in my opinion this does not justify turning all of them over to other authorities, and for two reasons. One is that there are a great many veterans who need continuing care and who ought to be cared for in institutions along with their former comrades. Second, I think there are a great many veterans of the last world war and of Korea who will require increasing hospital care in the years ahead, and there ought to be institutions to which they can go.
The danger is that if all the veterans hospitals are incorporated into general community hospitals there will not be beds available for these veterans. Perhaps the answer is to turn some of the veterans hospitals into hospitals for chronically ill veterans present and future who will require custodial care, and make arrangements for other hospitals to be incorporated into active treatment centres for the general community.
The one thing I would urge upon the minister-and I make this plea to the Prime Minister-is not to allow a snap decision to be made on this matter, because it affects a body of men and women to whom this country owes a great debt. I hope this whole matter will be thoroughly studied by the standing committee on veterans affairs so that no policy will be pursued which we would later regret. I trust that no action will be taken that would result in a situation where veterans would find that when they required hospital care, it was not available to them because these hospitals had been turned over to communities who had filled them immediately and not left sufficient beds to take care of the veterans.

As I say, I hope the government will send this matter to the veterans affairs committee, where not only members of the house can study the matter but where the veterans organizations, the D.V.A. itself and the medical director can make their views known to the members of that committee.


Mr.  A. B. Paiterson@Fraser Valley: Mr. Speaker, we realize that this is not the opportune time to debate the announcement which has just been made. As far as the reaction of many veterans across the country is concerned, I think it would be found in these words, that "The thing I most fear has come upon me". Many veterans have expressed their views, I am sure, to all members of the house relative to the proposals which are now before us, and have voiced serious concern over the fact that consideration was being given to turning the veterans hospitals over to civilian agencies.
In presenting his statement this afternoon the minister outlined three considerations, and I think they are very worth while. The main one is that in the event of such a change, veterans would be assured of immediate hospitalization and medical care of the highest quality. I think this is one of the main considerations which must enter into this picture.
As far as the entire principle is concerned, I believe this proposal should be referred to the veterans affairs committee before any definite action is taken in this regard, and before government policy is crystallized. It would be interesting-


Mr. Fleming (Okanagan-Revelsioke):: Not
crystallized; petrified.


Mr.  A. B. Paiterson@Fraser Valley: It would be interesting to get the.reaction of the various veterans organizations when they have an opportunity of presenting their views before the committee. I believe this is very important. If I remember correctly, the minister has made reference on other occasions to negotiations and discussions which were carried on concerning just two veterans hospitals, or at least the communities involved, one in Calgary and the other in Winnipeg. I wonder whether any attention or consideration has been given to discussions respecting the veterans hospitals in other communities of Canada.
Again, Mr. Speaker, I believe that very careful and thorough consideration must be given before any action is taken in this regard.


David Réal Caouette: Mr. Speaker, the statement made by the Minister of Veterans Affairs clearly shows that the
[Mr. Churchill.!

government intends to provide greater assistance to veterans who must spend some time in the hospital at present. It is interesting to note the attitude of the federal government which seeks to take every means at its disposal to improve, wherever necessary, hospital treatment given our veterans, no matter which institution is involved.
We, who sit in this corner of the house, sincerely congratulate the minister for his attitude towards veterans. Regardless of the party to which they belong, all hon. members feel sure, I think, that appropriate steps will be taken to give greater assistance to Canadian veterans.



On the orders of the day:


Hon. D. S. Harkness (Calgary North):: wish to direct a question to the Minister of Veterans Affairs. Can the hon. gentleman now answer the question I have asked him two or three times over the past several weeks? Will the government refer the whole question of the operation of veterans hospitals to the veterans affairs committee for an examination by that body and a report on the change of policy?


Roger-Joseph Teillet: Mr. Speaker, this question was
considered by the veterans affairs committee. It made a recommendation which I have adopted and followed. There is difficulty in making a statement in general terms at this time, because we will have to deal with each hospital according to its own circumstances, and some of them we may have to retain. I am not at all certain it will be possible to submit each case to the committee. There is one thing I have undertaken to do according to the recommendation of the veterans affairs committee, and that is to engage in consultation with the veterans organizations involved.


Douglas Scott Harkness: A supplementary question, Mr. Speaker. My question was whether the general policy question involved will be referred to the veterans affairs committee, not specific cases. I see no reason why that cannot be done; in fact I feel very certain that it should be done.


Mr. H. W. Herridge (Kootenay West):: supplementary question, Mr. Speaker, with respect to the statement made by the minister. Has the minister consulted all the dominion commands of the veterans organizations in Canada, and is he of the opinion they would agree with the general policy announced by the minister this afternoon with respect to veterans hospitals?
Statement on Veterans Hospitals


Roger-Joseph Teillet: Mr. Speaker, it is difficult for me to answer that question. I have discussed this matter at meetings with veterans on two or three occasions. In the case of Colonel Belcher hospital, which has been the only one that has been specifically discussed in terms of actual implementation, the veterans organizations were present at the discussion concerning that hospital. As far as others are concerned they were not.
I will not claim for a moment that the veterans organizations as such have approved of this action, because I do not suppose they have had an opportunity to discuss it in general terms themselves. I have had representations from them, as the hon. gentleman knows, but I undertook to carry out the recommendation of the veterans affairs committee, and this is what I am doing in each individual case. I cannot undertake to do this in the over-all picture, because it will be impossible to lay down a specific policy that will apply to all of them.


Douglas Scott Harkness: A supplementary question, Mr. Speaker, in connection with Colonel Belcher hospital. Is the minister aware that when the matter was referred to the veterans bodies in Calgary they were universally hostile to the idea?


Roger-Joseph Teillet: Mr. Speaker, my information is that they were not universally hostile to it.


Douglas Scott Harkness: That statement is completely wrong, and I wish the minister would go back and find out what the veterans organizations say about it.


Mr. Jack McIntosh (Swiff Current-Maple Creek):: A supplementary question, Mr. Speaker. Will the minister abide by the decision of the veterans organizations either to approve or disapprove, whichever they decide?


Roger-Joseph Teillet: Mr. Speaker, in this matter as in all matters I think the government will have to make up its mind, decide on a policy and stand by it.


Gordon Minto Churchill: Or fall by it.


Hon. W. G. Dinsdale (Brandon-Souris):: supplementary question, Mr. Speaker. Could the minister inform the house if representations on this matter are going to be received from the veterans organizations this afternoon?


Roger-Joseph Teillet: Mr. Speaker, I am having a meeting later this afternoon with representatives of all the national veterans organizations.


John (Jack) McIntosh: Will you abide by their ruling?

Questions


Mr. F. J. W. Fane (Vegreville):: I should like to ask the Minister of Veterans Affairs exactly when, and in what words, the standing committee on veterans affairs recommended that veterans hospitals should be taken over by other authorities?


Roger-Joseph Teillet: The recommendation of the committee was that if and when any transfer should take place, veterans organizations be consulted.



REVISED STATUTES OF CANADA


Hon. Guy Favreau (Minister of Justice) moved: the first reading of Bill No. S-2 (from the Senate), respecting the Revised Statutes of Canada.
Motion agreed to and bill read the first time.



QUESTIONS

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

Mr. Orlikow: Is the government considering implementation of the recommendation made in the report of the restrictive trade practices commission on the packing of meat, Wilsil Limited and Calgary Packers Limited in 1961 that "the possibility of seeking a court order under section 31(2) of the present Combines Investigation Act be fully explored for the purposes of dissolving the mergers of Calgary Packers Limited and Wilsil Limited with Canada Packers" and further "in the event that it is determined that such a remedy cannot be sought the commission would recommend that the possibility of seeking a court order under section 31(2) be fully explored for the purpose of prohibiting Canada Packers from making any further acquisitions which would lessen competition in the meat packing industry"?


Guy Favreau: In 1956, the director under the Combines Investigation Act commenced his inquiry into the acquisition by Canada Packers Limited of Wilsil Limited and Calgary Packers Limited. The matter was, in due course, referred by the director to the restrictive trade practices commission which made its report to the minister on August 3, 1961, which was subsequently made public as required by the Combines Investigation Act.
The commission recommended that-
-the possibility of seeking a court order under section 31(2) of the present Combines Investigation
Act be fully explored for the purpose of dissolving the mergers of Calgary Packers Limited and Wilsil Limited with Canada Packers. In the event that it is determined that such a remedy cannot be sought the commission would recommend that the possibility of seeking a court order under section 31(2) be fully explored for the purpose of prohibiting Canada Packers from making any further acquisitions which would lessen competition in the meat packing industry.
Since publication of the commission's report and recommendations, very careful study has been given to the question of the legal proceedings, if any, that should be taken. The matter was referred to leading counsel with instructions to proceed with prosecution or other criminal proceedings unless he should come to the conclusion that the evidence is insufficient. Full consultation took place between counsel and the departmental officials and the opinion was ultimately received that legal proceedings would be unlikely to succeed. This view was confirmed by an opinion obtained from second leading counsel.
In the circumstances I have felt bound to arrive at the conclusion that it would be unwarranted to subject the company to criminal proceedings when on the basis of expert opinion it appears unlikely that such proceedings could succeed.
I should add that my decision is largely influenced by jurisprudence on the merger provisions of the Combines Investigation Act that has developed since the merger took place and the inquiry was commenced.


ADVERTISING EXPENDITURES, EMPLOYMENT CAMPAIGNS
Mr. Starr: 1.	What amounts of money have been spent and are to be spent by the Department of Labour for national and local advertising during the period April 1, 1963 through March 31, 1964, on each of the following subjects (a) winter employment "Do It Now" advertising (b) $500 winter construction bonus advertising (c) employment of older workers advertising (d) employment of the handicapped advertising (e) Canadian government annuities advertising?
2.	In each of the above categories, what total amounts of money have been spent and are allocated to be spent during the period April 1, 1963, through March 31, 1964, in each advertising medium of (a) daily newspapers (b) weekly newspaper (c) ethnic newspapers (d) consumer magazines (e) business publications (f) farm publications (g) outdoor advertising (h) transportation advertising (i) radio advertising and (j) television advertising?
3.	What advertising agencies are responsible for the placement of the above Department of Labour advertising during the period April 1, 1963 through March 31, 1964, and what are the total amounts of the advertising budgets mentioned above directed through each of these agencies?


Mr. MacEachen:: 1.

Questions
Program
Balance of
January 31/64 March 31/64	Total
Expenditure to Commitment to
(a)	Winter employment
(b)	Winter house building
(c)	Older worker incentive
(d)	Handicapped workers
(e)	Annuities
2.
(a)	Winter Employment
(i)	Daily newspapers
(ii)	Weekly newspapers
(iii)	Ethnic newspapers
(iv)	Magazines
(v)	Business publications
(vi)	Farm publications
(vii)	Outdoor advertising
(viii)	Transportation advertising
(ix)	Radio advertising
(x)	Television advertising
Production
(b)	Winter house building
(i)	Daily newspapers
(ii)	Weekly newspapers
(iii)	Ethnic newspapers
(iv)	Magazines
(v)	Business publications
(vi)	Farm publications
(vii)	Outdoor advertising
(viii)	Transportation advertising
(ix)	Radio advertising
(x)	Television advertising
Production
(c)	Older worker incentive program
(i)	Daily newspapers
(ii)	Weekly newspapers
(iii)	Ethnic newspapers
(iv)	Magazines
(v)	Business publications
(vi)	Farm publications
(vii)	Outdoor advertising
(viii)	Transportation advertising
(ix)	Radio advertising
(x)	Television advertising Production
$ 17,972 111,809 33,468 891 11,695	$ 247,928 128,191 164,532 3,709 63,305	$ 265,900 240.000 198.000 4,600 75,000
	51,657 30,155 5,267 36,065 6,813 4,750	51,657 30,155 5,267 36,065 6,813 4,750
	46,612 23,142	46,612 23,142
	204,461 21,439	204,461 21,439
	$ 225,900	$ 225,900
42,487 4,472	31,110 3,920	73,597 8,39216,771 2,236	12,614 2,789	29,385 5,02515,653	12,372	28,02526,834	19,304	46,138108,453 3,356	82,109 46,082	190,562 49,438$ 111,809	$ 128,191	$ 240,0008,367 7,698	42,242 38,236	50,609 45,9343,338	9,866	13,2049,706 4,359	48,395 22,793	58,101 27,152$ 33,468	$ 161,532	$ 195,000
20220-60i
Questions

Balance of
Program	January 31/64 March 31/64	Total
Expenditure to Commitment to

(d) Handicapped workers-
Television clips Non-committed-(Feb. 1, 1964)	891	3,309	4,600
(e) Annuities Act-			
Administration			
(i)	Daily newspapers (ii)	Weekly newspapers (iii)	Ethnic newspapers (iv)	Magazines (v) Business publications (vi)	Farm publications (vii)	Outdoor advertising (viii)	Transportation advertising (ix)	Radio advertising (x)	Television advertising Mailbag, advertising Production	7,300	46,484 5,742 7,300 474$	7,300 $	60,0003.	MacLaren Advertising Company Limited,
Toronto, Ontario
(a)	Winter employment	225,900(b)	Winter house building	240,000(c)	Older worker incentive	program	193,000(d)	Annuities Act-administration	60,000Total	$ 718,900


* HALIFAX
Mr. Coates: 1.	Who was the successful tenderer for the supply and Installation of headstones and markers in the Halifax district for the Department of Veterans Affairs for the 12 month period commencing October 1, 1963?
2.	How many bids were received and what was the amount of each bid?
3.	Who was the successful tenderer in the previous two years?


Roger-Joseph Teillet: 1. W. T. Dauphinee Limited, Shelburne, Nova Scotia.
2.	Three (1) $12,400; (2) $12,490; (3) $12,524.
3.	Tingley Monuments Limited, Amherst, Nova Scotia.


C.N.R.-STENCILLING OF FREIGHT CARS IN BOTH LANGUAGES
Mr. Hales: 1.	How many freight cars of all types will be stencilled in French and English by the C.N.R.?
2.	What will be the cost per car?
3.	Under whose authority was this work undertaken?
[Mr. MacEachen.l


Mr. Pickersgill:: 1, 2 and 3. The Canadian National Railways advise that management's policy in connection with this whole matter was summarized in a document tabled in the House of Commons in October last. That part of the program relating to bilingual lettering of equipment will be on a gradual basis, and it is not contemplated that there will be any additional cost, as this will be undertaken only when the cars are shopped and repainted. The equipment fleet numbers approximately 100,000 units.


PORT AUX BASQUES, NFLD.  FERRY TRAFFIC
Mr. Tucker: 1.	What was the total number of passengers carried on the C.N.R. coastal ferries to and from Port aux Basques, Newfoundland from 1959 to 1963 inclusive?
2.	What was the total number of passengers carried by (a) the coastal ferry William Carson (b) extra ferries added to the service for this period?
3.	What was the number of motor vehicles carried each year from 1959 to 1963 inclusive?


John Whitney Pickersgill: The management of Canadian National Railways advise as follows:

1 and 2. The total number of passengers carried to and from Port aux Basques by the Cabot strait car ferries for the five year period 1959 to 1963 inclusive was-(a) 324,784 by the William Carson and (b) 39,415 by extra ship.
3.	The number of motor vehicles carried was as follows:
	Autos	Truck
1959	11,600	1,8821960	15,427	2,2771961	15,875	2,8861962	18,799	3,5721963	22,040	4,139Total	83,741	14,756


*C.N.R. BUILDING, MONTREAL  VACANT SPACE
Mr. Marcoux: 1.	What is the floor area of the space that is now vacant in the C.N.R. building in Montreal following the termination of the leases held by air lines?
2.	What were the rents paid for this space?


John Whitney Pickersgill: The management of Canadian National Railways advise as follows:
1.	3,582 sq. ft.
2.	Approximately $41,000 total.


COMMUNITY ANTENNAE SYSTEMS
Mr. Laprise: 1.	What is the number of community television
antennae in	(a)	Canada	(b)	the province	of
Quebec (c) the county of Chapleau?
2.	How many subscribers are covered by such
antennae in	(a)	Canada	(b)	the province	of
Quebec (c) the county of Chapleau?


John Whitney Pickersgill: 1. On December 31, 1963, the number of licensed systems were as follows: (a) 344; (b) 185; (c) 4.
2.	(a) (b) and (c). Information not available.


GRANT APPLICATIONS TO MEDICAL RESEARCH COUNCIL
Mr. Orlikow: 1.	How many applications for grants to finance research projects did the medical research council get in each of the past three years?
2.	What was the total dollar value of the projects requested from the medical research council?
3.	How many of the applications made to the medical research council were approved in full?
4.	How many of the applications were approved in part only?
5.	How many applications for research grants were turned down in each of the last three years?
6.	What were the reasons for the refusals?


Mr. Drury:: The answers in so far as the medical research council is concerned are as follows:
Questions
1.	During the three year period 1960-63, the medical research council received the following applications for operating grants to finance research projects: 1960-61, 293; 196162, 348; 1962-63, 435.
2.	Total dollar value of operating grants
requested:	1960-61,	$2,330,165.92;	1961-62,
$3,061,411.99; 1962-63, $3,943,588.98.
3.	Applications approved in full: 1960-61, 104; 1961-62, 119; 1962-63, 167.
4.	Applications approved in part: 1960-61, 161; 1961-62, 199; 1962-63, 229.
5.	Applications not approved: 1960-61, 28; 1961-62, 30; 1962-63, 39.
6.	All applications are reviewed and assessed by special committees convened for this purpose. So many factors are taken into account when considering these applications that it is not possible to give reasons for non-approval.


CITIZENSHIP AND IMMIGRATION DEPARTMENT BUILDING
Mr. Smallwood: 1.	Is it the intention of the government to erect before 1967 a public building for the use of the Department of Citizenship and Immigration and, if so (a) what is the proposed location and the projected date of commencement (b) if in the negative, has the government made alternative arrangements to accommodate the Department of Citizenship and Immigration or those sections thereof now located in the citizenship building (i) what is the nature of such arrangements, giving in detail the location of the building or buildings to be occupied, and (ii) amount of space to be available therein?
2.	If space is to be leased (a) what are the names of the owner or owners (b) the length of terms of the lease or leases (c) the amount of the annual rentals payable, and (d) the date of anticipated occupancy in each case?
3.	In any building to be leased, will other departments of government occupy space therein and, if so (a) what departments (b) what amount of space will each department occupy (c) what will be the term of the lease for each such department (d) what will be the annual rental for space occupied by each such department?
4.	In any building to be leased for occupancy by the Department of Citizenship and Immigration, what ratio will the space occupied by such department and by any other department of government accommodated in such building bear to the total office space available in such building?
5.	Did any of the plans or projections developed by the Department of Public Works or the national capital commission provide for a location for a citizenship and immigration building and, if so where and for what reasons has there been a change' of plan?


Mr. Deschaielets:: 1. No. (a) Not applicable, (b) Yes. (i) Space is to be leased in a new building under construction at the north east corner of King Edward and Rideau streets, Ottawa, (ii) 200,000 sq. ft. of net accommodation available to the department.
2. (a) Laurentian Realties Ltd.; (b) 10 years, with option to renew for a further 3 years;

Questions
(c) $650,000. per annum (i.e. 200,000 sq. ft. at $3.25 per sq. ft.); (d) Not later than April 1, 1965.
3.	(a) When the detailed requirements of the Department of Citizenship and Immigration have been established it will probably be the case that the need of that department will be less than the available 200,000 sq. ft. of net accommodation. In such event the balance of the space will be used for other government requirements; (b) No final decision has been reached so far; (c) As in 2(b) above; (d) Included in 2(c) above.
4.	The crown will occupy all floors in this building except the street floor which the owners will presumably rent commercially. The floor will be approximately 25,000 sq. ft., therefore the crown will occupy almost 90 per cent of the building.
5.	It was contemplated at one time that space might be available for citizenship and immigration in the union station complex, but that site is not presently available. However, the building now occupied by citizenship and immigration has to be vacated by the end of the fiscal year 1964-65 so that construction may start on the national museum building.


WARTIME TEMPORARY BUILDINGS, OTTAWA
Mr. Horner (Acadia): 1.	What wartime temporary public buildings are still in use and occupancy by the government in the city of Ottawa?
2.	What is the location of each such building?
3.	What is the projected time schedule for replacement of each such building?


Mr. Lamonlagne:: In so far as the Department of Public Works is concerned:
1 and 2.
Name of Building No. 2 temporary building No. 3 temporary building No. 4 temporary building No. 5 temporary building No. 6 temporary building No. 8 temporary building No. 9 temporary building Daly building annex Justice building annex
A.	building
B.	building
C.	building
Location
Wellington street Wellington street Wellington street Carling avenue Sussex street Carling avenue Sussex street Sussex street Wellington street Cartier square Cartier square Cartier square
3.	A study of accommodation requirements is continuing but it is not yet possible to say when new buildings will be constructed.
In so far as Central Mortgage and Housing Corporation is concerned: 1. Laurentian Terrace hostel. 2. 360 Sussex drive, Ottawa. 3. No projected time for replacement has been established.
[Mr. Deschatelets.I


LEASING OF OFFICE SPACE, OTTAWA
Mr. Chaplin: 1.	Since the 22nd day of April, 1963, has the Minister of Public Works or anyone on his behalf agreed to lease space or given to anyone notice of intent to lease space in any buildings in the city of Ottawa, the construction of which building had not been completed?
2.	If so, what are the names and locations of each of such buildings and on what dates was each such agreement concluded or notice of intent given?
3.	Who are the owners of each such building?
4.	What offices of government are intended to be located in each such building and what amount of space is to be occupied by each such office?
5.	What is to be the length of term of each lease and what is the annual rental to be payable under each such lease?
6.	Does the national capital plan or the Parkin plan or any other project of a planning authority indicate a location for the erection of a public building to house any of such offices of government and, if so (a) which ones (b) on what basis, and (c) for what reasons was the decision taken to lease space from private owners instead of erecting the contemplated public building or buildings?
7.	What stage of construction had each building referred to in part 1 reached at the time the agreement to lease was concluded or notice of intent given?
8.	In each case, what is the estimated date of completion of the building?
9.	Were public tenders called in any case bfore an agreement to lease was concluded or notice of intent given?
10.	If not, what opportunities, if any, were given to other persons who might be interested in leasing to the government of Canada on similar terms to submit proposals?


Jean-Paul Deschatelets: 1. Yes.
2.	Bourque memorial building, north east corner of King Edward avenue and Rideau street, Ottawa. The intention of the department to lease the space was communicated to the owner by letters of October 31, November 15 and November 18, 1963. MacDonald building, Slater street, Ottawa. The owner was notified on November 19, 1963 of the acceptance of its offer to rent space. Humson building, 180 Elgin street, Ottawa. The owner was notified by the department of its acceptance of his offer to lease on February 3, 1964.
3.	Bourque memorial building, Laurentian Realties Ltd., MacDonald building, Metcalfe Realty Co. Ltd., Humson building, Thomas L. Hum.
4.	Bourque memorial building, Department of Citizenship and Immigration and possibly others. A total of 200,000 sq. ft. of net accommodation has been rented. The final determination of space needed for the Department of Citizenship and Immigration has yet to be made. Any balance of rented space will be used for other government needs, dependant upon size of area available. MacDonald building, Department of Industry and Department of Defence Production in 96,420 sq. ft. of accommodation. Humson building, national harbours board in 16,521 sq. ft. of space.

5.	Bourque memorial building, 10 years, with option to renew tor a further three years. Annual rental $650,000 (i.e. 200,000 sq. ft. at $3.25 per sq. ft.). MacDonald building, from January 1, 1964; eight years for 96.420 sq. ft. ($3.98 per sq. ft.); nine years for 67,494 sq. ft.; 10 years for 38,568 sq. ft.; with a three year option on same rental conditions, to be exercised before the end of the eighth year. If option is exercised the phased withdrawal schedule is to be waived by the lessor. Annual rental (first eight years), $384,000. Humson building, from date of occupation (anticipated to be March-April 1964) to January 31, 1969, with option to the crown to renew for a further term of two years. Annual rental, $57,823.50 ($3.50 per sq. ft.).
6.	Bourque memorial building, (a), (b) and (c), it was contemplated at one time that space might be available for citizenship and immigration in the union station complex, but that site is not presently available. However, the building now occupied by citizenship and immigration has to be vacated by the end of the fiscal year 1964-65 so that construction may start on the national museum building. MacDonald building, (a), (b) and (c), yes. A building in the union station complex near the corner of Nicholas street and Laurier avenue is to be erected. Interim lease needed until projected space is available. Humson building, (a), (b) and (c), yes. A building in the union station complex near the corner of Nicholas street and Laurier avenue is to be erected. Interim lease needed until projected space is available.
7.	Bourque memorial building, construction had not started. MacDonald building, nearing completion. Humson building, nearing completion.
8.	Bourque memorial building, not later than April 1, 1965. MacDonald building, December 1963. Humson building, March/April 1964.
9.	No.
10.	The normal practice of the department was followed in that consideration was given to the property of those persons who had indicated interest in leasing to the government of Canada.


BUTTER STORAGE, MEGANTIC CONSTITUENCY
Mr. Langlois: 1.	Has the Department of Agriculture received requests from the constituency of Megantic for the construction of cold storage facilities for the storing of surplus butter and, if so (a) from whom, and (b) on what dates?
2.	How many pounds of butter, indicating the value and administrative costs, were stocked in the constituency of Megantic as of October 31, 1963?
3.	To what individuals or firms do these warehouses belong (a) what is the annual rent paid
Questions
for government storage (b) in each case how long has storage been rented (c) has the rent been increased during the last five years and, if so, in each case by how much?
4.	Has the federal government received requests for aid, in any form, to promote market gardening in the county of Megantic during the last five years and, if so (a) what was the nature of those requests (b) what financial assistance was given (c) if not, in what way can the federal government assist market gardening and under what program can it be achieved?


Mr. Hays:: 1. No.
2.	None.
3.	With reference to the answers to 1 and 2 above, non-applicable.
4.	The Department of Agriculture has received no specific requests for aid to promote market gardening in the county of Megantic during the past five years. Requests for technical information relating to market garden crops have been received, and the information has been supplied, by officials of the experimental farm, Lennoxville, and the research laboratory, St. Jean. Details pertaining to individual requests for information of this nature are not available.
The Farm Credit Corporation reports that applications for loans are not recorded by type of enterprise; it is, therefore, not possible to determine whether any applications for loans for market gardening purposes were received during the last five years.
There are no specific programs designed to promote market gardening as a particular enterprise. The technical information referred to above is available to individual farmers and to agricultural extension workers. Mortgage credit is available from the Farm Credit Corporation for market gardening enterprises.


EARNINGS OF C.N.R. HOTELS
Mr. Tucker: What was the profit or deficit in each of the following hotels operated by the Canadian National Railways for the years from 1959 to 1963 inclusive: Newfoundland hotel, St. John's, Newfoundland; Charlottetown hotel, Charlottetown, Prince Edward Island; Nova Scotian hotel, Halifax, Nova Scotia; Queen Elizabeth hotel, Montreal, Quebec; Chateau Laurier, Ottawa, Ontario; Fort Garry hotel, Winnipeg, Manitoba; Bessborough hotel, Saskatoon, Saskatchewan; Jasper Park lodge, Jasper, Alberta; Macdonald hotel, Edmonton, Alberta; Vancouver hotel, Vancouver, British Columbia?


John Whitney Pickersgill: The management of Canadian National Railways advise as follows:
The following statement indicates the profit or loss, after allowing for depreciation, which the railway received from the operation of the individual hotels. The amounts listed for the Queen Elizabeth and Hotel Vancouver represent the Canadian National's return from the operation and not the profits or losses of those hotels:
940	HOUSE OF
Questions	1962
Newfoundland hotel	$ 116,892
The Charlottetown	(27,551)
The Nova Scotian	119,200
Chateau Laurier	(144,824)
The Fort Garry	(231,101)
The Bessborough	(174,740)
The Macdonald	299,812
Jasper Park lodge	198,869
Queen Elizabeth	2,012,918
Hotel Vancouver	116,496

1961	1960	1959$ 150,715	$ 198,099	$ 203,254(10,650)	6,201	4,688(479,914)	(232,442)	(5,288)(22,725)	(55,072)	77,443(165,657)	(64,746)	104,834(102,082)	(109,225)	(12,323)425,112	458,110	568,161152,944	96,967	133,8921,718,303	1,401,383	1,264,362(53,265)	161,027	86,712


MAIL CONTRACT, R.R. NO. 1, BOIESTOWN, N.B.
Mr. MacRae: 1.	Who presently holds the mail contract for R.R. No. 1, Boiestown, N.B.?
2.	When was this contract awarded?
3.	On what date were tenders called?
4.	On what date did tenders close?
5.	Who tendered, and what were the amounts of each tender?
6. What is the age of the present contractor?
7. Does he live on the mail route for which he is the contractor?
8.	What are the regulations as to maximum age permitted for rural route mail drivers?


Mr. Nicholson:: 1. Roy T. Ross, Boiestown.
2.	February 10, 1964.
3.	October 10, 1963.
4.	November 1, 1963.
5.	Mrs. Agnes K. Ross, Boiestown, $2,700; Murdick W. Munn, Boiestown, $2,700; Roy T. Ross, Boiestown, $2,700; Elwood Earl Black, R.R. No. 1, Boiestown, $2,700; Mrs. Diana M. Amos, Boiestown, $2,800; Blaine E. Spencer, R.R. No. 1, Hayesville, $2,800; Floyd B. Wilson, Boiestown, $2,800; Arthur W. Moir, Boiestown, $3,000; Mrs. Audrey Loretta Abernethy, R.R. No. 1, Boiestown, $3,400.
6.	Seventy.
7.	No. He lives in the town of Boiestown.
8.	There are no limitations as to the maximum age for rural mail carriers.


UNEMPLOYMENT INSURANCE AND ASSISTANCE PAYMENTS
Mr. Pigeon: 1.	How many persons in Canada received unemployment insurance benefits during October, 1963?
2.	How many persons in Canada received unemployment assistance payments during October, 1963?


Maurice Lamontagne: 1. There is no figure available of the number of persons receiving unemployment insurance benefit in any month. The number of active claimants, that is the number of persons claiming benefit, in Canada at October 31, 1963, was 218,866.
2.	The Unemployment Assistance Act permits the provinces six months in which to submit claims, and thus the figures for October 1963 are incomplete; however, up to 
March 3, 1964, payments for 478,535 persons, including dependants, had been included in reimbursement claims submitted under the unemployment assistance agreements for October. The last month for which complete returns are available is July 1963, when the number included in claims was 650,557.


WROXETER, ONT.  POSTMASTER
Mr. Howe (Wellington-: Huron):
1.	What are the regulations pertaining to whether the appointment of a postmaster comes under the jurisdiction of the civil service commission or not?
2.	Does the post office at Wroxeter come in this category?
3.	Who has been appointed postmaster at Wroxeter, Ontario?
4.	Was the statutory preference for veterans taken into consideration?


Maurice Lamontagne: 1. The positions of postmasters of any revenue post office the revenue of which does not exceed $3,000 per annum are excluded from the civil service by the Civil Service Act (section 2 (1) (b) (v)). Positions of postmaster in this category are filed by the Post Office Department without reference to the civil service commission.
Positions of postmaster in any post office where the annual revenue exceeds $3,000 are filled by civil service competition.
2.	The revenue of the post office at Wroxeter, Ontario, exceeds $3,000 per annum.
3.	A competition is now under way to fill this position. Written and oral examinations will be held on March 17 and 18.
4.	The statutory preference for veterans will be taken into consideration in this competition.


* SEIZURES OF ARMS AND AMMUNITION
Mr. Coates: 1.	What cities, towns or other areas, by provinces, have received visitations from the armed forces in search of or a round up of arms and/or ammunition, between the 1st of February and the 27th of February, 1964?
2.	How many such visitations have taken place, by provinces, from the 27th of February to the 3rd day of March, 1964?

3.	What cities, towns and villages in each of the provinces have been designated as sensitive areas in respect of the possession of arms and/or ammunition?


Mr. Hellyer:: 1, 2 and 3. Orders were issued to withdraw temporarily small arms and ammunition from reserve units in the province of Quebec and in areas of Ontario and New Brunswick, adjacent to Quebec. As has been stated previously it would not be in the public interest to designate the exact areas where increased precautions were deemed necessary.
In addition, the individual services on their own initiative undertook security checks of various reserve and cadet units across Canada. In some cases small arms and ammunition were withdrawn pending the provision of adequate security arrangements. As these measures are implemented, small arms and ammunition for training purposes are being returned. Several hundred units are involved and to supply the detailed information, including action taken on specific dates, as requested in this question would involve some delay and considerable expenditure of public funds.


SEIZURE OF ARMS AND AMMUNITION, NEW BRUNSWICK
Mr. MacRae: 1.	From what units (active, reserve and cadet corps) in the Fredericton area have arms and ammunition been withdrawn recently?
2.	What are the reasons for the loyalist city of Fredericton being declared as a sensitive area?
3.	What other areas in New Brunswick have been declared as sensitive areas?
4.	What other units (active, reserve, cadet corps, etc.) have been disarmed in New Brunswick? '


Paul Theodore Hellyer: 1, 2, 3 and 4. Orders were issued to withdraw temporarily small arms and ammunition from reserve units in the province of Quebec and in areas of Ontario and New Brunswick, adjacent to Quebec. While the city of Fredericton was not declared a sensitive area, as has been stated previously it would not be in the public interest to designate the exact areas in the provinces of Ontario and New Brunswick where increased precautions were deemed necessary.
In addition, the individual services, on their own initiative, undertook security checks of various reserve and cadet units across Canada. In some cases small arms and ammunition were withdrawn pending the provision of adequate security arrangements.


* INLAND FISHERIES
Mr. Howard: Has the Minister of Fisheries delegated any of the authority vested in him or the government regarding fishery regulations in coastal and inland
Questions
waters and, if so (a) to whom has this authority been delegated (b) on what date, and (c) by what specific power?


Mr. Robichaud:: There are no instances where the making of any fishery regulations has been delegated by the government or the Minister of Fisheries, but some of the provinces have assumed responsibility for the administration of fishery regulations enacted by the federal government.


UNEMPLOYMENT INSURANCE COMMISSION OFFICE, PICTOU, N.S.
Mr. MacEwan: Has the government yet reached a decision In regard to the unemployment insurance commission office at Pictou, Nova Scotia and, if so, what has been decided?


Allan Joseph MacEachen: No decision has yet been reached.


C.M.H.C. SURPLUS
Mr. Doucett: 1.	Does Central Mortgage and Housing Corporation surrender its annual profits to the Receiver General of Canada and, if so, to what use is such surplus put?
2.	In each of the fiscal years since its incorporation, what annual profits has Central Mortgage and Housing Corporation surrendered to the Receiver General of Canada?
3.	Does Central Mortgage and Housing Corporation pay corporation tax?
4.	In each of the fiscal years since its incorporation, what amount of corporation tax has Central Mortgage and Housing Corporation paid?
Answer: 1. Yes. It is credited to the consolidated revenue fund.
2. Central Mortgage and Housing Corporation statement of net profit after income tax and income tax-1946-1962.
	Net Profit After	Income
Year	Income Tax	Tax
1946	$ 145,942	
1947	228,804	
1948	2,504,501	
1949	4,032,195	
1950	2,861,999	
1951	3,144,037	
1952	2,053,984	$2,325,0001953	2,234,660	2,130,0001954	892,939	939,0001955	1,449,788	1,360,0001956	869,304	831,0001957	1,017,512	970,0001958	2,362,466	2,181,0001959	4,348,129	4,433,0001960	5,232,412	5,312,0001961	5,731,983	5,731,0001962	5,588,358	5,615,000Yes.	
4. Answered in 2 above.

Questions


WINTER WORKS GRANTS, ROBERVAL COUNTY MUNICIPALITIES
Mr. Gauthier: What winter works grants were received from the federal government by the undermentioned Roberval county municipalities during the years 1962 and 1963: St. Stanislaus, St. Eugene, Notre Dame de Laurette, town of Mistassini, parish of Mistassini, Doibeau, Girardville, village of Albanel, parish of Albanel, village of Normandin, parish of Normandin, St. Methode, village of St. Edmond des Plaines, parish of St. Edmond des Plaines, village of St. Thomas Didyme, parish of St. Thomas Didyme, Point Bleue, town of Roberval, parish of Roberval, village of Chambord, parish of Cham-bord, St. Francois de Sales, village of Lac Bou-chette, parish of Lac Bouchette, village of St. Andre, parish of St. Andre?


Allan Joseph MacEachen: Municipal Winter Works Incentive Program 1962-1963
Municipality	Federal Government Payment
St. Stanislaus	Nil
St. Eugene	$9,946.20
Notre Dame de Laurette	Nil
Mistassini (town)	$35,230.50
Mistassini (parish)	Nil
Doibeau	$30,250.41
Girardville	$7,032.47
Albanel (village)	$3,081.74
Albanel (parish)	Nil
Normandin (village)	$39,615.97
Normandin (parish)	$11,541.61
St. Methode	$10,496.15
St. Edmond des Plaines (village)	Nil
St. Edmond des Plaines (parish)	$3,855.60
St. Thomas Didyme (village)	Nil
St. Thomas Didyme (parish)	Nil
Point Bleue	Nil
Roberval (town)	$61,122.27
Roberval (parish)	$24,272.88
Chambord (village)	$20,734.02
Chambord (parish)	Nil
St. Francois de Sales	$29,864.46
Lac Bouchette (village)	$10,358.96
Lac Bouchette (parish)	Nil
St. Andre (village)	$3,786.93
St. Andre (parish)	Nil


COWHIDE AND CALFHIDE PRICES
Mr. Vincent: 1.	What was the price per pound of green cowhide and calfhide for the years 1961-62-63 (a) on the Canadian market (b) on the American market?
2.	What was the approximate number of (a) green cowhides (b) green calfhides, put on the market in Canada for the years 1961-62-63?
3.	What was the price per pound, during the last week for which figures are obtainable, on (a) the Canadian market (b) the American market?
4.	During the years 1961-62-63, what percentage of our production was shipped (a) to the United States (b) to other countries?


Answer: 1. Price per pound for green cowhide and calfhide:
	Canada	Chicago
	(Average)	(Average)
	Cow Calf	Cow Calf
1961	20.6 45.0	18.0 62.21962	19.9 42.7	18.5 57.61963	14.4 19.7	12.8 33.02. Number	of green cowhides and green	calfhides put on the Canadian market:	Cow	Calf1961	1,913,656	588,2371962	2,452,320	550,1821963	2,462,996 (Est.) 663,000	3. Latest	price for green	cowhides and
green calfhides on the Canadian market and the American market:
Canadian Chicago Calf Cow	Cow Calf
March 1/64	13.8 20.0	11.0 30.0
4. Percentage of our production exported
to the	U.S.A.	and other	countries in	1961-62-	[DOT]63:	To	otherTo U.S.	Countries	Cow	Calf1	Cow	Calf11961	12.3	45.2	50.0	94.91962	10.9	60.7	28.7	60.71963	10.7	50.0 (Est.)	34.1	61.3 (Est.)
1 Canada imports large quantities of calf skins and when they are exported they are not identified separately from domestic skins.


JEAN PAUL LEFEBVRE, C.B.C.
Mr. Marcoux: 1.	Is Mr. Jean Paul Lefebvre a member of the B.B.G.?
2.	Is he associated with a regular C.B.C. program?
3.	Is he entitled to fill both these positions simultaneously?
4.	Is it the intention of the government to replace him on the B.B.G.?


Maurice Lamontagne: I am informed by the board of broadcasting governors and the Canadian Broadcasting Corporation as follows:
1.	Mr. Lefebvre was appointed a member by order in council passed on December 6,
1963.	However, he has not yet taken the oath of office prescribed in section 3(9) of the Broadcasting Act, and has not attended any meetings of the board or the executive committee of the board since his appointment.
2.	Mr. Jean Paul Lefebvre hosts and does the research for a series of 13 programs called "La Faim des autres", scheduled on the C.B.C. French television network since February 24,
1964.	The series will end May 18.

3.	See answer to 1 above.
4.	No.


N.H.A.-CONTRACTION OF MORTGAGE FUNDS
Mr. Latulippe: What measures has the government taken or does it intend to take to fill the gap between the demand for new houses and the contraction of mortgage funds available under the National Housing Act, thereby avoiding a slowing down of construction?
Answer: To ensure a continuous supply of mortgage funds under the National Housing Act, Central Mortgage and Housing Corporation is authorized, when loans are not being made by approved lenders, to make direct loans to prospective home owners and to builders.


TRANSPORT DEPARTMENT BUILDING, SELKIRK, MAN.
Mr. Stefanson: What is the estimated cost of the Department of Transport building proposed for Selkirk, Manitoba, and when will tenders be called?


John Whitney Pickersgill: There is no building
planned exclusively for the Department of Transport at Selkirk, Manitoba.


CANADIAN TROOPS UNDER UN CONTROL
Mr. Pigeon: 1.	In what countries are there Canadian troops under control of the United Nations?
2.	How many Canadian troops under United Nations control are there in each of these countries? [Translation]
Answer: 1 and 2. India/Pakistan (Kashmir), 10; Palestine, 18; United Arab Republic 971; Yemen, 1; Congo, 251.
There is also a Canadian army officer in Korea, and an R.C.A.F. officer with the United Nations headquarters in New York.


* DOMINION OBSERVATORY TIME SIGNALS
Mr. Gauthier: Has the dominion observatory of Canada been broadcasting a time signal on three frequencies (3330 kc., 7335 kc., and 4670 kc.), at one minute intervals for the past 30 years in English only and, if so, could the same service be provided in the French language?


Mr. Benidickson:: The dominion observatory has been broadcasting seconds' pulses on a continuous 24 hour basis on the three frequencies (3,330 kc., and 14,670 kc.), for the past 30 years. A voice announcement, in English only, each minute has been in operation for the past ten years.
Plans are well advanced for the inauguration, within three months, of a voice announcement of time each minute in both French and English.
Questions


SALE OF CURRENT TOBACCO CROP
Mr. MacLean (Queens): 1.	What is the amount already sold of the current year's tobacco crop in (a) Ontario (b) Quebec (c) the maritime provinces?
2.	What is the average price that has been paid in each case?


Harry William Hays: 1. (a) The Ontario flue-cured tobacco growers' marketing board reports sales to date in that province as 117,191,074 pounds, (b) Not available, (c) Not available.
2. (a) 51.14 cents per pound, (b) Not available. (c) Not available.


STUDY OF WINTER NAVIGATION, ST. LAWRENCE RIVER
Mr. Bell: Was a four year study made of year round navigation in the gulf of St. Lawrence and along the St. Lawrence river to Montreal by the glacio-logical section of the geographical branch of the Department of Mines and Technical Surveys and, if so, what was the result?


William Moore Benidickson: No study has been made by the geographical branch on the feasibility of year round navigation in the gulf of St. Lawrence and along the St. Lawrence river to Montreal. The glaciology section of the branch has conducted airborne studies of the distribution of ice in these waterways, strictly from the point of view of statistical analysis of the ice distribution itself and the relative importance of the various climatic parameters involved. These studies were initiated in 1956 and are being carried out during the current year. A series of research reports (geographical papers Nos. 11, 12, 14, 16, 19, 23, 25, 32 and 36) have been published, giving the complex results of these studies. I would emphasize, however, that no attempt has been made to relate the problems of ice distribution with that of the feasibility of year round navigation, as this is outside the area of our responsibility. Copies of the research papers can be supplied on demand.


*POST OFFICE SITES, MANITOBA
Mr. Forbes: Have sites been purchased for post offices at Rorketon, Fork River, Sifton and Ochre River and, if so (a) from whom were the sites purchased (b) what was the amount paid for each site (c) when will the post offices be constructed?


Mr. McWilliam:: Yes:
(a) and (b):
	Amount	
Location	Owner	PaidOchre River	Mr. George W. Grogan	$500Rorketon	Mr. Metro Korotash	650Fork River	Diocese of Brandon,	Church of England	500Sifton	Mr. and Mrs. A. J.	Stevens	450
Questions
(c) Post offices are being constructed at Fork River and Ochre River during 1964. Construction at Rorketon and Sifton has been deferred for the present.


POTATO SUBVENTIONS
Mr. Peters: 1.	How much is the total subvention paid to potato growers in each province?
2.	How much does this amount to on a cwt. from each province?
3.	What is the maximum payment per cwt. in each province?


Harry William Hays: 1. No subvention is being paid to potato growers in any province at present.
2.	Not applicable.
3.	Not applicable.


COST OF 1961 CENSUS
Mr. Laiulippe: 1.	To date, what was the cost of the 1961 census?
2.	What are the various items of the total cost?
3.	What is the approximate amount of the expenses yet to be incurred for this census?
4.	To date, how much money has been spent for the 1966 census and which are the votes to which these items have been charged?

Answer: 1. The cost of the 1961 decennial census to February 28, 1964 was $15,147,141 made up of the following items:
2.
Salaries and other payroll items $4,338,680
Professional and special services*	8,132,123
Travelling expenses	856,654
Freight, express and cartage	84,476
Postage	31,656
Telephones and telegrams	59,652
Printing and publications	92,146
Advertising, films and broadcasting	177,534
Office stationery, supplies and
equipment	1,061,785
Rental of office equipment	121,524
Rental of temporary accommodation 188,180 Sundries	2,731

* Includes remuneration of commissioners and enumerators.
3.	It is estimated an additional $1,000,000 will be required to complete the analysis and publication of the data made up as follows:
Balance of 1963-64	$120,000
Estimated expenditure 1964-65	730,000
Estimated expenditure 1965-66	150,000

4.	To date nothing has been spent on the 1966 quinquennial census. (Expenditure started in 1958-59 for the 1961 census.)
[Mr. McWilliam.l


STEPS TO RETAIN SCIENTISTS IN CANADA
Mr. Laiulippe: What practical steps has the Department of Mines and Technical Surveys taken to prevent scientists from leaving Canada?


William Moore Benidickson: The Department of Mines and Technical Surveys has endeavoured to maintain a work situation which provides scientists (1) with the degree of freedom considered essential for successful scientific research, (2) with up to date scientific equipment, (3) with effective support staff in so far as is permitted by establishment limitations, (4) with career arrangements as comparable with those of university and industrial research as is permitted by civil service classification schedules.
The above are aimed at keeping scientists on departmental strength rather than in Canada generally.


SALES OF QUEBEC CIDER
Mr. Laiulippe: During the last five years, did the Department of Trade and Commerce sell apple cider on behalf of the province of Quebec or producers of that province and, if so, what were, in each case (a) quantities sold (b) value thereof (c) names of buyers?

Answer: The Department of Trade and Commerce assists any Canadian firm or individual to export any product from Canada. The department did not sell apple cider nor does it make a practice of selling on behalf of any Canadian firm, individual, organization or provincial government apple cider or any other product.

BREAD EXPORTS TO NEW YORK STATE Question No. 356


Mr. Laiulippe:: 1.	Were any representations received by the government concerning the passage by the New York state legislature of a measure restricting the sale of Canadian bread in New York state and, if so (a) what is the nature of such representations (b) from whom were representations received?
2.	Is the Department of Trade and Commerce taking any steps to protect Canadian interests in this matter and, if so, what is the nature of such steps?

Answer: 1. I am not aware of any direct representations to the government by the Canadian industry concerning the New York state legislation on bread. The department, however, has been in touch with the industry association representing Canadian bakery interests with respect to this matter.
2. As I stated in the house on Friday, March 6, the U.S. authorities have been

informed of our concern regarding the possible implications of this proposed legislation as it may affect the export of Canadian bread to the United States. They have been made fully aware of our interest in ensuring that Canada's access to the United States' market should continue unimpaired. In addition I understand that Governor Rockefeller of New York state has been informed of Canada's interest in this legislation.


TRIP THROUGH NORTHWEST PASSAGE
Mr. Peters: 1.	In connection with the proposed journey this summer through the northwest passage by Mr. Scott Alexander and Mr. Gerald Waring, what amount of money is Eldorado Mining and Refining Ltd. contributing?
2.	Is it customary for a crown corporation to contribute to this type of private endeavour?
Answer: 1. $5,000.
2. It is customary for Eldorado to support on a limited scale endeavours which it considers helpful in promoting development in areas where it or its subsidiary companies operate.


ACCESS TO CAUSEWAY, NORTH SYDNEY, N.S.
Mr. Muir (Cape Breton: North and Victoria):
1.	Did public notices appear in the press to the effect that, on and after the 25th day of March 1964, any person or persons using the property of H. B. McCurdy to gain entrance to the causeway or ballast grounds used by fishermen at North Sydney will be prosecuted?
2.	If so, what steps are being taken to produce remedial action in the matter so that fishermen will be able to use the facilities provided there?


Jean-Paul Deschatelets: 1. The department has no knowledge of a public notice having appeared in the press.
2. Approval to purchase land from Mr. McCurdy for a public right of way to the ballast grounds is being sought.


POST OFFICE CONSTRUCTION, MARION BRIDGE, N.S.
Mr. Muir (Cape Breton: North and Victoria):
1.	What steps have been taken for the securing of a site for the construction of a new post office building at Marion Bridge, Nova Scotia?
2.	How soon will tenders be called for this building?


Jean-Paul Deschatelets: 1. No action has been taken to acquire a post office site at Marion Bridge, Nova Scotia.
2. Not applicable.


CLOSING OF RADAR STATION, BEAVERBANK, N.S.
Mr. Kennedy: 1. How many civilian personnel will be laid off as a result of the closing of the radar station at Beaverbank. N.S.?
Questions
2. What plans have the government made or are they making to secure alternative employment for these workers?
Answer: 1. A total of 87 civilians are employed at R.C.A.F. station Beaverbank and the number who actually will be laid off will depend upon the number of vacancies available elsewhere in the government service. It will also depend upon the willingness of the employees to move to other areas where vacancies may be available.
2. All civilian employees will be interviewed by personnel officers of the department to determine their availability for transfer beyond the immediate locality, in the event they cannot be placed locally. All employees will be interviewed and registered by the national employment service. The civil service commission and government departments in the area will be provided with particulars affecting all employees scheduled for lay-off. Every effort will be made to find other employment for these persons who are scheduled for lay-off and these efforts will continue after the station closes down. Classified civil servants for whom other civil service employment cannot be found will be placed on an official lay-off list and will be given preference in appointment to future vacancies with the public service in accordance with the provisions of the Civil Service Act. Prevailing rate employees will be offered vacancies at Department of National Defence units within the province of Nova Scotia. Those who cannot be transferred to other employment will be registered with the national employment office in Halifax who will be responsible for attempting to find other employment for them.


*T.C.A.-REPORT ON CHOICE OF DC-9 PLANE
Mr. Marcoux: Does the government plan to have a report made concerning the choice of the DC-9 by Trans-Canada Air Lines (similar to that made by R. Dixon-Speas and associates) and, if so, will the report be tabled after the removal of confidential information relating to T.C.A.'s business transactions?


Mr. Cantin:: No.


COST OF LIVING INDEX
Mr. Mather: What was the cost of living index figures for March 1961, 1962 and 1963?
Answer: The consumer price index (1949 = 100) was 129.1, 129.7 and 132.1 in March 1961, 1962 and 1963 respectively.


SCHOOL TEACHERS AT DEFENCE BASES OVERSEAS
Mr. Smith: 1. How many school teachers were employed at R.C.A.F. establishments in Europe for the year 1963-64?

Inquiries of the Ministry
2.	How many school teachers were employed at army establishments in Europe for the year 196364?
3.	How many will be employed in each case for the school year 1964-65?
4.	How many new teachers from Canada have been offered employment in Europe for the school year 1964-65?
5.	How many of these new teachers are married with dependants?
Answer: 1. As at September 1963, 279.
2.	As at September 1963, 148.
3.	Commencing September 1964, R.C.A.F. 259; army, 136.
4.	136.
5.	10.


* ACCESS ROAD ACROSS C.P.R., SICAMOUS, B.C.
Mr. Fleming (Okanagan-: Revelstoke):
1.	Can the Minister of Transport advise what the present status is of the application by the British Columbia department of highways for a crossing of the main line of the C.P.R. at Sica-mous, B.C. to provide access from the trans-Canada highway to property north of the railroad?
2.	When is it anticipated that a final decision on this application will be delivered by the board of transport commissioners?


John Whitney Pickersgill: I am informed that on February 27, 1964, the board received an amended application from the department of highways of British Columbia. This was immediately referred to the Canadian Pacific Railway Company for their comments. When the railway company's submissions are received they will be given immediate attention by the board.



LABOUR RELATIONS


[Stage Direction]
On the orders of the day:
John George Diefenbaker: I should like to direct a couple of questions to the Minister of Labour regarding the report in the press that there has been wire-tapping in the offices of the maritime trustees. What information does the hon. gentleman have regarding this most illegal and improper act?
Second, is it a fact, as reported in the press, that the Canadian Congress of Labour has demanded that in view of what has taken place in this regard, Hal Banks should be removed from his present position with the seamen's international union?


Allan Joseph MacEachen: With respect to the first question, may I take it as notice and reply on another occasion. With respect to the second question, I have no information that the congress of labour has made any request to the trustees in connection with this particular matter.


John George Diefenbaker: The board of trustees having been empowered by parliament to remove Banks, and Mr. Justice Norris having stated there would not be peace as long as Banks occupied his position, does the minister not think that action should have been taken heretofore in this connection? Has the hon. gentleman any report to give us from the board of trustees in connection with this aspect?


Allan Joseph MacEachen: I hope to be tabling tomorrow the report I have received from the board of trustees on the administration of the five maritime unions.


John George Diefenbaker: Does the report deal with the solicitude with which Mr. Banks has been treated by the trustees since they took office, inasmuch as he has not been removed? Does it deal with that?


Allan Joseph MacEachen: This is obviously an argumentative question and is not intended to elicit information. The board of trustees has been carrying out its functions in accordance with responsibilities assigned to it by parliament, and I think the people of Canada have reason to be confident that the trustees will carry out their duties in an appropriate manner.



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Thomas Clement (Tommy) Douglas: May I direct a question either to the Prime Minister or to the Secretary of State for External Affairs. Can the house be told when it is expected that the Swedish and Irish contingents will join the Canadian force in Cyprus? Second, what progress has been made toward appointing a mediator with a view to reducing political tensions on the island?


Hon. Paul  Marlin@Secreiary of State for External Affairs: With regard to the Swedish force, the government of Sweden announced late on Friday that it was then engaged in the process of recruiting elements of the Swedish contribution. With regard to the Irish force, the foreign minister of Ireland announced that a small advance group was being sent to Cyprus forthwith.
The terms of the resolution authorizing the setting up of an international force provide that a mediator shall be appointed by the secretary general. The secretary general had a definite person in mind, but objection

was taken by one of the communities on Cyprus. He is now engaged in selecting a mediator, and I know he is doing everything possible to make a nomination as quickly as he can.


Gordon Minto Churchill: Could the Minister of National Defence tell us what arrangements have been made for hospital services if required for Canadian troops serving in Cyprus?


Paul Theodore Hellyer: Temporary assistance is being given by the British contingent. There is still some question whether a hospital unit will be provided as part of the United Nations force. I will take this question as notice and give a more specific answer, probably tomorrow.


David Réal Caouette: Mr. Speaker, I should like to direct a question to the Prime Minister.
Could the Prime Minister tell us what reasons and considerations have prompted the government to appoint especially English speaking officers to lead a French Canadian regiment, the Van Doos, which is on its way to Cyprus at present?
Were there not, in Quebec, any French speaking officers in the 22nd regiment?


Lester Bowles Pearson: This regiment is going overseas with its own officers in charge. It would surely be quite improper for the government to try to interfere with the regimental conduct of affairs at this stage.


Gilles Grégoire: Mr. Speaker, I wish to ask the Prime Minister a supplementary question.
At the ceremony which marked the departure of the first battalion of the 22nd regiment for Cyprus yesterday, one could see that the regiment was flying two flags; the United Nations' flag and the English flag.
Can the Prime Minister tell us if the soldiers of the 22nd regiment will fight under the English flag in Cyprus, and what is the meaning of the union jack they fly?


Lester Bowles Pearson: The regiment is going to Cyprus under its own colours and under the colours of the United Nations, and I would be very surprised indeed if the hon. gentleman's statement is accurate that the regiment left under what he called the British flag.
Inquiries of the Ministry [Translation]


Gilles Grégoire: Mr. Speaker, that was seen, yesterday, on the French television network when the Governor General was delivering his speech; we could see then two flags, the flag of the United Nations and the union jack of England.


John George Diefenbaker: Mr. Speaker, I should like to direct a couple of questions to the Prime Minister in connection with the Canadian force that is now in Cyprus or en route thereto. Would he tell the house who is giving the orders to that force? Has the force the right to disarm guerilla bands and the like? Has either Greece or Turkey indicated to the Canadian government the measure of co-operation to be expected in the police duties which the Canadian force has now undertaken? I read in the press that the Secretary of State for External Affairs had been in touch with the foreign minister of Turkey. What assurance was received from either the Turkish government or the Greek government in this respect?


Lester Bowles Pearson: Mr. Speaker, the force will be under the direct military command of the senior United Nations military officer who, as my right hon. friend knows because he has mentioned him recently, is General Gyani of India. The secretary general is at the moment drawing up detailed terms of reference for the force covering, among other things, the point raised by my right hon. friend. Until we have received these detailed terms of reference, I do not think I am in a position to answer his question in detail, but I hope to be able to do so tomorrow or the next day.
In so far as the governments of Turkey and Greece are concerned, they have both indicated to us that they welcome the presence of a Canadian force in the United Nations contingent, and they have welcomed its early appearance in Cyprus.


John George Diefenbaker: May I take it from the Prime Minister's statement that they are willing to do everything they can to co-operate to the end that peace should be maintained on this island?


Lester Bowles Pearson: Yes, an assurance of that nature has been given both to the secretary general in respect of all contingents of the United Nations force, and to us directly.


Mr. J. E. Pascoe (Moose Jaw-Lake Centre):: I have a question for the Minister of Finance. A television news report showed Canadian

Inquiries of the Ministry troops being paid in advance in order, as the report said, that they might pay any debts they had before leaving for Cyprus. My question is, why were Canadian soldiers given United States money to pay any debts in Canada?


Hon. Walter L. Gordon (Minister of Finance):: I would be glad to take that question as notice.


Mr. L. J. Pigeon (Jolietie-L'Assomplion-Montcalm):: Mr. Speaker, I should like to direct a question to the Associate Minister of National Defence. Since our country will pay the full cost of our expeditionary force in Cyprus, does the government intend to supply the 1,100 Canadian soldiers stationed over there with Canadian farm products in order to help our farmers get rid of their surplus crops?


Mr. Speaker:: Order. The hon. member for Comox-Alberni.


Louis-Joseph Pigeon: Mr. Speaker, I rise on a point of order. I asked the Associate Minister of National Defence a specific question and I would be quite satisfied if he could assure the house that the farm products used by Canadian forces in Cyprus will come from Canadian sources.


Hon. Lucien Cardin (Associate Minister of National Defence):: Mr. Speaker, the first supplies will be sent on the H.M.C.S. Bonaventure and will include, of course, Canadian products. Once our forces have arrived in the area, study will be given to the possibility of having Canadian supplies.


Mr. Gerald Laniel (Beauharnois-Salaberry):: Is the Associate Minister of National Defence aware of the fact that all French Canadian hon. members on this side of the house are delighted and proud of the fact that a French Canadian regiment was selected as part of the Canadian peace force in Cyprus?
Also, does the minister realize that our valiant Quebec soldiers will prove once again their attachment to their country and will do honour to the whole province of Quebec?


Louis-Joseph-Lucien Cardin: Mr. Speaker, I am convinced that all hon. members are very delighted to see that the Royal 22nd regiment was chosen, and I know that we can expect the best possible results from the members of that regiment of which we are very proud.
We are also proud to see that other servicemen, like the members of the Royal Canadian Dragoons, will take part and in general I think there is unanimous agreement in regard to the forces we sent to Cyprus.
[Mr. Pascoe.l


David Réal Caouette: Mr. Speaker, I wish to
address a question to the Secretary of State for External Affairs. Naturally, we are very happy about the decision arrived at by the government last Friday-


Some hon. Members:: Oh, oh.


David Réal Caouette: But here is what I wish to find out from the hon. minister. A while ago he admitted that Sweden and Ireland were recruiting men in order to send their contingents to Cyprus. Now, according to an understanding reached at the United Nations, the contingents should have been in readiness; I would ask the minister to tell us how it is that Swedish and Irish troops are not already on the spot and why is Canada always so eager to be first and foremost, when it comes to meddle into other people's business?


Mr. Martin (Essex East):: Mr. Speaker, in the first place, that question should be asked of the Swedish and other countries' governments. In the second place, as a Canadian, I am proud of what we have done, here, in Canada.


Louis-Joseph Pigeon: Mr. Speaker, I should like to direct a question to the Associate Minister of National Defence. Is the minister aware that it is the previous government, under the leadership of the right hon. representative for Prince Albert (Mr. Diefenbaker) which designated the Royal 22nd Regiment to be at the disposal of the United Nations at all times?


Louis-Joseph-Lucien Cardin: Mr. Speaker, we recognize this fact but I also believe that most hon. members would hate to play politics with this important question.


Louis-Joseph Pigeon: Mr. Speaker, I rise on a question of privilege. I put a very appropriate question to the minister, following the compliments made by the hon. member for Beauharnois-Salaberry (Mr. Laniel). I feel that my question is most appropriate and, on this side of the house, we have only one concern, namely public interest.


ARTS, LETTERS AND SCIENCES ROYAL COMMISSION  IMPARTIALITY OP CO-CHAIRMAN
[Stage Direction]
On the orders of the day:
Robert Norman Thompson: Mr. Speaker, my question is to the Prime Minister. It has come to my attention that Mr. Andre Laurendeau, co-chairman of the royal

commission on bilingualism and biculturalism, is also first vice president of La Ligue d'Action Nationale. In the last issue of its official publication, "L'Action Nationale", an article by one Michel Brochu foresees the future division of Canada, demands that when this is accomplished there shall be conscription in Quebec and one third of Canada's military equipment and establishment should be turned over to Quebec, and goes on to say that instructors and training facilities would be requested from France.
Because statements such as these create grave doubts in the public mind as to the impartiality of Mr. Laurendeau in his capacity as co-chairman of the royal commission, will the Prime Minister undertake to obtain an official statement from Mr. Laurendeau dissociating himself from such policies of La Ligue d'Action Nationale or from the royal commission on bilingualism and biculturalism?


Lester Bowles Pearson: In view of the request made by the hon. gentleman I will make inquiries, of course, into his allegation, but I may say at once that I have no knowledge of any association on the part of the vice chairman of the bicultural commission-


An hon. Member:: Co-chairman.


Lester Bowles Pearson: Co-chairman-which would prejudice him in any way in the discharge of his important duties.


Robert Norman Thompson: A supplementary question, Mr. Speaker. Would the Prime Minister care to have a copy of this publication which shows his position in the organization?


Lester Bowles Pearson: That would be part of the inquiry I would be making.



PENSIONS


[Stage Direction]
On the orders of the day:
Hon. J. W. Monleiih (Perth):: Mr. Speaker, I should like to direct a question to the Prime Minister. In view of what the Prime Minister said in Toronto last Saturday evening when speaking on the Canada pension plan, namely "We are going to push this ahead as fast as we can consistent with the most careful examination that can be given it", and in view of statements made by the Minister of National Health and Welfare to the effect that she would welcome the fullest inquiry possible, is it the intention of the Prime Minister to have the pension bill examined by a parliamentary committee before second reading?
Inquiries of the Ministry


Lester Bowles Pearson: Mr. Speaker, if the resolution is adopted I hope we will be able to give second reading to the bill before the Easter recess, and then send it to a parliamentary committee.


Mr. Stanley Knowles (Winnipeg North Centre):: A supplementary question, Mr. Speaker. Will the Prime Minister arrange for the necessary change in house business, or have consultations with representatives of the various parties in the house in order that the business of the house can be arranged so that we can get this done before Easter?


Lester Bowles Pearson: Yes, Mr. Speaker, we would be glad to have such consultations.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. Andrew Brewin (Greenwood):: Mr. Speaker, my question is to the Minister of National Health and Welfare. Would she tell the house if the "very careful and active consideration" which she informed us on December 6 and again on March 3 was being given to the request for increased federal contributions to hospital bed construction has as yet produced any definite decision by the government in respect of this matter? If not, how soon can we anticipate such a definite decision?


Hon. Judy V. LaMarsh (Minister of National Health and Welfare):: Mr. Speaker, I should like to say to my hon. friend that the matter is certainly under direct consideration. It is a very complex and difficult subject. I cannot advise the house when an answer may be given. It may well be that it will not be until after further discussion of the matter between provincial and federal representatives at the Quebec conference at Easter. As quickly as an over-all formula can be devised it will be announced in the house.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. Robert Simpson (Churchill):: I should like to direct a question to the Minister of Defence Production. Can the minister inform the house whether any arrangements have been completed to assure the continuance of power and water services to the community of Cranberry Portage, Manitoba, when the mid-Canada site adjacent to the community ceases to operate on March 31? If not, will

Inquiries of the Ministry the minister take the appropriate steps to assure continuance of these most important services?


Charles Mills (Bud) Drury: In
answer to that question, as well as the question asked by the hon. member for Churchill the other day of the Minister of National Defence, I might say we have been in touch with the premier of Manitoba, reflecting the government's desire to see that the closing down of the station at Cranberry Portage should have a minimal dislocating effect on the population of the town, and we have also been in communication with the department of municipal affairs. A representative of the area development agency is going to Manitoba to ensure that the necessary arrangements for the interregnum are made.



INQUIRIES RESPECTING PROTECTION OF ARMS AND AMMUNITION

[Stage Direction]
On the orders of the day:
Mr. Eric A. Winkler (Grey-Bruce):: I have a question for the Minister of Justice. Can the Minister of Justice inform the house if he has any more information with regard to the identity of those responsible for the break-ins and robberies at the armouries in the province of Quebec?


Guy Favreau: My
answer must be the same as the one which I gave earlier.


Eric Alfred Winkler: I wonder if the minister has seen a statement in this morning's Gazette in which it is reported that the master mind of these break-ins and his identity are well known within the area of Montreal, and he is currently known as "Mr. X, the untouchable"?


Guy Favreau: No.


John George Diefenbaker: In that connection, I have not been able to find any information on this, therefore I ask the Minister of National Defence. Is there any basis in fact for an article that appears in Le Petit Journal to the effect that a group of machine guns were removed from the citadel? Is there any foundation for that article? Because certainly it is the type of thing which, unless true, should be denied at once.


Paul Theodore Hellyer: I have not seen the article, but there is nothing in it to my knowledge.


Mr. A. D. Hales (Wellington South):: I should like to direct a question to the Minister of National Defence. In view of the fact that the Guelph Royal Canadian Sea Cadet corps were ordered to ship their guns and

ammunition to the Longueuil, Quebec naval depot, will the minister have them returned as soon as possible so they can continue with their training?


Paul Theodore Hellyer: I am sure that as soon as they meet the necessary security requirements, the arms will be returned.



EDUCATION


[Stage Direction]
On the orders of the day:
Mr. Arnold Webster (Vancouver-Kingsway):: I should like to direct a question to the Prime Minister. In view of the recommendation of the Canadian teachers federation that a study be conducted on a national scale into the problem of educational inequalities across Canada, is it planned to place this question on the agenda of the federal-provincial conference to be held at the end of March?


Lester Bowles Pearson: I am grateful to the hon. member for giving me notice of this question. The teachers federation brought this matter to my attention before the last provincial conference, and at that time I agreed to inquire of the provinces whether it was a matter which they thought should be discussed or a matter which fell within their jurisdiction, that is the equalization of educational opportunity. I did that, and there was no reaction on the part of the provinces to put the subject on the agenda of the forthcoming conference. It is my view that while the federal government has an interest and its own responsibilities in certain phases of the subject, a discussion of this kind should be initiated by the provinces since they have jurisdiction in this field. If the provinces or a province would initiate such a discussion, and put it on the agenda of the federal-provincial conference, we would be glad to participate in that discussion.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. W. H. Jorgenson (Provencher):: I should like to ask the Minister of Agriculture if he is in agreement with the transfer of his responsibilities for ARDA, the Farm Credit Corporation, the Maritime Marshland Rehabilitation Act, the Prairie Farm Rehabilitation Act and the program respecting freight assistance and grain storage on western feed grains?


Harry William Hays: These are confidential matters-


Some hon. Members:: Oh, oh.


Harry William Hays: -upon which I suppose a statement will be given to the house by the Prime Minister later today.


Warner Herbert Jorgenson: I have not asked the minister to reveal what went on in the cabinet meeting, I am simply asking him to tell the house if he was in agreement with the transfer of his duties.


Mr. Speaker:: Order.


Mr. J. H. Horner (Acadia):: Mr. Speaker, I have a question that I am sure the house would be glad to have an answer to, if I may ask it. On March 10 I asked the Prime Minister whether he could inform the house and the country how the division of the responsibilities of various departments was to be effected as between the new department of forestry and agriculture. The Prime Minister at that time said he would reply in due course. The house has been informed that the Prime Minister has a reply ready, and I wonder whether we might hear it.


Lester Bowles Pearson: No, Mr. Speaker, not on orders of the day, obviously; but as soon as I am given an opportunity, I will be glad to go into that matter.



TRANSPORT


[Stage Direction]
On the orders of the day:
Mr. H. Russell MacEwan (Pictou):: I have a question for the Minister of Transport. Has the minister received any communication regarding the possible detrimental effect on the tourist trade as a result of increased wharfage charges? If so, would he consider amending the regulations at places where ferries ply between two provinces?


John Whitney Pickersgill: As a matter of fact, Mr. Speaker, before anyone else had brought this matter to my attention, my colleague the Solicitor General did so. He was authorized by the government at once to indicate that since there was an understanding that the fares between Caribou and Woods island and between Borden and Tormentine would be the same, this would be an inappropriate charge to make and the necessary change, as he indicated nearly a week ago, is being made so that no such charge will be imposed.
Inquiries of the Ministry


Howard Russell MacEwan: May I ask a supplementary question. Does this mean that regulations have been changed for such services all over Canada, or just the two services? I read a report in the Charlottetown Guardian stating that the Solicitor General had made representations to this effect concerning the two services the minister mentioned.


John Whitney Pickersgill: The case with regard to that particular service was so clear that there was no need to have an investigation made. But, at the same time, I asked to have all the others looked into to see if there were any anomalies of any sort and, if there are, they will be corrected.


Mr. Fred T. Armstrong (Shelburne-Yar-moulh-Clare):: Mr. Speaker, will the minister say if the new wharfage rates will also affect the Yarmouth-Bar Harbor ferry Bluenose?


John Whitney Pickersgill: Mr. Speaker, I feel quite sure this is the kind of local or regional question that would be best put on the order paper, and I am sure my hon. friend would be delighted to do that.



INCREASE IN TOLLS ON ST. LAWRENCE SEAWAY

[Stage Direction]
On the orders of the day:
John (Jack) Henry Horner: Mr. Speaker, may I direct a question to the Minister of Trade and Commerce. Can he confirm or deny reports in this morning's newspapers that the Canadian government is attempting to have the tolls increased on the St. Lawrence seaway?


Hon. Mitchell Sharp (Minister of Trade and Commerce):: Mr. Speaker, this is not a question that should be directed to me but rather to the Minister of Transport.


John (Jack) Henry Horner: Mr. Speaker, I wonder if I might redirect my question to the Minister of Transport.


John Whitney Pickersgill: Perhaps if the hon. gentleman would put his question on the order paper it could be answered. There is no urgency.


Mr. Thomas M. Bell (Saint John-Albert):: Mr. Speaker, I have a question for the Minister of Transport on the matter of seaway tolls, which is a question of great importance to the maritimes. Will the minister merely give an assurance to the house now that there will not be any change in seaway tolls until July, when the commission is to report to the government?


John Whitney Pickersgill: Mr. Speaker, I think I would have to consider very carefully the

Inquiries of the Ministry wording of that question before I could give a reply with which I would be satisfied.


Mr. Speaker:: Orders of the day.


Thomas Miller Bell: Will the minister make a statement as soon as possible about this matter of the seaway tolls, which is looming larger all the time to the maritimes and other sections of the country?


John Whitney Pickersgill: I would be very glad to do that, Mr. Speaker. As hon. members know, the premier of Ontario made representations to the government of Canada about certain aspects of this matter, which are under consideration by the government. As soon as I can say what the government's position is, in the light of those representations, I will do so.



BROADCASTING


[Stage Direction]
On the orders of the day:
Mr. T. S. Barnett (Comox-Alberni):: Mr. Speaker, I would like to direct a question to the Minister of Transport. I would like to know whether the amendments to part 2 of the regulations under the Radio Act, as found in the Canada Gazette of March 11, were made as a result of a report from the board of broadcast governors on the matters that were jointly referred to them by the minister and the Secretary of State at the beginning of the year. If this is so, I would like to ask whether this is the only action which the government is planning to take in respect to cable television at this time.


John Whitney Pickersgill: Mr. Speaker, it seems to me that is a highly technical question that no minister could be expected to answer without notice on orders of the day.


Alfred Dryden Hales: As a supplementary-


Mr. Speaker:: I must say I cannot possibly see a supplementary on a question like that. [Later:]


Thomas Speakman Barnett: Mr. Speaker, I should like to rephrase my question to the Minister of Transport in words that may be more suited to the untechnical mind of the minister. I would ask him whether any report has been received from the board of broadcast governors on the matters concerning cable television that were referred to them at the beginning of the year; and if so, whether the government has taken any action upon the recommendations of the board.


John Whitney Pickersgill: Mr. Speaker, the government has not yet received the report, but I understand it will be available in a day or so.


Mr. D. V. Pugh (Okanagan Boundary):: Mr. Speaker, I have a supplementary question for the Minister of Transport regarding cable television. Has the ban on the issuing of cable television licences been lifted?


John Whitney Pickersgill: Mr. Speaker, there is not precisely a ban on these licences. It was decided that until the B.B.G. had made its report and the government had had a chance to look at that report, no new licences would be issued. But this was not meant as a ban; it was meant as a deferment pending a resolution of policy, to avoid situations arising which would perhaps have to be corrected.
As I have already indicated to the hon. member for Comox-Alberni, the government expects to have the report of the B.B.G. in the next day or two. Until the government has considered that report it would be quite improper for me to say anything about it.


Alfred Dryden Hales: supplementary question to the Minister of Transport, Mr. Speaker. When the minister has received the report of the board of broadcast governors, will he assure the house that no regulations will be made through order in council, but rather will be referred to the house for debate and consideration?


John Whitney Pickersgill: I think I can quite safely assure the hon. gentleman that no such orders in council will be passed before the report is made public.


Some hon. Members:: Oh, oh.


Mr. Nielsen:: That is quite some assurance.


Mr. Speaker:: Order, please. I really must ask for the co-operation of hon. members. Orders of the day.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Erik Nielsen: Mr. Speaker, on March 9 I asked the Prime Minister whether he had received a telegram from the chamber of commerce in Whitehorse respecting a serious unemployment situation which is shaping up there, and referring specifically to certain construction work. He said at that time he would look into the matter at once, and I wonder whether he has had an opportunity to do this.


Lester Bowles Pearson: Yes, Mr. Speaker, I looked into the matter at

once, and 1 had not received such a telegram. I shall have another look to see if it has come in since then.



GRANDE PRAIRIE, ALTA.-PROVISION OP STRIKE- BREAKERS BY EMPLOYMENT OFFICE

[Stage Direction]
On the orders of the day:
Thomas Clement (Tommy) Douglas: Mr. Speaker, may I direct a question to the Minister of Labour which I directed to him on Friday last, and ask him whether he has yet received a telegram complaining that the national employment office at Grande Prairie, Alberta, is supplying strikebreakers to an I.W.A. strike bound plant owned by Canadian Forest Industries Limited. If he has received this complaint, then I ask him whether the information is accurate, and what action is being taken.


Allan Joseph MacEachen: Mr. Speaker, I have received that telegram, and I wish to inform my hon. friend that the national employment service is referring workers to this plant but is explaining to them the labour situation that prevails there. I am informed by the commission that this is the practice that has been followed by it since its inception; that in the case of a strike bound plant the national employment service will tell workers of the labour situation that exists there, and if they so wish they are entitled to receive employment, as the employer is entitled to receive the service of the national employment service in cases of this kind.


Thomas Clement (Tommy) Douglas: As a supplementary question, did I understand the minister to say on Friday that the contents of the wire were, in his opinion, highly inaccurate; and may I ask him why there has been a change in his attitude when he says now that this is standard policy?


Allan Joseph MacEachen: Because I attach, as my hon. friend does, a special meaning to the term "strikebreakers," and in no case is the national employment service recommending professional strikebreakers for this plant. It is recommending workers for employment.


Mr. Gerald A. Regan (Halifax):: As a supplementary question, would the Minister of Labour assure the house that if a worker declines to take employment in a strike bound plant his unemployment benefits will not be suspended?


Allan Joseph MacEachen: Mr. Speaker, this is an aspect of the problem I would like to investigate.
Supply-Citizenship and Immigration



VAL D'OR-PAYMENT OF UNEMPLOYMENT INSURANCE TO STRIKING MINERS

[Stage Direction]
On the orders of the day:
Allan Joseph MacEachen: While I am on my feet I want to reply to a similar question which the hon. member for Villeneuve asked last week, and to say that certain workers involved in the plant to which his question referred had been disqualified because they were involved in a work stoppage. This is the standard practice of the commission. The efforts of the Quebec mediation service are directed to a settlement in this particular case, and there is no indication that the plant has been closed down.


Mr. Speaker:: Orders of the day.


John (Jack) Henry Horner: Mr. Speaker, I have a question-


Mr. Speaker:: Order, please. May I point out to hon. members that it is now four o'clock, and unless the questions are really pressing we should proceed with the business of the house.



INQUIRY OF THE MINISTRY

[Stage Direction]
On the orders of the day:
Gilles Grégoire: Mr. Speaker, I would like to ask the Prime Minister a question.
Does the right hon. Prime Minister support the motion of censure by the Liberal caucus with regard to the hon. Minister without Portfolio, the hon. member for St. Jean-Iberville-Napierville (Mr. Dupuis)?


Hon. Yvon Dupuis (Minister without Portfolio):: It is a timely question by an expert in party undermining-not the Social Credit rally but the "Social Credit break up".


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

The house in committee of supply, Mr. La-moureux in the chair.
CITIZENSHIP AND IMMIGRATION Immigration branch-
20e. Administration of the Immigration Act, $133,800.


The Chairman:: Shall this item carry?


Erik Nielsen: Mr. Chairman, on Friday last while the Minister of Finance was out of the house and his colleague was "subbing" for him, I asked a number of questions and I asked for an undertaking by the minister-

Supply-Citizenship and Immigration in order to save the time of the committee- to have replies to those questions either mailed to me or tabled later in the house. I wonder whether the minister could give me an undertaking that the questions I asked on Friday will be answered either by letter or by tabling the answers.


Walter Lockhart Gordon: Mr. Chairman, I must apologize to the hon. member. I have not the answers yet. However, I will look into the questions and write the hon. member at the earliest possible opportunity. I hope he will forgive me if that is not until tomorrow.


Erik Nielsen: Certainly, Mr. Chairman. Some of the questions I asked concern, of course, other ministers and I would be quite happy to have replies from his now seatmate, for instance, the Minister of Citizenship and Immigration, because a good many of the questions concern his department. As long as I have the undertaking, I am quite happy.


Louis-Joseph Pigeon: Mr. Chairman, I read in the press various articles on a situation now prevailing in the province of Quebec, to the effect that the provincial authorities do not seem to co-operate with the federal Department of Citizenship and Immigration, as in other provinces, in order to encourage immigrants to settle in the province of Quebec to the greatest possible extent.
I would like to ask the minister if he intends or has already taken steps to have a special office set up in the province of Quebec-as is the case in Ontario, for instance- which would co-operate with the minister's department, so that Quebec would get its share of immigrants and help them obtain the same privileges as in the other provinces?


Mr. Tremblay:: Mr. Chairman, as my predecessor explained before, it is this government's policy to seek the fullest co-operation of the provincial departments to establish an immigration policy. We shall always be happy to see all the provinces answer the wish expressed by the Department of Citizenship and Immigration.


Louis-Joseph Pigeon: Mr. Chairman, I would like to ask the hon. minister a supplementary question. Has the government of the province of Quebec expressed the desire of having an immigration office, as I asked before now?


Léonard-David Sweezey Tremblay: I think, Mr. Chairman, that it is up to the provincial authorities to indicate their policy. As far as our own policy is concerned, it has already been made known, and I think that it is not appropriate for a federal minister to suggest the policy to be followed to a provincial government.


Louis-Joseph Pigeon: Mr. Chairman, I have another supplementary question.
The minister mentioned last week, that more provinces had expressed the wish to receive French speaking immigrants from Algeria. Could he tell the house whether certain provinces, among which Quebec, actually made a request to that end?


Léonard-David Sweezey Tremblay: Mr. Chairman, I explained my position with regard to this matter last week.


Mr. Aiken:: Mr. Chairman, I have several questions in connection with the proposed Indian claims commission that I should like to ask now and perhaps they could be dealt with together. I should like to ask how many replies in general have now been received from the Indian bands in connection with comments on the draft legislation which was sent out, and also how long the minister intends to wait for replies. In other words, to what date have replies been requested. Third, has there been a follow-up letter sent to those Indian bands which have not yet commented on the draft legislation?


Léonard-David Sweezey Tremblay: Mr. Chairman, I cannot say exactly how many replies we have received from the Indian groups to whom a letter had been sent asking their views on the setting up of the claims commission. They are still being received in the department.
As far as the second question is concerned, we asked in our letter that replies be forwarded before April 30, 1964.
In regard to the last problem raised by the hon. member, I wish to say that we will always be pleased to receive comments from interested persons before the bill is resubmitted to the house for consideration.


Gordon Harvey Aiken: I wonder whether I might ask just one more question. Can the minister tell us whether there will be any indication to the house as to the nature of the replies which he is receiving from the bands? I refer in particular to questions such as the two year limitation period on claims which may be made, which may thereby wipe out existing claims which have been there for 200 years. Has there been any comment on this particular subject, or are the comments which the minister has received ranging widely across the bill?


Léonard-David Sweezey Tremblay: Mr. Chairman, the purpose of such consultations is to permit the government to take note of claims and comments presented by the various Indian groups

before taking a final decision on this bill which the house has already considered to some extent. Such comments are made directly to the minister, and I have already indicated their nature to the house.
The recommendations and comments are considered by the minister and he will personally bring them to the attention of the cabinet in order that the bill, as amended, may be submitted to the house. Those consultations are, therefore, intended to inform the government and will not be made public.


Mr. Rheaume:: Mr. Chairman, on Friday I asked the minister for reassurance on one or two points and before the item passes I wonder if he could give me that reassurance. That is all I want him to do. I would just repeat my points briefly. Will he reassure the house that he is prepared to take up with the officials of his department the possibility of making an administrative decision whereby the rates of financial assistance to the Indian people of this country shall be no less than the rates being offered non-Indians in identical circumstances in the same community? I am not asking him for his decision; I am asking him to reassure the house that he will take a reading on this possibility, because I am satisfied that all that is required is an administrative decision.
I am also satisfied that no member of this committee would oppose or chastise the minister if in his next estimates he asked for those funds which would allow him to see to it that the Canadian Indian people will not be treated as second class citizens when qualifying and applying for financial assistance. That is the first reassurance I am requesting.
From the minister's answer to the hon. member for Parry Sound-Muskoka I take it that the time limit his department will set before introducing the legislation in respect of the Indian claims commission will be April 30. He has indicated to the Indian people that he wishes to have their views by then and that at that point the department will not wait any longer before bringing this legislation before the house.
The third point on which I ask for a reassurance is that his department will look into the possibility of setting up a contingency fund to provide for the costs of legal expenses incurred by those Indian people who require to go to court in certain areas. There are many areas in Canada in which we are not sure whether, for example, the provisions of the Migratory Birds Convention Act prevail or the treaty signed with the Indian people, and until such time as the Indian claims commission is a reality and has a
16. 1964	955
Supply-Citizenship and Immigration chance to examine the claims of the Indian people, which will be a matter of a few years, there will from time to time be those cases where the Indian people will want to appeal from decisions of lower courts. Therefore I want the minister to assure the committee and to assure the Indian people of Canada that the cost of legal services to present their case adequately will be provided to them. I hope the minister can do that before this item passes.


Léonard-David Sweezey Tremblay: Mr. Chairman, as regards the first point raised by the hon. member for Northwest Territories (Mr. Rheaume) concerning Indian welfare measures, I agree with him that the problem is not a simple one, although I am in complete agreement with him when he says that the Indians and other Canadian citizens, must be placed on an equal footing in regard to welfare benefits. It is precisely for that purpose that a federal-provincial conference will be held in May where the federal government will try to seek the co-operation of provincial governments so that in future, the Indians may profit from some adjustments in regard to the benefits given the citizens of other provinces in the field of social welfare.
As far as the second point raised by the hon. member for the Northwest Territories on community developments is concerned, we are quite pleased to say that this program is the very basis of our policy for the Indians. We followed with a great deal of interest the plans worked out in Manitoba and Saskatchewan on community developments.
We will be quite pleased, during our coming negotiations with the provinces, to find out how we could speed up those community development programs.
I might say that in the department, we are now reviewing all our Indian services in the light of the new policy which is being worked out.
As for the third point, that is payment by the federal government for legal services provided Indian groups who have to bring claims before the courts, this poses a more difficult problem. It is a very serious problem which was brought before the department on various occasions by the Indians.
We have a team working on that particular problem, in view of the new legislation to be brought before the house concerning Indian claims.
There are many facets to that problem. I am not yet in a position to announce the departmental policy in this respect, but I can
956	HOUSE OF
Supply-Citizenship and Immigration assure the hon. member that we do our best to help those Indian groups as far as this matter is concerned.


Mr. Cameron (Nanaimo-Cowichan-The Islands):: Mr. Chairman, I should like to call to the minister's attention a court case which took place in my constituency last week concerning an alleged offence by Indians in the way of contravention of the provincial game act. They had been convicted in the magistrate's court. Two of them had chosen to serve jail sentences in preference to paying fines. Others had been fined. Last week, Judge Swencisky of the Supreme Court of Canada-


An hon. Member:: The county court.


Colin Cameron: The county court; pardon me. Judge Swencisky reversed the decision of the magistrate's court and ordered the refund of the fines to those who had paid fines. He also expressed the view that if, as was, I think, indicated in court, the crown in British Columbia were to proceed to appeal this case to a higher court, then in his opinion the Indian affairs branch should foot the bill for the defence by these Indian citizens against that appeal.
I wonder if the minister could tell us whether his department has discussed this possibility-whether the matter has yet come to his attention-and whether anything has been done, too, with regard to providing some compensation for the men who had chosen jail sentences, instead of paying fines, so as to be consistent with the judge's order that fines should be returned to those who had paid them.


Léonard-David Sweezey Tremblay: Mr. Chairman, I do not have details here concerning the specific case raised by the hon. member. However, I can say that in cases where Indians were faced with actions taken in courts by provincial authorities, we follow these cases very carefully and we await final judgment, either in the lower courts or in the appeal courts.
But if reference is made to the more general problem of our position in relation to the rights the Indians may have with respect to fish and game, we will be very happy, when the commission of Indian claims is set up, to introduce a general policy on Indian affairs with respect to the established rights of Indians in the field of fish and game.


Mr. Lessard (Lake St. John):: Mr. Chairman, first of all, I would like to repeat the question I directed last week to the right hon. Prime Minister (Mr. Pearson) who was


advising me of his government's policy towards immigration, following an announcement by an employee of the Department of Citizenship and Immigration to the effect that an amount of $300,000 or more would be spent besides the amount granted annually, in order to attract more British immigrants to Canada.
An advertisement appeared in the press about five or six weeks ago, I believe, to the effect that the government would spend an additional $200,000 or $300,000 in England in the country to attract British immigrants to Canada.
I know that the government at the present time maintains seven offices in England to attract English immigrants to this country. There are also five offices in Germany and one in each of the other countries in which we are interested.
I would really like to know, from the minister, how the government intends to proceed in future to encourage nationals of other countries to come to Canada, so that there may be not only one group.
In France, where the population is almost identical to that of England, I find that we have only one office to attract immigrants and attend to the necessary publicity to induce French immigrants to come to Canada.
There is also Italy, where people readily expatriate themselves. In that country, there is a population of over 50 million people, and yet, we have only one immigration office there.
Mr. Chairman, I believe that if the government intends to instil a little more life into its immigration policy and to make a somewhat more appropriate selection of prospective immigrants to Canada, it should also consider other countries where there are possibilities of attracting interesting individuals who would become an asset for our country.
England is not the only source where we can find good citizens for Canada. I have no intention of discriminating in any way against British citizens who are coming to settle in Canada; I am convinced that they are excellent citizens.
On the other hand, we should consider opportunities of attracting equally good citizens from France, Belgium and Italy.
I think that the government should make available greater facilities to help the immigration offices in those countries do a better job.
In recent articles published in the press, it was said that the employees of our immigration offices in Europe, on the continent, were travelling about from place to place and had no real interest in administrating Canada's immigration policy, as they had

been sent there as a good riddance. Even here, in Canada, they would not have been taught a very definite policy nor given the necessary funds to administer the immigration program that had been indicated to them. On the whole, those people in the various Canadian immigration offices in Europe are more or less frustrated in their jobs.
I would like the minister to tell us what his intentions are regarding the policy he wants to promote for attracting to Canada other people than citizens of the British Isles.


Léonard-David Sweezey Tremblay: Mr. Chairman, the basic policy of the present government in the field of immigration is surely to increase publicity in countries likely to send us qualified immigrants. And this also entails an increase in the number of offices and of personnel.
Traditionally, this immigration has been directed towards certain European countries most likely to provide us with the type of immigrants required for the industrial development of Canada.
We intend to maintain this immigration policy in European countries, to increase the number of offices in France and in addition, to keep on looking into the possibilities of immigration from new or older countries which have not yet provided a great number of immigrants.
In other words, we are now revising our whole immigration policy precisely to be better able to determine the possibilities, in men, which the various countries of the world offer us in order to attain our objectives.
I thank the hon. member for pointing out to the department the need to increase its publicity and its activities in some European countries.


Mr. Mandziuk:: Permit me to speak in the same vein as the hon. member who was addressing the committee a few moments ago. I was pleased to hear him suggest that we should broaden the opportunities available to nationals of other countries who wish to enter Canada. I was pleased to hear him support this open door policy. Of course I do not believe any Canadian government could take effective steps to increase the flow of immigrants from iron curtain countries in central and eastern Europe. I have in mind Ukrainians, Lithuanians, Estonians, Latvians and others such as came here before the world war, established themselves here and are now making a splendid contribution.
I am all in favour of setting up more offices in France, Italy, and other countries from which larger numbers of immigrants might be expected to enter this country. I say this because we have wide open spaces;
Supply-Citizenship and Immigration we have lots of room and if we do not encourage these people to come, those in the congested areas of Asia will be looking across the Pacific and wondering why we keep them out.
I referred to a press report that the government of Manitoba had indicated a willingness to welcome a certain number of Algerian refugees. I hope that is correct. Manitoba is one of the most cosmopolitan provinces in our dominion. People of all races live there as Canadians with no squabbling. In fact, they are not even trying to set up a separate state of Manitoba or anything like that. We would welcome the Algerians, but there is some concern in Manitoba and other parts of the west over one matter and I should like the minister to give me an answer.
Does the admitting of Algerian refugees to Canada entail any expense on the part of the government? I know these people are unwelcome in Algeria, which has become an independent state after the revolution which lasted for five or six years. I can understand the situation of these people. Are they coming in as sponsored immigrants, are they coming in on their own or are they going to be supported as refugees in the same way that we supported the Hungarian refugees from Budapest after the 1956 rebellion had failed? I think this matter should be clarified for the people of western Canada, because they want to know the answer.


Walter Lockhart Gordon: First of all, may I say I agree with what my hon. friend said about the various peoples who now comprise the Canadian nation. I happen to have the privilege of representing a riding where the people come from all sorts of different origins. As the hon. member was speaking and as the hon. member for Lake St. John was speaking I was thinking particularly of the Italians, Ukrainians, Lithuanians and those from other iron curtain countries, as well as the French and the British, and may I add another minority group, the Scots.


J. Nicholas (Nick) Mandziuk: By all means, the Scots.


John (Jack) McIntosh: What do you mean, minority?


Walter Lockhart Gordon: On the particular point about the Algerians, my understanding is that the French government itself is assisting financially the emigration to this country of the people to whom the hon. member refers.


J. Nicholas (Nick) Mandziuk: Are they assisting them only to the extent of coming to this country or will they be assisting them to become established?


Walter Lockhart Gordon: I think they are going to assist them to get established here.

Supply-Citizenship and Immigration


Mr. Baldwin:: Mr. Chairman, I want to address a very few remarks to the Minister of Citizenship and Immigration and in doing so to support what was said by the hon. member for Yukon and the hon. member for the Northwest Territories with regard to the Indian claims commission. I recognize that the minister has not had too long at his task. The department is a very complex one and I wish him every success in his efforts to deal with the problems that come before him.
I want to suggest that he and his officials take a most careful look at what the terms of reference of this commission will be. Some of the litigation which has been referred to, some of the actions, some of the trials, stem from matters which should have been in the hands of an Indian claims commission at this time. I was a member of the joint committee on Indian affairs and we considered many of these contentions over a period of years. Many of the matters which were brought to our attention by the Indians have now been ventilated in court.
I refer in particular to the case which was brought to the attention of the minister by the hon. member for Nanaimo-Cowichan-The Islands. If the minister will recall, on March 6 I brought this specific case to his attention and asked him if he and his department would consider engaging counsel to represent these Indians, because a very important principle was involved. That principle was whether or not the royal proclamation of 1763 applied. If it did apply, then the entire issue involving a lot of the crown lands in British Columbia would be brought before the courts for adjudication at one time or another and some very serious questions might arise as to the status of these lands. This is one of the issues which was brought to the attention of the Indian affairs committee.
There is also a recent case from the supreme court of Manitoba decided by the Supreme Court of Canada as to the right of Indians to hunt and trap on certain unoccupied crown lands. It is interesting to note that in that case many of the attorneys general filed briefs. The attorney general of Quebec filed a brief in which he took the position that the Indians in Quebec were subject to all of the provincial game laws with respect to hunting, fishing and trapping. The brief filed by the attorney general of the province of Quebec flies right in the face of the Quebec Boundaries Act of 1912.
Then there are some decisions by a very distinguished jurist in the Northwest Territories, Mr. Justice Sissons, formerly a member of the house, and other decisions in Ontario as well. In other words, there are a number of issues involving Indians. There is

the question of the treaties signed in western Canada which, as I read them, quite plainly purport to give the Indians the right to continue to fish, hunt and trap in the provinces of western Canada. As far as Alberta and Saskatchewan are concerned, the natural resources were transferred by the federal government to the provincial governments, and the provincial governments by their game laws which they say apply have in effect curtailed what seemed to be rights guaranteed to the Indians by these treaties.
These are all matters which I would suggest to the minister should be encompassed within the four corners of any terms of reference in connection with the Indian claims commission. It is not just that these Indians should be compelled to go to the expense of engaging counsel, of having to appear before the trial judge, then the appeal division of the province and finally the Supreme Court of Canada in order to test the validity of the stand they have taken for many generations, namely that these are rights to which they are entitled.
If in framing the terms of reference of the Indian claims commission the minister and his officials narrow and restrict them I believe they will be doing an injustice to the Indians and to the people of Canada who want to see the Indians get a reasonable break, justice and equity. I suggest to the minister that he should give the most careful consideration to the terms of reference so that all matters now remaining to be decided can be brought before this commission and settled once and for all.


Francis Andrew Brewin: Mr. Chairman, I should like to take the opportunity of the discussion of the supplementary estimates to ask the Minister of Citizenship and Immigration one or two questions. I appreciate, as do other members, that the minister has only recently taken on the responsibility of this important portfolio and I should like to take the opportunity to wish him all good luck in the carrying out of that responsibility.
I have two matters which I think are of very great importance in the administration of the Immigration Act and I should like to ask him about them. First, can the minister say whether he and his department are considering amendments to the Immigration Act, and regulations to eliminate the remaining traces of discrimination on racial grounds from the act? I think this is something that is long overdue, and I hope this matter is being given consideration.
As for the second point I wish to draw to the attention of the minister, I believe there is need for the amendment of the act so as to provide that hearings on deportation cases

and cases of application for admission to Canada should be the genuine hearings which I think parliament contemplated in the Immigration Act. They should be hearings which have the true nature of proper hearings in accordance with the principles of the bill of rights and the fundamental principles of justice. That means that those who are being dealt with should have some idea of the reasons for deportation and the reasons for their exclusion.
I know there are difficulties about this matter but at the moment, in my experience, many of these proceedings are of a highly farcical nature. I will enlarge on this when the estimates of the minister come before the committee. I hope he is looking into this matter now and that we can anticipate action.


Léonard-David Sweezey Tremblay: Mr. Chairman, I thank the hon. member for having called the attention of the house to those problems which will soon be looked into seriously by the government.


John (Jack) McIntosh: I have a very brief question for the minister, which I think will come under the heading of field inspectional services abroad. Are all the employees of these offices abroad Canadian citizens? If the answer is no, then do the powers of those employees, who are citizens of the country in which the office exists, extend to the determination of whether or not applicants will be rejected? I am thinking particularly of a situation that exists in Hong Kong at the moment. I understand that some of the employees in the offices there are not Canadian citizens, but they are allowed to rule on some of these applications. Is this right or wrong?


Léonard-David Sweezey Tremblay: Mr. Chairman, I do not have the details at this time concerning the parts played respectively by Canadian citizens and citizens of other countries in our offices abroad. However, I do know that often, in those offices, local staff is hired to help with the work. But, if I am not mistaken, I think the people responsible for those offices are always Canadian public servants and that local persons to whom are assigned less important duties, are only hired to assist the Canadian personnel in the performance of their duties.


Robert Simpson: I have a matter to take up with the minister at this time. I realize that time is short, but I bring it up on this occasion because I believe an opportunity presents itself at this time to solve one of the 20220-61i
Supply-Citizenship and Immigration urgent problems confronting the Indian people in northern Manitoba as well as those in northern Saskatchewan, Alberta and British Columbia. For a long time now, in co-operation with my colleagues who represent constituencies which encompass Indian reservations, I have been endeavouring to bring electric power to some of these Indian reservations. We have had some measure of success, but nothing which would merit the thought of laying down on the job at this time.
When we first approached the department, it was understandable that their attitude was they were not really responsible for providing such services to these communities, and they should not be charged with the responsibility for setting up power lines, distributing power, setting rates and collecting moneys. This seemed a reasonable attitude, although we felt the Indian affairs branch did have an obligation along this line. However, the province of Manitoba has managed to overcome these difficulties, and I hope other provinces can do so as well. We have an agency to look after the power lines, set rates, collect moneys and distribute the power, provided surplus power is available. When nursing stations and hospitals were being built on reservations, we asked that provision be made in connection with those establishments for the generation of sufficient surplus power to accommodate the needs of the adjacent communities. I must say that we have not had too much co-operation in this regard. I hope that in future we will get more co-operation.
The reason I am bringing this matter to the attention of the minister today is that I believe an opportunity is being provided to make electric power available to many areas. Mention has been made recently of the drastic change which has been made in the operation of the mid-Canada radar line, with the dropping of the towers at the doppler sites. It is probably not generally known, however, that at each of these towers there were three diesel power generating units located. In northern Manitoba alone there are some 17 of these doppler sites that have been abandoned and the towers have been dropped. However, at each of these sites there are three diesel power generating units, which would mean that there are something over 50 of these diesel units sitting out in the bush of northern Manitoba.
I do not believe these units have been declared surplus as yet, but eventually they will be and they will go to Crown Assets Corporation. There will be a lot of people across Canada scrambling for these units. I believe it is the duty of the Indian affairs

Supply-Citizenship and Immigration branch at this time, in co-operation with the Department of National Defence, to alert Crown Assets Corporation that the Indian affairs branch has a definite interest in these units. The units from these 17 different sites in northern Manitoba would produce enough power for all the Indian reservations in northern Manitoba at the present time. There are one or two of these reservations which have power. Many of these areas that are without power now will be without power for many years unless this action is taken.
I think if co-operation can be arranged between the Department of National Defence and the Indian affairs branch so that these generators could be turned over to Indian affairs at a nominal sum, the problem would be solved. If the Indian affairs branch feels it cannot take the responsibility for bringing these units on Indian reservations, I think I can assure them that the Manitoba hydro would be very pleased to meet with federal authorities to do this job, provided the generators would be turned over to them. I know that money will be necessary and possibly it could be provided by the individual Indian reservations. Some of these people have band funds, but some of them probably are not in a position to go ahead with this project at the present time. I have thought, too, that the centennial commission is going to allot moneys to the provinces for certain projects and I can think of no better project for the Indian people of northern Manitoba than the bringing of power to these reservations. I hope, then, in conjunction with the minister it will be possible to obtain grants and, in this way, provide a very worth while and lasting service to these people. I hope that action can be taken by the minister before these units are declared surplus and are disposed of to the public. One or two communities on the Hudson bay line are also interested, but there are sufficient emits for all.


Mr. Olson:: There is just one point I want to draw to the attention of the Minister of Citizenship and Immigration. I do so at this time rather than wait for the main estimates because the Prime Minister has indicated the minister is making a trip to Hong Kong. I ask him to see if there is not something that can be done in order to permit the children of some of the families who are already in Canada to join them. These children are in Hong Kong now as refugees and they are not allowed to enter Canada because they cannot prove their identity. I have drawn some specific cases to the minister's attention. These children do not have papers, birth certificates or any other positive proof of identity.
When the minister takes this trip to Hong Kong I would like him to inquire whether

something could be done to relax this rigid regulation a little, so that children of families already in Canada can be brought in. Perhaps even on compassionate grounds some of these children could be allowed in, if they are healthy, and if there are families in Canada which would guarantee their support, even though the children cannot produce positive proof of belonging to these families.


Mr. Alkenbrack:: I congratulate the minister on his appointment and wish him success in his important duties. In order for him to have success I should like to ask him to help solve two problems which I have run across in my riding, and which are not conducive towards increasing the country's population with desirable new citizens.
In my opinion both this and the former administration were at fault in these cases. The first arose in September-October 1962, and the second came to my attention just the other day. In the first case a successful businessman, a Greek who has been a Canadian citizen for the past ten years, and who is living in Napanee, applied to have his niece admitted from Australia. She was born in Greece and went to Australia under the pretence of getting married, but when she got there she found that the man who had been picked out to marry her was old enough to be her grandfather and she refused the proposal of matrimony.
Her uncle in Napanee made certain guarantees to the department in order that she might be permitted to come to Canada. I know these people; they are neighbours of mine and live across the street from me. I gave them a good recommendation as guarantors of this girl, but to no avail, as we were turned down by a deputy minister.
It seems to me that ministers are not properly employing their executive prerogatives in cases like this, when we can obtain new citizens of good repute, and I feel the minister should be able to bend the rule a bit.


John (Jack) McIntosh: You mean, use common
sense.


Almonte Douglas Alkenbrack: Yes, a proper use of common sense, especially in the case of female immigrants who are biologically conducive to increasing the population of this great country of opportunities.
The second case concerns a Spanish girl. Some Spanish constituents of mine applied for permission to bring a niece from British Guiana, but only the other day they got an answer from a civil servant, not from the minister or the deputy minister but from someone further down the echelon in the department, refusing permission.

I shall be in touch with the minister on this matter and I can guarantee him that she has no criminal record. She is in good health and she is not a communist. We know that the government of British Guiana is somewhat along those lines, but this girl is not a communist. She has high school education and is capable of doing many classes of work. She is bilingual. She speaks Spanish and English, and that is another form of bilingualism, but I must say I do not know whether she speaks Gaelic.
I submit that this is another desirable type of citizen which we are letting slip through our fingers. It has always been a problem to get more people of desirable stamp into the country, and I suggest that we get together and right some of these departmental wrongs. I say to the minister, let him use the common sense that goes with his prerogatives in the execution of his very important duties.


Mr. Winch:: I wish to add my words in support of those of the hon. member for Medicine Hat. Because of the ethnic nature of my constituency I handle a great many immigration cases, the majority of which are Chinese. I ask the minister to use a little bit of what I would call common sense, with blood in his veins, not ice water, in arriving at ministerial decisions on these matters.
I have particularly in mind the case of a Chinese Canadian who has been living in my constituency for many years, and who has been trying since 1951 to bring over one of his sons from Hong Kong. The trouble he is encountering is one I run up against all the time, that the authorities do not believe it is his son. How, in the name of heaven, if he comes from a village in mainland China, are you going to prove this? It is impossible.
Since 1951, when he first made application, this man has been sending 100 Hong Kong dollars every month for the maintenance of his son, and I cannot believe that a man will send 100 Hong Kong dollars a month from 1951 to 1964 to maintain his son, if the boy in question is not his son. I know the minister is in this office just a little while, but I would ask him to keep his mind open. These people present a picture of the relative they want admitted, and who in the name of God can tell by a picture whether or not it is the son of the father? It is hard enough to tell with whites, but it is almost impossible with Chinese.
I see it is five o'clock, and since there is another question I wish to raise I shall do so when we resume.
Progress reported.
Expansion of Hospital Care Program BUSINESS OF THE HOUSE


Guy Favreau: Mr. Speaker, may I have unanimous consent of the house to revert to motions?


Some hon. Members:: Agreed.


Guy Favreau: May I ask, with the unanimous consent of the house, that a special order be made concerning the hours of sitting for tomorrow. If the house will agree I should like to ask that the hours for tomorrow be from 3.30 p.m. instead of 2.30, and that the hour of adjournment be fixed at 11 p.m. instead of 10. There will, of course, be the usual dinner hour between 6 and 8 p.m. With the unanimous consent of the house I would ask that it be so ordered.


The Acting Speaker (Mr. Batten):: Does the
house give unanimous consent?


Some hon. Members:: Agreed.


The Acting Speaker (Mr. Batten):: It is so
ordered. It being five o'clock the house will now proceed to the consideration of private members' business as listed on today's order paper, namely notices of motion.



HEALTH AND WELFARE


Mr. David Orlikow (Winnipeg North) moved:: That, in the opinion of this house, the government should consider the advisability of including mental hospitals and t.b. sanatoria in the federal hospital insurance program (Hospital Insurance and Diagnostic Services Act) so that the provinces will have available sufficient funds to provide for adequate treatment of the mentally ill, those people suffering from t.b., and the care and training of mentally retarded children.
He said: Mr. Speaker, it has been estimated that half of the hospital beds in Canada are now being used for the care of people who are mentally and emotionally ill. If we add those who are in t.b. sanatoria and those who are mentally deficient the percentage is even higher. In 1960 the house debated and adopted a resolution moved by the present Speaker of the house, the hon. member for Mount Royal (Mr. Macnaughton), which called for the co-operation of the federal government with the provinces and specialists in the field of mental health in "a survey of the extent of mental illness, its causes, problems and methods of treatment". That survey was conducted on behalf of the Canadian Mental Health Association by Dr. Tyhurst, a professor of psychiatry at the University of British Columbia, the survey having been issued under the title "More for the mind". This

Expansion of Hospital Care Program, is a report which ought to be studied by every hon. member of this house in view of the tremendous cost of mental illness to this country.
Dr. Tyhurst recommended that the patient suffering from mental illness should receive the same excellence of medical and ancillary health services as quickly, easily and as efficiently as the patient suffering from physical illness. Although this was his recommendation, Mr. Speaker, he pointed out that today mental illness is all too often considered a crime to be punished, a sin to be expiated or a disgrace to be hushed up. We have not yet calculated the cost to this country of mental illness, but according to the figures recently supplied for 1961, the last year for which we have any record, the cost of hospital care alone for mentally ill patients was over $150 million per year. This does not take into consideration the tremendous cost of medical services, loss of income through inability to work, cost of suffering to families and to the people who are mentally ill. We are spending, as I say, $150 million per year on people who are hospitalized because of mental illness. Yet, Mr. Speaker, if you compare the cost of a day's care in a general hospital with that in a mental hospital, you can see how little we have really considered the needs of the mentally ill. In 1961 the cost of keeping a patient in a general hospital was over $23 a day; the cost of keeping a patient in a mental hospital was just $5.90 a day. And we gave to those patients precisely what they paid for; we gave them no more than $5.90 worth, a day, in care.
Experience in the last 15 or 20 years has demonstrated conclusively that mentally ill patients can be treated successfully, can be brought back to well being and enabled to get back to work and to live with their families; but this has been done, not in the provincial mental hospitals as we have known them but mostly in the psychiatric wings of the general hospitals, which have been growing at a very substantial rate. It has been done in these hospitals because we have provided the services for them. We have provided a fairly adequate number of psychiatrists and social workers, psychologists and trained psychiatric nurses, which we have never provided and are still not providing in the provincial mental hospitals. Unfortunately these needs are precisely what we are not providing for the vast majority of the mentally and emotionally ill patients who have had, because of a lack of facilities and lack of money, to enter the provincial mental hospitals.
In the province from which I come-the province of Manitoba, which is no worse and probably no better than other provinces- according to a brief presented to the royal

commission on health services by the Manitoba psychiatric association there were only 27 qualified psychiatrists in the province. This is not more than two years ago. These people had to look after 3,000 patients in the provincial mental hospitals, 1,100 patients in the schools for mentally defective, as well as those people ill at home or in psychiatric wings of general hospitals. The province had established positions for 26 qualified psychiatrists in the provincial service, but there were only eight actually working in the provincial mental hospitals. Of these eight, four were doing administrative work almost exclusively. In one of the hospitals which I know very well, which has 1,200 patients, two years ago there were only three qualified psychiatrists on the staff and only two qualified social workers. So that even if a patient was lucky enough to get better and could have left the hospital, very often there was nobody who could make the arrangement for him to go into the outside world, help him to find a place in which to live, to find a job and help him learn to live again in the outside world. This is not an isolated case; the same is true in every province and in almost every provincial mental hospital in Canada. I am not being critical of the staffs of mental hospitals. I think they are doing a tremendous job within the realm of their ability, having regard to the tremendous staff shortages under which they are working.
The needs in the field of mental health for more active treatment of mentally ill patients can be met only by a very substantial increase in the number of trained personnel to treat mentally ill people. The present provincial mental hospitals, with their hundreds, or almost thousands of patients, which were established in the small towns or rural areas many years ago must be replaced by small community hospitals of 100 to 200 beds located in the larger cities or towns in Canada, to which trained personnel can be attracted.
The Canadian psychiatric association, in its brief to the royal commission, emphasized this point very well. I quote from the statement which can be found on page 5 of their brief:
In 1957 the federal government announced its program of hospital insurance and specifically excluded mental hospital patients from the benefits of this form of financial support. The consequences of this exclusion include a disparity in standard of care between the psychiatric divisions of general hospitals and mental hospitals, with secondary effects in terms of lessened recruitment of medical and ancillary personnel, and diminished incentives for program development and research inquiries within the mental hospital. The exclusion represents a continuance of segregation attitudes towards the mentally ill on the part of political and health authorities.

They recommend that federal-provincial hospital insurance programs be amended to include mental hospitals. To meet the needs of the mentally ill we need to double the number of doctors specializing in psychiatry by 1970. Training grants for students in this field need to be sharply increased. To accomplish this, the number of teachers in the field must be increased very sharply. Educational grants for this, according to the Canadian psychiatric association, will have to be tripled by 1970. A similar increase is needed for the training of additional clinical psychologists, psychiatric social workers, occupational therapists and psychiatric nurses. No single step could contribute more to the improvement of the treatment of mentally and emotionally ill patients than the inclusion of these patients and the hospitals in which they are treated in the benefits of the federal hospital insurance legislation.
Dr. Tyhurst's report for the Canadian Mental Health Association put it as follows:
Exclusion of mental hospitals from the benefits of the federal hospital Insurance legislation accentuates the differences between the general and mental hospitals. It has the added psychological effect of contributing to the sense of difference which the patient feels and to the general stigma associated with mental hospitals.
The Canadian psychiatric association's brief to the royal commission on health services recommended as follows:
That federal-provincial hospital insurance programs be amended to include mental hospitals.
If this were done, Mr. Speaker, and if the provinces could be-and I think they could- persuaded to maintain at least their present levels of spending in this field of mental health, we would indeed see the dawn of a new day for those people unfortunate enough to be struck by mental illness; a day in which they could have the same hope for quick and permanent recovery from their illness as people who are physically ill. That day would be a great one for them and for the Canadian people as a whole.


Mr. H. C. Harley (Hallon):: Mr. Speaker, I rise to say a few words on the hon. member's notice of motion. I would first of all like to congratulate him for bringing this matter forward, and I would like to say that I agree with this proposal in principle. At the present time-as the hon. member has stated-mental disease and tuberculosis are two of the three things that are excluded from the Hospital Insurance and Diagnostic Services Act. Both these diseases have been little understood by the general public, both tending to be dealt with as though the patient had leprosy. This raises the question of why these two diseases were originally excluded from the Hospital Insurance and Diagnostic
Expansion of Hospital Care Program Services Act. I cannot really answer this question, except to say that I would think it is probably because both these diseases are of a chronic nature and at the time of the passing of the act, in 1957-58, they meant long periods of hospitalization with usually little hope of cure.
Mr. Speaker, I should like first of all to read from a statement made by the previous minister of national health and welfare, the hon. member for Perth (Mr. Monteith), to the special committee on estimates on Tuesday, March 8, 1960. He was dealing with this very problem and listed six reasons for the federal government's not wanting to take part in bringing tuberculosis and mental illnesses under this act. The first reason given was as follows:
The government has been faced with implementing a very complex and far reaching project, a task that would have been made more difficult by any substantial change in its existing terms.
Mr. Speaker, this act came into force in 1958. This is now 1964, and surely the administration of the act has now become simplified to the point where it would not create a great problem to include two more diseases and two more groups of hospitals in the benefits provided by this act. The second reason given by the previous minister was as follows:
The inclusion of tuberculosis and mental hospitals in the insurance program would have little financial effect on patients themselves. In 1D57, only 9.4 per cent of operating costs of mental hospitals and 2.4 per cent of operating costs of tuberculosis sanatoria came from self-paying patients. The bulk was met out of provincial revenues.
This raises an interesting question of who actually pays for the patients, for instance in a tuberculosis sanatorium. I was quite surprised to receive a request from a constituent regarding an immigrant he wanted to bring to Canada. This is where the question arose. The immigrant came from Italy, where tuberculosis is much more prevalent than it is in Canada today. The person who wanted to come to Canada had a questionable X-ray and it was considered possible, although not very likely, that he would require treatment, in this case in the Weston sanatorium. The guarantor, who was asked to guarantee the care of the immigrant, had to assure the Department of Citizenship and Immigration that not only would the immigrant be admitted to the hospital within three days of coming to Canada, but he had to post a $1,000 bond and guarantee to pay any balance of the hospital bill that might be incurred. Despite this fact, the minister at that time pointed out that in many cases the treatment of tuberculosis in individual cases can be very expensive, is part of our program for health

Expansion of Hospital Care Program and as a rule was met by the provincial government, together with other hospitalization. The third reason put forward by the then minister was as follows:
Almost one half of the funds available under the tuberculosis control and mental health grants are being used currently for the support of services in sanatoria and mental institutions.
As far as federal assistance is concerned, in 1962 the mental health grant was increased to almost $9 million. On the other hand, the tuberculosis control grant was decreased in 1962 to approximately $3,500,000. I think this points up very vividly to all hon. members that the problems of tuberculosis, thanks to the newer drugs such as streptomycin and the drug commonly known as P.A.S., are coming under better control; hospital and sanatoria beds are being closed and converted to other uses. However, the care of mental disease is becoming a greater problem.
The next point made by the minister, No. 4, was:
More than $36 million has been approved under the hospital construction grant for some 25,600 new beds in these institutions.
We have been talking a great deal in the house lately about anomalies. It seems to me it is another anomaly that federal assistance under the hospital construction grant program should be the same whether it is in respect of active treatment, treatment of chronic cases, mental cases or tubercular cases. Why the full grant should be given in these instances, while being withheld under the hospital insurance act, I do not know.
Point No. 5 made by the minister was:
Both tuberculosis and mental hospitals are in a state of transition. The t.b. death rate has declined dramatically and, as a result of new methods of treatment, a portion of sanatoria beds is being left empty. Psychiatric units in general hospitals are becoming more and more prominent and, to illustrate this trend, in one recent year, 1958, almost one third of all mental patient first admissions and readmissions were to these units.
I should like to add some figures to the figures already quoted by the hon. member for Winnipeg North (Mr. Orlikow). In 1962 returns were reported from 83 mental hospitals showing a total of 67,739 beds. In the same year, 49 tuberculosis hospitals reported a total of 10,673 beds. Also in that year, 1,027 general hospitals reported a total of 103,551 beds. If these figures are studied it becomes clear there is a great discrepancy between the number of beds being used for psychiatric care and those listed as being in mental hospitals. This arises because a great many mental patients are now being cared for in general hospitals. This brings out a further anomaly. While patients who receive treatment for tuberculosis and mental diseases, in tuberculosis or mental hospitals, are excluded

from benefit under the health insurance act, those same patients, if they were admitted to a general hospital, would be qualified for benefits under the act.
The sixth point which the minister brought up was as follows:
Tuberculosis and mental patients are already covered under the insurance program when treated in general hospitals.
This is the point which I have just made in some detail and it is, surely, a reason for covering these illnesses, not for leaving them ineligible for assistance.
With regard to the general length of time spent by patients in both tuberculosis and mental hospitals, I should like to say that the period is rapidly decreasing. Statistics show that the average length of the stay in a general hospital is ten days. These are the statistics I previously used when giving figures of hospital beds available in 1962. A few years ago the average length of stay in a tuberculosis sanatorium was two years. I do not know the exact figure with regard to mental hospitals two or three years ago, but it was certainly longer than it is today. The reduction of time spent in hospital has been brought about in great measure by the discovery of new drugs. Then again, a great many patients are now being treated on an out-patient basis, rather than by being admitted to mental hospitals or tuberculosis sanatoria.
I should like to say a word about the royal commission on health services. This commission was appointed by the previous government and we are still awaiting its report. I certainly hope a report will be arriving soon, so that we may have not only a greater knowledge of this subject as a whole, but also some idea what the future treatment of tuberculosis and mental diseases is likely to be.
The last sentence in the hon. member's motion refers to the care and training of mentally retarded children. That is very good, and I certainly agree with the recommendation in this regard. I wonder whether the hon. member might not think it desirable to extend his proposal in this regard so as to include mentally retarded adults. In my own riding, though this does not present any great problem, it has presented some difficulties and recently a workshop was opened in the town of Burlington in connection with the care and attention of mentally retarded adults. These consist, generally speaking, of people in their late teens who require some supervision. It does not have to be psychiatric supervision, but it has to be supervision by understanding people to attempt to teach them a trade so that they can make a living, and function like ordinary citizens.

As I have mentioned, there is a great change in the circumstances surrounding treatment of both mental disease and tuberculosis. In the Canada Year Book, 1963-64, which I think most members received today, there are two paragraphs which are well worth putting on the record in this respect. Discussing psychiatric disorders and tuberculosis, the Year Book says:
Of the total of 76,486 psychiatric patients reported at Dec. 31, 1961, 35 per cent suffered from schizophrenia, the most frequent form of psychosis (insanity), 26 per cent suffered from other forms of psychosis and 29 per cent were mentally deficient. In most diagnostic classes, males outnumbered females; exceptions were certain psychoses, neuroses and drug addiction.
Of the 5,387 patients with respiratory tuberculosis on the books of tuberculosis institutions at the end of 1961, 63 per cent were males. Males outnumbered females in all age groups except for the ages from 0 to 19 years. The peak frequency for men (1,116) occurred in the 40-59 age group, and for women (688) in the 20-39 age group.
As I have said, there is a great change not only in the treatment of tubercular and mental patients but also in the type of patient whom the doctor is now meeting. With regard to both these diseases there is a change in the patient's outlook, in the number of admissions to hospitals, and so on. The number of admissions for tuberculosis treatment is gradually decreasing. This is probably because we now have good case finding methods, massive chest X-ray programs, the testing of school children and adequate follow-up care of patients. Because the length of stay in hospital has been greatly shortened we are now finding that beds in sanatoria are becoming empty. The reverse holds true in the case of provision for mental patients, more and more of whom are being admitted to hospital. I do not think this necessarily means that people are crazier now than they were a few years ago. I think it means that the general public is recognizing the fact that mental disease is a disease like any other. They are now coming forward in increasing numbers to request treatment either for themselves or for members of their families. They are asking for help so that doctors can treat them with the new drugs which are available.
Both tuberculosis and mental disease are being detected at an earlier date. This certainly leads to a greater expectation of success in the treatment of these diseases which, in turn, encourages the early reporting of cases. As I have mentioned, the time necessary to be spent in hospital in respect to both these diseases is much shorter than it was, and greatly improved treatment, both surgical and therapeutic, is available. If the people of Canada are to be encouraged to accept tuberculosis and, in particular, mental disease, as being, in essence, like any other disease, then, 20220-62
Expansion of Hospital Care Program surely, the government must be the first to take this attitude. The government must accept the fact that tuberculosis, mental disease and mental retardation are diseases like any others and should treat them like any other diseases under the Hospital Insurance and Diagnostic Services Act.


Harold Edward Winch: Mr. Speaker, I appreciate very much the opportunity of being able to speak this afternoon in support of the motion of the hon. member for Winnipeg North (Mr. Orlikow). To explain why I am so solidly in support may I go back into history for a few minutes. On November 2, 1933, Ernest Edward Winch was elected to the legislature of British Columbia for the constituency of Burnaby at the age of 55. He immediately made a study of provincial institutions and was the first member of the legislature to visit Essendale, that province's mental institution.
He was astounded at what he found. Men and women had been there for as long as 25 years who should have been discharged but were not because nobody was interested in them. He raised the issue in the legislature of British Columbia. I was the member for Vancouver East in the legislature at that time and I remember his saying: "Why do we not take people out of mental institutions as well as putting them in"? I can still remember the sneers and the jeers, and how he was almost howled down when he suggested in the British Columbia legislature that we should take people out of mental institutions as well as put them in.
Because the government of the day could not see the sense of his suggestion he went out and raised some money and bought a home. He furnished the home, hired a nurse and got the services of two doctors who believed in what he was doing. He then went to the mental institution, and because I was with him I remember well what happened. He said to the medical superintendent: "Have you any women here who should not be here"? The medical superintendent said: "Yes, how many do you want"? Over a period of three years women were signed out of the mental institution and taken into this home. After a three month period of rehabilitation they left and found jobs. Then others were taken from the mental institution.
November 2, 1933 was the beginning of the process which led to the establishment eventually in British Columbia of what is known as the Crease clinic. People no longer have to be committed directly to a mental institution. They can go voluntarily or by committal into a hospital for the mentally ill. The record is that in the majority of cases
966	HOUSE OF
Expansion of Hospital Care Program their mental illness is cured in three months just as a broken arm or leg or other physical disease can be cured.
Why have I introduced my remarks in this way? Because I did not understand and do not understand to this day why this and former federal governments have differentiated between mental illness and physical illness. One can break down mentally as well as physically, and in many instances he can be cured of a mental illness just as quickly as he can be cured of a physical illness.
Therefore I agree completely with the purpose of the motion which seeks to have the federal act changed in order that assistance may be given the provinces in caring for those who are mentally ill, just as the federal government now provides assistance in caring for those who are physically ill. The reclamation of the mentally ill, just as in the case of those who are physically ill, brings back into economic and social life exactly the same kind of people.
I also support strongly the latter part of the motion having to do with the care of mentally retarded children. Medical science has proved that many times a child who is mentally retarded can, with proper treatment, care and education, make a useful contribution to society and lead a better life as an individual. Yet what is the situation? So far as British Columbia is concerned, the situation is one of the most vicious, damnable and heinous of which I am aware. There are hundreds of mentally retarded children awaiting admission to the only institution we have in British Columbia. They cannot get admission, first, because there are not the facilities and, second, because there are not the trained personnel. Surely such care and treatment should not be the financial obligation of the provinces only, because a child or adult is a citizen not only of its own locality and province but of Canada. The assisting of one mentally retarded child will result in the addition of a most important asset to the country as a whole, irrespective of the benefit to the child itself.
I fail completely to understand why the responsibility for mentally retarded children should be wholly provincial. I say it is an out and out disgrace that the federal government should allow this situation to continue. In our province there are over 700 retarded children waiting for admission but who cannot get in, and not one cent is paid by the federal government on behalf of those children. From the knowledge I gained as a member of the B.C. legislature for 20 years, and having visited that institution every year, I know that these children can be helped to a great extent and need not have to stay there


all their lives; but if they are not attended to then they will have to spend the rest of their lives either there or in a mental institution.
Whether you look at the matter from a moral, social or financial viewpoint, surely the federal government has a responsibility toward the mentally ill and retarded children, just the same as it has toward those who are physically ill and for whom the government makes a contribution under the Hospital Insurance and Diagnostic Services Act. From any angle you look at the matter, Mr. Speaker, I do not know of any basis whatsoever on which the House of Commons or the federal government can refuse to accept responsibility for the three categories of people referred to in the motion now before us. I sincerely hope the motion will not be talked out.


Mr. Lloyd Francis (Carleion):: Mr. Speaker, I should like to make a few remarks with regard to what has been said by the mover of the motion and other speakers so far in the debate. We have, of course, the greatest sympathy with the objective that has been put forward of relieving suffering, and especially to do something to improve the facilities for the treatment of mental illness in Canada.
We also have to bear other considerations in mind. Many, many things can be done in the field of human welfare. Within a recent period this parliament passed a measure which has added a fairly substantial amount to the old age pension. We all were pleased to support it. We have to think in terms of the budget which the Minister of Finance (Mr. Gordon) will present to this house this evening. We are talking, in terms of this resolution-I have not done any precise cost calculation-of something of the order of $100 million per year, if we implement the resolution as it is framed. We are all in favour of doing everything that is possible, consistent with the growth of Canada and the prosperity of this country and with the achievement of a relative measure of stability in our public accounts which we certainly recognize as desirable at this stage of Canada's development.
I am particularly concerned with one aspect of this resolution which I think members of this house should consider in greater detail. The resolution refers to sufficient funds to provide for the adequate treatment of the mentally ill, those people suffering from tuberculosis and the care and training of mentally retarded children. I should like to speak for a moment about the care of those patients suffering from tuberculosis. From the information available to us, it is quite clear that

this disease is declining in incidence in Canada. I have a statistical report of the bureau of statistics for 1961 in my hand. This report indicates that between 1960 and 1961, for example, three institutions in the province of Quebec were converted from tuberculosis care to other types of care, two to chronic institutions and the third for the treatment of mental illness. In this period there was a 13 per cent decline in days of care in tuberculosis institutions, which is very revealing and encouraging to us.
From all reports, this is one disease that does not suffer from a lack of facilities in Canada. It is quite clear that the tremendous achievements of those who served in this field have resulted in this decline, and it is also a recognition of the standards of Canadian medicine and the standards of care in the institutions, as well as of the diligence of those who supported voluntary organizations who have gone out case-finding and so on. It is, as well, a general reflection of the standard of living in Canada, improved housing, improved nutrition and so on.
But we ask ourselves at this point, what is to be achieved by the inclusion of tuberculosis institutions under the Hospital Insurance and Diagnostic Services Act? I note from the same bureau of statistics publication that in the year 1961 15.6 per cent of the revenues of the institutions providing care came from federal government sources; 68.2 per cent of the revenues came from provincial government sources; 4 per cent from municipal governments. Looking on down the list, I find that less than 1 per cent, about eight tenths of 1 per cent, of the revenues of these institutions came from paying patients. Now, what would be the effect, I ask hon. members of this house, of the inclusion of a program in which there is, from all evidence, a satisfactory number of beds, satisfactory facilities for treatment and where there is a decline in the incidence of the disease? It still remains an important disease which cannot be neglected. If we were to sharply reduce the service facilities it would be a serious mistake, we all agree.
The fact is, however, there is nothing like the case to be made for the extension of services to tuberculosis that there is for its extension in respect of mental illness or mental retardation. I submit that the effect of including this program would be a fiscal measure. It would give fiscal relief to the provinces. It would not extend the services. It would not relieve charges on the patients. It would have the pure and simple result of a new alignment of fiscal responsibilities. This may well be one of the matters that the Minister of Finance may wish to raise with 20220-62J
Expansion of Hospital Care Program the provincial ministers at the federal-provincial conference, because of the demand for greater sources of revenue and the demand for higher grants from the federal government. This is surely a fiscal matter. Surely, the effect of including tuberculosis institutions, as proposed in this resolution, would be a fiscal matter. It would not have any significant effect upon the care of persons suffering from this disease.
Now, Mr. Speaker, the situation with regard to mental illness is different in many respects. It is not different, however, in regard to the general incidence, shall we say, or proportion of revenues received from different sources. The revenue sources are similar to those of tuberculosis institutions. The dominion bureau of statistics report for 1961 shows that 94.6 per cent of the revenues of these institutions came from public sources; 5 per cent from the federal government; 88.2 per cent from the provincial governments; 1.4 per cent from municipal governments, and patient payments amounted in this case to 3.3 per cent. This source is significant in the case of mental illness, but it still does not amount to a serious proportion in terms of the cost of operating mental institutions.
The case for the extension of federal aid in regard to mental illness is a case which has to be related to the extension and improvement of the quality of the services. None of us in this house who have looked at mental institutions can deny that there is a great job to be done here. However, the thing which we have to remember is the philosophy of government. It is not the intention of the federal government to own and1 operate hospitals. It is the intention, I am sure, to make sure that the health services' which have been traditionally and primarily" a provincial responsibility under our constitutional development are provided at the level which is most capable of providing them and supervising them.
Now, mental illness is provided for in four basic types of institution. There is the general mental hospital, the more modern concept of psychiatric hospital, training schools for retarded children and psychiatric wings in general hospitals. When the Hospital Insurance and Diagnostic Services Act was passed by this parliament, the framers of the act looked very carefully at the situation in regard to mental illness. They were not lacking in sympathy by any means. They were, however, to some degree, guided by the practical considerations of the treasury, and this must always be a factor in government. They were concerned also about the healthy and orderly development of a pattern of service to give the best possible care for mental

Expansion of Hospital Care Program illness. The psychiatric units in general hospitals are part of the benefits of hospital insurance. These units, which traditionally are for short term mental illness-the average days' stay the last time I looked at the statistics was about 23 days, which is more than twice that for general hospital admission- have been expanding. These facilities are closely integrated with the community. They are extremely well adapted to provide a good pattern of service. The Hospital Insurance and Diagnostic Services Act has stimulated a very healthy and necessary expansion of this type of facility.
In so far as training schools for the mentally retarded are concerned, there is a dividing line between the educational responsibility of the province and the health responsibility. In the health field, there has been a recognition more and more of the very positive role of the senior government in providing financial assistance or grants in aid. The previous speaker on the government side, the hon. member for Halton (Mr. Harley), detailed the form of national health grants and the benefits under the act which are available.
I cannot help repeating that those of us who have had any experience at the local level with the tremendous gap in educational facilities for the mentally retarded, recognize that here is an area where a great deal needs to be done. A child with a certain i.q. can go into the school system and receive grants. The child just below that level too frequently and sadly is denied even the minimum educational opportunities, with the great tragedy that follows from that.
There is a need for initiative to be taken by the provinces in extending grants for mentally retarded children, but a pattern of federal aid cannot be purely and simply fiscal relief for the provinces. We would be negligent in our responsibilities to the taxpayers if we were to adopt a resolution which merely has the effect of channelling more federal money out, without making sure that the necessary co-ordinating of services follows.
It is a limited initiative which this house can take in the field of education, and there is a very great need to call attention to provincial responsibilities in this regard. My concern in dealing with this measure is simply that we must not fall into the trap of adopting something which could have the result of merely providing fiscal relief. The emphasis on federal funds must be to encourage and assist in filling the gaps that now exist, in extending into areas where services are now inadequate, and in helping the provinces to do those things which the


hon. member for Vancouver East (Mr. Winch) so eloquently described as being necessary.
We are not lacking in human sympathy when we call attention to the need for orderly development. We are not lacking in human sympathy when we say we must not vote money without making sure of a balanced program.


John James Greene: Mr. Speaker, not too many months ago I had occasion to try to have a mentally retarded child gain admission to the only hospital available in my area for the cure of such cases. At that time the head of the hospital told me it was designed for 1,200 people but they had 2,700 children in it, and had a waiting list of at least another 3,000 children.
While the case I had was a particularly pathetic and sad one, which was affecting not only the well-being of the child but the well-being and education of other children in the family, by reason of having the mentally retarded child in such close association-


Harold Edward Winch: Did it happen to be a mongoloid, because that is one of the big problems?


John James Greene: As a matter of fact it was not, in this particular case. It was one where, under proper treatment in a proper hospital, there could have been some hope of rehabilitation. When I pleaded with the head of the hospital to try to find some place for this child, he told me he had some 3,000 children awaiting admission, whose cases were just as deplorable, who needed care just as much, and who had effects on other children to just as unhappy a degree as the child whose admission I was seeking.
I asked him if there was anything we could do, and his answer was, "Well, that is more in your province than it is in mine." I think those words of inherent criticism were unquestionably well deserved. It is up to us in this house to see that this kind of situation is not permitted to continue.


Francis Andrew Brewin: If the hon. member feels as he does, why does he not encourage a favourable vote on this resolution before it is talked out? That would be some indication of his feelings, and the feelings of other hon. members?


John James Greene: So far as the procedures are concerned whereby we can achieve these ends, it is my humble estimation and belief that a private member's bill is not the ultimate solution in this respect. As the hon. member knows, the report of the royal commission on health services, which should embrace the entire field, will shortly come

before us, and we hope it will result in a solution for this deplorable problem.
On all sides of the house and in all parties we are generally committed to the axioms of the welfare state. Great programs of welfare and social benefits are accepted by all parties, yet in those limited areas where the vast body of people are not represented, such areas as mental health, alcoholism and dope addiction, we know we will not gain a great number of votes by bringing in remedial measures. Alcoholism, dope addiction, and mental retardation do not strike the vast majority of people, but I suggest that if we are sincere adherents of social welfare and better standards of well-being we should begin with those who are the least able to look after themselves.
As politicians, it may be those are the very last people with whom we are concerned, because they are not politically popular, they do not control any large block of votes and, as I say, the vast majority of the population is not going to give us political approbation for helping such people.
I suggest that in this area of mental retardation, and specifically with respect to children, we cannot take very great pride federally or provincially in what we have done in this supposedly enlightened and advanced country. It is my hope that when the report of the royal commission comes in and is debated in this house, the hon. member who proposed this bill, and others who have supported his ideas, will give their approval to the kind of remedy which will do something for the problems of children who are mentally retarded.


Mr. Depuiy Speaker:: Order. The hour appointed for the consideration of private members' business has expired.
It being six o'clock I do now leave the chair.
At six o'clock the house took recess.


[Stage Direction]
AFTER RECESS

The house resumed at 8 p.m.


Walter Lockhart Gordon: That Mr. Speaker do now leave the chair for the house to go into committee of ways and means.
He said: Mr. Speaker, this afternoon the Prime Minister (Mr. Pearson), the Leader of the Opposition (Mr. Diefenbaker) and other hon. members spoke about Jack Garland, and how much he will be missed by all hon. members of this house. I shall not repeat
The Budget-Mr. Gordon what has been said, but I could not begin my budget speech without adding a few words about the feeling of loss and sadness that I share with all hon. members in not having Jack with us tonight. Inevitably there is a very close relationship between ministers of finance and ministers of national revenue. In my case I shall always be grateful to Jack Garland for his advice, his common sense, his sound judgment, his friendship and his cheerfulness, and support when times were tough. Jack Garland sat in on the many meetings preceding the preparation of the budget that I am about to deliver. He made a great contribution to it, as he did to everything he was involved in or associated with. He was a sensible, quiet man who was universally respected. Jack Garland was everybody's friend.
Mr. Speaker, all hon. members can take sastisfaction from the improvement that has been occurring in economic conditions in Canada and from the optimism with which we can view the immediate future. Unemployment is still too high, and in the Atlantic provinces and eastern Quebec it is much too high. But it is lower almost everywhere than it has been for some years. The deficit in our current account balance of payments with other countries is still too large but it is smaller than it has been since 1954. The prospects for the current year are good; indeed, in most parts of Canada they are very good. Employment, production and incomes should all be substantially higher than last year for the country as a whole.
Many changes in fiscal and economic policies were called for in the circumstances this parliament faced last spring. It was necessary to move quickly on a number of fronts, and understandably some of the proposals that were put forward were questioned at the time.


Some hon. Members:: Oh, oh.


John (Jack) Henry Horner: The understatement of the year.


Walter Lockhart Gordon: It is now clear, however, that the main policy changes proposed last spring and summer have paid off well and will continue to pay off in the months and years ahead.


Some hon. Members:: Hear, hear.


Thomas Miller Bell: For whom?


Walter Lockhart Gordon: These measures have contributed to the increase in economic activity that has occurred and to the reduction of unemployment. They should be continued and they will be.
The winter house building bonus was so effective that a limit had to be put on the

The Budget-Mr. Gordon number of houses to be financed in order to avoid congestion in markets this spring. The accelerated rates of capital cost allowances have been a powerful inducement to increased expenditures on industrial building and equipment. Already the measures introduced to stimulate the automobile industry have borne fruit. The new policy will mean greater investment, more production and more jobs in Canada in the future. The extended program of assistance in building vocational schools is proceeding at a rapid pace.


Some hon. Members:: Hear, hear.


Walter Lockhart Gordon: I am delighted we have unanimity on some of these matters.
Other policies which we said would require some time before becoming fully effective are beginning to take hold. I refer to the efforts to encourage our secondary manufacturing industries through the new Department of Industry; to the incentives designed to stimulate activity in areas of slower growth; and to the work that will be done, and the new jobs that will be created, as a result of funds made available by the municipal development and loan board and the Atlantic development board. All these policies, as I say, have proved their worth. We must now consolidate our gains and plan for steady growth.
Before reviewing the state of the economy and the prospects for the future, I should like to recall several of the government's major objectives in economic policy, which I am sure are generally supported by the members of this house.
Our first goal is high level unemployment-


Some hon. Members:: Oh, oh.


J. Nicholas (Nick) Mandziuk: It must be a bad translation.


Walter Lockhart Gordon: I feel, Mr. Speaker, in the same class as the Secretary of State for External Affairs (Mr. Martin) when he sometimes refers to the Leader of the Opposition (Mr. Diefenbaker). As I was trying to say, our first goal is high level employment, the highest we can expect to reach and maintain; employment in good jobs where we can produce efficiently. This requires not only jobs but men and women qualified to fill them.
Our second, and related goal, is a high level of economic growth, the highest we can expect to sustain over a long period. This will help employment and will bring better living standards, but it will require foresight and skill in economic management both private and public.
Third, we want to gain all the advantages that go with expanded international trade, both exports and imports. In the process we want to see our transactions with other countries on current account brought into better

balance. Continued deficits in our balance of payments on current account make it more difficult to attain high level employment and render us vulnerable to changes in the supply of capital available to us.
Fourth, we want to maintain general stability in our price levels and the value of our currency, for that is necessary to steady progress and to the protection of the savings of the people.
Our budget policies and measures, as well as others affecting our economic affairs, should be fashioned and considered with these objectives in mind. We should add to them another that is partially economic, partially political in the broadest sense of that word. We Canadians realize we cannot live in isolation; we are part of an interdependent world; we are members of the greatest peacetime alliance in history; we live in one of the most open and unrestricted economies in the world; we earn much of our living in foreign trade; and we benefit from foreign investment to a degree probably greater than any other nation. We recognize the advantages and obligations of these relationships with others. But we believe that we can and should combine them with a full participation by Canadians in the management and direction of all aspects of our own affairs.



ECONOMIC SITUATION AND OUTLOOK

[Stage Direction]
We can look back on the economic developments of 1963 and early 1964 with considerable satisfaction. Many new records have been achieved-in employment and trade, in agriculture and industry. More men and women have jobs; their take-home pay is higher; fewer fail to find the jobs they are looking for; and the number of young people in training to acquire up to date skills is steadily expanding.
Last year we built our budget estimates of government revenues on the assumption that total Canadian production and expenditure- our gross national product-would be about 5 per cent higher in 1963 than in the previous year, assuming a normal crop and reasonably stable prices. I am glad to say that our assumption about prices proved correct. Canadian crops far exceeded anyone's expectations. Economic activity in other sectors was more buoyant than we had anticipated. Accordingly, the increase in total output in 1963 turned out to be, not 5 per cent, but about 6 per cent.
Not only did we have a record wheat crop last year, more than 720 million bushels-
Mr. Clancy:: Call that a record?


Walter Lockhart Gordon: So far-but it was coupled with record overseas sales. Vast quantities of grain are being moved to ocean ports. In the

field of prices and costs the degree of stability that we have been achieving is greater than that of any of our overseas competitors and is about the same as that of the United States.


An hon. Member:: Same as last year.


Walter Lockhart Gordon: Details are to be found in the white paper on pages 38-40. It is worth noting that, for the latest month for which comparable figures are available-December-our consumer price index showed exactly the same movement in comparison with the previous year-1.7 per cent-as the American index. The latest 12 month increase for Britain is 1.9 per cent, for France 5.7 per cent and for Japan 4.9 per cent.
Thanks to the degree of stability we have maintained, much of Canadian industry is now competitive with that of other countries. Clearly we must strive to keep our costs down and to increase our productivity.
Our favourable competitive position is reflected in the fact that our merchandise exports in 1963 rose 11 per cent over the previous year, while imports rose only 6 per cent. In the result we had a favourable balance of $484 million on merchandise account-the largest since 1952. The sharp increase in our exports of manufactured products was particularly encouraging.
On travel account, we had run deficits for more than a decade, but in 1963 we earned a surplus of $13 million. On the other hand, we had an adverse balance in respect of interest and dividends amounting to $614 million, continuing the upward trend of the post-war years.
As a result of these and other changes our current account deficits with other countries, which stood at $848 million in 1962, was reduced by more than one third, down to a level of $521 million, in 1963.
Personal incomes rose steadily last year; private spending and saving both increased. Canadians chose to buy more Canadian goods; a number of Canadian industries improved their share of the Canadian market, taking advantage of the improvement in their competitive position. Canadians also decided to save more-a slightly higher proportion of their incomes than previously-and they were thus in a position to play a rather larger part in financing Canadian expansion.
Industrial and manufacturing production both increased by some 5.6 per cent in 1963 over 1962. Expansion of private investment in plant and equipment was also well maintained.
The general price stability to which I have referred was matched by general financial stability. In other periods of general economic expansion we have experienced some hardening of interest rates, a natural result of
The Budget-Mr. Gordon increased competition amongst borrowers for available funds. This did not happen last year. Interest rates at the end of 1963 and in the early part of this year were at about the same levels as a year before, some slightly higher and others slightly lower. The spread between Canadian and United States interest rates narrowed appreciably particularly on short term issues. Growth of the money supply, which had been reversed by the financial crisis of June 1962, was resumed; during 1963 the total money supply expanded by 9 per cent; over the two year period, 1962 and 1963, the total increase was somewhat less than the 14 per cent increase in the gross national product.
While economic activity, and with it the number of available jobs, increased in 1963, so did the number of people seeking work. However, the increase in jobs outran the increase in job-seekers. From an average level of 5.9 per cent, almost 6 per cent, the previous year, and 7.2 per cent in 1961, average unemployment in 1963 fell to 5.5 per cent.
Moreover, the reduction of the average of unemployment for the year does not tell the whole story. While economic activity was strong throughout 1963 it was strongest in the final months. As the house is aware, we have recently broken through the 5 per cent unemployment barrier on a seasonally adjusted basis for the first time since 1957. As we enter 1964, the economic momentum is even stronger than it was throughout 1963.
This does not mean we can afford to be complacent. Our international deficit has been cut down, but it still remained more than half a billion dollars in 1963. And a level of unemployment around 5 per cent represents only progress by comparison with previous performance. We must do better in the months and years ahead.
If we are to do better we must recognize that the nature of our unemployment problem is changing. Over-all national averages mask important differences that exist between the various regions of Canada. At the beginning of this year the seasonally adjusted figure for unemployment in Canada was just below 5 per cent. However, according to our best current estimates, the figure for British Columbia, again on a seasonally adjusted basis, was just above 4 per cent. For the prairies it was around 2 per cent. In Ontario it had fallen to about 3 per cent, but in Quebec, where the increase in the labour force had been quite exceptional, it was probably about 6 per cent. For the Atlantic region, the figure while falling, was probably still as high as 8 per cent.
The wide diversity of these figures and the prospect for the current year suggests that

The Budget-Mr. Gordon broad, general attacks on unemployment will be less useful now than they have been in the past. Accordingly our plans and policies are increasingly designed to meet the special needs of areas of the country or groups of the population confronted with special difficulties and problems.
The figures for the 1964 capital investment outlook published last week, show that a substantial increase over last year is intended by businessmen, home owners, and governments; forebodings lest, as a result of tax changes announced last year, investment would wither away have, of course, not materialized. It is reassuring to note that the greatest increase in investment is expected to take place in the province where, in absolute terms, the number of unemployed is at the moment greatest, that is in the province of Quebec.
In regard to the balance of payments too we must recognize the nature of the problem confronting us. Our extraordinary sales of grain to Russia and other countries have greatly helped to improve our current account position, while some of our policies designed to encourage a more permanent improvement are beginning to take effect. However, we cannot assume that sales of grain will continue indefinitely at current levels. Therefore we must maintain our efforts to strengthen our balance of payments by measures of a longer term nature.
On the capital side of our balance of payments we have now seen in two successive years how vulnerable we are to sudden changes in the inflow of funds. In July last the announcement of the proposed United States interest equalization tax caused a very sharp crisis in our exchange and capital markets because our vital dependence on a large inflow of capital to pay our bills in the United States was widely recognized. The situation was eased by the proposal to exempt new Canadian issues. However uncertainties relating to this tax while it remains before congress have held back Canadian borrowing in the United States. It is still difficult to tell what the final effect of the tax will be on the movements of capital between the United States and Canada.
Despite these cautionary remarks a careful review of the economic outlook at home and abroad gives us cause for optimism. We see good reason to expect that in 1964 the general growth of the economy will be maintained and the good progress of the year just past will be repeated.
At the same time we obviously cannot anticipate another record harvest such as we had last year. In forecasting our revenues and expenditures we have worked on the assumption that we will have a normal harvest and an increase in gross national product, apart

from farm production of about 6J per cent. Taking farm and non-farm production both into account we assume an over-all growth of 5i per cent.



TRADE AND TARIFF POLICY

[Stage Direction]
Before turning from economic affairs to fiscal matters, I should direct the attention of the house briefly to trade and tariff policy.
The United Nations conference on trade and development which opens in Geneva next week will focus on the special trade and development problems of the economically less developed nations of the world. One of the greatest problems of our age is to find practical ways of raising the standards of living of these nations. I should like to assure honourable members that Canada will play an active part in this United Nations conference. It will be our purpose to find effective methods for improving the trade opportunities of the less developed countries, without disruption of established industries in the more advanced countries. Clearly this will not be easy. For some years Canada has been accepting a substantial measure of imports from low-cost countries. We shall urge other advanced countries to do likewise.
As the house will be aware, the Kennedy round of trade negotiations is expected to get under way in the next few months. The prospects are that it will rank with the important trade negotiations that have taken place under the auspices of the GATT since the end of the war. While it has been agreed to conduct these negotiations on the basis of across-the-board tariff reductions by the United States and the European trade groups, agreement has not yet been reached on such matters as the depth of the basic tariff cut, the problem of trade in agricultural products, and the problem of tariff disparities between these countries. Accordingly, the full scope and nature of these negotiations remain to be settled.
Canada will not of course be negotiating on the basis of across-the-board linear tariff cuts. Our trading partners have recognized that such a system would not be appropriate for countries such as Canada. For us the objective is an exchange of concessions of equivalent value. Our participation should, I suggest, be guided by the following considerations.
First is the principle of reciprocity. There must be a reasonable balance between concessions obtained and those which we grant, which must be judged in terms of their practical effects or trade. Moreover, account must be taken of the degree of adjustment and time required to adapt to tariff reductions in terms of shifts in resources and employment.

A second key consideration is that the outcome of these negotiations should contribute to the balanced growth of the Canadian economy. Certainly we shall be seeking to expand the opportunities for our traditional exports of raw materials and foodstuffs. But these negotiations will be more concerned with manufactured products and we must keep clearly in mind that the expansion of efficient secondary industries is necessary to provide adequate employment opportunities for Canada's growing labour force. For this reason we shall be looking for those particular tariff reductions abroad which will open up new export markets for the products of our secondary industries. This will help them to achieve better economies of scale, which are vital to the attainment of cost efficiency.
A third important consideration is that there must be a reasonable balance between concessions given and concessions gained for the various sectors and regions of the Canadian economy. Each of the major productive sectors should get some benefit from and should make its contribution to the negotiations. This should be broadly true also for the various regions.
A fourth consideration relates to our balance of payments position. A successful tariff negotiation should help all the participating countries to become more efficient and more productive. But clearly, it cannot help them all to improve their balance of payments position. In our situation of continuing large current account deficits, we must be especially careful that any tariff bargain we strike does not aggravate our balance of payments position.
Guided by these considerations, Canada will play an important part in the Kennedy round. As hon. members are aware, a trade negotiating committee of experienced officers has been set up to assist the government in the conduct of these negotiations. Under its direction arrangements have been made to hear the views of Canadian industries and other interested parties, so that our preparations will take into account the most complete and up to date advice and information.

[Stage Direction]
In addition to taking into account the economic and financial situation, the government must have regard to the position and requirements of provincial governments when making plans both for expenditure and taxation. Earlier in the history of our nation it may have been possible for the federal and provincial governments to proceed about their own affairs without concern for the other, except for occasional arguments over the constitutional subsidies. But now the public
The Budget-Mr. Gordon expects so much from both levels of government that they often appear to be in competition with one another. To overcome this each must now take into account the demands upon the other. At times in the past the provinces have recognized that we had special and urgent requirements for war and defence and for major social security programs. More recently the federal government has recognized that the provinces have urgent requirements in the fields of education, health and highways, and has acted accordingly. Both sides must recognize that Canadians cannot afford to do everything at once. In a federal system such as ours there must be an effort made to work out priorities by co-operation.
This recognition on our part of the requirements of the provinces must not be mistaken for an abnegation of federal responsibilities. Canada needs to have both strong provincial governments and a strong federal government. As I say, the government of Canada must remain strong and dynamic, both in its effective jurisdiction and in finance. This was intended in the constitution; it is even more necessary today.
Parliament will be asked to make the necessary changes in our laws to implement the new equalization formula for 1964-65, which was put before the conference with the provinces in November, and to carry out the undertaking given by the government in regard to the larger share of death duties to be assigned to the provinces.
In our spring meeting of the conference to begin on March 31 we shall be considering among other things shared-cost programs and their relation to our fiscal arrangements. Our general position was put by the Prime Minister in his published statement in November. It remains to examine how it may be implemented in particular cases. If the provinces so wish, we are prepared to transfer to them full financial responsibility for some of these established shared-cost programs of a continuing nature, and to make suitable fiscal adjustments either in a larger share of the direct tax fields or by changes in, or supplements to, the equalization payments.
These financial adjustments must be fair both to the provincial and the federal treasuries. We appreciate the importance and value of joint programs. We have no desire, however, to go on indefinitely levying taxes simply to pay for programs that are well established and well within provincial jurisdiction. It is better that, within the limits of their own fiscal capacities, the provinces should levy the taxes required for such programs, assisted where necessary by equalization payments.
[Stage Direction]
The Budget-Mr. Gordon

[Stage Direction]
I come now to a consideration of our revenues and expenditures for the fiscal year now concluding. A detailed report is given in the budget papers that were tabled last Thursday. At this time of year the figures are, of course, preliminary and subject to change. Tonight I propose to refer only to the more important items.
In the budget speech last June, expenditures were forecast at $6,845 million. The revenue estimates, as revised on July 8, were $6,190 million. On this basis, a deficit was anticipated of $655 million, together with a deficit of $25 million for the old age security fund.
It now appears that our budgetary revenue will be $6,207 million. On the other hand, when we include the charging to expenditures of $76 million pension liabilities created by pay increases for the armed forces, and $48 million inventory losses on farm products held in storage, which I explained in the house on March 6, our budgetary expenditures now appear likely to be about $6,892 million. Consequently, the deficit for the year is expected to be about $685 million. It would have been appreciably less than the forecast but for the large "write-offs" I have mentioned.
The forecasts for the old age security fund were affected, of course, by the decision to increase old age pensions by $10 per month, effective October 1, and by the increase in the old age security tax on personal incomes from 3 to 4 per cent, effective January 1, 1964. As a result of these changes, revenues credited to the fund were $15 million higher, pension payments were $54 million higher, and the deficit was $64 million. This will be made up in the next few years; in the meantime it has been met by a temporary loan to the fund.
Mr. Nowlan:: It sounds like us.


Walter Lockhart Gordon: It sounds like you?


George Clyde Nowlan: What you said about us last year.


Walter Lockhart Gordon: I could not quite hear the hon. member for Digby-Annapolis-Kings reminiscing.
In addition to the revenues and expenditures that are included in what are known as budgetary accounts, the government disburses large sums for loans, investments and advances for a variety of purposes, and receives substantial sums from various sources

that do not constitute revenues, since at the same time they create liabilities or represent repayment of debts due the crown. During 1963-64, these cash disbursements included $122 million advanced to Central Mortgage and Housing Corporation and $72 million loaned to the Farm Credit Corporation, as well as many other items set forth in detail in the white paper. To meet these outlays, large sums were available from the repayment of loans, including $111 million from the Northern Ontario Pipe Line Crown Corporation, and from various annuity, insurance and pension accounts. In all, our nonbudgetary receipts exceeded non-budgetary disbursements by $166 million.
In explaining our total cash requirements I should take this opportunity to note that for the most part our budgetary revenues and expenditures involve cash receipts and disbursements. While our expenditures do include some charges of a bookkeeping nature, these are offset by equal credits to nonbudgetary accounts. When all are taken together, excluding the sale or redemption of debt securities, we obtain our total cash requirements. For 1963-64 the budgetary deficit of $685 million, offset by the net nonbudgetary receipts of $166 million, resulted in an over-all cash requirement of $519 million. It is expected that this net disbursement of cash during the year will have been somewhat less than the increase of $737 million in our outstanding debt, with the result that our cash balances will be some $218 million higher at the end of the year than they were at the beginning.
I turn now to consider the budget outlook for the next fiscal year. With the economic outlook as I have described it, and with no change in our present tax laws, I would forecast our budget revenues at $6,705 million, almost $500 million more than for the current fiscal year. With the consent of the house, I should like at this point to insert the usual table in Hansard showing our estimated revenues before tax changes and comparing them with revenues in 1963-64.
I should point out further that, since there will be other occasions tonight, Mr. Speaker, when I propose to present tabular material, perhaps the house might be prepared to give its consent now to having these tables printed as appendices in Hansard.


Some hon. Members:: Agreed.
[Editor's Note: The table referred to above is as follows:]

The Budget-Mr. Gordon
Budgetary and Old Age Security Fund Revenues (millions)
Budget Forecast	1963-64 Preliminary	1964-65 Forecast before tax changesPersonal income tax	$1,875	$1,863	$2,025Corporation income tax	1,273	1,249	1,340Non-resident withholding tax	135	127	125Estate tax	85	90	90Customs duties	585	580	620Sales tax	907	930	1,105Other duties and taxes	675	665	685Total taxes	5,535	5,504	5,990Non-tax revenues	655	703	715Budgetary revenues	6,190	6,207	6,705Old age security fund revenues	729	745	900Total revenues	$6,919	$6,952	$7,605


Walter Lockhart Gordon: The main estimates for 1964-65
show authorized expenditures of $6,703 million. There will, as usual, be additional expenditures under new statutory authorities such as equalization payments, and supplementary appropriations. Provision must be made for municipal winter works, for winter house building payments and other housing items, for payments to the railways under legislation arising out of the recommendations of the royal commission on transportation, for losses in the agricultural commodities stabilization account, and for the operating deficit of the Canadian National Railways. These and other costs, less probable amounts lapsing within appropriations, are expected to bring our total budgetary expenditures to about $7,125 million. This would amount to an increase of $233 million or about 3J per cent more than the expenditures for the current year. This is substantially less than the estimated percentage increase in gross national product.
On the basis of these forecasts, and with no tax changes, there would be a budgetary deficit of $420 million.
The old age security fund is expected to have revenues of $900 million and to pay out pensions of $885 million, leaving a small surplus of $15 million available to repay part of the temporary loan required this year.
During 1964-65 we expect to make substantial loans to the Central Mortgage and Housing Corporation-perhaps $180 million-over and above amounts received in repayment of earlier loans to them, because of the large-scale building programs they are financing. We also anticipate loan requirements of about
$80 million for the Farm Credit Corporation, and $50 million for the accelerating program of export credit financing, as well as substantial amounts for the purchase of C.N.R. stock, for municipal loans, for loans to the 1967 exhibition, the C.B.C., the unemployment insurance fund and other purposes. The total of all these non-budgetary cash disbursements can be expected to amount to about $800 million. This includes an unusual item of about 220 million Canadian dollars to be paid to British Columbia under the Columbia river agreements in exchange for U.S. dollars received as payment for the sale of future downstream power benefits. Apart from this, nothing has been included to anticipate changes in our holdings of foreign exchange.
Offsetting these extra-budgetary cash requirements and the budget deficit, we can expect net non-budgetary receipts of about $360 million, mainly from pension and annuity accounts. I do not include here the proposed Canada pension plan fund, which should accumulate about $25 million in the last few months of the new fiscal year, about half of which is to be invested in government of Canada securities, and half in provincial securities.
Taking these extra-budgetary receipts and disbursements into account, as well as the budget deficit itself, I anticipate total cash requirements of about $860 million before taking budget changes into account. Since our cash balances are abnormally high and can be reduced over the year by something over $150 million, I would expect that our borrowing requirements for new money might amount to about $700 million. In addition, the

The Budget-Mr. Gordon government must, of course, refund the $1,850 million of bonds maturing in 1964-65.
Before leaving the accounts to turn to other
matters of more immediate interest to the house, I should mention another way of looking at our accounts used nowadays by economists, and try to meet their interests in examining the budget. On pages 25 to 34 of the white paper will be found an analysis of our revenues and expenditures in terms of their impact on the flow of incomes of the national economy as a whole. We have this year projected these figures forward for the first time into the new year, just as we do our normal accounting figures. Rather than burden the house with these technical figures, I would table them and ask permission to have them included as an appendix to Hansard today.
They show that in terms of income flows our budget of revenue and expenditures is now close to a balance. They do not include, however, an analysis of our borrowing and lending, and crown company operations, which on balance have a substantial sustaining and stimulating effect upon national income and employment.
We have not endeavoured to forecast total provincial revenues and expenditures on this economic basis, but there is no doubt that the general trend shown in the figures in the white paper has continued, and provincial governments and municipalities together will be spending much more than the revenues they are raising together with the very large sums we are transferring to them. Taking everything into account, including the changes I am about to set forth, the government believes the economic effects of the budget are about right in our Canadian situation as we see it for the coming year.



GENERAL TAX POLICY

[Stage Direction]
The preparation of this budget has benefited greatly from the scores of briefs and hundreds of letters and calls received from organizations, companies and individuals concerned with tax problems and what should be done about them.
Louis-Joseph Pigeon: Experts too?


Walter Lockhart Gordon: Many experts, yes, including the hon. member for L'Assomption-Montcalm. What is the name of the other?


Louis-Joseph Pigeon: Joliette.


Walter Lockhart Gordon: I apologize for forgetting Joliette.

The government has welcomed this assistance and I acknowledge it gratefully. We look forward to improving in future the departmental arrangements for receiving and discussing suggestions and comments on this perennial and difficult subject.
One of the questions the government has had to consider is whether we should have a tax cut such as the United States congress has just enacted after so much heart searching. This has an immediate appeal and has naturally been urged by many Canadians on one ground or another.
After serious consideration, the government has decided not to propose a general reduction in either personal or corporate income taxes at this time.
Our present economic problems, such as the persistence of abnormal unemployment in the Atlantic provinces and eastern Quebec and in the less well trained types of male labour, are not such as can effectively be met by a general tax cut. More selective and long term measures are needed, such as the better education and technical training of our young people and the promotion of industrial development in the Atlantic provinces and eastern Quebec.
Second, in Canada we have been experiencing considerably larger budget deficits, when provincial as well as federal budgets are taken into account, than the United States has been having in proportion to its size.
We must also recognize that even after the tax cut in the United States personal income taxes in that country will remain higher than in Canada for most taxpayers. On single persons their federal taxes will be higher than ours in all brackets. On married persons the United States tax will be higher for most people. The people for whom it will generally be less than ours are married people with incomes above $10,000 a year, mainly because of the privilege of income splitting permitted by their law for married couples. Moreover, their social security taxes on employees' earnings are greater than the combination of our old age security tax on such incomes and the proposed Canada pension plan contribution will be, except for a very narrow range of incomes of single persons.
When we turn to corporation taxes the picture is less clear, because of the variety of state taxes and provincial taxes that must be taken into account, and the effects of the size of corporations. By and large, the Canadian corporation taxes are somewhat lower on small corporations and slightly higher on

large corporations. When account is taken of our 20 per cent dividend credit, income earned by a corporation and paid out as dividends to a shareholder is in nearly all cases less heavily taxed in Canada than in the United States.
I have here some tables of comparison of Canadian and the new United States tax rates which I would ask leave to table and to have printed as part of the appendix to Hansard.
I think these considerations of general economics and of the relative weight of direct taxation justify our conclusion that a general tax cut is not warranted in Canada by reason of the example of the United States.
Quite apart from the question of an overall tax cut, the government has decided, after considering the numerous suggestions and views put before us, that major changes in our tax structure should not be made until after we have received and published the report of the royal commission on taxation. Much thought and work on the part of thousands of Canadians have gone into the testimony placed before the commissioners, who are working intensively with their expert staff on this material and on research. Their conclusions and recommendations will be published, I am told, by the year end, with their technical supporting material following immediately after. This means we can have the benefit of all this work for the budget of 1965-though there will probably be more to be done than can or should be attempted in a single budget. In the circumstances it would be premature and unwise to set about major changes at this time. Consequently, it is proposed to make only changes which we feel cannot or should not be deferred a year and which will not prejudice more thorough-going revisions later.
It is not proposed to recommend any changes in the Excise Tax Act. We recognize that there are anomalies and difficulties in it-there always have been-but we believe these can wait until next year without serious consequences. There have been difficulties in particular in distinguishing "materials consumed or expended directly in the process of manufacture or production" in contrast to machinery and its parts, and apparatus, used in production, but these are gradually being resolved administratively. The government appreciates the patience and co-operation of taxpayers in helping the tax administrators to find a fair and reasonable solution to this inevitably troublesome problem.
The Budget-Mr. Gordon
I shall be recommending some changes in the income tax, a few in the estate tax-which we must open up because of the provincial aspects-and a few in the tariff.



CANADIAN OWNERSHIP OF BUSINESS

[Stage Direction]
The first tax measures I wish to discuss are those relating to Canadian and non-resident ownership of businesses in Canada.
The government believes that businesses in Canada, whoever owns them, should operate with due regard to the over-all interests of Canadians and the Canadian economy. Canadian materials should be processed to the greatest possible extent in Canada to provide employment and to sustain our international balance of payments. Export markets should be sought actively, wherever they may be found. Businesses in Canada should make a conscious effort to purchase supplies and components from Canadian sources whenever these are competitive; to use Canadian professional firms and other services; and to carry on in Canada all the industrial functions that can be performed efficiently here, including, particularly, basic industrial research and design. The fullest possible opportunities should be given to Canadian employees at all levels. Finally, we believe that a greater sense of partnership between Canadians and investors abroad will be of benefit to both. It is the government's desire to encourage this kind of partnership wherever possible.
These are the objectives of the government. Most people have said they agree with them, but some have stated they would like to see different methods used to achieve them. Some have said the methods should take the form of incentives to Canadians to acquire more equities in businesses in Canada without the imposition of penalties on foreigners who do not make such equities available. The government would prefer to avoid penalties, and to provide inducements-as most of us would- but we feel it is essential to have an effective program to accomplish these objectives, and tax measures are about the only practical instruments we have available to use for this purpose.
If our country is to develop rapidly and well, we should continue to expect substantial inflows of certain types of capital and an outflow of other types, with the free movement of capital into and out of the country unhindered by controls such as are found in most countries outside North America. But we will need less net import of capital, to pay our bills outside Canada, if we succeed in our efforts to bring our current account transactions with the rest of the world more nearly into balance.

[Stage Direction]
The Budget-Mr. Gordon
In the opinion of the government it is desirable that a greater proportion of the foreign capital we need should be in the form of bonds or other obligations which can be paid off. An important amendment to the Income Tax Act was passed during the last session of parliament intended to further this objective and it has begun to have an effect despite the uncertainty over the United States interest equalization tax.
When introducing the measures last year relating to companies with a degree of Canadian ownership, I referred to the Canadian participation as an equity interest. It has been found, however, that it is possible, by creating special types of voting shares having no real equity interest in the company, to meet the test in the present law without achieving its purpose. It is therefore proposed to add provisions in the relevant section of the act to make it clear that shares owned by Canadians, or shares made available to Canadians by listing on a Canadian stock exchange, must be equity shares if they are to be recognized in determining if a company has a degree of Canadian ownership.
It is also proposed to reword the requirement that is based on having shares listed on a Canadian stock exchange to permit the qualification of those companies that have made equity shares available to Canadians but have not found it possible to list all classes of voting shares. Under the proposed new wording it will be sufficient to list a particular class or classes of voting shares on a Canadian stock exchange provided that these shares are equity shares and represent at least 50 per cent of the paid-up equity capital of the company, and providing that no one nonresident person or persons associated with them owns more than 75 per cent of the company's equity shares.
It is also proposed to remove some technical obstacles which prevented the qualification of some companies such as subsidiaries of qualified companies. At the same time it is planned to close some avenues by which the requirements for qualification may now be circumvented.
Because of the requirements of budget secrecy, we have not been able to consult professional and business men-
Some hon. Members:: Oh, oh.


John George Diefenbaker: Where is the troika this year?


An hon. Member:: You made a joke, Walter.


Walter Lockhart Gordon: -during the preparation of the proposed modifications of these highly technical parts of the law.


Eric Alfred Winkler: Who did you consult-the Minister of Transport (Mr. Pickersgill)?


Walter Lockhart Gordon: However, the income tax resolution which I shall table at the conclusion of my remarks gives in considerable detail the proposed amendments to this section of the act. I would expect that those concerned will-in fact, I would be very surprised if they did not-study it carefully, and I would be glad to receive information, comments and suggestions which can be taken into account before the income tax bill is introduced.
The reduction in the rates of corporation income tax in the United States under the law passed recently has introduced a new factor into the situation pertaining to the rates of Canadian withholding taxes on dividends payable to corporations in that country. Parent corporations with subsidiaries in Canada are entitled to claim a tax credit in the United States for Canadian taxes paid. The amount of Canadian taxes that can be offset in this way depends on several factors, but broadly speaking the net effect on the tax position of a United States parent corporation of a 20 per cent withholding tax on dividends paid by a Canadian subsidiary, when the United States corporation income tax was 52 per cent, is about the same as would be a 15 per cent withholding tax in Canada when the rate of United States corporate income tax is reduced to 48 per cent, as it will be next January 1. Taking this into account, I think we can now secure a sufficiently strong inducement to achieve our objectives without imposing a higher rate next January. This being the case it is now proposed to leave the maximum rate of our withholding tax at 15 per cent. This will involve a number of consequential changes, including the deletion of the section imposing a temporary tax on increases in dividends.


John George Diefenbaker: Another retreat and recantation.


Walter Lockhart Gordon: Do you want to make the speech?


John George Diefenbaker: I would like nothing better.


Walter Lockhart Gordon: Then make it.


John George Diefenbaker: Recantation.


An hon. Member:: The arrogance is still there.


Walter Lockhart Gordon: The government expects that over the years an increasing number of foreign-owned Canadian companies will make

equity shares available to Canadians. With the proposed changes in the legislation, no penalties will be imposed on those that do not do so. They will be in exactly the same position as they were prior to June, 1963. Those that make shares available will be entitled to important tax concessions. And they will be complying with the government's expressed objectives.
It will be up to Canadians to invest in such equity shares as may be offered to them, to share the risks as well as the benefits and opportunities. Already our 20 per cent dividend tax credit gives individual Canadians a strong incentive to purchase equities in Canadian businesses. We do not think more is necessary in this regard.
There are, of course, a number of Canadian investment trusts and other institutions that enable Canadians to buy equities on a pooled basis, and I would hope these would develop further. Pension funds managed by trustees are becoming more common and important in Canada. We hope they will be able and willing to share in the larger ownership of Canadian businesses. I would urge those setting the rules for the investment of such funds, whether public authorities, business firms or trade unions, to keep this objective in mind.
The government holds the view that Canadian life insurance companies should be encouraged to buy more equities in Canadian businesses. It is the intention to propose a revision of our insurance legislation later this year. I would expect this revision would increase the proportion and range of assets that can be held in the form of equities, and that the rules for valuing them will make this type of investment more attractive to these companies.



TARIFF CHANGES

[Stage Direction]
In proposing any tariff changes at this time, we must have in mind the negotiations which are to take place in Geneva later this year, and in which Canada will be participating. These are expected to result in important reductions in the tariffs of our principal trading partners, and consequently in the Canadian tariff also. In these circumstances it seems advisable to hold for the negotiations a number of useful suggestions for tariff changes which we have received from various sources during the past year.
There are, nevertheless, about a score of tariff changes which I shall propose at this time. About half of these stem from tariff board reports which were received in 1962 and 1963. The others are a miscellaneous
The Budget-Mr. Gordon group of amendments, mostly of a relieving nature. Of this miscellaneous group, four involve the extension of existing free entry provisions which otherwise would expire on July 1, 1964. The most important of these relates to aircraft of a type or size not made in Canada. In several cases it is proposed to amend existing tariff wordings either for purposes of clarification or to broaden the coverage. One such amendment expands the list of educational materials covered by an existing free entry provision. A new item is being inserted to provide for the free entry of sacramental bread.
Mr. Kindt:: Oh boy.


Walter Lockhart Gordon: Perhaps the next item which I am about to refer will appeal to hon. members.


Thomas Miller Bell: Sales tax?


Walter Lockhart Gordon: Finally, tariff item 156, which covers whisky and other spirits, is to be amended by deleting a proviso relating to bottle sizes.


Some hon. Members:: Oh, oh.


Walter Lockhart Gordon: I should like to thank the Leader of the Opposition for his enthusiasm on a subject which I did not think he was much interested in. The effect will be to remove a duty penalty which otherwise would apply to spirits imported in bottles of certain sizes now widely used in Canada. Our friends in Britain, or perhaps I should say in Scotland, have considered this proviso to be a significant barrier to one of their traditional exports to Canada, and they will greatly welcome its removal.
The tariff board reports to which I referred a moment ago relate to oilfield equipment and to chinaware and glassware for decorating, respectively. Several of the tariff items in question were bound by the GATT. Accordingly, it was necessary to renegotiate them before the board's recommendations could be implemented. A similar situation prevailed in respect of the tariff item covering disinfectants, fungicides and insecticides which is being reworded for purposes of clarification.
The necessary negotiations have been completed, and the tariff resolutions which I shall table at the conclusion of my remarks provide for implementation of the results. Hon. members will have observed that the board's recommendations respecting oilfield equipment involved some increases and some reductions. On balance, there was a small

The Budget-Mr. Gordon net increase. Accordingly, compensating reductions were negotiated on three other products, namely barytes, montan wax and bread. Considerable border trade takes place in bread, and our main interest is in exporting rather than importing. The changes in regard to tableware and to glassware for decorating involve an expansion and further liberalization of the present provisions in the tariff.
The details of all these tariff proposals will be found in the resolutions, and I shall be glad to provide in committee any further explanations that are required. Before leaving the subject of tariffs, however, I should like to mention one group of items about which I have received conflicting representations. They are the special items providing for the free entry of certain equipment and materials for use by hospitals, educational and religious institutions. I have decided to refer these items to the tariff board for review and report.



ESTATE TAXES

[Stage Direction]
It is necessary to amend the Estate Tax Act to implement the proposal made to the provinces last November to turn over a larger share of the death duties field to them. It was intended to increase the abatement of federal tax from 50 per cent to 75 per cent in all those provinces that impose succession duties and to make a corresponding payment to those provinces that do not impose such duties. The provinces of Ontario and Quebec later indicated that they would prefer not to change their rates of succession duties at this time because their tax structures are now under review by provincial tax commissions. Instead they requested that for the fiscal year 1964-65 the federal government simply pay them an amount that is the equivalent of this 25 per cent abatement. British Columbia, on the other hand, has already a bill passed second reading to increase its rates of succession duty. It is therefore necessary to amend our Estate Tax Act to make this change. The existence of the two levels of abatement this coming year will require some consequential amendments to the rules determining the situs of property.
In addition, a number of amendments will be proposed to correct anomalies and close loopholes that have come to light in the course of administering this law. The details of these will be placed before the house in the resolution and the amending bill.
In reviewing the Estate Tax Act in the light of the representations that had been made about it, I was impressed with the case made by women's organizations saying that

more recognition should be given to the special contribution that a wife makes to the accumulation of property by her husband. Any action to give effect to suggestions of this nature, however, would now affect provincial revenues more than our own budget position. Death duties are under review by provincial commissions of enquiry as well as by our royal commission on taxation. We have therefore deferred any action on this matter, and hope that there will be consultations with the provinces on it, as well as on other aspects of death duties, following the reports of the various commissions.

[Stage Direction]
The important tax incentives introduced last year that provided accelerated capital cost allowances and other concessions in designated areas have been well received. They are of special importance because it is here that the greatest need for continued encouragement appears to lie. It will take time however for areas that have lagged behind the general rate of expansion to attract the new enterprises that are expected to result from these tax inducements. Accordingly, we are proposing that the provision under which new manufacturing or processing businesses in designated areas receive an exemption from tax on their income for three years after commencement of operations be extended. At present such businesses have to commence commercial operations within the 24 months period that started on December 5, 1963. It is now proposed that they be allowed to qualify if they commence operations at any time after December 4, 1963, and before April 1, 1967.
It is also proposed that the privilege of writing off new manufacturing equipment acquired for use by a new manufacturing or processing business in a designated area at the accelerated rate of 50 per cent be continued with respect to equipment acquired before April 1, 1967. The accelerated rate of 20 per cent for writing off new buildings acquired in designated areas will also apply to buildings acquired before April 1, 1967.
The rates at which taxpayers may write off for tax purposes the capital cost of depreciable assets acquired for use in their business are reviewed from time to time. The general principle followed in establishing these rates is to permit a taxpayer to deduct the cost of a depreciable asset during the useful life of that asset. After a study of representations made by the industry, it has been decided that the rapid rate of wear and tear for certain heavy mobile machinery used by the construction industry for excavating and moving earth

and rock and compacting road building materials justifies a faster rate of write-off. It is therefore proposed to amend the regulations to increase the rate of capital cost allowance for such machinery from 30 per cent to 50 per cent with respect to new equipment acquired after tonight.
Turning to another field, it is important that efforts be made to help Canadians pursue courses of study to improve their qualifications for employment. Tremendous assistance is being given in this direction through the program for constructing vocational training schools. Assistance is also accorded to fulltime university students by allowing them to deduct their tuition fees in computing income for tax purposes. Part-time students who must pay for courses to gain a university degree or a high school matriculation certificate or to acquire a technical skill or otherwise improve their qualifications for employment have not been permitted to claim their fees as a deduction. These courses are frequently taken at night or during vacation periods or are not of sufficient duration to qualify the participant as a full-time student. We propose that the law be amended to allow these students to deduct in this and future years the tuition fees they pay to educational institutions in Canada.
Another proposed change in the income tax would permit expenditures of a current nature for scientific research carried on outside Canada to be deducted in computing income if the research is related to the taxpayer's business. Another proposal of general interest is that taxpayers be allowed to deduct expenditures they incur in preparing a notice of objection to an income tax assessment or in appealing an assessment.
There will be a number of other amendments to the Income Tax Act. Some of these are outlined in the resolution to be tabled tonight and others of a technical or drafting nature will be brought forward in the bill to amend the Income Tax Act.
In the course of preparing these proposals for income tax amendments, we carefully reviewed over 250 separate suggestions and numerous variations thereof put forward by individuals and organizations across Canada. In addition, particular attention was given to the suggestions made in both houses of parliament during last year's debate on the budget resolutions and the income tax bill.
Hon. members will recall that the suggestions put forward last year included a number of ideas for changing the methods of dealing with deductions for charitable donations. These suggestions were examined very carefully, but quite frankly I have not yet
The Budget-Mr. Gordon been able to come up with a satisfactory solution. After many discussions about it, my late colleague the minister of national revenue requested the royal commission on taxation to give this matter special attention in the comprehensive study they are making of the tax system.

[Stage Direction]
Following a review of the budget situation for this coming year, and the employment and general economic prospects, the government has come to the conclusion that it is practicable to implement now another important item, in addition to those announced in the throne speech, of the four year program for a parliament which it put before the Canadian people.
A central feature of our policy is to encourage and assist young people to continue their training to fit them for employment. To further this objective we propose that family allowances shall be paid in respect of children aged 16 and 17 years who are attending fulltime educational or training courses.
Some hon. Members:: Hear, hear.


An hon. Member:: The only worth-while thing you have said.


Lester Bowles Pearson: Five years.


An hon. Member:: Why didn't you do it?


Walter Lockhart Gordon: It is reassuring to get such support for a good policy.


An hon. Member:: It is our policy.


Walter Lockhart Gordon: The monthly payment now being made for children less than ten years old is $6 and for those from 10 to 15 years old it is $8 in recognition of the higher cost of looking after older children-it has gone up from $6 to $8. Extending the same principle, the monthly payment for those 16 and 17 years old will be $10 a month. Eligibility will depend upon full-time attendance at a school, university or technical training course.
The necessary amendments to the Family Allowances Act will be placed before the house after the Easter adjournment. It will be necessary also to revise the terms of the Income Tax Act to change the tax exemptions allowed for children of these ages in respect of whom family allowances are paid.
We estimate that the net cost of these allowances, after taking into account the effect on our revenues of the lower income tax allowances, will be about $43 million in a full year. For the fiscal year 1964-65 the net cost falling on the budget will be about $27 million.

The Budget-Mr. Gordon
Teen-agers have faced more difficulty in finding jobs than most adults. This measure is designed to assist and encourage as many teen-agers as possible to obtain two years more of training to equip themselves more fully for the kind of jobs that are likely to be available.
The government believes that the expenditure involved will be an important investment in raising the level of skills and ability of our labour force, and thus will improve the growth and development of our economy. This measure is one we can afford this year. It will help young Canadians to fit themselves for better jobs.
The proposal to permit deduction from income for tax purposes of fees paid for parttime training will assist others to accomplish the same purpose. So too will the loans to university students which were announced in the throne speech and explained by the Prime Minister in his leaders' day address.
I believe these loans to university students can be provided most conveniently and efficiently through the chartered banks with their widespread facilities all across the country. We want to enlist the co-operation not only of the banks but through them of the university authorities in order to ensure that all loans are made to full-time students capable of proceeding to a degree and in need of financial assistance to carry on their studies. The government is prepared to guarantee these student loans; there are good precedents for such an approach in our other legislation. No interest would be payable by the student during his years of study.
We shall be exploring this proposal at our meeting with the provinces later this month, and also with the banks and the Canadian universities foundation. What we have in mind should in no way interfere with the operations of the universities or the jurisdiction of the provinces over them. But it should be a real help to promising young people, most of whom should be well able to repay out of higher earnings after graduation a considerable part of the cost of their university education.
By far the most important measure before this parliament is one intended to permit all the workers of Canada to look forward to an opportunity to retire eventually with far more security and dignity than has been possible heretofore. In presenting this budget I wish to make it clear that this government and this parliament have an equal concern to ensure that young Canadians have an

opportunity to fit themselves for life and work in the complex and competitive world into which they are now entering.



CONCLUSION

[Stage Direction]
It is estimated that the various changes I have proposed will increase the deficit by about $35 million to $455 million for the coming year. Budgetary expenditures are now forecast at $7,155 million and budgetary revenues at about $6,700 million. The estimated changes in the old age security fund are negligible. Over-all borrowing requirements in the coming year will be about $750 million taking into account the fact that present cash balances are on the high side.
The deficit I have forecast, of $455 million, is sharply reduced-by some 331 per cent- from the level of the preceding two years. This reduction is warranted by the improvement in the economic and employment outlook. But the need for continued support of the general level of incomes and employment makes it undesirable to go further at this time.
John (Jack) Henry Horner: Nothing for the
farmers.


Walter Lockhart Gordon: Have they no children?


John (Jack) Henry Horner: You bet they have.


Walter Lockhart Gordon: It should be noted in this connection that disbursements in the form of loans for housing, for export finance, for farm credit and for other purposes will help to support and improve the economic situation while not adding to the budget deficit.
Economic and financial conditions in Canada do not call for spectacular changes at this time. But there will be no lack of important financial legislation to come before this parliament. Late this year we hope to put forward a bill to embody the decennial revision of the Bank Act, prepared in the light of the thorough review carried out by the royal commission on banking and finance. We wish to revise the legislation concerning the investments of insurance companies. Next year and probably again the year after that we can expect important legislation to improve the tax structure, as I have already indicated.
For this year the budget put before you is, I believe, one that will best fit the needs of the Canadian economy. It retains and strengthens the measures that have helped in the past year. It makes substantial progress in reducing the budgetary deficit, while continuing to make the necessary contribution by

government action to the forces of economic growth. The Prime Minister on February 20 described the government's legislative program for this session as a business-like and forward-looking pattern of work. That is the spirit of the government's program as a whole. It is the spirit of this budget also.
I now table, Mr. Speaker, the resolutions which I propose to move in committee of ways and means. In accordance with usual procedure, these contain some detailed points which have not been mentioned in the speech.



RESOLUTIONS


[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Income Tax Act and to provide among other things:
1.	That for the 1964 and subsequent taxation years the deduction from income granted in respect of certain tuition fees be extended to include tuition fees paid by a taxpayer who is a student, whether or not he is a full-time student, to an educational institution in Canada
(a)	that is a university, college or other educational institution providing courses at a post-secondary school level,
(b)	that is a school operated by or on behalf of Her Majesty in right of Canada or a province, a municipality in Canada, or a municipal or public body performing a function of government in Canada,
(c)	that is a high school or secondary school providing courses leading to a secondary school certificate or diploma that is a requirement for entrance to a college or university, or
(d)	that is certified by the Minister of Labour to be an educational institution by which courses are conducted that provide or improve the qualifications of a person for employment or for the carrying on of a business or profession,
if the tuition fees paid by the taxpayer for the year exceed $25.
2.	That for the 1964 and subsequent taxation years a dependant in respect of whom a taxpayer may deduct an amount not exceeding $550 in computing his taxable income shall include a taxpayer's brother or sister who was 21 years of age or over and in fulltime attendance at a school or university.
3.	That the period commencing on December 5, 1963 within which a new manufacturing or processing business must have commenced manufacturing or processing in
The Budget-Resolutions reasonable commercial quantities in a designated area in order to obtain a certificate for the purposes of section 71A of the act be extended to March 31, 1967.
4.	That for the 1964 and subsequent taxation years in determining whether 95 per cent of the assets used in a business were new and situated in a designated area, for purposes of establishing under section 71A of the act that a person was carrying on the business in a designated area, the value of the assets shall be their fair market value notwithstanding that such value may be different from their capital cost.
5.	That where at a time when an area was a designated area a business has been certified to be a new manufacturing or processing business, or an application has been made in writing to the Minister of Industry by a taxpayer in respect of a business that upon the fulfillment of specified conditions would be certified to be a new manufacturing or processing business in the designated area, that area, notwithstanding that it may no longer be a designated area, shall for the purpose of the application of section 71A of the act to that particular business continue to be a designated area.
6.	That for the 1962 and subsequent taxation years a taxpayer may deduct in computing income all expenditures of a current nature for scientific research carried on outside Canada that are expenditures made in the year
(a)	for scientific research related to the taxpayer's business directly undertaken by or on behalf of the taxpayer, or
(b)	to an approved association, university, college, research institute or other similar institution to be used for scientific research related to the taxpayer's business.
7.	That for the 1964 and subsequent taxation years a taxpayer may deduct in computing income amounts expended by him in relation to an objection to an assessment or an appeal from an assessment and shall include in computing income any costs recovered in respect thereof.
8.	That for the 1964 and subsequent taxation years a taxpayer may deduct in computing income an amount paid in the year or in a previous year since 1962 as a contribution to or under a registered pension fund or plan in respect of services rendered by him in past years while he was a contributor even if he also deducts an amount as a contribution in respect of services rendered by him in past years while he was not a contributor, but the maximum amount deductible in a year in respect of past services while he was a contributor shall not exceed $1,500 minus
[Stage Direction]
The Budget-Resolutions the aggregate ol the amounts deducted in the year in respect of services rendered by him in the year and in respect of services rendered by him previous to the year while he was not a contributor.
9.	That for the 1964 and subsequent taxation years the period of 60 days from the end of a year within which an employer may pay an amount to or under a registered pension fund or plan in respect of services rendered by his employees be increased to 120 days.
10.	That for the 1964 and subsequent taxation years it be made clear that any amount received by an employer upon the winding up or reorganization of a pension fund or plan shall be included in his income.
11.	That for the 1964 and subsequent taxation years subsection (3) of section 12 of the act, which provides rules concerning an outlay or expense payable by a taxpayer to a person with whom he was not dealing at arm's length, be amended so that a taxpayer who at the end of his taxation year has a liability that
(a)	arose in respect of a non-arm's length transaction,
(b)	was deductible in computing his income, and
(c)	has been outstanding for two years following the end of the taxation year in which it accrued
must include in income for the third year after it accrued an amount equal to the liability, unless the debtor and creditor sign and file an agreement in which they elect to have their taxes computed as though the debt had been paid and replaced by a loan on the first day of that third year.
12.	That the 20 per cent rate of tax payable by a non-resident person on dividends paid or credited to him after 1964 by a corporation resident in Canada that does not have a degree of Canadian ownership be reduced to 15 per cent, and that in consequence thereof:
(a)	part IID of the act imposing a tax equal to 5 per cent of certain dividends paid by a corporation that does not have a degree of Canadian ownership be repealed;
(b)	the 20 per cent rate of tax imposed by part IIIA of the act on income earned after 1964 by a non-resident corporation carrying on business in Canada be reduced to 15 per cent; and
(c)	the 20 per cent rate of tax imposed on the taxable income earned after 1964 by a non-resident-owned investment corporation be reduced to 15 per cent.

13.	That for the 1964 and subsequent taxation years, where a taxpayer has disposed of his interest in a partnership, such part of the consideration as is reasonable in the circumstances shall be deemed to be proceeds of disposition of depreciable property of the taxpayer used in the partnership business.
14.	That for the 1964 taxation year the amount deductible in computing taxable income in respect of a dependent child who was over 15 and under 18 years of age at the end of the year shall not exceed $470 if an allowance was paid under the Family Allowances Act in respect of the child for any month after the month in which he attained the age of 16 years.
15.	That for the 1965 and subsequent taxation years, a child shall be regarded as a child qualified for family allowance for any year at the end of which he was over 15 and under 18 years of age, if an allowance under the Family Allowances Act was paid in the year in respect of that child after the month in which he attained the age of 16 years.
16.	That with regard to the definition of degree of Canadian ownership in section 139A of the said act, the said measure provide as follows:
"(1) Subparagraph (ii) of paragraph (a) of subsection (1) of section 139A of the said act is repealed and the following substituted therefor:
"(ii) either
(A)	not less than 25 per cent of the issued and outstanding shares of the corporation having full voting rights under all circumstances were owned by one or more individuals resident in Canada, one or more corporations controlled in Canada or a combination thereof, and equity shares representing in the aggregate not less than 25 per cent of that part of the paid-up capital of the corporation that was represented by all the issued and outstanding equity shares of the corporation were owned by one or more individuals resident in Canada, one or more corporations controlled in Canada, or a combination thereof, or
(B)	a class or classes of shares of the corporation having full voting rights under all circumstances were listed on a prescribed stock exchange in Canada, and it is established in prescribed manner that no one nonresident person and no one corporation that did not comply with clause (A) of this subparagraph owned more than 75 per cent of the issued and outstanding shares of the corporation having full voting rights under all

circumstances, alone or in combination with any other person related to such non-resident person or such corporation at any time within the period within the meaning of subsection (5a) or (5b) of section 139, and a class or classes of equity shares of the corporation representing in the aggregate not less than 50 per cent of that part of the paid-up capital of the corporation that was represented by all the issued and outstanding equity shares of the corporation were listed on a prescribed stock exchange in Canada, and it is established in prescribed manner that no one nonresident person and no one corporation that did not comply with clause (A) of this subparagraph owned equity shares representing in the aggregate more than 75 per cent of that part of the paid-up capital of the corporation that was represented by all the issued and outstanding equity shares of the corporation, alone or in combination with any other person related to such non-resident person or such corporation at any time within the period within the meaning of subsection (5a) or (5b) of section 139, and"
(2)	Subsection (1) of section 139A of the said act is further amended by striking out the word "or" at the end of paragraph (a) thereof, by repealing paragraph (b) thereof and by substituting therefor the following paragraphs:
"(b) the corporation complied with the conditions specified in subparagraphs (i) and (iii) of paragraph (a) and was a subsidiary wholly owned corporation subsidiary to a corporation that throughout the sixty-day period complied with the conditions specified in paragraph (a) or (c); or
(c)	the corporation complied with the conditions specified in subparagraphs (i) and (iii) of paragraph (a) and was a subsidiary controlled corporation
(i)	having issued and outstanding equity shares none of which were owned by a person other than
(A)	the corporation to which it was subsidiary,
(B)	a non-resident person not related to the corporation to which it was subsidiary,
(C)	an individual resident in Canada, or
(D)	a corporation controlled in Canada, and
(ii)	subsidiary to a corporation that throughout the sixty-day period complied with the conditions specified in paragraph (a) or (b)."
(3)	Paragraphs (a) and (b) of subsection (2) of section 139A of the said act are repealed and the following substituted therefor:
"(a) a corporation that has share capital is not controlled in Canada at a particular time
The Budget-Resolutions unless at that time the corporation is resident in Canada, and more than 50 per cent of its issued and outstanding shares having full voting rights under all circumstances, and shares representing in the aggregate more than 50 per cent of its paid-up capital are owned by
(i)	individuals resident in Canada,
(ii)	corporations resident in Canada with respect to each of which
(A)	more than 50 per cent of the issued shares having full voting rights under all circumstances, and
(B)	shares representing in the aggregate more than 50 per cent of the paid-up capital are owned by individuals resident in Canada, or
(iii)	any combination of individuals or corporations described in subparagraph (i) or
(ii)	;
(b) where
(i)	a non-resident person,
(ii)	a corporation that does not have a degree of Canadian ownership, or
(iii)	a corporation that is related to a nonresident person within the meaning of subsection (5a) or (5b) of section 139
has a right under a contract in equity or otherwise either immediately or in the future and either absolutely or contingently, to, or to acquire, equity shares in a corporation, those shares shall
(iv)	unless the right is contingent upon an event that it is not reasonable to expect to occur within a reasonable time, or
(v)	unless the right is such that a reasonable man concerned only with the value of the shares would not exercise it,
be deemed
(vi)	to be owned by the person who has the right,
(vii)	to be owned by a non-resident person, where the person who has the right is a corporation described in subparagraph (ii) or
(iii)	, and
(viii)	where the shares are unissued,
(A)	to be issued and outstanding, and
(B)	to have a paid-up capital value, with respect to each share, equal to
1.	the par value, where the shares have a par value,
2.	the amount that would be paid with respect to each share to exercise the right under the terms of the contract, where the shares have no par value and an amount is specified in the contract, or
988	HOUSE OF
The Budget-Resolutions
3.	the market value at the end of the relevant sixty-day period of a share of the class of shares of that corporation that is most closely similar to that share, where the shares have no par value and no amount is specified in the contract,
and any other person who actually owns the shares in respect of which that right exists shall be deemed not to own those shares."
(4)	Subsection (2) of section 139A of the said act is further amended by striking out the word "and" at the end of paragraph (c) thereof and by adding thereto the following paragraphs:
"(e) "equity share" means
(i)	a share, the owner of which has, as owner thereof, a right
(A)	to a dividend, and
(B)	to a part of the surplus of the corporation after repayment of capital, upon the redemption of the share, a reduction of the capital of the corporation or the winding up of the corporation,
as great as the right of the owner of any other share of the corporation, when the magnitude of the right in each case is expressed as a rate based on the paid-up capital value of the share to which the right relates, and
(ii)	a share, the owner of which has, as owner thereof, a right
(A)	to a dividend, after a dividend at a rate not in excess of 8 per cent per annum has been paid to the owners of shares of a class other than the class to which that share belongs, and
(B)	to a part of the surplus of the corporation after repayment of capital, upon the redemption of the share, a reduction of the capital of the corporation or the winding up of the corporation, after a payment of a part of the surplus at a rate not in excess of 10 per cent has been made to the owners of shares of a class other than the class to which that share belongs, as great as the right of the owner of any other share of the corporation, when the magnitude of the right in each case is expressed as a rate based on the paid-up capital value of the share to which the right relates; and
(f)	"paid up capital value" with reference to a share, means
(i)	in the case of an unissued share that is deemed by paragraph (b) to be issued and outstanding, the amount determined under clause (B) of subparagraph (viii) of that paragraph, and
(ii)	in any other case, an amount equal to the paid-up capital of the corporation that is represented by the shares of the class to
[Stage Direction]

which that share belongs divided by the number of shares of that class that are in fact issued and outstanding."
(5)	In the case of a taxation year commencing before January 1, 1965, of a corporation that would have had a degree of Canadian ownership in the 1964 taxation year if section 139A of the said act had not been amended by this act, that portion of subsection (1) of section 139A of the said act, as amended by this act, that precedes paragraph (a) thereof shall, if the corporation elects in prescribed manner before January 1, 1965, be read as follows:
"139A. (1) For the purposes of this act, a corporation has a degree of Canadian ownership in a taxation year if throughout any sixty-day period commencing after March 16, 1964 and ending before January 1, 1965"
(6)	This section is applicable to the 1964 and subsequent taxation years."
and for the purpose of determining whether a corporation had a degree of Canadian ownership for the purposes of paragraph (b) of subsection (la) of section 106 of the said act, section 139A of the said act shall
(a)	in relation to any dividend declared on or before March 16, 1964 be read as if it had not been amended by the said measure, and
(b)	in relation to any dividend declared after March 16, 1964 be read as amended by the said measure.

[Stage Direction]
Resolved that it is expedient to introduce a measure to amend the Estate Tax Act and to provide among other things:
1.	That in respect of property passing on the death of a person whose death occurs at any time after March, 1964, the deduction from the tax otherwise payable in respect of any such property that
(a)	was situated in a province that levied a succession duty and that was not entitled under the Federal-Provincial Fiscal Arrangements Act or any other act of the parliament of Canada to receive a payment in consequence of its refraining from increasing its succession duty in respect of such property or in respect of property described in subparagraph (b), or
(b)	was personal property situated outside of Canada that was, on the death of any such person who at the time of his death was domiciled in a province described in subparagraph (a), transmitted to a person who at the time of such death was domiciled in or resident in that province,
shall be 75 per cent.

2.	That the limit of $1,500 on the amount of certain kinds of property passing on the death of a deceased person that may be transferred, delivered or paid over to any person resident in Canada without the consent of the minister, in the case of any one transferor, deliverer or payer, be increased to $2,500, and that such kinds of property be extended to include an amount payable under a policy of insurance in respect of sickness or accident in which the deceased had, immediately before his death, a beneficial or other interest.
3.	That the property comprised in a settlement to be included in computing the aggregate net value of the property passing on the death of a person be deemed to include property comprised in a settlement where any income from such property is reserved to that person for life or any other period determinable by reference to death.
4.	That a disposition made by a person out of any community of property existing between that person and his spouse at the time
The Budget-Customs Tariff of the making of such disposition be deemed to have been made by each of them according to the respective share of each in that community.
5.	That where, on condition of the purchase of an annuity, a policy of insurance was effected after March 16, 1964 on the life of a person there be included in computing the aggregate net value of the property passing on the death of such person the lesser of,
(a)	the amount paid for the annuity less the aggregate of annuity payments made prior to the death, or
(b)	the amount payable under the policy of insurance.

[Stage Direction]
1. Resolved, that schedule A to the customs Tariff be amended by striking out tariff items 219a, 326m, 326n, 399a, 410c, 410d, 410e, 683 and 848, and the enumerations of goods and the rates of duty set opposite each of these items, and by inserting therein the following items, enumerations of goods and rates of duty:
[Stage Direction]


Tariff
Item
Ifia Bread made with the use of yeast as the leavening substance.
219a Non-alcoholic chemicals for disinfecting, or for preventing, destroying, repelling or mitigating fungi, weeds, insects, rodents, or other plant or animal pests, n.o.p.; non-alcoholic preparations compounded exclusively for disinfecting or for preventing, destroying, repelling or mitigating fungi, weeds, insects, rodents, or other plant or animal pests, n.o.p.:-
(1)	When in packages not exceeding three pounds
each, gross weight	
(2)	Otherwise	
%25d Montan wax	
287b Undecorated tableware of china, porcelain, semi-porcelain or while granite, including the foregoing with the surface uniformly coloured in only one hue, when for use in the manufacture of decorated tableware by kiln-fired decoration
326m Articles of glass, not to include plate, sheet, machine-made tumblers nor containers for the bottling or packaging of products, when for use in the manufacture of cut or decorated glassware, under such regulations as the Minister may prescribe	
399a Pipes or tubes of iron or steel, commonly known as ''oil-country goods", being casing or tubing and fittings, couplings, thread protectors and nipples therefor; seismograph drilling bits, in sizes three and one half inches to four and three-quarter inches inclusive; all of the foregoing for use in connection with natural gas or oil wells	
410<f Well-drilling machinery and apparatus, and parts thereof, for use in drilling for water or in prospecting for minerals, not including motive power	
Rates in Effect Prior to Rates Proposed in this Budget
Most-
British Preferential Tariff	Favoured- Nation Tariff	General Tariff	British Preferential Tariff	Most- F avoured- N ation Tariff	General TariffFree	Free	20 p.c.	71 p.c.	71 p.c.	20 p.c.Free	121 p.c.	25 p.c.	Free	12J p.c.	25 p.c.Free	Free	15 p.c.	Free	Free	15 p.c.Free	Free	10 p.c.	5 p.c.	71 p.c.	10 p.c.Free	10 p.c.	35 p.c.	Free	10 p.c.	35 p.c,Free	Free	321 p.c.	Free	Free	321 p.c.10 p.c.	221 p.c.	321 p.c.Free	15 p.c.	321 p.c.5 p.c.	10 p.c.	20 p.c.	5 p.c.	10 p.c.	20 p.c.Free	Free	Free	Free	Free	Free
w
[Stage Direction]


►d
n
o
3
o
as
m
The Budget-Customs Tariff
Jfil Machinery and apparatus for use in exploratory or discovery work in connection with oil or natural gas wells or for the development, maintenance, testing, depletion or production of such wells up to and including the wellhead assembly or surface oil pumping unit; well-drilling machinery and apparatus for use in the exploration, discovery, development or operation of potash or rock salt deposits; these provisions shall not include automotive vehicles or chassis on which the machinery and apparatus are mounted:
(1)	Belting and hose, wholly or partly of rubber, and fittings and accessories therefor whether attached or not;
Casing centralizers, wall scratchers and scrapers, stop rings and cement baskets;
Moulded or extruded rubber products, namely cementing plugs, protectors, wipers, swab rubbers and rubber rollers for wireline guides and turnback units;
Screens for shale shakers;
Sucker rods, pony rods, polished rods, and couplings therefor;
Swaged nipples and bull plugs not exceeding Ji inches in outside diameter;
Wellhead valves, not under 2 inch or over S inch nominal size, rated for service in working pressures up to and including 2,000 pounds per square inch W.O.G.
{water, oil, gas), excluding check valves, pressure regulators, automatic safety valves and needle valves;
Wire rope;
Parts of all the foregoing	 5 p.c.
(2)	Blow-out preventers;
Crown blocks and travelling blocks;
Elevators and elevator links;
Fishing tools;
Flanged casing heads;
Masts or derricks for drilling, servicing or work-over rigs;
Rotary tables;
Screwed casing heads for surface casings exceeding tO\ inches in outside diameter, or rated for service in working pressures exceeding 2,000 pounds per square inch W O.G. {water, oil, gas);
Swivels;
Well logging equipment;
Well perforating equipment;
Wellhead valves over S inch nominal size, or rated for service in working pressures exceeding 2,000 pounds per square inch W.O.G. {water, oil, gas);
Well-packers;
Parts of all the foregoing	 Free
10 p.c.
20 p.c.	Various	Various
Various
>
Sd
o
[Stage Direction]


Free
Free
Free
Free
Free
The Budget-Customs Tariff
Rates in Effect Prior to Rates Proposed in this Budget
[Stage Direction]


Most-	
[Stage Direction]
British Favoured-	British	Most-Tariff	Preferential	Nation	General	Preferential	F a voured- N ation	GeneralItem	Tariff	Tariff	Tariff	Tariff	Tariff	Tariff45/	(5) Drilling, servicing or work-over rigs, assembled or not;
(con) Draw works;
Slush pumjts;
Motive power and drive groups for operating slush pumps, draw works or rotary table	Free	Free	Free	Free	Free	Free(4) All other machinery and apparatus, and parts thereof; parts of goods enumerated in (S) of this item: (а)	Of a class or kind made in Canada	
(б)	Of a class or kind not made in Canada	5 p.c. Free	10 p.c. Free	20 p.c. Free	Free Free	Free Free	Free Freem	Bolted steel tanks; Chemical injection pumps; Chokes, beans and flow controllers; Separators and treaters, oil, gas or water; All the foregoing for use in connection with oil or natural gas wells for installation between the wellhead assembly or surface oil pumping unit and the field marketing valve: (/) Of a class or kind made in Canada; parts thereof....	5 p.c.	10 p.c.	20 p.c.	10 p.c. Free	22£ p.c. Free	35 p.c. Free(2) Of a class or kind not made in Canada; parts thereof.	Free	Free	Free	10 p.c. Free	22£ p.c. Free	35 p.c. Free492a	Drilling mud and additives therefor for use in drilling for oil, natural gas, potash or rock salt	Free	Free	Free	Free Various	Free Various	Free Various492b	Machinery and apparatus for use in the distillation or recovery of products from natural gas: (1)	Of a class or kind made in Canada; parts thereof	
(2)	Of a class or kind not made in Canada; parts thereof..	5 p.c. Free	15 p.c. Free	25 p.c. Free	Free Free	10 p.c. 10 p.c.	12£ p.c. 12^ p.c492c	Machinery and apparatus for use in producing unrefined oil from shales or for operating oil-sands by mining operations or for extracting oil from the sands so mined: (1)	Of a class or kind made in Canada; parts thereof.... (2)	Of a class or kind not made in Canada; parts thereof..	5 p.c. Free	10 p.c. Free	20 p.c. Free	Free 10 p.c. Free	Free 22, p.c. Free	Free 35 p.c. Free492d	Materials for use in the manufacture of the goods specified in tariff items 491, 492, 492a, 492b and 492c	Free	Free	Free	Free Various	Free Various	Free Various
s
s
o
w
The Budget-Customs Tariff
20220-63i
683 Barytes	 Free	20 p.c.	25 p.o.	Free
848 Drilling bits, n.o.p., and parts thereof, for use in exploratory or discovery work in connection with, and development, depletion and production of petroleum
or natural gas wells	 Free	Free	Free	Free
25 p.c.
Free
25 p.c.
Free
2- Resolved, that Schedule B to the Customs Tariff be amended by striking out item 1047 and the enumeration of goods and the rate of drawback of dutv set opposite that item, and by inserting therein the following item, enumeration of goods and rate of drawback of duty:	^
Item No. Goods	When Subject to Drawback	Portion of Duty (not including Special Duty or Dumping Duty) Payable as Drawback1007 Machine-made tumblers of glass, not cut nor decorated.	When used in the manufacture of cut or decorated tumblers; provided that no drawback shall be paid under this item unless at least twenty-five per cent of the cost of producing the finished article has been incurred in Canada	60 p.c.PH Schedule A to the Customs Tariff be amended by striking out tariff items 9i, 156, 196, 237a, 3565, 440ml., 440nl., 440r, 521(2) 521(7) 521(8) of goods and ratefofdut^ 6 enUmeratlons of goods and the rates of duty set opposite each of these items, and by inserting therein the following items, enumerations	
Rates in Effect Prior to Rates Proposed in this Budget
Tariff Item	British Preferential Tariff	Favoured- Nation Tariff	General Tariff	British Preferential Tariff	Most- F avoured- N ation Tariff	General Tariff9 i	Feeds for use exclusively in the feeding of trout.. On and after July 1, 1966	Free 15 p.c.	Free 20 p.c.	25 p.c. 25 p.c.	Free 15 p.c.	Free 25 p.c. 20 p.c. 25 p.c. (on and after July 1, 1964)	156	(1)Whiskey	per gallon of the strength of proof and in addition thereto, under all tariffs, $9.00 per gallon of the strength of proof	$4.50	$5.00	$10.00	$4.50	$5.00	$10.00(i)Gin, n.o.p	per gallon of the strength of proof and in addition thereto, under all tariffs, $9.00 per gallon of the strength of proof	$4.50	$5.00	$10.00	$4.50	$5.00	$10.00(S)Rum, n.o.p	per gallon of the strength of proof and in addition thereto, under all tariffs, $9.00 per gallon of the strength of proof	$4.50	$6.00	$10.00	$4.50	$6.00	$10.00
>
to
[Stage Direction]
The Budget-Customs Tariff
Most-
British Favoured-
Tariff Item
rreierential
Tariff
JNation
Tariff
156 (4)Brandy	per gallon of the strength of proof $4.00	$4.00
(con) and in addition thereto, under all tariffs, $9.00 per gallon of the strength of proof
(5) Liqueurs	per gallon of the strength of proof $4.50	$4.50
and in addition thereto, under all tariffs, $9.00 per
gallon of the strength of proof
(6)	Ethyl alcohol, or the substance commonly known as alcohol, hydrated oxide of ethyl or spirits of wine, n.o.p.; spirituous or alcoholic liquors, n.o.p.; absinthe, arrack or palm spirit, artificial brandy and imitations of brandy, n.o p.; cordials of all kinds, n.o.p.; mescal, pulque, rum shrub, schiedam and other schnapps; tafia, and alcoholic bitters or beverages, n.o.p.; and wines, n.o.p., containing more than forty per cent of
proof spirit	per gallon of the strength of proof $5.00	$10.00
and in addition thereto, under all tariffs, $9.00 per gallon of the strength of proof.
When the goods specified in item 156 are of greater or less strength than the strength of proof, the measurement thereof and the amount of duty payable thereon shall be increased or decreased in proportion for any greater or less strength than the strength of proof.
196	Newsprint paper	Free	Free237a	Deuterium oxide or heavy water; uranium in the form of pigs, ingots, billets or bars	Free	FreeOn and after July 1, 196£	Free	15 p.c.3565	Nickel chromium, in bars or rods not more than three-fourths of an inch in diameter containing more than fifty per cent nickel and more than ten per cent chromium, of a class or kind not made in Canada, for use in the manufacture of electric resistance wire and elec-trie resistance strip or ribbon	Free	Free440m	Aircraft, not including engines, under such regulations as the Minister may prescribe: 1. When of types or sizes not made in Canada	Free	FreeOn and after July 1, 1965	Free	15 p.c.
to
to
to
Rates in Effect Prior to Rates Proposed in this Budget
British	Most-	GeneralGeneral	Preferential	Favoured-Nation	Tariff	Tariff	Tariff	Tariff$10.00	$4.00	$4.00	$10.00$10.00	$4.50	$4.50	$10.00$10.00	$5.00	$10.00	$10.0025 p c.	Free	Free	25 p.c.25 p.c.	Free	Free	25 p.c.25 p.c.	Free	15 p.c.	25 p.c.(On and after July 1, 1964)	
w
n
o
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o
o
[Stage Direction]
o
a
tn
Free	Free	Free	Free15 p.c.	20 p.c.	25 p.c.27$ p.c.	Free	Free	27$ p.c.27$ p.c.	Free	15 p.c.	27$ p.c.(On and after July 1, 1964)	
The Budget-Customs Tariff
440n Aircraft engines, when imported for use in the equipment of aircraft:
1. When of types or sizes not made in Canada.
On and after July 1, 1965
440r Auxiliary power units;
Bars, tubes, extrusions of aluminum, aluminum alloys and magnesium alloys;
Batteries;
Bolts, cocks, cotter pins, eyelets, nuts, pins, rivets, screws, turnbuckles and clevis, washers;
Brakes, with related operating gear;
Carburettors;
Direct or inertia starters with or without related operating gear;
Distributors;
De-icing and anti-icing equipment;
Electric generators;
Electric lamps;
Exhaust gas analyzers;
Fittings and couplings;
Fuel pressure warning devices;
Forgings and castings;
Hinges;
Hydraulic jacks;
Hydraulic pumps;
Ignition coils;
Instruments;
Landing and navigation lights-Magnetos;
Oil coolers;
Pressure fire extinguishers;
Primer pumps;
Propellers and helicopter rotors;
Radio for navigation and air traffic communication; Seats;
Spark plugs;
Steel tubing;
Swaged wires and tie rods;
Tires and tire inner tubes;
Vacuum pumps with related operating gear;
Voltage control boxes;
Wheels;
Parts of all the foregoing;
All of the foregoing when of types or sizes not made in Canada and for use in aircraft, aircraft engines, airborne aircraft equipment, or parts of aircraft, aircraft engines, or airborne aircraft equipment	
Free
Free
Free
27$ p.c. 27$ p.c.
Free
Free
27$ p.c.
Free	27$ p.e.
15 p.c.	27$ p.c.
(On and after July 1, 1964)
[Stage Direction]
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a
o
[Stage Direction]
Free	Free	27^ p.c.15 p.c.	20 p.c.	30 p.c.
co
[Stage Direction]


The Budget-Customs Tariff
Rates in Effect Prior to Rates Proposed in this Budget
<o
[Stage Direction]
if*
Tariff
Item
Most-	
[Stage Direction]
British Favoured-	British	Most-Preferential	Nation	General	Preferential	Favoured-Nation	GeneralTariff	Tariff	Tariff	Tariff	Tariff	Tariff
521 Yarns and rovings, including threads, cords and twines, wholly of cotton:
(2) For use in the manufacture of cotton sewing thread or Schiffli embroidery thread:
(a) Singles	Free	10 p.c.	15 p.c.	Free 10 p.c.	10 p.c. 15 p.c.	15 p.c. 30 p.c.G81c	(6) Plied	
Cobalt-bearing scrap for recovery of the cobalt and	5 p.c.	10 p.c.	20 p.c.	5 p.c. 10 p.c.	10 p.c. 15 p.c.	20 p.c. 30 p.c.691a	attendant by-products	
Communion wafers or unleavened bread for sacramental pur-	Free	Free	Free	Free 15 p.c.	Free 20 p.c.	Free 25 p.c.696a	poses	
Moving picture films, sound or silent, separate sound	Free	Free	Free	15 p.c	20 p.c.	25 p c.
film track, slides and slide films, positive or negative, and sound recordings for use therewith;
Sound recordings for use by educational, scientific or cultural institutions or societies;
Sound recordings other than for sale or rental;
Models, static and moving;
Video tape recordings;
Wall charts, maps and posters;
All the foregoing when certified by the government or by a recognized representative authority of the government of the country of production or by an appropriate representative of the United Nations Educational, Scientific and Cultural Organization as being of an international educational, scientific or cultural character;
Under such regulations as the Minister may prescribe.. Free	Free	Free	Free	Free	Free15 p.c.	20 p.c.	30 p.c.
-n
o
o
s
s
o
5S
w
4. Resolved, that any enactment founded upon the foregoing resolutions shall be deemed to have come into force on the 17th day of March, 1964, and to have applied to all goods mentioned in the said resolutions imported or taken out of warehouse for consumption on or after that day, and to have applied to goods previously imported for which no entry for consumption was made before that day.
The Budget-Customs Tariff
George Clyde Nowlan: Mr. Speaker, I thought perhaps I should rise a little earlier than I ordinarily would so that my supporters on this side of the house could supplement the rather weak applause which the minister got for his budget. When he was dealing with tariff reductions I am not quite sure whether he referred to sacramental wine or sacrificial bread but I am quite sure that the government cannot last much longer with such a budget as they have produced tonight.
After all, Mr. Speaker, this is the 16th of March, the eve of St. Patrick's day and certainly no Irishman could be so uncharitable as to comment on this budget in the way it actually should be commented upon, so I will defer any real criticism of the budget until after tomorrow has passed at least.
I can certainly congratulate the minister on one thing, if not on the content of his speech. I think it is fair to say that he can be congratulated to some extent upon the improvement in the manner in which he presented the budget. All of us remember the rather superior, rather arrogant and certainly petty manner in which he presented his budget last year, and I congratulate the minister on its being very much less so this year.
As I said, I am not going to discuss any of the details of the budget tonight. They require and deserve more study before we deal with them at length.


An hon. Member:: What experts wrote your speech?


George Clyde Nowlan: No one is going to write my speech. I do not have a dozen experts to help me write it. Thank goodness the experts in the department were used this year by the minister, rather than men from outside to write his speech. Is there any more comment on experts over there?
There is one question I should like to ask the Minister of Finance (Mr. Gordon) at this time, although I do not expect him to answer it now. Perhaps some of his supporters over there who are so vociferous can do it when the debate comes up again. I wonder why the budget debate has been brought on so early in the session.


John George Diefenbaker: For so little.


George Clyde Nowlan: Yes, for so little. I was not thinking of so little, but rather the timing of it.


Lester Bowles Pearson: What are you frightened of?


George Clyde Nowlan: The minister made a very patriotic appeal tonight with regard to dominion-provincial relations, the co-operation which must exist between the dominion and the provinces and all the rest of it. He really
The Budget-Mr. Nowlan moved us to tears in that regard. Do you suppose, Mr. Speaker, it would be cynicism to suggest that possibly one reason this budget has been brought down at an earlier date vis-a-vis the opening of the session than any other budget might have been-


An hon. Member:: You never brought one down.


George Clyde Nowlan: No, and I have said more than once that I perhaps did not bring down a budget but at least I did not have to bring down four of them and then tonight bring down the fifth chapter of a budget which was brought down last year.
You know, Mr. Speaker we have had a reference to wine and also to spirits. It is said that spirits improve with age. The minister's budget improves with age, too and if he only had a little bit longer he could drop every section of the budget he introduced last year. Then, it would be the best budget he ever brought down. Certainly, the one tonight is a great improvement over the one he introduced last year because he has dropped a lot of the proposals which were contained in it.
I wonder if there is any connection between the meeting of the Prime Minister (Mr. Pearson) and the Minister of Finance (Mr. Gordon) on, I think it is March 31, with the provincial premiers, and the early introduction of the budget? Do you suppose that anyone would think of the fact that if a budget were introduced now, then when they meet the provinces with their demands- "demands" is the word that is sometimes used -they would be in a position to say: I am so sorry; you know, we brought down our budget, perhaps inadvertently-we have done so many things inadvertently-and our financial proposals are fixed now for the year. I am sorry, Mr. Premiers, but there is nothing we can do to assist you at this time. But, give us a little time, give us another year, and then you come back. We will then be able, perhaps, to consider your claims. This, of course, is co-operative federalism. I think that is the best example of co-operative federalism we have seen tonight. This would appear to me to be the reason for the early introduction of the budget.
If I recall correctly, parliament opened on February 18. We have had the debate on the address, one or two other matters, and now we are dealing with the budget tonight. I had hoped, of course, and obviously hon. members had expected, that the reason the budget was being brought down now was that the increased sales tax would not come into effect on March 31. This can be understood. Of course, it would have to be repealed or

The Budget-Mr. Nowlan cancelled by budget action. I am sure everybody in Canada hoped that would happen tonight. Instead of that, we have had no reduction, and it follows inevitably, I think, that the only reason for the early introduction of a budget is the desire to get in ahead of the dominion-provincial conference. If that is the way to promote co-operation between the provinces and the dominion, then I never heard of one which will be less likely to attain that result.
The minister has referred to his deficit which he expects in the coming year. As I said, I am not going to analyse these figures tonight at any length or analyse them at all. However, if I understand the figures correctly, he has suggested he is going to have a deficit next year of $424 million. He can take a great deal of satisfaction out of the fact it is substantially less than the deficit which is going to accrue for this year. My colleague says it is up to $455 million with the income tax changes. I do not doubt, Mr. Speaker, that my colleague's figures are correct. I do know this, that as announced by the minister last year, we have a windfall in the acceleration of corporation profits which has been variously estimated, but the lowest estimate I have seen has been $165 million, and this has added to his revenues for this year. Then, there will be a slight increase in that next year, and then this item completely disappears. On March 31, because he did not take remedial action tonight, we will have an increase in the sales tax of 4 per cent. Is it any wonder that the minister can announce there will be a reduction of some kind in the estimated deficit for the coming year?
As the minister says, and quite properly, we have a greatly accelerated economy. He suggests that you can read between the lines, and I think there is some merit in this suggestion, that in some provinces there is virtually full employment or full productivity. He expects to have this during the year, and I think that might be a reasonable assumption. With a windfall of $165 or $170 million, and with an increase of 4 per cent in the sales tax starting on March 31, surely there is no reason for boasting about these facts. Where are we after this increase? What is the situation? We have had a high rate of employment this year. We have had an increased rate of productivity. We have had increased taxes over last year. We are paying, as a matter of fact or will be after March 31, I think, the highest rate of taxation which this country has ever paid, outside of the war years. We have virtually full employment. We have everything on hand to balance a budget. Last year the minister said he was working toward a balanced budget and it was necessary to


work toward a balanced budget. He took, then, what he said were firm steps toward it.
When you look at the deficit which he announced for this year, after all the increases we have had this year in taxes, plus an expanding economy, you will find it is estimated at roughly $600 million. This is compared with the deficit the Progressive Conservative government had last year, after everything had been added by way of expenses except the kitchen sink, in order to increase it. If that, Mr. Speaker, is a step toward a balanced budget, then it is going to be a long, long time before we attain that end.
As I say, I concur entirely in what the minister says about the expanding economy. It is expanding, and expanding rapidly. It is expanding primarily because of the policies which were established and laid down by a Progressive Conservative government. There are various features to which I could refer, but I will mention only two of them at the moment, as going toward the expansion of our trade an the expansion of our economy. One of the actions that the former government took was the expansion of our export trade. We had always been an exporter of raw materials, but our exports of manufactured goods were not developing as rapidly as they should have. If we were going to work toward a balanced economy, if we were going to overcome the balance of payments deficit, we had to put a great deal of emphasis on export trade. We brought our trade commissioners here from all over the world to attend a conference. We took our exporters virtually all over the world so that they could meet the potential purchasers with whom they would be dealing. We spent a great deal of money in that connection, which went to our deficit but it paid off. I think the present Minister of Trade and Commerce (Mr. Sharp) would agree with that. I think people were made more export conscious than they had ever been before.
The second matter which I think was even more important was the revaluation of the Canadian dollar.
As I said earlier on this, the eve of St. Patrick's day, far be it from me to remind hon. gentlemen opposite of matters they like to forget such as the way they sneered, derided and laughed at the proposal to revalue the external value of the dollar. Yes, we proposed it, and we did it despite the protestations of hon. gentlemen opposite.
I will say this though, that I think the Minister of Finance kept himself aloof from that campaign. He knew it was the right thing to do and he said nothing about it whatever, but he allowed the present Prime

Minister and his colleagues to play around with the mud pies on the other side of the street while he, like the Pharisee of old, passed by on the other side. That, sir, was the most important contribution made to the development of the Canadian economy, but it was jeered, derided and laughed at by hon. gentlemen opposite. Now, if you please, with an unctuous grace and a degree of hypocrisy it is hard to believe, they claim credit for the expansion of the economy at this time.
Time is running out-


An hon. Member:: It sure is.


George Clyde Nowlan: It is for the government opposite, but I would like to make reference to the fact that the minister has said the withholding tax is going to be changed. As I have said already, that is one more retreat from the budget of last year. You know, Mr. Speaker, I understand that in the army, officers are trained in fall-back positions so that they can fall back from one position to another. The Minister of Finance, a graduate of R.M.C., shows great training in that, because no one has fallen so far back as he has in regard to the budget of last year.
Mr. Speaker, I know there are radio programs scheduled on which audiences expect the Minister of Finance to speak. It is now five minutes to ten o'clock and may I just say I wish everybody a happy St. Patrick's day tomorrow, and now move the adjournment of the debate.
16. 1964	997
Business of the House
On motion of Mr. Nowlan the debate was adjourned.



BUSINESS OF THE HOUSE

Gordon Minto Churchill: May I ask the house leader if he will indicate for the record the proposed government business for tomorrow and the rest of the week?


Guy Favreau: Mr. Speaker, the order of business is as already announced. Tomorrow at 3.30 we will take the resolution to introduce the Canada pension plan.


Gordon Minto Churchill: What do we do on Wednesday? You have not answered that.


Mr. Speaker:: Shall I call it ten o'clock?


Gordon Minto Churchill: Mr. Speaker, may I respectfully request the house leader to indicate the business for Wednesday and the following days? It is only the business for Tuesday which he has indicated definitely.


Guy Favreau: Mr. Speaker, we will announce tomorrow the business for Wednesday.


Mr. Speaker:: It being ten o'clock this house stands adjourned until 3.30 o'clock tomorrow afternoon, pursuant to order made this afternoon.


[Stage Direction]
At ten o'clock the house adjourned, without question put, pursuant to standing order.


[Stage Direction]
Budgetary revenue	
Supplementary period adjustment'11	
Extra-budgetary revenues
Old Age Security tax collections	
Prairie Farm Assistance Act levy	
Unemployment insurance employer-employee contributions	
Government pension funds, employer-employee contributions	
Interest receipts of social insurance and government pension funds
Corporate income tax '21: excess (+) of accruals over collections.
Profits before taxes (net of losses) of government business enterprises.
Interest on loans, advances and investments	
Less: Budgetary return on investments	
Less: Postal revenue	
Budgetary revenue items offset against budgetary expenditures'31.
All other adjustments to budgetary revenue'41	
Total revenue, national accounts basis	
1961-62	1962-63	1963-64	1964-6S
forecast
(millions of dollars)
5,730	5,879	6,207	6,705- 3	- 4	-	-644	693	745	9007	8	9	8278	286	297	311234	235	251	270117	125	141	15462	62	20	- 25145	176	194	206153	156	173	180-300	-293	-389	-366-182	-195	-199	-215- 97	-101	-100	-100-39	- 44	-26	- 436,749	6,983	7,323	7,985
(>) In the national accounts, revenues in the supplementary period are shifted to the following fiscal year.
<2>
Taxes on government business enterprises are excluded from this item and included in item 5.
<3>
See also line 10, expenditure reconciliation.
<4>
These adjustments are largely revenue items not relevant for the national accounts such as proceeds from sales of existing assets.
998	HOUSE OF COMMONS﻿20220-64J

[Stage Direction]
1961-62	1962-63	1963-64	1964-65
forecast
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Budgetary expenditure	
Supplementary period adjustment*1)	
Expenditures of extra-budgetary funds
Old Age Security Fund payments	
Unemployment insurance benefits	
Government pension fund payments	
Prairie farm assistance payments	
Transfers to extra-budgetary funds	
Adjustment to place other government funds and crown agencies on a disbursement basis*21 Budgetary expenditures offset against income of government business enterprises
Post Office expenditures	
Deficits of government business enterprises	
Adjustment to place interest on the public debt on a due-date basis	
Capital assistance to non-defence industry*31	
Reserves and write-offs	
Budgetary revenue items offset against budgetary expenditure*41	
All other adjustments to budgetary expenditure	
Total expenditure, national accounts basis	
Surplus (+) or deficit (-), national accounts basis	
Surplus (+) or deficit (-), budgetary basis	
Total	
	(Millions of dollars)		
6,521	6,571	6,892	7,125-47	-36	-87	115625	734	809	885455	403	372	37868	73	84	9154	15	11	15-65	-105	-65	-62-21	63	-17	-41-185	-189	-207	-209-86	-100	-77	-66-23	-18	-21	-15- 4	-35	-60	-72-39	-38	-83	-11397	-101	-100	-100129	115	93	947,285	7,352	7,544	8,025-536	-369	-221	-40(-791)	(-692)	(-685)	(-420)6,749	6,983	7,323	7,985
are shfited^tfrely"^toThTnext fisca" year"38 °D 8°°dS ®"d services in the supplementary period are split evenly between adjacent fiscal years. Other expenditure items <21 This adjustment replaces budgetary appropriations to various funds and agencies by the outlays actually made by these funds and agencies, ing in\h °na™OTa?accountsaSSiStanCe t0 induStry aPPears as Part of business gross capital formation and is removed from the government sector to avoid double count-
*41 The largest component of this item consists of revenue from sales of goods and services by the private sector and are deducted to avoid double counting.
government sector. These sales appear as final expenditure of the

[Stage Direction]
-	1961-62	1962-63	1963-64 Estimate	1964-65 Forecast
		(Millions of dollars)		
A. Revenue				

2,139	2,108	2,255	2,530
1,349	1,344	1,365	1,425
112	130	127	125
2,222	2,422	2,520	2,785
415	457	508	5406. Employer-employee contributions to social insurance and government pension funds	
512	522	548	580
6,749	6,983	7,323	7,985B. Expenditure	1. Goods and services: defence	
1,648	1,619	1,613	1,5652. Goods and services: non-defence	
1,375	1,386	1,380	1,610
2,078	2,086	2,150	2,270
780	861	931	990
236	262	287	2956. Transfers to other levels of government	
1,168	1,138	1,183	1,295
7,285	7,352	7,544	8,025
-536	-369	-221	-40
(U Excludes taxes on government business enterprises. These taxes are included with government investment income.
1000	HOUSE OF COMMONS

[Stage Direction]
(Single Taxpayer-No Dependants)
Canada-taxes at present rates	U.S.A.-taxes at 1965 rates
Income	Federal income tax	Provincial income tax	Federal O.A.S. tax	Total taxes	Federal income tax	State income tax (New York)	Federal social security tax	Total taxes$	$	$	$	$	$	$	$	$1,000	-	-	-	-	14	-	36	502,000	81	18	36	135	161	13	73	2473,000	194	42	76	312	329	43	109	4814,000	330	73	116	519	500	70	145	7155,000	485	106	120	711	671	106	174	9517,500	946	208	120	1,274	1,168	208	174	1,55010,000	1,509	331	120	1,960	1,742	334	174	2,25015,000	2,977	653	120	3,750	3,334	706	174	4,21420,000	4,629	1,016	120	5,765	5,048	1,190	174	6,41230,000	8,462	1,858	120	10,440	9,385	2,190	174	11,74950,000	17,011	3,734	120	20,865	19,416	4,190	174	23,780100,000	41,488	9,107	120	50,715	48,393	9,190	174	57,757
Notes: (1) The taxes shown for each country are the federal income tax, the state or provincial income tax and the federal social security charge. The provincial income tax shown for Canada is the provincial tax in any province except Quebec, Manitoba or Saskatchewan. The state income tax shown for the U.S.A. is the New York State income tax. Thirty five states impose personal income taxes.
(2)	In calculating the Canadian taxes, it was assumed that everyone with income under $20,000 takes the optional standard deduction of $100 in lieu of claiming deductions for charitable donations, unusual medical expenses and union dues. It was further assumed that everyone with income of $20,000 or more would not take the standard deduction but instead would claim $500 as deductions for charitable donations and unusual medical expenses.
(3)	In calculating the United States taxes, it was assumed that everyone with income under $20,000 takes the optional standard deduction of 10% of income with minimum of $300 ($400 for a couple filing jointly) plus $100 per dependent child and with a maximum of $1,000 in lieu of claiming deductions for charitable donations, unusual medical expenses, state taxes and other deductions. It was further assumed that everyone with income of $20,000 or more takes the optional standard deduction for state income tax purposes only and claims $500 as deductions for charitable donations, unusual medical expenses, etc. plus the amount of his state income tax for federal income tax purposes.
(4)	The old age security tax in Canada is the lesser of 4% of taxable income or $120. The social security tax in the U.S.A. (officially referred to as the Old Age and Survivor Insurance contribution) is the lower of 3-5/8% of adjusted gross income or $174.

[Stage Direction]
(Married taxpayer-No Dependants)
Canada-taxes at present rates	U.S.A.-taxes at 1965 rates
Income	Federal income tax	Provincial income tax	Federal O.A.S. tax	Total taxes	Federal income tax	State income tax (New York)	Federal social security tax	Total taxes$	$	$	$	%	%	*	$	$1,000	-	-	-	-	-	-	36	362,000	-	-	-	-	56	-	73	1293,000	81	18	36	135	200	7	109	3164,000	194	42	76	312	354	47	145	5365,000	330	73	116	519	501	67	174	7427,500	753	165	120	1,038	915	163	174	1,25210,000	1,266	278	120	1,664	1,342	283	174	1,79915,000	2,649	581	120	3,350	2,460	639	174	3,27320,000	4,260	935	120	5,315	3,592	1,115	174	4,88130,000	8,052	1,768	120	9,940	6,447	2,115	174	8,73650,000	16,560	3,635	120	20,315	14,153	4,115	174	18,442100,000	40,955	8,990	120	50,065	38,691	9,115	174	47,980
Notes <* See notes below table for ''Single Taxpayer-No Dependants".
(J>
In calculating the U.S.A. taxes shown above it was assumed that married taxpayers have used the privilege of filing a joint return. Effectively this means that the aggregate income of husband and wife is split in half and that the tax liability on the total income is computed by calculating the tax on one half and multiplying the result by two. This privilege is available to all married taxpayers even if their spouse does not in fact have any income.
1002	HOUSE OF COMMONS

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Combined
Taxable Income of Co. $	Tax in Canada including Ontario Tax	Federal tax in U.S.A. in 1965 (in states without corporation income tax)	Combined Federal and State tax in New Jersey (state rate 1-75%)	Combined F ederal and State tax in 7 States* (state rate 5%)	Federal and State tax in N.Y. and California (state rate 5.5%)	Combined Federal and State tax in Pennsylvania (state rate 6%)	Combined Federal and State tax in Massachusetts (state rate 6.765%)100,000	$ 41,850	$	41,500	$ 42,410	$ 44,100	$ 44,360	$ 44,620	$ 45,018Effective Rate	41.9%	41.5%	42.4%	44.1%	44.4%	44.6%	45.0%300,000	$ 145,850	s	137,500	$ 140,230	$ 145,300	$ 146,080	$ 146,860	$ 148,053Effective Rate	48.6%	45.8%	46.7%	48.4%	48.7%	49.0%	49.4%500,000	$ 249,850	$	233,500	$ 238,050	$ 246,500	$ 247,800	$ 249,100	$ 251,089Effective Rate	50.0%	46.7%	47.6%	49.3%	49.6%	49.8%	50.2%1,000,000	S 509,850	t	473,500	$ 482,600	$ 499,500	$ 502,100	$ 504,700	$ 508,678Effective Rate	51.0%	47.4%	48.3%	50.0%	50.2%	50.5%	50.9%3,000,000	$1,549,850	$1,433,500	$1,460,800	$1,511,500	$1,519,300	$1,527,100	$1,539,034Effective Rate	51.7%	47.8%	48.7%	50.4%	50.6%	50.9%	51.3%
* These states are Colorado, Connecticut, Delaware, Maryland, South Carolina, Vermont and Virginia.
Rates of Tax in Canada-Federal: 12% on first $35,000 and 41% on excess over $35,000. (This includes the old age security tax of 3%.)
Provincial (Ont.): 11% on all taxable income.
Rates of Tax in U.S.A.-Federal: (Rates as enacted for 1965) 22% on first $25,000 and 48% on excess over $25,000.
States:	Vary with each state. (It is assumed that the present rates of tax of the various states will remain unchanged.) Thirty-seven
states impose corporation income taxes.
Notes: In computing the combined Federal and State taxes in the U.S.A. shown above, an amount equal to the state income tax paid was deducted from the taxable income of the corporation before calculating its federal income tax liability.
In the U.S.A. employers are required to contribute under the Old Age and Survivors Insurance plan at a rate of 3-5/8% of employees' wages (maximum $174 per employee). This payroll tax has not been included in the U.S.A. taxes shown above.
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The Budget-Appendix

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presented by
the Honourable Walter L. Gordon, M.P., for the information of Parliament in connection with the Budget of 1964-1965
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The Budget-Appendix

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The purpose of these Papers is twofold:
1.	to present a general economic review of 1963, bringing together in one place and in convenient form some of the more comprehensive indicators of economic conditions prepared by the Dominion Bureau of Statistics, the Bank of Canada and other Government Agencies, together with brief comments;
2.	to present a preliminary review of the Government Accounts for the fiscal year ending March 31, 1964.

The Budget-Appendix
Part I

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Table of Contents
1.	General	
2.	National Accounts-
National Income and Product	
National Expenditure	
Personal Income and Its Disposition	
Investment and Capital Expenditure	
Revenue and Expenditure of all Governments
Page
1009
1021
1028
3.	Employment and Earnings	
10374.	Price and Cost Trends	
10415.	Balance of International Payments	
10466.	Disposition and Source of Saving	
10597.	Capital Markets	
1063
The tables and charts in this Budget Paper are based upon estimates provided by the Dominion Bureau of Statistics, the Bank of Canada and other Government Agencies. Some of the figures appear for the first time; others have been published elsewhere. All 1963 estimates are preliminary and subject to revision.
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The expansion in economic activity which began in early 1961 was still under way at the end of 1963. The hesitancy which marked the latter part of 1962 gave way to continued expansion in 1963, and production, sales and employment were continuing to expand substantially as the year closed. The expansion in 1963 was well balanced, with employment, incomes, trade and investment activity showing continued advances. There was no development of serious strains evident in any sector. A bumper harvest in Western Canada, accompanied by higher levels of grain exports, added significantly to the general level of economic activity. Gross National Product in the third quarter of 1963, the latest period for which complete data are available, at $43 billion (seasonally adjusted at annual rates) was 6 per cent aboye the level achieved in the third quarter of 1962. For 1963 as a whole, the G.N.P. seems to have exceeded 1962 by about 6 per cent in value, and by about 4 per cent in volume.
The previous economic upswing, that of 1958-1960, came to an end after only eight calendar quarters. The current upswing, which began in the spring of 1961, has already lasted eleven quarters and shows no signs of weakening. Indeed, the rate of expansion appears to have accelerated in the closing months of 1963. The strongest elements in this current upswing have been exports, consumer expenditures on durable goods, and expenditures by provincial governments and municipalities. Inventory accumulation has so far been modest. Since imports have risen only moderately, the strong upswing in exports has improved the current international account, and has been a most important source of strength in the expansion.
Production of both goods-producing and service-producing industries rose by about 4 per cent in 1963. Both domestic and export sales increased as the Canadian competitive situation improved and levels of demand of Canada's main trading partners continued to grow. There were noteworthy increases in manufacturing output in Canada, particularly in wood products, iron and steel products and motor vehicles and parts.
The gains in production were accompanied by increases in employment. The average level of non-agricultural employment in 1963 was nearly 3 per cent above 1962. Male employment in goods-producing industries increased significantly. Agricultural employment continued its long-run decline except at year-end when activity was unusually high. Strong gains in male employment were a most important factor leading to a decline in unemployment. Total unemployment averaged about 5? per cent of the labour force in 1963, but declined at year-end to a seasonally adjusted rate of 4.9 per cent of the labour force, the lowest rate in any month since mid-1957. At the same time, the labour force grew more rapidly in 1963 than in 1962, and at year-end was over 200,000 above the preceding year. The unemployment rate varied to a marked extent from region to region. A particularly rapid growth in the labour force in Quebec in 1963 matched the employment gains achieved in that province, so that the

The Budget-Appendix
unemployment rate remained virtually unchanged and somewhat above the national average. Unemployment in the Atlantic Provinces declined, but remained substantially higher than the national average.
Total investment in Canada, private and public, increased at about the same rate as total output. Housing activity was higher and 148,600 units were started in 1963, the second highest total on record. In the final quarter of the year, activity was particularly buoyant, stimulated in part by the special federal government bonus on winter-built housing. The number of housing units still under construction at year-end was at a record level. Other business fixed investment was also higher in 1963.
Saving by Canadians increased to match higher levels of investment, and more than offset a reduction in the net inflow of capital from abroad. Personal and business saving both increased, and the deficit of all levels of government (on a national accounts basis) was slightly higher, a reduced deficit of the federal government nearly offsetting a higher deficit of provincial governments and municipalities combined.
Prices of the main commodities and services bought by consumers, businesses and governments (components of Gross National Expenditure) were on average less than 2 per cent higher in 1963 than in the preceding year. Since more substantial price increases occurred in Europe and Japan, Canada's international competitive position improved.
Canada's balance of payments showed a sharp improvement in 1963, the 1962 deficit on current account of $848 million being reduced to about $500 million. Large sales of wheat to Russia in the final quarter of the year helped reduce the deficit. Monetary conditions remained easy throughout 1963 although financial markets underwent a two-day crisis in mid-July, when the proposed U.S. Interest Equalization Tax was announced. Tension in the capital and exchange markets eased upon the declaration by the U.S. Administration that authority would be sought from Congress to exempt from the proposed tax new issues of Canadian securities. The announcement in mid-September of the large wheat sales to the Soviet Union relieved market tensions further. However, uncertainty continued to prevail in Canadian financial markets, pending final action by the U.S. Congress on the proposed tax and virtually no Canadian borrowing in the United States took place from mid-July to the present time.
A more complete description of these events follows.
THE NATIONAL ACCOUNTS National Income and Product
The Gross National Product continued to rise throughout 1963. The rate of advance was fairly evenly sustained over the three quarters for which official data are available (see Table 1 and the charts on pages 10 and 11), and all types of income shared in the advance. Comparing the third quarter of 1963 with the same quarter of 1962, labour income was 6.6 per cent higher, corporation profits before tax were 6.8 per cent higher, and the net income of non-farm unincorporated business was 6.5 per cent higher. Gains in the non-farm sector of the economy were supplemented by further advances in farm income, as western wheat growers experienced an excellent harvest for the second successive year, while farm output in other parts of the country was well maintained and markets for farm products remained good. There are many indications that the expansion of the economy was accelerating in the final quarter of the year.

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National Income and Gross National Product (Seasonally Adjusted at Annual Rates)
	1962				1963		
	IQ	2Q	3Q	4Q	IQ	2Q	3Q
			(Millions of dollars)				
1. Wages, salaries, and supplementary labour income	19,940	20,268	20,500	20,728	21,272	21,536	21,8442. Military pay and allowances	600	588	600	556	548	608	5963. Corporation profits before taxes	3,720	3,836	3.772	3,968	3,984	4,120	4,0284. Deduct: Dividends paid to non-residents{1>	-576	-636	-512	-556	-628	-532	-5165. Rent, interest, and miscellaneous investment income	2,692	2,732	2,720	2,928	2,840	2,992	2,9406. Accrued net income of farm operators from farm production^	1,416	1,420	1,452	1,276	1,536	1,564	1,5287. Net income of non-farm unincorporated business^3*	2,432	2,360	2,344	2,384	2,464	2,428	2,4968. Inventory valuation adjustment	-108	-176	-196	- 48	-144	-296	-1489. National Income (1+2+3+4+5+6+7+8)	30,116	30,392	30,680	31,236	31,872	32,420	32,76810. Indirect taxes less subsidies	5,152	5,192	5,424	5,276	5,516	5,332	5,55211. Capital consumption allowances and miscellaneous valuation adjustments	4,660	4,704	4,756	4,900	4,820	4,844	4,84812. Residual error of estimate	-380	-240	-104	-160	-220	- 144	-15213. Gross National Product at Market Prices (9+-10+11+12)	39,548	40,048	40,756	41,252	41,988	42,452	43,01614. (Gross National Product at Market Prices excluding Accrued Net Income of Farm	Operators)	(38,132)	(38,628)	(39,304)	(39,976)	(40,452)	(40,888)	(41,488)
('(Includes the withholding tax applicable to this item.
('(Includes an arbitrary smoothing of crop production and standard seasonal adjustments for withdrawals of grain from farm stocks and the change in livestock items. Because of the arbitrary elements, too precise an interpretation should not be given the seasonally adjusted figures of accrued net income of farm operators. <3>Includes net income of independent professional practitioners.
1010	HOUSE OF COMMONS
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Up to the end of September, the current expansion had continued through ten quarters. It had by then already exceeded in length the expansion of 19581960, which came to an end after only eight quarters. This can be seen on the charts on pages 10 and 11, which depict both the duration and strength of the upswing in each of the three periods of expansion since 1954. These charts show that the total volume of non-farm output has continued to grow, although at a less rapid rate than during the early months of the upswing in 1961 when some of the cyclical slack was being taken up. The current expansion has well exceeded that of 1958-1960, both in strength and duration, but has not reached the dimensions of the 1954-1957 upswing, which was based largely upon a business investment boom. However, production in manufacturing industries has expanded about as rapidly in the current expansion as in the 1954-1957 period and far more than in the 1958-1960 period. The most recent data in the later months of 1963 suggested that manufacturing growth in the current expansion may soon surpass that of the 1954-1957 period. It is noteworthy that in spite of an exchange depreciation of more than 10 per cent which affects the cost of imports in Canadian dollars to this extent, prices have only risen by about 5 per cent during the current expansion, while they rose by some 9 per cent between 1953 and 1957.
The volume of output continued to increase during 1963. For the first nine months of 1963, the increase over the same period in 1962 was over 4 per cent. Apart from agriculture, which has shown a substantial increase due to the very large grain crop, non-farm output averaged about 4 per cent higher in the nine-month comparison. Output in both goods-producing and service-producing industries rose by about 4 per cent. In the final quarter of 1963, preliminary data suggest a somewhat larger quarterly increase than prevailed during the year.
Manufacturing output increased by nearly 5 per cent in the first three quarters of 1963, with durable goods output increasing by 6 per cent, and nondurable goods by about 4 per cent. There were noteworthy increases in the output of wood products, iron and steel products and motor vehicles and parts.
The output of electric power and gas utilities, of forestry, transportation, storage and communication industries rose more than the average of 4 per cent for all industries. Mining output did not increase as much as the average, as hesitant movements in the output of metals offset in part higher production in the natural gas and petroleum industries. Output in the construction industry fluctuated in the course of 1962 and the first three quarters of 1963, but appears to have increased in the final quarter of 1963.
It seems clear that a number of special elements of strength have played an important part in supporting and maintaining the levels of output and employment through the period of hesitancy which developed in the latter part of 1962, and in establishing a basis for renewed expansion in 1963. The U.S. economy, after experiencing a similar hesitancy in the third quarter of 1962, continued to expand through 1963. The decline in the exchange rate substantially improved the competitive position of Canadian industry, both in home markets and abroad. This has been reflected in the expansion of the secondary manufacturing industries, where employment has risen faster in relation to the previous peak than in either of the two preceding expansions and where output has risen faster than in 1957-1960 and at about the same rate as in 1953-1957. The comparative
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growth of output, employment and profits in the secondary manufacturing sector is depicted in the charts on pages 12 and 13. It is significant that exports of manufactured products have risen sharply, while imports in this area have not increased in the manner characteristic of earlier expansions. (Trade developments are discussed in greater detail below.) In the resource industries, as depicted in these charts, the expansion of output and employment has been less marked, while profits have risen more than in the preceding upswing.
Labour income, which was over 6 per cent higher in the third quarter of 1963 than in the same quarter of 1962, experienced sharper quarterly gains in 1963 than was the case in 1962. The total advance in the ten quarters from the early-1961 trough was 18 per cent, while the number of non-farm employees rose over the same period by 9 per cent.
The volatility of corporation profits in response to cyclical conditions is illustrated by the chart on page 10 showing corporation profits before taxes. In the third quarter of 1963, before-tax profits amounted to $4,028 million, seasonally adjusted at annual rates, and were 7 per cent higher than in the third quarter of 1962. During the 10 quarters which had elapsed since the beginning of the current period of expansion, profits rose by 36 per cent. The sustained high level of output in both secondary and resource industries, as well as the reduction in the exchange rate of the Canadian dollar, has been an important factor in the maintenance of profit levels in the first three quarters of 1963. Investment income advanced in a third-quarter comparison by over 8 per cent, and during the 10 quarters of the current expansion it had grown by 15 per cent.
The gains recorded in net farm income were again largely attributable to an increase in the western grain crop. The third-quarter total, seasonally adjusted at annual rates, was over $1.5 billion, which represented an advance of more than 5 per cent over the same quarter a year previously. A high level of world demand for imports of wheat has served to maintain price levels and to sustain the movement of grain into commercial channels. Farm production and prices of other agricultural commodities have also been maintained.
Farm inventories, as a result of the two successive good harvests, rose in both 1962 and 1963 despite large export sales. However, large export sales arranged in September, 1963, will reduce grain inventories in the coming months. Farm cash income has also remained high. In the third quarter of 1963, total cash income was about 2 per cent higher than the total in the corresponding quarter of 1962. It should be noted that most of the farmers' cash income from the sales of the 1963 bumper crop had not yet been reflected in these figures.
National Expenditure
All major components of demand continued to expand during the first three quarters of 1963. Comparisons of changes in demand over three post-war expansions are given in Tables 2 and 5, with Table 2 showing the relative contributions of the various types of expenditure to the growth in total expenditure over each expansion, and Table 5 showing the rate of growth in each type of expenditure within each period of expansion.

The Budget-Appendix

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Cycle-on-Cycle Sebies
Previous Business Cycle Peak = 100 Seasonally Adjusted

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INDUSTRIAL PRODUCTION INDEX [DOT] MANUFACTURING

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Cycle-on-Cycle Series
Previous Business Cycle Peak = 100 Seasonally Adjusted

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Cycle-on-Cycle Series
Previous Business Cycle Peak = 100 Seasonally Adjusted
I-Resource Industries
0UTPUT	EMPLOYMENT

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Cycle-on-Cycle Series
Previous Business Cycle Peak= 100 Seasonally Adjusted
II-Secondary Manufacturing Industries


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\

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-	2Q 1954 to 4Q 1956 (10 quarters after trough)	IQ 1958 to IQ 1960 (8 quarters from trough to peak)	IQ 1961 to 3Q 1963 (10 quarters after trough)Personal expenditure on consumer goods and services	43.6	51.3	52.0Non-durable goods	18.8	18.1	2S.4Durable goods	7.0	5.4	8.9Services	17.8	27.8	19.7Government expenditures on goods and services	15.6	15.4	17.3Federal	k.7	-1.8	0.8Provincial and Municipal	10.9	17.2	16. SNew residential construction	3.7	-0.5	3.5New non-residential construction	16.1	-5.8	1.7New machinery and equipment	11.8	6.0	6.9Non-farm business inventories	15.1	33.3	4.4Farm inventories and grain in commercial channels...	7.4	3.1	8.6Exports of goods and services	17.6	19.6	24.9Imports of goods and services (-)	-31.0	-22.3	-19.4GNE (ex. error)	100.0	100.0	100.0
During the current upswing, exports of goods and services have expanded by nearly one-quarter, and have accounted for a larger part of the growth in total demand than in either of the two preceding periods of upswing. The relative contribution of the external sector has been reinforced by developments in imports. Whereas in the ten quarters after the second quarter 1954 trough, imports rose by about 42 per cent and in the eight quarters of the 1958-1960 upswing they rose by 14 per cent, they have risen by only 15 per cent in the ten quarters from the early-1961 trough. Accordingly, a larger part of the increase in domestic demand has been met from Canadian sources in the current expansion, and the net change in exports and imports has acted as a stronger stimulus to the domestic economy in the current upswing than in either of the two preceding periods of expansion.
Expenditures on goods and services by all levels of government contributed 17 per cent of the growth in total expenditures over the first ten quarters of the current upswing. This is slightly more than in each of the two preceding expansions. Almost all of the increase has taken place at the provincial and municipal levels, although substantial transfer payments from the federal to the provincial governments have financed some part of the increased outlays by provincial governments and municipalities.
Personal expenditures have played a proportionately larger role in the current upswing than in 1954-1956, and about the same as in the 1958-1960 expansion.
One of the main reasons for the different proportions of the increase in demand accounted for by personal spending over the three periods has been the quite different proportions absorbed by investment. Investment spending has shown different characteristics in each of the three periods of expansion. The

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GROSS NATIONAL EXPENDITURE (Seasonally Adjusted at Annual Rates)
	1962				1963		
	IQ	2Q	3Q	4Q	IQ	2Q	3Q
			(Millions of dollars)				
1. Personal expenditure on consumer goods and services	25,540	25,592	25,696	26,168	26,644	26,824	27,3882. Government expenditure on goods and services	7,384	7,900	7,824	7,776	8,128	8,152	8,2443. Business gross fixed capital formation^	6,888	6,860	7,016	7,052	7,056	7,268	7,376New residential construction	1,536	1,564	1,616	1,592	1,664	1,640	1,648New non-residential construction	2,756	2,676	2,588	2,652	2,684	2,772	2,720New machinery and equipment	2,596	2,620	2,812	2,808	2,808	2,856	8,0084. Value of physical change in inventories-total	384	360	1,016	500	508	400	600Non-farm business inventories	200	S28	800	172	64	-40	296Farm inventories and grain in commercial channels	184	82	216	828	444	440	8045. Exports of goods and services(3)	7,940	8,272	8,248	8,436	8,480	8,976	8,9246. Imports of goods and services'3)	-8,972	-9,176	-9,144	-8,840	-9,052	-9,312	-9,6727. Residual error of estimate	384	240	100	160	224	144	1568. Gross National Expenditure at Market Prices (1+2+3+4+5+6+7)	39,548	40,048	40,756	41,252	41,988	42,452	43,016
(^Includes private businesses and institutions, and publicly owned business enterprises.
<2>The book value ot inventories is deflated to remove the effect of price changes and the derived "physical" change is then valued at average prices of the current period to obtain the value of physical change. The difference between this value of physical change and the change in book value is called the inventory valuation adjustment (see line 8, Table 1).
<3>Minor adjustments have been made to the figures of current receipts and payments shown in Table 24 to achieve consistency with the other component series.
1018	HOUSE OF COMMONS
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GROSS NATIONAL EXPENDITURE IN CONSTANT (1957) DOLLARS (Seasonally Adjusted at Annual Rates)
	1962				1963		
	IQ	2Q	3Q	4Q	IQ	2Q	3Q
			(Millions of dollars)				
1. Personal expenditure on consumer goods and services	23,912	23,828	23,784	24,136	24,536	24,608	24,9682. Government expenditure on goods and services	6,544	6,948	6,836	6,716	6,924	6,844	6,9003. Business gross fixed capital formation	6,268	6,192	6,284	6,284	6,256	6,420	6,436New residential construction	1,376	1,392	1,424	1,396	1,364	1,420	1,420New non-residential construction	2,533	2,U0	2,352	2,396	2,404	2,476	2,404New machinery and equipment	2,360	2,360	2,508	2,492	2,488	2,524	2,6124. Value of physical change in inventories-total	416	396	960	424	480	364	588Non-farm business inventories	204	S16	760	156	68	-44	292Farm inventories and grain in commercial channels	212	80	200	268	412	408	2965. Exports of goods and services	7,536	7,776	7,724	7,880	7,888	8,380	8,2806. Imports of goods and services	-8,248	-8,332	-8,288	-8,008	-8,112	-8,308	-8,5287. Residual error of estimate	356	220	92	144	204	132	1408. Gross National Expenditure at Market Prices (l-f-2+3+4+5+6+7)	36,784	37,628	37,392	37,576	38,176	38,440	38,784
>
a
o
a
o
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declines in residential and non-residential construction in the 1958-1960 upswing were not repeated during the first ten quarters of the current expansion. However, new non-residential construction contributed less to the total growth in expenditure in 1961-1963, compared with the 1954-1956 period.

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-	1954-1956	1958-1960	1961-1963Per cent change 10 quarters after 2Q 1954 trough	Per cent change 8 quarters after IQ 1958 trough	Per cent change 10 quarters after IQ 1961 troughPersonal expenditure	+20.4	+11.2	+ 14.5Non-durables	+ 16.5	+ 7.6	+ 13.0Durables	+27.8	+ 10.2	+23.3Services	+2+1	+ 16.7	+14-0Government expenditure on goods and services	+26.3	+ 11.8	+ 16.3Federal	+ 14-6	- S.O	+ 1.9Provincial and Municipal	+40 -S	+25.1	+26.1New residential construction	+23.9	- 1.5	+ 16.7New non-residential construction	+73.1	- 9.2	4~ 4.5New machinery and equipment	+44.5	+11.0	18.1Non-farm business inventories	(+$1136m.)	(+$1516m.)	(+$296m.)Farm and grain inventories	(+$556m.)	(+*140m.)	(+$572m.)Exports	+25.9	+14.1	+22.9Imports	+41.5	+ 13.9	+ 15.4Gross National Expenditure at Market Prices	+29.3	+13.3	+ 18.7Final Demand (ex. inventories)	+26.8	+ 9.8	4-15.8GNE in Constant (1957) Dollars	+21.5	+ 8.4	+ 14.4Real Non-agricultural Gross Domestic Product	+22.2	+ 9.4	+ 12.9


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Investment in non-farm business inventories had by September 1963 played a comparatively small part in the increase in total expenditures from the low point in 1961. By contrast, inventory accumulation accounted for about one-third of the 1958-1960 upswing, and for 15 per cent in 1954-1956.
Table 5 illustrates in somewhat different form the expenditure changes which have taken place over these same three periods of expansion. The behaviour of fixed investment during the current period contrasts sharply with investment during each of the two preceding periods. In the 1954-1956 expansion this category of expenditure grew very rapidly, while the 1958-1960 period was one of adjustment, in which no net impetus was gained from capital spending. During the 1961-1963 period non-residential construction has lagged substantially behind the rate of growth in total Gross National Expenditure. Investment in other fixed capital has expanded in proportion to total expenditure.
Investment in inventories over three periods of expansion is analyzed in the chart on page 11. Total inventories in the current upswing have provided less support to economic activity than was the case in 1958-1960, and the marked accumulation which occurred in the later stages of the 1954-1956 upswing has not been repeated in the current expansion.
Government expenditure on goods and services has risen less in the current upswing than in 1954-1956, but more than was ihe case in 1958-1960. As with residential construction and machinery and equipment purchases, the increase in government spending from the 1961 trough has been little different from the rise in Gross National Expenditure. Outlays by the federal government on goods and services, which grew by only 2 per cent, have not quite kept pace with the growth of population, while such expenditures by provincial governments and municipalities have expanded by more than one-quarter in the two and one-half year period.
Consumer spending has lagged slightly, in percentage rates of increase, with purchases of non-durable goods showing less expansionary tendencies than other categories. The change in consumer expenditure on durable products, however, has been more substantial.
Developments in the course of 1963 are shown in Table 7. Worthy of particular attention in the first three quarters of 1963 were high levels of consumer spending on durable goods (automobiles in particular), and rising outlays on new machinery and equipment. Very preliminary fourth quarter statistics suggest a significant increase in all main categories of business investment, continued increases in inventory holdings, a very high level of automobile sales and a substantial contraction of the deficit on international current account, following a temporary deterioration in the third quarter.
Personal Income and Its Disposition
Personal Income continued to rise in 1963 and by the third quarter of 1963 the seasonally adjusted rate was 6.2 per cent above the same quarter of 1962.
All of the major components have been showing substantial year-to-year increases.

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1959	1960	1961	1962	1963«>	IQ	2Q	3Q(Millions of dollars)	1. Wages, salaries and supplementary labour income	17,459	18,251	19,068	20,359	21,272	21,536	21,844Deduct: Employer and employee contributions to social insurance and government	pension funds	-652	-745	-787	-816	-832	-848	-8522. Military pay and allowances	496	509	550	586	548	608	5963. Net income received by farm operators from farm production	1,126	1,178	949	1,402	1,348	1,792	1,3844. Net income of non-farm unincorporated business	2,210	2.213	2.289	2,380	2,464	2,428	2,4965. Interest, dividends and net rental income of persons	2,599	2,836	2,985	3,186	3,288	3,400	3,3766. Transfer payments to persons-	(a) from government (excluding interest)	2,755	3.129	3,408	3,652	3,740	3,780	3,832(b) charitable contributions made by corporations	43	40	44	45	48	48	487. Personal Income (1+24-3-1-4+5+6)	26,036	27,411	28,506	30,794	31,876	32,744	32,724
("Seasonally adjusted at annual rates.
1022	HOUSE OF COMMONS
The Budget-Appendix
20220-65J

[Stage Direction]
1963<'>
1959	1960	1961	1962	IQ | 2Q | 3Q	1. Personal direct taxes- (a) income taxes	1,744 130 214	1,978 158 224	(MU 2,131 144 236	lions of do 2,311 166 237	lars) 2,492 144 248	2,376 148 240	2,492 180 244 £ >(b) succession duties	(c) miscellaneous taxes	Total direct taxes	2,088	2,360	2,511	2,714	2,884	2,764	2,916 *2. Personal expenditure on consumer goods and services- Goods-	11,373 2,678 8,540	11,785 2,669 9,058	12,257 2,697 9,532	12,877 2,913 9,959	13,240 3,028 10,376	13,164 3,120 10,540	X at 13,544 3,152 <S 10,692 2(b) durable	Services11'	Total consumer expenditure	22,591	23,512	24,486	25,749	26,644	26,824	27,3883. Personal Net saving	1,357	1,539	1,509	2,331	2,348	3,156	2,4204. Personal Income (1+2+3)	26,036	27,411	28,506	30,794	31,876	32,744	32,724 S'5. Personal Disposable Income(2)	23,948	25,051	25,995	28,080	28,992	29,980	29,808
(*'Includes net expenditure abroad. (*'Personal Income less total direct taxes* (*'Seasonally adjusted at annual rates.
The Budget-Appendix
[Stage Direction]
The Budget-Appendix
Wages, salaries and supplementary labour income increased steadily throughout the year maintaining approximately the same rate of increase as in 1962. Farm income was higher than in 1962 due mainly to the bumper wheat crop harvested in the west. The cash income effects of the large Chinese and Russian wheat transactions will be felt as deliveries are made and cash disbursements are made by the Canadian Wheat Board over the next 12 to 18 months. Net farm income in the personal account includes farm inventories and cash payments from the Canadian Wheat Board. Accrued earnings of the Wheat Board are not included here, but do appear as part of accrued net income of farmers in the national income table. Income of unincorporated business recorded small year-to-year increases in the first two quarters of 1963, and was 6.5 per cent higher in the third quarter of 1963 than a year before. Investment income fluctuated during the first three quarters of 1963, but each quarter has shown a good improvement over the corresponding period for 1962. Transfer payments increased slightly each quarter during the year as some declines in unemployment insurance payments from the federal government were more than offset by modest increases in outlays of the other levels of government.


[Stage Direction]
Personal disposable income increased at about the same rate as personal income. Personal direct taxes declined in the second quarter of 1963, as refunds on personal income tax were abnormally high. By the third quarter of the year, personal tax payments were again rising in line with the gains in personal income. Personal expenditure on durable goods recorded a substantial increase for the second year in a row after changing very little for the previous few years. The gain of the third quarter in 1963 over the third quarter in 1962 was 14 per cent. The gain in 1962 as a whole had been 8.0 per cent. Other consumer outlays rose fairly steadily in 1963. Personal savings were higher for the second consecutive year averaging 8.9 per cent of disposable income over the first three quarters.

The Budget-Appendix
This higher rate may have reflected in part the higher level of farm income which, in turn, reflected very large grain crops harvested in 1962 and 1963. Changes in farm inventories represent part of the saving of farmers. Savings ratios for the past fifteen years are given below:

[Stage Direction]
Year	Savings Ratio	Year	Savings Ratio1948	9.0	1956	1949	7.8	1957	1950	5.2	1958	1951	9.0	1959	1952	8.0	1960	1953	7.8	1961	1954	4.8	1962	1955	4.7	1963 ui	8.9
(1)9 months.
Investment and Capital Expenditure
Total public and private capital expenditure in 1963 amounted to $9,312 million, 7 per cent above the level of $8,715 million achieved in 1962 and 14 per cent higher than the 1961 level. After allowing for changing prices, the volume of total investment in 1963 was still about 5 per cent below the record 1957 level. Over the 1961-63 period the largest percentage increase in outlays has taken place in spending for institutional services (i.e. schools, universities, hospitals, churches) which has increased by $239 million or 39 per cent over the two years. A very large part of this increase is accounted for by increased outlays for technical and vocational schools, which have been assisted financially by way of substantial federal grants.
Capital expenditure in agriculture increased by 12 per cent in 1963, following an increase of 15 per cent in 1962. Farm incomes had increased substantially during this two-year period.
Capital outlays for mining, quarrying and oil wells were only moderately higher in 1963 than they had been in 1962.
Fixed investment in manufacturing amounted to $1,347 million in 1963, a gain of 6 per cent oyer 1962 and an advance of 24 per cent over the level of 1961. Within manufacturing, capital investment in the wood and paper industries showed strong gains. Investments here amounted to $262 million in 1963. Large percentage increases in capital expenditures were also recorded by textiles, machinery, chemical and chemical products and transportation equipment.
Capital investments by utilities rose substantially. Outlays for electric power, gas distribution and waterworks increased by 8 per cent in 1963. Large investments continued to be made by telephone utilities (up 31 per cent in two years) and for urban transit systems, air transport and oil and gas pipelines.
Capital expenditures on housing were up 8 per cent in 1963 following an advance of 8 per cent in 1962. Housing starts in 1963 amounted to 148,600, the second highest total on record. Starts rose gradually throughout the year until the fourth quarter, when a very sharp increase took place.
Capital expenditures in government departments were slightly higher in 1963 than in 1962. Investment outlays by federal government departments were reduced by about $45 million and this reduction was more than offset by increased departmental outlays of provincial governments and municipalities.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
-	1959	1960	1961	1962	Prelim. 1963Agriculture and fishing	539 48 342 1,144 760 1,076 145 833 5.36 1,752 1,236	(Mil 550 54 400 1,178 688 1,084 130 875 573 1,456 1,274	ions of dol 576 50 449 1,085 710 988 136 847 617 1,467 1,247	ars) 663 54 480 1,269 723 878 109 860 834 1,587 1,258	744 60 503 1,347 792 1,030 116 856 856 1,713 1,295Mining, quarrying and oil wells	Electric power, gas and water works. . 	
Transportation, storage and communications	
Construction industry	
Trade, finance and commercial services	Government departments	
Total Capital Expenditure10	
Total Capital Expenditure as a percentage of Gross National Expenditure	
Index of total Capital Expenditure in Constant Dollars (1957-100)	8,417	8,262	8,172	8,715	9,31224.1	22.8	21.8	21.6	21.793.5	90.2	89.3	92.1	95.0
<*For reconciliation with Business Gross Fixed Capital Formation in housing, plant and equipment as per national accounts, see below.
-	1959	1960	1961	1962	Prelim. 1963Private and Public Capital Expenditure Table 9... Deduct: New residential construction by governments.. New non-residential construction by govern-	8,417 18 1,368 137	(Mil 8,262 13 1,420 137	ions of dol 8,172 9 1,368 160	ars) 8,715 10 1,562 183	9,312 8 1,625 184New machinery and equipment outlays by	Business Gross Fixed Capital Formation in Housing, Plant and Equipment-National Accounts	6,894	6,692	6,635	6,960	7,495
In 1963, total public and private fixed capital investment absorbed 21,7 per cent of Gross National Expenditure, compared with a figure of 21.6 per cent in 1962 and 21.8 per cent in 1961. Table 10 traces the trend of capital expenditure in relation to GNE over the postwar period since 1948. Over this period, capital outlays reached their peak level in relation to national expenditure in 1957, when total public and private investment amounted to 27.3 per cent of GNE. This high level of investment activity in Canada in the middle 1950's resulted from a variety of influences. The outbreak of the Korean War was marked by a sharp increase in the prices of most raw materials. Military demands were supplemented by increased civilian demands as European recovery progressed. Public forecasts of growing shortages of raw materials led to a large-scale stockpiling programme in the United States. A significant part of total investment in Canada during this time was concentrated on the development of Canadian natural resource industries to take advantage of current and prospective demand for raw materials. Following the end of the mid-1950's investment boom, excess capacity emerged in a number of sectors, including both the resource sector and primary and secondary manufacturing. Private business investment declined

The Budget-Appendix


[Stage Direction]
1953	1954	1955	1956	19571959	I960	1961	1962	1963
both absolutely and as a proportion of GNE in the period after 1957. This relative decline continued until 1962, with the share of investment in GNE falling each year until it reached the level of 21.6 per cent in 1962. During the last years of the 1950's many Canadian manufacturing industries found themselves squeezed by rising costs, and along with the existence of excess capacty this tended to dampen investment activity. Recent stability in costs in Canada, a lower exchange rate of the Canadian dollar and rising costs abroad have helped improve Canada's competitive position. As a result, output for domestic and export markets has grown. Profits have increased in many lines of Canadian

[Stage Direction]
-	Total Private and Public Investment	Housing and Social Capital*1*	Business Investment Private and Public*2*1948	20.4	7.8	12.61949	21.7	8.7	13.01950	21.9	8.9	13.01951	22.4	8.6	13.81952	22.9	9.0	13.91953	23.9	9.4	14.51954	23.0	9.6	13.41955	23.0	9.8	13.21956	26.3	9.9	16.41957	27.3	9.6	17.71958	25.4	10.6	14.81959	24.1	10.4	13.71900	22.8	9.4	13.41961	21.8	9.1	12.71962	21.6	9.3	12.31963	21.7	9.1	12.6
<u Includes housing, outlays by government departments, institutions and municipal waterworks. *2*Includes government business enterprises.
[Stage Direction]
The Budget-Appendix
industry. While considerable excess capacity still exists in some sectors of Canadian industry, the overhang of excess capacity has been reduced. Recent increases in business investment have no doubt reflected the combination of stronger demand conditions, higher cash flow from retained profits and capital consumption allowances, and reduction in excess capacity.
Revenue and Expenditure op all Governments
The familiar public accounts, which for the federal government are discussed in Part II of this Survey, are designed to permit legislative and administrative control over the several items of government expenditure. They do not present information on government activities in a way that permits ready assessment of the magnitude and timing of the impact of government revenue and expenditure flows on the economy. Consequently, it is convenient to regroup the figures for government revenues and expenditures in such a way as to bring out the transactions between the government and other sectors of the economy as they appear in the broader framework provided by the national accounts. This regrouping also corresponds to the manner in which the accounts of the other sectors of the economy are kept and presented. In recent years the United States and a number of other countries have found it desirable to supplement their budgetary presentations on the familiar public accounts basis by publication of "national accounts" budgets.
The "national accounts" budgetary presentation differs from the parliamentary budgetary presentation in several ways. Only income and expenditure transactions which have a direct and immediate impact on the flow of incomes in the economy are included in the national accounts budgetary presentation; financial transactions (i.e. loans), which result in changes in the liabilities of one sector of the economy to another, are excluded from the national accounts presentation. A number of bookkeeping items in the parliamentary accounts of purely internal significance and having no impact on the private sector are also excluded from the national accounts presentation.
A number of items which are excluded from the parliamentary budgetary accounts are of immediate significance to the private incomes stream. The national accounts embrace these items, the most important of which are payments into and out of the Old Age Security Fund, the Unemployment Insurance Fund, and the government pension funds, by those contributing or drawing benefits.
National accounts items are entered as they accrue, that is, at the time when the economic impact is felt on the economy. Corporation income taxes in particular require a major adjustment from the public accounts to a national accounts basis. These taxes have been paid on an instalment basis beginning six months before the end of the companies' fiscal year and ending six months after. As a result, corporations accrue tax liabilities, which are measured at the time of accrual in the national accounts, six to nine months before tax payments are actually made and recorded in the public accounts. Since tax accruals are directly related to corporate profits at the time they occur, and since profits move with the business cycle, the recording of tax accruals and the analysis of the government sector on a national accounts basis, may permit a more meaningful appreciation of the timing of changes in the surplus or deficit of the government sector in relation to fluctuations in economic activity. In practice, corporations likely keep their own accounts on an accrual basis. Similarly, adjustments are made on the expenditures side to put the purchase of goods and services on an accrual basis, rather than at the time actual payments are made.
The reconciliation of the federal government's public accounts and the national accounts presentation quarterly for 1962 and the first three quarters of 1963 are set out in Table 12.

[Stage Direction]
1959	1960	1961	1962	1963<*	IQ	2Q	3Q(Millions of dollars)	Government Revenue-	Direct Taxes-Persons	2,088	2,360	2,511	2,714	2,884	2,764	2,916Federal	1,770	2,017	2,132	2,088	2,192	2,096	2,204Provincial and Municipal	318	343	379	626	692	668	712Direct taxes-Corporations	1,581	1,562	1,612	1,750	1,816	1,864	1,788Income-	Federal	1,310	1,284	1,311	1,328	1,380	1,412	1,352Provincial	271	278	301	422	436	452	436Withholding Taxes-Federal	74	79	116	125	124	124	116Indirect Taxes	4,464	4,706	4,970	5,552	5,788	5,724	5,872Federal	2,125	2,180	2,190	2,400	2,404	2,324	2,412Provincial and Municipal	2,339	2,526	2,780	3,152	3,384	3,400	3,460Investment Income	998	1,053	1,130	1,211	1,240	1,352	1,328Federal	350	384	409	448	440	528	524Provincial and Municipal	648	669	721	763	800	824	804Employer and Employee Contributions to Social Insurance and Government Pension	Funds	652	745	787	816	832	848	852Federal	414	482	510	518	524	532	532Provincial and Municipal	238	263	277	298	308	316	320Transfers from Federal Government-	Provincial and Municipal	880	994	1,128	1,136	1,188	1,236	1,092Total Revenue	10,737	11,499	12,254	13,304	13,872	13,912	13,961Federal	6,043	6,426	6,668	6,907	7,064	7,016	7,140Provincial and Municipal	4,694	5,073	5,586	6,397	6,808	6,896	6,824
('[DOT]Seasonally adjusted at annual rates.
s
>
a
The Budget-Appendix
TABLE 11-Concluded

[Stage Direction]
1959	1960	1961	1962	1963<*	IQ	2Q	3Q(Millions of dollars)	Government Expenditure-	6,490	6,755	7,205	7,721	8,128	8,152	Goods and Services	8,2441,273	1,179	1,361	1,328	1,592	1,356	1,3321,559	1,546	1,613	1,680	1,468	1,616	1,604Provincial and Municipal	3,658	4,030	4,231	4,713	5,068	5,180	5,308Transfer Payments to Persons	2,755	3,129	3,408	3,652	3,740	3,780	3,8321,791	1,979	2,015	2,122	2,156	2,140	2,092Provincial and Municipal	964	1,150	1,393	1,530	1,584	1,640	1,740Interest on Public Debt	963	1,096	1,164	1,274	1,300	1,352	1,352678	756	783	855	836	880	884Provincial and Municipal	285	340	381	419	464	472	468Subsidies	205	236	254	291	272	392	320189	210	221	260	244	360	284Provincial and Municipal	16	26	33	31	28	32	36Transfers to Other Governments-	Federal	880	994	1,128	1,136	1,188	1,236	1,092Total Expenditure	11,293	12,210	13,159	14,074	14,628	14,912	14,840Federal	6,370	6,664	7,121	7,381	7,484	7,588	7,288Provincial and Municipal	4,923	5,546	6,038	6,693	7,144	7,324	7,552Deficit (-) or Surplus (+)	-556	-711	-905	-770	-756	-1,009	-876Federal	-327	-238	-453	-474	-420	-572	-148Provincial and Municipal	-229	-473	-452	-296	-336	-428	-728Total Expenditure Minus Deficit or Plus Surplus	10,737	11,499	12,254	13,304	13,872	13,912	13,964Federal	6,043	6,426	6,668	6,907	7,064	7,016	7,140Provincial and Municipal	4,694	5,073	5,586	6,397	6,808	6,896	6,824
(''Seasonally adjusted at annual rates.
1030	HOUSE OF COMMONS
The Budget-Appendix
20220-66i

[Stage Direction]
1961-62	1962-63	1963-64	1962	1963	IQ	2Q	3Q	4Q	IQ	2Q	3Q(Millions of dollars)	1.	Budgetary revenue	
2.	Supplementary period adjustment*1*	5,730 -3	5,879 -4	6,207	1,481 -121	1,371 121	1,474	1,555	1,479 -125	1,394 125	1,4893. Extra-budgetary revenues	Old Age Security tax collections	644	693	745	169	188	161	164	180	196	170Prairie Farm Assistance Act levy	7	8	9	1	1	4	2	1	1	4Unemployment insurance employer-employee contributions	278	286	297	72	65	74	73	74	67	76Government pension funds, employer-employee contributions..	234	235	251	56	57	59	61	58	59	60Interest receipts of social insurance and government pension	funds	117	125	141	30	30	30	31	34	34	354. Corporate income tax*2*: excess (+) of accruals over collections. . . .	62	62	20	-29	-10	14	59	-1	5	175. Profits before taxes (net of losses) of government business enterprises	145	176	194	17	44	28	83	21	62	556. Interest on loans, advances and investments	153	156	173	32	37	32	54	33	36	347. Less: Budgetary return on investments	-300	-293	-389	-96	-45	-40	-142	-66	-67	-43- 182	- 195	-199 -100	-45 -26	-47 -25	43	-58 -26	-47 -25	-48 -24	-43 -249. Budgetary revenue items offset against budgetary expenditures®..	-97	-101	-25	10. All other adjustments to budgetary revenue*4*	-39	-44	-26	-24	-3	-25	7	-23	-10	-1611. Total revenue, national accounts basis	6,719	6,983	7,323	1,517	1,784	1,743	1,863	1,593	1,839	1,814
>
*
<'>In the national accounts, revenues in the supplementary period are shifted to the following fiscal year.
'[DOT]'Taxes on government business enterprises are excluded from this item and included in item 5.
®See also line 10, expenditure reconciliation.
(''These adjustments are largely revenue items not relevent for the national accounts such as proceeds from sales of existing assets.
The Budget-Appendix
TABLE 12-Concluded
1961-62	1962-63	1963-64	1962	1963	IQ	2Q	3Q	4Q	IQ	2Q	3Q1. Budgetary expenditure	6,521	6,571	6,892	(Mil 2,013	lions of c 1,349	ollars) 1,563	1,589	2,069	1,374	1,6042. Supplementary period adjustment*1*	-47	-36	-87	-321	321	-	-	-357	357	-3. Expenditures of extra-budgetary funds Old Age Security Fund payments	625	734	809	171	182	183	184	185	186	187Unemployment insurance benefits	455	403	372	185	116	43	66	178	115	42Government pension fund payments	68	73	84	18	18	18	18	19	19	19Prairie farm assistance payments	
4. Transfers to extra-budgetary funds	54 -65	15 -105	11 -65	26 -14	-61	-15	4 -15	11 -14	1 -21	-155. Adjustment to place other government funds and crown agencies on a disbursement basis'21	-21	63	-17	30	1	22	31	9	-51	226. Budgetary expenditures offset against income of government business enterprises Post Office expenditures	-185	-189	-207	-51	-45	-45	-48	-51	-47	-53Deficits of government business enterprises	-86	-100	-77	-2	-82	-4	-8	-6	-59	-47. Adjustment to place interest on the public debt on a due-date basis	-23	-18	-21	-45	-18	-40	93	-53	-38	-448. Capital assistance to non-defence industry'3*	- 4	-35	-60	-1	-3	-10	-8	-14	-12	-209. Reserves and write-offs	-39	-38	-83	-10	-11	-10	-9	-8	-10	-1010. Budgetary revenue items offset against budgetary expenditure'4* -	-97	-101	-100	-26	-25	-25	-26	-25	-24	-2411. All other adjustments to budgetary expenditure	129	115	93	-43	70	62	26	-42	78	6312. Total expenditure, national accounts basis	7,285	7,352	7,544	1,930	1,812	1,742	1,897	1,901	1,868	1,767 +4713. Surplus (+) or deficit (-), national accounts basis	-536	-369	-221	-413	-28	+ 1	-34	-308	-38	14. Surplus (+) or defict (-), budgetary basis	(-791)	(-692)	(-690)	(-532)	(+22)	(-89)	(-34)	(-590)	(+20)	(-115)15. Total	6,749	6,983	7,323	1,517	1,784	1,743	1,863	1,593	1,830	1,81416. Surplus (+) or deficit (-), national accounts basis, seasonally adjusted at annual rates	(-536)	(-369)	(-221)	(-780)	(-616)	(-256)	(-244)	(-420)	(-572)	(-148)Win the national accounts, expenditures on goods and services in the supplementary period are split evenly between adjacent fiscal years. Other expenditure items are shifted entirely to the next fiscal year.	.
WThis adjustment replaces budgetary appropriations to various funds and agencies by the outlays actually made by these funds and agencies.
W Government capital assistance to industry appears as part of business gross capital formation and is removed from the government sector to avoid double counting in the national accounts.	_
(4)The largest component of this item consists of revenue from sales of goods and services by the government sector. These sales appear as final expenditure of the private sector and are deducted to avoid double counting.
1032	HOUSE OF COMMONS
The Budget-Appendix

The Budget-Appendix
Government Revenues and Expenditures on a National Accounts Basis-Some Perspectives
Important trends have appeared during the 1950's and early 1960's in the pattern of federal government revenues and expenditures and their relation to revenues and expenditures of provincial governments and municipalities which deserve mention before giving closer attention to the past year. While total revenues raised from taxation by all governments have increased as a proportion of gross national product from 21.4 per cent in 1950 to 24.9 per cent in the third quarter of 1963, federal government revenues increased early in the 1950's but have since tended to decline and are currently 14.2 per cent of gross national product as compared with 14.8 per cent in 1950.

[Stage Direction]
taxation revenue of governments as a proportion of
GROSS NATIONAL PRODUCT, SELECTED YEARS 1950-1963 (National Accounts Basis)
-	1950	1955	1960	19630)	$ Millions	Per- centage of G.N.P.	$ Millions	Per- centage of G.N.P.	s Millions	Per- centage of G.N.P.	S Millions	Per- centage of| G.N.P.Federal Government	
Provincial Governments.. Municipalities	
Gross National Product...	2,660 677 503 18,006	14.8 3.8 2.8	4,346 960 851 27,132	16.0 3.5 3.1	5,560 1,689 1,458 36,254	15.3 4.7 4.0	6,047 2,736 1,810 42,485	14.2 6.4 4.3
^Average of first three quarters seasonally adjusted at annual rates.
The relatively diminishing role of the federal government in total tax revenue, notwithstanding larger transfer payments to provinces and municipalities, is reflected clearly in the federal proportion of total tax revenue collected by all governments; in the 1950-1963 period the federal government's proportion declined from close to 70 per cent to 57 per cent. Perhaps about 3 percentage points of this decline is related to the change in fiscal arrangements between the federal and provincial governments in 1962.
The following chart shows the quarterly changes in federal government revenues, of which personal and corporate income taxes represent about 50 per cent of the total. The effects of downturns in economic activity (shown as shaded areas) on federal revenues are clearly portrayed. Likewise, when economic activity is high and buoyant, government revenues increase sharply. From the chart on page 32 it will be noted that during the postwar period it has been at times when considerable unemployment (and associated under-utilization of plant and equipment) existed that governments in aggregate have run a deficit on a national accounts basis. Between 1946 and 1957 governments collectively showed a deficit only in the 1954 recession year. In the period since 1957 the level of the deficit of all levels of government combined has tended to reflect to some degree the extent of unused resources in the economy.
Turning to expenditures between 1950 and 1963, the proportion of total federal government expenditures represented by transfers to persons has risen from 26 per cent to 29 per cent. Transfers to provincial governments and municipalities have increased from 11 per cent to 16 per cent of total federal government outlays over this period (see Table 14),
[Stage Direction]
The Budget-Appendix

[Stage Direction]
MILLIONS OF DOLLARS	MILLIONS OF DOLLARS
( I) ON A NATIONAL ACCOUNTS BASIS. SEASONALLY ADJUSTED AND AT ANNUAL RATES (2) FEDERAL GOVERNMENT REVENUES WERE REDUCED AT TIME OF THE INTRODUCTION OF NEW FEDERAL PROVINCIAL TAX ARRANGEMENTS IN THE FIRST QUARTER OF 1962

[Stage Direction]
FEDERAL GOVERNMENT EXPENDITURES, SELECTED YEARS 1950-1963 (National Accounts Basis)
1950	1955	1960	1963<u	$ Millions	Percentage of total expenditure	$ Millions	Percentage of total expenditure	$ Millions	Percentage of total expenditure	$ Millions	Percentage of total expenditureGoods and Services	977	41.9	2,510	52.7	2,725	40.9	2,989	40.1Transfer Payments to Per-	615	26.4	1,232	25.9	1,979	29.7	2,129	28.6Interest on the Public Debt	427	18.3	494	10.4	756	11.3	867	11.6Transfers to Other Levels of Governments	251	10.8	450	9.4	994	14.9	1,172	15.7Other	60	2.6	75	1.6	210	3.2	296	4.0Total	2,330	100.0	4,781	100.0	6,664	100.0	7,453	100.0
O)Average of first three quarters seasonally adjusted at annual rates. (*>Excluding interest payments.
Federal expenditures on goods and services rose as a proportion of total federal expenditures in the early 1950's, then declined somewhat and currently stands at a level slightly below that of 1950. As a proportion of gross national expenditure, federal expenditures on goods and services followed roughly the same pattern, currently standing at 7.0 per cent, 1.6 per cent higher than in 1950

The Budget-Appendix
(Table 15). Interest on the federal debt, although rising in recent years, is now about 12 per cent of total federal expenditures compared to over 18 per cent in 1950. Interest on the federal debt is now the equivalent of 2.0 per cent of G.N.E. compared with 2A per cent in 1950.

[Stage Direction]
GOVERNMENT EXPENDITURES ON GOODS AND SERVICES AS A PROPORTION OF GROSS NATIONAL EXPENDITURE, SELECTED YEARS 1950-63 (National Accounts Basis)
1950	1955	1960	1963(1>	. S Millions	Percentage of GNE	Millions	Percentage of GNE	$ Millions	Percentage of GNE	s Millions	Percentage of GNEFederal Government	
Provincial Governments	977	5.4	2,510	9.3	2,725	7.5	2,989	7.0and Municipalities	
GNE	1,367 18,006	7.6	2,282 27,132	8.4	4,030 36,254	11.1	5,186 42,485	12.2
<'>Average of first three quarters seasonally adjusted at annual rates.
Provincial governments' and municipalities' combined expenditures are heavily concentrated in purchases of goods and services and transfer payments to persons, which account for 70 per cent and 23 per cent, respectively, of their total expenditures. Provincial and municipal expenditures on goods and services have risen rapidly since 1950 and are 12 per cent of G.N.E. compared with 7.6 per cent in 1950. Interest charges currently account for 6.4 per cent of total expenditures by provincial governments and municipalities.

[Stage Direction]
GOVERNMENT	RATE OF
SURPLUS OR DEFICIT	UNEMPLOYMENT
MILLIONS OF DOLLARS	PERCENTAGE
(I) ALL LEVELS OF GOVERNMENT ON A NATIONAL ACCOUNTS BASIS. 12) ESTIMATE.
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The Budget-Appendix
Current Position
On a national accounts basis, the Government of Canada's deficit, seasonally adjusted, has been moving downward irregularly since the first quarter of 1962; over this period as a whole revenues increased while total expenditures have fluctuated irregularly, and payments for goods and services have been relatively stable. The deficit increased during the first half of 1963 but the increase in the deficit was reversed in the second half of the year. Seasonally adjusted at annual rates the deficit in the third quarter of 1963 was $148 million.
The following chart sets out the movements of federal government revenues and expenditures and the deficit between 1957 and 1963. The movements of particular interest shown on the chart are the diminishing government deficit since early in 1962 and the relative flatness of expenditures on goods and services through the whole period. The increase in other expenditures is accounted for largely by transfer payments and the expanding interest cost of the public debt.
FEDERAL GOVERNMENT REVENUE AND EXPENDITURE National Accounts Basis
Over the four quarters ending September 30, 1963, almost all revenue items increased, reflecting higher personal incomes and corporate profits. The exception was indirect taxes, which were reduced by the removal of the temporary import surcharges in the first half of 1963. In the latter part of 1963 indirect taxes began to rise in line with increases in economic activity and some increases in sales tax coverage. A substantial increase in investment income was accounted for by higher earnings from the Bank of Canada and the Exchange Fund Account and a smaller deficit for the C.N.R.

The Budget-Appendix
Federal government expenditures increased by less than 2 per cent between the third quarter of 1962 and the third quarter of 1963. Expenditures on goods and services declined somewhat, slightly offsetting increases on transfer payments to persons, interest payments on the public debt, and increased subsidy payments. A decrease in transfer payments to other levels of government in the third quarter was mainly caused by some reduction from very high levels of payments in connection with capital outlays for technical and vocational training schools.


[Stage Direction]
Over the past year all types of provincial governments' and municipalities' revenue increased, but revenue gains were more than offset by heavier expenditures (Table 11), and the provincial governments' and municipalities' deficit grew over the period by $268 million.
Total revenues of all governments increased steadily quarter by quarter over the past year, as did expenditures until the third quarter of 1963, when they fell $72 million below the level of the second quarter of 1963. The aggregate deficit of all governments combined fluctuated irregularly but tended to increase slightly over the period, as a reduction in the federal deficit was more than offset by increases in the deficits of provincial governments and municipalities,

[Stage Direction]
Employment in 1963 continued to increase. After adjustment for seasonality, the gains were more pronounced in the later months of the year. The average level of employment for the whole of 1963 was 2.4 per cent higher than the average for 1962, but the change between December 1962 and December 1963 was 4.4 per cent, with 268,000 more people at work.
The total civilian labour force grew by rather less than 2 per cent in 1963. However, as with employment, the growth was more rapid towards the end of the year, with the December seasonally-adjusted total, at 6,839,000 persons, being just over 3 per cent above the year-earlier figure. The addition to the labour force, December to December, amounted to 208,000. Thus, over the year, employment grew more rapidly than the labour force, and unemployment as a
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The Budget-Appendix
percentage of the labour force declined accordingly. Average unemployment in 1963 was 5.5 per cent, compared to 5.9 per cent in 1962 and the postwar high of
7.2	per cent in 1961. The seasonally-adjusted unemployment rate in December 1963 was 4.9 per cent, the lowest monthly rate since 1957.

[Stage Direction]
MILLIONS OF PERSONS	MILLIONS OF PERSONS
(1)	SEASONALLY ADJUSTED ESTIMATES
(2)	SEASONALLY ADJUSTED ESTIMATES BY THE DEPARTMENT OF FINANCE
Goods-producing industries contributed significantly to employment growth in the early part of 1963, with manufacturing and construction employment showing large gains on a seasonally-adjusted basis. Around mid-year, manufacturing employment flattened out briefly. Later in the year, however, it again increased. Construction employment was influenced by a particularly strong upsurge of apartment building starts in the third quarter and by an even sharper jump towards year-end in single-family dwelling starts stimulated by federal government incentive programmes to raise the level of winter employment in the construction industry. The improvement in the manufacturing sector reflected both the sustained pace of domestic economic activity and the favourable trends which have been a feature of the external trade position.

The Budget-Appendix
The expansion of activity in the goods-producing industries especially manufacturing, construction and forestry, strengthened the demand for male workers. The number of employed males, which had risen by only 162,000 in the five years between 1957 and 1962, rose by 80,000 in 1963 alone. This improvement was a significant factor in reducing the total unemployment rate.
In the last half of 1963 there was a renewed rise in demand for workers in trade, government and other service industries, where employment growth had slowed down for about a year. The renewed rise here was associated with an increase in employment opportunities for women workers, who responded by entering or returning to the labour force in larger numbers.
Job opportunities for younger workers in the later months of 1963 were considerably greater than they had been a year previously. At the end of the year, employment of workers in the 14 to 19 age group was up by over 11 per cent, and in the 20 to 24 group by over 5 per cent.
The long-term decline in agricultural employment continued in 1963. Average farm employment fell from 653,000 in 1962 to 641,000 in 1963. The net increase in non-agricultural employment was therefore greater than the increase in total employment, rising by nearly 3 per cent from 5,564,000 in 1962 to 5,723,000 in 1963.
The incidence of unemployment has continued to vary widely from region to region.

[Stage Direction]
UNEMPLOYMENT AS A PERCENTAGE OF THE LABOUR FORCE (By Region-Annual Averages)
-	1961	1962	19637.2	5.9	5.511.1	10.7	9.59.3	7.5	7.55.5	4.3	3.84.6	3.9	3.78.5	6.7	6.3
The accompanying table shows that in 1963 employment rose somewhat faster than the labour force in all regions except Quebec, where the exceptionally sharp increase in the labour force about equalled the rise in employment. The rise in the labour force (average annual rates) was about 2.0 per cent for Canada as a whole, but about 2.7 per cent in Quebec.

[Stage Direction]
REGIONAL INCREASES IN LABOUR FORCE AND EMPLOYMENT (Annual Averages-Thousands of Persons)
-	1961 1960	1962 1961	1963 1962	Labour Force	Employ- ment	Labour Force	Employ- ment	Labour Force	Employ- mentAtlantic	25	19	8	10	i	8Quebec	16	12	30	59	50	49Ontario	26	22	19	47	52	62Prairies	36	30	21	28	7	10B.C	13	12	13	23	17	19Total	115	94	90	168	129	147
Note: Totals may not add due to rounding.
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The Budget-Appendix
The increase in the labour force in 1963 was greater than in 1962. This in part reflected the improvement in the employment situation, as greater job opportunities induced larger numbers of workers to come into the labour market, especially married women and young people leaving school. However, it also reflected the rise in the population in the age group 14 to 19 years. The total population 14 years of age and over rose by 242,000 in 1963, and 91,000 of these were in the 14 to 19 year group. The numbers of young people leaving school and entering the labour force rose in 1963 in comparison with 1962.

[Stage Direction]
(Thousands of Persons)				
1956	1957	1958	1959	1960	1961	1962	196338	66	68	68	74	77	80	91
The number of young people in this age group who participated in the labour force rose in 1963 from 643,000 to 660,000. This increase of 17,000 compared with an increase of only 9,000 in 1962. Despite these changes, however, the participation rate for these young people (i.e., the proportion of the age group in the labour force) continued its long-term decline.

[Stage Direction]
(Labour Force as Per Cent of Population)			
1956	1957	1958	1959 1960 1961	1962	196341.0	40.5	38.8	37.9 37.9 36.5	35.4	34.6
The participation rate for males in this age group, which had been falling fairly rapidly in recent years, declined only fractionally in 1963. The participation rate for females 14 to 19 years of age, however, showed a decrease of 1.1 per cent, close to the 1.4 per cent drop recorded in 1962. Participation rates among all women rose to 29.6 per cent from 29.1 per cent a year earlier.
Male unemployment in 1963 continued high in both the 14 to 19 and the 20 to 24 age groups. Among men, the age groups with the lowest unemployment rates were in the 35 to 54 brackets. Among women, the youngest age group again experienced the heaviest unemployment. In the older age groups, the readiness with which married women move into the labour force in response to increased job opportunities (and out again when jobs are not as readily available) limits the fluctuation in the unemployment rate, which was 3.3 per cent for the female labour force.
Total labour income, discussed earlier in these pages, reached a seasonally-adjusted level of $21.8 billion in the third quarter (annual rates), showing an increase of 6.5 per cent over the third quarter of 1962. Average hourly earnings in manufacturing rose by 3j per cent from $1.87 to $1.93 over the same period. No major industrial grouping showed any appreciable variation from the average gain of 7 cents per hour. The construction industry average rose by nearly 4 per cent from $2.05 to $2.13. Average weekly hours in manufacturing in the third quarter were very slightly lower than during the same period a year previously. This was true of both durable and non-durable goods-producing industries. Average weekly wages and salaries in manufacturing in the third quarter were $85.83, up by 3.1 per cent from the $83.22 of a year previously. The industrial composite was also higher by 3.1 per cent.

The Budget-Appendix PRICE AND COST TRENDS
A noteworthy feature of Canada's current period of growth has been the relative stability of most prices and costs. This stability has been maintained despite the substantial decline in the exchange value of the Canadian dollar and other developments in world markets all of which have exerted selective upward pressure on Canada's price structure.
The chart on page 39 shows the movements of some major price series over the course of the current expansion and over the two preceding upswings.
The chart shows that, apart from the wholesale price index, which is heavily weighted with import and export goods and is therefore directly affected by movements in the exchange rate, and the food component of the consumer price index, prices and costs have generally increased to a smaller extent since the first quarter of 1961 than in the two preceding periods of expansion.
It will be recalled that much of the devaluation of the Canadian dollar occurred between May, 1961, and May, 1962, when the Canadian dollar was fixed at 92.5 cents U.S. Table 18 has been calculated to contrast movements in the exchange rate with price changes over this and subsequent periods.

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COMPARATIVE EXCHANGE RATE AND PRICE CHANGES (Percentage Changes)
-	May 1962	May 1963	Dec. 1963	Dec. 1963May 1961	May 1962	Dec. 1962	May 1961Price of U.S. Dollar	+ 9.6	- 0.5	+ 0.3	+ 9.3Import Price Index	+ 7.4	+ 2.3	+ 4.3<*	+11.1<«Export Price Index	+ 4.9	+ 0.4	+ 0.2	+ 4.8General Wholesale Price Index	+ 3.5	+ 2.1	+ 1.4	+ 6.3Consumer Price Index	+ 0.9	+ 1.7	+ 1.7	+ 4.0G.N.E. Implicit Price Deflator	+ 1.4	+ 2.0	+ 1.70	+ 3.90)
(1>III Quarter November
It will be noted that the change in the exchange rate has been closely followed by changes in the import price index. These, in turn, have significantly influenced the level of wholesale prices. While the price of many internationally-traded export commodities responded to the higher value of foreign currency the rise in the export price index was only about one-half of that which was registered in import prices. Increases in consumer prices were moderate, as were the average prices of goods and services produced in Canada.
An important consideration in evaluating price and cost changes is their effect on Canada's competitive position in world markets. As may be observed from the chart on page 40 unit labour costs in manufacturing have risen very little since 1957 in comparison with their earlier postwar behaviour. The upward trend in total non-farm unit labour costs also slackened over this period.
Over the last two years, consumer prices and wages in Canada have risen less than in the United Kingdom and much less than in Continental Europe or Japan. Despite the exchange rate decline of about 9 per cent, which affected a
[Stage Direction]
The Budget-Appendix

[Stage Direction]
CYCLE-ON-CYCLE SERIES PREVIOUS BUSINESS CYCLE PEAK = 100
QUARTERS from reference trough

[Stage Direction]
4	0
REFERENCE trough
4
8

The Budget-Appendix
wide range of imported consumer goods, consumer prices in Canada rose little more than in the United States. Wholesale prices, which were affected more by the devaluation, have performed somewhat differently, as expected.

[Stage Direction]
Index 1949=100 Ratio Scale

[Stage Direction]
(Percentage Changes)
Consumer Price Index	Wholesale	Hourly Earnings in Mfg.Total	(Ex Food)	Prices	Canada	+ 3.4® + 3,0i'>
+ 5.3 + 6.0® +11.6 + 12.5® +13.9	+ 2.5® + 2.8® + 4.6 + 5.6 +11.4® +12.8® +13.7®	+ 3 9® - 0.1®	+ 7.1®u.s	U.K	Germany	+ +8 + 6.0	+19.1<*>France	Japan	Italy	+11.0	
® December ® November ^September ® 111 Quarter
Table 20 summarizes the changes in some major price and cost indexes between 1962 and 1963. In the first eleven months of 1963, the industrial composite of wages and salaries was about 3| per cent higher than during the same period of 1962. In manufacturing, hourly earnings showed an increase of nearly the same magnitude; in mining the increase was much smaller, while that in the construction industry was somewhat higher.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
RECENT CHANGES IN COSTS AND PRICES (Percentage Changes)
-	1962 1961	1963 1962
	+ 2.7 + 3.1 + 2.9 + 1.2 + 5.5 + 1.7	+ 3.2«>
+ 3.4W + 1.9 + 1.8 + 0.9 + 1.8<«)
		
		
		
PrWnf TTS Dollar 			
		
		
<011 months <!>three quarters
Aggregate prices, as measured by the G.N.E. implicit price index, rose by the same magnitude as in 1962.

[Stage Direction]
(Implicit Price Indexes of G.N.E. and Components)
	Year		3Q 1963 3Q 1962
	1961 1960	1962 1961	
+ 0.9	+ 1.5	+ 1.6+ 0.8	+ 1.2	+ 2.0- 2.0	- 0.2	+ 0.3+ 1.9	+ 2.3	+ 1.5+ 1.9	+ 3.7	+ 4.4+ 0.9	+ 2.5	+ 2.7+ 0.6	+ 2.8	+ 2.3+ 0.4	+ 2.0	+ 2.8+ 1.6	+ 2.9	+ 2.8+ 1.3	+ 3.2	+ 0.9-j- 3.3	+ 4.4	+ 2.8
+ 0.6	+ 1.7	+ 1.7
			
<*Price indexes of these sectors are measured mainly by elements entering into costs (materials and labour purchased) rather than final selling prices, and generally it has not been possible to allow for changes in productivity. Over short periods of time, these cost indexes are not likely to vary to any extent from indexes of actual selling prices. Over longer periods, it may be that these cost deflators overstate price increases.
The rise in general wholesale prices was less during 1963 than during 1962. This moderating trend reflected a similar trend in exchange rate movements. The price of the U.S. dollar in Canada averaged over 1962 was 5.5 per cent higher than in 1961. The increase from 1962 to 1963 was less than one per cent. Wholesale prices rose by 2.9 per cent from 1961 to 1962 and 1.9 per cent from 1962 to 1963. Only vegetable products and industrial materials showed larger increases in 1963 than in 1962. The former reflected the very sharp increase in raw sugar costs while the latter rose in response to some general strengthening in world prices of industrial materials.

The Budget-Appendix

[Stage Direction]
(Annual Averages)
1961 1960	1962 1961	1963 1962General Index	-f 1.0	+ 2.9	+ 1.9Vegetable Products	+ 4.2	+ 7.7Animal Products	+ 2.9	+ 3.1	- 2.6Textile Products	+ 2.0	+ 2.9	+ 2.8Wood Products	+ 0.4	+ 3.5	+ 2.4Iron Products	+ 0.7	- 0.7	- 1.0Non-Ferrous Metals and Products	+ 2.1	+ 5.8	+ 2.8Non-Metallic Minerals and Products	- 0.2	+ 2.1	+ 0.2Chemical Products	+ 0.3	+ 1.0	- 0.6Industrial Materials	+ 1.2	+ 2.0	+ 2.2
The consumer price index for 1963 averaged 133.0 compared with 130.7 in 1962, an increase of 1.8 per cent. The largest part of the increase occurred in the second half of the year with the index moving from 132.0 in January to 132.8 in June and to 134.2 in December. The food index registered the largest increase and was the major factor in the rise of the total index. Much of the increase in food costs was a reflection of the spectacular climb in world sugar prices which were mirrored in Canadian retail prices.

[Stage Direction]
-	1961 1960	1962 1961	1963 1962Total-All Items	+ 0.9	+ 1.2	+ 1.8F ood	+ 1.5	+ 1.8	+ 3.2Housing	+ 0.4	+ 1.2	+ 1.0Clothing	+ 1.4	+ 0.9	+ 2.5T ransportation	+ 0.2	- 0.1	Health and Personal Care	+ 0.5	+ 1.9	+ 2.6Recreation and Reading	+ 1.2	+ 0.8	+ 1.4Tobacco and Alcohol	+ 0.4	+ 1.3	+ 0.3Supplementary Classifications	All Commodities	+ 0.5	+ 0.8	+ 1.7Durables	- 1.8	- 0.7	+ 0.2Non-Durables	+ 1.0	+ 1.2	+ 2.0Non-Durables excluding Food	+ 0.6	+ 0.7	+ 1.0Services	+ 1.3	+ 1.4	+ 1.4Services excluding Shelter	+ 1.9	+ 2.1	+ 2.0
The clothing and health and personal care indexes also showed increases. In the latter ca,se, higher fees for medical, dental and optical services and prepaid medical care raised the cost of health care by about three per cent. This increase, in turn, was largely responsible for the increase in the services index excluding shelter. As in recent years, the increases in the price of all services were moderate.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
Canada's international payments position continued to improve during 1963. From the peak deficits of about $1.5 billion of 1957 and 1959, the deficit on current account was reduced to $848 million in 1962. In 1963, the deficit was further reduced to $521 million.
In the first and second quarters of 1963, the current account deficits were substantially below those of the preceding year. There was a small surplus on current account in the seasonally favourable third quarter and the picture in the fourth quarter was quite favourable. These improvements in the course of 1963 were accounted for by larger trade surpluses but there was also some further improvement on travel account.
The continued improvement in merchandise trade reflects the effect of several economic forces upon the level of exports and imports. Industrial activity in Canada and abroad, investment patterns, the relative changes in domestic and foreign prices and costs, the exchange rate changes, other government policies, have all affected Canada's international trade position. In the final quarter of the year shipments of wheat to Russia got under way in fulfilment of a very large contract signed in September. The amounts shipped in that quarter contributed significantly to the decline in the current account deficit for 1963.
An improvement on travel account during 1963 offset increased net payments for other non-merchandise transactions, and the deficit on non-merchandise transactions remained virtually unchanged at $1,005 million.
On the capital side, it will be recalled that the net inflow of long-term capital virtually disappeared in the first half of 1962, then resumed sharply in the last half of the year. This renewal of a substantial long-term capital inflow continued into the first half of 1963, in part attributable to special borrowings by the federal and Quebec governments. Most of this inflow was accounted for by security

[Stage Direction]
INTERNATIONAL PAYMENTS: CURRENT ACCOUNT
-	1959	1960	1961	1962	1963
		(Millions of dollars)			
Current Receipts-	6,364	7,064Merchandise exports (adjusted)	5,150	5,392	5,889	Gold available for export	148	162	162	165	166Travel expenditures	391	420	482	560	602Interest and dividends	182	173	209	211	228Freight and shipping	420	442	486	498	550Inheritances and immigrants' funds	109	102	103	124	149Other current receipts	392	419	403	426	444Total Current Receipts	6,792	7,110	7,734	8,348	9,203Current Payments-	5,716	6,209	6,580Merchandise imports (adjusted)	5,572	5,540	Travel expenditures	598	627	642	610	589Interest and dividends	671	653	770	781	842Freight and shipping	525	533	568	588	635Inheritances and emigrants' funds	165	181	174	163	182Other current payments	765	819	846	845	896Total Current Payments	8,296	8,353	8,716	9,196	9,724Balance on Merchandise Trade	-422	-148	+173	+155	+484Balance on other Transactions	-1,082	-1,095	-1,155	-1,003	-1,005Current Account Balance	-1,504	-1,243	-982	-848	-531
Note: Mutual Aid to NATO countries is not included.

The Budget-Appendix
transactions. New offerings of securities declined in the second quarter as interest rate spreads vis-a-vis the United States narrowed. Early in the third quarter the United States President proposed the Interest Equalization Tax and new security offerings in the United States by Canadian borrowers virtually stopped. For the third quarter as a whole, the net capital inflow in long-term forms declined to 134 million from levels of $373 million and $200 million in the first and second quarters respectively. In the final quarter of the year, net of retirements, there was a small capital outflow in long-term forms.
Movements of short-term capital during 1962, reflecting speculative influences, had been quite sharp and large. During 1963, the net movements in short-term capital were much smaller, with outflows in the form of increased resident holdings of foreign liquid assets such as bank balances being more than offset by an inflow of other short-term capital. In the final quarter of the year, there was an inflow of short-term capital of $159 million.
Early in January, 1963, the Government of Canada received the second half of the proceeds of the U.S. $250 million loan arranged in the United States in September, 1962. This U.S. $125 million accounted for the rise of approximately the same size in Canadian reserves from the end of December, 1962 to the end of January, 1963. From the end of January, 1963, to the end of June, 1963, there was no appreciable change in reserves. The net capital inflows which occurred during this period were just sufficient to cover the current account deficit. In the third quarter there was a reduction in official holdings of gold and United States dollars amounting in terms of U.S. dollars to $124 million, of which $80 million represented a partial repayment to the International Monetary Fund of Canada's $300 million U.S. borrowing at the time of the exchange crisis in June, 1962. In the fourth quarter of the year, the deficit on current account was more than offset by an inflow of short-term capital and reserves increased by $28 million.

[Stage Direction]
SUMMARY OF BALANCE OF PAYMENTS (Data not seasonally adjusted)
IQ | 2Q | 3Q
4Q
1963 Prelim.
IQ | 2Q | 3Q | 4Q
(Millions of dollars)
Merchandise Trade Balance		- 7	- 45	+ 69	+138	+ 70	+ 72	+144	+198
Deficit on Non-Merchandise Trans-								
actions	-326	-317	-103	-257	-308	-261	-130	-306Current Account Balance	-333	-362	- 34	-119	-238	-189	+ 14	-108Capital Movements:	Long-Term Forms	+ 5	- 29	+238	+458	+373	+200	+ 34	- 23Short-Term Forms	- 46	-243	+482	+ 139	- 69	+100	-107	+159Change in official holdings of gold	and foreign exchange expressed	in Canadian dollars	-364	+114	+686	+ 101	+ 66	+111	-145	+ 28Net International Monetary Fund	Position	- 10	-367	+ 86	Special international financial	assistance	-381	+377	
-374	-634	+686	+478	+ 66	+111	- 59	+ 28
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The Budget-Appendix
A more detailed exposition of these developments follows:
Current Account
The improvement in Canada's current international position by approximately $1 billion, from a peak deficit of $1.5 billion in 1959, has been of basic importance to the improvement in the Canadian economy.

[Stage Direction]
-	Merchandise Trade	Non- Merchandise Trade	Current Account Balance
	(Millions of dollars)		
1949	+293	-116	+1771950	+ 10	-344	-3341951	-147	-370	-5171952	+489	-325	+ 1641953	- 58	-385	-4431954	+ 13	-445	-4321955	-211	-487	-6981956	-728	-638	-1,3661957	-594	-861	-1,4551958	-179	-952	-1,1311959	-422	-1,082	-1,5041960	-148	-1,095	-1,2431961	+173	-1,155	-9821962	+155	-1,003	-8481963	+484	-1,005	-521
The reduction in the size of the current account deficit reflects primarily an improvement on merchandise account. In 1959, the deficit on merchandise trade amounted to $422 million; in 1963 there was a trade surplus of $484 million. Since 1959, the deficit on non-merchandise transactions, which runs about $1 billion annually, has been reduced by about $75 million. Travel expenditures have improved markedly in recent years, moving from a deficit of over $200 million in 1960 to a surplus of $13 million in 1963. This improvement has been partially offset by increased payments on other transactions, which are not generally susceptible to much reduction over short periods of time, or may even increase.
An increase in 1963 of 11 per cent in the value of merchandise exports more than offset a rise of 6 per cent in the value of merchandise imports, and resulted in an improvement of some $329 million in Canada's balance of trade. The trade surplus in 1963 advanced to $484 million, from $155 million in 1962. On a quarterly basis, and allowing for seasonal factors, the trade surplus remained at the high level of the fourth quarter of 1962 throughout the first half of 1963. It was reduced in the third quarter as a result of some increase in merchandise imports and a small reduction in merchandise exports (seasonally adjusted). In the fourth quarter of the year, however, there was a substantial surplus on merchandise account associated with the large movement of wheat to Russia.
A large part of the increase in merchandise exports in 1963 was accounted for by increased shipments of wheat. Significant gains also occurred in sales of lumber, iron ore, aluminum, wood pulp and agriculture machinery. Smaller gains were recorded in exports of semi-processed steel, fertilizers, railway locomotives, motor vehicles and parts, non-agricultural machinery and petroleum and natural gas.

The Budget-Appendix

[Stage Direction]
-										1
-	IMPORTS	SURPLUS	7-	i^^^*DEF|C	~JT	--	\EXPO	RTS	-'Ll 1 1 1353	-LI 1 1954	-LI. 1 ! 1955	JJ 1	INI	-1 1 1	INI	1 1 1	INI	1 1 1	-LL1*T
' * SEASONALLY ADJUSTEO AND AT ANNUAL RATES * ESTIMATE
The value of merchandise imports of automobile parts increased substantially along with imports of raw sugar, farm equipment, tractors and crude petroleum. This was partially offset by lower imports of automobiles, cotton and its products, farm machinery and electrical apparatus.
Geographically, the improvement in the balance on merchandise trade originated from increased surpluses with the United Kingdom and "all other" countries. There was a slight increase in the trade deficit with the United States.

[Stage Direction]
Exports	Imports	Trade Balance	Percentage Change	1962 | 1963	1962 | 1963	1962 | 1963	Exports | Imports	United States	
United Kingdom	
Other Countries	
Total	3,742 924 1,698	3,952 1,017 2,095	4,217 575 1,417	(Million 4,464 525 1,591	s of dolls -475 +349 +281	irs) -512 +492 +504	+ 5.6 +10.1 +23.4	+ 5.9 - 8.7 +12.36,364	7,064	6,209	6,580	+155	+484	+11.0	+ 6.0
In 1963, the price index of exports increased only slightly in contrast to an increase of about 3 to 4 per cent in import prices, causing some deterioration in Canada's terms of trade.
The behaviour of the merchandise account, in the current business expansion, has been unusual. Normally, some deterioration might have been expected to
[Stage Direction]
The Budget-Appendix
take place as the expansion progressed, but the merchandise account has in fact shown some improvement. The share of merchandise imports in Gross National Expenditure has not increased during the present business expansion, as had been typical of earlier expansions.

[Stage Direction]
-	Per cent
	16.5
	17.4
	19.4
	16.0
	16.8
	15.7
	16.7
	18.2
	17.2
	15.4
	16.0
	15.3
	15.3
	15.4
	15.3
	
(') Preliminary.	
The trend of imports in the current upswing has been affected by a number of factors, including the devaluation of the Canadian dollar, the temporary import surcharges, the pattern of demand, and changes in the structure of the Canadian economy.
Following the imposition of the temporary import surcharges in June, 1962, substantial reductions occurred in the value and volume of imports. Although the surcharges were imposed at the end of the second quarter of 1962, imports (seasonally adjusted) increased in the third quarter. This can be partly related to the delivery of orders of investment goods and industrial materials placed during the period of uncertainty surrounding the devaluation of the Canadian dollar and the exchange crisis in June. In the fourth quarter of 1962, imports of goods declined, remained at the lower level in the first quarter of 1963 and, following the final removal of surcharges on April 1, 1963, rose in the second, third and fourth quarters of 1963. Following the removal of the surcharges, the renewed growth in the volume of imports does not seem to be out of line with the growth of real output and demand.
While the value of merchandise imports in 1963 was some 18 per cent higher than in 1956, the volume increased slightly, as import prices were about 15 per cent higher. Over the same period, the value of merchandise exports rose by about 46 per cent; in volume terms the increase was about 37 per cent, as export prices averaged about 7 per cent higher in 1963 as compared with 1956, The deterioration of Canada's terms of trade over this period reflected the relative weakness in prices of resource products compared to manufactured products. Canada's exports are dominated by resource products while her imports consist largely of manufactured goods. In the course of 1963, the world price of many resource products began to strengthen.	[DOT]
Contributing dramatically to the increase in exports from 1956 to 1963 were shipments of manufactured goods such as machinery and parts, electrical apparatus and aircraft and parts. Exports of metals and minerals, and chemicals and fertilizers also rose substantially.

The Budget-Appendix

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-	Farm and Fish Products	Forest Products	Metals and Minerals	Chemicals and Fertilizers	Other Manufactured and Miscellaneous	Re- exports	Total1956	1,121	1,496	1,472	183	489	73	4,8341963	1,464	1,824	2,169	268	1,073	182	6,980% increase	+30.6	+21.9	+47.4	+46.4	+119.4	+149.3	+44.4
There have been a number of important factors influencing the expansion of Canadian exports. The recent growth in economic activity in the United States, the United Kingdom, Europe and Japan has led to an increased demand for Canadian exports of non-farm products and especially raw and industrial materials. The recent increase in demand for Canadian farm products has contributed appreciably to the improvement in Canada's balance of trade.
There are other important factors, more directly related to the Canadian economy, which have had important effects on the growth of Canadian exports. The relative stability of costs and prices in Canada at a time when costs in overseas countries have been rising has strengthened the Canadian competitive position and enabled continuing benefits to be derived from the change in the exchange rate in 1961-1962. The substantial expansion in exports of "other manufactured goods" during recent years can, to a large extent, be related to these factors. More positive efforts on the part of Canadian exporters have also contributed, as have improved credit financing and increased trade promotion. Substantial increases in exports of some resource products (iron ore, petroleum and natural gas) have followed from the broadening of Canada's resource base. In 1963, the announcement of a national policy to permit long-term export of major blocks of electric power not required for domestic purposes, and the new

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The Budget-Appendix
measures recently introduced to foster greater production and trade in motor vehicles and parts, are likely to lead to additional improvements in Canada s external trade.
Turning to the non-merchandise account, the modest improvement noted in 1962 was maintained in 1963, and the deficit remained at about $1 billion. Changes in the balance of most components were relatively small, and there was further improvement on travel account.
The non-merchandise account showed a significant improvement in the first and second quarters of 1963 compared to the same periods a year earlier. In the third and fourth quarters the non-merchandise deficit was somewhat above the irregularly low second half of 1962.

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NON-MERCHANDISE ACCOUNT (Seasonally Adjusted at Annual Rates)
Exports
Imports
(Millions of dollars)
Balance

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IQ 1963.. 2Q 1963.. 3Q 1963.. 4Q 1963<'>
1.968 1,972
1.968 2,052
2,876
2,896
3,012
3,064
-924
-1,044
-1,012
W Preliminary.
Canada's travel account has shown continued improvement from a deficit of more than $200 million in 1960 to a small surplus in 1963. Since 1960 the net improvement in the balance on travel account amounted to $220 million and was more than accounted for by an improvement in the balance with the United States.
The following table indicates the pattern on travel account.

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BALANCE ON TRAVEL ACCOUNT All Countries
1954.
1955.
1956.
1958
Receipts	Pay- ments	Balance	-	Receipts	Pay- ments	Balance
		(Millior	s of dollars)			
305	389	-84	1959	391	598	-207328	449	-121	1960	420	627	-207337	498	-161	1961	482	642	-160363	525	-162	1962	560	610	-50349	542	-193	1963	602	589	+ 13
Payments of interest and dividends to non-residents increased by $61 million in 1963 and this was offset to some extent by an increase in receipts of this kind from non-residents amounting to $17 million. In 1963, there was an increase of $29 million in official contributions, mainly due to larger shipments under the Colombo Plan. It will be recalled that contributions to the Colombo Plan had been reduced in 1962. Other changes in the net balance on non-merchandise transactions were small.

The Budget-Appendix
Capital Account
The substantial decline in net capital inflows which occurred in the course of 1963 was attributable both to a lower level of net direct investment in Canada throughout 1963 and to a sharp reduction in the sale of new security issues to non-residents in the second half of the year. In particular, sales of new Canadian bonds to United States residents declined markedly.
The level of such sales had been unusually high in the latter part of 1962, and was even higher in the first quarter of 1963. In early January, the proceeds of the second half ($125 million U.S.) of the Government of Canada's $250 million U.S. 25 year External Loan arranged in September, 1962, were delivered and in February the Quebec Hydro received the first $100 million U.S. of its $300 million issue to finance the purchase of private utilities. (The remaining $200 million U.S. was arranged for delivery in equal $50 million instalments in May and August 1963 and February and May 1964.)
In the second quarter, receipts from new issues remained high at $393 million. Approximately two-thirds of the inflow in that quarter arose from corporate borrowings, with natural gas pipelines, petroleum and finance companies all contributing in important measures.

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INTERNATIONAL PAYMENTS: CAPITAL MOVEMENTS
Direct investment in Canada	
Direct investment abroad	
Canadian securities:
Trade in outstanding bonds and debentures____
Trade in outstanding common and preference
stocks	
New issues	
Retirements	
Foreign securities	
Loans by Gov't of Canada-Drawings	
Repayments	
Change in Canadian dollar holdings of foreigners:..
Deposits	
Government of Canada demand liabilities	
Canadian treasury bills	
Other capital movements	
Net Capital Movement exclusive of change in official holdings of gold and foreign exchange..
Official holdings of gold and foreign exchange
Change in holdings	
Net International Monetary Fund position	
Other special international financial assistance.
1959	1960	1961	1962	1963(Mil	iona of dol	lars)	+550	+650	+520	+555	+210-80	-50	-75	-125	-80+91	+3	+61	+64	+39+110	+51	+39	-116	-169+707	+447	+538	+718	+964-258	-265	-300	-321	-327-33	-19	-34	-70	+20-1	-	-7	-10+34	+32	+37	+129	+25+16	-	+79	+34	-12	+40-	-12	-2	-4	+1-	+56	-58	+4	-27+357	+232	+512	+189	-19+1,493	+1,204	+1,272	+1,004	+667-70	-39	+229	+537	+60+59	-	+61	-377	+86~	-	-4	-
Although deliveries of new securities remained high in the second quarter of 1963, new contracts for deliveries of bonds to U.S. residents fell sharply as Canadian-U.S. interest rate differentials narrowed.

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INTERNATIONAL PAYMENTS: QUARTERLY CAPITAL MOVEMENTS
1962	1963
IQ I 2Q I 3Q I 4Q I IQ I 2Q I 3Q I 4Q (Millions of dollars)
Direct investment in Canada	
Direct investment abroad	
Canadian securities-
Trade in outstanding bonds and debentures	
Trade in outstanding common and preference stocks	
New issues	
Retirements	
Foreign securities	
Loans by Gov't of Canada-Drawings	
Repayments	
Change in Canadian dollar holdings of foreigners:
Deposits	
Government of Canada demand liabilities	
Canadian Treasury Bills	
Other Capital Movements	
Net Capital Movement, exclusive of change in official holdings of gold and foreign exchange	
Official holdings of gold and foreign exchange:
Change in holdings	
Net International Monetary Fund position	
Other special International Financial Assistance	
+114	+ 87	+147	+207	+ 75	+ 40	+ 50	+ 45- 29	- 31	- 25	- 40	- 25	- 25	- 15	- 15- 3	+ 4	+ 39	+ 24	+ 23	+ 27	- 7	- 4- 14	- 44	- 26	- 32	- 56	- 44	- 27	- 42+ 53	+194	+ 85	+386	+411	+393	+109	+ 51- 72	- 71	- 53	-125	- 54	-174	- 34	- 65- 26	- 34	- 7	- 3	+ 3	+ 23	- 4	- 2- 7	-	- 8	- 2+ 3	+ 7	+ 68	+ 51	-	+ 6	-	+ 19- 45	- 13	- 46	+ 92	- 29	+ 38	- 12	+ 43- 3	- 2	- 3	+ 4	-	- 3	- 1	+ 5+ 18	+ 50	- 3	- 61	+ 9	- 17	+ 19	- 38- 37	-419	+551	+ 94	- 53	+ 36	-143	+141- 41	-272	+720	+597	+304	+300	- 73	+136-364	+114	+686	+101	+ 66	+111	-145	+ 28- 10	-367	-	-	-	-	+ 86	--	-381	-	+377	-	-	-	
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The Budget-Appendix
The announcement of the proposed U.S. Interest Equalization Tax on July 18, 1963, led to a virtual cessation of new offerings of securities on U.S. markets, from then until year-end, although deliveries of previously arranged contracts continued in much smaller amounts. The following Table 34 shows what happened:

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Period	Contracts	Deliveries1962-	(Millions 371 372 530 131 28 25	of dollars) 75 370 400 369 104 374Q	1963- IQ	2Q	3Q	4Q

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Period	Canadian Bonds and Debentures	Canadian Common and Preference Stocks	Total	Sales to	Purchases from	Net	Sales to	Purchases from	Net	Sales to	Purchases from	Net(Millions of dollars)	1961-	IQ	80	50	+30	158	146	+12	238	196	+422Q	155	122	+33	208	176	+32	363	298	+653Q	112	123	-11	149	149	-	261	272	-114Q	204	195	+ 9	217	222	- 5	421	417	+ 41962-	IQ	225	228	- 3	249	263	-14	474	491	-172Q	192	188	+ 4	192	236	-44	384	424	-403Q	121	82	+39	114	140	-26	235	222	+134Q	162	138	+24	138	170	-32	300	308	- 81963-	IQ	67	44	+23	124	180	-56	191	224	-332Q	85	58	+27	131	175	-44	216	233	-173Q	39	46	- 7	75	102	-27	114	148	-344Q	48	52	- 4	85	127	-42	133	179	-46+-capital inflow.	- =capital outflow.
Trade in outstanding Canadian common and preference stocks, which over the decade of the 1950's had resulted in net sales of shares to foreigners, changed during 1961, and in the latter half of that year resulted in a small net purchase by Canadians. The change continued in 1962, and net purchases totalled $116 million in that year. During the first half ot 1963 the net purchases by Canadians rose to $100 million but declined to $69 million in the second half of the year.
United States residents, *who on balance had been net purchasers of outstanding Canadian stocks until the second half of 1962, were heavy net sellers of
20220-67J
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The Budget-Appendix
these securities in the late few months of 1962 and the first half of 1963. Iset purchases by Canadians from United States residents were somewhat smaller in the second half of 1963 than they had been in the first half of that year.
The gross trade in outstanding Canadian stocks with residents of the United States (i.e., sales plus purchases), which had risen sharply in the latter part of 1961 and the early part of 1962, declined again in the latter part of 1962 to a level which was maintained in the first half of 1963. Both sales to and purchases from United States residents declined noticeably in the second half of 1963.
The net inflow of capital resulting from trade in outstanding Canadian bonds and debentures was $39 million in 1963, about $25 million lower than it had been in 1962 and 1961. These annual figures mask considerable changes within the years. All of the net inflow in 1962 occurred in the second half of the year. In 1963 a net inflow of $50 million in the first half of the year was succeeded by a small net outflow in the second half.

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Period	Canadian Bonds and Debentures	Canadian Common and Preference Stocks	Total	Sales to	Purchases from	Net	Sales to	Purchases from	Net	Sales to	Purchases from	Net(Millions of dollars)	1961- IQ 	45	27	+18	111	90	+21	156	117	+392Q 	123	90	+33	157	111	+46	280	201	+793Q	101	92	+ 9	113	90	+23	214	182	+324Q	169	155	+14	173	141	+32	342	296	+461962- IQ 	203	210	- 7	204	188	+16	407	398	+ 92Q	158	131	+27	154	158	- 4	312	289	+233Q 	104	62	+42	83	88	- 5	187	150	+374Q	129	108	+21	103	121	-18	232	229	+ 31963- IQ 	43	24	+19	83	113	-30	126	137	-112Q	40	18	+22	76	105	-29	116	123	- 73Q	19	25	- 6	37	51	-14	56	76	-204Q	19	19	42	67	-25	61	86	-25+ = capital inflow.	- = capital outflow.
Changes in trade in outstanding Canadian bonds with residents of the United States were particularly marked. A net inflow resulting from this trade of more than $60 million in the second half of 1962 fell to just over $40 million in the first half of 1963, and disappeared entirely in the second half of 1963.
Gross trade in outstanding Canadian bonds and debentures was even more volatile than changes in net sales or purchases. Total sales to and purchases from United States residents, which had been $265 million in 1960, rose to $804 million in 1961, and to $1,103 million in 1962. By the first half of 1963 they had already dropped to $125 million, or to roughly the same level as in 1960. During the latter half of 1963 they shrank to about $80 million.
There has been much less change in the trade in outstanding foreign securities between Canadians and non-residents. Gross trade in these securities, at

The Budget-Appendix
some 1800 million in 1963, was somewhat higher than it had been in 1962. However, in 1963 this trade resulted in a new inflow of capital of some $40 million, while in 1962 it had resulted in an outflow of $74 million.
Direct investment in Canada in 1963 amounted to $210 million, considerably lower than the amount of $555 million recorded in 1962. During 1962 there had been substantial inflows for the acquisition of existing businesses and refinancing. Inflows for this purpose were negligible in 1963. Petroleum and natural gas, and mining were the industries attracting the largest part of direct investment inflows, but on a reduced scale. The outflow of Canadian capital for direct investment abroad amounted to $80 million compared to an outflow of $125 million in 1962.

[Stage Direction]
Period
lies to	Purchases from	Net
(Millions of dollars)		
113	110	+3
123	123	
87	85	+2104	114	-1089	118	-2995	130	-3583	90	-780	83	-379	75	+4132	111	+2188	92	-4127<"	108	+19<*
1961- IQ
2Q
3Q
4Q
1962- IQ 2Q 3Q 4Q
1963- IQ
2Q
3Q
4Q
+ = capital inflow.	- = capital outflow.
[DOT]"Includes some switch transactions, for which the corresponding purchase is reported as a new issue.
On balance in 1963 net short-term capital flows were relatively small in contrast to the very sharp movements which had taken place during the course of 1962. Different movements of particular components within the total of short-term capital tended to be offsetting. An outflow amounting to $252 million in resident acquisition of foreign bank balances in 1963 was more than offset by an inflow of $335 million in other items of short-term capital.
In general, periods of strength on capital account coincided with periods of weakness in the current account of the balance of payments, and vice versa. Consequently, movements in Canada's holdings of official reserves were, for the most part, relatively modest. Operations in the forward exchange market contributed to this relative stability as well as to restraining movements of short-term capital on a covered interest arbitrage basis.
The sole exception to this relative stability during 1963 was the drop in reserves of almost $200 million in July, partly as a result of losses incurred at the time of the announcement of the proposed U.S. Interest Equalization Tax and partly as a result of the repayment of U.S. $79.7 million against the Canadian drawing from the International Monetary Fund in June 1962.
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The Budget-Appendix
Monthly totals of official reserves are shown in Table 38.

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End of Period	Gold	U.S. Dollars	Total
	(Millions of U.S. Dollars)		
1Qfi9 Nnv. 	702.3	1,905.2	2,607.5708.5	1,830.9	2,539.41963 Jan. 	714.4	1,948.1	2,662.5Feb 	725.4	1,868.5	2,593.9732.1	1,868.0	2,600.1738.7	1,932.7	2,671.4746.4	1,965.6	2,712.0754.6	1,937.0	2,691.6762.0	1,739.0	2,501.0767.8	1,702.7	2,470.5774.7	1,793.6	2,568.3784.4	1,797.0	2,581.4799.5	1,831.5	2,631.0817.2	1,777.8	2,595.0
The movements in the value of the Canadian dollar expressed in U.S. funds are shown in the accompanying chart. For convenience, the chart shows the parity established for the Canadian dollar (92.5c U.S.) on May 2, 1962, and the 1 per cent range within which the rate must be kept under the Bretton Woods Agreements Act. It can be seen from the chart that, since the parity was set, the rate in the market has for most months averaged slightly above par. Daily movements of the exchange rate have, on occasion, been sharper than the monthly averages suggest (the movements on July 18-19, 1963, were an example of this).


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The broad monthly movements in the course of 1963 reflect a wide variety of factors, including seasonal movements in the current and capital accounts, changes in official holdings and the financing of trade, to name but a few. The chart does show the influence of the substantial long-term net capital inflow in the early part of 1963, the effect of the announcement of the proposed U.S. Interest Equalization Tax in July, and the signing of the large wheat contract with the U.S.S.R. in September. At the close of 1963, the spot rate of the Canadian dollar was at the 92.5c U.S. level.

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From a broad economic point of view, the nation's production of goods and services is either consumed in the period in which it is produced, or is invested in additions to the nation's capital assets. At the same time, additions to the nation's savings are equivalent to the amounts of income which are not consumed currently. Accordingly, the nation's savings, generated by its economic activities in any given period, are matched by a corresponding increase in its investment.
The nation's investment is represented by domestic physical assets (housing, business plant and equipment and inventories). In addition, the nation's claims on the resources of other countries properly count as additions to its wealth and increases in claims by other countries must be counted as a deduction. Hence, the nation's surplus (or deficit) on current international account, which gives rise to changes in claims on foreigners, or on the nation by foreigners is counted as part of total national investment. These relationships are portrayed in Tables 39 and 40.
Table 40 shows the total saving generated in the economy by persons, businesses and governments, on a national accounts basis. It should be noted that, in these accounts, fixed investment outlays by government departments are treated as current expenditure in the year the investment occurs. Consequently, governments' current expenditures appear higher and the governments' surplus (or deficit) position is correspondingly lower (or higher) than if these expenditures were capitalized in the national accounts on the same basis as business investment. It should also be noted that the total of national savings in these accounts appears lower as a result of this accounting treatment.
Table 40 does not portray or elaborate the flows of funds between the different sectors of the economy. Some of the financial mechanism by which the needs of borrowers are matched against the funds of savers is described in a later section.
Table 39 shows the disposition of saving. One of the important developments in 1963 was an increase in gross domestic investment in Canada, over the preceding year. At the same time the deficit on current account with non-residents declined significantly, giving rise to a smaller increase in claims by foreigners on Canadian resources.

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1959	1960	1961	1962	1963('>
^ IQ | 2Q | 3Q *	Business gross fixed capital formation	
Value of physical change in inventories	
Surplus (+) or deficit (-) on current account with non-residents	
Residual error	6,894 357 -1,448 31	6,692 361 -1,164 98	(MU 6,635 - 144 -911 150	ions of do! 6,954 565 -809 221	lars) 7,056 508 -572 224	7,268 400 -336 144	p It <Q S- 7,376 600 -748 S 156 ^Total	5,834	5,987	5,730	6,931	7,216	7,476	7,384 &
(''Seasonally adjusted at annual rates.

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1959	1960	1961	1962	1963<'>	IQ 1	2Q	3Q(Millions of dollars)	Personal saving	1,357	1,539	1,509	2,331	2,348	3,156	2,420Business gross saving-total	5,185	5,338	5,343	5,723	5,988	5,760	6,140(a) Undistributed corporation profits	986	873	778	979	980	1,144	1,148(b) Capital consumption allowances and miscellaneous valuation adjustments	4,204	4,459	4,539	4,755	4,820	4,844	4,848(c) Adjustment on grain transactions(2)	-5	6	26	-11	188	-228	144Inventory valuation adjustment	-122	- 80	- 67	-132	-144	-296	-148Government surplus (+) or deficit (-)	-556	-711	-905	-770	-756	-1,000	-876Federal	-827	-2S8	-453	-474	-420	-572	-148Provincial and Municipal	-229	-47S	-452	-296	-336	-428	-728Residual error of estimate	- 30	- 99	-150	-221	-220	-144	-152Total	5,834	5,987	5,730	6,931	7,216	7,476	7,384
(''Seasonally adjusted at annual rates.
<*>
Accrued earnings arising out of operations of the Canadian Wheat Board.
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The Budget-Appendix
The changes in national saving to match this increase in national investment are shown below:

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___________________________________ 1962
Domestic Investment	
Reduction in Current Account Deficit
Total	
+ 0.2 + 0.4
+ 0.6
Personal Net Saving	
Business Gross Saving	
Federal Government (Reduction in Deficit)	
Provincial Governments and Municipalities (Increase in Deficit)
+ 0.3 + 0.3 + 0.2 - 0.2
Total
+ 0.6
d>
Average of first three quarters seasonally adjusted at annual rates, rounded to nearest $.1 billion.
As was noted in the section on the International Balance of Payments, the reduction in the deficit on current account in 1963 was almost matched by a reduction in the net inflow of capital from abroad, as changes in official holdings of exchange reserves were small. The lower level of net capital inflow in 1963 was more than offset by higher levels of the nation's saving, and domestic investment was correspondingly higher.
Similarly, the higher level of personal saving noted in the section on Personal Income and Disposition is revealed in Tables 40 and 41.

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BILLIONS OF DOLLARS	BILLION! OF DOLLARS

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-	1959	1960	1961	1962	1963<>>
IQ | 2Q | 3Q	Corporation profits before taxes including dividends paid to non-residents	
Deduct: Corporation income tax liabilities	
Excess of tax liabilities over collections	3,504 1,581 156 1,425	3,359 1,562 -104 1,666	(Mil 3,460 1,612 61 1,551	ions of do! 3,824 1,750 95 1,655	lars) 3,984 1,816 104 1,712	4,120 1,864 116 1,748	4,028 1,788 -64 1,852
1,923 937 986	1,797 924 873	1,848 1,070 778	2,074 1,095 979	2,168 1,188 980	2,256 1,112 1,144	2,240 1,092 1,148
							
							
							
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("Seasonally adjusted at annual rates.
The Budget-Appendix

The Budget-Appendix
Business gross saving, in the form of larger undistributed corporation profits and capital consumption allowances, as set out in Table 40 (all figures at annual rates) rose by $332 million in the first nine months of 1963, over a year earlier Table 42 shows the year-to-year movement in corporate profits. Profits before taxes increased by $268 million in the first nine months of 1963 over the preceding year. The largest increases in profits in the current upswing have been made in the manufacturing industries where, as noted earlier, gains in output, have been substantial and where sales have increased in both domestic and foreign markets. Dividend payments showed a moderate increase in the first nine months of 1963. After payment of dividends, undistributed profits increased by $152 million in the first nine months of 1963 over the preceding year. Capital consumption allowances (based generally on amounts reported to government by businesses) also increased by $130 million. The deficit on combined Government Account, on a national accounts basis, in the nine months 1963-1962 comparison was higher by $74 million. The deficits of provincial governments and municipalities rose by $245 million, and this was offset to a considerable extent by a reduction of $171 million in the deficit of the federal government.
During 1963 credit conditions were such as to facilitate the continued advance in economic activity. The impact of special events was of particular importance to capital markets within the year. During the first half of 1963 interest rates continued to decline from the very high level to which they had climbed at the time of the exchange crisis in June, 1962. In this period, the interest rate differential between Canadian and United States interest rates was declining, and new offerings of Canadian foreign-pay securities were also declining from the abnormally high levels of the fourth quarter of 1962 and the first quarter of 1963.


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Weekly - Per Cent
6
2
1 DIFFERENTIAL
1962
1963	64
20220-6SJ
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The Budget-Appendix
On July 18, 1963, the President of the United States, in a special message to Congress on the balance of payments, proposed an interest equalization tax which would be effective immediately. The purpose of the tax was to check the increasing outflow from the United States of certain long-term investment capital. It was to be in the form of an excise tax, varying from 2.75 to 15 per cent on the value of debt obligations and 15 per cent on the value of equities purchased from foreigners by United States citizens and residents and to remain in effect until the end of 1965. The tax would have the effect of increasing the annual interest cost on such issues by about 1 percentage point.
The announcement produced a crisis in Canadian capital and exchange markets. A degree of equilibrium was restored when the administration on July 21 agreed to seek from Congress power for the President to exempt new Canadian issues from the tax. At the same time, the Canadian authorities stated that it would not be the desire or intention of Canada to increase her foreign exchange reserves through the proceeds of borrowings in the United States. The negotiation in September of a very large contract for the sale of wheat to the U.S.S.R. imparted a feeling of confidence in the immediate balance-of-payments outlook which was reflected in Canadian capital markets.

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1.	Jon. 15, 1975-78
2.	3!4% Jun* 15, 1978-83
The continued uncertainty surrounding the proposed interest equalization tax in the United States virtually eliminated any new long-term borrowing in the United States. Trade in outstanding securities, both Canadian and U.S., was sharply reduced in volume and, on balance, led to some outflow of capital from Canada in the latter half of 1963. These circumstances were reflected by an underlying sense of uneasiness which persisted in Canadian capital markets

The Budget-Appendix
through the last half of 1963. The gross volume of new market issues of securities was reasonably well maintained, especially in the fourth quarter of the year. The net volume of new market issues, after deducting retirements, was lower than in the same period in recent years.
It is against the foregoing background that financial developments in 1963 are analyzed.
Demands for funds on security markets and from banks were somewhat lower in 1963 than in 1962. Despite a decline in net capital inflow from abroad for 1963 as a whole, compared with the previous year, the financing needs of business, government, and consumers were met without much net change in the level of interest rates from the beginning to the end of the year. The increases in business fixed investment in 1963 were more or less in line with those of general business activity. Higher levels of retained earnings and depreciation allowances, along with the retirement of a substantial amount of stocks of the'privately owned hydro companies in Quebec, led to a decline in net demand for outside financing by the business sector. Demands for funds by all levels of government were somewhat higher than in 1962, reflecting in part higher deficits by provincial governments and municipalities and, in part, the acquisition of certain assets.

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The Budget-Appendix
The supply of funds was ample for the needs of domestic financing, and movements of interest rates within 1963 reflected, in large part, the special circumstances outlined earlier. Chartered bank assets, which had contracted sharply during the summer of 1962, at the time of the exchange crisis, began to increase strongly by the autumn of 1962. Initially, this represented a rebuilding of chartered banks' liquidity, in the form of security holdings, and as the general public built up its liquid holdings, in the form of bank deposits. Later, the demands for bank loans began to rise, reflecting consumer borrowing to finance higher levels of consumer purchases (in particular durable goods); and increased demands by business. Business demand for loans was associated with some increase in inventory holdings, as well as temporary financing, during the period of postponement of some domestic-pay issues, related to the interest equalization tax.
In total, the money supply (currency and chartered bank deposits) rose by less than 13 per cent in the two-year period ending December 31, 1963. The rise in G.N.P. over a comparable period was about 14 per cent (4th Quarter 1961 to 4th Quarter 1963).

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Interest rates remained below past peaks throughout 1963. From the level of 6 per cent established in June, 1962, at the time of the exchange crisis, the bank rate had been progressively reduced to 4 per cent by November, 1962, and was further reduced' to 3i per cent in May, 1963. This movement was in harmony with market rates. Following an increase in the U.S. rediscount rate in July, 1963, and some rise in Canadian market interest rates, the bank rate was raised to 4 per cent in August, at which level it continued through the rest of the year. Since May of 1963, Canadian-U.S. interest spreads have been such as to provide little or no incentive for U.S. short-term funds to flow into Canada. At the end of 1963 Canadian interest rates showed less increase over their levels at the start of the economic upswing in 1961 than in the previous two business cycles.

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NET CHANGES IN SECURITIES^) AND BANK LOANS<* OUTSTANDING
1960	1961	1962	1963	1962	1963	1st half	2nd half	1st half	2nd half(Millions of dollars)	Government of Canada	Securities(3)	669	1,110	787	982	-371	1,158	331	650Provincial Governments	Securities^1)	479	936	693	908	285	408	623	284Bank loans	89	- 82	- 17	19	- 22	6	- 2	20Sub-total	568	854	677	926	26S	41S	622	S05Municipal Governments	Securities	283	208	189	238	82	107	136	102Bank loans	- 14	30	- 3	57	45	- 48	33	24Sub-total	869	239	186	296	127	59	169	127Private Canadian Borrowers	Corporate Bonds	332	349	421	578	271	149	482	96Corporate Stocks'5)	172	224	333	-124	140	193	-252	128Finance Co. Notes	7	- 51	179	174	87	92	136	38Bank loans to Business and Instalment Finance Companies....	98	205	526	334	704	-178	110	224Sub-total	609	727	1,459	962	1,203	256	475	487Call and Day-to-day Loans	70	35	137	- 85	-167	304	-201	116Other Bank Loans(8)	224	182	224	235	129	96	17	218Sub-total (Private)	90S	944	1,820	1,112	1,165	655	291	821Total	2,410	3,147	3,469	3,316	1,183	2,286	1,412	1,904
(^Includes Canadian and foreign pay issues.
<2>Includes only Canadian dollar bank loans.
<3>
Direct and guaranteed securities held outside Government Accounts.
^Includes securities guaranteed by provinces.
<6>Excludes chartered bank stock issues.
(#)Insured mortgage loans and all other chartered bank loans in Canadian currency not included elsewhere.
s
>
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o
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The Budget-Appendix
Demands For Funds
Table 43 summarizes the changes in net demands for funds, in the form of all security issues and bank loans in Canadian currency by the major classes of borrower.
Demand for funds totalled $3.3 billion in 1963, about $150 million below
1962	and about $170 million higher than in 1961, the first year of the current business expansion.
Net new issues of federal government securities held outside government accounts totalled $982 million in 1963, compared to $787 million in 1962. Although the federal government deficit, on the national accounts basis, was reduced in
1963	by about $150 million from the 1962 level, the federal government accumulated various assets, notably cash, which added to the demand for funds. At the end of 1963, federal government cash balances were about $350 million higher than a year earlier. In 1963 the increase in Government of Canada debt held outside government accounts, less additional cash balances of the Government, totalled $625 million. In 1962 the increase amounted to $808 million.

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1. Excludes securities involved in special currency arrangements between the Bank of Canada and other central banks
Borrowings by provincial governments totalled $926 million in 1963. This total included funds raised in connection with the nationalization of the hydroelectric companies in Quebec during the year, when a net amount of $356 million of privately-held stocks were retired. In 1962, funds raised had totalled $677 million. Municipalities raised $296 million from security markets and through

The Budget-Appendix
bank loans in 1963, well above the $186 million raised in 1962. The total of $1.2 billion raised by provinces and municipalities in 1963 (which includes funds raised in connection with the takeover of private hydro-electric utilities) reflects the higher level of deficit, on the national accounts basis, which in the first three quarters of 1963 averaged $497 million seasonally adjusted at annual rates, and borrowings for some provincially- and municipally-owned utilities. In 1963, outlays by these governements and their owned utilities on new capital investment totalled $2.4 billion, a substantial part of which was financed through borrowings.

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-	1962	1963	ChangeEnterprises	(M 674 543 927	illions of dolla 784 578 1,008	rs) +110 + 35 + 81Institutions	Government Departments	Total	2,144	2,37*	+22®
Net demand for funds by private borrowers was $1.1 billion in 1963, about $700 million less than in 1962. As already noted, $356 million of this reduction represents the net retirement of privately-owned stocks of hydro-electric companies in Quebec. In the preceding section on Disposition and Source of Saving, the changes in flows of internally generated business funds and in levels of physical investment had been noted. In the first three quarters of 1963, domestic business investment (including the non-corporate sector) was $.2 billion higher than in the corresponding period of 1962 while the flow of business saving (retained earnings and depreciation allowances) was about $.3 million higher.
The following table shows who acquired the financial assets created by the new security issues and bank loans described above.
The table highlights a number of developments that occurred in 1963. The increase in bank loans was less in 1963 than in 1962, although there was a considerable acceleration in the last half of the year. In the third quarter of 1962, the general public had bought a considerable quantity of marketable Government of Canada securities from the banking system. This pattern was reversed in the fourth quarter of 1962 and in 1963, with the banking system buying market issues from the general public, in exchange for bank deposits. At the same time, the banking system built up its own liquidity through the acquisition of securities. The proportion of bank assets in cash, day and call loans, Government of Canada treasury bills and bonds, and other liquid assets rose from 34.1 per cent at the end of 1962 to 35.4 per cent at the end of 1963. Almost one-half of the increase in holdings of Canadian securities by the banking system had as its counterpart

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1900	1961	1962	1963	1962	1963	1st half	2nd half	1st half |	2nd half(Millions of dollars)	Chartered banks and Bank of Canada	Canadian securities	262	940	-262 |	761	-162	-100	477	284Chartered bank loans	407	370	868	560	688	179	- 43	604Total	729	1,310	606	1,321	526	80	433	888Non-bank holders	997Currency and bank deposits*1*	711	1,257	520	1.389	333	187	391	Other net liabilities of banking systems(2)	17	53	86	- 68	193	-108	42	-110Sub-total*8*	729	1,310	606	1,321	526	80	433	888Canadian securities	1,681	1,837	2,863	1,994	657	2,206	979	1,016Total	2,410	3,147	3,469	3,316	1,183	2,286	1,412	1,904of which: Government of Canada	-264	-100	456Chartered bank and Bank of Canada deposits*1*	96	84	- 23	357	241	Public in Canada*4*	1,163	-236	389Government of Canada securities	269	232	1,026	152	-138	Other Canadian securities	1,050	1,341	1,489	1,316	679	810	692	623Sub-total: Canadian securities	1,319	1,573	2,514	1,468	542	1,972	456	1,012Currency and chartered bank deposits*1*	541	1,134	577	993	161	416	481	512Other net liabilities of banking system	17	53	86	- 68	193	-108	42	-noTotal	1,877	2,760	3,177	2,393	896	2,281	979	1,415Non-Residents	88	142	- 30Government of Canada securities*6*	86	11	123	112	35	Other Canadian securities	276	253	226	415	80	146	381	34Sub-total: Canadian securities	362	264	349	527	115	234	523	4Canadian bank deposits	74	39	- 34	39	- 69	35	11	29Total	436	303	315	565	46	268	533	32
**>
Includes only Canadian Dollar Deposits.
*s)Balancing item.
*8>Equals total holdings of securities and loans by banking system as above. *4>
Excludes holdings by the chartered banks.
1070	HOUSE OF COMMONS
The Budget-Appendix

The Budget-Appendix
increased cash balances of the Government of Canada, which rose by $357 million during 1963.

[Stage Direction]
1.	Excludes holdings of Government accounts
2.	Excludes changes in connection with special currency arrangements between the Bank of Canada and other central banks
The figures on non-resident holdings of these Canadian market assets do not include direct investments, the net inflow of which was about $.3 billion lower in 1963 than in 1962.
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The Budget-Appendix
Housing Finance
Housing starts totalled 148,600 in 1963, an increase of 14.3 per cent from those in 1962 and the second highest annual total on record. Most of the increase in starts occurred in multiple dwellings which rose 28.4 per cent from 55,652 in 1962 to 71,466 in 1963. Single dwellings rose 3.6 per cent from 74,443 to 77,158. Seasonally adjusted, the trend in starts of multiple dwellings was buoyant during most months of the year. Single dwelling starts followed the fairly flat trend of recent years during the first three quarters of 1963 but increased dramatically in the final quarter. The strength in housing activity, especially during the latter months of the year, reflected the availability of private and public mortgage funds and Government measures.
A number of factors were of significance to the housing market in 1964. On June 10 the Government announced a winter housebuilding incentive programme consisting of a $500 direct payment to the first purchaser or owner of any house substantially built during the four months from December 1963 to March 1964. On June 13 it was announced that down payments on N.H.A. insured houses would be reduced and loans values increased, in terms of both an increased ratio of loan to lending value of a house, as well as in the maximum loan available. The Budget contained provisions for removing the exemption for building materials from the general sales tax. A sales tax of 4 per cent has been applicable since June 14; the remaining 7 per cent is to go into effect in two stages with 4 per cent on April 1, 1964 and 3 per cent on January 1, 1965. The N.H.A. rate was reduced from 65 per cent to 6? per cent, effective June 14. This action was taken against a background of previously declining market yields, and a good supply of private funds for N.H.A. mortgages.

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Source of Financing	I960	1961	1962	1963Loans Under NHA Direct CMHC Loans	1,380 12,408	3,551 20,301	1,943 13,690	1,829 19,384
Total CMHC					
	13,788	23,852	15,633	21,213
Approved Lenders				
	77 13,702 5,144	16 19,988 15,330	5 18,190 13,595	3 16,256 12,246
				
				
				
	18,923	35,334	31,790	28,505
Conventional Institutional Loans				
	25,741 14,375	24,347 13,969	31,684 22,530	41,738 30,245
				
				
	40,116	38,316	54,214	71,983
				
	2,115 1,830 32,086	1,993 2,778 23,304	3,004 2,354 23,100	N.A. N.A. N.A.
				
				
				
	36,031	28,075	28,458	26,923
				
	108,858	125,577	130,005	148,624
				
Source: CMHC.	.
^Includes Government loans under the Veterans' Land Act, the Farm Credit Act, and loans for Urban Military Housing and guarantees under the Farm Improvement Loans Act. ...	.
^Includes starts financed wholly from owner's equities and by loans made by individuals, credit unions and provincial and municipal governments.
N.A.-Not available.

The Budget-Appendix
On September 23, the Government authorized C.M.H.C. to extend its direct loans to builders, to cover houses which had not been pre-sold. In the fourth quarter, C.M.H.C. approved direct loans on about 15,000 dwelling units, before withdrawing direct loans to builders on unsold houses on November 15. An estimated loan potential of close to $195 million was created, which ensured a high level of housebuilding activity during the winter. At year-end, 96,613 new houses were under construction. This is a record rate of winter construction and compares with 76,000 at the end of 1962.
In January and May 1963, C.M.H.C. continued its series of auctions of N.H.A. mortgages from its portfolio, selling $27 million in January and $35 million in May, bringing the cumulative total sold to $148 million. They constitute a significant element among governmental and private efforts to improve Canadian mortgage finance, and are aimed at developing a secondary market for, and stimulating greater sales and purchases of insured N.H.A. mortgages. No auctions occurred in the remainder of 1963, largely because of the uncertainties in financial markets following the proposal of an Interest Equalization Tax in the United States.
Consumer Credit
As described in an earlier section, personal expenditures on goods and services increased 6.6 per cent from the third quarter of 1962 to the third quarter of 1963. Consumer purchases of durable goods rose more sharply due in large part to record sales of new and used automobiles. The use of consumer credit to finance consumer outlays grew, and average payment terms were eased by lenders. At the end of the third quarter of 1963, total consumer credit outstanding by chartered banks, instalment finance and small loan companies and retail stores was running 11.4 per cent above its level a year earlier, compared to a gain of
10.2	per cent in the year ending September 1962. At the end of September 1963, consumer credit outstanding equalled 13.4 per cent of personal disposable income, a higher percentage than in previous years. A similar development has been occurring in the United States.
Nearly all of the main lenders experienced a sharp increase in their outstanding loans. Chartered bank consumer credit, which had been level in the second half of 1962, resumed its sharp upward trend throughout 1963 and at the end of December was 21.0 per cent above the beginning of the year. Instalment finance company loans displayed a fairly level trend in early 1963, but rose steeply from the end of March to the end of August and thereafter levelled off to the end of December by which time they had risen 8.9 per cent from the beginning of the year. During 1963, small loan companies maintained the steady growth in loans which had begun in late 1961 and recorded a 13.2 per cent increase to the end of December 1963. Retail store credit showed little change in 1963 from the gradual upward trend of the previous year.
Federal Government Debt Operations
As indicated earlier, the federal government raised $982 million from net new issues of securities in 1963. Of this amount, $513 million was raised from the sale of Canada Savings Bonds in excess of redemptions, $72 million from treasury bills and $396 million from issues of marketable bonds.
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The Budget-Appendix
About one-third of the net amount raised in the calendar year 1963 covered the government deficit on a national accounts basis. Of the remaining two-thirds, $200 million was advanced to the C.N.R. to assist the railway in retiring a $250 million issue maturing in February and the rest was used to acquire other assets, including advances to C.M.H.C. and cash balances.
In addition to the net new cash that was raised, the Government had to refund about $1.5 billion of market issues which matured at intervals of 6 to 9 weeks throughout 1963, in addition to regular weekly maturities of treasury bills'1).
(^Excluding the regular weekly maturities of treasury bills, the refunding schedule of maturities during 1963 was:
$100 million in 4% bonds due January 1, 1963.
$250 million in CNR 2\% bonds due February 1, 1963.
300 million in 2\% bonds due April 1, 1963.
13 million in 51% bonds due April 1, 1963.
275 million in 2f% bonds due June 1, 1963.
16 million in sterling-pay bonds due July 1, 1963.
85 million in 366 day treasury bills due August 2, 1963.
223 million in 3% bonds due October 1, 1963.
300 million in 4% bonds due December 15, 1963.
Total $1,562 million
The objective of debt management is to finance the Government's cash requirements and to refund maturing obligations in such a way as to give maximum support to fiscal and monetary policy at a minimum cost and consistent with a prudent maturity pattern. The maturities chosen for new issues have an important bearing on the interest rate structure and the liquidity of the economy. The aim of financial policy in 1963 was to facilitate the economic expansion. The somewhat greater liquidity of the economy in 1963 was a factor which assisted the continued growth of output and employment.
The management of the public debt supported this objective. In 1963 the bulk of Government of Canada financing took the form of short-term issues.

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Date of Issue	Date of Offering	Amount ($ millions par value)	Coupon rate (%)	Term	Maturity Date	Price at issue (%)	Yield at issue (%)	Commis- sion to dealers (%)Feb.	i	Jan.	14	125	31	1 yr.	Feb.	1/64	99.25	4.02	0.10225	31	3 yrs.	Feb.	1/66	97.25	4.49	0.25Apr.	i	Mar.	18	240	31	10 mos.	Feb.	1/64	99.20	4.23	0.1060	41	2 yrs.	Apr.	1/65	99.50	4.51	0.20June	3	May	10	100	5	25 yrs.	June	1/88	99	5.07	0.75175	31	1 yr. 1 mo.	iJuly	1/64	99.35	3.87	0.10175	41	4 yrs.	June	1/67	99	4.53	0.375Oct.	1	Sept.	16	185	31	lyr.	Oct.	1/64	99	4.28	0.1090	41	1 yr. 6 mos.	Apr.	1/65	99.40	4.67	0.15316	5	5 yrs.	Oct.	1/68	100	5.00	0.25Dec.	15	Dec.	2	225	31	1 yr.	Dec.	15/64	99.15	4.13	0.1075	41	3 yrs.	Dec.	15/66	99.85	4.53	0.201,991	
of
or
net
11
25
8
22
8
22
5
19
26
10
24
7
21
5
19
2
16
30
13
27
11
25
8
22
6
20
3

The Budget-Apt

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(Average yield in % in Brackets) (Millions of dollars, par value)
Date of offering of new issues	New issues	Total Retire- ments3-month	6-month	1	year	Total	Dec.	27	105	(3.94)	30	(4.06)	135	135Jan.	3	105	(3.85)	30	(3.96)	135	135Jan.	10	105	(3.87)	30	(3.98)	135	135Jan.	17	105	(3.78)	30	(3.88)	135	135Jan.	24	105	(3.65)	30	(3.77)	135	135Jan.	31	95	(3.72)	30	(3.85)	125	125Feb.	7	95	(3.66)	30	13.77)	125	125Feb.	14	95	(3.65)	30	(3.76)	125	125Feb.	21	95	(3.68)	30	(3.79)	125	125Feb.	28	100	(3.63)	30	(3.73)	130	130Mar.	7	100	(3.64)	30	(3.75)	130	130Mar.	14	100	(3.62)	30	(3.73)	130	130Mar.	21	105	(3.62)	30	(3.74)	135	135Mar.	28	110	(3.60)	30	(3.73)	140	140Apr.	4	110	(3.48)	30	(3.60)	140	140Apr.	10	120	(3.57)	30	(3.67)	150	140Apr.	17	100<'>	(3.91)	100O)	Apr.	18	120	(3.66)	30	(3.80)	150	140Apr.	25	110	(3.60)	30	(3.74)	140	140May	2	100	(3.33)	30	(3.40)	130	125May	9	100	(3.28)	30	(3.36)	130	120May	16	100	(3.23)	30	(3.33)	130	120May	23	100	(3.19)	35	(3.30)	135	120May	30	100	(3.28)	35	(3.39)	135	125June	6	95	(3.19)	30	(3.30)	125	125June	13	100	(3.22)	35	(3.32)	135	125June	20	100	(3.24)	30	(3.34)	130	130June	27	110	(3.26)	30	(3.36)	140	140July	4	110	(3.39)	30	(3.48)	140	140July	11	110	(3.48)	30	(3.68)	140	150July	18	110	(3.41)	30	(3.56)	140	150July	25	110	(3.43)	30	(3.60)	140	225«>Aug.	1	100	(3.52)	30	(3.78)	130	130Aug.	8	100	(3.62)	30	(3.89)	130	130Aug.	15	100	(3.70)	30	(3.94)	130	130Aug.	22	100	(3.71)	30	(3.95)	130	130Aug.	29	100	(3.75)	30	(3.98)	130	130Sept.	5	100	(3.78)	30	(3.98)	130	125Sept.	12	100	(3.68)	30	13.87)	130	130Sept.	19	100	(3.56)	30	(3.71)	130	130Sept.	26	115	(3.61)	35	(3.76)	150	140Oct.	3	110	(3.56)	30	(3.69)	140	140Oct.	10	115	(3.54)	35	(3.69)	150	140Oct.	17	110	(3.56)	30	(3.73)	140	140Oct.	24	110	(3.59)	30	(3.77)	140	140Oct.	31	100	(3.63)	30	(3.79)	130	130Nov.	7	100	(3.66)	30	(3.81)	130	130Nov.	14	95	(3.63)	25	(3.78)	120	130Nov.	21	105	(3.63)	30	(3.76)	135	135Nov.	28	105	(3.68)	30	(3.81)	135	135Dec.	5	95	(3.66)	30	(3.78)	125	130Dec.	12	105	(3.71)	30	(3.88)	135	135Dec.	19	95	(3.78)	25	(3.99)	120	130Dec.	24	115	(3.74)	30	(3.93)	145	145
23,1963 tenders were accepted for $100 million of 365-day treasury bills to be >3 for cash.
* date of $85 million in 366-day treasury bills dated and issued on August : yield was 5.69%).
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The Budget-Appendix
Of the total of approximately $2 billion of direct market bonds issued in 1963, $1.4 billion had maturities of 3 years or less, just under $400 million had maturities of 4 or 5 years, and $100 million had a maturity of 25 years.
At the end of 1963, the average term to maturity of all Government of Canada marketable securities (excluding the perpetuals) was 7 years 11 months, compared to 8 years 5 months at the end of 1962. The average term to maturity of the holdings of the general public (i.e. outside the banking system and government accounts) declined only slightly from 10 years 9 months at the end of 1962 to 10 years 8 months at the end of 1963.
On four occasions during 1963 the Government added to outstanding issues rather than create new small issues. This reinforcement of existing issues was designed to promote broader and more active trading markets and to provide greater flexibility in future debt management operations.
An important development in 1963 was the advance refunding of $266 million outstanding in the 3f per cent Conversion Loan maturing on September 1, 1965.
Table 48 shows the movement through 1963 of Government of Canada financing through the sale of treasury bills.
The terms of the 1963 series of Canada Savings Bonds were announced on September 18. If held to maturity in 12 years these bonds yield 5.03 per cent compared to 5.11 per cent on the 1962 series. The terms proved attractive and the net sale of these bonds in the final quarter of 1963 totalled $750 million.

The Budget-Appendix
Part II

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Table of Contents
Page
1.	Introduction	 1078
2.	Highlights of the government's financial operations during 1963-64... 1078
3.	Budgetary accounts	 1082
Revenues	 1083
Expenditures	 1090
4.	Statement of assets and liabilities as at March 31, 1964.... 1115
Summary	 1115
Changes in liability accounts	 1116
Changes in asset accounts	 1124
Increase in net debt	 1134
5.	The	cash position	
11346.	The	public debt	
11377.	Supplementary detailed	tables	
1143
The Budget-Appendix


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This Part of the Budget Papers presents in summary form a review of the accounts of the Government of Canada for the fiscal year 1963-64. The government's fiscal year ends on March 31, but in accordance with section 35 of the Financial Administration Act the books must remain open for some time after that date to take into account all payments up to and including April 30, originating in and properly chargeable to the fiscal year 1963-64 and to record various adjusting entries. The figures used are based on ten months actual and two months estimated. The final figures when they become available next July or August will vary to some extent from those given in the following pages.
2. HIGHLIGHTS OF THE GOVERNMENT'S FINANCIAL OPERATIONS DURING 1963-64
This section outlines the financial operations of the government giving a brief summary of the budgetary and non-budgetary transactions, the unmatured debt transactions and the changes in the cash position and the debt position during 1963-64. More detailed explanations of these transactions are given in subsequent sections of this Part.
The following table summarizes the budgetary and non-budgetary transactions for 1963-64 with comparative figures for 1962-63 and indicates how these transactions affected the government's cash balances:

The Budget-Appendix

[Stage Direction]
(in millions of dollars)
Summary or Budgetary and Non-Budgetary Transactions and Changes in Cash Position	Fiscal year ending March 31	
	1964 (estimated)	1963
Budgetary transactions-		
Revenues-		
Tax	5,504	5,237Non-tax	703	6426,207	6,879Expenditures-	Defence	-1,699	- 1,600Non-defence	-5,193	-4,971-6, 89S	-6,571Deficit	-685	- 692Non-budgetary transactions (excluding unmatured debt transac-	tions)-	Receipts and credits-	Repayment of advances to the exchange fund account	48	Repayment of other loans, investments and working capital	advances	230	171Increase in non-interest-bearing notes payable on demand	385Net government annuities account receipts	21	29Net insurance and pension accounts receipts	366	472Other non-budgetary receipts	149	77814	1,184Disbursements and charges-	Temporary loans to old age security fund	-64	-41Decrease in non-interest-bearing notes payable on demand	-148	Other loans, investments and working capital advances	-364	-620Advances to the exchange fund account	-943Other non-budgetary accounts	-72	-302-648	-1,906Net amount available from, or required for (-), non-budgetary	transactions	166	-772Overall cash requirements to be financed by increase in debt or	decrease in cash balances	-519	-1,464Net increase in unmatured debt outstanding in the hands of the	public	737	1,064Net Increase or decrease (-) in Receiver General bank balances....	218	-400
Budgetary transactions
The budgetary revenues, expenditures and deficit as forecast in the budget speech of June 13, 1963 and as revised on July 8, 1963 and the actual figures as now estimated for the fiscal year 1963-64 are shown in the following table:

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(in millions of dollars)
Budgetary Transactions for Fiscal Year 1963-64	Budget forecast June 13, 1963	Revised forecast July 8, 1963	Actual (estimated)	Increase or decrease (-) compared with July 8, 1963 forecast	
				Amount	I er cent
	6,260.0 -6,845.0	6,190.0 -6,845.0	6,207.0 -6,892.0	17.0 47.0	0.27 0.69
					
					
	-585.0	-655.0	-685.0	30.0	
					
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The Budget-Appendix
Revenues
Budgetary revenues of the government in the fiscal year 1963-64 are estimated at $6,207 million. This is $17 million more than the July 8, 1963 revised forecast and is $328 million or approximately 6 per cent more than the total of $5,879 million collected in 1962-63.
Tax revenues account for $267 million and non-tax revenues for $61 million of the increase over 1962-63 receipts.
Receipts from customs import duties are $65 million less, due in large part to the removal of special surcharges which had been imposed by the government to curb imports and to improve the country's balance of international payments. The yield from personal income tax and from corporation income tax is $184 million more than collections in 1962-63 due to a higher level of incomes during 1963 and higher corporate profits in 1962.
Expenditures
Budgetary expenditures of the government in 1963-64 are estimated at $6,892 million, $47 million or more than one-half of one per cent higher than forecast and $321 million or about 5 per cent higher than expenditures in 1962-63.
Defence expenditures in the amount of $1,699 million are 25 per cent of total budgetary expenditures, compared with $1,600 million or 24 per cent in 1962-63 and are again the largest category.
Civil or non-defence expenditures of $5,193 million compare with $4,970 million in 1962-63, an increase of $223 million. The main items are increases of $73 million in public debt charges, $53 million in contributions to the provinces under the Hospital Insurance and Diagnostic Services Act and $50 million in the operating loss of the agricultural stabilization board; a decrease of $69 million in contributions to provinces under the Technical and Vocational Training Assistance Act; and a charge of $76 million to provide for additional liabilities in the Canadian forces superannuation account resulting from increased rates of pay.
Deficit
Expenditures of $6,892 million exceed revenues of $6,207 million resulting in a deficit of $685 million for 1963-64 compared with a deficit of $655 million as forecast on July 8, 1963 and the deficit of $692 million in 1962-63.
Non-budgetary transactions (excluding unmatured debt transactions)
Non-budgetary transactions are those which result in increases or decreases in the government's asset and liability accounts and do not enter into the calculation of the annual budgetary surplus or deficit.
In 1963-64 non-budgetary transactions (excluding those in respect of unmatured debt) are expected to result in a net receipt of $166 million. In 1962-63 these transactions resulted in a net requirement of $772 million.
Old age security fund
Temporary loans of $64 million to the old age security fund during 1963-64 compare with $41 million in 1962-63, resulting in total outstanding loans by the Minister of Finance of $105 million at March 31, 1964.

The Budget-Appendix
Pension payments from the old age security fund are $809 million and receipts are $745 million. Comparable figures for 1962-63 were $734 million and $691 million respectively. The increase of $75 million in pension payments is largely the effect of the increased rate of payment (from $65 to $75 per month) effective October 1, 1963.
The transactions in the account during 1963-64 compared with those for 1962-63 are as follows:
Fiscal year ending March 31 1964	1963
(estimated)
(in millions of dollars)
Pension payments	
809	734Tax receipts	
745	691
Excess of payments over receipts (-) covered in part by
temporary loans from the Minister of	Finance	 -64	-43
Temporary loans carried forward	 -41
Balance in fund at beginning of year	 2
Temporary loans outstanding at fiscal year-end	 105	41
Unmatured debt transactions
Unmatured debt transactions in 1963-64 are expected to result in an increase of $737 million in unmatured debt outstanding in the hands of the public compared with an increase of $1,064 million in 1962-63.
Cash position
Receiver General bank balances are estimated at $596 million at March 31, 1964, an increase of $218 million over the previous year-end total. The change in cash balances is the result of the increase of $737 million in outstanding unmatured debt and non-budgetary receipts of $166 million less the budgetary deficit of $685 million.
Debt position
As a result of these budgetary and non-budgetary transactions the gross public debt is expected to increase by $1,073 million to $25,872 million, net assets to decrease by $143 million to $10,736 million and net debt to increase by $1,216 million to $15,136 million at March 31, 1964. The increase in net debt reflects the budgetary deficit of $685 million plus an adjustment of $531 million in respect of prior years transactions. The adjustment of $531 million covers the write-off to net debt, subject to parliamentary approval, of the unamortized portions of actuarial deficiencies in the amounts of $525 million in the Canadian forces superannuation account and $6 million in the Royal Canadian Mounted Police superannuation account.
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Fiscal Yaars Ended March 31 Billions of Dollars
500 -

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Million* of Dollar*
ill
500
I960 1961	1962 1963 1964*

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* Estimated

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3.	THE BUDGETARY ACCOUNTS
Total revenues of $6,207 million for 1963-64 are $328 million more than the total in the previous year. Total expenditures of $6,892 million are $321 million more than the total for 1962-63. The resulting deficit is $685 million compared with $692 million for the previous year.

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Budgetary Revenues, Expenditures and Deficit (in millions of dollars)
Fiscal year ended March 31	Budgetary revenues	Budgetary expenditures	DeficitI960	5,289.8	5,702.9	413.11961	5,617.7	5,958.1	340.41962	5,729.6	6,520.6	791.01963	5,878.7	6,570.3	691.61964 (estimated)	6,207.0	6,892.0	685.0
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BUDGETARY REVENUES	BUDGETARY EXPENDITURES
BY MAJOR SOURCE	BY MAJOR FUNCTION
For Fiscal Year Ended March 31,1964 Estimatod
1.	Does nol include paymtnlt owl of old ago security fund.
2.	Does nol include those payments made to provincial and municipal governments for specific purposes.
Revenues
Budgetary revenues in the amount of $6,207 million in 1963-64 are $328 million or 6 per cent over the 1962-63 total of $5,879 million. Tax revenues of $5,504 million account for 89 per cent of the total for the fiscal year and non-tax revenues of $703 million for 11 per cent.

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Fiscal Years Ended March 31 Billions of Dollars
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The Budget-Appendix
The more important items are increases of $118 million in personal income tax collections, $66 million in corporation income tax collections, $124 million in sales tax receipts, $52 million from return on investments and a decrease of $65 million in receipts from customs import duties.

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Budgetary Revenues by Major Sources (in millions of dollars)
	Fiscal year ending March 31				Increase or decrease (-)	
Source	1964 (estimated)	1963	Amount	Per cent	Amount	Per cent	Amount	Per centTax revenues- Income tax- Personal!"	1,863.0	30.0	1,744.6	29.7	118.4	6.8Corporation*1*	1,249.0	20.1	1,182.8	20.1	66.2	5.6On dividends, interest, etc., going abroad	127.0	2.0	129.2	2.2	-2.2	-1.7Excise taxes- Sales!" <«>	930.0	15.0	806.0	13.7	124.0	15.4Other	270.0	4.4	260.4	4.4	9.6	3.7Customs import duties	580.0	9.4	645.0	11.0	-65.0	-10.1Excise duties	395.0	6.4	381.9	6.5	13.1	3.4Estate tax***	90.0	1.4	87.1	1.5	2.9	3.3Other taxes	(4) 6,504.0	88.7	(4) 6,287.0	89.1	267.0	6.1Non-tax revenues- Return on investments	364.0	5.9	311.9	5.3	52.1	16.7Post office-net postal revenue	199.0	3.2	192.8	3.3	6.2	3.2Other non-tax revenues	140.0	2.2	137.0	2.3	3.0	2.270S.0	11.3	61ft. 7	10.9	61.3	9.6Total budgetary revenues	6,207.0	100.0	5,878.7	100.0	328.3	5.6
(estimated) 1962-63
^Excluding tax credited to the old age security fund- Personal income tax	302.0	273.7Corporation income tax	116.0	115.2Sales tax	327.0	302.2745.0	691.1
("Net after deduction of refunds and drawbacks.
([DOT]'Includes duties levied under the Dominion Succession Duty Act. ([DOT]'Less than $50,000.

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Federal-provincial fiscal arrangements
The 1957-62 tax rental agreements under which the federal government made tax rental payments to certain provinces lapsed on December 31, 1961. Under the 1962-67 fiscal arrangements, the federal government withdrew in part from the field of direct taxation and left the vacated area to the provinces. The former renting provinces imposed their own personal and corporation income taxes effective January 1, 1962, and the federal government entered into agreements with them to collect these levies without charge, provided that the provincial personal income tax was expressed as a percentage of the federal personal income tax otherwise payable and the provincial corporation income tax applied to taxable income calculated in the same way as for federal income tax purposes.
To allow for the imposition of the provincial income taxes, the Income Tax Act was amended in the 1961 session of Parliament (1) to abate the federal income tax otherwise payable by individuals resident in the provinces by 16 per cent in 1962 and by a further one per cent in each subsequent year until the abatement reaches 20 per cent in 1966, and (2) to reduce the federal corporation income tax rates by 9 percentage points for taxable income earned in a province other than Quebec and by 10 percentage points for taxable income earned in Quebec. The additional one per cent reduction in respect of taxable income earned in the province of Quebec is to compensate for the additional tax levied by the province on corporation income to provide grants for the universities. The federal government has entered into tax-collection agreements under which it collects the provincial personal income taxes for all provinces except Quebec and the provincial corporation income taxes for all provinces except Ontario and Quebec. With the exception of Saskatchewan and Manitoba, the provinces which have entered into tax-collection agreements have imposed personal and corporation income taxes equivalent to the federal withdrawal. The Provinces of Manitoba and Saskatchewan have each imposed their personal income tax at a rate exceeding the federal abatement by 6 percentage points (22 per cent of federal tax otherwise payable in 1962) and their corporation income tax at the rate of 10 instead of 9 per cent of the taxable income of corporations.
Under these agreements payments are made monthly to the provinces based on estimated receipts. When the actual amounts of assessed returns are established, usually in the month of December following the end of the fiscal year, adjustments are made with the provinces.
Tax on personal incomes
The yield from the tax on personal incomes (excluding the old age security tax) of SI,863 million or 30 per cent of all budgetary revenue is $118 million or ! per cent more than the 1962-63 collections and is again the largest source of government revenue. In addition to the federal revenue, $286 million was collected on behalf of certain provinces under the terms of federal-provincial tax-collection agreements. In 1962-63 federal revenue was $1,745 million and $252 million was collected on behalf of the provinces.
The tax on personal incomes levied under the Old Age Security Act and credited to the old age security fund amounts to $302 million.
1086
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Corporation income tax
The yield from the corporation income tax (excluding the old age security tax) of $1,249 million or 20 per cent of all budgetary revenue is $66 million or 6 per cent more than the 1962-63 collections and is again the second largest source of government revenue. In addition to the federal revenue, $98 million "as collected on behalf of certain provinces under the terms of federal-provincial tax-collection agreements. In 1962-63 federal revenue was $1,183 million and $65 million was collected on behalf of the provinces.
The tax on incomes of corporations levied under the Old Age Security Act and credited to the old age security fund amounts to $116 million.
Taxes on dividends, interest, etc., going abroad
Revenue in this category is derived from taxes withheld on payments of dividends, interest, rents, royalties, alimony and income from estates and trusts paid to non-residents. Collections for 1963-64 are $127 million, a decrease of $2 million from the comparable total for 1962-63. The decrease is attributable to the changes, in the rates of withholding tax affecting dividends, which were enacted in 1963.
Excise taxes
Revenue under this heading includes collections from the general sales tax and other special excise taxes.
From a revenue standpoint the sales tax is the most important tax levied under the Excise Tax Act. Receipts therefrom (excluding the old age security tax) are $930 million, $124 million or about 15 per cent higher than in the previous fiscal year. This substantial increase is due in part to the imposition, effective June 14, 1963, of a 4 per cent sales tax on building materials and production machinery and equipment.
The tax on sales levied under the Old Age Security Act and credited to the old age security fund amounts to $327 million.
The yield from excise taxes levied under the Excise Tax Act, other than the general sales tax, is $270 million, an increase of $10 million over the 1962-63 receipts. The increase is due mainly to increases of $6 million in excise taxes on tobacco products, $2 million on television sets, radios, tubes and phonographs and $1 million on toilet preparations.
Customs import duties
Customs import duties at $580 million for 1963-64 are $65 million less than the comparable figure for 1962-63. This decrease is due in large part to the removal of surcharges which were in effect in 1962-63.
Excise duties
Excise duties are levied on alcoholic beverages and tobacco products. (Additional taxes on tobacco products are levied under the Excise Tax Act.) Net receipts in 1963-64 are $395 million compared with $382 million in 1962-63. Gross receipts of $229 million from taxes on alcoholic beverages and $171 million from taxes on tobacco products have been reduced by refunds and drawbacks totalling $5 million. Comparable amounts in 1962-63 were $220 million, $167 million and $5 million respectively.

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Fiscal Years Ended March 31
Estate tax
Revenue from this source of $90 million for 1963-64 is $3 million over the total for the previous year.
Other taxes
Revenue under this heading is approximately the same as for 1962-63.

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Non-tax revenues are estimated at $703 million for 1963-64, an increase of $61 million or approximately 10 per cent over the comparable total in 1962-63.

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(in millions of dollars)
Non-Tax Revenues	Fiscal year ending March 31	Increase or decrease (-)	1904 (estimated)	1963	Amount	Per centReturn on investments	364.0	311.9	52.1	16 7Post office-net postal revenue	199.0	192.8	6.2	3 2Refunds of previous years' expenditure	17.0	22.3	-5.3	23 8Services and service fees	54.0	46.2	7 8	16 QProceeds from sales	23.0	26.5	-3 5	13 2Privileges, licences and permits	29.0	25.0	4.0	16 0Bullion and coinage	9.5	9.4	0.1	1 1Other	7.5	7.6	-0.1	-1.3703.0	641.7	61.3	9.6
Return on investments
Receipts in this category in the amount of $364 million for 1963-64 are $52 million more than the total in 1962-63.
20220-69J
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(in millions of dollars)
Return on Investments	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Loans to, and investments in, Crown corporations-	19.7Bank of Canada-profits	116.4	96.7	Canadian National Railways	13.0	3.8	9.2Canadian Overseas Telecommunication Corporation....	2.6	2.0	0.6Central Mortgage and Housing Corporation	86.0	79.9	6.1Eldorado Mining and Refining Limited	2.0	3.0	-1.0Farm Credit Corporation	10.8	8.5	2.3National Capital Commission	2.2	1.8	0.4National Harbours Board	3.4	3.6	-0.2Northern Canada Power Commission	2.2	1.7	0.5Northern Ontario Pipe Line Crown Corporation	1.6	4.1	-2.5Polymer Corporation Limited	3.5	3.0	0.5Miscellaneous	0.7	0.3	0.4*U-4	m.i	S6.0Other loans and investments-	-0.4United Kingdom	21.1	21.5	! Other national governments	5.2	8.4	-3.2Provincial governments	0.7	1.5	-0.8Soldier and general land settlement loans and veterans land act advances	6.5	6.5	Exchange fund account	62.6	35.2	27.4Purchase fund account	10.4	- 10.4Securities investment account	0.8	2.0	-1.2Sinking fund and other investments held for retirement of unmatured debt	0.3	0.7	-0.4Interest-bearing deposits with chartered banks	12.0	14.4	-2.4Unemployment Insurance Commission	0.2	2.9	0.2Miscellaneous	10.2	7.3119.6	103.6	16.1364.0	311.9	52.1
Receipts from Crown corporations at $244 million in 1963-64 are $36 million more than in the previous fiscal year. The main changes are increases of $20 million in the Bank of Canada profits paid to the government, $9 million in receipts from Canadian National Railways, $6 million in receipts from Central Mortgage and Housing Corporation and a decrease of $3 million from Northern Ontario Pipe Line Crown Corporation.
The yield from other loans and investments of $120 million compares with $104 million in 1962-63. The increase of $16 million is due mainly to an increase of $27 million in the earnings of the exchange fund account partly offset by a decrease of $10 million in receipts from the purchase fund account due to the fact that no transactions took place in that account during the fiscal year 1963-64.
Post office revenue
Gross post office receipts are $234 million but authorized disbursements from revenue for salaries and rent allowances at semi-staff and revenue offices, commissions at sub-offices, transit charges on Canadian mail forwarded through and delivered in foreign countries, etc., in the amount of $35 million, bring net revenue to $199 million. In 1962-63 gross receipts were $223 million, authorized disbursements were $30 million and net revenue was $193 million. The increase of $6 million in net post office receipts is the result of increased revenue from postage.
Net costs of operating the Post Office Department during 1963-64 (excluding the $35 million charged to revenue) of $208 million exceed net revenue by $9 million. However, in making this comparison, it should be noted that the total

The Budget-Appendix
shown for post office revenue does not reflect any payment for the franking privilege covering parliamentary and departmental mail or for certain miscellaneous services provided for other government departments and agencies, nor does the total for operating expenses reflect any charges for premises occupied by the Post Office Department or for certain accounting and miscellaneous services provided by other departments.

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(in millions of dollars)
Post Office Revenue	Fiscal year ending March 31		Increase or decrease (-)
	1964 (estimated)	1963	
Postage-			
In Canada	217.7	207.7	10.0From foreign countries	4.2	3.5	0.7Commission on money orders	8.4	7.7	0.7Rental of post office boxes	2.1	2.0	0.1Other	1 6	234.0	m'.s	It.7Less-	Salaries and allowances at semi-staff and revenue offices	-29.5	-25.2	-4.3Transit charges on foreign correspondence	-1.7	-1.3	-0.4Other	-3.8	-3.0	-0.8-35.0	-29.5	-5.5199.0	192.8	6.2
Refunds of previous years' expenditure
Refunds in 1963-64 of expenditures made in prior years are $17 million, a decrease of $5 million from the comparable total for 1962-63.
The Department of National Defence received $9 million, of which $3 million was refunds on defence contracts resulting from cost audits and $1 million in respect of contracts with the United States Government for the supply of defence equipment. When Canada places contracts with the Government of the United States, payments of estimated costs are made to the United States Treasury. If these estimated costs are revised, or if there are reductions in the contracts, the United States Government refunds the excess payments. The Department of Veterans Affairs received $2 million in refunds of veterans' pensions, allowances and re-establishment credits.
Services and service fees
Revenues of $54 million during 1963-64 are $8 million over the previous fiscal year.
The Department of Transport received $18 million, including aircraft landing fees of $8 million and marine steamers earnings of $4 million; the Royal Canadian Mounted Police received $15 million for police services mainly to provinces and municipalities; the Department of Agriculture received $6 million, of which $4 million was for services in connection with the inspection, weighing, storage and elevation of grain and $1 million for race track supervision; and the Department of National Health and Welfare received $4 million, due mainly to a reimbursement of $3 million by the provinces for treatment of Indians in federal government hospitals.
Proceeds from sales
Receipts from this source in the amount of $23 million for 1963-64 are $4 million less than the total for 1962-63.
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The Department of Defence Production received $11 million, of which $9 million represented proceeds from the sale of surplus Crown assets (after deducting certain agency fees and transfers) and $2 million under agreements of sale of Crown assets; the Department of National Defence received $4 million mainly from sales of materials and supplies and from sales of meals; and the Department of Public Printing and Stationery received $2 million from the sale of publications.
Privileges, licences and permits
Revenues from this category are $29 million for 1963-64 compared with the 1962-63 total of $25 million.
The Department of Transport received $10 million mainly for rentals, concessions and radio licence fees; the Department of Northern Affairs and National Resources received $6 million, of which $2 million was in respect of oil and gas and $1 million for transient motor vehicle licences; the Department of the Secretary of State received $3 million mainly for patent fees; the Department of Public Works received $3 million for rental of public buildings and sites; and the Department of National Defence received $2 million, of which $1 million was for rental of quarters to armed forces personnel.
Bullion and coinage
Revenues of $10 million derived from the operations of the Royal Canadian Mint consist mainly of a net gain on coinage. Small amounts are also obtained from gold refining charges, handling charges and gain on gold refining.
Other non-tax revenues
Other non-tax revenues of $8 million for 1963-64 are approximately the same as for the previous fiscal year.
Expenditures
Budgetary expenditures are estimated at $6,892 million in 1963-64, $321 million or 5 per cent higher than the 1962-63 total.

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Fiscal Years Ended March 31 Billions of Dollars
I960	1961
1963
1964*
1964*
1.	Doet	not	include	diet* payment! mod*	to	provincial and municipal government! far ipecifiad purpoiei.3.	Deal	not	include	pemien payment! out	of	the old age security fund not charged to budgetary expenditures	in the year in which
they were paid.
* Estimated

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Statement or Budgetary Expenditures by Departments and Major Classifications
(in millions of dollars)
	Fiscal year ending March 31				Increase	
-	1964 (estimated)	1963	or decrease (-)	Amount	Per cent	Amount	Per cent	Amount	Per centDefence expenditures- National Defence	1,658.7	24.1	1,571.1	24.0	87.6	5.6Defence Production <l>	40.3	0.6	28.8	0.4	11.5	39.91,699.0	24.7	1,599.9	24.4	99.1	6.2Non-defence expenditures- Agriculture	257.1	3.7	199.1	3.0	58.0	29.1Atomic Energy	45.7	0.7	63.2	1.0	-17.5	-27.7Canadian Broadcasting Corporation...	86.9	1.3	80.8	1.2	6.1	7.5Central Mortgage and Housing Corporation	14.5	0.2	8.7	0.1	5.8	66.7Citizenship and Immigration	72.7	1.0	66.2	1.0	6.5	9.8External Affairs	97.8	1.4	85.2	1.3	12.6	14.8Finance- Public debt charges	990.8	14.4	917.8	13.9	73.0	8.0Fiscal, tax-sharing, subsidy and other payments to provinces	252.4	3.7	275.3	4.2	-22.9	-8.3Government's contribution to the public service superannuation account	54.0	0.8	51.1	0.8	2.9	5.7Other	105.6	1.5	110.9	1.7	-5.3	-4.81,402.8	20.4	1,355.1	20.6	47.7	3.5Fisheries	24.1	0.3	23.3	0.4	0.8	3.4Forestry	18.1	0.3	16.2	0.2	1.9	11.7Justice	14.0	0.2	12.3	0.2	1.7	13.8Office of the Commissioner of Penitentiaries	29.5	0.4	24.7	0.4	4.8	19.443.5	0.6	37.0	0.6	6.5	17.6Labour	186.2	2.7	242.8	3.7	-56.6	-23.3Unemployment Insurance Act administration and government's contribution	108.6	1.6	105.4	1.6	3.2	3.0294.8	4-3	348.2	5.3	-53.4	-14-3Legislation	13.1	0.2	8.1	0.1	5.0	61.7Mines and Technical Surveys	69.9	1.0	71.1	1.1	-1.2	-1.7National Health and Welfare- Family allowances	538.6	7.8	531.6	8.1	7.0	1.3Government's contributions under the Hospital Insurance and Diagnostic Services Act	390.0	5.7	336.7	5.1	53.3	15.8Other	274.3	4.0	255.1	3.9	19.2	7.51,202.9	17.5	1,123.4	17.1	79.5	7.1National Research Council, including the Medical Research Council	47.2	0.7	40.6	0.6	6.6	16.3National Revenue	83.6	1.2	78.6	1.2	5.0	6.4Northern Affairs and National Resources	84.3	1.2	86.4	1.3	-2.1	-2.4Post Office	207.7	3.0	189.4	2.9	18.3	9.7Privy Council	8.2	0.1	3.4	0.1	4.8	141.2Public Works	171.1	2.5	162.7	2.5	8.4	5.2Royal Canadian Mounted Police	67.3	1.0	65.4	1.0	1.9	2.9Trade and Commerce	72.7	1.1	66.1	1.0	6.6	10.0Transport	428.1	6.2	416.0	6.3	12.1	2.9Veterans Affairs	334.7	4.8	335.6	5.1	-0.9	-0.3Other Departments	44.2	0.6	40.6	0.6	3.6	8.95,193.0	?5.3	4,970.4	75.6	222.6	4.5Total budgetary expenditures	6,892.0	100.0	6,570.3	100.0	321.7	4.9
tIJDoes not include non-defence expenditures which are included in "All Other Departments".
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Fiscal Years Ended March 31
I960	61	62	63	64*	I960	61	62	63	64*
1. Th. unshaded arcai el the column, in the chart lor h.oM., w.llor. and locial security r.pro.enl pension payment! oul ol old age security fund not charged to budgetary
expenditure! in the year in which they were poid.
2. Doei not include those payments made to provincial and municipal governments for specific purposes. [DOT] Estimated

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Expenditures of the Department of National Defence and defence expenditures of the Department of Defence Production are again the largest category of government budgetary expenditure. The total of $1,699 million for 1963-64 is approximately 25 per cent of the aggregate budgetary expenditures of the government for the year and is $99 million more than the total of $1,600 million for 1962-63 when they were 24 per cent of total expenditures.
National Defence
Expenditures of the Department of National Defence are $1,659 million in 1963-64 compared with $1,571 million in the previous year.
Expenditures for naval services are $295 million compared with $269 million in 1962-63, for air services $685 million compared with $714 million, while army services at $443 million and inspection services at $7 million are approximately the same as in the previous year.
The government's contribution to the Canadian forces superannuation account of an amount equal to If times the contributions of permanent services personnel of $60 million are $2 million over the contribution in the previous year. There was an additional contribution of $76 million by the government to provide, subject to parliamentary approval, for additional liabilities in the Canadian forces superannuation account resulting from increased rates of pay.
Defence research and development costs are $48 million compared with $41 million in 1962-63.

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(in millions of dollars)
Defence Expenditures	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Department of National Defence-	Naval services	295.4	269.5	25.9Army services	443.5	443.0	0.5Air services	684.7	713.9	-29.2Inspection services	7.3	7.4	-0.11,450.9	1,455.8	-2.9Canadian forces superannuation account-	Government's contribution	59.7	58.1	1.6Special government contribution	76.5	76.5156.2	58.1	78.1Defence research and development	
Mutual aid to NATO countries including contributions	47.8	41.1	6.7towards military costs of NATO	29.5	25.0	4.5Administration and general	14.3	13.1	1.21,658.7	1,571.1	87.6Department of Defence Production®-	Technological capability	19.0	8.0	11.0Canadian Arsenals Limited	4.9	4.6	0.3Defence Construction (1951) Limited	2.6	3.2	-0.6Production capacity and capital assistance	1.3	1.5	-0.2Administration and general	12.5	11.5	1.040.5	28.8	11.51,699.0	1,599.9	99.1
(1,See also under "All Other Departments" at the end of this section.
Direct charges to mutual aid at $30 million consist of $15 million for procurement of equipment for mutual aid and $15 million for Canada's share of NATO military budgets and infrastructure costs. In 1962-63 direct charges were $11 million for procurement of equipment for mutual aid and $14 million for Canada's share of NATO military budgets and infrastructure costs.
Certain expenditures of the Emergency Measures Organization which in previous years were included in the expenditures of the Department of National Defence are now included in the expenditures of the Emergency Measures Organization under All Other Departments. For purposes of comparison the 196263 expenditures have been transferred from the Department of National Defence to the Emergency Measures Organization.
Defence Production
Defence expenditures for the Department of Defence Production, including those for Defence Construction (1951) Limited and Canadian Arsenals Limited, are $40 million in 1963-64 compared with $29 million in 1962-63.
The increase of $11 million is due to higher outlays in connection with the government program instituted in 1959-60 of supporting selected defence development programs in order to sustain technological capability in Canada's industry.
1094
[Stage Direction]
The Budget-Appendix
Cash outlays for defence
In addition to these budgetary expenditures for defence, there are other cash outlays which must be considered in arriving at the cost of Canada's defence program.
Section 11 of the National Defence Act provides that materiel, not immediately required for the use of the Canadian defence forces or the Defence Research Board, may be sold to such countries and upon such terms as the Governor in Council may determine. The proceeds of such sales are credited to a special account to be used for the procurement of materiel. In 1963-64 credits to, and cash outlays from, the account are each less than $500 thousand. The balance in the account at March 31, 1964 is $1 million, approximately the same as at the previous fiscal year-end.
The Department of Defence Production also makes cash disbursements for the procurement of materials for use in the manufacture of defence equipment which are not recorded as budgetary expenditures. For purposes of accounting and control, these amounts are charged to the defence production revolving fund and are treated as assets on the books of the government until they are charged to the Department of National Defence or sold to defence contractors for use in the manufacture of defence equipment. During 1963-64 proceeds from sales of $73 million exceed purchases of $71 million resulting in a balance of $37 million in the account at March 31, 1964.
TABLE 10 (in millions of dollars)
Cash Outlays for Defence	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Budgetary expenditures-	1,658.7	1,571.1	87.6Department of National Defence	Department of Defence Production*1*	40.3	28.8	11.51,699.0	1,599.9	99.1Disbursements for-	-13.9Defence production revolving fund (net)	-2.1	11.8	Replacement of materiel account-sec. 11, National	0.3	-0.2Defence Act (net)	0.1	-2.0	12.1	-14.1Net cash outlay for defence	1,697.0	1,612.0	85.0
(*See also under "All Other Departments" at the end of this section.

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Agriculture
The expenditures of the Department of Agriculture amount to $257 million in 1963-64, an increase of $58 million from the 1962-63 total of $199 million.
There are increases of $50 million in the operating loss of the agricultural stabilization board, $4 million in outlays of the production and marketing branch and $7 million in payments under the Agricultural Rehabilitation and Development Act and a decrease of $5 million in the deficit of the prairie farm emergency fund.

The Budget-Appendix
The 1963-64 net operating loss of the agricultural stabilization board of $122 million, including loss of $48 million resulting from revaluation of inventory, compares with $72 million in 1962-63.
TABLE 11 (in millions of dollars)
Agriculture	Fiscal year ending March 31		Increase; or decrease (- J
	1964 (estimated)	1963	
Agricultural stabilization board-net operating loss		122.0	71.8	50.2
Production and marketing branch-			
Freight assistance on western feed grains	1S.0	14.5	3.5Health of animals division	13.2	13.4	-0.2Premium on hog and lamb carcasses	8.0	6.1	1.9Other	17.2	18.7	-1.556.4	52.7	S. 7Rehabilitation and reclamation projects	28.7	29.0	-0.3Research branch	27.5	27.0	0.5Board of Grain Commissioners (Canada Grain Act)	6.7	6.2	0.5Agricultural Rehabilitation and Development Act	7.2	0.6	6.6Prairie farm emergency fund-deficit	1.9	7.3	-5.4Farm Credit Corporation-net operating loss	1.4	1.4Agricultural products board-net operating loss	1.0	0.9	0.1Administration and general	4.3	3.6	0.7257.1	199.1	58.0
The Prairie Farm Assistance Act, c. 213, R.S., as amended, provides for a levy of one per cent to be deducted by all licenced purchasers of grain, the amount so deducted to be transferred to the Board of Grain Commissioners for deposit to the credit of the prairie farm emergency fund. Awards are made under the provisions of the act to farmers in the spring wheat area in accordance with crop failure conditions provided for in the act and are payable from this fund. The act also provides for advances by the Minister of Finance to the fund to cover the year's deficit. Advances in 1963-64 of $2 million, representing the deficit in the fund, are a charge to budgetary expenditure. The comparable amount in 1962-63 was $7 million.
_ Outlays for the production and marketing branch are $56 million, an increase of $4 million over the 1962-63 expenditures.
The Agricultural Rehabilitation and Development Act, c. 13,1961, authorizes the Minister of Agriculture, with the approval of the Governor in Council, to enter into agreements with the provinces providing for the undertaking jointly with the government of the province of projects for the alternative uses of land, rural development of income and employment opportunities and soil and water conservation and for the payment to the province of contributions in respect of the cost of such projects. Outlays are $7 million compared with $1 million in the previous fiscal year.
Expenditures of the Canadian Wheat Board, which in previous years were included in the expenditures of the Department of Agriculture, are now included in expenditures of the Department of Trade and Commerce. For purposes of comparison the 1962-63 expenditures have been transferred from the Department of Agriculture to the Department of Trade and Commerce.
20220-70J
[Stage Direction]
The Budget-Appendix
Atomic Energy
Budgetary expenditures in respect of Atomic Energy of Canada Limited and the Atomic Energy Control Board are $46 million compared with $63 million in 1962-63.

[Stage Direction]
(in millions of dollars)
Atomic Energy	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Atomic Energy of Canada Limited- Research program-	31.2	28.6	2.6Construction or acquisition of buildings, works, land	13.6	8.4	5.1Write-off of the undepreciated capital cost of the	25.3	-25.3U.r	62. S	-17.6Atomic Energy Control Board-	0.9	0.8	0.10.1	0.1	t.o	0.9	0.145.7	63.2	-17.5
The decrease of $17 million is due mainly to the fact that in 1963-64 there is no charge comparable to the authorized write-off of $25 million in 1962-63 in respect of the undepreciated capital cost of the N.R.U. reactor.
During the fiscal year 1963-64, Atomic Energy of Canada Limited received $45 million in respect of its research program from the Government of Canada. Of this amount $31 million is for current operations and maintenance and $14 million for construction or acquisition of buildings, works, land and equipment. In 1962-63 the company received $37 million of which $29 million was for current operation and maintenance and $8 million for construction or acquisition.
Canadian Broadcasting Corporation
During 1963-64 payments by the government to the Canadian Broadcasting Corporation of $87 million are $6 million more than in 1962-63.

[Stage Direction]
(in millions of dollars)
Canadian Broadcasting Corporation	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Grants in respect of national broadcasting service-	78.2	72.6	5.66.8	6.4	0.486.0 1.9	7 9.0 1.8	6.0 0.1
86.9	80.8	6.1

The Budget-Appendix
Grants for net operating requirements are $78 million and grants for capital requirements for the national broadcasting service are $7 million in 1963-64 compared with $73 million and $6 million respectively in 1962-63.
Outlays of $2 million for the international broadcasting service are approximately the same as in 1962-63.
Central Mortgage and Housing Corporation
In 1963-64 budgetary expenditures of the government in respect of the Central Mortgage and Housing Corporation in the amount of $15 million are $6 million more than the total of $9 million in 1962-63.
TABLE 14 (in millions of dollars)
Central Mortgage and Housing Corporation	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Loans forgiven by the corporation	
Contributions to municipalities to assist in clearance, replan-	6.0	1.9	4.1ning, etc	4.6	4.2	0.4Losses sustained-	Federal-provincial projects	1.4	1.2	0.2Sale of mortgages	1.0	1.2 1.0	1.0Housing research and community planning	2.4 1.1	1.2 0.1Construction of national defence housing	0.4	0.4	14.5	8.7	5.8
Loans in the amount of $6 million, originally made to municipalities and municipal sewerage corporations, were forgiven by the Central Mortgage and Housing Corporation pursuant to section 36G of the National Housing Act and will be written off to budgetary expenditure upon parliamentary approval. Contributions of $5 million to municipalities to assist in the clearance, replanning, rehabilitation and modernization of blighted or sub-standard areas are approximately the same as in 1962-63.
Citizenship and Immigration
Expenditures of the Department of Citizenship and Immigration (which includes Indian affairs) in the amount of $73 million in 1963-64 are $7 million more than the 1962-63 total.
Indian affairs expenditures are $56 million, $5 million more than in 1962-63 due to increases of $2 million in respect of education, $2 million for welfare and $1 million for economic development.
Immigration expenditures of $14 million are $1 million higher than in the previous year.
[Stage Direction]
The Budget-Appendix
TABLE 15 (in millions of dollars)
Citizenship and Immigration	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Indian affairs-	31.3	29.1	2.214.0	12.3	1.75.7	5.6	0.13.6	2.3	1.31.7	1.7	56.3 13.6	51.0 12.5	5.S 1.11.6	1.6	Administration and general	1.2	1.1	0.172.7	66.2	6.5
External Affairs
Expenditures of the Department of External Affairs are $98 million in 196364, $13 million more than the previous year's total.

[Stage Direction]
(in millions of dollars)
External Affairs	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)External aid office-	41.5	41.5	2.26.6	4.4	0.6	0.6	48.7	46.5	2.216.4	15.0	1.4Contributions to international (including commonwealth)	14.5	8.8	5.7Canada's assessment for membership in international organ-	8.6	6.4	2.2Administration and general	9.6	8.5	1.197.8	85.2	12.6
Outlays of $49 million by the external aid office are $2 million more than in 1962-63 reflecting an increase in assistance to other countries.
Contributions to international organizations are $6 million more due to the fact that expenditures in 1963-64 include contributions for which there were no comparable expenditures in 1962-63.
Costs of assessment for membership in international organizations are $2 million higher and costs of representation abroad are $1 million higher than those in the previous fiscal year.

Finance
Expenditures for the Department of Finance are $1,403 million compared with $1,355 million in 1962-63.
The main changes resulting in the net increase of $48 million are an increase of $73 million in public debt charges and a decrease of'$23 million in payments to provinces.

[Stage Direction]
(in millions of dollars)
Finance	Fiscal year ending March 31		Increase or decrease (-)
	1964 (estimated)	1963	
Public debt charges	990.8	917.8	73.0Fiscal, tax-sharing, subsidy and other payments to provinces	252.4	275.3	-22.9Government's contribution to the public service superannuation account	54.0	51.1	2.9Grants to municipalities in lieu of taxes on federal property..	30.8	29.2	1.6Grants to universities- Payments to the Canadian Universities Foundation	26.8	26.3	0.5Office of the Comptroller of the Treasury-administration expenses	22.6	22.5	0.1Premium, discount and exchange	1.4	9.4	-8.0Government's share of medical-surgical insurance premiums	9.3	8.3	1.0Government's contribution as an employer to the unemployment insurance fund	0.9	0.9	Administration and general	13.8	14.3	-0.51,402.8	1,355.1	47.7
Public debt charges
Public debt charges are again the third largest item of budgetary expenditure being surpassed only by those for defence and those for health, welfare and social security.

[Stage Direction]
(in millions of dollars)
Interest and Other Public Debt Charges	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Interest on public debt- Unmatured debt including treasury bills- Payable in Canada	742.6	700.5	42.1Payable in London	0.3	1.1	-0.8Payable in New York	16.4	7.4	9.0759. S	709.0	50.3Other liabilities-	Annuity, insurance and pension accounts	1S9.3	169.4	19.9Deposit and trust accounts	3.4	3.2	0.2192. 7	172.6	20.1Total interest on public debt	952.0	881.6	70.4Other public debt charges-	Annual amortization of bond discounts and commissions	36.0	32.7	3.3Cost of issuing new loans	1.6	1.9	-0.3Servicing of public debt	1.2	1.6	-0.488.8	86.2	2.6990.8	917.8	73.0
The Budget-Appendix
Public debt charges consist of interest on the public debt, the annual amortization of bond discounts and commissions, the cost of issuing new loans and other costs incurred in servicing the public debt. In 1963-64 these charges total $991 million or 14 per cent of all budgetary expenditures compared with $918 million or 14 per cent in 1962-63.
Interest on public debt in 1963-64 amounts to $952 million of which $759 million is in respect of unmatured debt and $193 million in respect of other liabilities. The comparable amounts in 1962-63 were $882 million, $709 million and $173 million respectively.
The increase of $50 million in interest on unmatured debt is due mainly to an increase in unmatured debt. The increase of $20 million in interest on other liabilities is due mainly to increases of $13 million in respect of the Canadian forces superannuation account and $5 million in respect of the public service superannuation account. Of the increase in respect of the Canadian forces superannuation account $8 million is due to an adjustment of $199 million made in 1962-63 to bring the balance in the account into line with an actuarial valuation as at December 31, 1960 as calculated by the Department of Insurance.
Other public debt charges at $39 million are $3 million higher than in 1962-63, mainly attributable to annual amortization of bond discounts and commissions.
When considering the magnitude of these public debt charges and the burden they place upon the public treasury, it must be borne in mind that a substantial portion of the debt is attributable to, or is invested in, productive or earning assets. Therefore, in calculating the net burden of the government's annual interest charges, the income derived from loans, investments and other productive assets must be taken into account. For 1963-64 this income totals $364 million as shown in the non-tax revenue section under the heading "Return on investments". This amount deducted from the gross total of $952 million for interest as shown in the above table leaves a net amount of $588 million compared with a net of $570 million in 1962-63. Measured as a percentage of the net debt the burden of the net annual interest charges is 3.88 per cent in 1963-64 compared with 4.09 per cent in 1962-63.
TABLE 19 (in millions of dollars)
Net Burden of Annual Interest Charges	Fiscal year ending March 31		Increase or decrease (-)
	1964 (estimated)	1963	
	952.0 -364.0	881.6 -311.9	70.4 -52.1
			
			
	588.0	569.7	18.3
			
	3.88	4.09	
			
Fiscal, tax-sharing, subsidy and other payments to provinces
Payments to provinces in the amount of $252 million compare with $275 million in 1962-63.

The Budget-Appendix
However, in addition to the above payments, $384 million in provincial income taxes collected by the federal government on behalf of the provinces under tax-collection arrangements were remitted to the provinces. A more detailed explanation of these arrangements is given in the tax revenue section of this Part.

[Stage Direction]
(in millions of dollars)
Fiscal, Tax-Sharing, Subsidy and Other Payments to Provinces	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Payments under Federal-Provincial Fiscal Arrangements Act	218.9	218.3	0.6Payments under Federal-Provincial Tax-Sharing Arrangements Act, c. 29, Statutes of 1956, as amended	
Statutory subsidies	23.6	23.5 23.5	-23.5 0.1Transfer of certain public utility tax receipts	9.9	10.0	-0.1252.4	275.3	-22.9
A summary of payments, by provinces, during 1963-64 is given in the following table:

[Stage Direction]
(in millions of dollars)
Fiscal year ending March 31, 1964 (estimated)
Fiscal, Tax-Sharing, Subsidy and Other Payments to Provinces	Payments under fiscal arrange- ments	Statutory subsidies	Transfer of certain public utility tax receipts	TotalNewfoundland	33.1	1.7	0.2	35.0Nova Scotia	32.1	2.1	0.6	34.8Prince Edward Island	7.4	0.7	0.1	8.2New Brunswick	27.6	1.7	(1)	29.3Quebec	68.6	4.0	4.6	77.2Ontario	4.6	1.0	5.6Manitoba	16.4	2.1	0.1	18.6Saskatchewan	24.1	2.1	(1)	26.2Alberta	9.8	2.9	2.8	15.5British Columbia	-0.2	1.7	0.5	2.0218.9	23.6	9.9	252.4
<*) Less than $50,000
Government's contribution to the public service superannuation account
The government's contribution to the public service superannuation account (equal to the estimated current and prior service payments of individuals in
1962-	63) is $54 million compared with $51 million in 1962-63.
Premium, discount and exchange
Net expenditure of $1 million for premium, discount and exchange transactions during 1963-64 compare with $9 million in 1962-63.
The decrease of $8 million is due to the fact that there was no charge in
1963-	64 comparable to the adjustment of $10 million in 1962-63 resulting from the revaluing of the government's outstanding debt payable in New York and London at the official parity rates at March 31, 1963 ($1 U.S. = $1.08108 Can and £1 = $3,027 Can) rather than at the former rates ($1 U.S. = $1 Can and £1 = $2.80 Can).
[Stage Direction]
The Budget-Appendix
Fisheries
Expenditures of the Department of Fisheries are $24 million in 1963-64, $1 million more than in the previous year.
TABLE 22 (in millions of dollars)
Fisheries	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Conservation and development service	8.2	8.0	0.2Fisheries Research Board	6.5	6.9	-0.4Inspection service	2.2	2.1	0.1Newfoundland bait service	1.5	0.6	0.9Canadian share of the expenses of international commissions.	1.2	1.1	0.1Administration and general	4.5	4.6	-0.124.1	23.3	0.8
Forestry
Expenditures of the Department of Forestry amount to $18 million in 196364 compared with $16 million in 1962-63. The increase of $2 million is due mainly to the expenditures of the forest entomology and pathology branch.
TABLE 23 (in millions of dollars)
Forestry	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Forest entomology and pathology branch	5.2	3.7	1.5Contributions to the provinces- Assistance in forest inventory, reforestation, forest fire protection and forest stand improvement	4.5	4.4	0.1Forest access roads and trails	3.6	3.5	0.18.1	7.9	0.2Forest research	2.4	2.4	0.1Forest products research	1.3	1.2	Administration and general	1.1	1.0	0.118.1	16.2	1.9
Justice
Expenditures of the Department of Justice amount to $44 million in 1963-64 compared with $37 million in 1962-63. The increase is due mainly to increased expenditures of the Office of the Commissioner of Penitentiaries.
Expenditures in respect of patents, copyrights and trademarks, which in previous years were included in expenditures of the Department of the Secretary of State, are now included in expenditures of the Department of Justice. For purposes of comparison the 1962-63 expenditures have been transferred from the Department of the Secretary of State to the Department of Justice.

The Budget-Appendix
TABLE 24 (in millions of dollars)
Justice	Fiscal year ending March 31		Increase or decrease (-)
	1964 (estimated)	1963	
Judges' salaries and travelling allowances	6.6	5.2	1.4Patents, copyrights and trademarks	2.5	2.5	Administration and general	4.9	4.6	0.314.0	12.S	1.7Office of the Commissioner of Penitentiaries-	Operation and maintenance of penitentiaries	20.6	19.5	1.1Construction, improvements and equipment	8.2	4.4	3.8Administration	0.7	0.8	-0.129.5	24.7	4-843.5	37.0	6.5
Labour
Expenditures of the Department of Labour including the Unemployment Insurance Commission total $295 million in 1963-64, a decrease of $53 million from the 1962-63 expenditures.

[Stage Direction]
(in millions of dollars)
Labour	Fiscal year ending March 31		Increase or decrease (-)
	1964 (estimated)	1963	
Payments to provinces authorized by the Technical and			
Vocational Training Assistance Act	138.5	207.9	-69.4Municipal winter works incentive program	33.3	27.0	6.3Winter house building program	5.0	5.0Administration and general	9.4	7.9	1.5186.2	242.8	-56.6Unemployment Insurance Commission-	Government's contribution to the fund	58.8	57.3	1.5Administration and general	49.8	48.1	1.7108.6	105.4	S.2294.8	348.2	-53.4
Contributions to the provinces under the Technical and Vocational Training Assistance Act total $139 million in 1963-64, $69 million less than in 1962-63.
Payments under the municipal winter works incentive program to provinces and in respect of Indian bands amount to $33 million, $6 million more than the 1962-63 total. Under this program the Government of Canada contributes amounts not exceeding one-half of the cost of labour engaged on approved winter work projects.
Under the winter house building program payments are made, in accordance with terms and conditions approved by the Governor in Council, of $500 per dwelling unit substantially built during the period December 1, 1963 to March 31, 1964. In 1963-64 payments are $5 million.
[Stage Direction]
The Budget-Appendix
Unemployment Insurance Commission
Administration and general expenses of the Unemployment Insurance Commission are $50 million and the government's contribution to the unemployment insurance fund is $59 million in 1963-64 compared with $48 million and $57 million respectively in 1962-63.
Unemployment insurance benefit payments are not charged to budgetary expenditures but are paid from the fund which is financed by equal contributions from employees and employers, by interest earned on investments and by the government's contribution of an amount equal to one-fifth of the combined employee-employer contributions. Further information in regard to the fund is given under the liability category "Annuity, insurance and pension accounts".
Legislation
Costs of Legislation in 1963-64 are $13 million compared with $8 million in 1962-63. The increase is due mainly to increases in indemnities and expense allowances to members of the House of Commons and to members of the Senate.
TABLE 26 (in millions of dollars)
Legislation	Fiscal year ending March 31		Increase or decrease (-)
	1964 (estimated)	1963	
The Senate	2.5	1.8	0.7House of Commons	10.2	5.9	4.3Library of Parliament	0.4	0.4	13.1	8.1	5.0
Mines and Technical Surveys
Expenditures of the Department of Mines and Technical Surveys of $70 million are $1 million less than 1962-63 expenditures.
Outlays for marine sciences branch are $2 million less than 1962-63 expenditures.
TABLE 27 (in millions of dollars)
Mines and Technical Surveys	Fiscal year ending March 31		Increase or decrease (-)
	1964 (estimated)	1963	
Dominion coal board	20.0	20.4	-0.4Emergency gold mining assistance	15.3	15.2	0.1Marine sciences branch	9.0	11.0	-2.0Surveys and mapping branch	8.5	8.3	0.2Geological survey of Canada	6.6	6.2	0.4Mines branch	5.2	5.1	0.1Administration and general	5.3	4.9	0.469.9	71.1	-1.2
The Budget-Appendix
National Health and Welfare
Expenditures of the Department of National Health and Welfare amount to $1,203 million in 1963-64, an increase of $80 million over the 1962-63 total.
Outlays for the national health branch of $481 million are $59 million higher than the previous year's total, due mainly to an increase in the government's contributions under the Hospital Insurance and Diagnostic Services Act.
Outlays for the welfare branch of $715 million are $20 million above the 1962-63 total, due mainly to increases in family allowances and unemployment assistance payments.

[Stage Direction]
(in millions of dollars)
National Health and Welfahe	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)National health branch- Government's contributions under the Hospital Insurance and Diagnostic Services Act	390.0	336.7	53.3General health grants to provinces	31.0	30.3	0.7Medical services	30.9	28.9	2.0Hospital construction grants	22.0	20.0	2.0Other	7.3	6.3	1.0Welfare branch- Family allowances	481.2	422.2	59.0538.6	531.6	7.0Unemployment assistance	106.0	96.5	9.5Old age assistance	39.4	38.2	1.2Disabled persons allowances	20.3	19.6	0.7Blind persons allowances	5.0	4.9	0.1Fitness and amateur sport	2.0	1.0	1.0Other	3.9	3.4	0.5Administration and general	7 IS.2	695.2	20.06.5	6.0	0.51,202.9	1,123.4	79.5
Government's contributions under the Hospital Insurance and Diagnostic Services Act In 1963-64 contributions to the provinces under the Hospital Insurance and Diagnostic Services Act of $390 million compare with $337 million in 1962-63, an increase of $53 million.

[Stage Direction]
(in millions of dollars)
Government's contributions under the Hospital Insurance and Diagnostic Services Act	Fiscal year ending March 31		
	1964 (estimated)	1963	
Newfoundland		8.3 15.0 1.9 12.7 112.5 136.2 19.6 21.0 28.0 33.9 0.9	7.5 13.5 1.7 10.9 88.7 122.1 17.3 18.3 25.8 30.1 0.8	
Nova Scotia				
Prince Edward Island				0.2 1.8
New Brunswick				
Quebec				
Ontario				
Manitoba				
Saskatchewan				
Alberta				
British Columbia				3.8 0.1
Northwest and Yukon Territories				
			
	390.0	336.7	53.3
[Stage Direction]
The Budget-Appendix
General health grants and hospital construction grants to provinces
Grants to provinces during 1963-64 for general health services and the control of diseases are $31 million, $1 million more than in 1962-63.
Assistance in hospital construction of $22 million is $2 million more than in 1962-63.

[Stage Direction]
(in millions of dollars)
General Health Grants and Hospital	Fiscal year ending March 31, 1964 (estimated)		
Construction Grants	General health grants	Hospital construction grants	Total1.0	0.9	1.91.5	1.2	2.70.3	0.1	0.41.3	1.0	2.38.4	5.9	14.39.3	7.5	16.81.8	1.1	2.91.7	1.2	2.92.7	1.7	4.42.9	1.4	4.30.1	(1)	0.1
31.0	22.0	53.0
WLess than $50,000.
Family allowances
Family allowances are payable in respect of all children under sixteen years of age, resident in Canada, with minor exceptions such as in the case of children of immigrants who must reside in Canada one year before an allowance is payable. The monthly allowance is $6 if the child is under 10 years and $8 in the age group 10 to 15. Children of immigrants receive family assistance at the same rates during their first year of residence in Canada from appropriations of the Department of Citizenship and Immigration.
In 1963-64 payments of $539 million account for 8 per cent of all budgetary expenditure compared with $532 million and 8 per cent in 1962-63. The increase of $7 million reflects the increase in the number of children in the eligible age groups.

[Stage Direction]
(in millions of dollars)
Family Allowances Payments	Fiscal year ending March 31		Increase or decrease (-)
	1964 (estimated)	1963	
Newfoundland	16.7	16.6	0.1Nova Scotia	21.8	21.8	Prince Edward Island	3.3	3.3	New Brunswick	19.2	19.4	-0.2Quebec	162.3	160.3	2.0Ontario	175.7	172.7	3.0Manitoba	25.7	25.5	0.2Saskatchewan	26.7	26.5	0.2Alberta	41.2	40.3	0.9British Columbia	44.7	43.8	0.9Northwest and Yukon Territories	1.3	1.4	-0.1538.6	531.6	7.0
The Budget-Appendix
Old age assistance, disabled 'persons allowances, blind persons allowances and unemployment assistance
Under the Old Age Assistance Act, the federal government reimburses the provinces by paying 50 per cent of the lesser of $75 monthly or the amount of assistance given by the provinces in the form of monthly pensions to eligible persons in need who are in the age group 65 to 69. (Under the Old Age Security Act, all persons 70 years and over who satisfy the residence requirements of the act may receive a pension of $75 per month from the federal government out of the old age security fund.) Similarly, the federal government reimburses the provinces under the Blind Persons Act for allowances of not more than $75 per month to blind persons in need 18 years of age or over by paying 75 per cent of the total payments, and under the Disabled Persons Act by paying 50 per cent of not more than $75 per month for allowances to disabled persons in need 18 years of age or over. In 1963-64 payments for old age assistance of $39 million, for disabled persons allowances of $20 million and for blind persons allowances of $5 million compare with $38 million, $20 million and $5 million respectively in 1962-63.
Amendments to the Old Age Assistance Act, the Blind Persons Act and the Disabled Persons Act raised the maximum pension towards which the federal government would contribute from $65 to $75 per month, effective December 1, 1963. As increased payments are dependent on individual action by each province, expenditures in the fiscal year 1963-64 are not affected to any marked degree.
A similar increase was authorized in old age security payments, effective October 1, 1963, through an amendment to the Old Age Security Act.
Under the Unemployment Assistance Act, the Minister may, with the approval of the Governor in Council, enter into an agreement with any province for the payment by Canada to the province of contributions not exceeding 50 per cent of unemployment assistance costs in the province. All provinces have signed agreements with the federal government. Contributions in 1963-64 in the amount of $106 million compare with $97 million in 1962-63.
The following table presents a distribution of these payments to provinces for 1963-64:
TABLE 32 (in millions of dollars)
Federal Share of Old Age Assistance, Disabled Persons Allowances, Blind Persons Allowances and Unemployment Assistance	Fiscal year ending March 31, 1964 (estimated)			
Old age assistance	Disabled persons allowances	Blind persons allowances	Unem- ployment assistanceNewfoundland	2.0	0.6	0.3	4.5Nova Scotia	2.1	1.2	0.5	1.8Prince Edward Island	0.4	0.3	0.1	0.3New Brunswick	2.1	0.9	0.4	2.0Quebec	13.9	8.2	1.6	39.3Ontario	9.1	6.2	1.1	23.3Manitoba	2.1	0.6	0.2	5.4Saskatchewan	2.2	0.7	0.2	4.8Alberta	2.6	0.7	0.3	7.8British Columbia	2.8	0.9	0.3	16.7Northwest and Yukon Territories	0.1	(1)	(1)	0.139.4	20.3	5.0	106.0
WLess than $50,000.
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The Budget-Appendix
National Research Council, including the Medical Research Council
Expenditures of the National Research Council, including the Medical Research Council, are $47 million for 1963-64 compared with $41 million for 1962-63. Increases in research grants and assistance towards research in industry account for most of the change.
TABLE 33 (in millions of dollars)
National Research Council, Including the Medical Research Council	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Scholarships and grants in aid of research	17.3	14.7	2.6Construction or acquisition of buildings, works, land and equipment	4.3	2.6	1.7Assistance towards research in industry	1.7	0.5	1.2Administration and general	23.9	22.8	i.i47.2	40.6	6.6
National Revenue
Expenditures of the Department of National Revenue amount to $84 million in 1963-64, $5 million more than the 1962-63 total.
TABLE 34 (in millions of dollars)
National Revenue	Fiscal year ending March 31		Increase or decrease (-)
	1964 (estimated)	1963	
Customs and excise divisions	42.5	40.4	2.1Taxation division	40.9	38.0	2.9Income tax appeal board	0.2	0.2	83.6	78.6	5.0
Northern Affairs and National Resources
Expenditures of the Department of Northern Affairs and National Resources in the amount of $84 million are $2 million less than 1962-63 expenditures.
TABLE 35 (in millions of dollars)
Northern Affairs and National Resources	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Northern administration branch	37.9	41.8	-3.9National parks branch	24.9	26.2	-1.3Water resources branch	10.5	5.5	5.0Contributions to the provinces to assist in the development of roads leading to resources	9.3	10.4	-1.1Administration and general	1.7	2.5	-0.884.3	86.4	-2.1
The Budget-Appendix
The decrease in expenditures of the northern administration branch is mainly because there is no comparable expenditure in 1963-64 to a charge of $7 million in 1962-63 to cover a write-off of loans made to the Northern Canada Power Commission under the Northern Canada Power Commission Act for the construction and installation of central heating, water and sewage and fire alarm systems at Inuvik, Northwest Territories. However the costs of operation and maintenance in respect of the Northwest Territories in the amount of $9 million are $2 million higher than the 1962-63 costs.
The increase in expenditures of the water resources branch is mainly due to an increase of $5 million in contributions to the provinces towards the construction of dams and other works to assist in the conservation and control of water resources in accordance with agreements entered into between Canada and the provinces.
Expenditures in respect of the National Museum of Canada, which in previous years were included in expenditures of the Department of Northern Affairs and National Resources, are now included in expenditures of the Department of the Secretary of State. For purposes of comparison the 1962-63 expenditures have been transferred from the Department of Northern Affairs and National Resources to the Department of the Secretary of State.
Post Office
Costs of the Post Office Department charged to budgetary expenditure in 1963-64 are $208 million compared with $189 million in 1962-63.
Costs of operations at $136 million are $16 million higher due mainly to salary revisions.
Remuneration of postmasters and staffs at revenue and semi-staff offices and certain other authorized disbursements are paid from revenue. These payments are $35 million ($6 million greater than in 1962-63) bringing gross post office expenditures to $243 million for 1963-64.
TABLE 36 (in millions of dollars)
Post Office	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Charged to budgetary expenditure- Operations-salaries and other expenses of staff post offices, district offices and railway mail services; and supplies and equipment and other items for revenue post offices	136.2	120.0	16 2Transportation-movement of mail by land, air and water	66.1	63.9	2 2Financial services	3.3	3 4	-0.1Administration and general	2.1	2.1	*07.7	189.4	18. SCharged to revenue- Operations-salaries of postmasters and staffs at revenue and semi-staff offices, commissions paid at suboffices and other disbursements	35.0	29.5	5.5242.7	218.9	23.8
Privy Council
Expenditures of the Privy Council at $8 million compare with $3 million in
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The Budget-Appendix
Expenditures in respect of the centennial commission include $3 million for programs and projects of national significance and a grant of $2 million to the centennial of confederation fund.
Certain expenditures of the Emergency Measures Organization which in previous years were included in the expenditures of the Privy Council are now included in a separate heading under All Other Departments. For purposes of comparison the 1962-63 expenditures have been transferred from the Privy Council to All Other Departments.
TABLE 37 (in millions of dollars)
Privy Council	Fiscal year ending March 31		Increase or decrease (-)
	1964 (estimated)	1963	
Centennial Commission	5.0	1.3	3.7Royal commissions	2.0	1.2	0.8Administration and general	1.2	0.9	0.38.2	3.4	4.8
Public Works
Expenditures of the Department of Public Works in the amount of $171 million in 1963-64 compare with $163 million in 1962-63.

[Stage Direction]
(in millions of dollars)
Public Works	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Public buildings-construction and services-	42.9	43.8	-0.9Maintenance and operation	Acquisition, construction and improvements of public buildings-	11.9	9.7	2.2Ottawa	Other centres in Canada	11.6	13.4	-1.8Furniture and furnishings	2.3	2.2	0.1Fire prevention	0.2 68.9	0.2 69. S	-0.4Development engineering services- Trans-Canada highway division- Contributions to the provinces under the terms of the	45.0	29.2	15.8Trans-Canada Highway Act	Construction through national parks	2.1	3.8	- 1.7General	4.2	2.3	1.951.S	S5.S	16.0Harbours and rivers engineering services- Acquisition, construction and improvements of harbour	14.9	21.2	-6.3and river works	Dredging	4.2	4.0	0.2General	4.2	4.2	-6.126. S	29.4	National Capital Commission	12.3	13.0	-0.7Administration and general	15.3	15.7	-0.4171.1	162.7	8.4
Outlays for maintenance and operation of the public buildings at $43 million are $1 million less than the 1962-63 total.

The Budget-Appendix
Costs of acquisition, construction and improvements of public buildings are $24 million of which $12 million is in respect of Ottawa and $12 million in respect of other centres in Canada. In 1962-63 comparable figures were $23 million, $10 million and $13 million, respectively.
Expenditures relating to the trans-Canada highway consist of $45 million in contributions to the provinces and $2 million in respect of construction of the highway through national parks. In 1962-63 comparable expenditures were $29 million and $4 million respectively.
Outlays for the acquisition, construction and improvements of harbour and river works of $15 million compare with $21 million in 1962-63 and outlays for dredging are approximately the same as in 1962-63.
Royal Canadian Mounted Police
Expenditures of the Royal Canadian Mounted Police total $67 million in 1963-64 compared with $65 million in 1962-63. Arising from these expenditures are payments received for police services totalling $15 million in 1963-64 which is credited to revenue. In 1962-63, $13 million was received and credited to revenue.
TABLE 39 (in millions of dollars)
Royal Canadian Mounted Police	Fiscal year ending March 31		Increase or decrease (-)
	1964 (estimated)	1963	
Land, air and training divisions	50.0	49.1	0.9Headquarters administration and national police services...	8.4	8.2	0.2Pensions and other benefits	
Government's contribution to Royal Canadian Mounted	4.0	3.7	0.3Police superannuation account	3.1	2.6	0.5Marine services	1.8	1.8	67.3	65.4	1.9
Trade and Commerce
Expenditures of the Department of Trade and Commerce at $73 million are $7 million more than the 1962-63 total, due mainly to higher expenditures of the Canadian Wheat Board in respect of carrying costs of temporary wheat reserves.
Expenditures of the Canadian Wheat Board, which in previous years were included in the expenditures of the Department of Agriculture, are now included in expenditures of the Department of Trade and Commerce. For purposes of [DOT]comparison the 1962-63 expenditures have been transferred from the Department *of Agriculture to the Department of Trade and Commerce.
TABLE 40 (in millions of dollars)
Trade and Commerce	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Ganadian Wheat Board- Carrying costs of temporary wheat reserves	39.6	35.2	4.4Prairie Grain Advance Payments Act	0.9	0.5	0.4Dominion Bureau of Statistics	40.5 12.4	S5.7 11.9	4.8 0.5Trade commissioner service	6.3	5.6	0.7Canadian government travel bureau	3.8	3.4	0.4Standards branch	3.1	2.9	0.2National Energy Board	0.6	0.5	0.1Administration and general	6.0	6.1	-0.172.7	66.1	6.62	HOUSE OF COMMONS
The Budget-Appendix
Transport
Expenditures of the Department of Transport amount to $428 million in 1963-64. In 1962-63 comparable expenditures were $416 million.
TABLE 41 (in millions of dollars)
Transport	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Air services- Civil aviation branch	64.1	81.3	-17.2Telecommunications and electronics branch	32.6	30.7	1.9Meteorological branch	20.4	19.3	1.1Administration	5.9	5.6	0.31ZS.0	156.9	-15.9Railway and steamship services- Railway to Great Slave Lake	21.7	12.2	9.5Maritime Freight Rates Act- Difference between tariffs and normal tolls	13.5	12.9	0.6Victoria Bridge	6.8	6.8Auto-ferries, docks and terminals	1.5	3.0	-1.5Deficits- Canadian National Railways	43.0	48.9	-5.9Newfoundland ferry and terminals	8.6	8.2	0.4Prince Edward Island car ferry and terminals	3.4	3.3	0.1Yarmouth, N.S.-Bar Harbour, Maine, U.S.A., ferry service	0.2	0.2	-0.1Other	0.6	0.7	99. S	89.4	9.9Board of Transport Commissioners for Canada- Interim payments related to the recommendations of the Royal Commission on Railway Problems	50.0	50.0	Freight Rates Reduction Act	20.0	20.6	-0.6Maintenance of trackage	7.0	7.0	-0.7Contributions to the railway grade crossing fund	5.1	5.8	Administration and general	1.4	1.3	0.185.6	84.7	-l.tMarine services- Canadian coast guard	36.5	32.1	4.4Aids to navigation	10.5	10.5	-0.3Marine regulations	3.7	4.0	Ship channel services-St. Lawrence and Saguenay rivers	7.3	4.5	2.8Canals	4.7	5.3	-0.6Administration and general	1.2	1.4	-0.265.9	67.8	6.1Canadian Maritime Commission	49.8	31.0	18.8Trans-Canada Air Lines-deficit	3.5	-3.5Non-active advances-National Harbours Board	0.4	5.2	-4.8Canals and works entrusted to The St. Lawrence Seaway Authority	3.5	2.9	0.6Administration and general	4.7	4.6	0.1428.1	416.0	12.1
Air services
Outlays for air services are $123 million compared with $137 million in 1962-63. The decrease is due mainly to a reduction in expenditures for construction or acquisition of buildings, works, land and equipment by the civil aviation branch.

The Budget-Appendix
Railway and steamship services
Expenditures of $99 million for railway and steamship services are $10 million more than in 1962-63. There is an increase of $10 million in payments in respect of construction of a line of railway to Great Slave Lake. Expenditures in 1963-64 in connection with the Victoria Bridge (for which there was no comparable amount in the previous fiscal year) total $7 million, of which $4 million is in respect of the discontinuance of the collection of tolls and $3 million for rail diversion. Partly offsetting these increases is a decrease of $6 million in the charge to budgetary expenditure in respect of the deficit of the Canadian National Railways. In 1963-64, $43 million is included in expenditures to cover the 1963 deficit compared with $49 million in 1962-63 to cover the 1962 deficit.
Marine services
Expenditures for marine services amount to $64 million compared with $58 million in 1962-63. The increase of $6 million is due mainly to increases of $4 million in outlays for the Canadian coast guard and $3 million for the St. Lawrence and Saguenay rivers ship channel services.
Canadian Maritime Commission
Expenditures of the commission increased from $31 million for 1962-63 to $50 million for 1963-64. Capital subsidies for construction of commercial and fishing vessels total $40 million compared with $23 million in 1962-63, accounting for most of the increase.
Veterans Affairs
Expenditures of the Department of Veterans Affairs of $335 million are $1 million less than the 1962-63 total.
TABLE 42 (in millions of dollars)
Veterans Affairs	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Canadian Pension Commission-	Pensions for disability or death	173.4	175.9	2 5Administration and general	2.6	2.7	-0.1176.0	178.6	-2.6War veterans allowances and other benefits...	92.1	90 2	1.9 0.4Treatment and rehabilitation services	51.3	50.9	Soldier settlement and veterans land acts-	Provision for reserve for conditional benefits, veterans	land act	3.3	3 2	0.1Administration and general	4.6	4.6	7.9	7.8	0.1War service gratuities and re-establishment credits	0.4	1 0	Administration and general	7.0	7.1	-0.1334.7	335.6	-0.9
Expenditures in respect of the Canadian Pension Commission are $176 million compared with $179 million in 1962-63. Pensions for disability or death which constitute the greatest part of these expenditures amount to $173 million, $3 million less than in 1962-63.
[Stage Direction]
The Budget-Appendix
War veterans allowances and other benefits amount to $92 million compared with $90 million in 1962-63. The increase of $2 million is due mainly to an increase in payments made under the War Veterans Allowance Act and the Civilian War Pensions and Allowances Act. Payments under these acts are made principally to elderly, qualified persons who are incapable of maintaining themselves.
All Other Departments
Expenditures of the departments not dealt with individually amount to $44 million, an increase of $4 million over the total for 1962-63.
TABLE 43 (in millions of dollars)
All Other Departments	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Auditor General's Office	1.3	1.2	0.1Board of Broadcast Governors	0.4	0.4	Office of the Chief Electoral Officer	11.8	11.8	Civil Service Commission	5.2	4.8	0.4Defence Production^	2.0	2.0	Emergency Measures Organization	7.0	5.4	1.6Governor General and Lieutenant-Governors	0.5	0.5	Industry	0.7	0.71.4	1.4	National Film Board	5.7	5.6	0.1National Gallery of Canada	1.1	1.0	0.1Public Archives and National Library	1.1	1.0	0.1Public Printing and Stationery	2.1	2.0	0.1Office of the Representation Commissioner	0.1	0.1Secretary of State	3.8	3.5	0.344.2	40.6	3.6
(DSee also under defence expenditures at the beginning of this section.
Expenditures of the Emergency Measures Organization which in previous years were included in the expenditures of the Department of National Defence and the Privy Council are now included as a separate heading under All Other Departments. Expenditures of the National Museum of Canada which in previous years were included in the expenditures of the Department of Northern Affairs and National Resources are now included in the expenditures of the Department of the Secretary of State. Expenditures in respect of patents, copyrights and trademarks which in previous years were included in the expenditures of the Department of the Secretary of State are now included in the expenditures of the Department of Justice. For purposes of comparison previous years figures have been adjusted accordingly.
MARCH 16. 1964	Ills
The Budget-Appendix
4.	STATEMENT OF ASSETS AND LIABILITIES OF CANADA AS AT MARCH 31, 1964
The assets and liabilities of the Government of Canada at March 31, 1964, the comparable balances at March 31, 1963 and the changes in each category during 1963-64, are shown in condensed form in the following table.

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Summary of Assets and Liabilities of Canada (in millions of dollars)
	Balance at March 31		Increase
1964 (estimated)	1963	decrease (-)Liabilities Current and demand liabilities	1,587.3 200.7 5,133.2 103.7 122.3 6.1 18,718.6	1,631.3 225.2 4,747.0 120.0 107.7 6.1 17,961.8	-44.0 -24.5 386.2 -16.3Deposit and trust accounts	Annuity, insurance and pension accounts	Undisbursed balances of appropriations to special accounts	
Deferred credits	Suspense accounts	Unmatured debt	756.8
Total liabilities		25,871.9	24,799.1	
			
Assets Current assets		1,030.6 2,688.0	820.3 2.736.0 22.3 4.468.1 1,210.8 1,110.7 26.0 524.8 276.7 3.5 131.6 936.6 0.2 <i)	
Advances to the exchange fund account				-48.0
Sinking fund and other investments held for retirement of unmatured debt				
Loans to, and investments in, Crown corporations...	4,627.8		159.7 -13.1 100.3
Loans to national governments		L197.7 1,211.0 32.7		
Other loans and investments				
Securities held in trust				
Deferred charges- Unamortized portions of actuarial deficiencies- Canadian forces superannuation account				-524.8
Public service superannuation account		276.7		
Royal Canadian Mounted Police superannuation account				
Unamortized loan flotation costs		123.0		-8.6 -S36.9
Suspense accounts		S99.7 0.2 (0		
Capital assets				
Inactive loans and investments		94.8	94.8	
			
Total assets		11,282.5 -546.4	11,425.8 -546.4	
Less reserve for losses on realization of assets				
			
Net assets		10,736.1	10,879.4	
			
Net debt, represented by excess of liabilities over net assets...	15,135.8	13,919.7	<*>1,216.1
(1) Shown at nominal value of SI.
<2>
Reflecting the budgetary deficit of $685 million plus an adjustment of $531.1 million in respect of prior years transactions.
Summary
The gross liabilities of the government are estimated at $25,872 million as at March 31, 1964 compared with $24,799 million at March 31, 1963. The main items effecting the increase of $1,073 million are increases of $757 million in unmatured debt, $386 million in annuity, insurance and pension accounts and a decrease of $44 million in current and demand liabilities.
Net assets are estimated at $10,736 million as at March 31, 1964, a decrease of $143 million from the total at March 31, 1963. The main changes are a decrease of $537 million in deferred charges and increases of $210 million in current assets, $160 million in loans to, and investments in, Crown corporations and $100 million in other loans and investments.
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The Budget-Appendix
The net debt of Canada, or the excess of liabilities over net assets, in the amount of $15,136 million is $1,216 million higher than the March 31, 1963 total of $13,920 million. The increase reflects the budgetary deficit of $685 million plus an adjustment of $531 million in respect of prior years' transactions.

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|o/0 OTHER LIABILITIES |°/fe DEPOSIT AND TRUST ACCOUNTS CURRENT AND DEMAND LIABILITIES

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Fiscal Years Ended March 31 Billions of Dollars
I960	1961	1962	1963
*Esliniat«d
Changes in Liability Accounts
Current and demand liabilities
These consist of obligations of the government payable currently or on demand.
During 1963-64 a net decrease of $44 million in these obligations brings the total at March 31, 1964 to $1,587 million.

[Stage Direction]
(in millions of dollars)
Current and Demand Liabilities	Balance at March 31	Increase1964 (estimated)	1963	decrease (-)Outstanding treasury cheques	276.4	266.4	10.0Accounts payable	317.4	267.4	50.0Non-interest-bearing notes payable to-	19.3	5.7The international development association	25.0	The international monetary fund-	370.0	Canada's subscription	370.0	-154.0Other	214.0	368.0	609.0	757. S	-H8.SMatured debt outstanding	44.4	32.4	12.0Interest due and outstanding	93.0	79.5	13.5Interest accrued	215.0	197.0	18.0Post office-outstanding money orders	27.1	26.2	0.9Outstanding letter of credit cheques	4.6	4.6	-0.1Other current liabilities	0.4	0.5	1,587.3	1,631.3	-44.0
The Budget-Appendix
The main changes are a decrease of $148 million in non-interest-bearing notes and increases of $50 million in accounts payable, $12 million in matured debt outstanding, $18 million in interest accrued, $14 million in interest due and outstanding and $10 million in outstanding treasury cheques.
Non-interest-bearing notes are those portions of Canada's equities in the capital of certain international agencies which are not covered by cash or gold. During 1963-64 notes in respect of the international monetary fund were reduced by $154 million to a balance of $584 million at March 31, 1964 and notes in respect of the international development association increased by $6 million.
Deposit and trust accounts
Sundry funds, deposited with, or held in trust by, the Receiver General of Canada for various purposes are recorded in these accounts.
TABLE 46 (in millions of dollars)
Deposit and Trust Accounts	Balance at March 31	Increase1964 (estimated)	1963	decrease (-)Indian trust funds	29.2 24.1	Post office savings bank	Crown corporations deposits- Atomic Energy of Canada Limited	16.4 0.4 13.2 SO.O	-16.4Crown Assets Disposal Corporation	0 4	Eldorado Mining and Refining Limited.	13 2	IS.6	-16.4Contractors securities-sundry departments- Bonds	-2.8Cash	Certified cheques	0.6 8.0	- 1.6 -0.6 -5.01S.0	Contractors holdbacks	13.4 5.0 13 3	-4.3 -11.1Korean operations pool	Instalment purchase of bonds, public service	12.3	United States of America	4.8 1.4	-1.1Canadian Arsenals Limited pension fund...	1 F	Canadian Pension Commission-administration trust fund...	13.6	13.0	0.6Guarantee deposits- National Revenue	4 5	0.1 15.1 15.2Northern Affairs and National Resources....	23.2	8.1 12.5	.57.7	National Harbours Board-special accounts	11 7	7.8	3.9 -0.3Army benevolent fund	5.7	Soldier settlement and veterans land acts trust account- general	Permanent services deferred pay	3.7 2.7	0.2 0.5Common school funds-Ontario and Quebec	2.7	Veterans care trust fund	0.1 0.3 0.5 -7.6 0.6National Research Council-special fund	2 3	2.0 1.5	Emergency gold mining assistance-holdbacks	2.0	Canadian National Railways	Other	
200.7	225.2	-24.5
1118
[Stage Direction]
The Budget-Appendix
There is a net decrease of $25 million in these accounts during the year. Decreases of $16 million in Crown corporations deposits, $11 million in the Korean operations pool, $8 million in respect of the Canadian National Railways, $5 million in contractors securities and $4 million in contractors holdbacks are partly offset by increases of $15 million in guarantee deposits of the Department of Northern Affairs and National Resources and $4 million in the National Harbours Board-special accounts.
Annuity, insurance and pension accounts
Recorded herein are moneys held in the consolidated revenue fund to the credit of various annuity, insurance and pension accounts.
During 1963-64 an increase of $386 million brings the total balance to $5,133 million as at March 31, 1964. The main changes are increases of $218 million in the Canadian forces superannuation account, $135 million in the public service superannuation account and $21 million in the government annuities account.

[Stage Direction]
(in millions of dollars)
Annuity, Insurance and Pension Accounts	Balance at 1964 (estimated)	March 31 1963	Increase or decrease (-)Unemployment insurance fund	12.6	26.4	-13.8Less investment in bonds and accrued interest	-11.8	11.8Uninvested funds on deposit with the government	12.6	14.6	-2.0Government annuities	1,285.1	1,264.4	20.7Public service superannuation account	1,859.4	1,724.1	135.3Canadian forces superannuation account	1,823.9	1,605.8	218.1Royal Canadian Mounted Police superannuation account	46.0	37.3	8.7106.2	100.8	5.45,133.2	4,747.0	386.2
Unemployment insurance fund
The estimated balance in the fund as at March 31, 1964 is $13 million. However, there is a liability of $18 million for unredeemed warrants and deposits from employers. At March 31, 1963 the balance was $26 million (of which $17 million represented a liability for unredeemed warrants and deposits from employers) and consisted of $12 million invested in special government bonds (plus accrued interest) and $14 million on deposit with the Receiver General of Canada.
Receipts during the fiscal year of $357 million include employees and employers contributions of $297 million, the government's contribution of $59 million and $1 million in interest from investments. As benefit payments total $372 million there is a deficit for the year of $15 million. In 1962-63 receipts totalled $346 million (including employees and employers contributions of $286 million, the government's contribution of $57 million and $3 million in interest from investments) and total expenditures were $403 million for benefit payments, resulting in a deficit of $57 million for the year.

The Budget-Appendix
TABLE 48 (in millions ol dollars)
Fiscal year ending March 31
Unemployment Insurance Fund	I960	1961	1962	1963	1964 (esti- mated)
Revenue-					
Contributions-					
Employees and employers^1*	228.6	275.2	277.8	286.4	296.4Government^	45.7	55.1	55.5	57.3	59.3Net income from investments	8.4	2.7	6.2	2.5	1.3Other income	0.1	0.1	0.1	0.1	0.1282.8	333.1	339.6	346.3	357.1Expenditure-	Benefit payments	-415.2	-513.9	-454.7	-403.2	-371.6Interest on loans	-1.5	-0.4	-3.0	-0.3Excess of expenditure over revenue	-133.9	-181.2	-118.1	-56.9	-14.8Balance at credit of fund at fiscal year-end	365.9	184.7	66.6	9.7	-5.1Government loans	67.0	Unredeemed benefit warrants and deposits from	employers	11.4	12.9	11.6	16.7	17.7377.3	264.6	78.2	26.4	12.6Investment in bonds and accrued interest	-354.5	-247.0	-63.6	-11.8	Balance on deposit with the government	22.8	17.6	14.6	14.6	12.6
Contributions by employees and employers are on an equal basis.
<!>
Government contribution is equal to 20 per cent of the combined employee-employer contributions.
Government annuities account
An increase of $21 million in this account during the year brings the balance to $1,285 million as at March 31, 1964. Receipts of $78 million include $30 million from premiums and $48 million in interest from the government. Disbursements of $57 million consist mainly of vested annuity and commuted value payments and refunds of premiums. In 1962-63 receipts amounted to $85 million and disbursements were $56 million.
Public service superannuation account
The balance of $1,859 million in this account as at March 31, 1964 is $135 million higher than the balance at the previous fiscal year-end.
Receipts of $186 million consist of contributions of $57 million by individuals, $54 million by the government, $3 million by certain Crown corporations and interest of $72 million credited to the account by the government. Contributions by the government and Crown corporations are equal to the estimated current and prior service payments of individuals in 1962-63.
Disbursements of $51 million include $43 million in annuities and $8 million in withdrawals of contributions.
In 1962-63 receipts were $189 million and disbursements were $52 million.
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Canadian forces superannuation account
The balance of $1,824 million in this account reflects an increase of $218 million during the fiscal year.
Receipts of $239 million consist of $37 million in contributions by personnel, $60 million in contributions by the government at the rate of one and two-thirds times the current and prior service contributions by personnel, $66 million in interest credited by the government and a contribution of $76 million to provide, subject to parliamentary approval, for additional liabilities resulting from increased rates of pay.
Disbursements of $21 million include $13 million in pensions and retiring allowances and $8 million in cash termination allowances and return of contributions.
In 1962-63 receipts were $344 million and disbursements were $18 million.
Royal Canadian Mounted Police superannuation account
A balance of $46 million in this account as at March 31, 1964 compares with $37 million at March 31, 1963.
Receipts of $10 million consist of $2 million in contributions by personnel, $3 million in contributions by the government, $2 million in interest credited by the government and a credit of $3 million in respect of additional liabilities resulting from increased'rates of pay.
Disbursements are due mainly to annuities and allowances of $300 thousand and cash termination allowances and return of contributions of $200 thousand.
In 1962-63 receipts were $6 million and disbursements were $1 million.
Old age security fund
Under the Old Age Security Act, as amended, pensions at $75 per month (increased from $65 per month effective October 1, 1963) are paid, without a means test, from the old age security fund to all eligible persons seventy years of age or over.
During 1963-64 pension payments at $809 million are $64 million more than receipts of $745 million of which $327 million is from the 3 per cent sales tax, $302 million from the tax on personal incomes which was increased effective January 1, 1964 to 4 per cent with a maximum tax of $120 from 3 per cent with a maximum tax of $90, and $116 million from the 3 per cent tax on corporation profits.
During the year additional temporary loans of $64 million from the Minister of Finance to cover the 1963-64 deficit in the fund brings the total of temporary loans to $105 million as at March 31, 1964.
In 1962-63 pension payments of $734 million exceeded receipts of $691 million by $43 million. As there was a balance of $2 million in the fund at the beginning of the 1962-63 fiscal year temporary loans of $41 million were required to meet the 1962-63 deficit.

The Budget-Appendix
TABLE 49 (in millions of dollars)
Fiscal year ending March 31
Old Age Security Fund	I960	1961	1962	1963	1964 (esti- mated)Tax receipts- Sales tax	270.0	270.2	284.9	302.2	327.0Personal income tax	185.6	229.4	259.0	273.7	302 0Corporation income tax	91.3	103.5	100.1	115.2	116.0Total tax receipts	546.9	603.1	644.0	691.1	745 nPension payments	-574.9	-592.4	-625.1	-734.4	-809.0Excess of receipts over payments	
Temporary loans brought forward	-28.0	10.7 -28 0	18.9 -17.3	-43.3	-64.0 -41.7 105.7Balance in fund brought forward	
Temporary loans from the Minister of Finance to cover deficit in fund	28.0	17.3	1.0 41.7	Balance in fund	1.6	
A distribution by provinces of pension payments from the old age security fund for the last two years is shown in the following table:
TABLE SO (in millions of dollars)
Old Age Security Payments	Fiscal year ending March 31		Increase
	1964 (estimated)	1963	
Newfoundland				1.4
Nova Scotia		37.1 6.5 27.3		
Prince Edward Island				
New Brunswick				
Quebec				
Ontario				
Manitoba		48.9 50.7		
Saskatchewan				
Alberta				
British Columbia		102.7 0.6		
Northwest and Yukon Territories			0.5	0.1
			
	809.0	734.4	74.6
Undisbursed balances of appropriations to special accounts
These special accounts record the undisbursed balances of appropriations for which moneys have been appropriated by Parliament and from which disbursements may be made for authorized purposes in periods subsequent to that m which the appropriation was made. There is a net decrease of $16 million in these accounts during the fiscal year bringing the balance as at March 31, 1964 to $104 million.
During the fiscal year a grant of $42 million was credited to the Colombo plan fund and charged to budgetary expenditure. Disbursements of $50 million result in a balance of $77 million in the fund as at March 31, 1964. In 1962-63 there was a grant of $42 million and disbursements were $34 million resulting m a balance of $85 million at March 31, 1963.
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TABLE 51 (in millions of dollars)
Undisbuiisf.d Balances of Appropeiations to Special Accounts	Balance at March 31	Increase1964 (estimated)	1963	or decrease (-)77.1	85.3	-8.2 -9.017.7	26.7	5.8	6.8	- 1.03.0	1.0	2.0 -0.10.1	0.2	103.7	120.0	-16.3
The balance in the railway grade crossing fund as at March 31, 1964 of $18 million is $9 million less than at the previous year-end. The decrease is the result of disbursements of $14 million exceeding the $5 million credited to the fund and charged to budgetary expenditure.
The balance in the national capital fund as at March 31, 1964 of $6 million is $1 million less than the balance at the previous year-end. Disbursements of $9 million from the fund exceed credits of $8 million to the fund by the government.
The centennial of confederation fund in the amount of $3 million reflects a grant of $2 million by the government in 1963-64 and $1 million in 1962-63. There have been no disbursements from the fund.
Deferred credits
Recorded in these accounts are amounts due the government in respect of which payment has been deferred. These are contra accounts to corresponding items under the following asset categories: "Loans to, and investments in. Crown corporations", "Loans to national governments" and "Other loans and investments". There is a net increase of $15 million in these accounts during the fiscal year, bringing the balance at March 31, 1964 to $122 million.
TABLE 52 (in millions of dollars)
	Balance at March 31		Increase
Deferred Credits	1964 (estimated)	1963	or decrease (-)Deferred interest- .	66.3	49.4	16.944.2	44.2	1.5	1.5	16.9 -2.1Balances receivable under agreements of sale of Crown	112.0 4.6	95.1 6.7	Crown Assets Disposal Corporation- Government equity in agency account	5.7	5.9	-0.2122.3	107.7	14.6
The Budget-Appendix
Deferred interest in respect of The St. Lawrence Seaway Authority, which is a contra account to a corresponding item in "Loans to, and investments in, Crown coiporations , increased by $17 million during the year bringing the balance at March 31, 1964 to $66 million.
Balances receivable under agreements of sale of Crown assets are contra accounts to corresponding items under the asset category "Other loans and investments". During the year payments of $2 million leave an outstanding balance of $5 million as at March 31, 1964. There were no new agreements of sale during the year.
The government equity in the agency account of Crown assets disposal corporation is a contra account to a corresponding asset account under "Other loans and investments". The balance in the account as at March 31, 1964 is $6 million, approximately the same as at the previous fiscal year-end.
Suspense accounts
These consist of balances where some uncertainty as to disposition exists.

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(in millions of dollars)
Suspense Accounts	Balance at March 31		
1964 (estimated)	1963	or decrease (-)Replacement of materiel, sec 11, National Defence Act, Unclaimed cheques	1.0	1.1	-0.1Other	0.1
6.1	6.1	
The replacement of materiel account, which was established by section 11 of the National Defence Act, is credited with amounts realized from the sale of materiel that has not been declared surplus to requirements but has been authorized by the Governor in Council to be sold to other countries. The account is debited with disbursements representing amounts paid for procurement of replacement materiel. During 1963-64 credits and disbursements are each under $500 thousand resulting in the balance remaining approximately the same as at March 31, 1963.
Unmatured debt
The unmatured debt at the close of the 1963-64 fiscal year is estimated at $18,719 million, $757 million more than at the close of the previous fiscal year Obligations payable in Canada are $18,342 million and those payable in New York $377 million. At March 31, 1963 unmatured debt consisted of $17,551 million payable in Canada, $34 million payable in London and $377 million payable in New York.
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(in millions of dollars)
Unmatured Debt	Balance at March 31		Increase or decrease (-)
	1964 (estimated)	1963	
Payable in Canada-	11.041.4 5,070.8 16.112.5 2,230.0	10,792.2 4,582.1 11.5 15,385.8 2,165.0	249.2 488.7 - 11.5 726 4 65.0
Non-marketable bonds-			
			
			
	18,342.2 376.4	17,550.8 34.6 376.4	791.4 -34.6
			
	18,718.6	17,961.8	756.8
(^Marketable bonds.
(*>
Converted at the official parity rate of £1 = $3,027 Can. Converted at the official parity rate of $1 U.S. = $1.08108 Can.
The details of the various loan issues, maturities, redemptions and conversions resulting in the net increase are described more fully in the section 1 he Public Debt".

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Fiscal Years Ended March 31
Current assets
These accounts consist of working capital advances and revolving funds, the securities investment account and various cash accounts.
MARCH 16, 1964	j
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Total current assets estimated at $1,031 million reflect an increase of $210 million during the year. The main changes are increases of $218 million in cash in current and special deposits and $42 million in the securities investment account and a decrease of $68 million in the agricultural commodities stabilization account.
TABLE 55 (in millions of dollars)
	Balance at March 31		
Current Assets	1964 (estimated)	1963	Increase or decrease (-)Cash in current and special deposited)	595.5	377.3	218.2Cash in hands of collectors and in transit	134.1	134.1	Departmental working capital advances and revolving funds- Agricultural commodities stabilization account....	71.0	139.0	-68.0Defence production revolving fund	37.0	39.1	-2.1Royal Canadian Mint	30.7	27.2	3.5Miscellaneous departmental imprest and advance accounts	20.0	19.7	0.3Stockpiling of uranium concentrates (Trade and Commerce)	15.0	15.0Other	19.1	18.3	0.8192.8	24S.S	-BO. 5Securities investment account...	75.4	33.5	41.9Moneys received after March 31 but applicable to the current year	16.7	16.7	Post Office-cash on hand and in transit	16.1	15.4	0.71,030.6	820.3	210.3
(I)Receiver General year-end balances in London, New dollar equivalent of exchange rates at March 31.
York, Paris and Bonn are at the Canadian
The agricultural commodities stabilization account records the operations of the Agricultural Stabilization Board. During 1963-64 it is estimated that the board's operations will result in a net decrease in the account of $68 million bringing the balance as at March 31, 1964 to $71 million.
The balances of $31 million in the Royal Canadian Mint bullion and coinage accounts are $4 million higher than at March 31, 1963.
Stockpiling of uranium concentrates is a new account to record the acquisition of uranium concentrates in accordance with contracts to be entered into with the approval of the Governor in Council by the Eldorado Mining and Refining Limited on behalf of Her Majesty in right of Canada with certain mining companies. The balance as at March 31, 1964 is estimated at $15 million.
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Advances to the exchange fund account
Advances during the year to the exchange fund account to finance the purchase of gold and foreign exchange amount to $754 million and repayments to $802 million, a decrease of $48 million bringing outstanding advances to $2,688 million at March 31, 1964.
During 1962-63 advances were $1,991 million, repayments were $1,048 million and outstanding advances were $2,736 million at March 31, 1963.
Sinking fund and other investments held for the retirement of unmatured debt
As the 1933-63 Newfoundland stock matured on July 1, 1963, the holdings of that stock in this account were liquidated leaving a nil balance in the account at March 31, 1964.
Loans to, and investments in, Crown corporations
Loans and investments in this category total $4,628 million, an increase of $160 million over the total at March 31, 1963.
TABLE 56 (in millions of dollars)
Loans to, and Investments in, Crown Corporations	Balance at March 31	Increase1964 (estimated)	1963	decrease (-)58.8	53.3	5.55.9	5.9	-1.06.5	7.5	3.0	3.0	-1.08.5	9.5	1,415.9	1,434.7	-18.84.6	4.6	Canadian National (West Indies) Steamships Limited	1,420.5 0.3 60.3	1,439.S 0.3 49.3	-18.8 11.01,924.8	1,802.8	122.08.2	8.2	66.9	34.9	32.0341.0	269.0	72.055.2	40.9	14.3198.5	192.6	5.922.5	19.0	3.5110.6	-110.630.0	30.0	The St. Lawrence Seaway Authority-	349.5	341.5	8.066.3	49.4	16.9Other Crown Corporations	415.8 1.1	390.9 1.1	24.94,627.8	4,468.1	159.7
Canadian National Railways (including Trans-Canada Air Lines)
Outstanding advances to the Canadian National Railways at March 31, 1964 of $1,420 million compare with $1,439 million at the previous fiscal year-end, a decrease of $19 million.

The Budget-Appendix
TABLE 57 (in millions of dollars)
Advances to the Canadian National Railways	Balance at March 31	Increase1964 (estimated)	1963	or decrease (-)Capital Revision Act, 1952- Preferred stock	995.5	970.7	24.8Twenty year obligation	100.0	100.0	Refunding Act, 1955	238.0	283.8	-45.8Financing and Guarantee Acts	55.4	63.2	-7.8Canadian Government Railways	17.0	17.0	Canadian National Railways-income deficit, 1964 ..	10.0	10.0Trans-Canada Air Lines-income deficits	4.6	4.6	1,420.5	1,439.3	-18.8
During the 1963-64 fiscal year the government made available to the company $82 million and received repayments of $101 million. The amount of advances to the company outstanding at March 31, 1964 is therefore decreased by $19 million.
TABLE 58 (in millions of dollars)
Advances to, and Repayments by, the Canadian National Railways	Fiscal year ending March 31	Increase1964 (estimated)	1963	decrease (-)Advances-	For the refunding of debt	250.0	-250.0For capital expenditures	
For interim financing of income deficits-	5.8	-5.8Canadian National Railways	53.0	41.3	11.7Trans-Canada Air Lines	4.6	5.9	-1.3Total advances	57.6	303.0	-245.4Purchase of 4 per cent preferred stock (C.N.R. Capital	Revision Act, 1952)	24.8	18.9	5.982.4	321.9	-239.5Repayments-	Advances for capital and refunding purposes	
Advances for interim financing of income deficits-	-53.6	-53.6Canadian National Railways	-43.0	-41.3	-1.7Trans-Canada Air Lines	-4.6	-6.3	1.7101.2	-47.fi	-53.fiNet decrease during the fiscal year	-18.8	274.3	-293.1
To assist the company to finance further capital expenditure during the year, the government will have purchased $25 million of the 4 per cent preferred stock of the company. This stock is issued under the authority of the Canadian National Railways Capital Revision Act, 1952, in an amount equal to 3 per cent of the gross revenue of the company.
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The government also provided the company with temporary loans of $43 million in respect of its 1963 income deficit which will be repaid when the company's income deficit is charged to 1963-64 budgetary expenditure and $10 million in respect of its 1964 deficit.
At March 31, 1963 temporary loans of $4 million and $1 million were outstanding to the Trans-Canada Air Lines in respect of its 1963 and 1962 income deficits, respectively. These were repaid by the company during 1963-64. However, additional loans of $5 million have been made in respect of the 1964 deficit.
Central Mortgage and Housing Corporation
The balance in this account at March 31, 1964 of $1,925 million is $122 million over the balance at March 31, 1963, and comprises the Crown s investment of $25 million in the capital of the corporation and $1,900 million in loans and advances.
Loans and advances to the corporation are $260 million in 1963-64 and repayments are $138 million. In 1962-63 advances were $182 million and repayments were $80 million.
TABLE 59 (in millions of dollars)
Advances to, and Repayments by, Central Mortgage and Housing Corporation
Advances-	_
Direct lending and limited dividend housing,
Federal-provincial projects-
Municipal sewage treatment	
Housing	
University housing	
Repayments-	# <	.
Direct lending and limited dividend housing
Federal-provincial projects-
Municipal sewage treatment	
Housing	
University housing	
Housing	
Fiscal year ending March 31		Increase or decrease (-)
1964 (estimated)	1963	
195.6	136.5	59.138.0	24.1	13.98.0	11.2	-3.218.5	10.0	8.564.5	45.S	19.1260.1	181.8	78.3-127.3	-69.0	-58.3-5.9	-3.8	-2.1-4.8	-2.8	-2.0-0.1	-0.1-10.8	-6.6	-4.S-4.4	4.4-138.1	-80.0	-58.1122.0	101.8	20.2
Advances comprise $196 million for direct lending and limited dividend housing and $64 million for federal-provincial projects, of which $38 million is in respect of municipal sewage treatment, $8 million for housing and $18 million for university housing.

The Budget-Appendix
Repayments comprise $127 million for direct lending and limited dividend housing and $11 million for federal-provincial projects ($6 million in respect of municipal sewage treatment and $5 million in respect of housing).
Northern Ontario Pipe Line Crown Corporation
During the fiscal year 1963-64 Trans-Canada Pipe Lines Limited exercised its option to purchase from the Northern Ontario Pipe Line Crown Corporation the Northern Ontario section of the natural gas pipe line. As a result of this transaction the corporation repaid the government all its outstanding loans.
Farm Credit Corporation
The government provides loans to the corporation which makes loans on farm property. The balance in the account at March 31, 1964 of $341 million consists of the Crown's investment of $13 million in the capital of the corporation and $328 million in loans and advances. At March 31, 1963 the balance was $269 million consisting of capital investment of $10 million and loans and advances of $259 million.
During 1963-64 transactions in the account consist of additional subscriptions by the government of $3 million to the capital of the corporation, loans and advances of $77 million and repayments by the corporation of $8 million.
The St. Lawrence Seaway Authority
At March 31, 1964 outstanding loans in this account in the amount of $350 million compare with $342 million at March 31, 1963. Loans during 1963-64 total $8 million. There are no repayments.
Deferred interest increased by $17 million during the fiscal year bringing the balance at March 31, 1964 to $66 million.
Atomic Energy of Canada Limited
The outstanding balance in this account as at March 31, 1964 amounts to $59 million, an increase of $6 million over the previous fiscal year-end.
A refund of $14 million was received from the company and was applied as a reduction in capital stock under authority of P.C. 1963-840, May 30, 1963, reducing capital stock to a balance of $15 million as at March 31, 1964. Additional advances of $20 million brings the balance of loans to $44 million at the fiscal year-end.
Other Crown Corporations
Loans to the Export Credits Insurance Corporation are estimated to increase by $32 million during the fiscal year, loans to the National Capital Commission by $14 million, loans to the Canadian Overseas Telecommunication Corporation by $11 million, loans to the National Harbours Board by $6 million and advances to the Northern Canada Power Commission by $4 million and loans to the Canadian Commercial Corporation to decrease by $1 million.
Loans to national governments
There is a net decrease of $13 million in this category during 1963-64 bringing total balances to $1,198 million as at March 31, 1964 from $1,211 million at the previous fiscal year-end.
The United Kingdom repaid $18 million of the $1,185 million loan made under the $1,250 million credit authorized by the United Kingdom Financial Agreement Act, 1946, reducing the principal to $995 million at March 31, 1964.
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[Stage Direction]
(in millions of dollars)
	Balance at March 31		Increase
Loans to National Governments	1964 (estimated)	1963	or decrease (-)Loan to United Kingdom- The United Kingdom Financial Agreement Act, 1946...	995.1 44.2	1,012.8 44.2	-17.71,089.8	1,057.0	-17.7Loans under the Export Credits Insurance Act, Part II-	30.0	32.3	-2.367.0	67.0	32.1	32.1	-8.8189.1	181.4	Special loans to Colombo plan countries to finance the purchase of wheat and flour from Canada-	1.1	1.4	-0.315.4	20.1	-4.718.8	81.8	-8.0Miscellaneous loans and advances-	0.7	0.7	India-loans for the purchase in Canada of aircraft and	12.0	12.00.1	0.2	-0.112.8	0.9	11.91,197.7	1,210.8	-13.1
Advances under Part II of the Export Credits Insurance Act to Belgium, France and The Netherlands to assist them in the purchasing of goods in Canada were reduced by repayments of $2 million during the fiscal year. The balance at March 31, 1964 was $129 million.
Special loans from Canada to Colombo plan countries to finance the purchase of wheat and flour by them amount to $16 million, a decrease of $5 million from the previous fiscal year.
Loans amounting to $12 million were made during the fiscal year 1963-64 to the Government of India for the purchase in Canada of aircraft and associated spare parts and equipment.
Other loans and investments
Balances in these accounts total $1,211 million at March 31, 1964, $100 million more than at the end of the previous fiscal year.
Canada's subscriptions to the capital of international organizations increased by $8 million during the year due to additional subscriptions of $8 million to the international development association. Working capital advances and loans to international organizations are approximately the same as at the previous fiscal year-end.
Loans to provincial governments are estimated to increase by $2 million due mainly to increases of $5 million in loans to New Brunswick and $2 million in loans to Nova Scotia and decreases of $3 million in loans to British Columbia and $2 million in the provincial tax collection agreements account.
Advances are made by the government under the Veterans Land Act for the acquisition, by the Director, of properties, buildings, materials, live stock,
MARCH 16, 1964	j
The Budget-Appendix
farm equipment and commercial fishing equipment for purposes of the act, for sale to qualified veterans of world war 2 and Korea under sale agreements which cairy specified conditional benefits if the terms of such agreements are adhered to by the veteran. Advances during the year of $43 million and repayments of $22 million bring outstanding advances at March 31, 1964 to $245 million. This is partially offset by a reserve for conditional benefits amounting to $27 million, resulting in a balance in this account of $218 million at the year-end.

[Stage Direction]
(in millions of dollars)
Other Loans and Investments
loans to, international organizations- Canada's subscription to capital of-
International bank for reconstruction ;
ment	
International development association..
International finance corporation	
International monetary fund	
Working capital advances and loans to organizations	
Loans to provincial governments-
Alberta	
British Columbia	
Manitoba	'
New Brunswick	
Newfoundland	'''
Nova Scotia	' ' '
Saskatchewan	'
Provincial tax collection agreements account.
Veterans land act advances	
Less reserve for conditional benefits- Veterans Land Act, 1942	
Miscellaneous-
Assisted passage scheme	
Balances receivable under agreements of sale of Crown
assets	
City of Montreal-
Atwater tunnel	
St Remi tunnel	
City of Whitehorse	
Construction of dock and rail facilities for Steep Rock
Iron Mines Limited	
Crown Assets Disposal Corporation-
Government equity in agency account	
Dominion Coal Company Limited	
Hamilton Harbour Commissioners	
Housing projects for Canadian forces	
Municipal Improvements Assistance Act, 1938..
New Westminster Harbour Commission	
Northwest Territories	
Old age security fund-temporary loans	
Town of Oromocto, New Brunswick	
Town of Oromocto Development Corporation	
Yukon Territory	
Other	
Balance at March 31		Increase
1964 (estimated)	1963	or decrease (-*)
		
80.5	80.5	
32.8	24.9	7.9
3.5	3.5	
577.3	577.3	
8.1	7.8	0.3702.2	694.0	8.£6.8	7.2	-0.415.1	18.4	-3.311.6	12.3	-0.736.2	31.1	5.10.6	0.5	0.19.5	7.3	2.228.3	26.9	1.410.7	13.1	-2.4118.8	116.8	2.0245.4	224.5	20.9-26.8	-28.5	1.7£18.6	196.0	22.62.6	2.2	0.46.0	8.3	-2.31.9	2.0	-0.11.1	1.1	2.0	2.1	-0.11.3	1.5	-0.25.6	5.9	-0.35.0	5.9	-0.91.3	1.3	18.6	12.5	6.11.1	1.3	-0.21.4	1.9	-0.53.2	2.4	0.8105.7	41.7	64.03.7	3.9	-0.21.1	1.2	-0.14.2	3.4	0.85.6	5.3	0.3171.4	10S.9	67.61,211.0	1,110.7	100.3
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Miscellaneous loans and investments in the amount of $171 million reflect a net increase of $68 million over the March 31, 1963 total. The increase is due mainly to additional temporary loans of $64 million to the old age security fund by the Minister of Finance.
Securities held in trust
Recorded herein are the security holdings of various deposit and trust accounts and annuity, insurance and pension accounts. Bonds and certified cheques held in connection with contractors' securities included in the deposit and trust category are also recorded under this heading. The balance at March 31, 1964 of $33 million is $7 million more than at the end of the previous fiscal year.
Deferred charges
The balance of $400 million in this category is $537 million less than at March 31, 1963, reflecting a write-off to net debt, subject to parliamentary approval, of $528 million representing the unamortized portions of the actuarial deficiencies in the Canadian forces superannuation account and the Royal Canadian Mounted Police superannuation account and a decrease of $9 million in unamortized loan flotation costs.
Unamortized -portions of actuarial deficiencies
These accounts record the unamortized portions of the actuarial deficiencies in the public service, the Canadian forces and the Royal Canadian Mounted Police superannuation accounts which have been set up as deferred charges.
The deficiencies are based on actuarial valuations made as at December 31, 1957 for the public service superannuation account, December 31, 1960 for the Canadian forces superannuation account and December 31, 1961 for the Royal Canadian Mounted Police superannuation account.
The decrease of $528 million in the unamortized portions of actuarial deficiencies consists of $525 million in respect of the Canadian forces superannuation account and $3 million in respect of the Royal Canadian Mounted Police superannuation account. These amounts plus an additional amount of $3 million credited during 1963-64 to the Royal Canadian Mounted Police superannuation account will be charged to net debt during 1983-64 upon parliamentary approval.
Unamortized loan flotation costs
This account records the residual balances of discounts, commissions, redemption bonuses and conversion premiums on loan flotations that have not been charged to budgetary expenditure. The balance at March 31, 1964 of $123 million is $9 million less than the previous year-end balance.
Cost of new loans issued during 1963-64 and charged to the account amount to $43 million, of which $14 million is in respect of treasury bill discounts which will be charged to interest on public debt in 1964-65 and $3 million is an adjustment due to exchanges of unmatured loans prior to their maturity date. Credits to the account are $51 million of which $36 million is a charge to the budgetary expenditure item "Annual amortization costs" and $15 million (representing discount applicable to 1963-64 on treasury bills sold in 1962-63) is a charge to the budgetary item "Interest on public debt".

The Budget-Appendix
TABLE 62 (in millions of dollars)
Unamortized Loan Flotation Costs
Balance of account at beginning of fiscal year...
New flotation costs to be amortized-
3i% loan June 1, 1963-July 1, 1964	
5% loan June 1, 1963-June 1, 1988..
31% loan Oct. 1, 1963-Oct. 1, 1964.
41% loan Oct. 1, 1963-Apr. 1, 1965....
5% loan Oct. 1, 1963-Oct. 1, 1968	
31% loan Dec. 15, 1963-Dec. 15, 1964.
41% loan Dec. 15, 1963-Dec. 15, 1966	
31% loan Feb. 1, 1964-Feb. 1, 1965	
31% loan Feb. 1, 1964-Feb. 1, 1966	
41% loan Feb. 1, 1964-Jan. 15, 1968	
5% loan Feb. 1, 1964-June 1, 1988	
Adjustments^)	
Treasury bills discount	
Canada savings bonds-adjustment of previous issues.
Canada savings bonds-new issue...
3|% loan May 1, 1962-Oct. 1, 1967	
51% loan Aug. 1, 1962-Oct. 1, 1969	
51% loan Aug. 1, 1962-Aug. 1, 1980....
41% loan Oct. 1, 1962-Apr. 1, 1965	
51% loan Oct. 1, 1962-Apr. 1, 1969	
31% loan Dec. 15, 1962-Feb. 1, 1965...
31% loan Feb. 1, 1963-Feb. 1, 1964..
31% loan Feb. 1, 1963-Feb. 1, 1960	
5% loan Oct. 15, 1962-Oct. 15, 1987<® ...
Fiscal year ending March 31
(estimated)
131.6
1.2
1.8
2.0
0.7
0.1
2.1
0.3
0.6
2.2
2.4
2.3
3.2
13.7
1.0
9.0

121.3
1.3
14.9
0.9
14.6
1.8
1.1
3.1
1.6
0.8
4.9
1.0
6.6
0.4
63.0
Less-
Amortization applicable to fiscal year-
Canada savings bonds and general loans	
Discount on treasury bills charged to interest on public debt,
-36.3 -14.9 -SI. 3
-32.7
-10.0
Increase or decrease (-) during the year Balance of account at end of fiscal year..
-8.6
123.0
10.3
131.6
16 Adjustments due to cancellations, exchanges, conversions and additional issues of existing loans. '[DOT]'Loan issued in New York.
Suspense accounts
The only item in this category is the cheque adjustment suspense account which reflects unadjusted balances resulting from the reconciliation of payments for redemption of paid cheques with the amount of those cheques as subsequently determined in adjustment of the outstanding cheque account.
Capital assets
Assets of the government such as land, buildings, works and equipment, etc., that are charged to budgetary expenditure at the time of acquisition or construction, are included in this category and are shown on the statement of assets and liabilities at a nominal value of $1.
Fnactive loans and investments
Loans and investments which are not currently revenue-producing or realizable are recorded herein. Included are the loan of $49 million to China under the Export Credits Insurance Act, loans of $24 million and $7 million
[Stage Direction]
The Budget-Appendix
made to Roumania and Greece in 1919-20 and 1920-21 and advances of $15 million in respect of the implementation of guarantees (Ming Sung Industrial Company Limited).
Reserve for losses on realization of assets
There was no change in this reserve during the year, the balance at March 31, 1964 being $546 million, unchanged from the end of the previous year.
Increase in Net Debt
The net debt of Canada, or the excess of liabilities over net assets, in the amount of $15,136 million at March 31, 1964 is $1,216 million higher than at March 31, 1963. The increase reflects the 1963-64 budgetary deficit of $685 million plus an adjustment of $531 million in respect of prior years' transactions.
The adjustment of $531 million covers the write-off to net debt, subject to parliamentary approval, of the unamortized portions of actuarial deficiencies in the amounts of $525 million in respect of the Canadian forces superannuation account and $6 million in respect of the Royal Canadian Mounted Police superannuation account.
5.	THE CASH POSITION
The government's bank balances are expected to amount to $596 million at March 31, 1964, an increase of $218 million over the total at March 31, 1963.
The government's cash position is affected not only by budgetary transactions but also by changes in the government's outstanding unmatured debt and other non-budgetary transactions. Non-budgetary transactions are those which affect the government's asset and liability accounts and must be taken into account when considering the full scope of the government's financial operations and their effect on the economy of the country.
In 1963-64 an estimated deficit of $685 million in budgetary transactions and estimated cash receipts of $166 million in non-budgetary transactions (excluding unmatured debt transactions) result in a net cash requirement of $519 million. As outstanding unmatured debt is estimated to increase by $737 million, an increase of $218 million is reflected in Receiver General bank balances. In 1962-63 there was a budgetary deficit of $692 million and a net requirement of $772 million in non-budgetary transactions which was financed by an increase of $1,064 million in outstanding unmatured debt and a draw-down of $400 million from the government's cash deposits.
On the assets side, the non-budgetary transactions consist, for the most part, of loans and advances to, and repayments by, Crown corporations and other government agencies and funds (including the old age security fund), national, provincial and municipal governments, international organizations, veterans and other borrowers. On the liability side they relate mainly to receipts and payments in connection with the many deposit and trust accounts, and annuity, insurance and pension funds held or administered by the government.

The Budget-Appendix
The following statement summarizes both the budgetary and non-budgetary transactions for 1963-64 and indicates how they affect the government's cash position. For purposes of comparison the corresponding figures for 1962-63 are also shown.

[Stage Direction]
(in millions of dollars)
Changes in Cash Position	Fiscal year ending March 31	
	1964 (estimated)	1963
Budgetary transactions- Revenues		6,207.0 -6,892.0	5,878.7 -6,570.3
Expenditures			
Budgetary deficit			
	-685.0 813.7 -647.6	-691.6 -564.7 -207.6
Non-budgetary transactions (excluding unmatured debt transactions) (net)- Receipts and credits			
Disbursements and charges			
Net amount received from, or required for (-), non-budgetary transactions			
	166.1	-772.3
Overall cash requirement to be financed by increase in debt or decrease In cash balances			
	-518.9 691.8 65.0 -42.0 22.3	-1,463.9 736.1 280.0 50.5 -2.9
Net increase in unmatured debt outstanding in hands of public- Unmatured debt- Bonds(1)			
Treasury bills			
Securities investment account(2)			
Sinking fund and other investments			
Net increase or decrease (-) in Receiver General bank balances		
	737.1	1,063.7
	218.2	-400.2
0>Includes decreases of $12 million in 1963-64 and $51 million in 1962-63 in special non-marketable bonds issued to the Unemployment Insurance Commission.
([DOT]'Excluding securities other than government issues.
[Stage Direction]
The Budget-Appendix
Non-budgetary receipts and credits (excluding unmatured debt transactions)
Non-budgetary receipts and credits, as already indicated, amount to $814 million in 1963-64 as shown in the following table:
TABLE 64 (in millions of dollars)
Fiscal year ending March 31
Non-budgetary receipts and Credits
Repayments of loans, investments and working capital advances (net)-
Agricultural commodities stabilization account	
Agricultural products board account	
Canadian Arsenals Limited	
Canadian Commercial Corporation	 [DOT] [DOT] [DOT] [DOT]
*
Canadian National Railways (including Trans-Canada Air Lines)..
Defence production revolving fund	
Exchange fund account	
Northern Ontario Pipe Line Crown Corporation	
Provincial tax collection agreements account	
United Kingdom (1946 loan)	[DOT] [DOT]	 [DOT] [DOT] [DOT] [DOT] [DOT]
Special loans to India and Ceylon (re purchase of wheat and flour
from Canada)	
Other loans to national governments	
Other	
Net government annuities account receipts-	<
Premium receipts less payments to beneficiaries	
Interest paid by government	
Net insurance and pension accounts receipts-
Employee contributions less payments to beneficiaries	
Government contributions...;	
Special government contribution to the Canadian forces superannuation account	,	; [DOT] [DOT]
Special credit to the Royal Canadian Mounted Police superannuation
account	
Interest paid by government	
Old age security fund	[DOT][DOT][DOT][DOT][DOT][DOT][DOT]
Net decrease in unemployment insurance fund cash on deposit with government	
Net increase in-
Current and demand liabilities-
Accrued interest	
Interest due and outstanding	
Matured debt	
Outstanding treasury cheques	
Accounts payable	
Other	
Deposit and trust accounts-guarantee deposits	
Undisbursed balances of appropriations-centennial of confederation
fund	 [DOT] [DOT];-[DOT][DOT][DOT][DOT][DOT]**[DOT]
Deferred credits-The St. Lawrence Seaway Authority deferred
interest	
Suspense accounts	
Net decrease in sundry asset accounts- Unamortized loan flotation costs- Other	
1964 (estimated)	1963
68.0	-6.2
0.8	-1.2
1.0	
1.0	0.5
18.8	-274.3
2.1	-11.8
48.0	-943.0
110.6	8.4
2.4	-13.1 .
17.7	17.5
5.0	5.0
2.4	106.5
	13.0
	
	
-27.6	-18.3
48.3	47.4
	29 1
	
26.8	38.0
120.4	114.9
76.5	198.5
2.8	
141.0	122.0
	-1.6
-2.0	0.1
	471 c
	
18.0	22.4
13.5	5.6
12.0	-4.0
10.0	0.7
50.0	-13.3
0.8	0.5
15.2	2.1
2.0	1.0
16.9	15.7
	0.8
	21 fi
	
8.6	-10.3
2.7	11.8
	1 j
	
813.7	-564.7

The Budget-Appendix
Non-budgetary disbursements and charges (excluding unmatured debt transactions)
Non-budgetary disbursements and charges total $648 million in 1963-64 as shown in the following table:
TABLE 65 (in millions of dollars)
Non-budgetary Disbursements and Charges
Loans, investments and working capital advances (net)-
Atomic Energy of Canada Limited	
Canadian Overseas Telecommunication Corporation	
Central Mortgage and Housing Corporation	
Export Credits Insurance Act (sec. 21A)	
Farm Credit Corporation	
Housing projects for Canadian forces	
International organizations	
National Capital Commission	
National Harbours Board	
Northern Canada Power Commission	
Old age security fund	
Provincial governments	
Royal Canadian Mint	
The St. Lawrence Seaway Authority	
Special loan to India re purchase of aircraft	
Stockpiling of uranium concentrates	
Veterans Land Act advances	
Governments of Yukon and Northwest Territories	
Net disbursements from liability accounts-
Current and demand liabilities-
Non-interest-bearing notes payable on demand	
Deposit and trust accounts-
Canadian Arsenals Limited pension fund	
Canadian National Railways	
Crown corporations deposits	
Korean operations pool	
Provincial tax collection agreements account	
Other	
Undisbursed balances of appropriations-
Colombo plan fund	
Railway grade crossing fund	
Other	
Deferred credits-
Miscellaneous	
Net increases in sundry asset accounts-
Cash in hands of collectors and in transit	
Securities held in trust	
Unamortized portion of actuarial deficiency in the Canadian forces
superannuation account	
Other	
Fiscal year ending March 31
(estimated)
5.5		-12.5
11.0		11.4
122.0		101.8
32.0		19.6
72.0		59.0
6.1		6.1
8.2		34.1
14.3		9.4
5.9		13.8
3.5		-7.2
64.0		41.7
4.4		5.8
3.5		6.6
24.9		22.7
12.0		
15.0		
22.6		18.6
1.6	428.5	3.9
		
148.3		-385.3
0.1		10.6
7.6		-7.6
16.4		-5.8
11.1		38.0
4.5		8.3
8.2		-7.7
9.0		7.1
1.1		-3.3
2.3	208.6	3.0
		16.3
		
6.7		0.1
		108.5
3.8		0.6
10.5
647.6
334.8
-342.7
215.5
207.6
6.	THE PUBLIC DEBT
Gross and net debt
The gross debt of Canada is estimated at $25,872 million as at March 31, 1964. Unmatured debt, including treasury bills, in the amount of $18,719 million account for approximately 73 per cent of the total. The remaining liabilities, consisting of current and demand liabilities, deposit and trust accounts, annuity, insurance and pension accounts, undisbursed balances of appropriations
[Stage Direction]
The Budget-Appendix
to special accounts, deferred credits and sundry suspense accounts, amount to $7,153 million or approximately 27 per cent of the total debt.
The net debt of Canada in the amount of $15,136 million at March 31, 1964 is $1,216 million more than the net debt at March 31, 1963. Total liabilities of $25,872 million are $1,073 million higher and net assets of $10,736 million are $143 million lower than the March 31, 1963 totals.

[Stage Direction]
Statement of Public Debt, Unmatured Debt, Recorded Net Assets and Net Debt of Canada
(in millions of dollars)
As at March 31	Gross Public Debt	Less recorded net assets	Net debt	Increase in net debt during fiscal yearUn matured debt	Other liabilities	Total	1960	
1961	
1962	
1963	
1964	(estimated)	15,890.1 16,067.9 16.945.7 17.961.8 18,718.6	5.096.3 5,534.9 5,962.1 6.837.3 7.153.3	20,986.4 21,602.8 22.907.8 24,799.1 25.871.9	8,897.2 9.165.7 9.679.7 10,879.4 10,736.1	12,089.2 12.437.1 13.228.1 13.919.7 15.135.8	410.8 347.9 791.0 691.6 1,216.1
Unmatured debt
The total unmatured debt of Canada at March 31, 1964 in the amount of $18,719 million is $757 million more than at the end of the previous fiscal year.
The government's holdings of its own securities are $74 million, all of which are held in the securities investment account, an increase of $42 million. At March 31, 1963 holdings were $54 million of which $32 million were in the securities investment account and $22 million in the sinking fund and other investments account.
The sinking fund and other investments account was liquidated during the year due to the maturing on July 1, 1963 of the Newfoundland 3% guaranteed stock.

[Stage Direction]
Billions of Dollars Fiscal Years Ended March 31
25 -

[Stage Direction]
Billions of Dollars

The Budget-Appendix
Of the total unmatured debt, $18,342 million or approximately 98 per cent is payable in Canada and $377 million in New York. Securities payable in New York have been valued at the official parity rate of $1 U.S. = $1.08108 Can.
TABLE 67 (in millions of dollars)
Unmatured Debt Transactions	Fiscal year ending March 31	
	1964 (estimated)	1963
Balance at beginning of year		17,962 106 1,061 1,725 66 65 5,025 266	16,946 78 1,634 1,347 86 280 5,425 960
New issues- For cash- Canada savings bonds series 16			
Canada savings bonds series 17			
Canada savings bonds series 18			
Marketable bonds			
Non-marketable bonds (Unemployment Insurance Commission) Treasury bills (net)			
By renewals and conversions- Marketable bonds			
Total new issues			
	3,289	4,385 10
Adjustments due to conversion of securities payable in London and New York at the official parity rates^>
Less- Matured marketable bonds			
	3,289	4,395
	-1,510 -77 -266 -679 -2,552	-984 -137 -960 -1,185 -5,256 -113
Redeemed non-marketable bonds (Unemployment Insurance Commission)			
Conversions			
Canada savings bonds redeemed or matured			
		
Increase in unmatured debt			
	-2,532	-3,379
	757	1,016
Balance at end of year			
	18,719	17,962
		
(^Official parity rates at March 31, 1963 were £1=$3.027 Can. and $1 U.S. = $1.08108 Can.
Summary of security issues and maturities, redemptions and conversions
During the year ended March 31, 1964 it is estimated that the government will have issued securities payable in Canada in the principal amount of $3,289 million (excluding the refunding of treasury bills which mature weekly).
Securities payable in Canada amounting to $2,497 million are expected to mature, be redeemed or converted in 1963-64. Securities payable in London amounting to $34 million matured during the year.
During 1963-64 net sales of Canada savings bonds series 18 are estimated at $1,061 million and additional sales of Canada savings bonds series 17 at $106 million. Canada savings bonds series 7 outstanding in the amount of $19 million matured on August 1, 1963 and redemptions prior to maturity of series 7 to 17 are expected to amount to $660 million. The net increase for all series is $488 million and the amount outstanding and unmatured for all series at March 31, 1964 is $5,071 million.
Treasury bills outstanding at March 31, 1964 in the amount of $2,230 million consist of $1,350 million in three-month bills, $780 million in six-month bills and $100 million in one-year bills.
[Stage Direction]
The Budget-Appendix

[Stage Direction]
Debt Matured, Redeemed or Converted During the Fiscal Year Ending March 31, 1964 (estimated)
Matured	Redeemed	Converted	Total3% 1945-63	
3|% 1958-65	
51% 1960-63	
4% 1960-63	
21% 1962 63	
21% 1962 63	
31% 1963-64	
3% 1933/34-1943/63	
31% 1938-1958/63	
Canada savings bonds S.7	
Canada savings bonds S.7-17	
Unemployment Insurance Commission (non-marketable bonds)- 31%	
4f%	
51%	$ 223,020,200 12,802,000 300.000.	000 275.000.	000 300.000.	000 365.000.	000 32,445,301 2,138,751 18,459,300	$ 660,161,448 29,000,000 36.500.000 11.500.000	$ <'>266,000,000	$ 223,020,200 266,000,000 12,802,000 300.000.	000 275.000.	000 300.000.	000 365.000.	000 32,445,301 2,138,751 18,459,300 660,161,448 29,000,000 36.500.000 11.500.0001,528,865,552	737,161,448	266,000,000	2,532,027,000
<'>
Exchanged for 5% loan due Oct 1, 1968.

[Stage Direction]
New Securities Issued During Year Ending March 31, 1964 (estimated)
-	Price to government	Yield at price to government	Total amount issued	Renewals or conversions included in amount issued	Amount issued for cash$	per cent	$	$	$Marketable bonds- Loan due June 1, 1967, 41%..	99.00	4.53	175,000,000	175,000,000Loan due Apr. 1, 1965, 4j%..	99.50	4.51	60,000,000	60,000,000Loan due Feb. 1,1964, 3j%...	99.20	4.23	240,000,000	240,000,000Loan due July 1, 1964, 3|%..	99.35	3.87	175,000,000	175,000,000Loan due June 1, 1988, 5%...	99.00	5.07	100,000,000	100,000,000Loan due Oct. 1, 1964, S\%..	99.00	4.28	185,000,000	185,000,000Loan due Apr. 1, 1965, 41%..	99.40	4.67	90,000,000	<'>266,000,000	90,000,000Loan due Oct. 1, 1968, 5%...	100.00	5.00	316,000,000	50,000,000Loan due Dec. 15, 1964, 3*%	99.15	4.13	225,000,000	225,000,000Loan due Dec 15, 1966, 4^%.	99.85	4.55	75,000,000	75,000,000Loan due Feb. 1, 1965,31%..	99.15	4.38	65,000,000	65,000,000Loan due Feb. 1, 1966, 3§%..	98.10	4.50	105,000,000	105,000,000Loan due Jan. 15, 1968, 4J%.	98.25	4.74	130,000,000	130,000,000Loan due June 1, 1988, 5%...	96.25	5.27	50,000,000	50,000,000Non-marketable bonds- Unemployment Insurance Commission, 31%	100.00	3.87	29,000,000	29,000,000Unemployment Insurance Commission, 4|%	100.00	4.37	36,500,000	36,500,000Canada savings bonds- Nov. 1,1962-Nov. 1,1976, 4H>i%, S. 17	100.00	5.11®	106,103,000	106,103,000Nov. 1,1963-Nov. 1,1975, 41-51%, S. 18	100.00	5.03®	1,061,167,000	1,061,167,000Treasury bills (net)	various	various	65,000,000	65,000,0003,288,770,000	266,000,000	3,022,770,000
<'>
In exchange for 3f% loan due Sept. 1, 1965. ® If held to maturity.
Interest rates
The average interest rate on the government's unmatured debt did not vary to any great extent in 1963-64. It is estimated at 4.22 per cent as at March 31, 1964 compared with 4.15 per cent at the end of the previous fiscal year.

The Budget-Appendix
The yield on three-month treasury bills at tender on March 28, 1963 was 3.62 per cent. On June 13, 1963 it was 3.19 per cent and on February 27, 1964 it was 3.88 per cent.
The yield on six-month treasury bills at tender on March 28, 1963 was 3.74 per cent. On May 30, 1963 it was 3.30 per cent and on February 27, 1964 it was
4.02	per cent.
The following table shows the high and low yields together with the yield on the latest issue of three-month and six-month bills for the fiscal years 1959-60 to 1963-64 inclusive:

[Stage Direction]
Treasury Bill Yields at Tender
Fiscal year ending March 31
Three-month bills- 1900	
1961		
1962		
1963		
1964		
Six-month bills-
1960		
1961		
1962		
1963		
1964		
<*>
At tender on February 27, 1964.
High	Low	Last issueper cent	per cent	per cent6.16	3.01	3.013.95	1.68	3.213.34	2.26	3.125.51	3.04	3.623.88	3.19	W>3.886.87	3.23	3.234.07	1.99	3.373.49	2.53	3.295.74	3.19	3.744.02	3.30	<04.02

[Stage Direction]
As At March 31
Indirect debt or contingent liabilities
In addition to the direct debt set out in the statement of assets and liabilities, the government has assumed certain indirect or contingent obligations. These consist of securities of the Canadian National Railways, guaranteed as to principal and interest, and a number of miscellaneous guarantees, the chief of which are the guarantee of insured loans made by chartered banks and other approved lending institutions under the National Housing Act, 1954, deposits maintained
[Stage Direction]
The Budget-Appendix
by the chartered banks in the Bank of Canada, bank advances to the Canadian Wheat Board, advances under the Export Credits Insurance Act and bank loans under the Farm Improvement Loans Act.
The government's liability under its guarantee of loans under the National Housing Act, 1954 is $4,499 million at December 31, 1963 compared with $4,123 million at December 31, 1962.

[Stage Direction]
Summary of Indirect Debt or Contingent Liabilities as at March 31, 1964 (estimated)
Railway securities guaranteed as to principal and interest* *1*-
1.	Canadian National 5^% due December 15, 1964	
2.	Canadian National 3% due January 3, 1966	
3.	Canadian National 2|% due January 2, 1967	
4.	Canadian National 4£% due April 1, 1967	
5.	Canadian National 5% due May 15, 1968	
6.	Canadian National 21% due September 15, 1969	
7.	Canadian National 2|% due January 16, 1971	
8.	Canadian National 5§% due December 15, 1971	
9.	Canadian National 3*% due February 1, 1974	
10.	Canadian National 2f% due June 15, 1975, U.S. $6,000,000
11.	Canadian National 5% due May 15, 1977	
12.	Canadian National 4% due February 1, 1981	
13.	Canadian National 5f% due January 1, 1985	
14.	Canadian National 5% due October 1, 1987	
Other outstanding guarantees and contingent liabilities-
15.	Deposits maintained by the chartered banks in the Bank of
Canada*2*	; [DOT]
16.	Loans made by lenders under Part IV of the National Housing
Act, 1954, for home extensions and improvements*3*	
17.	Insured loans made by approved lenders under the National
Housing Act, 1954*4*	
18.	Liability for insurance and guarantees and other commitments
with respect to long-term financing under sections 21 and 21A of the Export Credits Insurance Act	
19.	Loans made by chartered banks under the Farm Improvement
Loans Act*3*	 [DOT] [DOT] [DOT]
20.	Loans made by chartered banks under the Veterans' Business
and Professional Loans Act*3*	
21.	Loans made by chartered banks and credit unions under the
Fisheries Improvement Loans Act*8*	 [DOT]
22.	Loans made by chartered banks under the Prairie Grain
Producers' Interim Financing Act, 1956*6*	
23.	Loans made by chartered banks under the Prairie Grain Loans
Act*6*	_....
24.	Loans made by chartered banks under the Small Businesses
Loans Act*3*	;	
25.	Loans made by chartered banks to the Canadian Wheat
Boards*	
26.	Loans maintained by approved lending institutions under
National Housing Acts prior to 1954 Act	
27.	Guarantees to owners of returns from moderate rental housing
projects*8*	
Amount of guarantee authorized	Amount outstanding March 31, 1964
$	$
196,508,000 35.000.	000 50.000.	000 75.000.	000 60.000.	000 70.000.	000 40.000.	000 2,492,000 200,000,000 6,486,480 90.000.	000 300.000.	000 100.000.	000 175,000,000	196.508.000 35.000.	000 50.000.	000 72.300.000 55.800.000 70.000.	000 40.000.	000 2,492,000 200,000,000 6,486,480 84.150.000 300,000,000 99.500.000 167.125.000
1,400,486,480	1,379,361,480
Unstated	817,380,310
25,000,000	14,490,893
6,000,000,000	4,499,000,000
700,000,000	378,404,945
Indeterminate	57,673,374
Indeterminate	34,389
Indeterminate	187,066
Indeterminate	4,956
Indeterminate	1,086
30,000,000	7,429,154
180,000,000	968,121
	5,775,574,294
Unstated	Indeterminate
Unstated	Indeterminate
<** As at January 31, 1964.
*2>
As at February 19, 1964.
*8* As at December 31, 1963.
<4* As reported (in accordance with Sec. 45, National Housing Regulations) by approved lenders at December 31, 1963.
*8* As at March 31, 1963.
<8* Funds totalling $3,933,453 are held by Central Mortgage and Housing Corporation for the purpose of settling claims. In 1963 rental guarantee contracts totalled $14,786,770.

The Budget-Appendix
7. SUPPLEMENTARY DETAILED TABLES Revenues Expenditures
Annual Changes in Loans and Investments
Unmatured Debt
[Stage Direction]
The Budget-Appendix
STATEMENT OF REVENUES FOR THE LAST FIVE FISCAL YEARS (in millions of dollars)
-	1959-60	1960-61	1961-62	1962-63	1963-64 (estimated)Tax Revenues Income tax-	$	$	$	$	$Personal^*	1,566.6	1,711.2	1,792.7	1,744.6	1,863.0Corporation W	
On dividends, interest, etc., going	1,142.9	1,276.6	1,202.0	1,182.8	1,249.0abroad	73.4	88.2	112.3	129.2	127.08,781.9	S,076.0	8,107.0	8,056.6	8,889.0Excise taxes-	Sales tax<l><2>	
Other excise taxes-	732.7	720.6	759.7	806.0	930.0Automobiles	
Cigarettes, tobacco and	64.3	59.6	25.3	(3)	(3)cigars	185.5	193.7	207.6	217.8	223.8Electric power export	
Jewellery, watches, orna-	1.3	1.6	1.0	0.5	0.1ments, etc	5.6	5.9	5.6	5.8	6.3Matches and lighters	
Television sets, radios, tubes	0.8	0.8	1.1	1.2	1.3and phonographs	17.8	15.9	18.4	19.9	21.9Toilet preparations	7.7	8.4	9.4	10.2	11.0Wines	3.0	3.2	3.3	3.7	3.9Sundry commodities	1.2	1.1	1.1	1.2	1.2Interest and penalties	0.6	0.8	0.7	0.5	0.8Less refunds	-0.4	-0.3	-11.0	-0.4	-0.3887.4	890.7	868.5	860.4	870.0Customs import duties	525.7	498.7	534.5	645.0	580.0Excise duties-	Spirits	102.4	108.5	114.1	122.1	127.0Beer	90.7	91.0	92.7	98.2	102.0Cigarettes, tobacco and cigars...	146.2	149.6	160.5	166.5	171.0Licences	(3)	(3)	(3)	(3)	(3)Less refunds	-4.1	-4.2	-4.5	-4.9	-5.08S5.8	S44.9	862.8	881.9	895.0Estate tax^)	88.4	84.9	84.6	87.1	90.0Miscellaneous tax revenues	(3)	(*)	0.1	(3)	(3)Total tax revenues	4,752.3	5,015.8	5,111.2	5,237.0	5,504.0Non-Tax Revenues	Return on investments	239.7	283.8	307.5	311.9	364.0Post office-net postal revenue	167.6	173.6	183.7	192.8	199.0Other	130.2	144.5	127.2	137.0	140.0Total non-tax revenues..	537.5	601.9	618.4	641.7	703.0Total revenues	5,289.8	5,617.7	5,729.6	5,878.7	6,207.0
**>
Excluding tax credited to the old age security fund-
"	1963-64
1959-60 1960-61 1961-62 1962-63 (estimated)
Personal income tax	
185.6	229.4	259.0	273.7	302.0Corporation income tax	
91.3	103.5	100.1	115.2	116.0Sales tax	
270.0	270.2	284.9	302.2	327.0
(*Net after deduction of refunds and drawbacks as well as transfers to the old age security fund. (*>Less than $50,000.
<0Includes duties levied under the Dominion Succession Duty Act.

The Budget-Appendix

[Stage Direction]
(in millions of dollars)
	1959-60	1960-61	1961-62	1962-63	1963-64 (estimated)
Agriculture-					
Administration and general		2.8	3.1	4.2	3.5	5.7
Agricultural commodities stabilization					
account-net operating loss		57.7	53.4	22.0	71.8	122.0
Agricultural products board account-					
net operating loss	4.9	0.9	1.0Board of Grain Commissioners	6.1	6.3	6.5	6.2	6.7Prairie farm emergency fund-deficit..	12.5	9.2	47.7	7.3	1.9Production and marketing branch	25.4	29.3	33.9	32.1	30.4Contributions to Alberta, Saskatch-	ewan and Manitoba-unhar-	vested crops	4.7	1.4	Payments to western grain producers.	40.5	40.1	0.1	Freight assistance on western feed	grains	23.8	19.2	17.5	14.5	18.0Premium on hog and lamb carcasses	suitable for export to United King-	dom	8.2	6.6	7.6	6.1	8.0Rehabilitation and reclamation proj-	ecta	17.6	20.2	26.1	29.6	35.9Research branch	25.6	26.2	26.8	27.0	27.5m-i	315.4	337.3	199.1	357.1Atomic Energy	30.1	38.9	34.7	63.2	45.7Auditor General's Office	0.9	0.9	1.1	1.2	1.3Board of Broadcast Governors	0.2	0.3	0.3	0.4	0.4Canadian Broadcasting Corporation-	Grants toward the net operating and	capital requirements of the radio	broadcasting and television services	61.9	64.9	76.5	79.0	85.0International service	2.0	1.9	1.7	1.8	1.963.9	66.8	78.3	80.8	86.9Central Mortgage and Housing Cor-	PORATION	2.4	3.7	5.8	8.7	14.5Office of the Chief Electoral Officer.	0.3	0.6	0.4	11.8	11.8Citizenship and Immigration-	Administration and general	2.1	2.4	2.6	2.7	2.8Immigration branch	11.7	12.3	12.0	12.5	13.6Indian affairs branch	41.1	46.4	50.4	51.0	56.364.9	61.1	65.0	66.3	73.7Civil Service Commission	3.7	4.2	4.7	4.8	5.2Defence Production-	Defence expenditures	17.6	20.4	23.9	28.8	40.3Non-defence expenditures	2.1	2.1	2.1	2.0	2.019.7	33.5	36.0	SO. 8	43. SEmergency Measures Organization. .	2.3	3.4	4.8	5.4	7.0External Affairs-	Administration and general	36.5	35.6	28.9	23.7	32.7External aid	50.6	55.8	53.9	40.5	48.7Representation abroad	10.1	11.6	12.8	15.0	16.497. 3	103.0	95.6	85.3	97.8Finance-	Administration and general	10.8	19.9	19.5	23.5	24.0Office of the Comptroller of the Treas-	ury	18.2	19.8	21.3	22.5	22.6Grants to municipalities in lieu of taxes	on federal property	22.5	24.5	24.7	29.2	30.8Grants to universities	26.1	19.0	19.4	26.3	26.8
The Budget-Appendix
STATEMENT OF EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS- Continued
(in millions of dollars)
-	1959-60	1960-61	1961-62	1962-63	1963-64 (estimated)
Finance-Concluded					
Government's contribution with re-					
spect to the public service super-					
annuation account		40.0	41.4	46.9	51.1	54.0
Payments to provinces-					
Statutory subsidies	20.8	20.7	23.5	23.5	23.6Tax-sharing arrangements, 1956 act..	485.4	504.9	503.3	Fiscal arrangements, 1961 act	241.8	218.9Transfer of certain public utility tax	receipts	4.8	4.2	6.4	10.0	9.9Transitional grant to Newfoundland.	0.7	0.3	Additional grants to Newfoundland.	7.3	7.7	8.0	Premium, discount and exchange	0.2	9.4	1.4Public debt charges-	Interest on public debt	735.6	756.7	802.9	881.6	952.0Cost of issuing new loans and annual	amortization of bond discounts and	commissions	47.3	40.2	35.3	34.6	37.6Servicing of public debt	0.5	0.7	0.8	1.6	1.21,420-2	1,460.0	1,612.0	1,S56.1	1,402.8Fisheries	19.9	19.2	23.1	23.3	24.1Forestry	9.9	10.1	14.7	16.2	18.1Governor General and Lieutenant-	Governors	0.4	0.4	0.5	0.5	0.5Industry	0.7Insurance	1.2	1.3	1.4	1.4	1.4Justice-	Administration and general	8.1	8.6	9.5	9.8	11.5Office of the Commissioner of Peni-	tentiaries	19.7	19.1	23.1	24.7	29.5Patents, copyrights and trade marks..	2.7	2.7	2.8	2.5	2.5SO. 5	so. 4	S5.4	37.0	43.5Labour-	Administration and general	12.9	15.6	31.6	34.9	47.7Government annuities-amount re-	quired to maintain reserve	0.2	Technical and vocational training	assistance payments to provinces....	8.2	8.5	35.7	207.9	138.5Unemployment Insurance Commis-	sion-	Administration and general	35.9	42.1	46.0	48.1	49.8Government's contribution	45.7	55.1	55.6	57.3	58.8102.9	121. S	168.9	S48.2	294-8Legislation-	House of Commons	5.6	6.3	6.2	5.9	10.2Library of Parliament	0.3	0.3	0.3	0.4	0.4Senate	1.8	1.9	1.9	1.8	2.57.7	8.5	8.4	8.1	1S.1Mines and Technical Surveys-	Administration and general	23.7	27.7	35.3	35.5	34.6Dominion Coal Board	17.6	19.3	19.9	20.4	20.0Energency gold mining assistance	13.1	12.1	12.4	15.2	15.354-4	59.1	67.6	71.1	69.9National Defence-	Defence forces, army, naval and air	services	1,397.1	1,406.0	1,502.8	1,433.8	1,430.9Defence research and development....	39.2	41.9	40.4	41.1	47.8Government's contributions with re-	spect to Canadian forces superannua-	tion account	51.8	40.5	56.0	58.1	59.7
The Budget-Appendix
STATEMENT OF EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS-Continued
(in million of dollars)
-	1959-60	1960-61	1961-62	1962-63	1963-64 (estimated)$	$	t	$	iNational Defence-Concluded	Special government contribution to the	Canadian forces superannuation fund.	76.518.4	14.6	11.1	25.0	20.5Pensions-payments under Defence	Services Pension Act	6.3	6.7	7.3	7.5	7.9Other	2.1	5.6	5.4	5.6	6.41,514.9	1,516.8	1,623.0	1,571.1	1,668.7National Film Board	4.6	4.9	5.1	5.6	5.7National Gallery of Canada	0.7	0.9	1.0	1.0	1.1National Health and Welfare-	Administration and general	4.0	4.5	4.9	6.0	6.5National health branch-	General health grants and hospital	construction grants	46.0	48.0	49.0	50.3	53.0Government's contributions under	the Hospital Insurance and Diag-	nostic Services Act	150.6	189.4	283.9	336.7	390.0Medical services	25.6	26.8	28.1	28.9	30.9Other	5.0	5.6	6.0	6.3	7.3Welfare branch-	Family allowances	491.2	506.2	520.8	531.6	538.6Fitness and amateur sport payments	0.2	1.0	2.0Old age assistance, blind persons and	disabled persons allowances	50.6	51.3	51.4	62.7	64.7Unemployment assistance	40.2	51.5	92.0	96.5	106.0Other	3.0	3.3	3.3	3.4	3.9816.9	886.6	1,039.6	1,123.4	1,202.9National Research Council, Includ-	inq the Medical Research Council ..	31.5	34.4	38.8	40.6	47.2National Revenue	68.7	73.3	75.3	78.6	83.6Northern Affairs and National Re-	sources	70.7	70.8	78.4	86.4	84.3Post Office	165.8	178.4	185.0	189.4	207.7Privy Council, including Prime Min-	ister's Office	1.3	1.3	3.5	3.4	8.2Public Archives and National Library	0.7	0.8	1.0	1.0	1.1Public Printing and Stationery-	Publications	1.4	1.4	1.9	2.0	2.1Public Works-	Administration and general	156.0	142.2	132.7	116.7	111.7National Capital Commission	6.2	6.3	8.7	13.0	12.3Trans-Canada highway contributions.	53.3	48.7	41.6	33.0	47.1215.6	197.2	183.0	162.7	171.1Office of the Representation Com-	MISSIONER	0.1Royal Canadian Mounted Police	52.4	56.0	60.5	65.4	67.3Secretary of State	2.6	3.0	3.1	3.5	3.8Trade and Commerce-	Administration and general	18.5	22.7	39.6	27.0	28.7Assistance re storage costs of grain....	42.3	48.2	48.8	35.2	39.6Canadian government travel bureau...	3.0	2.7	3.0	3.4	3.8National Energy Board	0.2	0.4	0.5	0.5	0.664.0	7 4.0	91.9	66.1	72.7
The Budget-Appendix
STATEMENT OF EXPENDITURES BY DEPARTMENTS AND MAJOR CATEGORIES FOR THE LAST FIVE FISCAL YEARS-Concluded
(in million of dollars)
-	1959-60	1960-61	1961-62	1962-63	1963-64 (esti- mated)$	$	$	$	$Transport-	Administration and general	4.6	5.0	8.4	8.8	9.6Air services	124.1	133.9	150.0	136.9	123.0Canadian Maritime Commission	6.7	0.9	10.2	31.0	49.8Marine services	59.1	49.1	48.6	57.8	63.9Non-active assets-	National Harbours Board	2.0	0.6	4.9	5.2	0.4Railway and steamships services	3.7	6.2	5.9	15.9	30.6Deficits-	Canadian National Railways	43.6	67.5	67.3	48.9	43.0Newfoundland ferry and terminals	5.8	5.4	7.3	8.2	8.6Prince Edward Island car ferry	and terminals	2.6	2.6	3.0	3.3	3.4Yarmouth-Bar Harbour ferry	service	0.2	0.1	0.1	0.2	0.2Freight Rates Reduction Act	7.8	20.4	19.0	2C.6	20.0Interim payments related to the rec-	ommendations of the Royal Com-	mission on Railway Problems	50.0	50.0	50.0Maintenance of trackage	7.0	7.0	7.0	7.0	7.0Maritime Freight Rates Act	14.3	14.1	12.2	12.9	13.5Contribution to the railway grade	crossing fund	15.0	15.0	10.0	5.8	5.1Trans-Canada Air Lines-deficit	2.6	6.5	3.5	296.6	SS6.4	410.4	416.0	428.6Veterans Affairs-	Administration and general	9.0	9.5	9.7	9.8	9.6Hospital accommodation, additions,	alterations and improvements	4.5	6.1	4.9	2.1	0.9Pensions	149.7	150.7	177.9	175.9	173.4Provision for reserve for conditional	benefits	3.8	3.4	3.3	3.2	3.3Soldier settlement and veterans land	acts	5.2	5.2	4.6	4.6	4.6Treatment and welfare services	48.7	48.5	47.7	48.8	50.4Veterans allowances, treatment allow-	ances and other benefits	64.5	66.0	83.3	90.2	92.1War service gratuities and re-estab-	lishment credits	2.9	2.9	1.8	1.0	0.4288.S	292. S	SSS.2	SB. 6	S3 4.7Total Expenditures	5,702.9	5,958.1	6,520.6	6,570.3	6,892.0
The Budget-Appendix

[Stage Direction]
(in millions of dollars)
-	1959-60	1960-61	1961-62	1962-63	1963-64 (estimated)$	%	*	$	SLoans to, and investment in, Crown corporations- Atomic Energy of Canada Limited	0.6	1.5	4.9	-12.5	5.5Canadian Arsenals Limited	
Canadian Broadcasting Corporation... Canadian Commercial Corporation....	2.0	3.0 1.0	3.0	-0.5	-1.0 -1.0Canadian National Railways	-261.4	-116.5	72.3	274.7	-18.8Canadian National (West Indies) Steamships Limited	-0.2	-1.0	-0.7	-0.6	Canadian Overseas Telecommunication Corporation	9.6	9.1	6.2	11.4	11.0Central Mortgage and Housing Corporation	315.1	192.0	190.3	101.8	122.0Export Credits Insurance Corporation. Farm Credit Corporation	28.5	40.1	5.2 54.2	19.6 59.0	32.0 72.0National Capital Commission	10.7	7.4	6.2	9.4	14.3National Harbours Board	15.8	11.4	6.0	13.8	5.9Northern Canada Power Commission.	5.0	0.9	-0.3	-7.2	3.5Northern Ontario Pipe Line Crown Corporation	8.0	2.2	-4.7	-8.4	-110.6The St. Lawrence Seaway Authority..	«>33.1	24.0	0>28.3	0)22.7	0)24.9Trans-Canada Air Lines	1.0	1.3	0.2	-0.4	Other	-0.1 167.7	0.1 176.5	371.1	483.8	159.7Loans to national governments- United Kingdom- The United Kingdom Financial Agreement Act, 1946	-16.4	-16.7	-17.1	-17.5	-17.7Export Credits Insurance Act	-17.9	-15.2	-15.3	-105.9	-2.3Special loans to Colombo plan countries to finance the purchase of wheat and flour from Canada	0.5	-3.5	-5.0	-5.0	-5.0Loan to India for the purchase in Canada of aircraft and associated spare parts and equipment	
Other	-0.6	-0.9	-1.0	-0.6	12.0 -0.1-34.4	-36.3	-38.4	-139.0	-13.1Other loans and investments- Subscriptions to capital of, working capital advances and loans to, international organizations- Canada's subscription to capital of- International monetary fund	235.4	15.0	21.0	12.6	International bank for reconstruction and development	
International development association	2.8 8.5	7.9	6.8 8.5	7.9Working capital advances and loans to international organizations	-0.1	-0.3	-0.1	6.2	0.3Loans to provincial governments^ ....	1.9	-1.1	-0.5	5.8	4.4Provincial tax collection agreements- advances	
Balances receivable under agreements of sale of Crown assets	-3.1	-3.9	-1.5	13.1 -2.3	-2.4 -2.3Housing projects for Canadian forces..	1.0	0.1	1.9	6.1	6.1Old age security fund	28.0	-10.7	-17.3	41.7	64.0Unemployment Insurance Commission Veterans land act advances	0.6	67.0 14.5	-67.0 11.3	18.6	22.6Other	-4.4	0.3	2.5	-0.3	-0.3359.3	93.S	-41.8	116.8	100.3Net total of changes in loans and investments 	392.6	232.4	290.9	470.6	246.9
^Includes deferred interest.
([DOT]'Includes advances to Newfoundland, Nova Scotia and New Brunswick pursuant to the Atlantio Provinces Power Development Act.
[Stage Direction]
The Budget-Appendix
UNMATURED DEBT INCLUDING TREASURY BILLS AS AT MARCH 31. 1964 AND THE ANNUAL INTEREST THEREON (estimated)
-	Date of maturity	Rate per cent	Amount of loan	Annual interestPayable in Canada-	$	$Loan of 1961	
AT. 1	1964 May	1	4	360,000,000	14,400,000Loan of 1963	
AT.20	July	1	3}	175,000,000	5,687,500Loan of 1961	
AT. 8	Oct.	1	3*	250,000,000	8,125,000Loan of 1963	
CT. 1	Oct.	1	3}	185,000,000	6,012,500Loan of 1961	
AT. 5	Dec.	1	4	240,000,000	9,600,000Loan of 1963	
CT. 4	Dec.	15	31	225,000,000	7,312,500Loan of 1962	
AT.17	1965 Feb.	1	31	350,000,000	12,250,000Loan of 1964	
CT. 6	Feb.	1	31	65,000,000	2,275,000Loan of 1962	
AT.15	Apr.	1	41	110,000,000	4,675,000Loan of 1963	
CT. 2	Apr.	1	41	90,000,000	3,825,000Conversion loan 1958	
T. 27	Sept.	1	31	999,890,600	37,495,898Canada savings bonds 1953	
S. 8	Nov.	1	31	<'>53,749,000	2,015,587Loan of 1963	AT.19	1966 Feb.	1	31	225,000,000	7,875,000Loan of 1964	
CT. 7	Feb.	1	31	105,000,000	3,675,000Ninth victory loan	
P. 7	Sept.	1	3	245,202,200	7,356,066Canada savings bonds 1954	
S. 9	Nov.	1	31	<'>33,041,000	1,073,833Loan of 1961	
AT. 6	Dec.	15	41	175,000,000	7,875,000Loan of 1963	
CT. 5	Dec.	15	41	75,000,000	3,375,000Loan of 1961	
AT. 9	1967 June	1	41	275,000,000	11,687,500Loan of 1962	AT.12	Oct.	1	31	100,000,000	3,750,000Canada savings bonds 1955	
S. 10	Nov.	1	31	<'>31,798,000	1,033,435Loan of 1962	
AT.11	1968 Jan.	15	41	250,000,000	10,625,000Loan of 1964	
CT. 8	Jan.	15	41	130,000,000	5,525,000Refunding loan 1950	
P. 9	June	15	21	308,581,000	8,485,977Loan of 1963	
CT. 3	Oct.	1	5	316,000,000	15,800,000Canada savings bonds 1959	
S. 14	Nov.	1	5	<'>972,506,000	48,625,300Loan of 1962	
AT.16	1969 Apr.	1	51	100,000,000	5,500,000Loan of 1960	
T. 39	Apr.	1	51	80,000,000	4,400,000Canada savings bonds 1956	
S. 11	May	1	4	<'>56,289,000	2,251,560Loan of 1962	
AT.13	Oct.	1	51	80,000,000	4,400,000Loan of 1958	
T. 24	1970 May	1	31	200,000,000	7,000,000Canada savings bonds 1957	
S. 12	Nov.	1	41	<'>439,094,000	20,856,965Canada savings bonds 1960	
S. 15	Nov.	1	41	<'>454,408,000	21,584,380Canada savings bonds 1961	
S. 16	1971 Nov.	1	41	<'>397,907,000	17,905,815Conversion loan 1958 	
T. 28	1972 Sept.	1	41	1,267,203,100	53,856,132Canada savings bonds 1958	
S. 13	1973 Nov.	1	41	<'>129,685,000	5,511,612Loan of 1959	
T. 36	1975 Oct.	1	51	310,361,000	17,069,855Canada savings bonds 1963	
S. 18	Nov.	1	41	<'>1,061,167,000	47,752,515Loan of 1960	
T. 38	1976 Apr.	1	51	436,198,000	23,990,890Loan of 1954	
T. 11	June	1	31	247,046,500	8,029,011Canada savings bonds 1962	
S. 17	Nov.	1	41	<'>1,441,164,000	64,852,380Loan of 1953 and 1958	
T. 5	1978 Jan.	15	31	207,911,500	7,796,681Loan of 1954	
T. 13	1979 Oct.	1	31	343,246,500	11,155,511Loan of 1962	
AT.14	1980 Aug.	1	51	120,000,000	6,600,000Conversion loan 1958	
T. 29	1983 Sept.	1	41	1,992,679,450	89,670,575Loan of 1963	
AT .21	1988 June	1	5	100,000,000	5,000,000Loan of 1964	
CT. 9	June	1	5	50,000,000	2,500,000Conversion loan 1956	
T. 15	1998 Mar.	15	31	197,045,000	7,389,188Loan of 1936	
P. 1	Perpetual	3	55,000,000	1,650,000Three-month treasury bills	<2)3.88	1,350,000,000	50,895,000Six-month treasury bills	<2)4.02	780,000,000	30,732,000365-day treasury bills	3.91	100,000,000	3,910,00018,342,172,850	772,696,166Payable in New York-	Loan of 1949	1974 Sept.	1	21	<*>65,087,502	1,789,906Loan of 1950	1975 Sept. 15	21	<*>41,047,527	1,128,807Loan of 1962	1987 Oct.	15	5	<*>270,270,000	13,513,500376,405,029	16,432,21318,718,577,879	789,128,379
Note: The interest shown is a projection for one year at the annual interest rates on the principal amounts outstanding at March 31, 1964. Where various rates of interest are applicable during the term of a loan the interest rate in effect at March 31, 1964 has been used.
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Estimated.
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Rate of discount at tender on February 27, 1964.
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Conversion rate $1 U.S. = $1.08108 Can.