1964-08-07

EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, I would like to ask the Secretary of State for External Affairs whether he has anything to report to the house on whether the international control commission carried out investigations into the shipment of men and materials into North Viet Nam by the communists. Also, would he care to make any observations on statements by Hugh Campbell, a retired R.C.A.F. adviser of the Canadian delegation, to the effect that the Canadian members of the Viet Nam truce team should long ago have expressed their complaints about the presence of P.T. boats? Mr. Campbell said P.T. boats were outlawed by the Geneva agreement of 1954 under which the three man Polish, Indian and Canadian teams were established. Among other things Mr. Campbell said Canadians always backed down when Polish members of the inspection team called the vessels fishing boats.


Hon. Paul Marlin (Secrelary of Slate for External Affairs):: Mr. Speaker, the international control commission in Viet Nam is, of course, made up of three countries. The limitations attending the operations of the commission arise largely from the insistence by at least one member that no action can be taken without unanimity on the part of all three members. This has hampered somewhat, as the right hon. gentleman will realize, not only in the immediate past but earlier, even during the days when his government was faced with this situation, the operations of the commission. Nevertheless the commission continues, particularly in circumstances such as these, to serve a useful purpose. There are now five teams of the commission in North Viet Nam. We are hoping to receive a report based on their observations. That report has not of course come in as yet, but I hope that later we will be in a position, assuming there
is general agreement among the members of the commission, to say something further.


John George Diefenbaker: What about the question I asked relative to the criticism of the air force officer who was an attache, to the effect that Canadians always back down, and the Polish statement that these P.T. boats which are being concentrated are simply fishing boats? Will the secretary of state also tell us what information he has regarding the alleged considerable addition of aircraft contributed by red China within the last 24 hours?


Paul Joseph James Martin: With regard to the arrival of Chinese aircraft in the last 24 hours I cannot offer any information except to pass on to the right hon. gentleman and to the house what has already apparently been said publicly by the United States secretary of defence, who said it was possible Chinese aircraft would be given to North Viet Nam.
With regard to charges about Canadian participation in the commission, I think the right hon. gentleman, who has had some experience as head of the government, will agree with me, that the Canadian member of the commission-and I have investigated this-during the period of ten years has given a lead and has taken the position, particularly since 1962 when the right hon. gentleman was in office, that in the absence of the unanimity rule the commission should be able to act on the basis of a decision by two members.
If the commission has not been able to fully discharge its responsibilities, I am satisfied after a careful examination of the evidence, that the fault does not rest with Canada. I would hope particularly in the present situation, when the commission may render useful service, both the Polish and Indian members will accede to the position of Canada, that the commission's good offices should be used where asked.


John George Diefenbaker: Would the minister say, then, whether during the last few days there has been a higher degree of unanimity among the three members of this commission than has been the case heretofore, and whether, on the basis of what the minister knows-and I am surprised he does not know more than
6518	HOUSE OF COMMONS
Inquiries of the Ministry
what was said publicly by secretary Me- to state what action we might find it necessary Namara-he can say whether the situation in to take if the commission were not able to southeast Asia is ameliorated?	act.


Paul Joseph James Martin: Mr. Speaker, I am sure my right hon. friend will agree it is not surprising that I should not be able forthwith to pinpoint the movement of the military forces of all countries in Asia. My right hon. friend, better than anyone else in the house other than members of the government, will appreciate why I have said that. I believe there is some ground for believing that the commission as a whole will try to assist in this very difficult situation.


Mr. T. C. Douglas (Burnaby-Coquillam):: Mr. Speaker, may I direct a question to the Prime Minister. Is the report in this morning's paper correct that Canada stands ready to assume the role of intermediary in the United States-North Viet Nam crisis? The report goes on to say that Mr. Blair Seaborn, the newly appointed Canadian member of the international truce commission, is going to Hanoi and that Canada has offered its services in an endeavour to mediate between the government of North Viet Nam and the government of the United States in the present situation as well, of course, as seeking to get the truce commission to assert some of its authority.


Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, yesterday when I mentioned this matter I was referring to the opportunity that might be open to Canada as a member of the three power commission in Viet Nam, but only in respect of that membership which may give us an opportunity as a member of the commission. If so, we as a member of the commission will be glad to take full advantage of that opportunity.


Thomas Clement (Tommy) Douglas: May I ask the Prime Minister what position Canada will take if as a member of that commission it finds that because of the unanimity rule its role is no longer effective. Is it Canada's intention either to withdraw from the commission or to ask that the 14 nations who were parties to the agreement in Geneva in 1954 and again in 1962 should either be reassembled or the matter submitted to the joint chairmen?


Lester Bowles Pearson: Mr. Speaker, I can only express the hope than this possibility of ineffectiveness because of the inability of the commission to work as a group will not arise. In these difficult circumstances I would prefer not
[Mr. Diefenbaker.)


FREEDOM OF MOVEMENT OF UN FORCE
[Stage Direction]
On the orders of the day:
Mr. H. A. Olson (Medicine Hat):: Mr. Speaker, I should like to direct a question to the Secretary of State for External Affairs. Will he comment on the report made by a United Nations spokesman that the fighting in Cyprus that occurred yesterday is the heaviest yet, and in general and perhaps specifically will he tell us whether a note has been received by the United Nations signed by President Makarios indicating that the United Nations forces on Cyprus should have access to all areas of the island?


Paul Joseph James Martin: Mr. Speaker, the Canadian high commissioner has reported today that Turkish Cypriots began to build fortifications on the green line on the morning of August 5. Despite assertions to the contrary they improved their positions later in the day when United Nations troops withdrew because they screened the line of fire.
The secretary general has received a further communication from the head of the government of Cyprus assuring the United Nations forces freedom of movement on the island, a position different from the one he took ten days ago.


Thomas Clement (Tommy) Douglas: supplementary question, Mr. Speaker. May I ask the minister whether he has received a copy of this further letter from Archbishop Makarios; and will it be tabled? The minister agreed on two occasions, I think, to table his previous letter and as far as I can learn it has not yet been tabled. I made some inquiries about half an hour ago and it still had not been received in the sessional papers office.


Paul Joseph James Martin: I gave instructions that it be tabled, and I will see why that has not been done. The most recent letter from Archbishop Makarios was received at the United Nations late last night, and a copy has not yet been sent to us. However, our ambassador is sending it today and I hope to be able to table it on Monday.


Thomas Clement (Tommy) Douglas: May I ask the minister whether it is true, according to press reports, that this letter for Archbishop Makarios agreeing to freedom of access for the United Nations peace keeping force is carefully

hedged about with certain exceptions, and that these exceptions will affect certain localities, access to which may be arranged only after consultation between the government and the commander of the United Nations force?


Paul Joseph James Martin: Mr. Speaker, when I have the full letter before me I will be able to give the kind of reply which the hon. gentleman is asking.


Thomas Clement (Tommy) Douglas: One final supplementary question. When the minister has an opportunity to examine it will he give the house some information on whether this is a genuine commitment of freedom of access for United Nations forces, or whether it is merely another subterfuge in order to get the United Nations to agree to an extension of the period of occupancy by the United Nations force?


Paul Joseph James Martin: I would not agree with that conclusion.


Mr. Stuart A. Fleming (Okanagan-Revelsioke):: A supplementary question to the minister of external affairs. Several weeks ago the minister referred in the house to the meetings taking place in Geneva under the auspices of the United Nations mediator in an endeavour to bring the two factions in Cyprus together in order to resolve the situation on the island and permit the withdrawal of United Nations forces. Can the minister report to the house whether those negotiations are continuing, whether any progress has been made, or whether the negotiations have ceased?


Paul Joseph James Martin: Those negotiations are continuing, Mr. Speaker.


Stuart A. Fleming: A
further supplementary question. Has any submission been made to the mediator which is likely to be accepted by the Greek Cypriots that does not include union of the island with Greece?


Paul Joseph James Martin: Mr. Speaker, I can only say that the attitudes taken by the governments of Turkey and Greece seem to have been helpful. I do not think when negotiations are under way that it is desirable to go further than this.


Stuart A. Fleming: Can
the minister give the house any indication when we will be having some positive information on this situation in order to give us some idea what progress has been made
Inquiries of the Ministry or whether the whole matter is entirely futile?


Mr. Marlin (Essex Easl):: Mr. Speaker, if I were able to reach a conclusion as to all the activities now under way I could give a satisfactory reply to that question.


John George Diefenbaker: Mr. Speaker, in view of the widespread interest and concern of Canadians and people from all parts of the free world over the situation, in southeast Asia particularly, and recognizing the limitations which circumscribe the minister in answering questions in the house, would he be willing to appear before the committee on external affairs behind closed doors, allowing some of us who are not members to be present, and let us have the picture? I suggest this because it is quite impossible for anybody to form any conclusion on the basis of press reports and-and 1 say this without criticism -the incomplete and sometimes incomprehensive answers given by the minister.


Murdo William Martin: Except for the last observation of my right hon. friend-


John George Diefenbaker: I said "sometimes".


Murdo William Martin: -I was going to say that perhaps the interpolation of the right hon. gentleman was a helpful one, and I would be very glad to do that.


Mr. H. W. Herridge (Kootenay Wesl):: Mr. Speaker, I wish to put a simple question to the Secretary of State for External Affairs. Is he convinced that the United States authorities are telling the world the complete truth in respect to certain unfortunate incidents in the Vietnamese area recently?


Murdo William Martin: Mr. Speaker, of course I am; and I suggest to the hon. gentleman that the evidence is such that he should take a similar view.


Horace Andrew (Bud) Olson: Mr. Speaker, I would like to ask the Minister of National Defence a question which is really supplementary to the one I asked the Secretary of State for External Affairs a few minutes ago. Would the minister undertake to make a statement to the house, after the government has studied the latest communique from President Makarois, respecting the duties, responsibilities, authority and perhaps even the limitations of the activities of Canadian forces on Cyprus, so that hon.

Inquiries of the Ministry members will be assured that our forces will not be placed in awkward positions without any authority to defend themselves?


Hon. Paul Hellyer (Minister of National Defence):: I do not think there is anything I could usefully say, Mr. Speaker, but I might be of assistance if the committee on external affairs met and had a briefing. I might sit in, and there might be some points on the military side which I could amplify.


REPRESENTATIONS RESPECTING
[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a question to the Prime Minister, relating to continuing reports of anti-Semitism in the Soviet union. The Prime Minister will recall that on a previous occasion when we asked whether representations were being made with respect to this matter he said:
If such representations were contemplated the more appropriate channel would be to make an approach directly to the Soviet authorities through the Canadian embassy in Moscow.
I should like to ask whether anything has been done along this line, or whether it is being contemplated?


Lester Bowles Pearson: Yes, Mr. Speaker, inquiries have been made along those lines, and I shall be glad to look into the results of those inquiries and make a report to the house.


INQUIRY AS TO AID TO INDONESIA
[Stage Direction]
On the orders of the day:
Mr. W. B. Nesbitt (Oxford):: I should like to direct a question to the Secretary of State for External Affairs. Would the minister give the house a specific and detailed list of the items of aid which the government is presently giving to Indonesia?


Paul Joseph James Martin: I will be glad to do that and to table it. I may say in answer to the hon. member's earlier question that there is no Indonesian being trained at the moment in a military way, as the hon. member suggested yesterday.


Wallace Bickford (Wally) Nesbitt: Is the Secretary of State for External Affairs assuring the house, then, that flying instructors provided by Canada at the Indonesian air academy are in no way training Indonesian military pilots to be used in their aggression against Malaysia?
fMr. Olson.]


Paul Joseph James Martin: What I am really saying is that the hon. member's allegations yesterday have no foundation at all.


Wallace Bickford (Wally) Nesbitt: In view of the remark just made in the house by the Secretary of State for External Affairs, would the hon. gentleman explain to us why the Prime Minister told us a week ago last Wednesday that the only aid being given to Indonesia was food in the form of wheat, whereas the minister told us that the only aid being given was the training of students, together with a little food?


Wallace Bickford (Wally) Nesbitt: In view of the remark just hon. member said yesterday. I cannot obviously deal with this matter on orders of the day. I have written the hon. member a very full and interesting letter.


CANADA YEAR BOOK
[Stage Direction]
On the orders of the day:
Mr. Gilles Gregoire (Lapointe):: Mr. Speaker, I wish to direct a question to the Minister of Trade and Commerce. Could he tell us when he will send the members of the house a French copy of the Canada Year Book, 1963-64?


Hon. Mitchell Sharp (Minister of Trade and Commerce):: Mr. Speaker, as I indicated to the house in reply to a question on the subject some time ago, it is the hope and expectation of the bureau of statistics that the French edition of the Canada Year Book will be published about the 15th of this month.


Gilles Grégoire: A supplementary question, Mr. Speaker. Is the Minister of Trade and Commerce taking the necessary action so that the French edition for 1964-65 will be available at the same time as the English edition? [Text]


Mitchell William Sharp: Yes, Mr. Speaker. It is my hope that the French translation services for the publications in my department can be improved considerably. As the hon. gentleman knows, there is a tremendous demand upon these services. We are now publishing in the French language far more publications than have ever been issued in the past, and it is taking time to improve the service in order to keep ahead of the demand.

Inquiries of the Ministry
[Translation]	Mr. Pickersgill: I do not happen to have
Hon. Maurice Lamonlagne (Secretary of read the statement, sir.
State): Mr. Speaker, to complete the answer Mr. Muir (Cape Breton North and Victoria):
just given to the hon. member for Lapointe, Mr. Speaker, I should like to ask a further I should also like to mention that the French supplementary question. May I ask the minis-version of the government of Canada tele- ter whether it would assist him if I sent him a phone directory will be finished next week copy 0f the submission to the Atlantic de-and the French edition of Beauchesne will be velopment board and a copy of Premier ready at the end of the month.	Stanfield's release to the press?



THE CANADIAN ECONOMY


[Stage Direction]
On the orders of the day:
Mr. Robert Muir (Cape Breton North and Victoria):: Mr. Speaker, I should like to direct a question to the Minister of Transport. In view of the statement by the Minister of Labour upon the release of Professor T. Wilson's report on regional development in the Atlantic provinces with reference to grants to industry, that "very careful consideration would be given by the federal government to a system of direct grants", would the minister explain why the Atlantic development board has already refused to go along with Professor Wilson and the government of Nova Scotia concerning the recommendations for industrial incentives as contained in paragraph 10 of the provincial government's recent submission to the board?


Hon. J. W. Pickersgill (Minister of Transport):: Mr. Speaker, I am afraid the hon. gentleman does not seem to be very adequately or recently informed, because at the last meeting at Sydney the Atlantic development board earmarked the sum of $20 million out of the grant precisely for the purpose, in co-operation with the government of Nova Scotia, of providing direct incentives to industry. The method of working this out will have to be agreed on between agencies of the two governments.


Robert Muir: Mr. Speaker, I should like to ask a supplementary question. May I ask the minister whether he has read the press statement of Premier Robert L. Stanfield of July 31 which said that while the Atlantic development board has earmarked $20 million to assist industry in Nova Scotia, the board has not accepted the recommendations regarding industrial incentives contained in paragraph 10 of this submission?


John Whitney Pickersgill: I would be delighted, sir.



CANADIAN BROADCASTING CORPORATION


[Stage Direction]
On the orders of the day:
Mr. Robert Simpson (Churchill):: Mr. Speaker, I should like to direct a question to the Secretary of State. In relation to the question I asked yesterday regarding certain aspects of the apparently new C.B.C. policy concerning the consolidation of facilities as opposed to the extension of services, and in view of the answer of the Secretary of State that an advisory committee had been established to review broadcasting, can the Secretary of State advise the house whether the terms of reference of this committee will include a study of the C.B.C.'s policy concerning the very important question of expansion of services to areas not now served?


Hon. Maurice Lamonlagne (Secretary of Slate):: Mr. Speaker, I tabled the terms of reference of that committee on May 25, if I remember well. It was clearly stated that the point raised by the hon. member is within those terms of reference.


Robert Simpson: I should like to ask a supplementary question. In view of the gravity of this newly announced policy, would the Secretary or the government consider impressing upon this committee the desirability of a full review of this situation, which concerns so many people in outlying parts of Canada who do not at the present time have the services of C.B.C. television?


Maurice Lamontagne: I am quite sure, Mr. Speaker, that the committee will give very careful consideration to this important problem without any pressure from me.



COMMENTS BY PRESS GALLERY MEMBERS FAVOURING GOVERNMENT

[Stage Direction]
On the orders of the day:
Wallace Bickford (Wally) Nesbitt: I should like to
direct a question to the Secretary of State.

Inquiries of the Ministry Will the Secretary of State be kind enough to ask the C.B.C. whether it is coincidence or policy that in the last 48 hours three of the leading apologists for the government in the press gallery have appeared on the programs "Viewpoint" and "Preview Commentary" making comments heavily distorted in favour of this government?


Maurice Lamontagne: I will, Mr. Speaker.



PERSONNEL OF NEW TELEVISION


[Stage Direction]
On the orders of the day:
Mr. Auguste Choquette (Lotbiniere):: Mr. Speaker, I should like to direct a question to the Secretary of State. In view of the fact that the new television station in Quebec city is to open soon, can the minister tell us whether the personnel has been selected?


Maurice Lamontagne: Mr. Speaker, I am unable to answer that question at present, but I shall be glad to get in touch with the hon. member as soon as I have the required information.



EDUCATION


[Stage Direction]
On the orders of the day:
Mr. Reynold Rapp (Humboldi-Melforl-Tisdale):: Mr. Speaker, I have a question for the Minister of Finance, the urgency of which deserves his immediate attention. I have received some complaints from university students who are not able to avail themselves of the student loans because it seems the proper machinery is not set up as yet.


Hon. Walter L. Gordon (Minister of Finance):: We had a fairly extensive debate on the student loans bill, Mr. Speaker, and as I remember it was explained that the machinery for making loans would be worked out with the provinces and that it would take some time. In fact, if I remember correctly, I said it would take at least a month to work out the machinery. This was one of the reasons some hon. members thought it was important to get the bill through as quickly as possible. We are in touch with the provinces and the banking institutions, and I have received a number of letters on the same subject. I think it is important to advise students or applicants that it will be the end of August or early


September before all the arrangements have been worked out in detail.


Gilles Grégoire: Mr. Speaker, may I ask a supplementary question?
Can the Minister of Finance tell us if his department has figured out the amounts of the alternative payments to be made to the province of Quebec and if those calculations were made according to the formula given in Bill No. C-110?


Walter Lockhart Gordon: Mr. Speaker, these arrangements are being negotiated with the government of Quebec which, I think, is perhaps the proper authority to speak for the province on this matter. I have nothing to report in specific terms to the house, at this time. When I have I shall be glad to do so.


Thomas Clement (Tommy) Douglas: May I ask a supplementary question. What arrangements will the minister's department make to publicize the procedures which a student must follow in order to apply for these loans? The minister recognizes there will not be much time, since the machinery will not be ready until the end of August. There will have to be definite procedures outlined so the student will know what to do. What is the minister's intention?


Walter Lockhart Gordon: Except in any province that decides to handle the matter on its own, the student will apply to the authority designated by the province. Until the provinces have settled how they want to handle this matter it will be impossible to advise the student in detail what to do. However, we are drafting a booklet or brochure which will contain this information. We will not be able to complete it until the arrangements with the provinces have been completed. In the meantime I think if hon. members who are receiving requests for information would suggest to the students that they apply either to the loan boards that are set up in the provinces, with which they are familiar, or to the university authorities, this would be the best course to take for the time being.


Gilles Grégoire: May I put a supplementary question, Mr. Speaker?
Could the Minister of Finance tell us whether any province other than Quebec has expressed its intention of taking advantage of the alternative payments instead of the provisions of the act itself?


Walter Lockhart Gordon: I could reply only after the expiry of the time limit provided in the bill. Up to this moment the only province that has signified it wishes to take advantage of clause 12, I think it is of the bill, has been the province of Quebec.



BUSINESS OF THE HOUSE


[Stage Direction]
On the orders of the day:
Mr. Eric A. Winkler (Grey-Bruce):: Mr. Speaker, I have a question for the Minister of Justice in his capacity as house leader. Will the minister comment on whether he will be proposing a program for the consideration of main estimates in the ensuing weeks?


Hon. Guy Favreau (Minister of Justice):: Mr. Speaker, I will be in a better position to answer this question on Monday. For the moment it is understood that if the fiscal arrangements bill passes today, the balance of the day will be taken up with consideration of the estimates of the Department of Citizenship and Immigration, after which the estimates of the Department of Labour will be considered.



REQUEST FOR RETURN TO NORMAL SITTING HOURS

[Stage Direction]
On the orders of the day:
Mr. Mac T. McCulcheon (Lamblon-Kent):: In order to make the conduct of the business of the house more effective, will the minister consider reverting to the regular hours of sitting so that ministers will have the extra time available for the preparation of much needed new legislation?


Gilles Grégoire: Mr. Speaker, a further supplementary question.
Would the minister not consider instead extending our sittings over 24 hours a day from next Monday?


Guy Favreau: Mr. Speaker, it is obvious that any suggestion likely to enable the house to dispose of its work as soon as possible, while allowing the fullest freedom of discussion, will be duly considered.


John George Diefenbaker: May I ask the minister, in view of that latter suggestion and the widespread references in the Liberal press to the
Inquiries of the Ministry application of closure, is this one of the methods the minister has in mind? Will the minister answer, please, or does silence mean assent?



INCOMPLETE ANSWER TO ORDER FOR RETURN

[Stage Direction]
On the orders of the day:
Mr. Terry Nugent (Edmonton-Straihcona):: Mr. Speaker, I wish to direct a question to the Minister of Transport in connection with an order for return which he tabled in the house yesterday. This was an order for return made on July 29, dealing with the application by Northern Transportation Company for a change of licensing of their vessels. The order asks for a copy of the reasons given by the board in granting such application. The minister has given the application and the order, but it is simply the order without any reasons, and I wonder if the minister would look into it to see if there were any reasons and have them added to this order for return.


John Whitney Pickersgill: If anything that has not been given is needed to complete the order, I will certainly bring it down without delay.


Terence James (Terry) Nugent: As a supplementary, I want to point out to the minister that the reasons are the main point of the order, and they are missing. Therefore they should be added to the order.


John Whitney Pickersgill: I heard the hon. gentleman the first time.


Some hon. Members:: Arrogance.



SUGGESTED TIME LIMIT ON FLAG DEBATE

[Stage Direction]
On the orders of the day:
Gilles Grégoire: Mr. Speaker, I should like to direct a question to the right hon. Prime Minister.
During the meeting of the party leaders which took place a few days ago, did the Prime Minister ask the Leader of the Opposition (Mr. Diefenbaker) how many days were necessary for him to complete, to his full satisfaction, the discussion on the flag resolution? Did he get an answer?


Lester Bowles Pearson: Inquiries of the Ministry PUBLICATIONS
"maclean's" magazine-discussion of



EDITORIAL POLICY BY TRANSPORT MINISTER

[Stage Direction]
On the orders of the day:
Hon. Alvin Hamilton (Qu'Appelle):: In view of the evident willingness of the Minister of Transport to keep the house informed of the most recent developments, policies, attitudes and so on, I should like to direct this question to him. Did he have any discussions with any member of the management or editorial staff of Maclean's in recent months?


John Whitney Pickersgill: Notwithstanding the fact that the hon. member, who is an experienced member, knows this has nothing to do with my department and therefore is a question that is totally out of order according to the rules laid down by this house, I will say I have had no discussions with them about editorial policy at any time in my life.



&quot;MACLEAN'S&quot; MAGAZINE


[Stage Direction]
On the orders of the day:
Mr. D. M. Fisher (Port Arthur):: I wish to ask the Prime Minister a question in connection with order No. 2 on today's order paper, that is the amendment to the Customs Tariff respecting periodical publications. My question relates to those asked by the hon. member for Qu'Appelle in connection with Maclean's magazine. I should like to ask the Prime Minister whether he has had any meetings with senior executives of Maclean's since the recent change in connection with the periodical legislation proposal and whether he has given those people in particular any information about the government's intention which is different from the information he has given previously in the house.


Lester Bowles Pearson: No, Mr. Speaker, I have had no such meeting.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Hon. Marcel Lambert (Edmonton West):: Can the Minister of National Defence tell us if he and his officials have completed their study of the role of the navy and its ship requirements? If so, when can he make an announcement about the urgently needed ship
[Mr. Pearson.)
replacements, the cancellation of the frigate program having been announced many months ago?


Paul Theodore Hellyer: I understand that the report is now complete, Mr. Speaker, and will be available to the minister as soon as it has been transcribed. I am not sure whether this will take a few days or not, but it should not be too long until we get to consideration of our future requirements.


Marcel Joseph Aimé Lambert: As a supplementary question, can the minister make any forecast as to when a government decision in this regard may be forthcoming?


Paul Theodore Hellyer: I really cannot, Mr. Speaker, but it will be done just as expeditiously as it can be done well.



AVAILABILITY OF REPORTS ON AIR FORCE RESERVE

[Stage Direction]
On the orders of the day:
Marcel Joseph Aimé Lambert: wish to direct a further question to the Minister of National Defence. Can the hon. gentleman tell us whether the Hendy and Draper reports on the royal air force and naval reserve will be available to the defence committee?


Mr. Churchill:: And to the whole house.


Paul Theodore Hellyer: Perhaps the chairman of the committee would be in a better position to answer this question, but I believe the two reports will be tabled on Tuesday next.


Marcel Joseph Aimé Lambert: The minister does the tabling.



WEIGHTS AND MEASURES


[Stage Direction]
On the orders of the day:
Mr. L. J. Pigeon (Joliette-L'Assomption-Montcalm):: Mr. Speaker, I should like to direct a question to the Minister of Trade and Commerce, of which I have sent him notice. Is it true that he has set up, within his department, an organization which is studying at the present time the adoption of the metric system in Canada?


Mitchell William Sharp: Mr. Speaker, the standards
branch of my department has been studying this question of the metric system for some

time. So have other agencies of the government. The problem, as the hon. gentleman knows very well, arises out of the nature of our business, our export trade being so important that we must be sure our action in this respect would not interfere with that export business, and would be in harmony with other countries with which we do a lot of business.



ATTENDANCE OF PRIME MINISTER AT OLYMPIC TRIAL GAMES

[Stage Direction]
On the orders of the day:
Mr. Jean-Pierre Cote (Longueuil):: Mr. Speaker, I wish to direct a question to the Prime Minister. Will the Prime Minister attend the Olympic trials that are being held today and tomorrow in St. Lambert, Quebec; and, if so, at what time?


Lester Bowles Pearson: I shall attend them, Mr. Speaker.



DOMINION-PROVINCIAL RELATIONS METHOD OF DETERMINING OFFSHORE OIL RIGHTS

[Stage Direction]
On the orders of the day:
John George Diefenbaker: I have a question for the Prime Minister. Would the Prime Minister say whether the government is giving any consideration to the question of offshore oil rights, which the provincial premiers meeting together agreed-unanimously, as I understand it, Mr. Smallwood not being present- should be determined by arbitration between the federal government and the provinces rather than by litigation or by the submission of the whole question to the Supreme Court of Canada?


Lester Bowles Pearson: The matter was discussed at the last meeting with the provincial premiers in Quebec, and consideration has been given to it since that time by the federal authorities. I will be glad to make a report on it as soon as possible.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. Fred F. Stenson (Peterborough):: I
wish to direct a question to the Minister of Finance. It stems from a question I asked him yesterday with regard to industry. Can the minister explain to us why he considers that
Federal-Provincial Relations a tax on production machinery has stimulated investment in production machinery in Canada, and does he not feel that this tax-


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



PENSIONS


[Stage Direction]
On the orders of the day:
Stanley Howard Knowles: Mr. Speaker, may I direct a question to the Prime Minister. Since it has not been tabled today, may we now take it as definite that the white paper on the new version of the Canada pension plan will definitely be tabled on Monday?


Lester Bowles Pearson: The fact that it was not tabled today is an indication that the French translation is not complete. I hope it will be completed in time for it to be tabled on Monday.



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

[Stage Direction]
The house resumed, from Thursday, August 6, consideration of the motion of Mr. Gordon for the second reading of Bill No. C-lll, to provide for the revision of certain fiscal arrangements with the provinces and to provide adjustments of fiscal arrangements and taxation provisions consequential upon the provision of youth allowances to parents resident in certain provinces.
Stuart A. Fleming: Mr. Speaker, when I was speaking prior to the adjournment last night I indicated that my principal criticism of this bill is in respect of what it fails to contain rather than what it does contain.
In the course of that criticism I must confess I made reference to a conference on national highways which I understood the Minister of Public Works would be calling. I now find I was in error and that no such conference has been called or, apparently, is contemplated. I was giving the minister credit for a conference which apparently he has not arranged. Consequently this still gives no hint whatsoever of any agreement with the provinces regarding the development of a national highway policy-


Mr. Speaker:: Order. It is extremely difficult to hear the hon. member.
6526	HOUSE OF
Federal-Provincial Relations


Stuart A. Fleming: It
contains no hint whatsoever of government policy on national highway development. We now know that the forest access program has gone. The roads to resources program has gone, and no indication is given here that any agreement has been reached with the provinces to continue a program for the development of roads or highways, except for a new policy which can only be called a squeaking wheel policy; in other words, where the squeal is loudest the grease is applied thickest.
I say this because in the absence of a national policy, despite the necessity of such a policy, we heard from the Minister of Transport with regard to the construction of roads in one particular province. I will quote his words as they appear in Hansard on page 6425:
Of course, we realize that road building comes under the provinces, but we are told that there is such a backlog in Quebec's road building and rebuilding program that the Gaspe highway will not be completed before several years, unless special financial assistance is provided in that connection.
Does not that same condition prevail in all the provinces of Canada? What kind of an excuse for policy is this? If we are to have a national government legislating in the national interest it should surely produce a better reason than that in order to justify an ad hoc arrangement with one province when the other nine provinces all have similar problems of at least equal urgency.
I make no complaint about a contribution to the Quebec road building program providing the government will indicate in its legislative program, or somewhere in its announcements, that it intends to extend this principle to the other provinces which have the same problem, particularly to my own province which has an even greater problem. Nowhere in Canada, and in few places in the world, is road building more essential to the development of the provincial economy, and nowhere is road building more expensive or does it, as a result, place a greater drain on provincial resources. During the past 12 months submissions have been made to the present administration seeking some indication of federal policy either in the fiscal field or through cooperative programs to assist British Columbia as well as other provinces, including Alberta, Saskatchewan and Manitoba, in developing a second trans-Canada highway or at least in developing those highways which are neces-


sary to the continuing development of the resources of the western provinces.
I am thinking particularly of the necessity for a highway program linking central British Columbia and the western provinces east of the Rockies to the northern port of Prince Rupert. Canada is a Pacific power. We are apparently coming very reluctantly to a realization that much of Canada's future, much of Canada's growth and much of Canada's prosperity will be dependant upon our relations in the Pacific and the development of trade in that region, matters which in turn are related to a substantial degree to the economic and fiscal help given to the western provinces to enable them to acquire ready access to the west coast ports so as to take full advantage of the markets and services of the Pacific area.
There is at present an intense concentration on the development of facilities in the lower mainland through Vancouver, New Westminster and some of the Vancouver island ports. But one port on the Pacific coast which has received all too little attention over the years is the port of Prince Rupert, which has ready access to the Peace river area and which also has potentially a close link with the city of Edmonton and the economy of northern Alberta.
This is not simply a provincial consideration; it is something which is in the national interest. It comes within the scope of federal participation. It involves the development of facilities on the Pacific coast which will lead to the greater servicing of trade in the Pacific area.
Apart from the trade aspect, we in this house are now considerably concerned with the political situation in the Pacific area. There is conflict there. There has been conflict for years, and there will be conflict for many more years. If it cannot be contained, Canada undoubtedly will be involved. As a Pacific nation it would have no choice. It would be thrust into events even if it did not enter of its own volition. Therefore the development of port facilities on the west coast and transportation through that difficult terrain is of the utmost national importance. However, neither in this mill nor in any announcement which has been made by the government in the past 11 months can I find any sign of any appreciation by the government of this necessity.
There was an announcement made by the Minister of Public Works 53 weeks ago almost precisely, in which he indicated that

Federal-Provincial Relations
some consideration might be given to a national road building program. Then later we heard there would be a stocktaking, and that the provinces would indicate how much it costs to build roads and would be told what they might expect from the federal government. But we heard no more, except that the government was considering the situation, gathering information and filing it. That is all we heard. This is not encouraging at a time when there is a tremendous potential for development in the whole of the Pacific region, including trade with the west coast of the United States and the coast of Alaska, and increasing trade with Australia and New Zealand. The whole of the Pacific region lies open to Canada providing the facilities of the west coast are adequately developed to serve the growing needs of that region.
I believe there is immediacy here. The province of British Columbia recently announced that it was extending its provincial ferry system from Port Hardy to Prince Rupert, from the northern tip of Vancouver island to Prince Rupert, and a connecting highway link would add substantially to the economy of Vancouver island.
The benefit to be gained from federal participation in this type of program is tremendous. I am asking for such participation specifically for British Columbia because of the very special and urgent needs of that province, but I realize as well that a program of this kind embodied in legislation like this could be of immense benefit not only to British Columbia but to all the western provinces, and by benefiting all the western provinces would lead to benefits throughout the whole of Canada. Anyone who has travelled on our national highway system in the last year or two is conscious of the way in which Canadians are travelling and visiting the various provinces. There is a great interchange of people. It is as common now to see Quebec and Ontario licence plates in Vancouver as it was common to see California licence plates. Eastern Canada has suddenly discovered western Canada, and western Canadians are here in the east in the thousands each summer because of one highway network, one cost sharing agreement for highway construction which has brought about this great interchange of people within Canada.
Now we must go further. We must recognize that this has been a good thing and, if the federal government will enter into agreements with the provinces to assist them this tendency can be increased and we can go
a step further. The national government by co-operating with the western provinces, particularly with the province of British Columbia, in the development of highway access to the coast and port facilities on the coast will provide for Canada a new horizon on the Pacific. We can take advantage of the situation. It is there for us to gain. It is there for the taking provided there is some willingness on the part of the federal government to enter into agreements with the western provinces in particular to develop the necessary facilities that will give Canada its opportunity in the Pacific.


Mr. Beri Leboe (Cariboo):: Mr. Speaker, I rise particularly to protest the taxation arrangement involving the use of a gross figure for natural resources rather than a net figure. I think it is only fair to say that the action of the government in this regard has been very discriminatory, and in the few minutes I will take of the committee's time I hope to point out some of the reasons why I make this statement.
I am particularly interested in expressing my views with relation to the forestry industry of British Columbia, which does in fact provide a large return in gross revenue to the province. This is not the case as far as net revenue is concerned, because throughout almost the whole of the province we have established a sustained yield program which is very costly and extends far into the future. It is an investment in the future of British Columbia and Canada. It is an investment on the part of Canadians living today that will be beneficial to those who will follow us.
In the forest industry a tremendous amount of money has to be expended on reforestation and nurseries for the growing of trees. A great deal of money has to be spent every year for forest fire protection. In that connection there are extensive programs involving roads that have to be built, water supplies that have to be maintained and the hiring of aircraft under contract for the whole season whether or not the aircraft are used. The aircraft must be available and have to be paid for in case we have a season with many forest fires. All these expenses have to be met in connection with the forest service.
Forest access roads also have to be built. When we build forest access roads we naturally open up the country for travellers, and this increases the fire hazard. Therefore the amount of fire protection has to be considerably extended because of the number of people using these access roads, and the cost of such protection is increased. These services

Federal-Provincial Relations all cost a lot of money and therefore reduce substantially the amount of net revenue obtained from the forest industry.
A great deal of money also has to be spent both privately and publicly on forest research. There is also the cost of collecting revenue for the government. As any government knows, the money that is received is not a net figure. There is a cost involved in collecting the revenue. These things are not taken into consideration.
Generally I should like to mention the cost of services in British Columbia. The province is one where wages are relatively high, which is a good thing, and it has a high standard of living, which is also a good thing. We appreciate these things and we want to maintain high wages and a good standard of living. There is also the fact that we have a good climate in British Columbia which every year causes an influx of unemployed people from every part of Canada. This influx of unemployed people is no advantage to British Columbia. It is costly to the province to have these unemployed people there seeking work because they find it is much easier to live in a warm climate with limited funds. Many dollars have to be spent on these people in welfare payments. This again is an added expense to a growing province that is moving forward economically.
The increase in the population of British Columbia clearly indicates that this is true. The higher wages result in the federal government receiving a greater amount of personal income tax from those people who are earning their dollars in British Columbia. This, of course, results in added revenue to the federal government without any relation to the wages paid in other parts of Canada or the income of people in other parts of Canada. Here again we are penalized.
We are penalized in another way as well. I refer to the fact that if industries can find a place where wages are lower they will gravitate to that area if it is possible to do so. Therefore in the type of legislation now before us a province that is trying to increase the standard of living of its people and develop the province is being penalized. Legislation of this type will discourage a province from making progress and encourage other provinces to sit idly by and reap the benefits of the development of neighbouring provinces. This type of thing is certainly discriminatory and I believe should be taken into consideration.
The fact that we in British Columbia have higher incomes is evidenced by the fact that in the year just past British Columbia bought


$660 million worth of goods from Ontario and Quebec alone. That is a very sizeable purchase and would not have been possible were it not for the fact that the people in the western provinces have high incomes and are able to spend the money they have earned. Of course the necessary capital expenditure in the province, along with the production of goods and services, has resulted in this type of increase in the money supply for the federal government. All this I have mentioned compounds the discrimination of this type of legislation, which includes the gross income from natural resources. It has been pointed out that many of these resources are not renewable resources, and in this particular case we are selling off what might be termed a capital asset.
Some mention has been made of highway construction in Canada and I would go along with the minister this far, that as long as the fiscal arrangements with the provinces are such that they will permit the provinces to take their responsibility in connection with highway construction I see no real reason why the federal government should get into extensive highway construction. Aside from that, there is a general responsibility on the part of the federal government in connection with highway construction which should be based, as the hon. member for Okanagan-Revelstolce said, on a sound, predetermined policy, not on a haphazard sort of policy which is really not a policy at all but merely a matter of saying "There is a great need here; let us jump in and help build a highway"; or, as the hon. member put it, it is the squeaking wheel which gets the grease.
With regard to sales tax paid by the federal government to provinces which levy a sales tax, here again there is a discrimination against those provinces which do not have such a tax, which discrimination should be eliminated. In the first place, if the federal government engages in extensive construction programs in a province which are liable to sales tax, the province concerned gets a double benefit; it gets the benefit of the expenditures of the federal government within the province and it also gets the benefit of the collection of sales tax. That is certainly discriminatory, and there should be compensation to provinces who do not receive this benefit.
The Minister of Finance can enter the picture very substantially in one respect. This is now the case to a degree and I hope it will be a continuing policy. That is, he can use the increase in the money supply as a means

of revenue. By this I mean that the Bank of Canada should supply the increase in the money supply which is necessary, and this money supply could be used for social and public capital spending. This would reduce the amount of pressure which would be put on the provinces and thereby bring about a reduction in taxation. I am sure the minister would agree with this although he will not admit that some of the things are needed that we would like to see.
We placed some questions before the minister during the previous debate, and I noticed a great reluctance on the part of my hon. friend to answer them. I hope before the session ends the estimates of his department will be up for review in sufficient time to allow the minister to answer some of these questions, instead of bringing them forward in the dying moments of the session. I think it is quite important to realize that in a developing and growing country there has to be an increase in the money supply from year to year, and there is no reason why this increase in the money supply should not be brought forth by the Bank of Canada on behalf of the government by way of expenditure on social and capital needs.
I should like to make one last plea, Mr. Speaker, for consideration to be given to the matters which have been raised in this debate in connection with discrimination. I hope we will find that these discriminatory policies will be eliminated. Surely if there is one thing we need in Canada today in talking about Canadian unity, or a united Canada, or a confederation which is going to work, it is a government which will get away from discriminatory policies and institute a broad policy which is good for all Canadians everywhere.


Mr. Charles J. M. Willoughby (Kamloops):: Mr. Speaker, on listening to the hon. member for Cariboo, whose office is next door to mine, I was a little afraid that he had seen what I am going to say to the house today. However, I feel there are some points which I might still emphasize which I hope will be of interest to the Minister of Finance. I did speak briefly on the resolution stage of this bill, and I should like to emphasize some points I brought out.
I would again emphasize that I agree with the principle of tax abatement. I think all of us do. I feel it is a principle which is recognized as fair throughout the dominion, and as long as it is fair we are for it. Generosity in general is something of which we all approve provided it does not ruin the
Federal-Provincial Relations donor in the process. This situation with which we are faced in Bill No. C-lll is very complicated, and I definitely feel that the bill requires revision before the house endorses it.
I am naturally particularly concerned with the welfare of my own province of British Columbia. It is a province which is still largely undeveloped. As previous speakers have mentioned, especially the hon. member for Okanagan-Revelstoke and just now the hon. member for Cariboo, we have large expenditures facing our province. These large expenditures will develop resources which will bring more revenue to the federal treasury. The situation is simply this, that we are concerned at the suggestion that 50 per cent of our income from natural resources will be taken by the federal government out of the treasury of the province.
As we all appreciate, natural resources in many cases are expendable resources and must be maintained if we are to have any future prosperity. We cannot allow these resources to be used up, or allow 50 per cent of the revenue from them to be handed over to the federal government for use in other ways. I feel any suggested assessment in this bill should be applied fairly. I agree with what the hon. member for Cariboo has said, and I am sure no one in this house can disagree with him, that the method of assessing industry on gross income rather than on net income is ridiculous. I intend for my purposes to use the same example used by the hon. member for Cariboo. I am using that example because the forestry industry is the largest in British Columbia and requires great emphasis. Other resources in British Columbia such as oil, gas and mining should naturally be treated in the same way, but I feel that an examination of the forestry industry will give us the best example.
We know that forestry products depend on the forestry industry and must be maintained in perpetuity, otherwise a great deal of our income will disappear. It is only common business sense to protect this industry. It is of interest to note that the forestry industry in British Columbia produces an income of approximately $850 million per annum, and that the maintenance of the forests on a high grade basis is being carried out mainly by private industry.
The forests which come under the jurisdiction of the provincial department of forestry amount to 83 per cent of the forest acreage in British Columbia. It is impossible to maintain those forests out of revenue that is being pro-

Federal-Provincial Relations vided from forestry income. At the present time in the coast area alone there are 100,000 acres of forest land underdeveloped, and in the interior where the forestry industry is developing rapidly this situation is even worse.
People all over British Columbia want roads, schools, hospitals and social services. These are excellent things, and I would be the last man to stand here and argue that they should not be provided. These people want these things because they can see where the money is being spent. On the other hand, money spent in respect of forestry preservation cannot be seen, and in this regard this industry is in an unfavourable position. The federal government through its Department of Forestry contributes toward the maintenance of forests in British Columbia under the provisions of the reforestation act of 1949. The government participates in inventory, the building of protection roads, and reforestation. This system is not working fairly. The federal treasury contributes only 15 per cent of the cost of these services, whereas 85 per cent is being paid by the provincial treasury. However, in respect of services such as the provision of hospitals and welfare the government has seen fit to contribute 50 per cent of the cost.
The forestry industry creates a great deal of income, and if we reinvest this income more industry and more income will be produced. More pulp mills could be created as a result of which there would be a natural increase in income. I am sure the Minister of Finance and the minister of revenue would be pleased to know of the possible development of ten or 20 more pulp mills in British Columbia, because the federal treasury would receive 11 per cent tax on the machinery and buildings.
Several years ago Mr. Justice Sloan conducted an inquiry in respect of the development of forestry in British Columbia. At page 417 of his report regarding this British Columbia industry he indicates that one third of the provincial tax in British Columbia is related to the forestry industry, and that one third of the amount received through the federal tax rental agreement is derived from the forestry industry development. The report also indicates that 26 per cent of total federal revenue from British Columbia is derived from forestry. In other words, out of the revenue from the forestry industry in British Columbia during the past year it is estimated that the province of British Columbia has received $116,500,000. On the other

hand the federal treasury has received $157 million. In other words the federal treasury receives 60 per cent of the revenue of a British Columbia development. The British North America Act on the other hand indicates that a province is responsible for resources and must maintain those resources. Under the tax agreement the federal government only maintains this resource to the extent of 2J per cent.
The province of British Columbia must maintain the forestry industry or become another part of Canada dependent upon subsidization. A more extensive forestry industry must be developed, and the $117 million in tax must be protected. At the present time only 8J per cent of the total income is put back into development, study and fire protection in respect of this industry in British Columbia. The British Columbia government devotes 15 per cent of its income to these services, whereas the federal government contributes only 2J per cent.
If we do not protect this industry; if we allow all the profit to be taken out of forestry production, eventually we will kill the goose that laid the golden egg. We must put more money into forestry development. We must put more money into forestry protection. We must provide better headquarters establishments for these services in the districts which have been opened up in British Columbia. To properly service these headquarters in respect of the forestry industry will cost a great deal of money. It is estimated that $450,000 will be required for buildings alone in new areas necessary for the development of this industry. The federal government is only contributing 2\ per cent toward the cost of construction, reforestation, disease research and research in respect of preservation.
I feel, therefore, that this particular clause in Bill No. C-lll is completely unfair. It is unreasonable and it is unbusinesslike. I feel the minister should give serious consideration to the removal of this provision for imposing a tax on gross income rather than net income. There is no other industry of which I know that is taxed on its gross income. I have never heard of such a thing. I am sure the minister, who has been associated with financial circles in Canada for years, will agree that it is utterly ridiculous to impose a tax on the gross income of any business. Surely to goodness the industry must be maintained, and the net revenue only should be considered when it comes to taxation.
We should encourage these industries to expand because eventually income will be

increased. We should not ruin an industry by taking away more money than we put back into it for its development. No industry can operate on that basis; it will go bankrupt. We all recognize this because it is only ordinary common sense. We should encourage our natural resource development so that we will have more income. We should not discourage it. The present system, especially with regard to forest rehabilitation in British Columbia, is one that will completely discourage the industry in the long run. The only thing that maintains this particular industry in British Columbia is the fact that we are blessed with a great deal of good forest area which we are able to harvest continually without replacement or proper protection. Forestry needs more roads, and this has been dealt with already, Mr. Speaker. Forestry needs more fire protection, more airplanes for fire protection, and this has already been suggested.
I hope I have emphasized the point that you cannot get returns from a business unless you spend money on the development and improvement of that business. This is the point I want to bring home. I am not trying to tell this house that we are not in favour of tax abatement. I am trying to tell this house that tax abatement must be based on the net income of a province and not on the gross income. I think that is only fair; it is only common sense. The remarks 1 have made apply equally to mining and oil production and things of that type.
At the time the resolution was under discussion I asked the minister to give us the assurance that the Columbia river downstream benefits, which result from the sale of a natural resource to the United States, will not be considered a taxable natural resource of the province of British Columbia. This would, of course, completely alter the whole Columbia river treaty. We must not allow that to be included as a natural resource in the consideration of the sale of natural resources so far as British Columbia is concerned.
I believe, Mr. Speaker, this is all I have to say at this time. I am just asking for fair play for British Columbia, Alberta, Saskatchewan, Manitoba or any other province. I am not saying we are the only province affected by this provision. I just want to put this on the record. We must not allow legislation to be passed that deals unfairly with any province. I feel an adjustment must be made in this bill in order that the tax will be imposed on a net basis rather than on the gross.
Federal-Provincial Relations [Translation]


Auguste Choquette: Mr. Speaker, I have a few remarks to make regarding the speech delivered yesterday by the hon. member for Lapointe (Mr. Gregoire).
I must say, briefly, that the present government policy is based on co-operative federalism.
The hon. member for Lapointe denounced this principle in very strong terms.
I should only like to point out that if the last federal-provincial conference last April was so successful, it is precisely because the formula of co-operative federalism was applied.
I can appreciate the hon. member for Lapointe advocating rather radical theories; his group, no doubt is leaning more and more towards provincial politics. Besides, the hon. member himself, in his suggestions, showed that he favoured the establishment of two associate states in Canada. This is a theory that we on this side of the house reject strongly.
We believe that the co-operative federalism formula has produced very good results and wonderful advantages. In fact, at every federal-provincial conference which took place since this government has been in office, there was a remarkable harmony. There were some exchanges of views, sometimes diametrically opposed, but thanks to the conciliatory attitude always shown by our Prime Minister, and his great patriotism, those federal-provincial conferences have been very successful.
Mr. Speaker, like all hon. members on this side of the house, I feel called upon to disprove what the hon. member for Lapointe said, that co-operative federalism is more or less treason and that the French Canadians reject that theory.
I do not agree at all with that statement and I even claim it is completely false.
In an editorial, Le Devoir, which has always fought for the interests of French Canada, holds justifiably that the co-operative federalism formula has not been sufficiently tried and that it should be tested to the full.
I fully agree with the views expressed in that editorial in Le Devoir there is no other effective formula at the present time except co-operative federalism.
I understand very well that the hon. member for Lapointe and his group, as I said a moment ago, are increasingly interested

Federal-Provincial Relations in provincial politics. He would like to know- and I am convinced of this-whether separatism could be profitable in the province of Quebec and if so, they would embrace separatism to try to win the electorate.
Unfortunately for them, most citizens of the province of Quebec think that, as expressed by a prominent economist, Mr. Marcel Faribeault, economic federalism is rooted in the soil of Canada.
We know that the speech of the hon. member of Lapointe is based on wrong figures-


Some hon. Members:: Oh, oh.


Auguste Choquette: I know that the Minister of Finance (Mr. Gordon) will in due time set the record straight and that the experts of his department will give us exact figures in keeping with the facts, which will definitely prove that the province of Quebec has, and will always have, everything to gain by remaining within confederation.
We cannot admit that people with separatist tendencies come forward as the spokesmen of the French Canadian group. The majority of French Canadians want their rights to be respected, yes, but they also trust that it will be so under a federal system.
I challenge the hon. member for Lapointe to present himself as the spokesman of French Canadians. He speaks on behalf of an insignificant minority, because we want to remain in the Canadian confederation, we have every confidence in its future, we know that Canada is a great country and that, the more Quebec will flourish and prosper, the more Canada will shine.
This is the thesis we advocate and defend, and we are not afraid of letting people everywhere know it.


Gilles Grégoire: Mr. Speaker, is the hon. member for Lotbiniere ready to supply us with the true figures he mentioned?
Second, does he mean, by his statement, that the figures supplied by Mr. Taylor, from the Department of Finance, are wrong?


Auguste Choquette: Mr. Speaker, 1 do not mean nor suggest anything. I am speaking of the figures quoted by the hon. member for Lapointe. I say that those figures are wrong, and that in due time, the Minister of Finance will reveal the true situation, as regards the taxes collected by the federal government in the province of Quebec and the redistribution of those taxes in that province.
I say and repeat that we have everything to gain by remaining within confederation. We will be better off financially, and the

opposite is untrue. That is what I wanted to tell the house.


Gilles Grégoire: You did not answer my question.


Auguste Choquette: I maintain that the
hon. member for Lapointe has separatist tendencies.


Mr. Deputy Speaker:: Order, please. The hon. member for Lethbridge.


Mr. D. R. Gundlock (Lethbridge):: Mr. Speaker, I have just heard something in the house that I have wanted to hear for a long time, and want to hear repeated many times. The hon. member who spoke before me said something to the effect that Quebec will always benefit by belonging to confederation. As a western member I would like to compliment him for uttering those words and to assure him and others that we feel exactly the same way. We all want to benefit from being in confederation, and those of us who are, comparatively speaking, new members feel this more strongly than a lot of people give us credit for at times.
Dealing with Bill No. C-lll there are one or two items I would like to bring to the attention of the house through you, Mr. Speaker. I have listened to the debate with interest. I have heard much said about federal-provincial problems and about the problems of different provinces. Many discrepancies in fiscal arrangements have been mentioned, but one person has been neglected, or at least has not been mentioned in the speeches previously made. That person is the Canadian taxpayer. He exists under many names. He may be called one thing or another but to me, Mr. Speaker, Mr. Canadian Taxpayer is the one who is really most concerned with this bill. It is not the individual member who speaks, and rightly so, about a grievance concerning a whole province, who is most concerned with this bill; it is the individual taxpayer.
I heard a very eloquent and telling speech by a colleague of mine from Alberta. He is, in a manner of speaking, my neighbour, and he dealt with federal-provincial fiscal arrangements as they relate to taxpayers in Alberta. If I may I would like to dwell on that subject for a few moments and ask questions. Albertans are asking questions locally; they are asking them provincially, and they are asking them federally through their representatives in this chamber. There are two things I have in mind, dealing particularly with the relationship between urban and rural taxpayers.

I could, Mr. Speaker, quote from the Financial Post of August 1, which gives a very optimistic report on business conditions, one that I am sure we all like to see. It carries headlines such as "Barometer Rising"-I presume this refers to the financial barometer- "Jobs Galore," "Builders' Boon," "Strength Overseas", etc. All these things affect the Canadian taxpayer very closely, probably more closely than a lot of us mention or even think about because we are so wrapped up in our own duties here that we often forget this sort of thing.
I would like to draw a comparison between rural and urban taxpayers, and I do this quite sincerely and honestly because I am concerned with both categories. A rural taxpayer may deduct certain expenses for interest rates and certain costs related to his over-all income, and I think it would be a good thing if the urban dweller could be entitled to the same consideration, particularly concerning the cost of interest on mortgage loans as related to the purchase of dwellings. For a long time I have said that there is a discrepancy between these two groups. For instance, if I am on my own farm I am entitled to many more deductions than the city dweller, who does not receive a deduction for the interest rate he pays on the mortgage covering his home. I believe he should be entitled to that deduction and to enjoy all the things that the rural taxpayer enjoys. Then too, as a farmer, if I am not able to pay my taxes and the tax collector finally comes along accompanied by the sheriff, I am dispossessed of my property, and rightly so. I am not complaining about that, but with that goes my livelihood.
The economic barometer, it has been said, is rising, and with it comes the prospect of jobs galore. According to statistics, which no doubt are reliable, six and a half million people are at work today, six and a half million out of approximately 19 million. I do not mean to imply that the remaining 12i million are not taxpayers, but certainly the 6j million who are employed are taxpayers. What do they get for their tax dollar? I think the Canadian taxpayer has a right to know where his tax dollar is going.
I am particularly interested in Alberta, as I said earlier. The government of that province provides its taxpayers with a small piece of paper which sets out in detail each and every grant made to a municipality. This adds up to a great deal of money. As a matter of fact, I think in Alberta at the present time it would probably amount to well over $8 mil-20220-4131
Federal-Provincial Relations lion, perhaps $8,750,000; the figure may not be entirely correct, because I speak from memory. But it is a fact that such details are made known to individual taxpayers and I should like to draw this practice to the attention of hon. members as well as to the attention of Canadian taxpayers generally. In one province, at least, taxpayers receive a piece of paper setting out in detail each and every expenditure by way of grant to a municipal government.
Since this is the case with regard to government expenditures within a certain province, I wonder whether it would not be fair to tell the federal taxpayers what is being done with the tax dollars which go to the federal government. I have in the past objected to this sort of propaganda. I did so because I did not believe it was entirely fair for the provincial taxpayer to be reminded what the provincial government was giving to him when he was not also reminded at the same time of the benefits brought about by certain fiscal relationships between the province and the dominion or central government. It left him wondering what the central government was doing with the money he was paying in federal income tax every year.
The hon. member for Lapointe was among several members who spoke earlier in this debate. I am sorry he is not in his place at the moment, because he had a great deal to say about the federal-provincial relationship. As I recall it, he expressed the view that his province should no longer be placed under any restrictions whatsoever. He said in effect that the relationship between the provincial and the federal governments led him to think of Quebec as being a child in a family. If that is so I should like to ask the hon. member whether he thinks that, in effect the federal government should turn the pay cheque over to the family and say "Do as you like; I will take what is left." Does he not believe that to follow such a course would only lead to a deterioration of the federal-provincial relationship? My own view is that it would be bound to do so.
If I may turn now to the agreements themselves, let me say I am frankly and sincerely of the opinion that though they may not be entirely correct, they are certainly good agreements, as far as possible, between the federal government and the provinces. We could argue for a long time about ways in which they could be improved, but let us remember that the premiers of the ten provinces have sat down time after time together with representatives of the government of Canada to

Federal-Provincial Relations consider these fiscal arrangements conscientiously and to reach agreements which seemed lair to all sides. It is true that I have put forward some criticism, but I do not really question the agreements themselves and, in fact,
I should like to compliment the minister responsible.
Earlier in this debate one hon. member referred to the subject of education. I fully realize that this is definitely a provincial responsibility, and it is one which I hope the provinces will always guard jealously. Nevertheless there may be some possibility of reaching agreement and understanding on a a few points at some future conference, in the same way as understanding and agreement have been reached on various matters in the past. There is one point in particular that I should like to draw to the attention of the house, and it is this; the need for a basic standard of education right across this nation regardless of geographical or economic differences.
I know I am treading on ground here where I have no real right to tread. However, having in mind the rapid transportation and communication facilities which today perform a very good service, although some of them have been under fire in the house recently; having in mind also the amount of the taxpayer's dollar that is funnelled into education in all phases, elementary and intermediate schools and universities, I think it is time that we came to some agreement. It would be my hope that there might at least be agreement on a basic standard. Those members of the house who have children and who come from constituencies far from Ottawa try to meet the very difficult problem that arises.
Our country is nearly 5,000 miles wide and our children move from one province to another or one area of the country to another each year. I have experienced this, and I should like to say that the educational systems with which I have had contact are very close but not quite close enough. There is a difference in the grading. But what is even more disturbing is that in a city such as Ottawa and in my own city-no doubt the same situation exists throughout the country -even when a student moves from one area in the same city to another area in the same city he is very often faced with different textbooks and a different curriculum.
I am not speaking from a selfish point of view or from the federal standpoint at all, but surely in the interests of the Canadian taxpayer we can find some area of agreement
[Mr. Giuidlock.f
regardless of provincial autonomy or any other argument that may be brought forward. Surely we can arrive at very basic standards so that students who move from one area of the country to another or even from one school division to another within the same city will be able to take advantage of the fact that there are basic standards.
Yesterday the hon. member for Lapointe dealt with a matter to which I have taken some exception, but I think I learned something from him yesterday. I am referring to the fact that we in this house often hear about the great breach between the races. I have taken exception to such statements on several occasions in the house, but I think I may have learned something from the hon. member. He pointed out that the definitions of certain words are not the same in the two languages. If I have been mistaken in the past I offer my apologies, but I would like to ask the hon. member to give a clearer definition of these words, because certainly my idea of confederation does not encompass differences between the races.
I hope I am completely mistaken, because when I look at certain members of the house it is very hard for me to realize that we are of different races, and I should like the dictionary definition of these words to be made clear. I said earlier it was my hope that before long we would not be talking about differences of this sort. I have also said that I hope we can have a basic standard of education regardless of geographic or economic differences. When the federal government and the provinces sit down again in conference I think they might consider this matter. If they would do so I am quite sure it would enhance Canada's chances of taking her proper place in the very near future. We must be very cognizant of this, because we have to take our proper place.
I have also referred to the position of the Canadian taxpayer in relation to employment or unemployment. I should like some answer in this regard, because when we are talking about federal-provincial arrangements the Canadian taxpayer is most certainly involved. I think he should receive a full explanation of where his tax dollar goes. I tried to point out earlier that the province of Alberta does a very good job of explaining to the taxpayers where the municipal grants come from, but they do a very poor job of pointing out the differences, which leads the Canadian taxpayer to wonder in some cases, as we have heard during this debate, where the

rest of his tax dollar goes and what is being done with it.
I know some of us would like to think that the gross national product will increase to a point where taxes will not have to be raised in the next budget, but I wonder frankly whether this will really be the case. When I note that six and a half million people work in Canada today it leaves a question in my mind about the other four or five or six million people. Where are they? I realize that we have a great many professional people in Canada who are taxpayers, and in looking over the figures there is a very nice picture. But where are these other people who are worth thinking about and who are really the people concerned about this present debate? Where do they fit into these figures? How many of them really know the answer as to where their tax dollar is going? As I mentioned earlier, some of these people -admittedly I do not know how many-are paying more than other people. I think they have every right to some explanation of where their tax dollar goes.
I hope, Mr. Speaker, the minister will take note of one or two of the matters I have raised and will give some public explanation, or if not public at least give an explanation to this house, in reply.


Mr. Georges Valade (St. Mary):: Mr. Speaker, this is the first time I have an opportunity to say a few words in the house since an unfortunate accident kept me in hospital for a few weeks.


Some hon. Members:: Hear, hear.


Georges-J. Valade: I wish to thank my colleague from Longueuil for this welcome.
I want to tell the house that, although I was kept apart from the debates, I followed with a keen interest all the developments in this house, especially as regards relations between the provinces and the federal government.
I felt somewhat unhappy being unable to take part in the debate on Bill No. C-110 relating to the student loans. I wish to say at this stage that had I been present in the house when that bill was introduced, I would have surely registered my opposition on this question, since I consider that education, as understood by the Fathers of Confederation and sanctioned by the British North America Act, and more especially by sections 92 and 93, comes under the exclusive jurisdiction of the provinces. The more so since I believe this central government, failed to discharge
Federal-Provincial Relations
its responsibilities in the course of the various federal-provincial conferences which were held in Ottawa since its coming into office. This government was certainly made aware, in no uncertain terms, of the stand of the province of Quebec on the question of education. I was told very clearly by several Quebec Liberal ministers that the province of Quebec intends to retain its full authority over the matter of education.
Besides, we are under the impression that the Prime Minister has given way to pressures from his entourage, but mostly to pressures put on him and his ministers by the teachers' federation of Canada through a brief dated November 18, 1963, in which on page 13, it is stated:
The federation of Canadian school teachers does not feel that the Canadian government should control in any way education in our country, but it recommends nevertheless:
The word "nevertheless" is very significant.
That the federal government should take the initiative in calling a representative meeting of ministers of education of every province, their advisers, and representatives of national organizations most directly concerned in order to seek together the means of removing existing difficulties.
In itself, this recommendation seems acceptable, but the fact remains that the spirit and the letter of the confederation pact seem to be completely ignored, because in educational matters, such an initiative must not be taken by the central government, but rather by the provinces themselves. And that is the danger which arises when the federal government takes the initiative in the field of education.
Mr. Speaker, I would not want my observations to be interpreted as separatist or nationalist remarks. Far from it. On the contrary, I am one of those who believe that in Canada, there are 11 equal governments and not that one is superior to the 10 provincial governments. And it is only when we accept that philosophy, those facts, that we will reduce in Canada the number of problems which oppose from time to time the provinces and the central government.
Besides, if the federal government wanted to do so, it could take measures allowing the provinces to discharge their own obligations in that field. But it seems that the federal government always wants to keep the door closed to initiatives which could come directly under the provinces.
For instance, some departments' estimates could be reduced, as pointed out by one of Quebec's most prominent ministers, Mr. Rene Levesque who, as reported in Le Devoir on
6538	HOUSE OF
Federal-Provincial Relations October 22, 1963, recommended that money be invested in education rather than national defence.
That is, in my opinion, a very logical proposal which would be acceptable, because it would take away from the federal government a source of expenditures which, I feel, is used only to increase taxes and which could be put to good use by the provinces in the field of education.
In Le Devoir of December 4, 1964, the editorial writer stated the problem rather clearly. Under the heading:
Provincial needs and military expenses.
Mr. Paul Sauriol stated:
Three days alter the federal-provincial conference, a report from Ottawa indicated that the Department of National Defence had cut some $74 million from its budget for the current year. The federal treasury is thus recovering almost the equivalent of the $87 million turned over to the provinces. There is perhaps no direct connection between both facts, but it is not a mere coincidence, since a great number of people believe that the most efficient and logical way to satisfy provincial claims is to reduce considerably our military expenditures.
A little further, Mr. Sauriol wrote:
In August 1962, Mr. Diefenbaker added to the austerity program announced a few weeks earlier by cutting defence expenditures by $100 million. Outlays are nevertheless $1,576 million but, since there has been an increase in the meantime, total spending in that connection will be reduced to 1,560 this year.
Consequently, if the government truly wished to solve the problem of education, it could imitate the former Prime Minister and take up the suggestions made by the provincial premiers who advocated a cut in certain government expenditures which are not really essential so that the provinces might get the funds they absolutely need for education.
In fact, there are several means the federal government could take to allow the provinces to recover the money they need for education. But I wonder why the present government persists in refusing to amend the Criminal Code so that the provinces that may wish to do so could set up a lottery program and use the profits therefrom for educational purposes.
Mr. Speaker, why that request is being repeatedly turned down is beyond me, since the province of Quebec has already declared itself in favour of such a project in the proportion of 87 per cent, following a public opinion poll throughout the province. Besides, two of the more recent premiers of the province, that is, Mr. Lesage and Mr. Duplessis,


made such a request to the central government.
Besides, during the last election campaign, the parliamentary secretary to the Prime Minister (Mr. Rouleau) formally stated that if their party was elected they would see to it that the Criminal Code be amended in order to legalize the holding of lotteries in the provinces. That would be a means for the provinces to finance their education requirements.


Auguste Choquette: Mr. Speaker, may I ask the
hon. member a question?


Georges-J. Valade: And when the hon. member for Lotbiniere wants to ask a question, I would simply refer him to the words he uttered yesterday when he stated that in this country, we enjoyed complete freedom. I am prepared to admit that we have some freedoms, but the hon. member has not yet been free to ask his government to accept this suggestion from the province of Quebec, and from several other provinces as well, to amend the Criminal Code in order to provide for the legalization of lotteries in Canada on a provincal basis.


Auguste Choquette: Mr. Speaker, would the hon. member allow me a question?


Georges-J. Valade: No, Mr. Speaker. I shall answer questions later because the hon. member's questions are often of a demagogic nature rather than serious or relevant questions.


Auguste Choquette: We can see that you have been ill.


Georges-J. Valade: Mr. Speaker, would the hon. member repeat what he just said?


Auguste Choquette: I said it was easy to see that you were sick.


Georges-J. Valade: Mr. Speaker, I must tell the hon. member that I was sick in one leg, but not in the head, as might be the case with the hon. member for Lotbiniere.
Mr. Speaker, other means are available to the central government to find formulas which would be acceptable to the provinces, while respecting fully the spirit and the letter of the confederation pact, with regard to education which is strictly a matter of provincial jurisdiction. I am thinking, for instance, of a step which could be taken by the provinces: until such time when the central government would give back to the provinces the rights of direct taxation to which they are entitled under the B.N.A. Act, organizations could be set up which would make it possible for the

provinces to meet their obligations in the field of education.
But I think that, in the meantime, the provinces could undertake to set up an interprovincial council for university grants.
You are no doubt aware that England, after the second world war, created a sort of council for university grants. The council is above politics and serves only as liaison between the government and the universities. But it nevertheless has the power to conduct inquiries in all universities in the country, assess their needs and point out to the government the amount the universities need to discharge their responsibilities. Then the government approves a budget based on the requirements submitted by the council.
The provinces might set up themselves a council which would be somewhat based on the same principle and which would be non-political. This council might include one representative per province, appointed by the government of course, and another representative from the business world. It might thus voice the views of Canadian institutions to their government which, in turn, would present to the federal government the needs of universities.
The sums of money given this way, according to the evaluations of this council, would then be handed out to the provinces, which would distribute them; this would be in accordance with the spirit and the letter of the confederation pact of 1867.
Mr. Speaker, the education question is obviously not the only one that can be raised during this debate on Bill No. C-lll.
We have now the opportunity to find out what created uneasiness for a number of years between the government of Canada and the provincial governments.
In respect to the relations between the provinces and the federal government, I should like to say that I deplore the fact that quite often when we speak about these relations, we tend to make faulty comparisons; for instance, someone suggested that the federal government and the provinces should have father-and-son relations. In my opinion, Mr. Speaker, there are no father-and-son relations between the federal government and the provincial governments, but instead there should be brother-and-brother relations, so that they may discuss on an equal basis.
I also think that, as a member from the province of Quebec, I should say that there is no serious dispute between the province of Quebec and the other provinces of Canada.
Federal-Provincial Relations As the hon. member for Lapointe (Mr. Gre-goire) said yesterday, the word "racial" is sometimes differently interpreted by our English speaking fellow members and those who are French speaking.
But there is rather a problem of provincial claims on the central government, because of the difficulties which each province has in settling its own problems, in the field of education, health or any other field, which come under exclusive provincial jurisdiction.
And, here, I think I may quote a view of the Minister of Forestry (Mr. Sauve)-now vacationing on the French Riviera or at Capri -who, when he was on the job, made certain statements which should hold our attention.
On November 6, 1963, according to Le Devoir, the present Minister of Forestry said during a talk he gave in Montreal:
The marked uneasiness in Quebec is due to economic factors.
And he added:
It is up to the federal government to "save confederation" by enacting legislation which will reduce unemployment and raise the living standard of the people in Quebec. A step in the right direction has already been taken by the Liberal government-
I wonder what step, as unemployment has risen in the province of Quebec, and more particularly in Montreal, where there are 1700 more unemployed than last year.
The article says further:
When taking part in a discussion on unemployment in the House of Commons, the Montreal economist noted that the unemployment level in Quebec was much higher than in Ontario, and that the opposite was the case with regard to the per capita income.
And further on:
Mr. Sauv6 stressed that the majority of Quebeckers are nationalist in that sense, but that only the "majority" is separatist-


Mr. Prud'homme:: The minority.


Georges-J. Valade: Of course, the minority.
The hon. member for Iles-de-la-Madeleine charged his English speaking fellow citizens with mistaking Quebec nationalism for separatism. By that very fact, English speaking Canadians ignore the facts and jeopardize national unity.
The hon. member was not yet a minister when he made such statements.
The Liberal member of parliament called for a closer co-operation between the federal government and the provinces with regard to steps likely to check unemployment.
This man, when he was a private Liberal member, acknowledged the existence of unemployment, in spite of promises of full employment made by his party during election campaigns.

Federal-Provincial Relations
Mr. Sauve added:
Provincial governments are in a better position than the central government to deal with local economic problems.
Those are the words of man considered within the Liberal party as a first-rate economist, even though he prefers to take holidays instead of carrying out his parliamentary duties.


Some hon. Members:: Oh, oh.


Georges-J. Valade: Here is a man who is now a minister and who is saying to the federal cabinet:
Provincial governments are in a better position than the central government to deal with local economic problems.
Despite that assertion made by the Minister of Forestry, despite that warning from his colleagues, the Minister of Finance introduced Bill No. C-110 and Bill No C-lll, the second of which is contrary to the thinking of the Minister of Forestry and constitutes also a further obstacle to the good relations that should exist between the provinces and the central government.
Moreover, opinions expressed by various Canadian newspapers are favourable to provincial autonomy in several fields. I hope the central government will realize it cannot be the master of destinies in Canada, but that it ought to be the collaborator, with the provinces, in the development of an economic policy set down, not according to the co-operative federalism formula, which I feel is but a smokescreen for greater centralization, but in a spirit of close co-operation between the central government and the provinces, as regards the rights and prerogatives provided for in the British North America Act of 1867.
To show how better co-operation between the central authorities and the provinces would be the solution, it is essential to point out certain statements made in Canadian newspapers.
Among others, I would like to quote an article by Mr. Vincent Prince published in La Presse, on Wednesday, November 27, 1963 under the title:
Very fine plea by Mr. Lesage- in which Mr. Prince stated the following:
In fact considering their revenues, the provinces have effectively spent more than the federal authorities since 1954. As a result, their debts have increased by almost 50 per cent, while those of Ottawa only increased by 22.8 per cent.
In my opinion, this is the crucial point of the trouble facing the provinces in their relations with the federal government. While the

provinces have greater obligations in the field of education, road communications, health, etc., the federal government, with lesser obligations, has taken for itself taxation fields on a much higher scale than was needed.
We are told that provincial expenses have increased by 50 per cent, while the expenses of the federal government have increased by only 22 per cent. It seems to me that it would be normal for the central government, if it wanted to be really honest in its relations with the provinces, to yield not to political representations, but to priority rights that the provinces have outlined to the Ottawa authorities during federal-provincial conferences.
Despite the fact that Premier Lesage of the province of Quebec has mentioned priority needs, in my opinion there are indeed priority rights. One of those priority rights is the authority of a province to collect taxes for purposes which are a definite provincial responsibility.
Moreover, all enlightened people, economists, like the Minister of Forestry, as well as financiers, except perhaps the federal government, are of the opinion that there should be a better distribution of taxes in Canada.
And it should be noted that I object to the pretense that there must be a strong federal government and ten provincial governments under its control.
This is a false conception which is contrary to the views expressed by the Minister of Justice in a speech he recently delivered in Montreal when he said-and here the Minister of Justice and myself perhaps agree, as well as Quebec and the other provinces: We must realize that there are in Canada 11 governments which have equal rights within their own jurisdiction and which can negotiate on an equal footing.
But if we accept the theory that there must be one superior government and ten inferior governments, then we are sustaining the very antithesis of the spirit of the confederation pact because when the pact was signed in 1867 it was agreed that henceforth we were to become equal partners within an administration which would recognize the rights conferred under the pact.
Over the years, the centralizing spirit developed to such an extent that, during the war, we agreed to the theory of a strong central government, in view of the fact that our country was at war and that emergency measures had to be taken; and in the circumstances, the government had to ensure the security of Canada at any cost. But, due

to the war, or rather to these agreements made in time of war, the central government grabbed more rights belonging to provinces, under the terms of an agreement respecting tax rentals.
We recall only too well how easily Mr. Godbout voluntarily and quickly yielded the rights of the province of Quebec to the federal government of the time, which was headed by the Right Hon. Mackenzie King.
Those tax-rental agreements were supposed to be temporary and in effect only during the war, but they still exist.
That is why in certain provinces, and particularly in the province of Quebec, problems arose because of inadequate revenues from direct taxation.
All the premiers who have headed the province of Quebec have claimed the taxation fields which belong to the province. First of all, Mr. Duplessis, then Mr. Sauve and finally Mr. Lesage. Mr. Lesage even served an ultimatum to the present government to yield to the representations of the province of Quebec, otherwise the province would take other drastic measures.
For those who denied that Mr. Lesage had given such an ultimatum-I remember that the Prime Minister as well as other ministers in this cabinet denied that Mr. Lesage had given the central government an ultimatum-[DOT] there is but one thing to do and it is to read the monthly bulletin issued by the Banque Canadienne Nationale in May 1963; on page 2 of this bulletin, reference is made to Mr. Lesage's ultimatum.
Those people are not politicians but business men, and I suggest that they are as honest as our friends opposite.
Now, in this bulletin, under the heading:
Mr. Lesage's ultimatum-
One can read:
The financial difficulties confronting the province of Quebec stem mainly from the fact that, since the end of the war, Ottawa has invaded many fields, this action resulting in increased taxes, especially direct taxes. That fiscal field, granted the provinces by the constitution, has become nearly exclusively federal property. All the political parties represented in parliament continue, at every election, to make promises which, if implemented, would put a heavier burden on the Canadian taxpayer. The federal government should put off such and such project, even give up certain responsibilities-education, for instance-which, by their very nature, come under the provinces. The most urgent needs, apart from those concerning national defence, are the responsibility of the provinces and the municipalities.
These things have not been said by political organizations but by businessmen who, in my 20220-414
Federal-Provincial Relations opinion, deserve our respect and our consideration.
This article goes on as follows:
The presence of Liberal governments in Quebec and in Ottawa complicates the situation. Before the election of April 5 last, Mr. Lesage stated that only the party under the leadership of Mr. Lester Pearson offered adequate guarantee for the province of Quebec's fiscal autonomy.


Some hon. Members:: Hear, hear.


Georges-J. Valade: I hear my hon. friend from Lotbiniere applauding.
Since then, we have deceived him, because the Liberal government has voted the student loans act.


Some hon. Members:: Hear, hear.


Georges-J. Valade: I see those people approving intrusions in the educational field which strictly come under provincial jurisdiction.
Another federal intrusion is that of loans to municipalities which have been denounced by the Quebec premier, Mr. Lesage, and by Mr. Laporte, minister of municipal affairs.
That is what makes relations so tense between the federal government and the provinces in Canada. Some people are willing to sacrifice the rights guaranteed by an unalterable pact, the confederation act, in order to toe the party line.
Mr. Speaker, the public and the provincial governments have, for the past several years, been constantly reminded of such federal encroachments.
In that connection, I should like to quote an article which appeared in La Presse. I choose a newspaper which is friendly to the Liberals, because it is even more conclusive. The article in question written by Mr. Vincent Prince on February 26, 1964, reads as follows:
"Infringement by consent?"
Could it be that under the cover of "co-operative federalism", Ottawa is trying to impose "infringement by consent" upon us?
This query is perhaps not as futile as it may seem at first sight. At least, to those who may for some time have observed the central government's activities.
We may simply recall last year's legislation authorizing Ottawa to grant municipal loans. We might, more particularly, consider the federal bill now before the house and which, this time, concerns financial aid to students.
In our humble opinion, this is not co-operation of a federalist character, but an infringement on that very federalism-
That, I think, proves what this central government, and perhaps the former administrations, do not want to understand that national unity would benefit if doors, and

Federal-Provincial Relations minds, were open not only to a sincere discussion but to an honest and practical observance of provincial claims.
The provincial governments have problems of their own. In Quebec, we have, and will have, more than in the other provinces where the problems are perhaps less complicated, except in Ontario. Each province must, therefore enjoy the entire possession of its sources of revenue required for the proper administration of the public weal and the discharge of its responsibilities in matters of education, health and in other fields which are under exclusively provincial jurisdiction according to the terms of the confederation pact. Only such a spirit can prevent certain radical elements in the provinces of Quebec from extending their venture into the field of separatism, something which would have damaging effects for Canada.
But I feel that the one to blame, should such a situation materialize, will be the present central government. Indeed, it has been told about that kind of situation by its own ministers, by the Minister of Forestry (Mr. Sauve), the man responsible for the fact that the Liberals of Mr. Lesage and Mr. Levesque have been elected in the province of Quebec. As I say, those people have made the present central government aware of the serious problems now facing Quebec but which the central government refuses to recognize or to take seriously, inasmuch as, through the strength of its majority and perhaps with the co-operation of certain minor opposition parties, it insists on passing Bill No. C-110 and Bill No. C-lll.


Some hon. Members:: Oh, oh.


Georges-J. Valade: I did say minor parties, which will disappear anyway in the next election, and this will benefit Canada as a whole.
I hope the central government will try, at the next premiers' conference, to understand that it is not simply with magic formulas, such as the co-operative federalism formula which was suggested by the Secretary of State (Mr. Lamontagne), but rather with practical solutions, through the central government becoming conscious of the fact that it must withdraw from the taxation fields reserved to the provinces, that the problem will be solved.
It is by this means only that we shall succeed in achieving strong provinces, provincial governments as strong as the central government, and such co-operation will occur only

if there exists good will on the part of the central government.
Now, in conclusion, I wish to state that I object-and I wish to register my objection since I had no opportunity to do this sooner- to this Bill No. C-110, which I consider as an interference in a strictly provincial field. I urge the Minister of Finance (Mr. Gordon) to stop such encroachments, such intrusions in fields of provincial jurisdiction and to provide practical consideration for the problems raised or the representations made by the premiers of the provinces.


Mr. Speaker:: The hon. member for Parry Sound-Muskoka (Mr. Aiken).


Auguste Choquette: Would the hon. member for St. Mary allow me to ask a question, namely-


Mr. Speaker:: I should inform the hon. member that the time of the hon. member for St. Mary has now expired.


Mr. Deputy Speaker:: I must call attention to the fact that the time allotted to the hon. gentleman has expired.


Mr. G. H. Aiken (Parry Sound-Muskoka):: take this opportunity to express some real fears concerning the course this government is taking with regard to federal-provincial relations, particularly as related to the bill before us. My conclusion, which I will state at the beginning as well as at the end of my remarks, is that the government is, through its actions, contributing beyond doubt to the separation of this country into two parts.
This is happening in two ways. The first is obvious; it is a direct method. The other, the indirect method which is less obvious, is one having to do with financial measures. It is this aspect of federal-provincial affairs I should like to deal with today because it lies at the very heart of the bill we are considering. I wish to deal with financial arrangements as they concern the increasing difficulties which have arisen between the province of Quebec and the rest of Canada. I say at once that I am a believer in "one Canada", albeit a changing Canada. As I understand confederation, it was something of an agreement between a number of provinces-something very much in the nature of a contract. One term of the contract was spelled out very clearly at that time. It was that certain matters should lie solely within the jurisdiction of the provincial governments. There were reasons for making these reservations at the time, and some of them are still valid.

In particular the provinces, especially the province of Quebec, insisted that questions concerning education and public welfare, among other things, would be decided by the provinces.
It may be that the national picture has changed since the time of confederation, and perhaps we ought to recognize this. But we must first of all recognize that the contract which was made at that time still stands, valid and unamended, and we must not continually make demands on the provinces for parts of their jurisdiction unless there has been unanimous agreement beforehand. The bill before us relates directly to the youth allowances bill as well as to certain other fiscal arrangements. Perhaps I might just for a moment examine the legislative proposals which have preceded this measure and which are along the same lines. We have already this session passed the youth allowances bill and the student loans bill. We have also had the Canada pension bill before us on at least two occasions. Here are three bills, all brought forward by the present government, which have followed a pattern. I do not say this pattern has been followed intentionally, but I do assert that, intentionally or unintentionally, they have brought about a result which is most undesirable in Canada. These three bills I have mentioned have one thing in common. They all invade the provincial field to a degree, some more than others, regardless of whether or not that was the intention of the government.
Some people in English speaking parts of Canada find it difficult to understand how the youth allowances bill might be considered as invading the provincial sphere of responsibility with regard to education. Yet I have heard many of my colleagues explain why Canadians in the province of Quebec feel that it is an invasion of provincial rights, basically because it influences the priorities which the province has to set up and in respect of which it must apply provincial revenues. In all these bills there has been an invasion of provincial rights to the point which one province, the province of Quebec, has said: No, we will not agree; you will have to make some other arrangement. This is not what I would call unanimous prior consent. All it amounts to is an agreement that the other nine provinces are to be allowed to take advantage of the legislation if they wish to, while Quebec declines to have any part of it. To this extent the situation does not meet the requirement I have men-20220-414J
Federal-Provincial Relations tioned, namely that there should be prior unanimous agreement.
I do not think we can blame the provinces if they complain about an invasion of their provincial rights. This applies to other provinces besides Quebec. However it is the province of Quebec which has raised the greatest objection, and it is the province of Quebec which is the subject of discussions and talk about separation. I think therefore that we must consider how this legislation affects that province, in particular. I would say that the continual invasion of provincial rights by this government in its controversial and somewhat ineffective legislation is making a farce out of confederation as it was designed in 1867. This situation is being brought about without any effort to get together with the provinces and say: Conditions in Canada have changed; we must recognize this; we must hold a conference to see whether, perhaps, at university level there might be some federal control in the field of education.
These things should be discussed as a preliminary, before the government considers the unfortunate invasions it has been making into provincial fields. I am not putting up a case for the provinces, or for the province of Quebec in particular. That is not what I am here for. But I want to follow up these comments with the conclusion I have reached, namely that the nine provinces which accept these proposals by the federal government are tending to form one bloc, or one group of Canadians to whom certain legislation applies, while on the other hand we have the province of Quebec standing alone as the one province which has not taken part in these programs-the province which has declined to accept the legislation I have mentioned. The nine provinces are tending to surrender to the central government in Ottawa powers which are traditionally theirs. Quebec says, in effect, that none of these programs shall apply in that province. Thus a situation is developing which really concerns me, since we are bringing about a de facto separation of this country into two groups within the framework of confederation-within the framework of one Canada in which all the provinces are supposed to have equal rights.
I say that we should face the problem directly at a conference, as has been suggested many times, to consider the changing conditions in Canada and to come to some agreement on the particularly sensitive problems of welfare and education. If we cannot reach

Federal-Provincial Relations any agreement we should stop breaking up the country by trying to invade these fields. Second, if we cannot reach any understanding on this matter we should make payments of money in the nature of grants in lieu of these programs, and leave the programs alone. We should increase the tax fields of the provinces and make larger grants to the provinces.
It has been stated by several hon. members that there is no point in increasing the tax fields of the provinces if they are poor provinces and just do not have the money. This is a waste of effort because it is only a larger percentage of nothing. As the hon. member for Burnaby-Coquitlam (Mr. Douglas) pointed out last night, the percentage in one or two of the provinces is zero minus, because they are receiving more from the federal government than is being collected in taxes within those provinces. Therefore to increase the share of taxation would not bring about the result. What we have to do if we have to have these national problems is to leave alone the question of making two rules for two different groups of Canadians and design, if we must, a different system of tax sharing within this country.
I will admit that education has now become a matter of national concern. I think that many people both inside and outside the house feel that the federal government should take an interest in and become a part of the educational field in Canada, most particularly at the senior levels. From what I can understand as the result of inquiries, this is a subject which, at the university level, might certainly be open to discussion with the province of Quebec. If it were, perhaps the great need we have in science and other related fields for the ability to be educated in one part of Canada and to take postgraduate work in another might be met. I believe this is something we must consider, but we cannot do it by the backdoor method as we are doing now and continue to keep this country together.
I should like to quote an hon. member with whom I have never found myself in agreement, but who pointed out something that is in line with what I am saying now.


Stanley Howard Knowles: To whom is the hon. member referring?


Gordon Harvey Aiken: It is not the hon. member for Winnipeg North Centre (Mr. Knowles) but the hon. member for Lapointe (Mr. Gregoire). That hon. member says: "Let this happen; I like to see it." I say it is happening but it should not. Nevertheless we both have the same idea as to what is happening. When we

were considering the student loan legislation he said, as found on page 5932 of Hansard:
Mr. Speaker, I hope that more and more such bills will be introduced in the House of Commons and that more and more the federal government will try to control all the jurisdiction possible in the nine English speaking provinces, so that, more and more, the nine provincial governments will have nothing to do and we may see their consolidation in the hands of the Ottawa government, whereas, at the same time, the province of Quebec will withdraw from all those joint plans and will administer its affairs by herself. So, before long, we shall have only two governments in Canada: the Ottawa government for the nine English speaking provinces and the Quebec government for the province of Quebec. We will then achieve what I forecast yesterday: two governments only, two states, not separated but associated.
I do not agree with this as an objective, Mr. Speaker. I could not disagree more strongly. Nevertheless I do say that this is the effect and result of the types of legislation that have been introduced at this session. It is something that causes me a great deal of concern because, perhaps by an indirect method, perhaps by an imperceptible method and perhaps unintentionally, we have drifted into a situation now where, with regard to almost half of the legislation that is introduced, one of the provinces says: We will not become involved in this; you can do what you like; give us the money instead and we will use it the way we want to.
If it is logical for one province to do this, surely it is logical for the others. I merely say that the government should not be continually embarrassing the provinces and this house by introducing the type of legislation which is achieving this result. I ask myself why the premier of Quebec is constantly raising objections to certain measures, such as the three pieces of legislation I have mentioned, to such an extent that the federal government says: All right, you do not have to come in; we will give you some money instead. I do not think it is particularly because he wants more money although I am sure every province does. I think the premier of the province of Quebec sees what is happening and understands these joint plans are leading to a situation that he would like to see, namely a Quebec which is not just a province of the country but is a separate and strong part of the country.
We in English speaking Canada have to admit that Quebec is not a province like the others. This is an obvious fact not often understood. It is obvious because if it had not been that Quebec was different we would not have confederation as it was formed in 1867. If we had been all the same we could

have agreed on everything and would not have had to have a separation of powers. Quebec is different, but in recognizing this we must not fall into the trap that I think is now being laid, to have us recognize that it is different in a different way from what it was understood to be at the time of confederation.
The Fathers of Confederation said: There are certain rights you will have as a province along with all the other provinces. They said: Each province shall have the same rights as all the other provinces and the federal government shall have those rights that the provinces do not specifically require. This is understandable. This is the basis of confederation. We have gone along on this basis now for nearly 100 years. But this is not the type of confederation into which we are drifting today. We are drifting into a confederation where reference is not made to all the provinces but where it is said that Quebec is entitled to certain things and the rest of the country must join with the federal government to make a separate block.
This is the great fear that I have from watching pieces of legislation as they come in, particularly the Canada pension plan, and I will certainly have more to say about that when it comes forward for debate. This is the direction into which the whole matter is drifting. Perhaps some other provinces will opt out of the pension plan, and frankly I would not blame them; but this is all part of the same picture.
However, Mr. Speaker, having said that I must also say that I will have to support this bill because it is necessary to the implementation of other legislation which we have already passed. We have passed the Youth Allowance Act, and clause 6 of this bill and following are necessary to follow up that act. Therefore I cannot vote against the bill because it is necessary to legislation we have already passed. However, this indicates the problem we are facing in our national life, that we take one step here and then have to take another step in another direction in consequence, and gradually we find ourselves taking steps to the side rather than ahead.
In conclusion, Mr. Speaker, may I say that I hope we have seen the last of this type of divisive legislation. I think there is hope that this sort of drifting to which I have referred is becoming perceptible to the members of the government and that they are beginning to see what they are doing by bringing in this sort of legislation without unanimous agreement. Surely the government
Federal-Provincial Relations can now see the direction in which they are going, whether it be intended or accidental. In any event, I trust this will be the last bill which is brought in under which one province can declare itself excepted from its provisions while the others are included.


Hon. George C. Nowlan (Digby-Annapolis-Kings):: Mr. Speaker, this has been a rather prolonged debate. We have gone through the resolution stage and are now on second reading. I think that some of those pundits who say that parliament has deteriorated and is no longer the body it was at one time should read some of the speeches which have been made during the course of the resolution debate and now on second reading, which I think have been at a very high level and reflect credit upon the parliament of Canada. I deprecate any suggestion that parliament has deteriorated, because when one goes back over the problem, which is not a new one-as I will suggest in a moment or two it goes back to my own province, from whence it originated-he realizes that it has been with us for almost a century. I suggest that the debates which have taken place on this particular bill on the matter of dominion-provincial relations compare favourably with debates which have taken place at any time heretofore.
As I said, Mr. Speaker, the debate has been prolonged, but the subject with which we are dealing is most important. I do not intend to take the time of the house by going into too much detail with regard to these matters, albeit that there are some complicated problems here which I am sure will be dealt with at the committee stage. Therefore 1 do not intend to deal at this time with the intricacies of these matters.
In introducing the resolution I think the minister deserves the commendation of this house for the manner in which he dealt with a very intricate matter. There were facets of that resolution which could easily be misunderstood or perhaps overlooked, but the minister brought them into the foreground and I thing he explained very well the problem with which this house is confronted.
Having said that, Mr. Speaker, and hoping to get the same sort of commendation now from the other side of the house, I would also say that some very good speeches generally have been made. It is given to some of us to give a fair speech, or to give a mediocre speech or to give a good speech, but once in a while it is given to some hon. members to give a great speech. I am expecting commendation now from the other side of the

Federal-Provincial Relations
house when I say that I think the speech of the Leader of the Opposition (Mr. Diefen-baker), in which he surveyed the whole field of confederation, was a great speech which deserves the attention of the house.


Some hon. Members:: Hear, hear.


George Clyde Nowlan: I know there can be some quarrel with the arguments which he advanced. After all, he made a political speech to a political body and he is a political leader, which is all as it should be. He took the credit for having carried out certain policies, for having exercised certain authorities and for having created certain functions in which he took pride. This is of course the function of any political leader and it is one in which this party and this country also take pride.
I think he also spoke as a Canadian reviewing the whole range of confederation, taking pride in the accomplishments of the past and suggesting some of the things which he thought should be done so far as the future is concerned.
One of the suggestions or recommendations which he made was that there should be called a dominion-provincial conference, not in the technical sense of a dominion-provincial conference of the type we have had during the last few years-we have them from time to time to deal with certain specific matters-but a conference which represents all of the legislatures of the provinces and all of the political parties in Canada. It would be a conference at which, without the spotlight being focused upon it, without television or the pressure of one, two, or three days of debate, we could sit down and review the accomplishments of this country in the 97 years of its first century and look forward to the future. I think that that recommendation deserves the serious consideration of the government of the moment. There are many problems with which we are faced and they cannot be dealt with at an ad hoc conference meeting which assembles on a Tuesday afternoon, holds a dinner on the Wednesday night and another on the Thursday night, and then you say goodbye and go home on the Friday morning.
That is not the way in which confederation was accomplished. At that time the provinces were scattered and had no political connection. There was Nova Scotia, New Brunswick, Prince Edward Island and Upper and Lower Canada-or at that time it was the Canadas. A conference was held in 1864, another in 1865, and finally in 1867 there took place the discussions at Westminister. Out of

those conferences arose and developed a nation, Canada, of which we are all proud to be citizens.
If out of conferences of that kind, in years when the provinces were scattered and had, as I say, no direct political connection one with the other, provinces consisting largely of, shall we say, villages and hamlets and very small towns, arose this nation which we now call Canada, I would suggest, Mr. Speaker, that a further conference on that basis, bringing together all the provinces and representatives of all the political parties, who in turn would represent the citizens of Canada, would surmount the problems or find solutions to the problems with which we are confronted at the moment. We all recognize, of course, that we do have problems here, but I would suggest they could be settled if this government were to consider the calling together of such a conference as suggested by the Leader of the Opposition in his speech on the resolution stage.
We have accomplished a great deal. We are considering today centennial projects which are going to cement the achievements of the last century and lay the foundations for the achievements of the next century. I suggest one approach to the solution of this problem, to which the government and this parliament should give attention, lies in the calling of a conference on the basis suggested by the right hon. Leader of the Opposition (Mr. Diefen-baker), similar to the basis upon which the conferences were called in 1864-65, and the conference in Westminster in 1867. I am quite sure if that were done a solution could be found to the problems with which we are confronted today.
Progress in this country over the last century has occurred in spite of our travels over a very rough road, and those who are pessimistic about the future of this country should look back and survey that road over which we have travelled. The development of the provinces, with scattered villages and hamlets, into a nation, represents an accomplishment by men and statesmen of all political parties working together. I am quite sure this country can be further developed, refurbished and increased in stature during the next century. As I have said, I think one of the ways by which this will take place is by calling a conference such as has been suggested by the right hon. Leader of the Opposition.
My principal purpose in rising to take part in this debate is not to discuss the details of the bill now before us. As I said earlier, I

believe the Minister of Finance has done a very good job in developing the various facets of the bill, and has given a frank, fair and full explanation of the matter. I am sure all members of this house have appreciated his endeavours in this regard. I do not intend to go into detail in respect of the bill at this moment, but intend primarily this afternoon to state my confidence in the future of this country. I do not believe that confederation is falling apart at the seams. I do not believe that this nation which has travelled so far over such rough territory, accomplishing all it has accomplished, is not now going to disintegrate, or is going to disintegrate at any time in the near future.
Perhaps my confidence in this regard is based to some extent on the history of my own province. All those individuals here who are students of Canadian political history will realize that Nova Scotia was perhaps the first province to present problems in respect of confederation, and the first province which intended to secede. Nova Scotia I believe was the first province which intended to create a state, not within a state but outside the state. I have in mind the situation in 1864, 1865 and 1867 when there was a provincial election in which every member who supported confederation was defeated. In 1867 there was a federal election as a prelude to the opening of this parliament during which 17 members of 18 ran against confederation as Liberal members. They were all elected. The lone Conservative member who was elected from Cumberland county did manage to eke out a majority of 65 or 67. He ran in support of confederation. That is the history of my province at that particular time.
Many students will know that Nova Scotia at that time was very prosperous. This situation was perhaps to some degree due to confederation, the loss of the wooden ship industry and the loss of markets as a result of the American civil war. I understand there were profits made from other sources including rum-running in the 1920's, although I have no knowledge of that whatsoever.
Nova Scotia before that time was perhaps the most prosperous part of this country, as I am sure some of my friends will admit who are now from Ontario, but which was Upper Canada at that time. Following confederation that prosperity disappeared. I do not suggest for one moment this disappearance was due entirely to confederation. The disappearance of wooden ships, with the development of steam and steel ships, together with the loss of markets due to the civil war had a great
Federal-Provincial Relations effect. The fact remains that Nova Scotia had been the most prosperous section of Canada and then became, to use the Minister of Finance's words, an unemployed or depressed area.
Naturally, blame in this regard was attached to confederation, and this became an issue. Nova Scotia had been Conservative in support of confederation, but every member who had given support was defeated at the next election, with the exception of the one who received the majority of approximately 67 votes. A government which pledged repeal of confederation was elected.
That is the history of my province. I do not intend to say anything further along this line this afternoon except to remind you that Hon. Joseph Howe travelled to London to demand repeal. I should also remind you that Sir Charles Tupper made a similar trip expressing the impossibility of repeal.
Finally some changes were made. These changes which were made at that time represented relatively minor adjustments in financial terms. The increase in subsidy to the province of Nova Scotia amounted to the price of one sheepskin per capita. A slogan was developed to the effect that Nova Scotia had been sold out for the price of a sheepskin. This slogan was perpetuated in political annals and campaigns for almost half a century. Scores of black flags were erected on July 1, Dominion day. There was a Liberal government in power for 47 years in the province of Nova Scotia because the Liberals had been opposed to confederation. The terrible Tories had been in favour of confederation. This situation existed for a very long time, as I suggest.
As a young man I was elected to the legislature of Nova Scotia and helped to bring down the 47 year regime of Liberals in the province. We in Nova Scotia know something of the talk of repeal. We can remember a premier going to London to demand repeal. Of course he did not accomplish his mission. That premier went on to become the minister of finance in the government of Sir Wilfrid Laurier. One of my predecessors, and a predecessor of the present Minister of Finance, won his prestige in parliament by his pledge for repeal. From 1891 to 1911 he was a very good minister of finance.
This was the situation that developed throughout the years, Mr. Speaker. As most of us are aware it has been dissipated as a result of a variety of factors, perhaps including the effect of the first world war and the

Federal-Provincial Relations efforts of Sir Robert Borden. Sir Robert Borden insisted, for instance, that Canada sign the league of nations charter as an independent nation rather than as a colony of Great Britain. That fact may have had something to do with the change of attitude. A great deal of pride gradually developed in Canada. Instead of referring in Nova Scotia to Upper and Lower Canada we began to speak as Canadians. We took pride in Canada, despite the fact that for many, many years the premiers of Nova Scotia, New Brunswick and Prince Edward Island, and later even the premier of Newfoundland returned from Ottawa saying they had not received a fair deal from the government of Canada.
I do not want to speak personally, Mr. Speaker, but I can remember when the premier of your province, Newfoundland, returned from here and said he was going to lead your province out of confederation because of the raw deal it had received as a province of Canada. We had the same situation with regard to the provinces of Nova Scotia, New Brunswick and Prince Edward Island during those years. Nevertheless, despite the pressures, despite the criticism and despite all the problems with which we were confronted, and we were confronted with many, we did evolve a Canadian patriotism, a Canadian statemanship and a Canadian position. I think we have it today, in fact I know we have it today.
The president of a Canadian historical association-I did not have time to look up the name-made a speech about 20 years ago. There are hon. members presently in the house who know the gentleman very well. In his report to the Canadian historical association he stated that Canadians were the most introspective people in the world. He said that every morning we were inclined to take out our livers, prop them up on our knees and look at them to see if we had cirrhosis. If we did not have it, we were slightly disappointed. I think that is one of the difficulties under which we labour. We worry about Canada. We worry about confederation falling apart. We worry about all these problems with which we have lived and which we have surmounted and will continue to surmount as time passes.
I said that in the maritimes we overcame these problems. I do not want to get political about these matters, but politics does enter into them. After 1957, we did get an adjustment of our grants. We found that our coal, instead of lying in the ground, could be sold. We provided subventions for the movement

of that coal to upper Canada. We received an equalization grant, the like of which we had never received before. We had a power grid developed in the maritime provinces. We had a new outlook given to us by the government of Canada, and that government was led at that time by the right hon. gentleman who is now the Leader of the Opposition (Mr. Diefenbaker).
I could go on and explore the various facets of this subject, particularly the Atlantic provinces adjustment grant. I think the time has come when the minister should review that grant. We provided first $25 million, and it was afterwards increased to $35 million. I think the time has come when that has to be increased still further. One could go on and on dealing with the various problems with which the government of Canada dealt between 1957 and 1963. As I have said, I think the old feeling of secession had evaporated before that. We had through war, through loyalty and through development, become Canadians rather than citizens of Nova Scotia, Upper Canada or Lower Canada. As the hon. member for Burnaby-Coquitlam said, speaking on this matter a few weeks ago, he found usually when people talked about the principle of a matter they were talking about dollars and cents. I think we found in the maritime provinces that it was an adjustment in dollars and cents which went a long way toward alleviating the conditions under which we had operated. They could be alleviated still further.
We still have a lower per capita income than many other parts of Canada. We have economic problems with which we are confronted and with which the government of Canada will have to deal. There are matters of detail with which we shall have to deal when we get into the estimates later, such as the matter to which my friend the hon. member for Cape Breton North and Victoria (Mr. Muir) referred this morning, namely the Atlantic provinces development board and the subsidies which should be provided through it. These are matters of pressing importance. What I want to register at the moment is that we, in the maritimes-I am speaking now as a Nova Scotian primarily-have come through an era of wanting to secede, of wanting to see this nation broken down. Today I presume there are no people more determined to see Canada maintained and developed as a nation than those who live in the Atlantic provinces.
I say therefore as I did when I started to speak, one of my purposes in speaking here today is to register my conviction that Can-

ada is not falling apart at the seams; confederation is not failing. We in the maritimes, having survived the problems with which we have been confronted, I am sure the other parts of Canada will do likewise. As I said earlier if we were to hold a conference such as the Leader of the Opposition suggested during his speech at the resolution stage, we could go ahead into the second century and develop our country even more than we have to date.
The other night the hon. member for Peace River (Mr. Baldwin) referred to our patching of the ship of confederation. I think we have gone about as far as we can with patching it.
I think we have to reconsider the whole basis of our confederation. I do not believe the constitution has to be scrapped. We cannot use the term "repatriation of our constitution", because we never had it here in the first place. However there are adjustments that can be made and will be made in the constitution which will make our confederation, which was established in 1867 and the centenary of which we are approaching, applicable, modern, streamlined and flexible so that this nation will continue to improve in the second century as it has in the first.
When we talk about what we have accomplished, Mr. Speaker, we only have to think of the series of little hamlets and villages scattered across several thousand miles; provinces which were not connected with other provinces and which, at least in so far as the provinces of Canada were concerned, were warring one with another, merging in order to avoid war. We had the east block and west block erected before confederation in order to accommodate these people. When you think of what we have done in 97 years, then to say that confederation is collapsing is ridiculous. We have a potential which is unequalled by any other country in the world for going ahead and developing our status as a nation.
I am not going into the economics now, but we have a unique situation. We have a privately owned railway crossing this nation, and we have a nationally owned railway crossing this nation. No other nation has that. We had until a short time ago a national system of radio and television and now we have a private system and a national system. You can go through our institutions, Mr. Speaker, and examine any one of them and you will find we have made a unique contribution to the development of a nation, one in which we should take pride instead of one for which we are apologizing. As I said, we should stop taking out our livers, propping
Federal-Provincial Relations them up on our knees and examining them to see whether or not we have cirrhosis. We should take pride in the fact we are Canadians and have developed a record of which any country in the world can be proud. I do not want to go on in this vein, Mr. Speaker.
I do not think it is necessary. I am sure there is no hon. member in this house who does not agree substantially with what I am saying today.
We are verging on the centennial of our national development and, as I said earlier, one of the things I think should be done as one of our centennial contributions is the holding of a national conference, such as was suggested by the right hon. Leader of the Opposition some time ago, and to which I referred earlier in my remarks, to lay again the foundations, as they did in 1864, 1865 and 1867. And I will assure you of one thing, Mr. Speaker, there will be no premier from Nova Scotia coming to that conference in our second century and suggesting Nova Scotia should secede.
We are of course dealing with a technical bill and I did not intend, and do not intend, to deal primarily with the technicalities of it. We will deal with those in committee. But I would say a word or two to the Minister of Finance who is here, and who has the responsibility of having control of the fiscal and financial development of Canada, or at least of the fiscal and financial measures. It is a very difficult problem with which he has to deal. There was a time when the minister of finance did have control over fiscal measures. I am not speaking of the present minister personally, or of his party personally, because this is a matter which has grown up over the years; nor am I speaking politically, although this is something which has been accelerated tremendously in the last year or two. But I am just wondering how much control the minister has over fiscal policies of this country today. I ask, is it enough? I suggest that he should maintain a relatively high degree of control over fiscal policy, but I know we all utter these cliches. I have done it. The Minister of Finance has done it, the right hon. Leader of the Opposition has done it, and everyone speaking here says, "Oh, we must have a strong federal government and we must provide for all of the legitimate demands of the provinces." That is a very easy thing to say, Mr. Speaker, but it is a very difficult matter to administer, and I am sure no one knows it better than the Minister of Finance.
6548	HOUSE OF
Federal-Provincial Relations The Minister of Finance gave certain figures in his speech, and the right hon. Leader of the Opposition submitted tables which were incorporated in Hansard. I checked those this morning and, according to the figures filed by the right hon. Leader of the Opposition- official figures given to the last dominion-provincial conference, not his own figures- $1,946 million was spent by the federal government for the year ending March 1964 in assistance to and co-operation with the provinces. Since then we have had the abatement which is envisioned in this bill, amounting to something over $200 million during the next two years. We have had the abatement in estate tax, which is envisioned in this bill, amounting to a good many millions of dollars, and the situation now is far changed from What it was when the right hon. Leader of the Opposition produced those figures just a few short days ago.
I think we are facing a situation where the minister of finance-not speaking personally, but the minister of finance as a minister, an institution-has ceased to be a dominant factor in the fiscal policies of the country. As a matter of fact, if the present policies continue he will be a minor factor in the fiscal control of this country in the very near future. Financially, thank heaven, he does still exercise financial control over financial policies of the government. I hope that in a short while, as the house passes second reading and the committee considers this bill, we will consider the responsibility of the minister of finance, of the parliament of Canada, of the government of Canada-whoever it may be-in dealing with the fiscal and financial policies of the country.
We talk about medicare. I am sure the minister knows very well that with the hospital schemes such as we have in the various provinces a system of medicare could be mobilized. You would not have a doctor go to a house to treat a youngster for a bellyache, but you would have a degree of medicare over which the Minister of Finance would have no control whatever.
The minister has said this; I have said it and the Globe and Mail were very critical of me for saying it-that there was a very narrow area in which the Minister of Finance could operate. I repeat there is a very narrow area in which the Minister of Finance can operate today, and the area is getting narrower. We are narrowing it much more by this bill which we have before us today, which I hope will soon secure second reading. 

These, Mr. Speaker, are some of the problems, and I apologize to the house for discussing the matter at length. I know we want to get into committee and discuss the details of the bill, but I had it in mind to express myself on (a) the desirability of a conference to lay foundations for Canada for its second century; (b) my confidence in the fact that this nation is not falling asunder, falling apart and, (c) that there are problems with which the minister and the house have to deal in maintaining financial and fiscal control. I am afraid we have lost the fiscal control and, unless we watch it very carefully we may end up with loss of financial control and balkanize the nation, which our forefathers foresaw in 1864, 1865 and 1867, and which we are determined to continue now into its second century.


The Acting Speaker (Mr. Batten):: I must
advise the house that if the Minister of Finance speaks now he will close the debate.
Hon. Walter L. Gordon (Minister of
Finance): Mr. Speaker, we have just listened to a very thoughtful and helpful speech and I for one wish to express my thanks to the hon. member for Digby-Annapolis-Kings (Mr. Nowlan) for the thoughts that were incorporated in that speech, because I think they are thoughts all of us should dwell on very seriously. I was personally pleased that he dealt with these matters in a broad way, rather than dealing with some of the details incorporated in this bill which, in my view, we can handle better at the committee stage.
I am grateful to the hon. member also for the remarks he made about the description which I attempted to give the house at the beginning of the resolution stage, and I am sure I do not need to tell him I am also grateful for some very generous remarks about myself that he saw fit to make outside the house recently, and which have attracted some attention.
I would like to associate myself with the hon. member's stated conviction that this country is not going to fall apart at the seams. I agree with him completely that confederation is going to continue to work, and I hope all hon. members of the house are equally determined to make this so. In fact, if that were not the case I do not know why any of us would be here. On occasion I have thought that there are other occupations we could follow with perhaps a little less frustration, but perhaps that is only the view of a relative newcomer to this chamber. I agree

with the hon. member also, and I was delighted to hear him say it, that Canadians are probably the most introspective people in the world. We are always worrying. At the moment the economy is going very well. But we are worrying, nevertheless. I think the business community worries more than we do, perhaps. They worry because things may not always go as well as they are going at the present time.
As one who is inclined to be an optimist by nature, I find it is difficult to understand-


George Clyde Nowlan: My cynical friends remind me of "Troubled Canada".


Walter Lockhart Gordon: Well, at that time conditions were not going so well.


John George Diefenbaker: According to your recent speech, the boom started in 1961.


Walter Lockhart Gordon: I am delighted to agree with some of the people who seem to be helping me with my speech. But the economy is going much better, now.


Eric Alfred Winkler: Would the minister permit a question?


An hon. Member:: You are not in your seat.


Eric Alfred Winkler: Well, I could easily move.
Is the minister aware that, as the Leader of the Opposition remarked, the boom started in 1961 and has been in steady progress for at least three years?


Walter Lockhart Gordon: Of course I am, Mr. Speaker.


John George Diefenbaker: Oh, good.


Walter Lockhart Gordon: We reached the very depth of the depression during the recess, some time in 1961. Then there was a faltering improvement. It started to improve a little, and then things happened and it did not go up quite as much. But certainly in the least year or so, as I think most hon. members would agree, things have been very much better.


Eric Alfred Winkler: Devaluation at work.


Walter Lockhart Gordon: I was intrigued by the hon. gentleman's reference to our collective livers, or perhaps to the individual livers, and the fact that some of us are inclined to take our livers out to see whether we have developed cirrhosis from whatever he were doing the night before. And if we found we had not developed that condition we put our livers back, feeling somewhat disappointed. I can only say to the hon. gentleman that there
Federal-Provincial Relations will be many other opportunities and we shall probably not be disappointed in that respect one of these days, although I hope that in his case and in mine it will be delayed for some time. But I really think the point he made about the introspection of Canadians or, as I have sometimes thought, the timidity of Canadians, needed to be emphasized and repeated because, like the hon. gentleman, I am convinced that we in this country have a greater opportunity before us, a greater chance of achieving real prosperity in a material sense and also to make a real contribution by way of example to other peoples in other places than perhaps any other country or any other people in the world. I was pleased to hear the hon. gentleman remind us of this sort of thing. It is something which I think more of us should be saying more often.
The hon. member for Digby-Annapolis-Kings (Mr. Nowlan) raised a most important question, in my opinion, toward the end of his speech when he questioned the extent of the control a federal minister of finance is now in a position to exercise over the fiscal policies of the nation. It does, I suppose depend on definitions, but if fiscal policy can be expanded to include economic policy in general I should like to state my personal conviction that the federal government, including the federal minister of finance, must be in a position to influence economic policy throughout the nation in the broadest sense of that term. I believe all members of the house must take care to see that this situation continues. I have felt, as I suggest many other members have felt who are interested in this difficult problem of extracting taxes from reluctant taxpayers and deciding who would collect the taxes and who would meet the expenditures, that closer consideration should be given to the question of how much of the tax collecting and how much of the spending should be done by the federal government and how much should be done by the provinces, or by the municipalities under them.
I said the other day that I thought a good many people have been wondering-I must say I have been doing so myself-whether it would not be better, at least in some cases, if the level of government which is responsible for the administration of programs of expenditure were responsible at the same time for the collection of the taxes needed to pay for those programs. I would at once qualify what I have said by adding that I am one of those who believe implicitly in the principle
6550	HOUSE OF
Federal-Provincial Relations of equalization, because if there were not some principle of equalization so that moneys which happen to be collected in certain parts of Canada could be spread fairly throughout the country, then we would have nothing like equal standards of services throughout Canada, and in those circumstances I can well believe questions would arise as to the desirability of holding this country together. Let us make no mistake about it, it is important that we do the things which are necessary to maintain a reasonably fair standard of services throughout Canada.
I suppose I had the same concern as the hon. gentleman experienced when he took over the portfolio which I have the honour to hold at the moment, about the extent to which the federal government or the federal minister of finance can influence the various aspects of economic policy. One of the important areas, and one which probably should not be mentioned at this particular moment, is the area of monetary policy and the influence which monetary policy in other countries now has on the flexibility we have in Canada. The hon. gentleman questioned whether the federal minister of finance now plays a dominant role in the formulation of fiscal and, I would add, economic policies in Canada. I would like to say that if I believed that the federal minister of finance was not able to play the most important role in those areas-I would not say the sole role, by any means-then I, for one, would have no wish to continue as federal minister of finance. I do not believe for one moment that the federal minister of finance or the federal government, which I think is the better way of putting it, has lost that dominant influence. There will always be a struggle or difference of opinion in any federal state as to the extent to which the federal and provincial governments respectively should control policy, but I am one of those who think that greater discussion between the people responsible for policy in these areas at the federal and provincial levels is highly desirable. The government is hopeful that the proposed tax structure committee, which will be set up by the federal and provincial governments together will over a period of years try to iron out some of the obvious ambiguities or anomalies in our present division of taxes and also, I would hope, in the present division of responsibilities for various areas of policy.
I am also hopeful that the proposal that the finance or economic ministers of the federal and provincial governments should 

meet annually in the late fall will be something that will be productive and useful. It seems to me that if this gets started on the right note and if we recognize that collectively we have a responsibility that transcends party politics we can do something in this area. I hope it will be successful or at least that it will be helpful, although I think we must recognize that there will always be tugs and pulls between the federal and the provincial governments.
I was very pleased to hear the hon. member for Burnaby-Coquitlam (Mr. Douglas) say, if I interpreted him correctly, that he was heartily in favour of the system of federal-provincial fiscal relations that has evolved, even though he felt it proper and desirable to criticize some aspects of the formula that has been developed. He suggested, if I interpreted him correctly, that the proposals contained in the bill represented some improvement but he is still not satisfied. Like him, I hope we will never be satisfied that we have reached perfection in this or any other field.
The hon. member questioned in particular, if I recall correctly, the basis of the equalization formula and raised the question why resource revenues should be taken into account to some extent in arriving at equalization and why the additional 25 per cent abatement in the estate tax that was agreed to last November is not subject to equalization. The hon. member for Medicine Hat (Mr. Olson), the hon. member for Okanagan-Revelstoke (Mr. Fleming) and a number of other members emphasized some of the same points. The hon. member for Medicine Hat raised a number of other points. In particular he questioned one of the sections of the bill which would compensate the provinces for the sales taxes that they expected to receive from crown corporations starting in 1962. Under the bill that was passed some months ago this was made effective from April 1, 1964. I think the hon. member for Medicine Hat questioned why it should be made retroactive, and particularly so in the case of Alberta which does not levy a sales tax. He thought there was some unfairness there.
As I said in my opening statement at the resolution stage, while we did not feel in introducing the bill that it would be practicable to make the payment of these taxes by crown corporations retroactive to 1962 because they did not have the necessary detailed records. Nevertheless the provinces believed there had been commitments made by the previous government that this would be done, and therefore we are asking in the bill for

authority to make payments in lieu of the sales taxes which would otherwise have been paid by these crown corporations.
The hon. member for Medicine Hat also referred to the income taxes on public utilities, which has been a matter of some difference of opinion between the Alberta government and the federal government, and also to another area where there has been a difference pertaining to the so-called coinsurance feature of the hospitalization plan as it is administered in Alberta. There, a charge is made against people who are in hospital, which is sometimes described as a deterrent against people who might otherwise remain in hospital too long. All I can say on this matter is that in principle there is an honest difference of view.
When the hospitalization plan was introduced the purpose was to make it possible for all Canadians, regardless of their financial ability, to obtain hospital treatment. Various ways have been developed for financing this. It was not the intention of the parliament that passed the legislation, having first of all approved a measure which would make hospitalization available to all Canadians on the same basis, to impose a special charge on those who were unfortunate enough to have to take advantage of the provisions of the plan. There is an honest difference of opinion about this in Alberta. I am sure the hon. member for Medicine Hat would say that the charges imposed by the Alberta government are not particularly onerous and furthermore that there is provision to look after the charges in the case of people who are unable to pay them themselves. Nevertheless, there is a difference in approach and an honest difference of opinion as to the principle involved.
If the hon. member for Burnaby-Coquitlam will forgive me, I do not think that very much advantage would be gained at this stage by going into a technical argument about the various points he raised on the subject of equalization. I think we are all in favour of equalization. The difficulty is to find a formula with which everybody will agree. I am not prepared for a minute to say that the formulae developed in the past were perfect or that they could not be improved on. I am not prepared to say that the present formula cannot be improved upon. One of the objectives of the tax structure committee will be to try to achieve some improvement. What we are trying to do in the bill is to improve the situation to some extent immediately,
Federal-Provincial Relations pending the studies that will be conducted by the tax structure committee.


Thomas Clement (Tommy) Douglas: May I ask the minister a question? In spite of my theological training I am not opposed to change and I have no objection to change which improves the formula. However, I had hoped the minister would deal with why, when the federal and provincial governments were agreeing to increase the estate tax abatement by 25 per cent, this was not included for equalization purposes. Revenue from the estate tax has always been included for equalization purposes and all that would have been necessary would have been to change the 29-50 formula to 29-75. Why this particular addition to the abatement for estate tax should be excluded and the rest of the revenue from the estate tax included, I really find difficult to understand.


Walter Lockhart Gordon: My hon. friend says he finds it difficult to understand and I do not disagree with him as far as his difficulty is concerned. I think these things are sometimes developed late in the day at these conferences, and that is one of the reasons why we need this kind of tax structure committee that will approach these rather intricate problems with a little more leisure and in a way that will perhaps meet some of the difficulties to which my hon. friend refers.
There are many other difficulties to which I could refer my hon. friend, which are contained in this formula. I do not think it is perfect. I am not pretending that it is or pretending to defend it in that respect. I would say however that as the result of the provisions of this bill, two years from now the provinces as a whole will be receiving some $265 million more than they would otherwise have received. While there are arguments as to the way in which this amount applies to individual provinces, in the last analysis every province will be better off than they were before.


Thomas Clement (Tommy) Douglas: Some will be more equal than others.


Walter Lockhart Gordon: Yes, some will be more equal than others. Some have been more equal than others in the past, and some will be more equal than others in the future. Perhaps some day we will all be equal; but I will keep my fingers crossed.


Mr. Starr:: You will not be around then.


Walter Lockhart Gordon: The hon. member for Ontario is taking a crack at me because of my advanced years, but he may be right.
6552	HOUSE OF
Federal-Provincial Relations
The hon. member for Cariboo (Mr. Leboe) emphasized some of the points which were also made by other members who participated in this debate, particularly in connection with resource revenues. In addition he reminded me that I had not answered some questions which were put to me earlier by the hon. member for Red Deer (Mr. Thompson) and I should like to do this now. I felt they were not exactly pertinent to this particular debate, but as the hon. member for Red Deer has mentioned them twice and my hon. friend from Cariboo has now also referred to them, perhaps the committee would permit me to answer the questions.
The first question he asked was: To what extent has the Bank of Canada purchased government bonds? Might I say in reply that as at June 30, 1964 the Bank of Canada owned a total of $2,925 million government of Canada direct and guaranteed securities, the breakdown being as follows: treasury bills, $403.3 million; bonds of two years and under, $389.6 million; bonds of over two years to five years, $549.1 million; over five to ten years, $874.9 million; and over ten years, $708.2 million. This makes a grand total of $2,925 million. These holdings comprise 14.6 per cent of the total government securities outstanding at June 30, 1964.
The second question was: What is the average length of time that these bonds are likely to be held until they do mature or before they are sold? The answer is that the Bank of Canada in the course of its open market operations buys and sells government of Canada securities. Decisions as to the over-all direction of these operations and the particular securities which are bought and sold are made within the context of the monetary policy being carried out by the Bank of Canada, with the approval of the government. It would be impossible to make a general statement as to the length of time the securities have been held in the past or will be held in the future. I think the table I have given does give some idea of the breakdown of the Bank of Canada's holdings at that particular time.
The third question was: How much money is actually paid to the Bank of Canada in interest on these bonds which the Bank of Canada holds? What portion of these charges is returned, this accruement of interest charges on government bonds held by the Bank of Canada, to the consolidated revenue fund? In reply I would point out that the Bank of Canada pays over the surplus available from its operations to the consoli-


dated revenue fund every year. In 1963 the income of the bank from investments, which included income from interest on bonds and treasury bills, totalled $127,407,000. The total income of the bank was $127,851,000, and the net income paid to the consolidated revenue fund was $116,386,000. So it is quite clear, Mr. Speaker, that with the exception of operating costs and that sort of thing all of the interest which is paid to the Bank of Canada is paid back again in the form of profits to the consolidated revenue fund.
There is one other point on which I would ask the house to bear with me if I reply to it in detail. It is in connection with the figures which were read into the record last night by the hon. member for Lapointe (Mr. Grer goire). He referred to some figures which were supplied by Mr. K. W. Taylor when he was deputy minister of finance early in 1963 to Mr. Maurice Allard, the former member for Sherbrooke. Mr. Allard has given these figures wide currency in the province of Quebec and I feel it is desirable that we take note of them and of their serious deficiencies, and also of the misleading conclusions which have been drawn from them. Several hon. members have asked questions on these matters, which have been made orders for returns, and the Department of Finance has been working for some months to try and get together some material which would produce a reasonable answer to the questions which have been asked. This is a matter which has proven to be of great complexity and difficulty, and I should like to refer to this in connection with the figures put on the record by the hon. member.
First of all, I should like to read to hon. members the English version of the letter sent to Mr. Allard, and I should be happy to table a copy of the letter which was actually sent in French, so that hon. members may see for themselves that there is no problem arising from the translation. The following is the English version from which the French was produced. The letter is dated February 4, 1963 and reads:
Dear Mr. Allard,
I have been asked by Mr. Heward Grafftey, M.P.r parliamentary secretary to the Minister of Finance, to reply to your letter of January 24, 1963, in which you ask what revenues were received from, and what payments were made to, the province of Quebec by the federal government in 1961.
In answer to your question I wish to advise that during the fiscal year ended March 31, 1961 revenues collected by the federal government in the province of Quebec were estimated to be $1,748.9 million while payments to the province were estimated as $1,072.7 million. It must be noted, however,

that the following qualifications apply to the compilation of the above amounts:-
And it is these qualifications which sometimes are not noted with too much emphasis in some of the speeches which we hear.
(a)	Corporation taxes paid by the head offices in the province of Quebec are not allocated to the other provinces.
That in itself throws these figures completely out of kilter and in my opinion makes them utterly misleading.
(b)	Revenues of the customs and excise division included in gross amount as refunds are not allocated to individual provinces; also, the port of Montreal collects considerable amounts in customs duties that properly apply to other provinces but which do not lend themselves to allocation. Similarly, certain collections made by the Ottawa district taxation office apply to the counties of Hull, Gatineau and Pontiac.
(c)	The expenditure figure does not include:
(i)	The more general type of budgetary expenditures which are made for the benefit of the country as a whole and of direct benefit to all provinces. In this category are the expenses of the central legislative body at Ottawa, financial and administrative departments at Ottawa, the foreign service and the research activities of the national research council.
(ii)	Payments to a number of suppliers of goods and services as the payments in many cases are made to the head offices of the companies and therefore do not lend themselves to accurate allocation by provinces.
(iii)	Operations of the post office as the expenditures are considered to more or less offset the revenues collected by that department.
(iv)	Payments to the national conference of Canadian universities.
Yours sincerely,
K. W. Taylor.
It will be seen from this that the qualifications which Mr. Taylor carefully applied to these figures are most important and material.
I apologize again for taking time to make this point, but I should ask for permission to carry on for a few moments as I think it is important that the facts of this matter are put on the record so that my hon. friends, unwittingly I am sure, will not again use the earlier material which has been very misleading in many parts of the country.
Much of the corporation taxes paid by head offices in the province of Quebec are properly allocated to other provinces, as we do under our fiscal arrangements. The customs collected in the ports of Montreal are really paid by people in many parts of Canada, and do not in fact represent revenues collected from the people or province of Quebec even though they are collected in the ports in the province. I have no doubt that the same point would apply to a good deal of the federal sales
Federal-Provincial Relations taxes collected from manufacturers in the province of Quebec on products sold to buyers in other provinces. It will also be noted that the expenditure figures do not include a number of categories, as well.
The Ontario figures which the hon. member quoted are subject to the same qualifications and exhibit the same kind of differences. It is perfectly evident that during this time, as at the present, the federal government is paying out as much as it takes in, one way or another, and it is not withholding the huge amounts that these figures are interpreted to suggest. In fact the federal government is paying out more than it takes in, if I remember correctly.


Georges-J. Valade: Mr. Speaker, may I ask the minister a question for the purposes of clarification? The minister made reference to sales taxes collected in Quebec. Does he not agree that these sales taxes are paid by people in Quebec?


Some hon. Members:: Oh, oh.


Walter Lockhart Gordon: I am referring to federal sales taxes paid by manufacturing concerns in Quebec and included in the cost of goods sold throughout Canada.


Gilles Grégoire: Would the Minister of Finance agree that the same problem exists in respect of every other province including Ontario, Manitoba and British Columbia, and does not only exist in Quebec?


Walter Lockhart Gordon: Yes, and that is what I am saying. These kinds of calculations are meaningless, and I would urge my hon. friend not to rely upon them.


Bert Raymond Leboe: Mr. Speaker, perhaps we could allow the minister to conclude his remarks. Hon. members can make notes in respect of questions they wish to ask, and when we go into committee to consider these things they will then have an opportunity of asking those questions. Let us have some order.


Gilles Grégoire: If the minister wants to answer the questions now, he can do so.


Walter Lockhart Gordon: I think my hon. friend has made another very excellent suggestion and I thank him for it.


Georges-J. Valade: Federal-Provincial Relations


An hon. Member:: We are not in committee. You have been away too long.


Georges-J. Valade: I was not on Capri with the Minister of Forestry.


Walter Lockhart Gordon: I am very pleased to see the member back. I am sure he was away on business.
The Department of Finance has endeavoured to allocate fairly as much as it could of the federal revenues, by provinces, for the year 1961-62. This endeavour has been taking place over the last several months. I may say the departmental officials have been struggling with this problem for quite some time. They reviewed the situation with me early this week, and it is obvious that these calculations involve so many assumptions, so many ifs, ands and buts, that as a one-time accountant I was pretty nervous about them.
It is possible to make this kind of calculation in respect of individual and corporate income tax, estate tax, and as a result of some detailed studies, for taxes on alcoholic beverages, tobacco and related products. These revenues that can be allocated in this way amounted to a total of some $4,163 million. The balance of approximately $2,184 million of federal revenue cannot be allocated properly by province. That balance represents something over one third of federal revenue. This total figure which I have mentioned does not include amounts collected under tax rental agreements, but it does include amounts collected for old age security and unemployment insurance, as well as certain smaller items. It is evident from these figures that it is not possible to get an allocation of total revenues which can be compared with expenditures made to people in the various provinces or for their benefit.
The Department of Finance has made a detailed study of the expenditures and finds it can allocate approximately 40 per cent of gross federal expenditures to provinces by residence of recipient. This includes social security payments made directly to individuals, and various payments made to provincial governments and provincial institutions. Another 16 per cent of our expenditures can be roughly allocated by provinces on the basis of the location of the works on which they are spent or the service which they are used to provide. When these are eliminated this leaves about 44 per cent of the gross expenditures for items which cannot be said to be paid for the benefit of people in any particular province, and these can only be distributed arbitrarily, for example,


on the basis of population. This would not include, for example, expenditures on parliament itself and the various central services of the government, expenses incurred in public debt charges, in external affairs and in national defence. It also includes various expenditures on research and a variety of other general services provided by the federal government on a national basis.
The expenditures, which we have endeavoured to study and allocate in this way, amounted-and this refers to the whole 100 per cent-to approximately $7,246 million in 1961-62.
In view of what I have said, I do not think that any meaningful comparisons can be drawn between the expenditures which we can allocate to persons in a particular province and revenues we can allocate as being collected from persons in a particular province, unless we make arbitrary assumptions as to how these can be assumed to affect persons, provincial institutions and governments indirectly.
Time has only permitted the department to make a detailed study of this nature for the year 1961-62. We shall provide the details of these figures in answer to the questions to which I have referred. I thought, however, that at this point in this debate I should make clear the general nature and content of the figures, and to say that they show that the statements made on the basis of the letter, to which the hon. member for Lapointe (Mr. Gregoire) made reference, and which I have read into the record, are misleading and based on information that is inevitably incomplete.


The Acting Speaker (Mr. Batten):: Is the
house ready for the question?


Gilles Grégoire: You did not prove that.


Walter Lockhart Gordon: Mr. Speaker, I think I heard my hon. friend ask a question, the purport of which was that I did not prove this. With the greatest respect, I think I have proved it to most hon. members who were willing to listen with an open mind. If I have not proved it to my hon. friend, then I admit that perhaps, as far as I am concerned, this may be impossible.


Gilles Grégoire: Mr. Speaker, since the Minister of Finance has questioned-


Some hon. Members:: Order.


Marcel Joseph Aimé Lambert: Order.


Gilles Grégoire: Mr. Speaker, I rise on a question of privilege-


Marcel Joseph Aimé Lambert: Another question of privilege.


An hon. Member:: There can be no question of privilege at this time.


Gilles Grégoire: Mr. Speaker, my question of privilege is based on the following fact. Contrary to standing orders, the Minister of Finance has questioned our intentions. He has no right to question our intentions. As far as accepting what he has just said-


The Acting Speaker (Mr. Batten):: Order; the Chair is not able to accept the remarks now being made by the hon. member for Lapointe as a question of privilege.


[Stage Direction]
Motion agreed to, bill read the second time and the house went into committee thereon, Mr. Batten in the chair.
On clause 1-Short title.
Marcel Joseph Aimé Lambert: Mr. Chairman, I want to thank the minister for some of the information he gave toward the conclusion of his remarks on second reading. However there are a number of other items which were discussed at the resolution stage which I believe will be coming forward in due course.
Before I speak to the bill, I should like to make a few remarks about the speech made this afternoon by my colleague the hon. member for Digby-Annapolis-Kings. I would recommend this speech to every member of this house, particularly to those members sitting at my extreme left. I think they will perhaps learn a lesson in constitutional history which is all too often forgotten. I would commend that speech also to the very careful attention of those people who comment upon those things which pass in this house. I would have liked to see the members of the press gallery present in the numbers in which they attend at the question period to hear this kind of speech. I think it was a very thoughtful one, and one of the best speeches we will hear in this house during this session. I commend it also to some of the editorial writers who ought to study it with considerable reflection.
On July 7 the right hon. Leader of the Opposition put forward a proposal for a full-fledged dominion-provincial conference on matters dealing with fiscal relations, national symbols and other matters such as the patria-tion of our constitution; all those things which go toward national unity. I saw some criticisms of this suggestion the following day, and I thought they were most ill-considered.
Federal-Provincial Relations I do not believe the writers had really seen the text of what the right hon. gentleman had said. I am as sure as I am standing here that some of these criticisms were not only ill-considered but were based on partisanship or personal prejudice and they were as predictable as night following day. I would have thought we would hear from the Minister of Finance, and I hope we still might hear something more than just a casual dismissal of the proposal as being woolly. I think on reflection the minister will see that what the hon. member for Digby-Annapolis-Kings has said, and of which the Minister of Finance approved, follows on from the proposal of the Leader of the Opposition.
I was disappointed equally the other day when in reply to a question of mine the Prime Minister indicated he was not giving any thought to the convening of a conference between federal and provincial authorities on the proposals put forward by the premier of Manitoba concerning the question of priorities. This proposal, contained in a letter to the Prime Minister from Premier Roblin, after mature consideration has received wide commendation in the editorial columns from one end of the country to the other. I am sure the minister does realize that there is a terrible problem existing in this country in connection with priorities of expenditures on education, health and welfare. These problems have grown within the past five years or possibly ten years, and have become much more acute. About five years ago we were not spending a great deal of money from the federal point of view on hospital insurance. However we are now paying over $400 million and the provinces are committed to expenditures on the same level. We are now spending some $850 million on hospital services and diagnostic services. Around the corner is the proposal for medicare. What the expenditure is likely to be for that-


An hon. Member:: Staggering.


Marcel Joseph Aimé Lambert: I hear an hon. member say "staggering". It will be beyond what I feel people estimate it will be. Certainly the experience of Britain has pointed that out clearly and I do not believe Canadians are going to be any different from the British people when it comes to medicare.


Walter Lockhart Gordon: Do you think they want to get rid of it?


Marcel Joseph Aimé Lambert: They may think they would like to get rid of it, but politically it is certainly not the acceptable thing. I can assure
6556	HOUSE OF
Federal-Provincial Relations you the chancellor of the exchequer would like to get rid of it because it constitutes a tremendous drain on gross national production. However, if people are prepared to pay for it, that is fine. The people should realize they are going to pay for it and it is not free; that it is not manufactured out of thin air. So long as we at the legislative level can convince the people of Canada these programs are never free and they must always be paid for, then if they are prepared to pay for them and desire them, all very well.
I do not believe the question of priorities does receive proper attention. It is discussed at dominion-provincial conferences but it is only one item, perhaps merely half an item if you can call it that, among the other matters with which the conferences are concerned. As the hon. member for Digby-Annapolis-Kings pointed out, and I have also gone through dominion-provincial conferences, we know how much time is spent on the formalities and social amenities, and you have the ten premiers each taking their turn to speak. We know how little real hard work can be done under those circumstances, and I think the conferences could be greatly improved upon.
We are caught in this horrible dilemma because of a lack of agreement on priorities. We are getting pressure from the various provinces to opt out of this or that program, and opting out is a phrase coined by my hon. friends opposite. It is not limited to the province of Quebec. We have even heard it said in Alberta that so far as hospital and diagnostic services are concerned, if they could have the revenues they would like to run the show themselves. I wonder for whose consumption such statements are made. Oft times it is for purely local consumption, for partisan reasons. There may be other considerations, and we do know we would all like to run our own show and not have somebody watching over our shoulders.
I would like to see serious consideration given to Premier Roblin's suggestion as an intermediate step to the conference suggested by the Leader of the Opposition. It is a more immediate step, and is necessary because I feel that with this growing participation in joint programs, in the fiscal relations between provinces and the federal government we must do away with this principle of opting out, and we must do as much as possible to eliminate the conditions that lead to it.
If the provinces agreed, education should have a certain priority, health should have a priority and welfare a priority. Then there


would be a much greater desire and ability on the part of the provinces to participate, all going in the same direction without any loss of autonomy. Sometimes I am a little short tempered at this insistence on the rights of provinces. I hear precious little about the responsibilities of provinces and how they intend to carry out those responsibilities, particularly in the field of education. It is always the rights of the provinces and, dealing with education, we know this is in the constitution, but I would like to see a better look taken at the responsibilities with respect to education.


Gilles Grégoire: Change the constitution.


Marcel Joseph Aimé Lambert: I am not going to cut down on the rights of the provinces. What I am saying is, look at the responsibilities, and I am very glad to see that the premiers at their conference last week in Jasper looked at one aspect of education, namely, establishing a uniformity of education. If there is anything that is nonsensical from the point of view of national development it is that in going from one province to another we find serious dislocation in educational standards. Canadians serving in the armed forces, in government services or working for any interprovincial concern, have this problem with the education of their children. If a man has to move from one province to another he is concerned that his children do not suffer as a result.
We have the example of West Germany. That is a federal state composed of 11 lander, or provinces. The lander have complete rights over education and, incidentally, they have much greater rights over taxation than do Canadian provinces, but since the establishment of the present federal state of West Germany the ministers of education of the lander have held over 100 meetings and conferences in a period of about 11 years, and people have no problem when moving from Bavaria to Rhineland-Palatinate, for example, so far as their children's education is concerned. We should work together much more than we do now-


Gilles Grégoire: On a point of order, Mr. Chairman.

Mr. Chairman, I rise on a point of order.
I should like to know if the hon. member for Edmonton West (Mr. Lambert) is really making remarks that are within the purview of the debate and if he is within the limits permitted by standing orders when he talks

about all kinds of things except the bill before us. He has been talking about the educational system in West Germany and the educational system in the provinces of Canada, but that is not what we are now considering. I would, therefore, ask you to call the hon. member for Edmonton West to order. He should be familiar with the rules of the house, but he is now showing that he is not.


Marcel Joseph Aimé Lambert: Mr. Chairman-


Some hon. Members:: Order.


The Acting Chairman (Mr. Kelly):: Ordinarily on clause 1 great latitude of debate is allowed, so the hon. member may continue. '[Translation]


Marcel Joseph Aimé Lambert: Mr. Chairman, I am always happy to reply to interjections by the hon. member for Lapointe (Mr. Gregoire) who himself, when discussing a subject, goes over the whole picture; even if he mentions only the [DOT]title of the bill under consideration, he gives us his own views.
As I said a few moments ago, I spoke about -the educational system in Western Germany as an example. Also, when I spoke of education, it was to illustrate the rights and responsibilities of the provinces.
Therefore, I do not think the hon. member [DOT]can teach me a lesson.
Furthermore, with regard to his points of order, we know very well that most of the time they are not justified.


Gilles Grégoire: It is easy to see who is speaking.


Marcel Joseph Aimé Lambert: Now, to get back to the item under discussion, I would suggest there was a great deal in what was said by the hon. member for Digby-Annapolis-Kings about fiscal policy and the responsibility of the Minister of Finance for the fiscal policy of the country, as well as for the financial policies. I have some grave doubts as to whether in that narrow sector which remains to him, with the proposals that are contained in this bill and that are implicit in what we are told is to be the formula under the Canada pension scheme, the Minister of Finance is going to leave himself any room at all. He may well become prisoner of a system where he has all the responsibilities and none of the powers.
I would also like to underline, and I certainly support what he said in regard to the various fallacies that arise in thinking that you can compare the revenues derived from
Federal-Provincial Relations one province and allocate to that particular province certain moneys, and then draw conclusions from that. I think there is nothing more misleading than this type of consideration. To say that Ontario, or Quebec, pay into the federal treasury far more money than they get out of it leads to an illogical position. The same is true with regard to any other province. I do not know whether this is Social Credit policy or not, I hear a great many such statements made out in Alberta, too. There are provincial cabinet ministers and members of the legislature who say that Alberta pays so much into the federal treasury and only gets so much back. This leaves out a great deal. For instance, the income tax paid by the head offices of our chartered banks comes mainly out of two provinces, yet the earnings are derived from provinces all over Canada. Consider the situation of the major oil companies. British American Oil and Imperial Oil do not pay their income tax out of offices in Edmonton or Calgary but out of Toronto or Montreal. The Canadian Pacific Railway is another example. This division of provincial revenue on the basis of funds contributed and received becomes nonsensical.
In addition, we could talk about defence. Those who live in the maritimes or in the western provinces could say: What about all the defence spending done by the Department of Defence Production in the provinces of Ontario and Quebec? Does that not constitute a return to those provinces to the extent of this defence expenditure? Nothing is said about that.
Any conclusion reached as to these revenues must be so conditional that it can no longer be regarded as valid. All one can say is that the federal government collects so much money and spends so much money. I do not know how anything else can be said. What about the excise tax on the distillation of spirit alcohol, for instance, which emanates mainly from Ontario and Quebec? This is a most important fiscal consideration. I do not believe for a moment that the people of Ontario and Quebec have a monopoly on the consumption of these spirit liquors. These spirits are drunk from one end of the country to another and the tax is paid by the people in the provinces where the liquor is consumed. The same applies to tobacco. So let us forget all about trying to allocate revenues and expenditures within provinces, because doing so does not lead to any meaningful conclusions.
If the minister would refer to Hansard of July 9 at page 5286, he would be able to
6558	HOUSE OF
Federal-Provincial Relations refresh his memory and I am hopeful he will be able to provide for us the table for which I asked on that occasion.


Walter Lockhart Gordon: Does the hon. member wish me to put it on record now?


Marcel Joseph Aimé Lambert: No. The hon. gentleman can do it in the course of his remarks when we reach the appropriate clause. I am dealing with the subject of natural resource revenue, and I would also like to ask on behalf of the hon. member for Esquimalt-Saanich whether it would be possible to provide a schedule showing what payments will be made to the provinces during the balance of the fiscal agreement on the basis of the national average, for the purpose of equalization rather than on the basis of the two highest provinces, providing also for the increase in the succession duty and the abatement, and so forth, as proposed, and using in the equalization formula the existing natural resource revenue formula rather than the one proposed. It may be that it will take some time to have this prepared but I would appreciate it if a note could be taken and the figures compiled at some future time.
We shall have some further points to bring up as we discuss the bill clause by clause. In conclusion, I would again strongly urge the minister to try to convince his colleagues that there is a great deal of merit in arranging for a conference to be limited exclusively to the consideration of priorities so that we can eliminate the jarring which happens when there is a decision to opt out. Opting out creates a very poor image, a very poor frame of mind among people across Canada, and I do not think it contributes at all to national unity. This is very apparent to me since I represent a constituency in western Canada where, frankly, I would prefer not to hear those sentiments expressed. But I cannot ignore the fact that they do exist, and many of them are based on the right of opting out, or on decisions to opt out. I would much prefer that we should eliminate the necessity or the desire to opt out by establishing a general agreement on priorities so that we can all act together.


Mr. Barnett:: I presume the Minister of Finance has noted that a number of members from the province of British Columbia have shown an interest in this bill. I decided I would make a few remarks and ask a few questions when we reached the committee stage because I have learned from experience that sometimes it is easier to get explanations and answers from the minister during


the examination of legislation clause by clause.
I was interested in the remarks which have just been made by the hon. member for Edmonton West. I agree with some of them. With others, I do not agree. However, I certainly endorse what he said as to the desirability of reaching some agreement which would eliminate the desire, or the necessity, as he put it, to opt out of various programs which are put forward.
I am not sure I can completely support his approval of the suggestion made by the premier of Manitoba. I have a high regard for the ability of the premier of Manitoba and I think any suggestions he has to make should be considered very seriously. Nevertheless, I am not at all sure that it would be desirable to hold a conference on priorities confined within the framework of education, hospitalization, welfare and medical services. If these matters were considered outside the context of the general economic state of the nation and the general policies which might be formulated with regard to fiscal relations between the provincial governments and the federal governments, such a conference might tend to produce a false impression of what the priorities really are. It might, for instance, suggest that what we needed was more education and less health care, or vice-versa, whereas on the basis of the over-all situation in the country with regard to priorities, in my view at least we should be making progress rapidly in both those fields.
However, I wish primarily to raise some questions in respect of two particular points concerning the formula which have already been dealt with by the hon. member for Burnaby-Coquitlam, namely the non-inclusion of the additional 25 per cent rebate on estate tax and the newly devised policy of taking into account natural resource revenues within the provinces. When the minister was concluding the debate on second reading I was quite pleased to note that he indicated his agreement with the belief of the hon. member for Burnaby-Coquitlam in the principle of equalization, as far as the distribution of revenues from the shared tax fields is concerned. I was not surprised that in this connection the Minister of Finance is in agreement with statements that have been made by the present Prime Minister of Canada. In this regard I should like to refer briefly to the statement made by the then premier of Saskatchewan at the federal-provincial conference in November of last

year in which he quoted with approval an earlier statement made by the present Prime Minister. In his opening statement to the conference the then premier of Saskatchewan had this to say, as found on page 93 of the report:
What I mean is the concept which the Prime Minister so clearly stated in 1958.
Then he quotes the Prime Minister as follows:
All provinces should receive an equal revenue per head of population from the tax field shared between the two levels of government.
What concerns me, and I have not heard any explanation yet from the Minister of Finance, is why, when he says he believes in the principle of equalization and when the present Prime Minister has on previous occasions stated so clearly his belief in the principle of equalization, in the particular formula proposed in the bill the minister has so clearly departed from the principle of equalization in respect of the increased rebate of estate taxes. In answer to the hon. member for Burnaby-Coquitlam all that the Minister of Finance has said so far is: We are going to do it. But he has not told us why. Nor has he made any attempt as far as I can determine to relate the reasons for doing so to his avowed belief in the principle of equalization. Nor has he, as far as I was able to determine from listening to him, given us any rational explanation of why at this time he is asking us to agree to an exception to this principle.
Before we proceed too much farther with the discussion in committee and the passage of the bill, I think the minister should explain in greater detail than he has so far why he is agreeing to this being done. If he does not do so, we are going to have to try to work out some kind of theory as to why he has done this, and we may not come up with the right conclusion. We may branch off into speculation that is completely off the track as to the reason for this action.
I should like to give an example of the direction in which speculation may very well turn. I believe I am correct in saying that in answer to questions at the resolution stage with regard to what had taken place at the federal-provincial conference the minister made a statement to the effect that the premier of British Columbia had indicated he was very happy with the idea of excluding the additional 25 per cent from the equalization formula.


Walter Lockhart Gordon: I wonder whether I might interrupt the hon. member for a moment
Federal-Provincial Relations on this point. So that we will not misquote the premier of British Columbia or so that I will not misquote him, may I point out that I think what I said was he was very happy with the additional abatement of 25 per cent. That is what he was happy about. It had nothing to do with equalization. At least, that is what I think he was happy about.


Thomas Speakman Barnett: I think the minister is correct.
I think that is what he did say. But in reading it I would assume that the premier was particularly happy because it was not being included in the equalization formula. That may or may not be correct, but in order to give some indication of why I may have jumped to that conclusion perhaps I might refer to the statement which was made by the premier of British Columbia at the federal-provincial conference. I take it from his statement that the premier of British Columbia does not agree with the Minister of Finance, the hon. member for Burnaby-Coquitlam or the hon. member for Digby-Annapolis-Kings with regard to the need for the principle of equalization. At the bottom of page 69 the premier of British Columbia is reported as having said:
British Columbia is opposed to federal equalization grants to the provinces. Equalization does not contribute to national harmony or efficient use of public moneys. The grants are undue subsidies to certain provinces at the expense of others.
I think that statement makes it quite clear that the premier of British Columbia would logically be happy that the estate tax rebate was not related to the equalization formula, because in his earlier remarks the premier sets out his whole attitude toward the idea of the federal government having any recourse to the direct tax fields. This is what I have been wondering about. I know the minister does not have to answer this question and perhaps I do not expect him to answer in detail. However, in lieu of any really logical explanation with regard to the relation of this matter to the formula, knowing what a strong willed individual the premier of British Columbia can be, which may apply to other premiers as well, and in view of the minister's earlier remarks in replying to the question of the hon. member for Burnaby-Coquitlam when he said that this was a sort of afterthought, one cannot help but wonder whether in effect this was a kind of ad hoc political sop thrown to the premier of British Columbia and perhaps to the premier of Ontario, provinces which in my view obviously stand to gain unfairly by the
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Federal-Provincial Relations
exclusion from the formula of the 25 per cent increase in the rebate.
As one who believes in the principle of equalization, I would say that if there is any one of the three tax fields which should be equalized more than any other it is the estate tax field, because of the fact that there tend to be concentrations of wealth in certain centres which are accumulated from all across the country. When the minister was closing the debate on second reading and discussing the figures presented by the hon. member for Lapointe, I think he brought out that situation very well. I should like the minister to enlighten us further on this question.
While on this subject I also want to make it very clear that although it is true that at the federal-provincial conferences the premier of British Columbia speaks for the government of British Columbia, which purports to speak for the people of British Columbia- he certainly speaks as expressing the policies which are going to be put into effect in the province-there are a great many of us in British Columbia who could not differ more diametrically from the attitude expressed by the premier of British Columbia at the federal-provincial conference last November. In his statements he is doing what he so often does; he is attempting to distort the constitution of this country in an effort, in my view, to get his own way, thereby creating unnecessary tensions in confederation. I made the statement that the premier of British Columbia is the greatest separatist in Canada; I used the phrase that he could "out-Caouette Caouette". If he was sitting in this house I am sure that his only spiritual home would be a seat close to the hon. member for Lapointe.
The premier of British Columbia has been saying a great deal lately about his belief in co-operative federalism, but when one reads the fine print contained in the kind of proposals he puts before a federal-provincial conference, then I think it is not unfair to say that by his attitude he is perhaps the greatest separatist in the country today. As one citizen of British Columbia I want to make it clear to the Minister of Finance that this is an attitude and a frame of mind with which I thoroughly disagree.
I was quite interested in the remarks made earlier by the hon. member for Digby-Annap-olis-Kings to the effect that it was long ago that the people of Nova Scotia forgot about the kind of outlook which is now advocated


by the present premier of the province from which I come.
Having said that, I should like to move on to the second question concerning the business of including in the formula a provision for taking into account natural resources revenue. A great deal has already been said on this subject by members from the province of British Columbia, and I for one agree with the serious questions which have been raised by other members from British Columbia as to the desirability and the reasonableness of taking into account this particular element of the formula.
It might be argued that it is a relatively academic question as far as British Columbia is concerned because it really does not affect the balance of payments to British Columbia by that much, as matters stand at the moment. At least that is the way I interpret the figure. However, to me it does raise some serious question as to whether it is an equitable and desirable principle to incorporate in arrangements regarding equalization for distribution of taxes. It seems to me that the question of the revenue which a province draws into its provincial treasury from natural resources is not necessarily related in any way to the natural wealth or natural resources of the province, but rather to the policies which a particular provincial government may have seen fit to implement with respect to levies which are made and which draw revenue to the provincial government from those resources. It may be that one province levies a realistic charge, for example, on those who harvest the forest crops. Another province may practically give them away, at least as far as any direct revenue to the provincial treasury is concerned, and therefore would have no revenue.
Several hon. members have already mentioned the question of what is gross revenue and what is net revenue in this regard. As far as British Columbia is concerned-I realize this is a matter which has to be discussed in detail in another forum than this one-a great many of us have felt that over the years the policy of British Columbia governments has been faulty on two counts. One is that they have not drawn into the provincial treasury sufficient revenues from our basic natural resources, forest resources in particular. Up until comparatively recent years they have been the main source of natural resource revenue, although as we all know gas and oil has become an increasingly important element in the natural resource picture in British Columbia. On the second

count, an insufficient portion of the natural resources revenue is being reinvested or ploughed back into the development and perpetuation of those resources, again with particular reference to forest resources.
Earlier in the discussion of this measure reference was made to this matter by the hon. member for Cariboo, who of course also comes from the province of British Columbia but as everyone realizes is in a slightly different part of the political spectrum of the province. He made some reference to the amount that it costs the province of British Columbia to construct access roads, the cost of reforestation, fire protection, and so on, and he suggested that this was a rather expensive process.
I have before me a copy of the public accounts for the province of British Columbia for the fiscal year ended March 31, 1964, and as far as I can understand the figures they do bear out the fact that there is a fairly substantial revenue now coming in from the natural resources field, but that really the portion which is being ploughed back into the resources field is not very substantial in comparison with the total. I have taken the figure for the total revenue from natural resources during the last fiscal year to be $75,804,000 and the total expenditures to be $22,180,000, which leaves a balance of provincial funds over and above expenditure of $53,623,000, which means that less than one third of what is taken in is being spent on the development of such things as fire protection, reforestation, forest access roads and the like. I would not want to say that I have taken into account every factor which may be involved in those figures. The total expenditure figures which I have quoted are taken from the expenditures of the departments of lands and forests, recreation, conservation and mines. Also there may be certain other expenditures of a more minor nature which I have not included.
The point I am trying to make is that under the formula proposed by this bill no provision is made, as far as I can understand it, apart from what I said earlier about the scale of charges which may be levied by a province, for the scale of expenditure which a province may be making for the preservation, conservation and development of these natural resources. In other words, as far as the province of British Columbia is concerned the application of this formula would make no difference; if instead of spending $22 million on resources, conservation and development, the province was spending $122 million. It
Federal-Provincial Relations could be spending half as much again as it was taking in in gross revenue, and this would still not be an element which would be used in deciding their eligibility under the equalization formula.
The minister here again, as far as I have heard so far, has explained to the committee that this is what has been done. An announcement was made in this regard by the Prime Minister at the time of the federal-provincial conference. The minister has not explained why this is being done. If one believes, as I think the minister himself has said, in the principle of equalization, one certainly should be able to expect the minister when he asks us to depart from these principles, to give us a good account of his reason, particularly when he is asking us to approve this suggestion.
While there are many of us who are prepared to do battle wherever necessary with those who oppose the principle, as does the premier of British Columbia, if we are going to be a party to the approval of a bill which is not on all fours with the principle, we find ourselves in a position of having weakened the case we represent.
Very often in British Columbia we hear the argument, one which has been suggested here in the house, that the big greedy Ottawa government is taking much more out of the province than it is putting back in. On the surface very often this argument is convincing. It is difficult for those of us who. believe in the Canadian nation to answer it. One of the best methods of coping with this argument would lie in an ability to go back to our constituencies and say that the parliament of Canada is passing arrangements in respect of federal-provincial fiscal arrangements involving redistribution in tax fields on all fours with the principle of providing an equal opportunity to Canadians in all parts of Canada. However when we must go back and say that parliament has done this only to a point, it is not very satisfactory.
Using British Columbia as an example I think will best explain my feeling, particularly now that British Columbia is going to establish its own bank and will become one of the financial centres of Canada, with increased wealth accumulations and large estates. We could perhaps say in these circumstances that we are going to hold on to this nice little pie, and keep it for ourselves, ignoring some of the other provinces which have not been able to accomplish these things.
Mr. Chairman, I hope while we are on clause 1, or when we are dealing with par



Federal-Provincial Relations ticular clauses of this bill which refer to the points I have touched on, the Minister of Finance will elucidate to a somewhat further extent than he has done so far in respect of the principles he is asking us to approve.


Horace Andrew (Bud) Olson: Mr. Chairman, I should like to refer briefly to what the minister said in reply to the many questions which were raised before the conclusion of second reading. Unfortunately I was not present at the opening of his remarks. I came as quickly as possible, as soon as I knew he was replying.
I should like to thank him very much for expressing concern about and appreciation of some of the points I raised in my speech yesterday. I should also like to say to him that while I appreciate his concern, and thank him for his felicitations, what I really wanted was money. I did not hear him say anything about amending portions of Bill No. C-lll to take care of some of the inequities I pointed out yesterday. He said there could have been, or is, an honest difference of opinion in respect of his position and the contention I outlined regarding hospitalization cost sharing arrangements. Although I did not hear him, I think perhaps he intimated that this was also true as far as natural resource revenues are concerned, when considering these figures in light of equalization grants.
The minister said one other thing, Mr. Chairman, and I do not wish to misquote or misconstrue what he said. I believe he said there was an honest and sincere desire on the part of the federal government to meet frequently with the provinces-I think perhaps he said annually-in an attempt to work out ground rules and principles that could be applied to distribution of tax money, and that when such a set of rules and principles had been worked out all of the provinces would be treated fairly and equally within this scope. Mr. Chairman, I certainly hope that he meant what he said. If there is a disposition on the part of the federal government now to work out some kind of rules and principles so that every province of this country can share in the distribution of tax revenues on an equal basis and every citizen in this country will then be treated equally, I think that would be a step in the right direction. I hope this situation will materialize.
Mr. Chairman, in the event the minister has forgotten the position of Alberta in this respect I should like to make that position abundantly clear. The premier of the province of Alberta had the following to say in this regard:


In arriving at any new arrangement in the field of federal-provincial relations, are the specific constitutional responsibilities assigned to the respective governments, under the British North America Act, going to he respected?
Mr. Chairman, we are being told that so far as the federal government is concerned, the major reason for the amendment in Bill No. C-lll is an attempt to help the provinces take care of their responsibilities in the field of education. If it has now become a major responsibility of the federal government to help the provinces financially in the field of education, then surely we have the right to expect that this at least ought to be provided for in the constitution of Canada. In the event that some hon. members from the province of Quebec feel they are alone in demanding that the terms and conditions of the British North America Act be adhered to, I should like to point out to them that the premier of the province of Alberta has stated this:
The government of Alberta maintains they should be, not merely in theory but in fact. We are deeply concerned by the extent to which these constitutional provisions have been progressively eroded away in recent years by federal policies and programs advanced in the name of the national public interest. We do not accept the premise that it is necessary to violate the constitution in order to meet any alleged national need. We believe in every case there is a more desirable alternate way of meeting such needs without violating either the letter or the spirit of the B.N.A. Act. We desire to have this matter clarified.
It is quite obvious, Mr. Chairman, that there are other provinces in addition to Quebec that are deeply concerned about this business of continually providing temporary expedients to meet some political promise that might have been made.
The only other thing about which I wish to comment at this time, Mr. Chairman, is this matter of priorities. The premier of Manitoba has made it clear to the federal government on a number of occasions, and again at Jasper during the past few days, that the premiers of all the provinces would like to see the federal and provincial governments sit down together to work out some list of priorities so that each level of government knows where it is going, in harmony with the other. There have been occasions on which the federal government has gone to the Canadian people during an election campaign and made certain promises. These political parties, whether Liberal or Conservative, did not consult with the provincial governments to ascertain whether or not the provinces were willing to expand social services in those areas. Then, regardless of which party was elected, it was found that in

order to fulfil those promises made in the election campaign it was necessary to impose some additional expenses on the provinces. We have seen such situations during the last few years, Mr. Chairman. There have been serious intrusions into the field of provincial administration when the federal government has passed certain measures calling upon the provincial treasuries to meet, in part, some of the expenditures to give effect to those measures.
There was an example of this situation last fall when the federal government passed a measure to increase old age assistance allowances. This required expenditure from the provincial treasury. Many of these provincial legislatures had completed their sittings at that time and had not provided in their budgets for these additional expenditures. There is, therefore, a very real need for the two levels of government to get together and agree on a set of priorities so that they can move forward in harmony when such agreement is reached. The premier of Alberta also agrees with this when he says:
In those areas where rights and responsibilities are assigned jointly to both the federal and provincial governments, what role properly should be played by each of the two levels of government?
This requires an analysis and reassessment of revenue sources and taxation policies and a review of the whole field of social welfare programs, including hospital and medical services and pensions and also other fields, such as education, Indian affairs, resources, management and development and agriculture.
It could not be made much clearer, Mr. Chairman, that the government of Alberta and the government of Manitoba would like to know in advance what the federal government intends to do by way of expanding social service programs so that they can make provision for these expansions.
I do not want to pursue this matter further at this point, Mr. Chairman. I feel it is important that the federal government is now prepared to sit down with the provinces and work out a set of principles or ground rules that will be applicable to all the provinces equally, and equitable or fair to the population of the country. This is certainly a step in the right direction and I commend the minister for the suggestion this is now the attitude of the federal government.


Walter Lockhart Gordon: I wonder if my hon. friend would allow me to point out that this is what I was referring to as the tax structure committee that was announced following the last federal-provincial conference on March 31. This is the committee that will be doing the 20220-415
Federal-Provincial Relations things to which my hon. friend has been referring.


Horace Andrew (Bud) Olson: Yes, Mr. Chairman, I did understand that. However, surely following the recommendations of that committee there will then be a federal-provincial conference.
The main point is that there be a disposition on the part of the federal government to go into a conference with this in mind. This is the point I am making. If this is the attitude of the federal government, that they are now willing to carry into a federal-provincial fiscal conference, then I commend the minister. I want to say this in closing, that the Liberal party made many commitments to the Canadian people during the election campaign of 1963. The fulfilment of some of those commitments will require expenditures from the provincial treasuries. I want to say that, for my part, I am ready to absolve the Liberal party from any further commitments that will require the spending of any more money from the provincial treasuries. If, as the minister has said earlier this afternoon, the federal government is already spending all the money that they have, and then some, I think we have to develop a set of principles or ground rules and then accept our responsibilities within that concept, rather than reeling from one temporary provision to another to meet the political expediency of the day.


Gilles Grégoire: Mr. Chairman, I do not propose to speak at length on clause 1 of this bill, but I simply want to follow up a few remarks heard with regard to the statistics 1 quoted yesterday in the house.
I realized that those statistics raised quite a few comments throughout the house. Anyway, one thing must be kept in mind: the Minister of Finance (Mr. Gordon) stated that he would supply us with true figures and he advanced some arguments which I cannot remember, because I think they are wrong. The hon. member for Lotbiniere (Mr. Cho-quette) tried to prove that the figures supplied by the hon. member for Lapointe were not correct, that he knew nothing about them and that the Minister of Finance would let us have his figures later. That was the basis of his argument.
We cannot accept-though maybe he can- the fact that the minister should describe those figures as false, or rather saying that, in spite of the figures supplied in Mr. Taylor's letter being correct, one and the other thing should be considered and that, as far as the
6564	HOUSE OF
Federal-Provincial Relations actual figures were concerned, he would supply them later. He did not explicitly prove that our figures were wrong. He simply stated that he would give other figures later and that the officials of the department were analysing the things the Minister of Finance wants to take into consideration.
The Minister of Finance stated that two of those amounts were spent all across the country and that he could not show they were spent in such and such a province but rather in the general interest of the country as a whole. That we recognized yesterday when we mentioned that the government, in 1961, had collected $5,700 million in the various provinces, while it had spent $1,200 million less. It is precisely those sums of money which are not spent in any specific province but for the country as a whole that we want to know about. I gave exactly the same examples that the Minister of Finance gave, for instance, the administration of the House of Commons, the interest on the national debt. The minister used the same examples I did. The Minister of Finance said that there are amounts of money which are collected in the provinces but which cannot be said to come from a specific province. For instance, the sales tax or customs duties; and the Minister of Finance gave as an example the Montreal harbour, where goods enter from abroad and where customs duties are collected, and then the goods are shipped to other provinces. On the other hand, we must not forget that there are also the Halifax, Toronto and Vancouver harbours and that, in those harbours as well, goods enter on which customs duties are collected, and then those goods are shipped to other provinces.
If one wants-as the minister intends to do-to find out exactly what comes from a specific province, then the minister will realize that figures will not change much. That is why I would ask the Minister of Finance, before saying that we are wrong, to check the figures. We are ready to wait before making new statements, but let the Minister of Finance give us the true figures, as he promised to do, instead of saying that our figures are false and claiming that we did not want to understand the explanations. We are ready to wait for those figures, but he should first give them to us.
Yesterday I quoted figures and the Minister of Finance rose at once to say that they were false. Let him produce his figures, and then we will compare them with those supplied by Mr. Taylor, which do not take into account


the income tax on the profits of corporations whose head office is in Montreal. The same applies to corporations whose head offices are in Toronto, Winnipeg, Vancouver or Halifax. When trying to establish the origin of those federal sources of income, one realizes that, in any province, everything comes out even in the end.
Besides, it is just as normal for a company such as the Aluminum Company of Arvida, whose plant is located in the riding of Ville-neuve while the head office is in Montreal, to pay taxes to the province of Quebec and sell goods in Ontario and in western provinces, as it is for a company whose plant is in the United States, to pay taxes to the American government and then sell its goods in foreign countries. Such a thing normally exists between different countries and it exists also between the various provinces. Every province has its own taxes; every province collects its own taxes.
Now, Mr. Chairman, I merely wanted to make this quite clear, before the Minister of Finance or the hon. member for Lotbiniere or the hon. member for Comox-Alberni (Mr. Barnett) or the hon. member for Edmonton West (Mr. Lambert) or others contend that our figures are wrong. They should start by giving us their own figures and until then, they should stop saying that the hon. member for Lapointe is in error.
Let them not say; "The hon. member for Lapointe is mistaken; we will give figures in two months' time." No. We are willing to wait until they give their figures. They should show the same goodwill as we do and let us see their figures; we would then be in a better position to discuss the issues.
That, Mr. Chairman, is the point I wanted to clear up. The Minister of Finance stated he was ready to put other statistical data on the record, and we are quite willing to wait. In the meantime, however, he should be as courteous to us as we were to him and he should not question our figures. In one word, he should not question our intentions because we made a comparison of statistical data.


Terence James (Terry) Nugent: Mr. Chairman, I am sure that anyone who has heard some of the remarks made in this chamber today, indeed anyone who has over the last few years noticed the amount of stress and strain between the dominion and the provinces will realize that really what we have been doing from time to time is quite a patchwork of trying to satisfy the growing needs of various provinces, as their responsibilities grow heavier on them.

I think it is time we took a look, not just at the fiscal arrangements but at the duties and responsibilities of the governments themselves. In my opinion the B.N.A. Act is a little out of date. I believe that the responsibilities of the federal government might be eased somewhat by giving more responsibilities to provinces, and I think if we were now to align in a sensible manner some of the duties and responsibilities of the provinces, we could transfer some of their duties to the federal government.
I cannot see how any long term arrangement can be worked out that will get us out of this ever recurring struggle to make another concession here or grant another small amount of money there. The trouble with most of us in this chamber is that we have not looked closely enough at the changing conditions in the world today, at the demands made on the federal government in the context of a new modern world. Certainly ever since people have begun to be better educated, ever since we have begun to realize the extent to which automation and new methods of production could make ever higher standards of living available, it has been obvious that our demands for more and more of the better things of life have been increasing even faster than the methods of production can provide them. This has brought about, not just in Canada but in all other countries, a greater intervention of government in business.
I know there are those who believe in private enterprise who used to say a few years ago that it was the business of government to create an economic atmosphere in which private enterprise could flourish, but I believe we have left that concept far behind. The idea has been accepted and acted upon, not only in this country but in others, and not only in the federal government but in the provincial governments, that there are areas and fields in which only the provincial governments or the federal government have the authority and the means, and only government itself can control the factors which will aid private enterprise.
To give just one slight example, there is the roads to resources program. We can all concede that while there might be some very valuable timber that any efficient private enterprise could get out and could profitably sell in this country and abroad, sometimes the accessibility of that timber involves dredging a new canal, building a new railroad or providing new roads, all of these projects being out of the reach of practical financing by 20220-415J
Federal-Provincial Relations most companies. I am aware that in some places, for example where there are vast iron mine resources, very large corporations with very huge sums behind them have been able to get together and build very substantial railroads and docks, and provide the ships and all the rest; but as a general rule undertakings of this nature require concessions by government that are few and far between; and there are many other pools of resources where provincial governments find that properly directed public funds can open up an area where private enterprise can exploit the resources and healthy competition can exist.
I have previously made reference in this chamber to the difference today as compared with a few years ago in international trade circles. Most of us are aware that there are state trading nations, such as the communist countries, where it is the government itself which does the trading, where our manufacturers who do business on a private industry basis have to compete with the entire weight and influence of foreign nations when they are seeking foreign markets. Even countries such as Japan, which rely on state trading cartels, are a little too much competition for individual exporters from this country in world markets.
While many of us in this house value local autonomy and have great respect for provincial rights, when we reflect on the conditions which exist in the world today we are bound to concede that the power of the federal government must remain very strong. In fact in many fields, especially in the field of commerce, this strength must be increased if we are to hold our own successfully with other countries. If our private traders are unable to compete without government assistance of some kind or another, then we can no longer remain in the forefront of the nations of the world today, with our high standard of living.
It is axiomatic, I think, that the government can only carry out those projects which it is able to finance, and I submit that the major responsibility for keeping Canada an important country in the world today can only be assumed at the federal level. If we are not to have interprovincial conflicts to an extent which might seriously weaken the country as a whole, I suggest that every Canadian should have an equal opportunity, that the provinces should review the rights which have been entrusted to them and that the question of how much money should be made

Federal-Provincial Relations available to each province should be resolved as fairly as possible.
The hon. member for Peace River made a reference in this house recently to the steps being taken in the province of Quebec to encourage industry to settle there. Certainly it is logical that any provincial government should try to encourage industry to come to its own province. I know that the federal government has taken the initiative from time to time in designating areas where the economic growth is so much less than it might be that it is thought necessary for the central authority to try to encourage industry to locate there. But when there is too much incentive given to industry to locate in one particular province rather than in another, we find ourselves confronted with the equivalent of trade barriers erected between the provinces. I believe we must strive to place as much emphasis as we can on getting industry to come to Canada. The question of the location of industry within one province or another should relate entirely to those natural economic factors which give industry an advantage-efficient means of communication, a pool of labour, the natural resources upon which it is relying, and so on. Certainly if because of the zealousness of particular provinces-the fact, for instance, that the tax structure has been made to offer highly artificial advantages-industry finds that it is advantageous to locate in one province rather than in another, it may be that since, the enterprise has failed to take advantage of the factors which would naturally lead to its efficiency, it is unable to sell its product successfully on world markets, with the result that all Canada is poorer.
I realize a suggestion that there should be a limitation placed on the extent to which provinces could discriminate in favour of industry in this way is bound to be the subject of heated debate. I am not yet clear in my own mind whether it would be better to have uniformity of legislation agreed on between the provinces in this respect or whether it would be desirable to remove from the provinces some of their power to penalize or reward companies for locating in one area rather than in another. I know there are companies who are studying this situation very seriously. Many companies have to make up their minds whether they will make a serious effort to get into the export market or whether they will simply concentrate on trading within Canada. Once we get to this stage, I think all of us are concerned, first of all, for the good of Canada. If Canada cannot

remain strong and healthy in the field of international trade, each of the provinces will be that much poorer in the end.
I think we should set up a conference to study, not just the taxation system but the responsibilities of the two levels of government, and this question of the challenge of foreign competition and the necessity of keeping our place in the export markets should figure very prominently. I have been aware for many years of some of the conflicts which have grown up almost incidentally in the field of taxation. For instance, it is hard to talk to any trucker in western Canada who is not annoyed at the trucking regulations of the province of Ontario. It seems that only certain truckers can get Ontario licences. There are allegations in Alberta that the province of Ontario has set up its trucking regulations in such a way that it is much easier for Ontario truckers to get licences to haul back and forth than it is for Alberta truckers to do so. I have heard allegations made by many trucking firms in Alberta that it is only a chosen few who can get into Ontario at all, whereas the haul from Alberta to Ontario is wide open to competition from Ontario truckers. I am sure members of this committee are aware that interprovincial transportation is a federal responsibility but that the federal government has turned it over to the provincial governments as far as control over trucking is concerned, because administration is easier-the provinces already have responsibility for the licensing and regulation of trucks, and so on. Then there is the question of their responsibility for highway maintenance. These trucks could ruin their roads. In short, there are many good reasons why the provinces should handle this matter. However, I suggest that this conference should take a look at what has happened in the field of interprovincial transportation. I suggest that the question of the amount of money derived from licensing trucks, sales of gasoline, and so on, should be considered again since this is the subject of competition between the provinces and it is something which might better be handled by the federal government which could set up an arrangement based, for instance, on road miles travelled within a province; the federal government could collect the money and remit a due share of it to each of the provinces according to its entitlement.
The hon. member for Medicine Hat, obsessed with the problems of Alberta, mentioned something having to do with education; he made a number of remarks, includ-

ing one about alleged national needs. The hon. member for Jasper-Edson who spoke yesterday might have given the hon. member for Medicine Hat a little lesson on the needs in the field of education. In the province of Alberta the municipalities have to bear a much larger share of the load of education than in any other province. I might say that the efforts of the Social Credit government in Alberta to maintain the pretence that it is a debt free province have perhaps done more than anything else to make it difficult for the province to negotiate with the federal government on legitimate needs of the province, while at the same time it is heaping on the municipal taxpayer the burden of education within that province.
I am not suggesting it is only the province of Alberta that creates or erects artificial barriers because of the kind of political propaganda that a province uses for its own purposes. I am sure that in every province throughout the dominion there is a different method of tax accounting for different purposes. They like to keep their records in a different way and they lay stress to varying degrees on different aspects of governmental problems and responsibilities within their own borders.
It always seems to be the case that as long as there are differences between the provinces on matters of policy it is very hard to say that all Canadians can have an equal opportunity in this country.
With the cost of government being what it is and having in mind the size of the country and the number of governments we have with so few people, I think anyone must concede that one of the reasons the tax load is so heavy is that we are so overgoverned. To me the ideal situation would seem to be that most questions of policy should be decided by the federal government and those that are not should be decided by the provincial governments in conference, so that there would be a standardization of policy in so far as taxation problems are concerned. To that extent the provinces would be more administrative units rather than self-governing entities.
I know this suggestion will be received with many screams in some parts of the country, but I suggest that those who scream the loudest for financial assistance or for financial independence should really be the first to look at their own set ideas, their sacred cows, so to speak, the first to come forward with suggestions as to how there could be more co-operation between the provinces, and as a start could see if a uniform
Federal-Provincial Relations standard of accounting could at least be worked out so that everyone would know where they stood, and everyone who was talking about fiscal policy and taxation would be speaking the same language.
I suggest that there might be a much stricter policy than that laid down for assistance to or interference with private industry within the borders of a province. I suggest that the federal government could play a much stronger role in these negotiations to make sure that there would be uniformity and limits within the provinces. In this way the federal government could keep a very close eye on any policies that would unduly tend to encourage industries to settle in particular provinces, because of what it would do to their export potential. Since the good of Canada must be maintained in order for each province to have a chance to flourish, I suggest this is one field where we must not allow competition to develop to the extent that one province may become healthy in the short term by attracting new industries, only to find that these industries cannot grow to the extent that will really help Canada in the long run.
I do not want to take too long and I have mentioned this subject before, but I do want to emphasize that what is needed is not just short term temporary adjustments in fiscal arrangements such as we are now considering, but rather a very searching look at the rights and responsibilities of the provinces as well as the matter of taxing powers.


Mr. Perron:: Mr. Chairman, I should like to base my comments on the statement the Minister of Finance (Mr. Gordon) made, at the beginning of his speech, when he said everything was going to be the best in the best of all possible worlds and that prosperity seemed to have become the lot of the Canadian people.
I realize that the fact that during the last three months the federal revenue was higher than the expenditures of all departments, should constitute for the minister a sign of prosperity.
But I wonder what will be the reaction of the general public, and especially the 100,000 unemployed in the province of Quebec, if they should happen to read what the minister said about the period of prosperity we are going through?
I wonder also what the numerous people who went bankrupt in the course of the last 12 months will think of the prosperity

Federal-Provincial Relations mentioned a while ago by the Minister of Finance. What will be the reaction of the thousands of farmers whose income is less than $1,200 a year? Will they rejoice with the Minister of Finance at the prosperity Canada has known under the administration we have had for the past two years?
I wonder also what will be the feelings of those who, in the province of Quebec, fell for the policy of grandeur based on the restoring of the province's taxation powers. Indeed, Quebec had been demanding for a couple of years that its taxation powers be restored to her so that she may progress in the field of education and other fields.
I wonder if the people of Quebec who have seen the provincial debt tripled, even quadrupled, will see in the present or future equalization formulas a solution to problems such as the Canadian constitution, taxation and the revenue required by the provincial governments to look after fields coming under their jurisdiction: social security, education, industrial and economic development, development of natural resources, etc.
I wonder what will be the reaction of the small landlords of the province of Quebec who are now overburdened with municipal and school taxes.
I wonder what will be the reaction of the 10,000 farmers who marched on the Quebec parliament, threatening that government to go on a tax strike if the whole municipal, school and provincial taxation structure were not revised.
I wonder if all those people will be, tomorrow, as cheerful as the Minister of Finance was a while ago when he was speaking of our prosperity.
I also wonder whether the Quebec government will find it advisable to appoint an inquiry commission to suggest to both provincial and federal authorities to revamp their taxation structure.
I wonder if they will be satisfied with the small changes which will be made from now until 1967 under this Bill No. C-lll.
Those are some of the questions we had to ask ourselves.
I realize that often when we deal with fiscal matters, threats of separatism-sometimes called excessive-are heard in certain parts of the country.
We are not the only ones, I think, to bear witness on behalf of all Canadians, those from Vancouver as well as those from the province of Quebec. I noted that, yesterday, on the resolution stage. We claim that the present equalization and fiscal system does

not meet, in all fairness, the needs of some provinces. Now, we are not alone, because the hon. member for Medicine Hat (Mr. Olson) pointed it out yesterday. In turn, will it be necessary for us to use words that he did not dare utter, but has intimated to say that in British Columbia as well as in Alberta, there is no justice within the fiscal system as it is administered at the present time, in the field of federal and provincial taxation?
I realize that the Minister of Finance might have a certain control over the monetary and financial system in order to regulate the monetary values in the country as much as possible. But what control does he have at the present time?
He has absolutely no control on the issuing of credit. It is undoubtedly for that reason that we see bills come up such as those introduced during this session to set up new chartered banks.
Yet, there are financial institutions such as the "caisses populaires", credit unions and savings banks. But there does not seem to be such a good control over those institutions. That control seems to escape the federal Minister of Finance at the present time.
Therefore, the purpose is probably to strengthen the federal control by the setting up of new chartered banks while remaining within the framework of our present debt system.
During that time, parliament has a good time with federal-provincial conferences, and, for weeks and weeks, people drag on fiscality, taxation, whether at the federal government level, or at the levels of the provincial governments, the municipal councils or the school boards. Whatever the form of taxes levied, direct or indirect, eventually things add up and are reflected in the cost of living. Who suffers the most from this situation? The poor consumer, the humble man, who is indirectly crushed under the burden of taxes, which is being included in the cost of living. The one who suffers most from the situation is the one who is least able to pay.
I wanted to make those remarks because it is already suggested, in certain circles among the public and in the house, that new formulas should be sought to settle the financial and monetary problem, in order to allow, as much as possible, established norms, through standardization in the fields of social security, education, and so forth. But that is always done at the expense of the small fry who, under this system, are always shouldering the heaviest load, so much so that, at a given moment, the majority of the people are in a

state of insecurity for the benefit of the minority. That is what we are opposed to in those fiscal arrangements that settle nothing.
We have been talking about equalization for several years. In 1945, we promised the provinces that they would get back the rights taken away from them at the beginning of the war. We started to hold fiscal conferences and there were meetings between the federal and provincial governments on taxation.
Where do we stand? We are more than ever divided in this country and it will certainly not be fiscal matters which will unite us, but on the contrary, they will divide us even more.
This afternoon the history of a province since confederation was outlined. It would also be useless to outline the history of the ten Canadian provinces because as far as tax matters are concerned, we must face the division and fears of one or the other of the provinces who wishes to grab the better part, while another may pretend that it contributes more than some others.
We are not asking for anything, we do not want to take anything away from the other provinces, but we want the central government to find other ways to solve the problem so that the people can benefit fully from our country's huge resources which are more varied than in any other country in the world. Let us take steps so that the provinces, in their respective fields under the constitution, can exercise their rights as freely as possible. That is what the province of Quebec wants. It has opted out of some joint programs. In the last three or four years, it has withdrawn from several joint programs which would have made it easier for it to develop some natural resources. It gave up those programs and again two days ago we were told that $13 million would be spent on highways, a field which is the exclusive jurisdiction of the provinces, to rebuild highway No. 6 in the Gaspe peninsula.
We no longer wish to participate in joint programs because the latter are, in our opinion, an encroachment upon provincial jurisdiction. Nowadays, they are being abandoned for more direct action. Out of some sort of surplus, millions and millions of dollars are being paid under the form of subsidies in fields where the federal government has no business at all.
Consequently, I feel that instead of dividing the country as he is doing at present with respect to taxation, the Minister of Finance should urgently seek other formulas which would set standards under which each prov-
Federal-Provincial Relations ince would get its full share of taxes paid to the federal government. That should be accomplished not through a limitation of the money supply or credit necessary for Canada's expansion but by encouraging better understanding between the provinces and by providing better living conditions for all Canadians.


Georges-J. Valade: I wish to rise once again this afternoon to discuss Bill No. C-lll, particularly section 1. I must correct the Minister of Finance with regard to the figures he gave the house this afternoon or ask him to prove that the figures which he obtained are related to the amounts paid by the provinces and redistributed to them by the federal government.
Those figures were supplied by a former Conservative M.P. after he had asked a public servant, in this case Mr. K. Taylor, deputy minister of finance, for them on February 4, 1963. I think that the Minister of Finance, who has just returned to his seat, replied that they had been supplied by the hon. member for Lapointe who, himself, had obtained them from the former M.P. for Sherbrooke, in order to ask the minister to prove that they were genuine or accurate.
If those are not correct figures, then let the Minister of Finance give us more detailed information so that we may know exactly what the situation is. In his reply, the Minister of Finance adhered closely to the letter of the deputy minister, Mr. Taylor, and referred to the four restrictions mentioned by the deputy minister.
So, the minister gave the former member for Sherbrooke the figures concerning amounts paid and, because of those four restrictions, he did not invent those figures but he failed to prove that they were correct. As far as we can rely on the restrictions made by the deputy minister himself, we will accept them. He was rather nebulous and evasive, as he usually is because of his centralizing tendencies.
In quoting those figures the hon. member for Lapointe claimed they were his own. They are not the figures of the Ralliement Credit-iste because they would never have been able to sort out this information-but I ask the minister why, if he wants to give us-


Mr. Drouin:: To be honest with the hon. member for Lapointe, who is absent this afternoon, I heard him say that he got those figures from Mr. Allard, former Conservative member and now executive assistant



G570 HOUSE OF

[Stage Direction]
Federal-Provincial Relations to the hon. member for Three Rivers (Mr. Balcer).
Georges-J. Valade: My hon. friend who just interrupted, did not listen to the remarks of the hon. member for Lapointe, because I did follow his speech. Besides, he will see in tomorrow's Hansard that it is quite correct. Anyhow, the interruption is of no consequence at all.
The important thing is to get the minister to tell us which figures are correct. As responsible members of the house, we have the right to know what the score really is and it is the duty of the minister to give us the exact figures.
Indeed, a while ago he assured us that he would give some information in the near future. If we go by the record and by the time it takes to give an answer to questions No. 740 and 741 which were put on the order paper by the hon. member for Three Rivers last April 14, we must not expect them soon. If the minister had replied then to those two questions, the debate would probably have been shortened by as much, because we would have known exactly what sums of money had been collected, directly and indirectly, for conditional and unconditional grants to institutions and individuals. We would also have obtained a comparative table of amounts collected by the federal government in each province and their distribution among all provinces.
If the minister assures us that he will provide us with this information, I hope that it will not take another four months, because he is now four months late. I wonder whether we shall have to wait that long, since we are now considering a bill dealing precisely with this particular aspect of federal-provincial relations.
I wonder why the minister does not provide us with this information; since he has very competent and devoted experts working for him, why does he not give us right now the information we have a right to expect and to require from him?
There, Mr. Chairman, is the crucial problem, the source of all the difficulties which arise at federal-provincial conferences. If the minister would give us such information, the situation might be clearer, simpler, and hon. members could then study the matter thoroughly with figures supplied by the minister himself. Mr. Chairman, it is unfortunate that the minister should have almost questioned a little earlier the figures that the deputy minister of finance, Mr. Taylor, gave
[Mr. Drouin.l

a former M.P. in official but not confidential letters.
Mr. Chairman, I hope that the minister will give us those figures soon. I would like him also to tell us when we will get them. Will it be after the bill is passed, or next year, or in the years to come, just like the promises of the Liberal party which seems to make it a point to delay supplying the information that hon. members request.
Mr. Chairman, as we are only discussing the first clause, I want to mention some statements which, without being wrong, nevertheless show that some people do not quite understand the difference there may be between rights conferred to the provinces under the British North America Act and the rights the provinces enjoy with regard to the internal control of their problems. The rights and responsibilities of the provinces in certain priority fields have but too often been confused when speaking of those rights. There obviously are certain responsibilities in some priority areas, but there are also constitutional responsibilities, and those are the ones which Quebec does not want to give up, nor yield.
When speaking of the province of Quebec, I am also conscious of that argument being more and more used by the provinces, because none of them, in the present context of confederation, is ready to yield its constitutional jurisdiction and responsibilities to the central power, as long as the Canadian constitution remains unchanged.
This is precisely the point I wanted to stress, and I do not think it futile nor vague to discuss it and to say that the provinces, though they enjoy certain rights, have to yield them in favour of prior responsibilities which they have in the educational field.
Somebody stated just now that the proof of education being an increasingly important problem in Canada, was that it had been discussed at the provincial premiers' conference in western Canada. But what the hon. member did not say, was that educational problems were not considered under the auspices of the central government, but solely following the impulse given by the provincial premiers who took action in this respect.
Mr. Chairman, I should like to rectify the impression I might have created at the outset, to the effect that the central government must be a strong government. The central government must be strong in its own spheres but on the other hand, it must not be any stronger than the provincial governments in other spheres than its own. I am referring to

education, health, and some fields reserved to them under the B.N.A. Act.


Auguste Choquette: Name those fields.


Georges-J. Valade: Mr. Chairman, if my hon. friend for Lotbiniere is in the mood to make jokes about the confederation pact

he knows how-and if he does not know the matters reserved to the provinces under the B.N.A. Act, I advise him to go back to school and then run again as a member of parliament when he has learned certain things.
In the present context of things, the provinces have on many occasions made representations to the central government concerning their own problems. Indeed that matter is of such importance that it was the main item on the agenda of federal-provincial fiscal conferences and I note the lack of consideration of the Liberal members and of the government for that matter.
If the Minister of Finance will be honest toward the citizens he represents, if he is conscious of his responsibilities toward parliament, he will give us, before continuing the discussion on this bill, the figures which he says he has. That might clear up some alleged misunderstanding because of figures quoted by other hon. members. If the minister will give us the assurance that we will get those figures in a not too distant future, we are prepared to accept his explanations. But until then, we wish the minister would carry out the necessary researches and studies in order to provide the house and the members of parliament with the information which could remove these misunderstandings that have been raised by the government itself.
Mr. Chairman, may I call it five o'clock? [Text]


Herman Maxwell Batten: Shall clause 1
carry?


Mr. MacLean (Queens):: No, Mr. Chairman. I refrained from speaking during second reading of this bill, but I should like to make a few brief remarks. I do not know whether any other members have not spoken as yet, and I do not intend to hold up this measure, but I should like to devote two or three minutes to a discussion of certain aspects. I will not take up much time of the committee, but perhaps since we have made good progress today, and it being five o'clock, I should wait until another occasion.


Some hon. Members:: It is five o'clock.


Herman Maxwell Batten: It being five o'clock shall I rise and report progress?
Progress reported.
Royal Assent



BUSINESS OF THE HOUSE

Gordon Minto Churchill: Before proceeding with private members' business, would it be convenient if we had the business outlined to us for next week?


Guy Favreau: After the adoption of the present bill concerning fiscal arrangements, we will be resuming the debate on the flag resolution. I am now in a position to announce to the house that as long as parliament continues to sit, the government thinks it would be normal to have one day on estimates on each intervening Friday. If we are still sitting next Friday, therefore, there would be a day on estimates, and I will announce the department on Monday or Tuesday.



THE ROYAL ASSENT

The Acting Speaker (Mr. Batten):: I have the honour to inform the house that I have received the following communication:
Ottawa, August 7, 1964
Sir:
I have the honour to inform you that the Honourable Wilfred Judson, a puisne judge of the Supreme Court of Canada, acting as Deputy of His Excellency the Governor General, will proceed to the Senate chamber on Friday, the 7th August, at 5.45 p.m. for the purpose of giving the royal assent to certain bills.
I have the honour to be, sir,
Your obedient servant,
A. G. Cherrier.
Assistant Secretary to the Governor General.


The Acting Speaker (Mr. Batten):: It being five o'clock, the house will now proceed to the consideration of public bills as listed on today's order paper.



BRITISH NORTH AMERICA ACT


Stanley Howard Knowles: the second reading of Bill No. C-49, to amend the British North America Acts, 1867 to 1960, with respect to the quorum of the House of Commons.
He said: Mr. Speaker, it being already about seven minutes after five, and it having been announced we are going to have royal assent at 5.45, this means that this private members' hour has been somewhat truncated. Nevertheless I would hope there would be sufficient agreement to the principle of this bill that

British North America Act we might be able to deal with it even in this short period of time.
The explanatory note to the bill is a very short one. It reads:
The purpose of this bill is to increase the quorum of the House of Commons from 20 to 50 members.
I am sure, Mr. Speaker, that many members of the house have had the same experience I have had, namely that people outside of the House of Commons are very surprised when they learn what our quorum is. If you ask the average Canadian to guess as to what he thinks is the quorum of the House of Commons where we have 265 members, he will start with 150 or some such large figure. When you tell him it is only 20, he wonders why that quorum is so small. I wondered myself where it originated. I am still searching for the very beginning of this figure, but I have been able to find some interesting information.
When the House of Commons of Canada as we now know it first met in November of 1867, it of course had no rules. It had no Beauchesne. There were certain other people they did not have, and I suppose they were lucky. They had to do something about this matter and accordingly, on the second day of the sitting, November 7, 1867, they did two things. They passed a motion to set up a committee to draft rules for the House of Commons and they passed another motion providing that the rules and regulations of the house of assembly of the late province of Canada should be the rules of this House of Commons until the first committee had made its report.
Well, when you look into the rules of the assembly of the late province of Canada- this is the one that existed between 1841 and 1867-you will find in those rules provision was made for 20 to be the quorum. I remind members, however, that the membership of the house of assembly of the late province of Canada was only 130; 65 from Upper Canada and 65 from Lower Canada. Nevertheless, the figure of 20, which was the quorum for 130 members, was carried over provisionally as the quorum for the House of Commons of 181 members, which was the number we had when we started in 1867. In the meantime, that number of 181 has grown to 265 and our quorum is still the 20 with which we started. It is still the 20 that obtained in 1841 when there were only 130 members in the house of assembly as opposed to our present membership of 265, more than double the membership of 1841.


It is still a matter of curiosity to me as to where the house of assembly, in 1841, got its quorum of 20. I find that that house held its first meeting on June 14, 1841, in the city of Kingston. This was during the period when the parliament of the province of Canada moved about from Kingston, to Montreal, to Quebec city, to Toronto and finally to Ottawa. It met first on June 14, 1841. On June 15 the house passed a motion to the effect that the rules for that house of assembly should be the rules of the old province of Lower Canada. Perhaps some of my hon. friends from Lower Canada, from Quebec, know their history better than I do, but I have not yet been able to find out what the quorum was in Lower Canada and how it ever came to be the quorum. But, Mr. Speaker, in whatever way this figure of 20 was first arrived at, I submit it is completely out of line with the membership of our House of Commons today.


John George Diefenbaker: Would the hon. gentleman permit a question?


Stanley Howard Knowles: Certainly.


John George Diefenbaker: Is it not a fact that the quorum in the British house of commons, which has 650 or 660 members, is 40?


Stanley Howard Knowles: I do not quite see the logic of that at this point, but I might say that the quorum in the house of representatives and in the senate of the United States is a majority of the total membership.


John George Diefenbaker: But they have the roll call there.


Stanley Howard Knowles: Perhaps the right hon. gentleman might let me develop my argument.


John George Diefenbaker: I am sorry.


Stanley Howard Knowles: We will probably hear from the right hon. gentleman later.
I suggest what we should be concerned about is our own situation, our own feelings about it and what our people think about it. We are all aware of the fact that when people come into the gallery of the house, or hear about our activities either through the press or radio, they are shocked at our attendance which sometimes gets down to 21 or 20, and yet we still carry on.
I also know it is the common thing for us to defend our actions and to defend our public image, but it would be more sensible for us to pay attention to the criticisms which are made of the House of Commons, and if one of those criticisms is that we are not in attendance here as much as we ought to be,

then I think we ought to do something about it. I do not contend that to change the quorum rule will provide lull attendance, but if we did change the quorum rule it would force better attendance because we would not be able to carry on unless we had the number present that is provided for in the rule.
I suggest that in order to make the rule effective and one that would last, we should write it into the constitution, which is where we find it at the present time. It is there is section 48 of the British North America Act, that the presence of at least 20 members is required. So this bill now before us, No. C-49, is proposing an amendment to the British North America Act, changing one word in that section-"twenty" to "fifty"-so that section 48 would then read:
The presence of at least fifty members of the House of Commons shall be necessary to constitute a meeting of the house for the exercise of its powers; and for that purpose the Speaker shall be reckoned as a member.
As I say, this bill if adopted would help to improve our image in the eyes of the Canadian people, and I think that is something we ought to do. I have already said this, but I will say it again, that I do not think we should spend so much time defending our performance as some members do. I think we should respond to some of these criticisms and try to improve our performance, and one of the things we could do is improve our attendance in the House of Commons.
There are a great many aspects and angles to this question, but because of the limited time I shall shorten my remarks and deal with just one main phase of it. One of the main defences that is put up by members of the house for our small attendance-and I should say it is not always small; sometimes the house is very full, but a great deal of the time it gets rather low-is that members have work to do other than their work in the chamber. They have work to do in their offices; and then there are the committees. Of course this is the most abused defence, the fact that there are committees and that members are in those committees instead of being present in the house. Personally I think this excuse is overworked. I do not believe there are any committees meeting right now, yet our attendance is not exactly the 265 which is the membership of the house. Maybe because I have introduced this bill it is a little better than it is sometimes at this hour.
Although this defence about committees is used, as I say I do not think it really stands up. But even so this leads me to just a word 20220-416-1
British North America Act or two I would like to say about the relation between committees and sittings of the house itself. A few references were made earlier to a very interesting experience some of us had last week. I refer to those of us who had the privilege of attending the annual Couchi-ching conference, and I can tell hon. members that the Canadian institute on public affairs will in due course produce a book reporting those proceedings in full. Hon. members will be able to distil for themselves the wisdom that was produced last week. One of the things which was discussed rather fully was the need of making better use of committees in our House of Commons.
I took part in some of these discussions and I made one suggestion at Couchiching last week to which I would like to allude, because I think it has a bearing on this question of our attendance in the house. I suggested that in order to make better use of our committees, in order to bring them to the centre of the stage, to give greater importance to their work, we should reorganize the work of parliament on an annual basis, and I proposed that the session of parliament in a year should be divided into three sections. I suggested that each of these sections might be for about two months. I proposed further that in between these meeetings of the House of Commons as a whole there should be a period of a month here and a month there, when the house does not sit but when the committees do.
I suggested, of course, that attendance in Ottawa when the committees are in session should be just as mandatory upon us, from the standpoint of our pay, as is our attendance in the house. My whole contention was that if we gave the committees the position of being at the centre of the stage, being given the undivided attention of hon. members, we could expect them to do better work.
On some more appropriate occasion I would like to develop that line a little more. Last week was not the first time I suggested it, and I am not the first one to propose it. I wrote an article on this for Queen's Quarterly a decade ago, and it was suggested long before that. I suggest it now for this reason, that if we organize our work in that way, spending part of the year in committees without the house sitting, and spending part of the year back in our constituencies, more than we are now doing, and thus getting the pulse of our people, then the sessions of parliament themselves, say, two months early in the year, two months in the middle of the year and two months toward the end of the year, would



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[Stage Direction]
British North America Act command more attendance on our part, and they would be free from meetings of committees that would collide with meetings of parliament. In that way we could expect better attendance and do better work.
These proposals are all tied together and I think it is legitimate for me to mention this one on a simple bill like this, because I do not propose to reform completely the image of parliament by making just one change, namely a change in the quorum. But if this is linked with other kinds of improvements, with planning and organization of the whole work of our parliament, we could do a much better job.
The people of Canada believe that it is our duty to be here, and they have every right to be shocked that our quorum is only 20. The Leader of the Opposition may point to the experience in other countries. We all know the quorum in Westminster is only 40, and they do not pay any great attention to it. Many of us have sat in the gallery at Westminster when attendance was far below 40. In Washington the quorum is the majority of the membership, and they do not pay too much attention to it there either, unless somebody calls attention to the fact that there is not a quorum, and the bells are rung, the representatives or senators are called in, and a roll call made. I do not think very much of that system, any more than does the right hon. gentleman.
In any case, I do not think we can solve our problem by looking at other countries. We have to look at our own situation and I think we are all grateful that the parliamentary system we have is a good one. However I believe it would be much better if we upgraded our committees by some such method as I have suggested, and I believe if we did that it would reduce the number of months we would require to sit in the house, it would produce better attendance on the part of all hon. members, and to that end I put forward this proposal to increase the quorum from 20, which it has been since 1367, even since 1841, to the more reasonable figure of 50.
Mr. J. A. Byrne (Parliamentary Secretary to Minister of Labour):: It is customary, Mr. Speaker, for me to joust with the hon. member from Winnipeg North Centre (Mr. Knowles) on legislation and other matters affecting labour. He of course has studied the rules and forms of parliament to a greater extent than I have; he has had more experience in these matters. But I do feel on equal terms with him when we discuss questions having to do with labour and the


labour movement. I believe even my years give me some advantage in that respect.


Stanley Howard Knowles: Maybe this is part of the parliamentarians' labour code.


James Allen (Jim) Byrne: However, I do have some right, I believe, to take part in this debate this afternoon by reason of the many years I have spent in parliament. I have watched its activities for many years; indeed, I believe their number would exceed those of most members of the house. And I have come to the conclusion that there is nothing really wrong with the House of Commons or with its rules. It is, really, the people who make up the House of Commons. It is they who are causing the image of parliament to fail, as the hon. member suggested-if it is failing. It is not because of the rules, but rather because of the people who are here and their disinclination to follow the rules -their disinclination to co-operate with Mr. Speaker so that the house may carry on as it was originally designed to do.
However, I am sure it will be the disposition of those of us who sit on this side of the house to have this matter, which is indeed an important one, brought before the special committee which is presently reviewing the rules of the house. It should be pointed out that in 1867 when the quorum was established there were 181 members, as the hon. member has reminded us. The quorum was set at that time at 20 members. If we were to increase the quorum now to 50 members we would have increased it by 150 per cent, whereas the membership has increased by only 32 per cent.


Stanley Howard Knowles: Would the hon. member permit a question? Did he not hear me point out that the quorum of 20 was actually established in 1841 when the total membership was only 130?


James Allen (Jim) Byrne: I think I heard the hon. member correctly. But he went further and said it was established by virtue of debating rules which were previously in effect having regard to the membership of the two provinces, which gave a membership of about 120 members. So I was not so far out in the comparison I made.
The hon. member mentioned the committee work and he indicated that the committees did not take up a large part of the time of the members. For this reason he thought the quorum could well stand at 50. I am sure that in 1867 there was much less committee

British North America Act
work, since the affairs of the federal government were less complex and there were fewer subjects for discussion affecting the well-being of Canadians generally. As I have said, I believe it is not the rules as such but our disinclination to follow the rules which causes members to be out of the house. There is little opportunity for them to really take an active part in debates. If members were required to follow the rules strictly, particularly the rule with regard to the reading of speeches; if members could participate in the crossfire of debate such as we have at the opening of the sitting during the question period, there would be an inclination among many members to work longer hours at night and during the lunch hour break to get their office work done so that they could be in the house listening to and taking part in the debates.
However, as hon. members stand up and carefully read long, prepared speeches which might as well, as indeed was suggested the other day, be placed on the record without ever being read, there is an inclination among members generally to go to their offices and do work which is of a constitutional nature having to do with their constituencies. I am sure most members, at least those who did not learn to read under the "See and Do" method, or the "Dick and Jane" method of reading, can read much faster than most people can speak; they can run through Hansard very rapidly and are able to follow in this way what has taken place in this house. So their time is really better occupied in looking after their constituencies, and, of course in committee affairs, than by actually sitting here and listening to speeches being read.
I think that in addition to taking effective steps to discourage the reading of speeches in the house some limitation should be placed on the reading of articles and editorials which appear in newspapers. Of course it is always good publicity for newspapers and editors to have their editorials and other articles read in this chamber. However members of parliament as a general rule read the newspapers voraciously. They are always looking for accounts of what they have said, or what someone else has said, so in all probability they are familiar with what another hon. member proposes to read before he even begins. In addition, of course, it is contrary to the rules to read at length from editorials, bringing before the house the thoughts and opinions of those who were never elected
to represent the people of Canada in this chamber.


Herbert Wilfred Herridge: Would the hon. member permit a question.


James Allen (Jim) Byrne: Yes.


Herbert Wilfred Herridge: Does the hon. member not know that the Prime Minister (Mr. Pearson) frequently reads from editorials in this house and has done so in this session to justify his course of action?


James Allen (Jim) Byrne: Yes, I am well aware of that fact. If the hon. member was as familiar with the rules as his confrere, the hon. member for Winnipeg North Centre (Mr. Knowles), I think he would realize it is the accepted practice that the Prime Minister and other members of the cabinet may read prepared statements in order that there will be no misunderstanding as to the policy of the government.


Herbert Wilfred Herridge: I was referring to editorials.


James Allen (Jim) Byrne: It is not so important, of course, in the case of a backbencher like myself making statements that may not be related to government policy. But when policy statements are being made by the Prime Minister or other ministers they are reporting on what is actually taking place in their departments, quoting figures and so on. This practice, of course is quite appropriate. But that does not lead toward bringing about participation in a similar way by members on the other side of the house. I have often sat here, as I have done for quite a number of years, when ministers have been making important statements of policy, and the benches on the other side of the house have begun to empty very rapidly indeed.


John George Diefenbaker: What about those sitting behind the ministers? Do they listen to the statements?


James Allen (Jim) Byrne: The Leader of the Opposition (Mr. Diefenbaker) has posed the question whether backbenchers behind the ministers listen to statements. I have found that they normally do. They have a very high regard for the frontbenchers. They sit here and listen carefully to what is being said, and I believe even read Hansard the next day because they relish so much what they have heard.


Stanley Howard Knowles: I wonder whether the hon. member would permit another question. Since he is having so much to say about observing the rules we now have, what about the rule of relevancy? The bill before us has

British North America Act to do with the quorum, but the hon. member is wandering all over the lot.


Gordon Minto Churchill: Talk about the Lake Couchi-ching conference.


James Allen (Jim) Byrne: I have already referred to the rule of relevancy, but if the hon. member will recall the speech he has just made he will remember that he brought up this particular question himself. He said there was a great need for improvement in the rules and certainly observance of the rules. I am saying it is not so much a matter of improving the rules but of observing the existing rules. For instance, a suggestion emanated from that committee for an improvement of standing order 39. The suggestion originated with the subcommittee of which the hon. member is chairman. The new rule provides for lengthening the hours of sitting by half an hour each evening. I find it strange that this should come from the hon. member who, like myself, has always advocated shorter hours.
The net result of this order is to lengthen the sittings. Hon. members arrive at their offices in the morning at eight o'clock, eight thirty or nine o'clock. In the past they had to be here until ten o'clock in the evening, but now they are asked to be here until ten thirty. Certainly the net result has not been to shorten the question period. It has simply given a few extroverts another half hour in Which to get on the pages of Hansard and into the headlines.
The hon. member has also neglected of course to think of the House of Commons staff when lengthening the sittings by half an hour. The queen's printer is also affected because his staff has to prepare Hansard for the next day. The idea behind the rule may have been good but it is difficult to find that this rule has really been useful.
I took some notes while the hon. member was speaking. He did not introduce anything new or anything that will, as I see it, improve the situation in the house. We can talk all we like about the house sitting for two weeks and committees sitting for another two weeks, but when the chips are down members are going to come back into the house and again have their say in order to get it into Hansard and into the headlines. The suggestion that committees sit half the time and the house sit half the time just means we would have to have 18 months sitting in the year rather than 12 months.


Stanley Howard Knowles: The hon. member did not listen very well.


John George Diefenbaker: Would the hon. member please tell us what he meant by "when the chips are down" because some of us understand that in a different sense?


James Allen (Jim) Byrne: Not having the experience and the background of the Leader of the Opposition, and having come from the mines where language is used with somewhat less fluency, I would say that in this case "when the chips are down" means when members are up-


John George Diefenbaker: Very good.


James Allen (Jim) Byrne: -and want to hear their own voices and get themselves on the record. The hon. member has suggested that more committees should be sitting and more committee work should be done. I hesitate to mention this, but I believe it was the whip of the official opposition who stated in the house the other day-I certainly did not agree with him-that in this session it had been very difficult indeed to get quorums in order that committees might sit. So the committees must already be overworked.
As I said, I am sure it will be the disposition of members on this side of the house to have this matter referred to a committee, but I hope the hon. member will come up with something better than he did in the amendment to standing order 39 (5).


Bert Raymond Leboe: Mr. Speaker, for a few moments I should like to speak on the bill that has been brought before us. I am not in favour of the bill at all for a number of reasons, some of which have already been put forward by the mover of the bill in an attempt to head off, as it were, arguments that might be put forward. However, in my view the arguments that he suggested would come up have not been invalidated, because they are justified.
The hon. member mentioned that in 1841 the quorum of the house was 20 when the total membership was 130 and suggested that on a percentage basis the quorum should therefore be increased at this time. I do not think this is a valid argument at aU. One of the things we have to face, which was mentioned by the Leader of the Opposition, is that in Great Britain there is a quorum of 40 with a membership of over 600. I am sure that the land area represented by those 600 members could be put entirely within my constituency, let alone within a broad country like Canada where members of parliament have to travel 3,000 miles or more to Ottawa, the seat of parliament.

I do not agree that the work of members of parliament is all in the House of Commons or all in committees. I think one not only has an obligation to his own constituency but should travel throughout the country to find out at first hand exactly what people are thinking and saying and what their problems are, so that in our position as members we will have a background of information to call upon in adjudicating on those matters that are presented to us.
Further than that, if we increase to 50 the number of members to constitute a quorum we must remember there are those who are the faithful sitters and those who are unfaithful in regard to their attendance in the house. Therefore those who are available will be penalized that much more and their work will lag because of the attitude they have towards this chamber. That will again cause unnecessary hardship.
With regard to the argument about committees and the other work a member of parliament has, one of the members from the hon. member's own party this afternoon had to get an additional secretary to do a lot of the extra work which he has as a member of parliament. These arguments are valid and we cannot confine our work. As a matter of fact, one of the reasons we have a Hansard, which I sincerely believe is part of this institution, is so that members who cannot sit each day in the house can refer to Hansard and get the gleanings of what has been said in order that they can judge the better what is to be their position with regard to any issue.
The suggestion that committees sit for a certain period and that then parliament would sit would require close scrutiny. My observations in this House of Commons, although I have not been here nearly as long as the hon. member, and I am sure I have not been on my feet as often as he, lead me to think that we would have to look very carefully into the proposition of dividing parliament into sections. I think we as members of parliament must work closely with the committees of the house because their activities are interrelated with those of the house. By having a committee sit at the same time as the house we have the advantage of being up to date on matters before parliament.
I might mention that we have been waiting for some time now for a report from the standing committee on privileges and elections to come down, and I have heard grumblings and rumblings about the fact that this report has not yet been brought down. If a
British North America Act standing committee deals with a certain matter-let us take as an example the Columbia river treaty-and the house does not sit for two or three months after the matter has been disposed of by the committee, I do not think the matter should be put into a box or a pigeonhole, because the business of the House of Commons and its committees, is as I say, very much interrelated.
With regard to the question of setting up an agenda for our committees and how the committees will operate, I think there is a snag in this regard. I do not think we are prepared to meet our obligations in connection with committees without doing a great deal of work. Will this question of the agenda be purely a matter for the government?


Stanley Howard Knowles: It will be by reference from the house.


Bert Raymond Leboe: So the hon. member says. But we are in a changing world, and at times emergencies arise and the house should be reconvened if it is not in session. Personally, I do not accept the proposition, although my mind is not closed at all and the hon. member may yet convince me.
But getting back to the question of the quorum and the argument about what the people in the country think about the number of members sitting at any time in the House of Commons, if the quorum were raised to 50 it would not change people's attitudes. There are those in the gallery at the moment who are listening to one speaker speaking his mind. There are so many speakers in an afternoon, and that is parliament, regardless of whether 25 members or 50 are in the house. I do not think it will make any difference to the impression which the public has of parliament.
I think we must look at the problem much more closely, in spite of what I have heard this afternoon. Frankly, at the moment I am not in favour of increasing the quorum to 50. There may be an argument for bringing it up to 25 or even 30, but certainly not 50. As I say, long distances are involved. Members are called upon to travel across Canada in order to carry on in full their parliamentary duties; and let no one make any mistake that that is not part of the duties of a member of parliament serving his constituency. Those members whose constituencies are in close proximity to this house in Ottawa may find it convenient to slip off on a Friday and come back late Monday afternoon or Tuesday morning, and possibly this is the gripe which the hon. member has in
6578	HOUSE OF
British North America Act mind; but the faithful attenders in the house will be here and they are the ones who are here steadily. Those people who are in the habit of taking off on week ends will still take off on week ends, regardless, and the situation will not improve at all.


Hon. E. J. Benson (Minisier of National Revenue):: Mr. Speaker, we on this side of the house believe that the question of the number of members necessary to form a quorum in the house is worthy of further consideration. Therefore I move, seconded by the Minister of National Defence (Mr. Hellyer):
That Bill No. C-49 be not now read a second time but that the subject matter thereof be referred to the special committee on procedure and organization.


Gordon Minto Churchill: Mr. Speaker, I move the adjournment of the debate.


Stanley Howard Knowles: Closure.



THE ROYAL ASSENT

[Stage Direction]
A message was delivered by Major C. R. Lamoureux, Gentleman Usher of the Black Rod, as follows:
Mr. Speaker, the Honourable the Deputy Governor General desires the immediate attendance of this honourable house in the chamber of the honourable the Senate.
Accordingly, Mr. Speaker with the house went up to the Senate chamber.
And being returned:
Mr. Speaker informed the house that the Deputy Governor General had been pleased to give, in Her Majesty's name, the royal assent to the following bill:
An act for granting to Her Majesty certain sums of money for the public service for the financial year ending the 31st March, 1965.
At six o'clock the house adjourned, without question put, pursuant to standing order.
[Stage Direction]
Monday, August 10, 1964