1964-08-28

Hon. Walter L. Gordon (Minister of Finance):: I wish to table copies in English and in French of a report by the tariff board on reference 131, which covers oilseeds, vegetable oils and related products. I am tabling also a transcript of the evidence presented at the public hearings held by the board.
This report contains recommendations relating to oilseeds, vegetable oils, oilcake and oilcake meal. I assure hon. members that these recommendations will be carefully considered by the government. May I urge any interested parties who wish to comment on this report to do so promptly.



EXTERNAL AFFAIRS


[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Leader of the Opposition):: I have two questions to ask the Secretary of State for External Affairs. First, is he in a position to advise whether it is generally expected that the United Nations force in Cyprus will be withdrawn, a conclusion indicated by some words and expressions used yesterday by the President of the United States?
The second question has to do with Canada's position within NATO. May 1 ask the minister whether in view of the strong feelings of Canadians of Greek origin the government of Canada, as a NATO member, has protested to the Turkish government regarding its treatment of the Patriarch Athenagoras and the expatriation of Greek citizens in Turkey? Protests have come from our good citizens of Greek origin in this country and it is for that reason I ask this question, as well as to bring about an assurance that there will be no exacerbation of the relations between two NATO countries
by reason of Charges such as those which have been made by Canadian citizens.


Hon. Paul Martin (Secretary of State for External Affairs):: Mr. Speaker, I am not aware of the statement made by the President of the United States in connection with the Cyprus force. Nothing has come over my desk this morning in this connection. I indicated yesterday that it is not the intention of Canada to withdraw its contingent from the United Nations force. That is a decision to be made following action by the security council on the recommendation, among other factors, of the secretary general. Any remarks attributed to the secretary general that refer to a possible withdrawal, arise only because of his desire, shared by Canada, that the necessary funds be made available to enable the force to carry on what continues to be, in the language of the head of the government of Cyprus, among others, a very needed presence in the island.
With regard to the position of the Patriarch and the representations made by what my right hon. friend calls good Canadians citizens of Greek descent-and I agree with this characterization-we have impressed on the government of Turkey the desirability of not taking any step with regard to the Patriarch and other Greek citizens in Ankara that would in any way exacerbate the situation. I fully agree with my right hon. friend that it is most desirable that no action should be undertaken that in any way complicates the position of our two NATO partners. It is for this reason that from time to time I have been careful, in response to questions, not to say anything that would in any way affect our association both with Greece and with Turkey.


John George Diefenbaker: Might I ask a supplementary question, Mr. Speaker. Has the government of Canada specifically informed Turkey that in the opinion of the Canadian government and people anything in the nature of persecution against the Patriarch and the Greek citizens in Turkey should be discontinued, and should certainly receive the disapprobation of the Turkish government?


Paul Joseph James Martin: Mr. Speaker, we have made the strongest representations to

Inquiries of the Ministry Turkey, as in another context we have made representations to the government of Greece, that they should not undertake any act that would excite the people of either country in respect of a situation so sensitive. I discussed this matter with the foreign minister of Turkey on two different occasions. I must say that in both instances the Turkish foreign minister denied the allegations which I put before him pursuant to representations I had received from a number of quarters, including certain Canadian citizens of Greek origin.


Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I have a supplementary question for the Secretary of State for External Affairs. In view of repeated reports late last evening and this morning over the Canadian Broadcasting Corporation which suggest that Archbishop Makarios is going to continue to object to the carrying out of the terms of the treaty among Cyprus, Greece, Turkey and the United Kingdom concerning the replacement of Turkish troops over the week end, can the minister give the house any information as to whether the attitude of the archbishop is likely to change or whether the Canadian government has made representations to Greece and Turkey in this regard? Could the minister also tell us whether he has any information as to what the Greek government might do in the event that Turkey commences to replace its troops presently on the island with other troops, and what would be likely to occur if the archbishop attempted to resist this with armed force? Would Greece come to the archbishop's assistance or not?


Paul Joseph James Martin: Mr. Speaker, this detailed and involved question has to do, I suppose, with the proposed rotation of part of the Turkish contingent in Cyprus. The contingent there is stationed in accordance with the treaty among Greece, Turkey and Cyprus which was signed in August, 1960 and which provided that both Greece and Turkey would have the right to station on the island contingents numbering 950 and 650 respectively. The reported action of the head of the government of Cyprus is one which has been noted by the Canadian government. The secretary general has advised us that this is one of the matters he hopes to discuss in Geneva when he arrives there later today.


Mr.   Nesbill@: Just one thing. I realize I put a number of details into my question, but perhaps the minister could tell us whether he has any information as to what


the Greek government is likely to do should the Turks insist on carrying out that term of the treaty and intend to rotate their troops this week end, and should the head of the government of Cyprus attempt to resist that with armed force.


Mr.   Marlin@Essex East: The hon. gentleman does not, of course, expect me to be able to give an answer to that question. I cannot say what the Greek government will do, but I can say that in my judgment both, the Greek and Turkish governments have within the recent period been displaying a commendable measure of restraint. I would sincerely hope that the position taken by the government of Prime Minister Papandreou, which represents a constructive attitude, will be maintained. I trust that both of these members of the NATO alliance will continue to avoid further complication with regard to the situation in Cyprus.


AGREEMENT RESPECTING EXCHANGE OF ATOMIC INFORMATION
[Stage Direction]
On the orders of the day:
Hon. Gordon Churchill (Winnipeg South Centre):: Mr. Speaker, I would like to ask the Secretary of State for External Affairs whether he is now prepared to answer the question I put yesterday. He had unfortunately left the house, but I am sure he would want to clear up the situation and correct the misleading information which he gave to the house on July 8 and July 16 with regard to the exchange of atomic information.


Hon. Paul  Marlin@Secretary of Slate for External Affairs: Mr. Speaker, I just learned after coming into the house, when yesterday's Hansard was sent to me by one of my officials, of the question which my hon. friend asked yesterday. I am sorry I had not seen it previously, because if I had I would have dealt with it earlier this morning.
Of course I do not agree with what my hon. friend has said, that there was any inaccurate information. What I said was that there was an exchange of atomic information for the use of members-that is, members of the NATO alliance-for scientific purposes.
Yesterday my hon. friend referred to a message of the President of the United States. I shall table this message, and I think my hon. friend will see that while my statement in this house was not detailed, it was certainly not an inaccurate statement.


Gordon Minto Churchill: May I direct the minister's attention to the answer he gave on July 16,

when I asked him this question with regard to the document tabled:
Is it not true that article III deals with the development of defence plans, the training of personnel and the employment of methods of defence against atomic weapons, as well as matters affecting the delivery systems of atomic weapons?
The minister said in reply:
-it has nothing to do with nuclear weapons as such-
-and then went on to say it was just with regard to the exchange of atomic information for the use of members for scientific purposes. I suggest to the minister that this is not the information which the President of the United States relayed to congress, in which he said:
This expanded area of information is needed to enable our allies to make effective use of nuclear delivery systems.. .This new agreement thus represents a logical and useful step in our continuing and varied efforts to ensure wider allied participation in NATO nuclear defence.
The question I asked on July 8 and then on July 16 was, what are the implications for Canada in this, and the minister was not clear in his answer. He is under a cloud, and I want him to clear himself.


Paul Joseph James Martin: My hon. friend says I am under a cloud. He should know, because my hon. friend is continually under a cloud. I may say to him in the best of humour that this morning he is clearly in a fog. But I shall be glad to give the hon. gentleman information on this matter.


Gordon Minto Churchill: The minister is, of course, very cheerful. I realize that. But the fog has thickened. I asked him to give us a clear and decisive statement with regard to this matter. Has this exchange of information to do with the advancement or fuller employment of nuclear weapons rather than being just an exchange of atomic information for peaceful purposes?


Mr.   Marlin@Essex East: May I point out that I was only aware of the hon. gentleman's intervention a few minutes ago. I propose later to make a statement which I think will satisfy him. He says the fog is thicker. He will not mind my saying it is not only the fog that is thickening.


CANADIAN PARTICIPATION IN CONFERENCE ON DESALINATION OF SEA WATER
[Stage Direction]
On the orders of the day:
Mr. William Dean Howe (Hamilton South):: Mr. Speaker, I should like to address a very brief question to the Secretary of State for External Affairs. Has the government accepted an invitation from the United States government to participate in a conference on
Inquiries of the Ministry the desalination of sea water, to be held in October of 1965?


Paul Joseph James Martin: Mr. Speaker, I am at sea
on this subject. I will have to get some information.


HOUSING
[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, I have a question for the Postmaster General in his capacity as minister responsible for housing, and I also have a question for the Prime Minister. In the absence of the Postmaster General perhaps I can put both questions to the Prime Minister.
In view of the alarming revelations contained in the report given to the government yesterday by the Ontario association of housing authorities regarding the housing conditions of hundreds of thousands of younger and elderly families, will the government give consideration to the imaginative program set out in this report?
My other question also arises out of the report and it is the one which I have for the Prime Minister. Will the Prime Minister consider the suggestion that there be appointed a full time minister of urban affairs and housing? Perhaps the Postmaster General could serve well in that post and somebody else could be postmaster general.


Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, so far as the first part of the question is concerned, I have had that report brought to my attention and it is receiving the careful examination of the government. Any steps that might be required will be taken, but I do not propose to make any announcement until we have had a chance to formulate them.
With regard to the second part of the question, concerning the establishment of a ministry of urban development, I do not think I can say anything about that at this time, Mr. Speaker.


COMBINES
[Stage Direction]
On the orders of the day:
Mr. Gerard Laprise (Chapleau):: Mr. Speaker, I wish to direct a question to the
7386	HOUSE OF
Inquiries of the Ministry Minister of Justice. Last Wednesday I asked him if he intended to do something about the brief submitted to him recently by the national automobile products dealers association. Can he give me an answer now?


Hon. Guy Favreau (Minister of Justice):: Mr. Speaker, I will answer that question at the next sitting of the house.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Hon. Paul Martineau (Poniiac-Temisca-mingue):: Mr. Speaker, I wish to direct a question to the Minister of Justice. Does he intend to propose amendments to the Bankruptcy Act to prevent fraudulent bankruptcies from increasing?


Guy Favreau: Mr. Speaker, I said to the house that the Bankruptcy Act was now under consideration. A first bill will soon be introduced in the house and more general legislation will be submitted first to experts and then to parliament.


Paul Raymond Martineau: Mr. Speaker, a supplementary question.
Does the minister propose to modify the administration of the Bankruptcy Act in order to permit the establishment of an anti-fraud squad, as suggested yesterday by Mr. Donald Jupp, president of the Canadian building association?


Guy Favreau: Mr. Speaker, the necessary measures to be taken under the act in order to prevent more adequately fraud in bankruptcies are a problem which, among others, is now under consideration and to which I am personally giving very serious thought.



HAL BANKS


[Stage Direction]
On the orders of the day:
Mr. Real Caouelle (Villeneuve):: Mr. Speaker, I wish to direct a question to the Minister of Justice. Can he tell the house whether he has received since yesterday any information about the Canadians' friend, Mr. Hal Banks who cannot be found?


Guy Favreau: No, Mr. Speaker.


rTprtl



IMMIGRATION


[Stage Direction]
On the orders of the day:
Hon. Rene Tremblay (Minister of Citizenship and Immigration):: Mr. Speaker, on
Tuesday last the right hon. Leader of the Opposition and the hon. member for Melville inquired about two gentlemen who were purported to have come to Canada to take part in the newpaper labour dispute in Toronto, possibly as professional strike directors.
I have made inquiries and have ascertained that the two men in question, George Hogan and Robert Ameln, are official union negotiators and have come to Canada at the request of the Canadian local union for the purpose of assisting the union in its negotiations with the newspapers. As such, these men were legally and properly admitted in accordance with section 7 (1) (h) which provides for the entry of people engaged in legitimate professions, trades or occupations for the temporary exercise of their respective callings. As long as these two men remain in the category in which they were admitted there is no action the Department of Citizenship and Immigration could take in the matter.
Regarding the inquiry by the Leader of the Opposition as to what direction was given to the three Toronto newspapers in respect of certain persons from the United States employed by the three newspapers in question, the newspapers were directed to arrange for the immediate departure of all ten persons involved, and all these persons left Canada by July 27. No suggestion was made to the newspapers that these persons were to be given the option of applying for landed immigrant status.



INDUCEMENTS TO ENCOURAGE ENTRANCE OF DOCTORS, NURSES, ETC.

[Stage Direction]
On the orders of the day:
Mr. P. B. Rynard (Simcoe East):: Mr. Speaker, I should like to address a question to the Minister of Citizenship and Immigration. Would he consider offering incentives or other inducements to encourage doctors, nurses and laboratory technicians to come to this country to relieve the very severe shortage that has developed?


René Tremblay: Mr. Speaker, I feel that this is an excellent suggestion, and I

will discuss with the officials of my department what arrangements could be taken to facilitate the admittance of these specialists in Canada.



INQUIRY AS TO OFFICES IN FRANCE AND ITALY

[Stage Direction]
On the orders of the day:
Mr. Marcel Lessard (Lake St. John):: Mr. Speaker, I should like to put a question to the Minister of Citizenship and Immigration. Since the minister has announced that he is considering the reorganization and the expansion of his department, could he tell us how many new immigration offices he intends to open up in France and Italy and whether he proposes to do so in the near future?


René Tremblay: Mr. Speaker, we are revising our immigration program in Europe and reorganization will include an increase in the staff of our regular offices in Paris and in Rome. We are also considering the opening of new offices to improve the service given to European immigrants.


Marcel Lessard: A supplementary question, Mr. Speaker. The minister has evaded the issue and has not answered my question.
Could he tell us why his department has seven immigration offices in England and five in Germany but only one in France and in Italy? Does he intend to redress such a situation so as to bring in a more equal proportion of the various European ethnical groups?


René Tremblay: Yes, Mr. Speaker.



AGRICULTURE


[Stage Direction]
On the orders of the day:
Mr. Clement Vincent (Nicolel-Yamaska):: Mr. Speaker, I have a question for the Minister of Agriculture, but in his absence and in view of the fact that this is very important to a large group of people in this country, I should like to direct it to the Prime Minister. In view of the remarks of the Minister of Agriculture on August 20, and especially in view of the strong protests of farmers and dairy organizations in Canada, will the Prime Minister ask the Minister of Agriculture to call a special emergency
Inquiries of the Ministry meeting of dairy farmers and organizations to consider immediate action before the house adjourns?


Lester Bowles Pearson: Mr. Speaker, I will be glad to discuss this matter with the minister immediately.



PROPOSED MARCH BY FARMERS ON OTTAWA AND QUEBEC

[Stage Direction]
On the orders of the day:
Mr. Robert Beaule (Quebec East):: Mr. Speaker, since the Minister of Agriculture (Mr. Hays) is away, I wish to direct a question to the Prime Minister. Is he aware of the fact that the Quebec farmers intend to march on Ottawa as well as on Quebec and if so, will he take the necessary measures to meet these farmers?


Lester Bowles Pearson: Mr. Speaker, I am not myself aware of this particular march on Ottawa.



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Mr. H. Russell MacEwan (Pictou):: Mr. Speaker, I have a question for the Minister of National Defence. I should like to ask the minister if it is proposed that the first battalion of the Canadian Guards will replace the Van Doos in Cyprus later this month; also whether he is considering the cancellation next year of the changing of the guard ceremony by the second battalion?


Hon. Paul Hellyer (Minister of National Defence):: Mr. Speaker, the first battalion is the stand-by battalion for the United Nations. Consequently if rotation does take place it will replace the first battalion of the Royal 22nd regiment. An advance party will be going forward on September 7 so they will be familiar with the situation there in case rotation is authorized.
In respect of the changing of the guard ceremony by the second battalion on parliament hill, no thought has been given to this particular problem. I had not really had it drawn to my attention very forcefully until I read about it in the newspapers. There are some problems connected with training that are self evident, but it is also recognized that this is one of Canada's very important tourist attractions and that it is a source of

Inquiries of the Ministry pride to both Canadians and visitors. I can assure my hon. friend that all these factors will be very carefully weighed before any decision is made as to any change.


William Dean Howe: A supplementary question, Mr. Speaker. Will the government consider the employment and training of university students to perform this ceremony in future years, as is done at Fort Henry in Kingston?


Paul Theodore Hellyer: Mr. Speaker, I suppose there is no reason why we should not consider that at the same time we are thinking about the over-all problem. It would, however, involve some additional expenditure, and this would have to be discussed very carefully with the other members of the government who are responsible for the national budget.


Gordon Minto Churchill: Mr. Speaker, the minister used the phrase "if rotation takes place" with regard to the force in Cyprus. Is he contemplating withdrawal of the force, or is rotation not to take place if the force is continued?


Paul Theodore Hellyer: No, Mr. Speaker, the Secretary of State for External Affairs has made that clear; but there is in the meantime the extension of the mandate which will take place on September 27, I presume, and if that occurs rotation will proceed as planned.


Mr. Speaker:: The hon. member for Edmonton East.


Mr. Skoreyko:: My question has been
answered, Mr. Speaker.


Paul Raymond Martineau: Mr. Speaker, I have a short question for the Minister of National Defence, to clarify an answer he gave a little while ago to the hon. member for Pictou. It is understood that the minister's executive assistant has announced that the ceremony of the changing of the guard will be continued throughout 1965. Will the minister therefore confirm this?


Paul Theodore Hellyer: Mr. Speaker, I am sure he has made no such statement. The matter will be reviewed next spring in the normal course, and a decision will be announced at that time.


Paul Raymond Martineau: You had better check on what he said.


Mr. Speaker:: Orders of the day.


William Skoreyko: Mr. Speaker-


Mr. Speaker:: Order. I would like to call the attention of all hon. members to the fact that the question period started today at 10.41.


Gordon Minto Churchill: On a point of order, Mr. Speaker, I do not quite see the relevance of that statement. The question period is not limited except on Wednesdays.


William Skoreyko: Mr. Speaker, the Minister of National Defence answered the last question by saying that no change is being made, as far as he is concerned-


Some hon. Members:: Question.


William Skoreyko: -with respect to the changing of the guard. I want to know from the Minister of National Defence whether he is going to pay any attention to the ridiculous editorial that appeared in the Citizen yesterday under the name of Christopher Young. Is this going to have any influence on the minister's thinking?


An hon. Member:: Who is Christopher
Young?
Another hon. Member: A nephew of the Prime Minister.


Paul Theodore Hellyer: I have not seen the editorial, Mr. Speaker.



REQUEST FOR STATEMENT ON RESERVE ARMY STRENGTH

[Stage Direction]
On the orders of the day:
Gordon Minto Churchill: Mr. Speaker, I have a question for the Minister of National Defence. Will the minister give an authoritative statement to the house regarding the proposed over-all strength of the reserve army for the future? Is it to be 30,000 or some greater or smaller number?


Paul Theodore Hellyer: Mr. Speaker, the associate minister made that point perfectly clear in evidence before the special committee on defence.


Gordon Minto Churchill: I am asking for a statement to be made in the House of Commons. Statements made in committees may be all right, but I am asking the minister to let the house know, and let us have it recorded in Hansard.


Paul Theodore Hellyer: I am sure that when the committee reports to the house, the report will make some reference to that particular point.


Gordon Minto Churchill: Well, Mr. Speaker, the attitude of the minister shows a shocking disregard for the House of Commons. I am asking for public information. I want an authoritative statement from the Minister of National Defence with regard to the proposed strength of the reserve army. The Associate Minister of National Defence has been uncertain in his mind with regard to this and has given confused statements to the members of the defence committee. What is the authoritative statement, so the members of the militia may have some understanding of the situation for the future?


Paul Theodore Hellyer: Mr. Speaker, the associate minister made an authoritative statement to the special committee on defence and I would have expected the hon. gentleman, who has a considerable interest in these matters, to have read it before now.


Gordon Minto Churchill: Mr. Speaker, I am surely within my rights as a member of this house in asking for an answer to a legitimate question. All I want to know is, what is the proposed limit to be set on the reserve army? The Minister of National Defence should be able to give that answer. And I have a supplementary question. If there is to be a limit set, where will the reduction take place? Is it to be a reduction proportionate to the people now enrolled by provinces in the reserve army, or is the reduction to be specified in certain selected areas?


Paul Theodore Hellyer: I am of the opinion, Mr. Speaker, that as soon as the flag debate has been resolved and a decision taken, we will be able to get on with other important business-


Some hon. Members:: Oh, oh.


Paul Theodore Hellyer: -including consideration of the estimates of the Department of National Defence. We will be glad to answer all questions at that time which are directly related to the estimates of the department.


An hon. Member:: He doesn't know.


Gordon Minto Churchill: Mr. Speaker, I rise on a question of privilege. This is a flagrant abuse-


Some hon. Members:: Oh, oh.


Gordon Minto Churchill: And I am not going to be shouted down by members on the other side.


Some hon. Members:: Hear, hear.


Gordon Minto Churchill: One of the purposes served by parliament is to get information for the people, and that is what I am asking for today. This is a legitimate question. The 20220-467
Inquiries of the Ministry minister is refusing to give this information. It is a flagrant abuse of the rules of this house, a flagrant abuse of his authority as a minister, and I enter this protest against the refusal of the Minister of National Defence to give essential information to the people of this country. The information I am asking for affects our defence arrangements; it affects our reserve army, the citizen soldiers of this country. Why can we not have this information?



EQUALIZATION OF PAY FOR PREVAILING RATES EMPLOYEES

[Stage Direction]
On the orders of the day:
Mr. E. Nasserden (Rosthern):: Mr. Speaker, I directed a question about a week ago to the President of the Privy Council with regard to the situation of some employees at the Dana station and he said he would have a reply for me. I wonder whether he has it at this time.


Hon. G. J. Mcllrailh (President of the Privy Council):: Mr. Speaker, this matter is being looked into, but I am sorry the information by way of reply is not yet available.



CANADIAN FLAG


[Stage Direction]
On the orders of the day: tTranslation]
Mr. Georges Valade (St. Mary):: Mr. Speaker, I should like to direct a question to the right hon. Prime Minister.
Does he intend to consult provincial premiers on the flag issue when they meet here in Ottawa next week?


Mr. Robichaud:: In Ottawa? In Charlottetown.


Georges-J. Valade: In Charlottetown.


Lester Bowles Pearson: Mr. Speaker, the meeting is in Charlottetown, and the flag question is not on the agenda.


Georges-J. Valade: A supplementary question, Mr. Speaker. Will the Prime Minister discuss this question with the premiers if some of them bring up the subject?


Lester Bowles Pearson: I do not think any useful purpose would be served by a formal discussion at this time at this particular conference.


Mr. R. W. Pritiie (Burnaby-Richmond):: supplementary question on the flag, Mr. 7390	HOUSE OF
Inquiries of the Ministry Speaker. I should like to ask the Prime Minister if he has taken note of the design suggested by the hon. member for Nicolet-Yamaska, a non-union jack design, and will the government give serious consideration to that design?


Lester Bowles Pearson: I have taken note of a great many designs, including that one.


Mr. R. A. Webb (Hastings-Frontenac):: Mr. Speaker, I would like to direct a question to the Minister without Portfolio and ask him whether he or his office has been in contact with any firms or importers in regard to the importation of three leaved flags from Japan.


Hon. Yvon Dupuis (Minister without Portfolio):: I am not a Tory; I buy Canadian.


Gordon Minto Churchill: Insulting.


Mr. H. W. Danforth (Kent, Ont.):: I would like to direct a supplementary question. Has the minister been in contact with any firm that has a patent or copyright on the three maple leaf design with regard to its use on the Pearson flag?


Yvon Dupuis: That question is completely out of order.


Roderick Arthur Ennis Webb: The minister has said he is Canadian. I wonder whether he would not consider flying the Canadian flag, the red ensign?


Some hon. Members:: Hear, hear.


Yvon Dupuis: I will be very happy to fly the Canadian red ensign until the moment comes that we decide to have a distinctive flag without the emblem of any other country.


Marcel Lessard: supplementary question, Mr. Speaker. I should like to ask the Minister without Portfolio, who just stated that he is a Canadian and buys mostly Canadian products, whether he agreed with the Minister of National Defence (Mr. Hellyer) when the latter decided recently to purchase three submarines from England and military equipment from the United States?


Yvon Dupuis: The reply is the same as the one I gave a while ago; the submarine question had been decided by the Tories who were here before us.


Paul Raymond Martineau: Mr. Speaker, I have a question for the Prime Minister which is supplementary to
[Mr. Prittie.l

the one asked a few minutes ago by the hon. member for Burnaby-Richmond. In reply to that question the Prime Minister said that a large number of flags were being considered, particularly the model proposed by the hon. member for Nieolet-Yamaska. Can the Prime Minister be interpreted as saying that consideration is being given to proposing a model other than the one which is the object of the resolution before the house at present?


Lester Bowles Pearson: Mr. Speaker, we have a resolution before the house which deals with this matter. When it is disposed of, then we can decide what other steps are required, if any.


Mr. Gilbert Rondeau (Shefford):: Mr. Speaker, I wish to direct a question to the right hon. Prime Minister. Since most hon. members wish to reach a solution on the flag as soon as possible, would the Prime Minister give special attention to the proposal of the hon. member for Nieolet-Yamaska (Mr. Vincent), which seems to have been approved by several members on all sides of the house?


Lester Bowles Pearson: I certainly hope there will be a decision as soon as possible, Mr. Speaker.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
William Dean Howe: Mr. Speaker, I would like to direct a question to the Minister of National Health and Welfare, who was served notice of it two or three days ago, and in her absence possibly her parliamentary secretary could answer.
In view of public reports that lack of a survey of Canadian food habits and health standards is hampering research workers, and in view of a statement attributed to a spokesman at the Department of National Health and Welfare that there is need for a national survey of nutrition, a contention with which I heartily agree, would the minister consider authorizing such a survey to be made so the necessary work could be done in this highly important field, and so we as Canadians would not have to rely on the statistics gathered by authorities of the United States of America?

Inquiries of the Ministry


Mr. J. C. Munro (Parliamentary Secretary to would be erected in Hull. But it has been Minister of National Health and Welfare):: decided that Hull would have a building.
Mr. Speaker, I will take up this matter with I further stated in reply to a supplementary the department and the minister, and try to question, that within a month I would be have a reply early next week.	in a position to give specific details.



LABOUR CONDITIONS


[Stage Direction]
On the orders of the day:
Gilbert F. Rondeau: Mr. Speaker, my question is intended for the Minister of Labour. Is he considering the possibility of re-establishing the winter works period from October 15 to May 31, as previously, instead of the dates in effect last year, that is, from November 1 to April 30?


Hon. A. J. MacEachen (Minister of Labour):: No, Mr. Speaker, this change is not under consideration, although there are other changes presently under consideration.



PUBLIC BUILDINGS


[Stage Direction]
On the orders of the day:
David Réal Caouette: Mr. Speaker, I should like to direct a question to the Minister of Public Works.
Yesterday, in reply to a question put to him by the hon. member for Hull (Mr. Caron), who wished to know whether the department intended to have at least one building built in the city of Hull, the minister stated that, in principle, it had been decided that perhaps one building would be built in Hull.
This is my question. Is the minister ready to accept the responsibility for the fact that Hull, which is right across the river, should be treated as a poor relation as compared to Ottawa?


Hon. J. P. Deschatelets (Minister of Public Works):: Mr. Speaker, it is precisely-


David Réal Caouette: In principle.


Jean-Paul Deschatelets: That is precisely why I stated yesterday that the government had decided Hull should have its share of public buildings under the proposed construction
program.
When I said yesterday that the decision had been made in principle, it was because I could not actually specify what building 20220-4674


Paul Raymond Martineau: A supplementary question, Mr. Speaker. Would the minister tell us whether in principle this building would be the new mint?


Jean-Paul Deschatelets: I cannot add any further details to what I stated yesterday, but in about a month I think I will be in a position to make a statement on this matter.
In answer to the question of the hon. member for Villeneuve, this will meet a need which has been felt for the last six years. [Text]



POST OFFICE DEPARTMENT


[Stage Direction]
On the orders of the day:
Mr. C. S. Smallwood (Battle River-Camrose):: I wish to direct a question to the Minister of Public Works. The former government instituted a policy of building small post offices across Canada costing less than $25,000. Is it the intention of the department to continue this program under the winter works program this year?


Jean-Paul Deschatelets: Yes, Mr. Speaker, this policy is being maintained. However, if the hon. member wants further details, I would advise him to direct his question to the Postmaster General (Mr. Nicholson) who decides where these small post offices are needed.
I think the Postmaster General will be in a position before long to give the house the details of the present program because the Department of Public Works has received from him a list of these post offices, the building of which will be completed before the end of next winter.



FINANCE


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Yesterday the hon. member for Pontiac-Temiscamingue asked a question of the Minister of Finance regarding the appointment of certain advisers on taxation. I do not

Inquiries of the Ministry want to go into this question any further except to ask whether these appointments have been made. If the appointments have not been made, could the minister say whether the identity of these persons has been determined and when they will begin their duties?


Walter Lockhart Gordon: I do not know whether the Leader of the Opposition is adding to the fog or not, but so far only one appointment has been made, and that has been announced. I am hoping to announce some further appointments as soon as suitable people have been found.


John George Diefenbaker: One appointment has been made, and the purpose is to examine and give consideration to the recommendations of the royal commission on taxation. I would ask why the appointments should be made now, having regard to the fact that Mr. Carter, the chairman of the taxation commission, allegedly has informed the government that there will be a delay of six months in the presentation of the report. What will these gentlemen be doing in the meantime?


Walter Lockhart Gordon: The chairman of the royal commission, Mr. Carter, had previously advised the government that the report would be ready this fall. Therefore, in preparation for it, I was seeking staff who would help the government to implement such recommendations as might be approved. So far I have succeeded in finding one such person and he has been appointed.
Yesterday the chairman of the commission came to see me in my office and informed me that the commission had run into difficulties and that the completion of the report would be delayed about six months. I am now considering whether to use the individual who has been referred to-


John George Diefenbaker: Who is he?


Walter Lockhart Gordon: He is Mr. James Brown of Montreal. He can assist in preliminary work in connection with this matter, and I expect we shall decide that this is in the public interest and that he should take up his appointment in October.


Paul Raymond Martineau: I wonder if the minister would tell us whether, in accordance with well known precedent, these outside advisers will have access to budget secrets.


Walter Lockhart Gordon: I find that question rather unnecessary.


An hon. Member:: And embarrassing?


Walter Lockhart Gordon: Not embarrassing, no. I would remind the hon. member that as the pressure of public business increases, it would probably be a good thing for governments to take advantage of any expert help they are able to obtain from time to time. I hope nothing will be said in this chamber which would discourage public spirited Canadians from accepting appointments of this kind.


Paul Raymond Martineau: I wonder whether after his long diversionary tactic the minister would mind answering yes or no to the question I asked him. I believe, Mr. Speaker, that the minister was about to answer my question. If he has forgotten it, my question was simply-


Mr. Speaker:: Order. In my opinion the question was out of order, and I think the minister should not answer.


Mr. L. E. Cardiff (Huron):: Does the minister think the new appointments will be any improvement on the others he made before?


Walter Lockhart Gordon: I think they are all going to be excellent appointments.


John George Diefenbaker: With the minister taking such a friendly attitude this morning, may I ask him whether in view of the success enjoyed by the three wise men he imported for his first budget he intends to ask their advice in connection with the next budget?


Walter Lockhart Gordon: I do not know whether other people have noticed it, but it has occurred to me that since the right hon. gentleman's hands were removed from the economic levers of this country there has been a rather noticeable improvement.


John George Diefenbaker: Taxes have gone up and the deficits are about the same as ever. But the minister has not answered my question. Surely he does not intend to discard the three wise men he imported to produce the first budget which turned out to be such a mess.


Georges-J. Valade: I have a supplementary question for the Minister of Finance. The hon. gentleman has indicated that he is finding difficulty in procuring the specialists he needs as counsellors. I wonder if he could inform the house how he proceeded to appoint this first expert, so that other persons could apply in the same way.


Mr. A. B. Patterson (Fraser Valley):: In
view of the announcement that there will be

a delay of six months in the tabling of this report on taxation, does the minister still intend to await this report before making any substantial changes as far as the tax structure of Canada is concerned?


Walter Lockhart Gordon: Perhaps I might defer answering that question until the time comes to present the next budget.


Mr. Fred F. Stenson (Peierborough):: Mr. Speaker, I should like to address a question to the Minister of Finance and ask him, with regard to his new appointments, whether any of these men will be tool engineers, so the tax on production machinery can be properly supervised?


Walter Lockhart Gordon: Mr. Speaker, it would be premature for me to answer that question, as they have not yet all been appointed.



WORLD BANK PROFITS FOR LOANS TO UNDERDEVELOPED COUNTRIES

[Stage Direction]
On the orders of the day:
Alexander Bell Patterson: should like to ask the Minister of Finance if he is yet in a position to reply to the question I asked the other day with respect to the proposal to use the profits of the World Bank for the furthering of educational and agricultural programs in underdeveloped countries.


Walter Lockhart Gordon: There will be a meeting in Tokyo the week after next to discuss this matter. These discussions will take place at the annual meeting of the World Bank. As far as Canada is concerned, we have informed the president of the World Bank that we think this is an excellent idea and that we will support it fully.



PRIVILEGE


[Stage Direction]
On the orders of the day:
Mr. Lloyd Francis (Carleton):: Mr. Speaker, I rise on a question of personal privilege. In the course of last night's debate the hon. member for St. Mary is reported in Hansard as having said-


Gordon Minto Churchill: What page?


Cyril Lloyd Francis: Page 7366.


An hon. Member:: What date?
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Cyril Lloyd Francis: I am quoting from yesterday's Hansard, Mr. Speaker. The hon. member said:
Not only has the Prime Minister contradicted himself on a question of principle, but he has lied openly. This charge is not made by myself but by two of his colleagues, the hon. member for Carleton (Mr. Francis) and the hon. member for York-Humber (Mr. Cowan), who said as much during their participation in the debate-
Mr. Speaker, I have not participated in the flag debate, and I brought to the attention of the hon. member earlier in the debate the fact that I had not participated. In the course of reading his remarks the hon. member made this totally erroneous, fallacious, completely irrelevant remark which in no way represents my position and is a gross distortion.


Georges-J. Valade: Mr. Speaker, on the question of privilege, if I said that the hon. member for Carleton had spoken and I accused the Prime Minister of lying, it was because these were the words used by one of his colleagues. I withdraw the remark that the hon. member for Carleton said this, but I think the hon. member for York-Humber said it. It also underlines the fact that the members on the opposite side of the house do not wish to speak in the flag debate.


Mr. Ralph Cowan (York-Humber):: Mr. Speaker, I rise on a question of personal privilege. I have never made any such accusation in regard to my lifetime friend, and I never will.


Some hon. Members:: Hear, hear.

The house in committee of supply, Mr. La-moureux in the chair.



DEPARTMENT OF INDUSTRY

[Stage Direction]
1. Departmental administration, including grants as detailed in the estimates, $4,677,100.
Mr. Lambert:: Mr. Chairman, I am sure that if there were a few less private conferences proceeding in full tilt we might be able to hear the minister make his statement.


Hon. C. M. Drury (Minister of Industry):: Mr. Chairman, as was done on the last occasion when the various branches for which I am responsible to the house were called, I suggest that perhaps under vote No. 1 I might also make a statement on Atomic Energy of Canada Limited, the national research council, the Department of Defence Production and the atomic energy control board. This was the procedure followed the

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last time my estimates were under consideration, and I think it might be helpful to the committee if this procedure were followed again. It worked quite well the last time. If that is so I would be glad to proceed with an initial statement on the Department of Industry.
I should first like to review briefly the present economic situation in so far as it concerns our manufacturing industries. Production, employment and shipment of Canadian manufacturing idustries reached record levels in 1963. Volume of production rose by about 6 per cent, employment by 2 per cent and the value of factory shipments by 8 per cent. The factors mainly responsible for this continued strong growth were a rising domestic demand, of which a larger share was supplied by Canadian manufacturers, and increased exports of manufactured products. In 1963 the exports of secondary manufacturing rose sharply and were 16 per cent above those of 1962. At home, consumer demand continued to increase and purchases of consumer goods were 5 per cent higher than in the previous year. At the same time outlays by businessmen for capital goods rose 7 per cent, although there was some slight reduction due to accumulations from 1962.
The greatest increases in production took place in the motor vehicle and related industries. Motor vehicle production rose by nearly one quarter and the parts industry increased by the same proportion. Other notable production increases included 14 per cent in the rubber products industry, 15 per cent in synthetic textiles, 12 per cent in electrical appliances. Above average rates of increase took place in such key industries as primary iron and steel, textiles, chemicals and industrial machinery.
Present indications are that Canadian manufacturing will continue to expand in 1964. Domestic demand is expected to be strong. Factors such as the continuing growth in personal income and a sharp increase in housing completions, as well as the build-up in 1964 capital spending programs which was outlined in the statement of the Minister of Trade and Commerce on July 28, will ensure a further increase in domestic demand for Canadian manufactured goods. Some industries, such as automobiles, steel, rubber and Certain sectors of the textiles and chemical industries are now operating virtually at full capacity, and until additional capacity is created the rates of growth may not show substantial increase.
Capital expenditure plans show that considerable additional capacity will become

available late in 1964 or in 1965. The plans of businessmen for investment at the beginning of the year involved increases of 40 per cent in capital spending in the primary metals industries, principally in steel, 45 per cent in the textile industries and 26 per cent in the transportation equipment industry. Recent announcements by a number of industries indicate the increases now planned will almost certainly be considerably greater than was at first thought. Another factor which will determine the rate-


William Skoreyko: Mr. Chairman, I wonder
whether I might ask the minister if he has available extra copies of the report from which he is now reading, which would help us on this side who would like to follow him. If he has not I wonder whether in the future he would provide us with extra copies, since this is not a statement off the cuff. The minister is reading a statement and it would help us if he let us have copies, as the Minister of Citizenship and Immigration did.


Charles Mills (Bud) Drury: Mr. Chairman, I think it is rather unusual for copies of statements made in the house to be distributed to all hon. members.


William Skoreyko: The Minister of Citizenship and Immigration did it.


Mr. Moreau:: Mr. Chairman, I wonder whether the hon. member for Edmonton East, when he spoke in the flag debate, gave us advance copies of his speech.


William Skoreyko: Mr. Chairman, as usual the hon. member is reckless with the truth. I used no text at all. I had a few editorials in front of me, and the hon. member knows that.


The Chairman:: Order. If the Chair is being asked to comment on this matter, my understanding is that when a minister makes an opening statement on his estimates he usually reads from a prepared text, and I believe it is unusual to have copies of such statements circulated, certainly among members.


William Skoreyko: I agree that it is not done on many occasions, but the Minister of Citizenship and Immigration provided us with copies of his speech. I only ask for the same courtesy that is shown to the press.


Charles Mills (Bud) Drury: I have no extra copies, Mr. Chairman, so perhaps the question is a little academic.
Another factor which will determine the rate of manufacturing growth is the extent to which Canadian producers are able to increase the domestic content of final prod-

ucts, such as automobiles and electrical goods, and the extent to which manufacturers are successful in obtaining a larger share of the growing Canadian market for capital goods and other products which are still imported in substantial quantities. The encouraging growth of Canadian manufacturing is attributable to a considerable extent to the steady improvement in the competitive position of Canadian producers. Sales abroad of manufactured goods have increased markedly during the past few years and have contributed to the growth of certain sectors of manufacturing.
Turning now to consider the Department of Industry, hon. members will recall that in November, in connection with the estimates for the last fiscal year, I spoke of dividing the work of establishing the new department into three phases: (i) organizational planning, (ii) staff recruiting and (iii) operations. I said at that time that the first phase was essentially complete, and staffing and recruiting was under way. By July 13, 1964 a total of 290 officers and supporting staff had been recruited, including offers of employment which have been made by the civil service commission and which have been accepted or for which acceptances are pending although the persons involved may not yet be appointed. This number of 290 represents 45 per cent of the total approved strength of the department.
Recruiting started at the senior levels, and directors have now been appointed for each of the ten branches concerned with particular industries, as have most deputy directors. In some branches, such as aircraft and electronics, there were substantial numbers of experienced personnel available from within the civil service, and consequently these have larger staffs in being at the present time. In other branches we have been fortunate in recruiting a nucleus of well qualified personnel from industry. I should, however, inform hon. members that recruitment has not progressed as fast as was initially contemplated. I will make a further comment regarding this matter when the administration vote of the department is under detailed discussion.
Administrative services and advisory functions, such as personnel, legal, financial or other general support services, are being provided by the Department of Defence Production. However, provision has been made within the organization of the Department of Industry for certain key functions not available from defence production, the main ones being an economic advisor and a scientific
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advisor together with a small staff for each. The scientific advisor and the economic advisor have recently been appointed.
Although the process of staffing the department is still underway, sufficient progress has been made to enable work on the third or operational phase to be initiated and carried on concurrently. The automotive and automotive parts incentive plan and the area development agency's program to attract manufacturing industries to the designated areas of high chronic unemployment are, of course, two of the major programs which have been undertaken. These programs have received wide attention. I would, nevertheless, like to say a word or two about area development in relation to the designated areas.

As most members know, 35 national employment service areas were designated last September as areas of slow economic growth and high unemployment. The purpose we had in mind was to stimulate quickly the establishment of new manufacturing and processing enterprises in these areas; and in this way to give immediate relief to the situation of chronic unemployment prevailing in these parts of the country. Members of this house should bear in mind that the initial designation planned to bring about quick results and meet an emergency situation, is to be regarded as only a first step in a long term program to assist the economic expansion in those areas where it is most needed.
The emphasis on unemployment criteria as the prime factor in designation, while highly desirable for maximum impact in the short run, is obviously not the full answer when we consider a more complete approach. Other factors such as underemployment and the inefficient use of manpower resources must be taken into account in assessing the progress of one area with another. With this in mind we are presently engaged with the Departments of Finance and Labour in making a detailed and exhaustive review of criteria for designating areas in order to take into account these and other factors which will enable us to single out those areas where special efforts will be required over the years if they are to participate more fully in the general prosperity of the country.
Our efforts to stimulate economic development in these designated areas by means of tax incentives for new enterprises are meeting with success. According to the intentions which were indicated to us, more than $245 million of capital is to be invested in new businesses in 23 out of 35 designated areas

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and more than 9,000 people are to be employed in 103 businesses. These figures do not take into account the tremendous boost that will be given the construction industry in the areas concerned, nor does it take into account the impact it will have on service industries which will be established as a result of new industry moving into an area.
Notwithstanding these results, the same rigorous review given to criteria for designating areas will be given to incentives and I can assure hon. members that every effort is being made to develop even more effective incentives to improve the economic fortunes of designated areas in a fundamental and lasting manner.

A number of other projects are also being undertaken jointly with industry groups. Detailed reports prepared by two technical furniture missions, one to Europe and the other to the United States, have been published and made available to the industry generally. The membership of these missions consisted of representatives of the furniture industry specializing in the fields of design, materials, production, management and marketing, and they studied the latest techniques in their fields which are being applied in Europe and the United States. A series of regional conferences have been organized under the sponsorship of provincial governments and the furniture industry to meet with members of the missions in order to study the application of their findings to the industry in Canada. Such meetings have been held in Montreal, Winnipeg, Calgary and Vancouver.
A design award program to encourage the development of improved design concepts for structures using steel was recently worked out jointly with the structural steel industry. The awards will be sponsored by the department and will be made annually.
All of the ten main branches of the department are working with the Canadian tariff and trade committee, considering briefs submitted by industry respecting the forthcoming GATT tariff negotiations.
The department has been receiving a steady flow of requests from industry, provincial governments, trade associations and other groups respecting a wide variety of industrial subjects. The department has been able to provide information and expert advice regarding most of these matters. This service is one of the valuable contributions which the department is offering to groups interested in fostering the development of manufacturing industry in Canada.

As may be seen from the estimates which have been tabled, the largest item is vote 5, supporting the development aspects of the Canada-United States defence production sharing program. The purpose of this vote is to sustain technological capability in Canadian defence industry by supporting selected defence development programs. It has stimulated employment activity to a marked degree. Its benefits include the retention of technically trained people in development work, and it has assisted companies to maintain pace with the growth of technology in industry.
It will be recalled that the Canadian-United States defence production sharing program was initiated in 1959 to provide for more efficient and economical use by both countries of their defence industries and to offset the need for substantial Canadian procurement of certain United States weapons systems. This program, in which Canadian industry is given the opportunity to compete for production of U.S. military equipment, requires a high level of technological capability in industry. To retain this capability, a level of development activity has been required which is beyond that which has been supported by the Department of National Defence in recent years.
The development sharing program originated as a result of recognition of this need by both the Canadian and United States governments. The future role of Canadian defence industry otherwise would have been confined to the production of the more simple items of hardware, and our ability to contribute to equipment programs for the defence of North America would have been seriously weakened.
Since 1959 the Department of Defence Production has provided substantial sums to assist Canadian companies to undertake development projects for both United States and allied programs. This development sharing activity in support of the production sharing program has served to maintain some development activity in the defence industry. Many of these development sharing projects, of course, had their roots in earlier Department of National Defence research and development projects to meet Canadian military requirements.
Beginning with the current fiscal year, the vote has been transferred from defence production to the Department of Industry. The transfer took place for the practical reason that many of the people in the Department of Defence Production, who in the past have been responsible for this form of assistance

to industry under the development and production sharing program, have now largely been absorbed into the Department of Industry, which has assumed responsibility for the over-all development of Canadian industry. This vote, however, continues to be devoted to the development in Canadian industry of defence items for export.
The department's expenditures for this purpose, which began at an annual rate of $1.8 million in 1959, have now reached a level of $19 million, after having experienced a growth rate of approximately 100 per cent per year. This $19 million of Canadian government expenditure is, of course, only a portion of the total cost of the programs involved. Some $25 million additional will be provided from industry funds and by the military of the United States and allied countries.
The five year period it has taken to achieve the present level reflects the amount of time it takes to find good projects which can be expected to result in eventual sales of the developed product. It is also indicative of the amount of time involved in the relocation of technical people from stand-by occupations back to important development projects. There has been the closest co-ordination with the Department of National Defence in this program.
The response of Canadian industry in the past to Canadian military research and development requirements, and more recently to the challenge of the development and production sharing program, shows that our companies have the management, research and development ability to respond and offer unique products which are acceptable not only in Canada but to other countries. These developments include the Buffalo aircraft, PT-6 aircraft engine, the CL-84 aircraft, CL-89 surveillance drone and the OT-4 engine.
The Buffalo is a turbine powered version of the Caribou I which is being developed for evaluation by the United States army under a cost sharing arrangement among the department, the United States army and the Canadian contractor. The PT-6 is a 600 horsepower turbo shaft engine. The CL-84 is a vertical and short take-off and landing aircraft employing the tilt wing deflected slip stream principle. The CL-89 is a battlefield surveillance drone, the development of which is being financed jointly by the Department of Industry and the British government. The OT-4 is a stationery gas turbine engine which is being developed for evaluation by the United States navy under a cost sharing 20220-468
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arrangement between the department and the United States navy.
My department's efforts in the development field are co-ordinated with the national research council program for industrial research assistance and with the defence industrial research program initiated in 1961 by the defence research board. In the defence field, considerable success has been achieved by the defence research board industrial research program in originating new scientific concepts as a basis for new development programs.
Although vote 5, development expenditures of the Department of Industry, and the associated research expenditures of defence research board in industry are related specifically to defence products, hon. members will appreciate their importance to Canadian industrial capability generally. The upgrading of our technological capability in such fields as aircraft and electronics through these defence oriented programs is of great significance to the future capability of these industries to compete in world commercial markets.
I should now like to say a word about the estimates of the Department of Defence Production which, as hon. members will understand, are linked with those I have just discussed. They appear at page 86 of the blue book.


Marcel Joseph Aimé Lambert: May I interrupt the minister at this point. I am wondering whether we are not steadily entering into a field that is rather too extensive. I certainly appreciate the connection between the Department of Defence Production and the Department of Industry, but I hope we are not going to get into atomic energy and other fields because, as my colleague the hon. member for Edmonton East has pointed out, the minister is in a field that involves statistics to a considerable extent. Hon. members do not have the minister's statements before them; therefore their discussion of these estimates is perhaps not as cohesive as it might be. They will no doubt ask questions about matters which the minister has covered in his statement, and obviously they cannot take down the points. Personally I do not think we should deal with two departments at the same time. I would much rather that we confined ourselves now to the Department of Industry.


Charles Mills (Bud) Drury: I can understand that point of view, and my suggestion to cover both departments was made with the desire to be helpful. I do not have copies of these statements for hon. members, and because they

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do contain some statistical information I thought it might help if I were to make both statements at the outset so they would then be available to everybody rather than dealing with these operations seriatim. If I make these statements now covering the items I have outlined I think it will expedite the business of the house in the long run, and help members.
In my statement today on the estimates of the Department of Defence Production I should like to speak not only of the primary responsibilities and accomplishments of the department in the field of defence procurement where, under the provisions of the Defence Production Act, the minister has exclusive authority to buy or otherwise acquire the defence supplies required by the Department of National Defence, but also to report on some of the progress that has taken place in the Department of Defence Production since the last time I presented the estimates of the department.
In my view we have had a very productive period of study, planning and organization, together with the implementation of certain undertakings which reflect these activities. There has been a great deal accomplished in the department, and this work has involved certain highly important areas. One of the primary activities of importance has been the organization of ten operational branches based on major industrial groupings. These branches, which carry out both the procurement responsibilities of the Department of Defence Production and the industrial development responsibilities of the Department of Industry, are aircraft, electrical and electronics, machinery, shipbuilding, clothing and textiles, materials, food products, wood products, chemicals, and mechanical transport. In certain instances, for example aircraft and shipbuilding, departmental procurement branches have been in existence since the establishment of the department, but in other cases it has been necessary either to reorganize existing procurement units or to establish completely new branches.
Another important activity involves the service branches of the department. These branches, which might be generally described as financial and administrative, have been made responsible for the provision of appropriate services to both the Department of Defence Production and the Department of Industry.
In the course of my estimates statement last year I referred to those recommendations

of the royal commission on government organization, the Glassco commission, which involved the Department of Defence Production and which had been approved by the government. These recommendations provided that the department should be made a central purchasing agency to serve all departments and agencies of the federal government, both civil and military, other than the commercially oriented crown corporations. In addition, the government approved recommendations that the department be given the responsibility for certain additional activities associated with procurement, including responsibilities relating to the development of standard specifications, the development of warehousing and materials handling services for all departments other than the Department of National Defence, and for establishing a traffic advisory group to improve traffic management throughout the public service.
As a result of the consideration of these recommendations the concept has emerged of an integrated supply service by which the existing procurement and service branches of the department will be augmented by branches that are responsible for such matters as specifications, cataloguing, regional purchasing, warehousing, traffic management and quality assurance.
Another recommendation of the Glassco commission which I discussed in my statement last year, and which at that time had already been implemented, was the transfer and the control of certain branches from the department of public printing and stationery to the Department of Defence Production. Consequently during the past year the activities of the procurement, purchasing and stores branch have been integrated into my department.
During the past year an international programs branch was established within the department to consolidate the activities of the Canadian Commercial Corporation with those of our departmental personnel who are concerned with the Canada-United States defence development and production sharing program and the field of overseas defence exports. I shall discuss these matters in greater detail later on in my statement.
I hope that in these general remarks I have succeeded in giving some indication of the activities that have been going on in the department in addition to the carrying out of the primary responsibility, which is the provision of defence supplies for the Department of National Defence. It has been an important year, and I anticipate that the

present year will be most important too. Changes of the nature of those I have mentioned require detailed study and planning and cannot be carried out overnight. However, I might mention in this regard that in addition to taking over the procurement, purchasing and stores functions of the former department of public printing and stationery, the department is presently carrying out certain purchasing activities for a number of departments and agencies, including the departments of citizenship and immigration, public works, the civil defence college and the world fair corporation. This activity is in addition to issuing approximately 150,000 contractual documents with a value of almost $800 million.

I would like to set out now some aspects of our procurement responsibilities. In my opinion, it would not be practical to review all our procurement programs, but I want to call your attention on several fields of activity which might be of special interest to you.
In the aircraft field, the main manufacturing programs at this time concern the Star-fighter F 104G and the training plane Tutor CT 114. The Starfighter F 104G is a version of the CF 104 now used by the Royal Canadian Air Force. The manufacture in Canada of about 140 planes of this type, including motors and radars, navigation, flying and ranging systems, will be financed jointly by the Canadian and American governments under the mutual assistance program. The CT 114 is a two-seater jet for basic training; 190 planes of this type and also the J 85 motors which will equip them are being made in Canada for the Royal Canadian Air Force.
Among the other great production programs, there are the CHSS 2 helicopter and the Cariboo I aircraft. The helicopter is in the course of being delivered to the Royal Navy of Canada where it will be assigned to anti-submarine warfare. Of the 24 aircraft ordered so far, four were built by the American contractor and the others are being partly built and assembled in Canada. The Cariboo I is a twin-engine aircraft STOL (short take-off and landing) designed and developed in Canada. Up to the present time, 207 such aircraft have been ordered, nine for the Royal Canadian Air Force, 164 for the American army, 16 for the Indian army and 18 for the Royal Australian Air Force. Moreover, many types of aircraft the demand of which is not sufficient to allow economic production in Canada have been ordered from American contractors. Among them there are the CH 113 and CH 113A helicopters which 20220-468i
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have been ordered for the Royal Canadian Air Force and the Canadian army, the CH 112 light helicopter, reconnaissance aircraft, for the Canadian army and the C 130E cargo aircraft for the Royal Canadian Air Force.
In the electrical and electronic field, the responsibilities of our electronic branch in matters of procurement and production have been increased this year by the transfer to that branch of the procurement of electrical materials which were formerly under the general purchases branch.
Besides the continuing procurement of radar systems, fire control communications, navigation and identification systems for the 104 program, certain needs concerning the CT 114 aircraft and the CHSS 2 helicopter for the navy must be looked after. A number of navigation devices of a new and advanced design, a data registering device in case of accident and an instrument to locate the site of a crash, all in the course of development through our defence exportation program, will be integrated as far as possible later in these production programs.
Electronic training aids remain an important item and simulators are still being manufactured for the governments of Germany, Italy and other European countries. Shipments to the governments of the Netherlands and Belgium have been completed without delay.


Lucien Lamoureux: Order. I must interrupt the hon. minister to call the attention of the house to the fact that his time has expired and that he cannot continue with his comments without the consent of the house.


Some hon. Members:: Agreed.


Marcel Joseph Aimé Lambert: Mr. Chairman, we are willing to let the minister complete his remarks, but only as regards the Department of Defence Production. I do not think we could accept that the minister gave an account of the work done by the emergency measures organization or other agencies for which he is responsible in this house, for I feel we have enough on our hands for the time being. I agree to let the minister complete the statement he is now making.


Lucien Lamoureux: Is it agreed?


Charles Mills (Bud) Drury: I agree on that, Mr. Chairman.
A great variety of communication material for land and sea will be procured for the three services to support their modernization programs and further material has been ordered to improve the stationary communication system within Canada.

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The needs in operation and maintenance material of the Mid-Canada line have decreased following the closing of about half the stations. Another decrease has been noted with regard to auxiliary contracts for the Pinetree line stations.
The rental of communication circuits operated on a commercial basis to maintain the administrative and operational link between the military establishments in Canada continues on a large scale.
During the past year, two other destroyer escorts were completed as well as a tanker for the navy and an hydrographic survey ship. Construction of a research ship for the naval laboratory on the Pacific coast has been continued.
Four destroyer escorts have been built under the modernization program for those vessels. A contract has been awarded for the modernization of a fifth destroyer, whereas the contract for a sixth will soon be let. The modernization program will go on for a few years until every destroyer escort has been transformed.
With regard to development work started for the national defence department, I want to mention a few projects, and, more particularly the building of a 180-ton hydroglider prototype, the design and plans as well as the final development and construction of which are taking place in Canada for our navy. This will require skill in the fields of aviation, electronic and shipbulding.
Furthermore, contracts have been awarded for the development and production of a series of satellites to complete the Alouette program of the defence research board. The main object will be to develop and produce a new Sonar and other antisubmarine detection systems for the Royal Canadian Navy and air force.

I should like to make a reference to Canada-United States defence development and production sharing program. As my colleague the Secretary of State for External Affairs has already reported, a meeting of the Canada-United States ministerial committee on defence took place in Washington on June 25. Our joint defence development and production sharing program was one of the subjects discussed, and I am pleased to take this opportunity to confirm that the full support of both governments was reaffirmed for continuation of the program with the agreed objective of assuring maintenance of a long term balance at the highest practicable level in reciprocal procurement of

items of mutual defence interest by the United States and Canada in accordance with principles established by agreement with Mr. McNamara in June 1963. A special study of the factors affecting this cross-border procurement is being undertaken with a view to assuring maintenance of the rough balance over the next few years.
While historically the balance of this crossborder procurement of defence equipment has been in favour of the United States, increased participation by Canadian industry in United States programs under our joint program has resulted in a swing of the balance in favour of Canada. Recent Canadian procurements in the United States such as the M-113 personnel carrier and C-130 aircraft have reduced this Canadian advantage, and present indications are that over the next year or so the balance will tend to swing toward a position favourable to the United States. It is in the light of these trends that the study I have referred to above is being undertaken, since it is possible for Canada to look to United States sources for economical supply of certain defence requirements only with the assurance that the rough balance will be maintained.
A very significant aspect of the program is the development sharing agreement. A memorandum of understanding on development sharing has recently been concluded between the United States and Canada which provides arrangements for participation by Canadian industry in United States defence development projects on a cost sharing basis. The projects being undertaken under this agreement are conducted in private industry with costs being shared by United States and Canadian governments and the Canadian firms concerned in appropriate case by case arrangements.
Beyond our Canada-United States program there has been increased emphasis on extending our efforts toward collaboration with our European NATO allies and other friendly countries in the field of defence development, research and production and in bilateral defence trade. An important recent activity was the third meeting of the Anglo-Canadian committee on co-operation in defence development and production which met in London May 25 through May 28. Following that meeting, members of the Canadian team visited other European NATO countries to discuss extension of Canada's bilateral trade in defence equipment.
To sum up, increased emphasis is being given both to continuation of our joint program with the United States and to defence

export activities with other NATO and allied countries. To this end, as I have already mentioned, the international programs branch was established to provide central guidance and direction for all the departmental activities associated with these United States and overseas programs.
With regard to the actual votes in this year's estimates, hon. members will note that the most significant increase over 1963-64 is found under vote 1, covering administration costs and grants paid on crown owned defence plants in lieu of taxes. This increase is almost entirely attributable to the establishment increases which have been made necessary by the additional departmental responsibilities that I have outlined in my statement. There has been a decrease in anticipated expenditures under vote 5 for the establishment of production capacity, and there is no change in vote 10, which covers the establishment of qualified sources for the production of component parts and materials.
Vote 15 covers the requirements of the directorate of printing which was made a responsibility of the department in July 1963. The present estimates reflect the reorganization which has taken place during the past year as a result of the transfer and control of certain branches of the Department of Public Printing and Stationery to the Department of Defence Production, and the only item where a significant increase is shown under this vote is that covering plant equipment and replacements. Over 30 per cent of the equipment at the Canadian government printing plant is beyond 20 years of age, and accordingly it is essential that some modernization be effected in order to produce work as efficiently as possible.
This year the estimates covering the development aspects of the Canada-United States defence development and production sharing program are included under vote 5 of the Department of Industry. These proposed expenditures have been discussed in conjunction with the consideration of the estimates of that department.
As requested by hon. members, I will speak separately about the votes provided under section B of the Department of Defence Production estimates relating to the emergency measures organization.
Under section C of the defence production estimates provision is made under vote 35 for the expenses incurred by Defence Construction (1951) Limited at a lower level than the
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previous year, which reflects a further reduction in the operating costs of this agency which coincides with the reduction in the construction program required by the Department of National Defence.
Similarly, votes 40 and 45 to cover the unrecovered operating costs and capital requirements respectively for Canadian Arsenals Limited show a marked reduction in anticipation of the possible sale to private industry of several divisions of this crown company.
In closing these remarks I would like to refer to the final paragraph of section 6 of the white paper on defence, and in this regard would quote as follows:
Defence expenditures can make a contribution to the efficient development of manufacturing both for the domestic market and for export and, in so doing, contribute to the general growth of Canada. Programs to establish and improve production sources will continue. The closest co-operation between the armed services and the Department of Defence Production will be maintained in order to promote efficient purchasing practices and to see that Canadian products are used wherever that is feasible.
Thank you, Mr. Chairman.


Mr. Hales:: I think we must realize at the outset that the minister was confronted with a difficult task in presenting the main estimates of this department, inasmuch as there are so many branches for which he is responsible. It seems to me that to load down one minister by placing so many branches under his jurisdiction shows very poor organization indeed on the part of the government.
As I understand it, the Minister of Industry is responsible for the following departments: the Department of Industry, the Department of Defence Production, the atomic energy control board, Atomic Energy of Canada Limited, Canadian Arsenals Limited, Canadian Patents and Development Limited, Canadian Commercial Corporation, Crown Assets Disposal Corporation, Defence Construction (1951) Limited, the emergency measures organization, national research council, Polymer Corporation, public printing and stationery, and the queen's printer; some 14 departments. This in itself is not fair; it is not good business organization, and it is humanly impossible for any one minister to have all these departments under control.
I think the suggestion made by the hon. member for Edmonton East was a good one, namely that when a minister introduces estimates of the complexity of those that have been placed before us this morning, we should at least have a copy of the introduction by the minister under item 1. I think this would

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be a very good idea to follow on future occasions.
This raises another question. I should like to impress upon the government once again that we have an estimates committee in our house organization. This government has not seen fit to set up the committee on estimates; they have not called that committee, and they have not referred to it any of these departments. When one considers the remarks of the minister with regard to vote 5 of the Department of Industry, having to do with the United States-Canada cost sharing program, which is a tremendous undertaking in which millions of dollars are spent, one cannot think of a better department to be referred to the estimates committee than this.
Therefore, Mr. Chairman, today we have the first opportunity to look into the estimates of these many departments. And above all things, we are expected to criticize and investigate a new department that has been set up, namely the Department of Industry. However, with the time at our disposal we will just have to do the best job we can with this tremendous list of departments.
The minister started off by giving us a resume of the great increase in trade, productivity and the volume of sales in Canada today. I would ask him to just recall a few things that were done in the past few years. I do not wish to take up the time of the committee by pointing out what we did when we were on the government side of the house, but much of this great increase in productivity, trade and development in Canada today is due to many of those things which the Conservative party put into operation in the last four or five years.
I need only mention a few of them. There was the great trade crusade that was put on by the Department of Trade and Commerce, when the minister of that day said to the trade commissioners "Off with the striped pants and on with the overalls, and get out and sell our exports". This is what was done, and the results were tremendous. We set up the national productivity council immediately upon taking office. We only need think of the winter works program, the great assistance given to the maritime provinces of $25 million a year which was later increased to $35 million; the vocational training schools program; the great sales of wheat. Remember the millions of bushels of wheat that were left on our doorsteps, and we got out and sold them to the countries of the world. Then there were the loans to farmers, grants to hospitals, and so on. I could mention others.

These, Mr. Chairman, were the things that helped to bring about the high degree of prosperity that Canada is experiencing today, I would not want the house to forget them.
We are now considering the minister's estimates. I have listed all the main items, and I notice that under atomic energy, the emergency measures organization, national research, defence production, industry and public printing his estimates show an increase of $24 million over last year. When we come to the individual votes I am sure hon. members will want to question why there is this tremendous increase of $24 million over the estimates of last year.
In speaking of the economy of the country the minister mentioned automobile parts and transmissions. I wonder whether he realizes that this was brought about by the study made by Professor Bladen which resulted in the Bladen report. Professor Bladen came forth with a formula that was so simple that it is hard to understand why someone did not come up with it sooner. It was done under a Conservative regime; we appointed Professor Bladen; we instituted the Bladen commission report. We did this with regard to transmissions and car engines to start with, and the Liberal government has simply followed on with the same program and extended it to automobile parts. It simply means that for every engine or transmission part that is imported into Canada and put into a car which in turn is exported out of the country, the manufacturer of the car receives a remission of the duty on the importation of that particular part. This has been a tremendous help to the automobile industry in Canada. It will be interesting to see what stand the minister takes when he sits down at the table with his United States counterparts who are at the moment deciding whether Canada should be allowed to continue this particular program.
The minister spoke about the great competitive position in which Canadian industry finds itself today. I wonder how much better this position would be if the Liberal government had not imposed the 11 per cent sales tax on production machinery. I am sure it would have been much better.
Then the minister dealt with the organization of the Department of Industry. In this respect he set before us one of the greatest empire building programs in the history of this government, in the setting up of the Department of Industry. He said that at this time they have recruited a staff of 290 people and this represents only 45 per cent of the

staff that will be engaged. This is what I understood him to say. This means that before too long the staff will be up to 500 or 600 people, and the department was only set up last July.
I do not think I need take up the time of the committee in explaining our party's position in regard to this department. We thought the work that is being done for industry by this department could have been done quite well by the Department of Trade and Commerce, which could have been called the department of trade and industry, if necessary. I realize that the Canadian Manufacturers' Association made representations to the Liberal government to set up such a department, but I do not think they had any idea that it was going to cost the taxpayers of this country something in the order of $24 million to operate it. I think they would have been just as happy if the taxpayers' dollars had been saved and the same work had been done by a department that was already in existence.
What did they do in order to get staff? They came out with a booklet asking people to join the Department of Industry. Twenty thousand booklets were printed at a cost of $2,140, and they were spread all over the country. That was one of the minor expenditures. Then they rented a new building at a cost of $384,000 a year which has 119 private offices, 59 shared offices, 29 general offices and 21 miscellaneous areas, as outlined by the minister in Hansard. for March 4, 1964 at page 530. I say this is a wonderful example of empire building. However, the taxpayer has to pay for it now that it is set up.
The minister went on to talk about area development. I could take all the time which is allotted to me to discuss this particular branch. The designated or depressed area system is under the jurisdiction of this branch. In case there is any misunderstanding I take full responsibility for what the Conservative government did in the designation of depressed areas. We instituted this scheme. These areas which were set up as designated or depressed areas were a result of the recommendation of the people in those areas. In other words, we as a government said to these people "If you find difficulty with the economic problems in your area, come to Ottawa and we will look into them, and if we think it is necessary we will designate yours as a depressed area". But, no the Liberal government took the opposite stand. They took the labour statistics, looked at them on a sheet of paper, and then went down the list and picked out the areas. The people in the particular areas
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had nothing to say about it, until the day an industry went to one of these areas and said to the officials there "We believe you are a designated area, and we think we would like to locate here".
These 35 designated areas have been set up across Canada. On different occasions I have spoken in this house about the problem existing in my own area, and I will not take the time of the committee by going into it again at this point. I would simply say that the designated area of Brantford lies plunk in the heart of an industrial area in southwestern Ontario which includes Galt, Kitchener and Guelph. The government picked out Brantford as a depressed area, and this makes the whole program very discriminatory and contradictory.
The criterion adopted is unfair. It is set up in such a way that municipal and provincial autonomy are disregarded, and the industrialists are not satisfied with it at all. The only industry interested is one contemplating moving into such an area and benefiting from these great concessions. It is discriminatory to the areas surrounding. In my community one industry was establishing itself in the city of Guelph; at least the foundations for the building were in. Then this particular industry heard of the concessions offered in Brantford, and moved over to that city. Other industries have also done this. The city of Galt is in the process of losing an industry to Brantford. I would ask the minister to remove Brantford from the list of designated areas immediately. The people in that community want no part of it, and it is discriminatory to the very roots.
The minister has promised on various occasions to look into the criterion adopted; he has said that it would be reviewed and something would be done about it. He said today that the criterion was not satisfactory, and I was pleased to hear that. The minister has admitted the criterion is not satisfactory, and I repeat that it certainly is not. As hon. members know, it is based on a six month period, on the percentage of unemployment during six months in the summertime. I submit it should be over the whole year. For example, in the city of Brantford, where the big industry is farm machinery manufacturing, for six months over the winter this machinery is produced and in the six months during the summer production eases off while the equipment is sold. This is one example which makes the criterion unsuccessful.
The minister said it has had good results, and I hope it has. The commercial industries

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which move into these depressed areas would have no doubt located somewhere else in Canada. The object of the scheme, of course, is to create employment in a particular area; but when this is done in a place like Brantford, working people simply motor from Galt or Guelph to Brantford and it does not ease unemployment at all. The whole business of area development must be very carefully scrutinized. The criterion should be changed, and I hope that before too long the minister will do this and put it on a much fairer basis than at present.
The minister went on to talk about trade missions, and in particular those respecting furniture industry and design, and the meetings which were held in various parts of Canada. I am at a loss to know how this is done under both the Department of Industry and the Department of Trade and Commerce, because I cannot see anything except overlapping, confusion and added cost. The Department of Trade and Commerce holds these meetings. They also hold trade fairs. They had a great trade crusade, and now here is the Department of Industry overlapping and doing the same thing. I hope I am wrong about this, but it appears to me there is a tremendous amount of overlapping.
The minister spoke under vote 5 about the U.S.-Canada cost sharing defence arrangement, which is a tremendous undertaking. This involves a large amount, and I hope some day this matter will be referred to the estimates committee for complete study. The program is very complicated. I spent some time with the deputy minister in charge of this program, and I must confess that we only scratched the surface. There is a lot more to be learned about it, and I confess I know very little about it.
I now turn to the Department of Defence Production. The minister referred to the transfer of people from that department. When we considered interim supply on August 4 I spoke about the Department of Industry, and at that time mentioned the fact that we had been told that when the Department of Industry was set up people would be transferred from trade and commerce and defence production to industry. We may not have been told in so many words, but we vere also led to believe that the staffing costs would not be too great. However, when we looked at the figures for these departments we found the over-all cost of operation of defence production showed an increase of $2,036,980 between 1962-63 and 1964-65. The Department of Defence Production staff was

increased by 168, so there could not have been very many transfers made.
On interim supply I then went on to point out how confusing the situation seemed to be because of the apparent overlapping among the Department of Industry, the Department of Defence Production and the Department of Trade and Commerce. I asked many questions during the debate on August 4, and suggested that the minister should answer the questions at this time. When the minister made his introductory statement today I expected that he would answer many of those questions. It may well be that he will do so at a later stage of this debate.
The minister stated that his department was following the suggestions made by the Glassco commission, and I was very pleased to hear that statement. I feel the Glassco commission recommendations are excellent. It would seem to me that the minister is taking steps to convert the Department of Defence Production into a department of purchasing and supply. In making these changes I think it is folly and poor business to hire new and additional staff. I think the staff of the department being converted should be transferred to the new department, but for some reason this does not seem to be the case. Very little thought is given to the cost and it seems that someone just says to go ahead and do it, spend the money and the taxpayer will have to pay more. I think that practice is nothing more than folly, and is morally wrong. I think when a department is reorganized its staff should be moved from the old department to the new department.
Mr. Chairman, the minister referred to Defence Construction (1951) Limited. This corporation was set up in 1951 to look after construction and procurement for the Department of National Defence. This corporation's estimates are lower, and I think they should be because there is less and less work to do in view of the present changeover position of the national defence program.
Mr. Chairman, I was a member of the public accounts committee and remember the Auditor General bringing certain cases in respect of Defence Construction (1951) Limited to our attention. As an example of what he found, I have picked three specific cases out of his 1963 report. The first example is referred to at page 150 of the Auditor General's 1963 report and relates to the authorized payment of $12,985 to a contractor because of delay in plans for construction. Another example involves the authorization of a $36,604 payment necessitated by delays and

changes in design. This payment was in respect of a project at Camp Petawawa. The third example relates to the expenditure of $16,315 resulting from a delay in the supply of electric power to a project to extend water and sewage facilities at Greenwood, Nova Scotia.
Mr. Chairman, there seems to be something in the operation of this department which is not as it should be. There are many other observations which one could make and to which the minister made reference in his introductory remarks. There are other estimates which will be dealt with specifically at a later stage of this debate, and I am sure many other members of this party will be particularly interested.
Mr. Chairman, with those few introductory remarks I shall take my seat. I hope as the debate on these estimates continues many interesting observations will come to the attention of the minister. I conclude by repeating what I said at the outset. It is a great mistake for this government, or any government, not to make use of the estimates committee, which is a part of our parliamentary procedure. I do not understand why this government did not set up this committee and refer the estimates of some of these departments to it. When the next session is under way I hope that committee will do what it is supposed to do, so the time of this house is not taken up considering a great number of minor details which could be discussed by the committee members.
Those are my general observations, and I hope to take part in some of the other discussions later on during the debate.


Mr. Peters:: Mr. Chairman, I should like to echo the remarks of the last speaker in relation to the Department of Industry being of importance to a large segment of the Canadian economy. I also feel that the minister should not be burdened with the responsibilities of those other departments under his ministry. The department for which the minister is now responsible at one time was under the ministry of defence production, and was considered to be a full time job, and one of the most important. The responsibility for administering this department has now been added to the burden carried by the Minister of Industry.
Mr. Chairman, many Canadian people will be looking to the minister for a much more forthright and frank statement about the Department of Industry and what is intended to be done in the future than he has made today. His is a department of resources, and
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I refer to the use of labour and production in a way that will provide advancement in the field of industry, in the form of assistance to those areas of Canada which have not been as fortunate as others. To date I believe this department has failed, as have most of the resource departments of the federal government, to give the leadership to the people in those areas which they can rightly expect. This failure is also true in respect of the Department of Forestry. That department in my opinion has been a complete flop as far as the development of the forest industry in Canada is concerned. The department of mines has also been a flop, in that it has given little encouragement to the mining industry in Canada.
This failure has probably occurred as a result of the lack of leadership. The lack of leadership I feel is a result of the lack of proper distinction between the responsibilities of the federal and provincial governments in these fields. That situation is not true of the Department of Industry, and for this reason we should be entitled to expect a great deal more.
Mr. Chairman, I am particularly interested in that branch of the Department of Industry relating to area development. I represent an area that is not a designated area. If the hon. member who has just taken his seat asks that the city of Brantford, which is a designated area, be taken out of that category he should bear in mind that that is an area which has obtained a great number of new industries. Brantford now has 29 new industries. Maybe he is saying that the plan was so successful in the Brantford area that they no longer want to presume upon the Department of Industry and are willing to share the wealth with other areas.
My problem is that the area I represent, particularly Teck township and the town of Kirkland Lake, is not a designated area. I would ask why it is not. There is very little difference between the town of Timmins, the Rouyn-Noranda area and the township of Teck and Kirkland Lake. These areas are very similar in nature and depend entirely upon mining. All of them have experienced a decrease in their labour forces because of the curtailment of mining operations; yet Noranda and Timmins have been named designated areas.
I asked the minister the other day if some consideration was going to be given to Teck township and Kirkland Lake. I am aware of the fact that the Department of Labour has more to do than any other department with the designation of these areas, but certainly

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a recommendation from the minister of the Department of Industry would be helpful because that department is aware of the results achieved in designated areas and the reasons other areas should be designated. There should be some statement why Kirkland Lake has not been designated and why the assistance available to sister communities on both sides is not available to it.
When I asked a question the other day the minister said he did not intend to intervene in this particular instance. Yet the Financial Post for August 22 contains an article headed "New Medicine Coming for 'Weak Job' Areas". The subheading is:
Drury team moves into phase H, plans whole raft of sophisticated remedies to cure "inefficient" use of labour force.
The article goes on to say:
"We are going to have to develop the industries that are natural to the areas," an official sums it up. This is probably going to be much easier than the more ambitious program to cut down on underemployment. Here the area development agency will be sailing in uncharted waters. Officials of the Department of Finance and Labour are joining with the industry men in search for ways of finding and working on these pockets where the work force is being used inefficiently.
It is far too early yet to guess how they will tackle the problem. But so far as the Department of Industry is concerned this is much more the sort of work it was set up to do than just moving industries into unemployment areas. In the long run, the officials believe, it will be on their success or failure in this field that the area development agency will be judged.
I have been very cautious about saying anything with regard to the Department of Industry or the area development section of the department because it was my hope that this agency in particular would provide some of the assistance that we in northern Ontario need to solve our problems. I am sure that when the Department of Industry was set up the officials were aware of what had been done by the former government and particularly what had been done by the governments in the maritimes. Because of the depletion of resources in my area and other mining communities a large unemployment factor resulted, and these communities found themselves completely unable to utilize the resources they had or to find capital to develop new resources. As was done by the maritime provinces, these people came to Ottawa with their hand out asking for assistance in the form of subsidies.
I think the people of the maritimes should be given full credit for the fact that through the Atlantic development agency they were able to do something for communities like Springhill. I have had the opportunity of
IMr. Peters.]
visiting Springhill several times in the last few years. The mining industry there disappeared completely because of a disaster. The people of the community set up an agency whereby money was provided to industries that would settle there. It was not done, as the minister has said, on the basis of finding industries which could be tied in with the resources of the area. That is an obvious consideration but, more important, they brought in industries that had no connection whatever with the former industry. I was very pleased to be able to go through the new battery factory and the new woodworking factory which is producing prefabricated houses. It is also interesting to note that several new coal mines are being developed in the area which are not related in any way to the very large company which carried on coal production there for so many years.
It seems to me that the people of Springhill have not found the situation as disastrous as they had anticipated. New industries are being brought into the area, and it would appear to me as an outsider they have gone a long way toward solving their problems. Now that they have taken the first step with assistance from the Atlantic development agency they will be able to take further steps on their own and other industries will follow.
We in northern Ontario carried much of this country for many years. The income from the gold mining industry during the depression years is well known to those with an interest in the history of our country. That industry provided a great deal of employment and a large part of the income in the province of Ontario in those years. There are few industries today in which you cannot find workers who during the depression went to northern Ontario or northern Quebec, found jobs and as a result paid income taxes and supported their families in other communities throughout the country. I believe that the contribution which was made by that area over a long period of time is well known.
It is interesting to note that in 1931 there were 2,894 miners employed in the gold mines. In 1932 the figure was 3,197; in 1933, 3,272; in 1934, 3,455; in 1935, 3,513 and in 1936, 3,687. The number rose to its maximum in 1939 when there were 4,440 miners working underground in mines in the township of Teck. But in 1963 the figure was only 1,282.
The need of assistance has been made more imperative by something which has happened, although it was not as great a disaster as

occurred at Springhill. In one of the mines at Kirkland Lake a severe series of air blasts occurred on August 14 with the result that two miners were trapped and lost their lives. Their bodies were not recovered until August 25. The mine has not yet been able to assess the damage and is completely closed down except for a few people engaged in cleaning up operations. No decision has yet been made as to what is going to be done.
I suggest this is an additional indication that the situation in Kirkland Lake is most serious and warrants consideration by the department. But we did not hear the minister say that such consideration would be given. A delegation from Kirkland Lake is meeting the Minister of Labour today, and I hope they will be able to convince him that the situation in that area is sufficiently critical to justify the inclusion of the area when areas are being redesignated this fall. Unfortunately in this area workers in agriculture, farming and the forest industry were removed from the jurisdiction of the unemployment insurance office in Kirkland Lake and placed in the tri-town area, with the result that the actual situation in Kirkland Lake is not apparent from the unemployment insurance commission figures.
I asked the minister several days ago what assistance would be given to the Timmins area to help in developing the Gulf Sulphur project recently established there. I was surprised to find out that the assistance the department was willing to offer hinged again on the Department of Mines and Technical Surveys and the small assistance it can provide, a small consideration by the Department of Finance, and really no understanding by the Department of Finance as to what it was going to be able to do in relation to developing this industry. Yet this is something that would provide enough employment for the town of Timmins so that it would no longer qualify for designation as a distressed area.
Incidentally it would provide all northern Ontario with secondary industry, because if we can process the minerals in this area it will provide employment for a large number of men. I am told that the handling of ores from Texas Gulf in that area, over 300 million tons, would employ 20,000 employees in the smelter complex, and this in turn would provide many jobs in secondary industry. Still the department is not in a position to decide what it will do about it.
You may find it surprising to learn that a company like Gulf Sulphur is not unlike a company such as Cleveland Cliff, because in many instances a company finds it impossible
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to undertake a multimillion dollar complex for the development of mineral resources on its own, and has to work out arrangements with other companies or agencies to find the capital necessary to establish a refining industry.
That is what we expected the Department of Industry to do, and I had considerable faith in the ability of the deputy minister to instigate surveys to find out the potential of an area, something which is referred to in the Financial Post of August 22, in which it stated it was indicated by officials of the department that they would be able to decide what was the potential of an area, that surveys would be conducted according to the arrangements outlined in the booklet issued by the Department of Industry when it was seeking recruits. In my opinion all this should have been done by now.
To northern Ontario, the maritimes and many other areas this is the most important department of government and is the one that can make the greatest contribution in the shortest period of time. The minister did not announce whether he was going to initiate controls over industry. I do not think there will be any argument when I say that every time a new industry goes into the city of Toronto it creates an added liability on the resources of that city. A factory going into the outskirts of Toronto will overtax its already overtaxed school system. The city's transportation systems are vastly overtaxed and new factories put a further strain on them. I believe the Department of Industry has a responsibility to calculate these liabilities.
If the department wants to bring any type of industry into northern Ontario we will provide that industry with all kinds of concessions, but it is unfortunate that under the free enterprise system industry is reluctant to take advantage of any offer made by municipalities outside metropolitan areas. The reason is that industry believes it must centre its factories in the major areas of consumption. I have talked to industrialists who say they figure an area must be able to consume 80 per cent of a factory's production, whether it be corn flakes or radio parts, before they would be interested in establishing a factory in it. If this is true then obviously the only thing a manufacturer can do is establish his factory in a major centre of consumption, which means in the golden horseshoe or in the Montreal area.
This may be very satisfactory from the manufacturer's point of view but it is damned

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unsatisfactory from the point of view of areas built on a natural resource and which find that natural resource being depleted. It is all very well for the minister to say, as his officials have said, and I am sure with his agreement, that they are going to concentrate on those areas whose basic resources can be used to develop secondary industry. In the main this will not apply to resource areas of currency or precious minerals, where the mines are facing depletion and their closing is only a matter of a few years hence.
I have some knowledge of the lumber and forest industry in Ontario, where for a number of years I represented a segment of the forest industry in negotiations with many of the companies involved. Many of these companies are nearing the end of their existence in their present localities because reforestation has not taken place, and most of the communities that were supported by the forest industry have no other resource. This is true of Renfrew, Pembroke, Temagami, Latch-ford and Blind River-all through the whole white pine industry where the resource will not be rebuilt in our lifetime. It will be 70 or 80 years before the natural resources of these communities can be replaced, and none of them are willing to wait that length of time. Certainly we should not wait for our centennial as an occasion to rebuild them as ghost towns, as was done in Dawson City.
I would ask the minister to give us a resume of what the department has done in the relocation of industry. In this respect we have a lesson to learn from other countries because Canada's problems are not unique. They have been explored and solved by many other countries. In Sweden the authorities take industry into areas of underpopulation, but the minister has said that we are not interested in taking industry into unemployment areas. For that matter I am of the opinion that we are not interested in taking unemployed people into other areas but should concentrate on improving areas already settled and on spreading industry across the nation in order to give benefit to all areas.
Relocation of industry has been a very serious part of industrial programming in the United Kingdom, which has an act governing the relocation of industry. In fact many of the promises made by the Liberal party to give assistance for the relocation of industry are not unlike the program undertaken in England, but you cannot relocate industry solely by co-operation with industry because 
you wiR find industries have no intention of going into areas in which they are not interested.
It took one terrific factor, the wage factor, to move industry out of Toronto into the towns of Barrie and Orillia, whereas in England the authorities solved this problem by saying to companies, "If you want to expand, the department of industry will give you a permit to expand in areas of large unemployment where the social services are in excess of the needs of the local communities." They held out a carrot by offering concessions in a financial sense. They gave tax concessions, and the department of finance ruled that companies would not be able to draw on undistributed profits unless they were putting them into an area for which the department was giving them licences.
Take, for example, the Ford plant in Great Britain. Ford did not go into its present location because it wanted to, but because it was asked to. The authorities in Britain were greatly concerned about rebuilding certain areas of the country which, since the war had fared less well than others, economically, particularly those areas in the northern midlands which had been adversely affected by changing conditions in the textile industry. Consequently industry was invited, or directed, to places where the necessary public services such as schools, roads, hospitals and so on already existed, in addition of course to large numbers of skilled workers with housing to accommodate them. I think this system has brought great benefit to the areas concerned.
Here in Canada, one of the areas where a similar arrangement could be followed is northern Ontario. We are not situated a great distance from potential markets. We have the facilities-housing, hospitals, schools, and so on. We have the northern Ontario institute of technology. There is the Ontario-owned railway which could be used for the subsidized transport of industrial products to the main centres of consumption. We have all these advantages. We also have the people. In Kirkland Lake, a town of 17,582 persons, only 1,282 are employed in the mines, virtually the only occupation open to them. It is up to the minister to decide, in conjunction with his colleagues, that he will designate this area and use it as a showcase for industrial development. There are advantages here which exist nowhere else. Since the beginning of the war, this community has existed by reason of emergency gold mines assistance payments, receiving each year grants to the

tune of about $13 million. We have made concessions. The town has made concessions, and the whole country has made concessions. If the present minister would take a look at this $13 million and agree to put this kind of money into the establishment of new industry in this area we would be happy if he were to cut off E.GJVf.A. payments tomorrow. I say this because we are not happy about carrying an industry which has no foreseeable future, or whose scope is very limited. We are interested in industries which have a future, which will grow with the community and allow the community to grow with them. Steps can be taken immediately in this direction. I will certainly support them. Let me tell the hon. gentleman that I will defeat any of his party's candidates in that area for years to come if this government neglects to do something for communities where there is obviously so great a need.
If no action is taken along these lines, then the hon. gentleman's government is not worthy of support. The minister has the ability. There is nothing wrong with it. His talents in administration have been proven for many years. Certainly, Dave Golden is one of the most capable administrators this government has. If these two men are unable to do anything about this situation it means the cabinet is not interested in the Department of Industry. If I have any justification for being here, it is to see that this department does the job for northern Ontario which it was set up to do. And if the hon. gentleman's colleagues will not support him in this effort, and if he is not prepared to make a more active presentation with regard to these issues, and to the case of northern Ontario in particular, then I hope the government is defeated in the near future, regardless what the reason is. I am confident that the very existence of the people of northern Ontario depends upon their getting federal assistance to develop industry in the area. The future in northern Ontario depends on this, just as people in the maritimes are dependant on this department for their future existence.
The government should not consider this department as being a department of the second rank. I believe it should be considered immediately as one of the most important departments of the crown. It is the department with the greatest future. It is the one which in my opinion offers the greatest opportunity. The distressed areas need strong leadership to put them back in the field of production so that they can make their contribution to the payment of income tax and the other
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forms of tax which support the finances of the central government. We in Kirkland Lake are not interested in drawing unemployment insurance; neither is any other community in northern Ontario. We are interested in paying heavy income tax and this will only be possible if the Minister of Industry can provide us with the means of employment which will allow us to do so.


Marcel Joseph Aimé Lambert: Since this department received some attention in the interim supply debate a few weeks ago my remarks today will be shortened because it was definitely the intention of the official opposition at the time that since the main estimates were not coming forward we would discuss the departments as though this had been the case. For this reason, my remarks this afternoon will be limited.
First, I can only agree with what was said by my hon. friend from Wellington South (Mr. Hales). As I have said many times in the past, I believe the estimates of a department such as the Department of Industry should have been referred to the committee on estimates. I think the department itself might well recognize the wisdom of this course. After all, this is a new department which is still feeling its way and I think it would be a good thing for the senior officials, as well as for the government and the minister himself, if the opportunity had been taken to explain, before the committee on estimates, the way they were going.
I cannot agree with all the hon. member for Timiskaming said, but I certainly agree that there is implicit in the erection of the Department of Industry a great potential. I myself thought initially that this department could have been maintained within the Department of Trade and Commerce. I can only agree with the criticism put forward by the hon. member for Wellington South that a great deal of this work could have been done under the one department. Since the criticism has been made, I will limit myself in that regard.
The minister painted a glowing picture of the economy as though the present situation had been brought about by the beneficence of the Liberals-they had merely to come to power for all to be well. Obviously, the hon. gentleman did not consult the Minister of Finance who is aware that the improvement began in 1961. Indeed we could point to a number of factors to explain why the minister was able to quote the statistics he did this afternoon.

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First of all, Mr. Chairman, we all agree that Canadian manufacturers are much more active today than they were a few years ago. I believe the pegging of the dollar at 921 cents gives manufacturers in this country a definite advantage. I do not think there is any manufacturer or any responsible minister who will deny that this move has given Canadian industry a considerable lift. Second, there has been through the aegis of the Department of Trade and Commerce, initiated some years ago and continued by this administration, a much greater activity on the part of its trade commissioners. This fact and the various trade fairs that have been organized have helped our industry.
I would say, too, that Canadian manufacturers are much more active abroad, not necessarily only because of incentives provided by the government. There has been a great change in their own attitudes, and I believe we must pay considerable tribute to the management in the majority of industries, and to labour, for approaching this problem from a sensible point of view. Management, who were faced with a very gravely declining international and domestic market, decided they would have to modernize; they would have to cut costs; they would have to do away with outdated methods, rebuild, re-equip, and place some restriction on the withdrawal of earnings. I believe this is one particular step that we must encourage; we must encourage industry to plow back earnings into productive capacity. This is one of the criteria used to justify a tax cut.
Labour must also assume its proper share of responsibility in this regard. It is not only a question of rates of labour, but it is the responsibility of labour, as distinguished from management, if you will, not to make unreasonable demands, although they have a right to share in a just proportion of expanded earnings. But we must first of all realize there will be no opportunity for greater employment unless there are additional capital facilities to absorb additional labour, and there must be correspondingly additional sales. I do not care how much you get people to work; you can put thousands upon thousands of people to work, but if the goods are not sold at a profit or a fair return, the enterprise is bound to fail and those people are not going to continue in employment.
Therefore we must give management the encouragement to retain earnings for the replacement of capital production facilities, whether they be new, for expansion or for

replacement. Second, as I have said, I believe both management and labour must exercise due restraint, bearing in mind that it is only with an economically viable capital that we are going to get not only continued economic activity but expanded economic activity. Therefore, Mr. Chairman, labour and management must approach this problem with a real degree of sense of responsibility.
Having said that, I think we must turn to the remarks of the minister. I do not think he had seen an article that appeared in the business section of the Globe and Mail this morning, entitled "Boom continuing, but weak spots mar some fields". We must realize that our economy goes forward, not necessarily at an even pace but some sectors go ahead further than others. The statistics the minister gave us this morning were interesting, particularly those with regard to household appliances, furniture and automobiles. However, Mr. Chairman, I believe that if the minister had reference to certain surveys which were conducted very recently he would have a better understanding of the situation. I will quote comments in regard to these surveys, which indicate that perhaps a degree of caution might be introduced at this point and in order that the figures the minister has placed before us can be viewed in their proper perspective. I quote from this morning's business section of the Globe and Mail:
Producers of household appliances and furniture have had little to crow about since spring, when the government stimulated winter housebuilding program came to an end. Retail sales of furniture and appliances, seasonally adjusted, fell 6.3 per cent between April and June.
I continue reading this article:
The decline appears to have been centred chiefly in such big ticket items as refrigerators, television sets and record players. The demand for electric stoves and washing machines continued to rise, but not enough to offset what appears to be a developing weakness in the market for consumer durables as a group.
The pattern of demand for household equipment has been disrupted by the winter building incentives-which are to be offered again in the 19641965 season-but it seems that market saturation also is a factor.
I would warn the minister that reliance on statistics up to, say, the end of April or the end of the fiscal year, March 31, in this particular sector will be distorted, much as the over-all building picture is distorted if it stops as at March 31. This is because there was an artificial stimulation for the period December 1 to March 31; I believe the minister would be the first to recognize this. Therefore a general conclusion arrived at on

a short period base for these indices of industrial activity can be very misleading. This is all I shall say in this regard, Mr. Chairman.
I now pass on to the question of the underdeveloped areas. The minister said that in 23 regions some $245 million of investment had taken place in plant or projected plant and that some 9,000 men were being employed. There immediately comes to mind the question that the only worth of this program is with regard to what increase it has created over and above normal development. If this is all that has happened in these regions, I would say again that there is a distortion. But if it is $245 million of additional, over the normal, development that one could expect, then I say it is all very well. However, Mr. Chairman, I think the question as to whether this is the whole picture or is an increase must be answered. I realize that because of the time lag that is required from the time you make a decision to build a plant to the time when you are employing people, when you are in production, many months can elapse. One cannot look for miracles overnight in industrial stimulation. This applied to some of the other programs instituted by the former administration, which were cut off I think much too soon. Insufficient time had been allowed to give them the opportunity to show true results.
I should now like to deal with the area development agency. The hon. member for Timiskaming has almost made this a compulsory economic planning unit, and the comparisons that he made with the United Kingdom are, I think, improper, in that dealing with Great Britain we must remember this is a very small country and the costs of moving populations are very small, as are the costs of moving plant. These costs are relatively small compared to this country. We cannot take something and say we will transfer it from some area in the Atlantic provinces to another area in western Canada, although western Canada is fortunately blessed with few underdeveloped areas. What I am concerned with is the cost of this overhead to Canadian industry as a whole. How many people are employed in the area development agency, and what have been the expenses of its administration compared with the results obtained? This is a very important question to which we should get an answer because, as in business, you cannot undertake a mammoth sales campaign unless it results in gain. If it results in no increase in sales then it has just been a great waste
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of money. That is the criterion on which we must measure the efficacy of the government program so far as area development encouragement is concerned.
I was glad to hear the minister in his opening remarks indicate that the criteria on which the 35 areas had been selected were not quite the right ones, and that there could be a considerable improvement. Without wishing to claim that I am one of those who said "I told you so", I think this danger was pointed out to the minister at the time. I am hoping that he will come up with some much more worth-while and viable yardsticks for a determination of an underdeveloped area which can come under this particular tension.
So far as the Department of Industry is concerned, the minister indicated that he had a staff of around 250 to 275. However, when we look at page 177 of the book of estimates we see that the paper establishment for the coming fiscal year will be 573. It is very instructive to note that of those 573 some 261, or nearly 46 per cent, are to be officers with a minimum salary of $10,000. So the minister is obviously not running a department of low-paid personnel. I realize he has to compete with industry. Although he has a lot of directors of various branches, I realize he cannot get directors from industry to assist industry unless he offers these salaries in order to encourage them to enter government service. But let us not think that this is going to be a cheap operation. At the present time it is almost composed of as many chiefs as Indians, if I might use that very slangy phrase.
I would repeat what has been said by my hon. friend from Wellington South, that I would have thought we could do the same sort of job, and perhaps a better job, by concentrating this whole complex within a section of the Department of Trade and Commerce and renaming it the department of trade and industry, if you want. This could have been done at much less cost in numbers of personnel, as well as office space and what-have-you.
Now let me turn to defence production, as I have a few matters to raise in this regard. With regard to the ten purchasing branches which the minister has set up-I think that is correct, but having taken just a brief note as he went along it is a little difficult to be sure I have all the detail-this is perhaps a refinement of what existed before. True enough, if defence production is to become a central purchasing agency perhaps there is

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justification for this division of the Department of Defence Production, each section under a director, and so on. The proliferation of the hierarchy is evident in all sectors. What further concerns me is the matter of warehousing. I should like the minister to give us an explanation as to how warehousing will be controlled. Is the department going to take over warehousing from, say, the Department of National Defence which has huge warehouses? To what extent will they take over warehousing on behalf of public works, northern affairs, or transport? I am not too sure, but I have a feeling that in its first steps towards a central purchasing agency the department is caught in a sort of a tug of war with other departments which may not wish to give up the purchasing establishments which they have at the present time. We know that certain of the departments have very extensive purchasing agencies with technical staffs to back them up. I must confess I fully agree with the Glassco commission in this respect. I have come across more of the lesser departments, shall we say, whose purchases are not as great as others. I do not include in this the Department of Transport or the Department of Public Works, but there are others which have their technical engineers, and they are buying equipment. They have their own people to assess and to determine whether graders, draglines and cranes, and what-have-you, are of a certain value, and whether the new bids are based precisely on what they want. I think that a lot of this could be telescoped into a proper, efficient purchasing agency. But let me give one word of caution: It must not be up to the central purchasing agency to decide necessarily whether the item concerned is required. After all, are we setting up just another establishment alongside to query and evaluate what a department has already done?-because that is merely duplication. After all, a department, if it is going to enter into the purchase of major equipment, must justify itself to treasury board. Certainly the purchasing agency must not then set up a third body for evaluation purposes. This has applied to some extent, I think, to defence production. It has unfortunately crept in at times in defence construction. It must be something that the minister should always watch.
With regard to defence production sharing,
I recall that one of the problems which the defence committee ran into in Europe last November was that each of the countries had something to say about defence production

sharing. Each country felt it should have a greater share within the NATO complex. I realize I am only telling the minister something he already knows, but we found each country had its own aspirations. That is all very well, until you run into the dominant NATO partners, who themselves have their own aspirations in the production of defence equipment. This is a very complex point and I do not know whether there is an ideal solution. I think it is just a case of pushing as hard as you can, and trying to struggle on. Ideally on paper, and perhaps in editorial columns, it looks as though it is a very easy thing to achieve; but having talked to the defence people in these countries and to our friends the Americans and our own people, it does become exceedingly difficult.
The Canadian army is now using one weapon manufactured in France. I understand this weapon was purchased under the standardization procedure. It is very well to obtain this kind of equipment, but I understand it is difficult to obtain the technical information required. Unfortunately the French government, or the manufacturer is very reticent about providing technical information. When this information cannot be obtained it is very difficult to maintain the equipment or carry out further workup procedure. These manufacturers or governments may feel perfectly justified in the attitude they take, and I am not suggesting the French government or manufacturer of that particular weapon is alone in this regard. However, I think if we are going to enter into defence sharing programs everything must be put on the table. There must be complete co-operation between the partners, because if something is being held back because of a fear that one partner will suddenly commence to manufacture a specific article, this mistrust within the spirit of co-operation in the alliance will doom the whole program to failure.
Mr. Chairman, the minister in his opening remarks referred to the use of a general supply ship, and I am sure he had in mind the Provider. We have heard some very disquieting rumours about the Provider. I was on that ship and found the whole supply idea novel. It certainly represents a departure from normal supply patterns, in that we have lumped together various supply requirements in the one ship rather than having specialized ships doing specific things, which is the practice followed by larger navies. I should like the minister to tell us what corrective measures will have to be made in respect of the Provider in order that it may

function more efficiently in the role originally intended. Some of the equiment on the Provider I understand is not functioning properly. I am not criticizing the minister in this regard nor the principle of this ship because I realize this whole concept is new and perhaps has not worked out as well in practice under actual conditions as may have been hoped. I think we must be reassured that this was a proper venture, and that whatever difficulties have occurred will be corrected so the ship can take its proper place in the defence picture.
Mr. Chairman, because of the restricted activities of Defence Construction (1951) Limited, other than in respect of maintenance of our defence establishments, obviously we have reached the point where we must decide whether this corporation is required. Surely we are not going to expand our airports or army barracks, and with the cutback in our forces there will be a lesser requirement for this corporation. Surely this corporation will not be maintained merely for the purpose of constructing a new national defence headquarters. I should like the minister to tell us why Defence Construction (1951) Limited is being continued. In the event that it does remain in operation I should like the minister to tell us what experience his department has had in respect of time and material payment bonds, the use of which was brought into the picture in respect of tendering on government construction projects about two or three years ago following a series of several very unfortunate incidents. I understand subcontractors were not being paid by prime contractors because these went into bankruptcy and abandoned projects which the government had to take over and complete one way or another. I am concerned primarily with time and material payment bonds because it took three years to convince treasury board and senior government officials in certain government departments that this practice should be followed. I would appreciate receiving all the information the minister can give me in this regard.
Mr. Chairman, I am sure there will be other items in respect of which we will ask questions. I hope the minister will bring down the appropriate senior officials so that we will have the necessary information available at the time we are dealing with particular items. I think perhaps the minister will understand why we did not want him to deal with every branch on item No. 1 of his estimates. I am sure the minister will bring his officials of the various departments
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and crown corporations or agencies for which he is responsible, so that we may obtain information readily.


Mr. Gray:: Mr. Chairman, I value this opportunity of making a few brief comments about the operation of this very important department. The first spokesman for the official opposition made some reference to the usefulness of referring estimates of this type to an estimates committee. Since I have had the privilege of being here I have considered that estimates, certainly in the initial stages, could be considered much more effectively by various committees than by immediately commencing our consideration in this chamber in the committee of the whole. However, I must say that to have these estimates, this type in particular, studied by a blanket committee on estimates would not be the most effective way of considering them. If this is the type of procedure to be followed, and I hope we will arrive at this stage at some relatively early date, it should be changed so that estimates of various departments are referred to a committee comprised of members particularly interested in the specific topics to be considered.
I may also say in passing that I think note should be made of the fact that the previous government was not in a hurry to set up a committee on estimates to study the estimates. Certainly there was no such committee set up during the 1962 parliament, and, if I am not mistaken, no committee was created during the greater portion of the period in which the previous government was in office.
Mr. Chairman, I was pleased to hear the praise of the hon. member for Wellington South in respect of the Bladen report and formula. I find it curious, however, that the hon. member indicated the great degree of simplicity in this program, in view of the fact it apparently took the previous government some two years to do anything about it by way of implementation. I think I should point out briefly that the implementation of this formula was only in respect of transmissions, and the program was to last for only one year. It is to the credit of the Minister of Industry and the present government that the plan which has now been set up covers the whole range of automotive manufacturing and is to be in effect for a period of some three years, which is the period the industry itself believes is necessary before it will be possible to have a truly useful and beneficial effect on the economy of our country.

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Mr. Chairman, I must say I was somewhat surprised to note also that spokesmen for the official opposition felt that secondary industry in this country had not yet reached the point where it merited as much attention from the federal government as the fields of agriculture, mining and forestry, all of which I will readily admit are very important to the economy of this country. Each of these fields has a separate department of the federal government to look after its interests. Each of these departments has several thousand employees and, in fact, in the case of the Department of Agriculture the number runs into tens of thousands. I would not think that a staff of 400 or 500 people is too large to help to look after the needs of secondary manufacturing in this country, a phase of our economic development which now encompasses the employment of some one million people. In fact, the latest edition of the Canada Year Book indicates that in 1960 it employed some 21 per cent of the labour force and was responsible for some 26 per cent of the gross national product.
Instead of criticizing what is really more or less a tentative beginning in bringing the attention of the federal government more fully to bear on this important segment of our economy, I think the opposition should have called for even greater attention by the federal government to this field of activity, an attention which can only be provided in a truly effective manner through a separate department and a separate minister. As I have said, Mr. Chairman, if the forest industry, the mining industry and agricultural industry are sufficiently important to require separate departments with separate ministers, surely the time has been reached when secondary manufacturing now plays such an important role that it must have a vital, effective department of the federal government to give it the proper attention it needs.
I think it should be noted that there has certainly been no real criticism from secondary manufacturing itself with regard to the fact that this vital department has been set up and is now operating. In fact, quite contrary is the case. The hon. member for Wellington South has suggested that for this vitally important segment of our economy employing some one million people an expenditure of $24 million is too large, but it should be noted that of this $24 million some $19 million is, to quote from the estimates, "to sustain technological capability in Canadian industry by supporting selected defence

development programs". I hope the hon. member does not mean that the official opposition is opposed to this vital work of the federal government. In fact, this would apparently leave only $4J million for the actual operation of the department itself and, with one million employed in secondary industry, this means in fact an expenditure of about $3 per employee. I must say I do not think that is too much for a phase of our economic activity that is so important to the country.
While some reference has been made to the attempt of the previous government to do something about areas of slow growth and chronic unemployment, without attempting to indulge in a detailed critique of these efforts at this point I think it should be recognized that the tentative steps they took in this regard were generally recognized as useless and ineffective by those directly concerned-the people in secondary manufacturing industries. I refer particularly to the very slight results from the double depreciation program. I think it must be reiterated that a very important feature of the present government's approach to dealing with areas of slow growth and chronic unemployment has been the creation of criteria which, though they may be subject to improvement, have been set up in a fair, open and equitable manner and may be applied in the same way in any area of our country.
I think it is quite well known, Mr. Chairman, that the area I represent has been included in this very important program, and I want to say at this time that as far as I am aware there has been no criticism of this program and the benefits which have flowed from it already from my community. On the contrary, there has already been not only a considerable degree of praise from the community but also of actual success in getting our community moving forward once again.
As an example of the interest of the local industrial and business community in this program, I would point to the very successful industrial development seminar which was held in Windsor at the end of March and which was attended by some 250 leaders of business, industry and the accounting and legal professions primarily from the Windsor area itself for the purpose of learning more about how the community of Windsor could take advantage of this very important program. It should be pointed out once again, as I have had the privilege of doing already in the house, that this seminar was carried on under the joint sponsorship of the Windsor chamber of commerce, the Windsor and district labour council, the Windsor industrial

commission and the greater Windsor foundation. It was a splendid example of the true spirit of co-operation that exists at the present time between all segments of the Windsor economic and industrial community.
It should be pointed out that to a great degree the expansions that have been announced and are under way in the Windsor area as a result of this very important and useful area development program have been undertaken by local firms. I think this helps to show the interest that can be generated in the areas concerned because of the new incentive program. I should like to bring to the attention of the committee one or two examples of what has happened since the program went into effect. I want to refer to one or two brief extracts from the Windsor Daily Star. On August 7 the Windsor Star had an article reading in part as follows:
A prediction that construction in Windsor during 1964 will reach $20 million, an all time high, was made today by city building commissioner Patrick Maguire.
Another article which appeared on August 20, 1964, reads in part as follows:
Windsor's building department is lagging about a week behind in processing building permits because of the unusually brisk pace of construction this year, Patrick Maguire, building commissioner, said today. The department issued permits worth $600,000 Wednesday. So far this year, more than $10 million worth of construction has been cleared through the building department and officials will not be surprised if this figure is doubled by the end of the year.
I must say that a large part of the building development has been in the form of commercial building, apartments, factory expansions and stores, all of which are eligible for the fast write-off of depreciation which the government has created as a part of its area development incentive program. I am sure the committee is also aware of the plant expansions that have been announced for the Windsor area since this program went into effect. One hon. member quoted from an interesting article in the Financial Post with reference to the new General Motors plant which will employ almost 2,000 people in the Windsor area. Other expansions have been announced. Just from memory I can recall the L. A. Young expansion, the Kelsey Wheel expansion, the International Tool expansion, and there are others as well, all of which came about only after this program was announced. While members of the official opposition may attempt to claim that this was perhaps due to some form of coincidence or to some type of program which they attempted to set up, I think it goes
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beyond mere coincidence or any efforts of the official opposition when we look at the fact that this prosperity, which exists in the Windsor area at this time, and which did not exist in any way whatsoever, unfortunately, because of the neglect of the previous government, came into effect only after the present government took office. The Department of Industry was established, the area development agency was established and the tax incentive program was established, and this program is already doing so much for my own community of Windsor.


Alfred Dryden Hales: Would the hon. member permit a question?


Herbert Eser (Herb) Gray: When I finish my remarks I would be happy to receive questions. There was some suggestion made by the hon. member for Timiskaming that we should have greater regard to approaches taken in other countries, when it comes to the location of industry. I think that at least in part he is making a very useful suggestion. However I would point out that in Sweden, so far as I have been able to determine, their emphasis is directed more on moving people to jobs than jobs to people. Their major emphasis is on mobility of labour, and so far as I have been able to determine there is very little in their program to encourage industries to move into areas of slow growth.
They have nothing similar to the English program of, in effect, making it necessary for firms to go into certain areas through the granting or withholding of building permits. That leads me to another point, to remind this committee that because England is a unitary state, with one parliament dealing with all aspects of national life, they are in a position to use methods with regard to the location of industry which, for constitutional reasons, would not appear to be available to the federal parliament.
The main activity of the English parliament in so far as making it necessary for firms to move from one area to another, or stay where they are, arises out of the fact that they have legislation which makes it possible to grant or withhold building permits, something which in Canada would appear to be under the jurisdiction of the provincial governments.
When we deal with this important subject we should be sure to take measures which are clearly within the competence of the federal parliament, so that if we do create plans to help industries to expand in certain areas and move into certain areas we will not create

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programs which will lead only to complicated constitutional disputes, rather than to industrial expansion in areas of slow growth.
It should be clear from the measures already taken that the present government is interested in encouraging the location of industries in areas of slow growth and chronic unemployment that still may exist in this country. While it may be suggested that this type of measure might lead to some form of increased costs for individual firms, this must be balanced against the over-all economic cost to the entire country of having certain areas remain areas of slow growth with high welfare costs and high unemployment insurance costs under which many of these areas remain in their present state. If we balance the economic cost to the entire country against the cost of measures of this type, put into effect by this government, I think it will be readily seen that this is something which even from the sheer economic point of view is most necessary and valuable to the country.
I might point out, however, that the incentive approach, the tax incentive approach used so far by the government, is something which helps prevent uneconomic industry from going into areas of the country where it should not go because the use of the incentive measure means the individual firm itself makes the decision rather than the government and, second, for these measures to have the most beneficial effect it is necessary for the firms which locate in the areas in question ultimately to make some form of profit, which helps prevent firms which do not have a sound economic future from locating in areas of slow growth.
In conclusion, while this department has already made a most useful and constructive beginning, there is no question that there is more that can be done, and I want to mention one point briefly here. I am referring to the area of public relations. It would seem to me that the programs this department is administering at present, and is going to be called on to administer, depend for their success on having as many of the people in this country as possible know enough about them so that they will be able to take advantage of them, and of course the public generally needs full information about the operations of the programs of this department so that it can assess its value to the country.
It would seem to me that up to now the department to an unnecessary extent has kept its light under a bushel. I recognize this is because some of the programs it administers

involve tax incentives and that there are requirements of secrecy in existing law. However I hope that in future the department will do more to encourage firms which qualify for the incentives to announce that they are taking advantage of them, or to get permission from these firms to make the announcements itself. As an alternative, in future, once the firms make the announcements, in a way that appears to a certain extent in that very interesting article in the Financial Post to which I referred, the department should take greater steps to spread this information throughout the country and put it in the hands of people in the business and financial communities who would be interested in it.
I must say that as yet, in spite of the good work that has been done, a lot more can be done in the area of public relations. I just mention one example. I do not think enough persons know as yet that if an area, because of improvement in economic conditions, because of improvement in employment, may leave a status where under the existing criteria it will be removed from the list of designated areas, the firms which qualify for the incentives, either the accelerated depreciation or the three year tax holiday, will be fully entitled to take advantage of these incentives for the full statutory period provided by law. There is no reason why such a community should really be concerned about at some time not being on the list of designated areas because, if that is the case, because of the specific criteria which have made it necessary to place that community on the list, it will mean there has been sufficient improvement in employment and economic conditions so that the community has now begun to catch up with other areas of the country and can stand on its own feet. This type of thing should be brought more fully to the attention of the business and financial communities, and to some of the areas that might be removed from the designated area list.
I hope that the Department of Industry will not be afraid to continue to take vigorous and effective steps, even more vigorous and effective steps, to assess the development of secondary industry in the country. There has been a negative type of criticism of the department in this chamber today, but I think that generally the secondary manufacturing segment of our economy and the people employed in it will welcome and support measures taken by the government and the department to continue to strengthen secondary manufacturing, and thereby take very

important steps to maintain and increase employment and production in this country.


Alfred Dryden Hales: Would the hon. member not agree that the institution of the Bladen commission's report by the Conservative government did more to help the employment picture in Windsor than any other single factor?


Herbert Eser (Herb) Gray: If the previous Conservative government had actually instituted the Bladen report I would agree with the hon. member. Unfortunately, that government did not have either the courage, or the interest in the Windsor community, to do so. After two years of continuous pressure by my hon. friend from Essex East, to which I added my own voice when I had the privilege of being elected to this house in June, 1962-


An hon. Member:: Another speech?


Herbert Eser (Herb) Gray: I am answering the hon. member's question. Perhaps he wishes now that he had not asked it. What happened was this. In effect, the Conservative government brought forth a small mouse, a very limited application of the Bladen principles only with regard to automatic transmissions. It was a program which was to last only one year, and representatives of industry said it was not long enough to do anything meaningful for the automobile industry in Canada. The development to which the hon. member referred began only after the present government brought in a plan which reflected the Bladen principles, and applied them to the entire range of automotive manufacturing over a term of three years so that industry could really take advantage of the situation.


Alfred Dryden Hales: But would the hon. member not agree that the Bladen report was instituted in 1962 and that it took effect on engines and transmission parts?


Herbert Eser (Herb) Gray: I will agree that there was an implementation of the report only to cover automotive transmissions and parts. It should be to the eternal shame of the Conservative government and its supporters that it took them two years to do that, when they should have applied the principles of the report to the whole field as soon as it came out.


Fred Frise Stenson: I think the department whose estimates we are now considering is one of the most important departments to come before us. I am sorry there are not more members present on the government side of the house to give the minister their support. There are six of them in the chamber. That
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is how interested they are. Even the whip is not here.
With regard to these estimates, may I say I am at a loss to understand how this department can operate efficiently, spending the amount of money it does, and how it has aided industry in this country, or will aid it. The minister, like the hon. member who preceded me in this debate, the hon. member for Essex West, spoke about our flourishing economy. That, Mr. Chairman, is a direct result of good legislation and planning by the former government.


Some hon. Members:: Hear, hear.


Fred Frise Stenson: I should like to ask the hon. member for Essex West if he considers the devalued dollar of any help to Windsor?


Herbert Eser (Herb) Gray: Would you like me to deal with it now?


An hon. Member:: He opposed it.


Fred Frise Stenson: Some time ago I asked the minister if his staff would be drawn from the Department of Trade and Commerce and the Department of Defence Production and he assured me this would be the case. Yet the estimates of the Department of Trade and Commerce have increased by approximately $9 million this year. The Department of Industry itself has a budget of $24 million, and if we look at the estimates of the Department of Defence Production, we find they have only decreased by the amount of $1,857,000. So we can presume that this new department is costing the country, taking into account the increase in the estimates of the Department of Trade and Commerce, a total of $31,200,000. It is most interesting to note this increase. I know many people in the country must be wondering what the government is doing with this money. Certainly industry is wondering what assistance it is getting from the department.
The hon. member for Essex West referred to this increase. I should like to call to his attention the fact that the work of the department under consideration was formerly covered by the defence department and by the Department of Trade and Commerce. So I consider there has been a direct increase of $31,200,000. The Canadian Manufacturers' Association is extremely unhappy about the tax which has been placed on production machinery. Governments often blame the mounting tax burden on the demands made by electors. But this was not the case when the Department of Industry was set up. The

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people did not demand it, neither did industry demand it. I feel it is an attempt by the government and the civil service to hinder free enterprise in industry. So far, I feel, it is a dictatorship imposed on industry, and that it is not at all necessary in this country.
The scheme to set up factories in designated areas has been a failure. In directing industries to cities such as Windsor and Brantford, discontent has resulted throughout the rest of the province of Ontario. The concessions granted to industries in designated areas are questionable. How much assistance will they be to them? New industries starting in any locality usually And their profits fairly small in the first two or three years.
In answer to a question I put on the order paper regarding industries operating in designated areas, I was told that there were seven or eight industries in production and of these not one had yet received financial aid. It will be interesting to see just how much they do receive over the next two or three years. The Department of Industry with this legislation has left a bad taste in the mouths of industrial promoters, municipal councils and provinces which have worked hard to promote industry in their own localities. Here again we find municipal governments and provinces being dictated to by a department here in Ottawa.
I should like the Minister of Industry to explain to the house what his department is doing in regard to research facilities in industry. What industries are receiving aid? How many men are working on an examination of imported items not manufactured in Canada? Is there a branch set up to advise industry regarding the manufacture of such products? I wonder how many industries would take advantage of these facilities if they were available. I think that many Canadian industries have these facilities in their own plants at the present time?
Another question I should like to ask the Minister of Industry is this: Has his department made any studies regarding the decentralization of industry, that is, the bringing of industries from centres of large population to smaller centres? Two or three weeks ago, a Toronto firm announced that it was moving its Port Hope operation to Toronto. Did the department consult this firm and try to have them stay in Port Hope? The same thing has happened in my constituency.
With regard to foreign ownership, I feel direct interference by the federal government in this situation is a negative approach. United

States firms and others are primarily responsible for the great industrial advance which has taken place in Canada. United States companies have set up plants in Canada and have trained many Canadians in their skills and techniques. It has not occurred to many Canadians that we are being presented with golden opportunities to learn the tricks of these trades that are being brought into Canada so we can gradually use them in the development of Canadian owned industry.
Correction of this situation must of necessity be a long range project. Encouragement should be given to every Canadian firm that can muster the resources to get started, so they can prove they have the required skill and fortitude. This should be in the form of relief from taxes, until they are well established, and the best equipment should be made available to them at the lowest cost; financing should be made available on reasonable terms and in amounts proportionate to the progress that they make with the resources available.
I consider the further development of secondary industry to be of prime importance to the future economic welfare of Canada. A high level of activity in the primary industries of Canada, such as mining, pulp and paper, agriculture, and so on, with their correspondingly high level of exports is excellent for Canada's financial stability; but these industries do not provide jobs in proportion to the dollar value of their output. Secondary manufacturing industry is the major provider of jobs.
To encourage the development of secondary manufacturing I suggest the government start by removing the most detrimental forms of taxation. At the moment I would class the sales tax on production equipment as the worst, not because of the actual tax rates but because of the complexity and uncertainty it introduces into the operation of this industry. It is my opinion that increased export of manufactured goods is necessary for the expansion of our secondary manufacturing industries. Canada must import large amounts of industrial equipment and other items, the manufacture of which cannot be sustained on Canadian volume alone. To balance this it is imperative that we manufacture many items on a high volume basis so that we can successfully export, and in so doing can easily compete in the home market. In this way we could supply the Canadian market at a much lower price than when these items were imported.

I spoke in the house regarding the Fisher Gauge Company and I warned the government that if this tax on production machinery was retained, this company would be forced to move part of their manufacturing plant to the state of New York in the United States. The other day in the house the Minister of Finance made the statement that this move was prompted because of the high excise tax on their products going into the United States. I have here a letter that the president of this firm wrote to the Minister of Finance and I would like to read parts of it into the record. It is addressed to Hon. Walter L. Gordon:
Your recent statement in the House of Commons that our firm was establishing a plant in the United States because of the U.S. customs tariffs and not because of the Canadian sales tax came as a surprise in view of the effort that we have made to advise the government of the effects of this tax on firms such as ours.
I wish to state emphatically that our establishment of production facilities in the state of New York is primarily because of the detrimental effects of the Canadian sales tax on production in Canada. The U.S. customs tariffs and other factors are secondary considerations. The present tax situation will permit us to continue the manufacture of machines and tools in Canada, providing that they are not used to turn out products in this country. If you can spare a few minutes of your extremely valuable time to read further, I will explain why this is so.
He goes on for several more paragraphs, but I am just going to read the last three:
The regulations require that tax must be paid if a tool is used to produce an article in Canada, whether the article is exported or not. However, if we move the tool across the border and use U.S. labour and material, we will be exempt from the tax and spared the headaches of its administration.
We have recently built a tool costing many thousands of dollars. After producing and exporting less than one hundred dollars worth of castings from it, a design change made retooling necessary. Nevertheless, because this tool was used "for production" in Canada, the tax must be paid, being a direct loss to us.
I am sure that you will see that this intolerable situation left us with no alternative but to set up production facilities outside Canada.
This is just one industry. How many others are affected and will be taking the same steps? As the Minister of Industry knows, our industries in Canada are British or American owned in a good many cases. This tax will affect their Canadian plants in the same way, and it is a serious threat to their economy in this country. However, these industries have a choice. If the manufacturing conditions are not healthy in Canada, they can switch to their United States or British plants. That is what this Canadian industry had to do, namely move to the United States. I believe that the United States plants will
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not use our plants in Canada to manufacture their goods, but will use their own plants and import their products into this country instead of having them manufactured here.
Cannot the Minister of Industry see what is already happening across the country? Not only is the Fisher Gauge, a Canadian company, moving, but in the Peterborough Examiner recently there was an announcement that Canadian General Electric would move into the European field. The vice president and general manager of the Peterborough plant has often spoken of the keen competition from overseas suppliers, and any added taxes on production increases the threat of losing these markets. This type of legislation on production machinery is just one of these added costs.
When other countries are going ahead industrial-wise, are we going to sit back and put up with a government that puts up roadblocks and hangs millstones around the necks of our industries? The other day in the house the minister announced the construction of a new atomic energy power plant in which Ontario hydro, the Ontario government and the federal government are taking part. Everyone seemed happy to hear this announcement. However, Mr. Chairman, I feel that private industry should have been given a chance to bid on this contract. I know that Ontario hydro could have received a fixed price in regard to this nuclear power station. The estimated cost of the station is $266 million. That is just an estimate and we do not know how much more it will cost. It will probably run over that amount, rather than under it.
I should like to ask the minister how long this government is going to subsidize Atomic Energy of Canada Limited while ignoring private industry, with the facilities it has set up to carry out this work? I am referring to Canadian General Electric, who I am sure would have been interested in making a firm bid on this type of station. The Department of Industry should take a look at this matter.
I feel that private industry could have built this nuclear electric power station at a fixed price and completed the work for less money and in less time than Atomic Energy of Canada. Private industry cannot be encouraged to develop if government controlled industries are given these contracts without fixing a set price and are subsidized by the Canadian taxpayer. Just last Wednesday the United States government released to private enterprise whole atomic material which will create a full-fledged private nuclear industry without federal competition.

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I think Atomic Energy of Canada should get out of the field of building nuclear power plants and leave it to private industry.


Lucien Lamoureux: Shall the item carry?


Alfred Dryden Hales: Mr. Chairman, in order that we might have some orderly arrangement I was wondering whether the minister would like to make some report to the committee on these two departments, industry and defence production, before we get into the many other items which he may wish to speak on or introduce.


Charles Mills (Bud) Drury: Mr. Chairman, I was going to wait until all the questions had been asked in general speeches before endeavouring to answer.


Alfred Dryden Hales: On these two departments?


Charles Mills (Bud) Drury: Yes, on the two departments. A question was raised here about Atomic Energy of Canada Limited on which I have not yet made a statement. I understand the desire is that we should proceed with just the two departments at the moment.


Mr. Lamberi:: Yes, just the two.


Charles Mills (Bud) Drury: Are there any more questions to be asked about the departments of industry and defence production, Mr. Chairman?


Mr. Doucetf:: Mr. Chairman, may I say I fully realize the problems that the minister has with a department such as this, but it has been said by other hon. members that his department has developed very rapidly by way of taking on a very large staff. Some 248 employees have been taken on during the last few months at a cost of some $3,614,000. This is a fairly large amount of money for such a new department to be spending in so short a time, and an envisaged expenditure for this year of over $24 million seems to indicate that the expenses are mounting up.
This is probably the way in which many new departments have developed into a size which probably is far beyond immediate demands. If we look over some of the information he has given us we find that 105 persons have been employed at a salary of over $8,000 a year. There are 142 employees receiving salaries below that figure. I am wondering whether his department within a few months of its organization needs a staff of that size, involving this huge expenditure. What are these men doing? The department has only one office outside the city of Ottawa. Do the rest of the employees travel throughout the Dominion of Canada? We got along in Canada for many years without such a department,

and now within a few months we find this huge army of employees and a contemplated expenditure of several million dollars. This seems to indicate a little more than the normal growth which should take place within so short a time.
I do not think we should be empire building when there are so many other urgent matters of importance to consider. If it can be proven that this is going to develop the economy of Canada, produce markets in the world and add to the industries of our country, then that is a different matter, of course. However, I just wanted to bring this matter to the attention of the minister and to say that the expenditure and size of the department seems out of all proportion to the time it has been in operation.


Fred Frise Stenson: Mr. Chairman, when I referred to Atomic Energy of Canada Limited I felt it tied in so closely with industry, on which the minister made a statement, that it was appropriate to mention it. That is why I hope he will have something to say, after he makes his statement on atomic energy.


Mr. Canielon:: Mr. Chairman, from what we have heard so far in the comments from this side of the house, it is quite obvious that there is a question in the minds of many of us whether this new Department of Industry is actually going to be able to justify its added cost to the government. I think the question is: Will it add more to the national economy of Canada than it costs the taxpayer?
I know very well the government and the minister feels that it will indeed do this. I hope he can justify this feeling, and I wish him every success in his attempts to do so, but I think he should realize that this is a question which will crop up certainly with a great deal more force next year when we have more figures on which to base our opinions.
Nevertheless I do feel the costs are excessive. One of the preceding speakers thought there were something like 105 executive personnel involved. My figures are a little larger than his; my count is 125 executive personnel. I estimate-and this is all I can do, of course, because I do not know exactly how much each individual is being paid-that on the average the cost will run somewhere between $1.5 to $2 million for executive personnel alone. The minister pointed out that he already had 290 officers-I do not think he means just executive personnel-which represents 45 per cent of the total strength. So indeed we have a case of empire building once more. I think it would be well for him

to realize that this government is being tagged with the accusation that it is enlarging the civil service establishment at a tremendous rate; and undoubtedly the minister will hear more of this. Therefore I hope he can justify the expenditure he is incurring through the establishment of his new Department of Industry.
Mr. Chairman, I should like to say a few words about the policy of designated areas. I think we all understand that the purpose of placing some areas in a designated category is to rehabilitate these declining areas. I wonder whether the present method followed is the most economically feasible one. I understand that Sweden is following an entirely different procedure, moving the people to places where industry can and will operate most efficiently. I feel that is the proper procedure to follow, and I am sure if assistance can be provided to people in moving from one area to another, many will do so, although others may have very strong roots and prefer to remain. I am sure the vast majority could be persuaded to move to areas where development of industry is logical. I do not think the method followed by this government is a particularly efficient or economical way of carrying out a good idea.
In this country we will certainly face a great deal of development within a relatively short number of years. Many areas are close to markets, and have other advantages, such as the ready supply of fuel. The area from which I come has an immediate supply of gas, oil, salt, and also potash which is becoming very important to our economy. I am sure potash will become more important to our economy within the next two decades. I hope the existence of potash in my area will encourage the development of a chemical industry there, just as was the case in Germany. I think that modern industrialized Germany owes a great deal to the development of the potash industry there. I think a similar development could take place at other points in the west where these potash deposits are located. I am very happy to say that the government of Saskatchewan did not approve a plan to build a pipe line to carry the potash to Chicago. I hope that government never does approve of such a plan, because if such a pipe line were built, neither the federal government nor any other government would be able to develop that industry in this country as it should be developed.
Mr. Chairman, I feel that we should allow the economic forces to work a little more
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than we have allowed them to work. In this connection I should perhaps mention the heavy water plant industry. As a result of a recent visit, I appreciate the needs of the maritime provinces, and I think everything we can do should be done to develop industry there. Nevertheless, having regard to where heavy water plants could be developed economically, considering the enormous quantities of coal which can be obtained very cheaply by strip mining in Saskatchewan, I think it would have been more economical to have constructed that plant there.
With those few comments, Mr. Chairman, I should like to conclude by again emphasizing that I feel the designated area policy is good, but should not be used to prevent industry from locating in areas where they would be closer to the source of supply of raw materials and can operate more economically. Second, I would warn the minister that in future he is going to have to answer the question as to whether the Department of Industry actually warrants the expenditures now required.


Harold Warren Danforth: Mr. Chairman, I had
thought the hon. member for Essex West, having taken part in this debate, would have covered the several things I intended to say, and thereby obviate the necessity of my getting to my feet. That hon. member represents a riding adjacent to my own, and is interested in industrial problems which are similar to those experienced in my area. However, sir, when he spent three quarters of his time on a partisan, political theme, and the rest congratulating his own government and this department, he left a great deal to be brought to the attention of the Minister of Industry.
The hon. member pointed out in no uncertain terms, and I agree with him, that there is a tremendous increase in building and expansion of industry in the particular area to which I have referred, although not nearly as much as we had hoped. Perhaps I may dare to suggest that this expansion, in spite of the hon. member's claim, was partially occasioned by the government's pegging the dollar at 92 cents, which encouraged business to take advantage of the then existing situation, before taxes were increased. That fact had as much to do with the industrial activity that has taken place as anything else.
Having made those remarks, Mr. Chairman, I should like to bring two specific problems to the attention of the minister. I hope in his reply this afternoon he will give consideration and answers to both problems. I am sure his

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department is well aware of the first one, and I assure the minister that we know he is following the proceedings with a great deal of interest. The automobile industry is very much concerned about the attitude of the treasury department of the United States in respect of tariffs on the importation of Canadian parts into the United States. I wonder whether the minister could make a statement this afternoon which would allay the feelings of deep concern on the part of the officials of the automobile industry in respect of this very serious problem? I understand the secretary of the treasury in the United States is taking this situation under very active consideration. Any statement the minister could make this afternoon in this regard I am sure would be welcomed by the entire industry.
The second point I should like to bring to the attention of the minister is one which I brought to the attention of the house on an earlier occasion. I should like to ask the minister whether he or the officials of his department have taken cognizance of the differentiation on freight rates in the entire area of southwestern Ontario, and the great discrepancy in transport costs east and west. May I assure the minister that it is the concern and the opinion of various chambers of commerce and leaders of industry in that particular area that if something can be done to equalize transportation costs east and west this would go a long way towards encouraging not only expansion of present industry in that area, but would encourage new industry to locate there. Certainly when there is such a differentiation in rates it works a direct hardship on industry in the particular area, and does encourage industry to move further east.
I should like to ask the minister whether he or his departmental officials have taken this fact into consideration and, if not, whether he will assure us that he will consider the problem and intercede with the Minister of Transport on behalf of local industry? I have brought the situation to the attention of the Minister of Transport, but it is my opinion that to date nothing has been done about it in a concrete way. I am concerned about this situation, as are the officials of industry there, and I am sure that concrete steps taken to alleviate this situation would do much not only to help the major industries located there but also subcontractors. No doubt major industry is in a position to arbitrate rates that are beneficial to them, because of the tremendous

amount of freight they are moving, and thereby can circumvent this differentiation to some extent. That does not assist small industry in my area. Quite to the contrary, small industry is penalized by the additional cost of moving freight and their lack of ability to negotiate equal relief in this area.
Mr. Minister, I hope in the course of your reply this afternoon you will be able to comment briefly in respect of these two particular problems facing industry in our area. I refer to the uneasiness of the automobile industry and parts suppliers because of the latest tariff development, and the manner in which transportation costs are creating definite hardships for industry in southwestern Ontario.


Mr. Ricard:: Mr. Chairman, coming as I do from an area in Quebec which is considered to be one of the main industrial centres, I could not very well refrain from making a few comments concerning the Department of Industry.
First, I should like to inform the minister that St. Hyacinthe and the surrounding area have the most stable and qualified labour force one could find anywhere. I also wish to ask him to use his influence, while reminding him that, if ever he is short of a place to direct new industries, the city of St. Hyacinthe will always be the ideal location for them. Indeed, he could guarantee those companies making representations to that effect the same success now being achieved by industry already established there.
At this point, I wish to call the attention of the minister on a report published in he Devoir of August 3, 1964 by Mr. Jean Pierre Fournier. It seems that Mr. Fournier agrees with several members that the new Department of Industry has not brought the results that people were entitled to expect. In fact, if the results obtained up to the present are compared with the estimates of the department, it is realized that the little relief the Department of Industry may have brought cost a lot to the Canadian taxpayers.
Mr. Fournier's article is entitled:
The designated areas: a failure?
Here is what it says:
The limited information given to the House of Commons by the Minister of Industry, Mr. Charles Drury, about ten days ago, shows in a convincing way the futility of the federal policy of fiscal discrimination designed to favour industrial development in economically depressed areas.
Although that policy has been in effect for about a year, only nine firms have already advised the

government oi their intention of establishing plants which will give jobs to a total of 1,265 workers in all the areas eligible for tax incentives. Out of those nine plants, three will be established in the province of Quebec and will provide jobs for a total of 87 men;
Mr. Chairman, we were certainly entitled to expect much more than what the Department of Industry is presenting today, a year after it was set up.
I cannot help but remind the minister that during the election campaign of 1963, according to a pamphlet I have here, the Liberal party promised to create 250,000 jobs a year in order to meet the needs of the increasing population. Now I wish to remind the minister that the needs felt during the election campaign are more urgent now, and the people clamour for new jobs in order to earn a livelihood.
A quick look at the information contained in the estimates for the fiscal year ending March 31, 1965, will show that 301 new employees have been recruited to provide the staff of that new department. Looking at the salaries paid, we find that the minister was rather generous for those who were fortunate enough to be employed in that new department.
It seems to me that we could very well come to the conclusion that the minister is building up what could be called a patronage empire. I would like to draw the attention of the minister to the fact that that is not what the people are expecting, quite the contrary; they are expecting the Minister of Industry to do his part in carrying out the various programs promised during the last election campaign to promote employment in Canada.
That department has been in operation for a year already. I feel it is high time it should do something.
Just think, Mr. Chairman, that only nine industries have shown any intention of establishing new plants. Incidentally, that does not mean nine new industries; they are nine companies which have expressed interest in that measure.
Just think also that those industries would create only 87 new jobs.
Therefore, you would be justified to conclude with Mr. Jean Pierre Fournier that this new department is a complete failure.
Since it is recognized that the minister has a great number of job-creating ideas, I take this opportunity to ask him to implement some every day of the week; I suggest to him also to ask his officials to make extraordinary efforts so that Canada, and the province of 20220-469J
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Quebec in particular, will get the industries they urgently need.
In addition, I should like the minister to tell us in which Quebec communities the new industries will be established and whether they will be located only in designated depressed areas.
When I have that information, I will probably have other questions for him.


Philip Bernard Rynard: Mr. Chairman, I rise at this time to say a few words. Most of what I intended to say has been fairly well covered, but I should like to say to the minister that I do not believe the yardstick used in assessing depressed areas is a good one. I do not believe it is as broad as it should be. I do not think that unemployment, summer or winter, is a complete indication of the situation. I think you also have to know certain other facts. I think you have to know why the area is depressed. Why is there a blight on industry? What caused it? I think we must also know certain other things such as what preparations have been made in the field of sanitation. What about water pollution? What about sewage facilities? Is the water supply adequate? I think you also have to consider transportation. Right at the present moment there is one industry moving out of a town in my area, and one of the reasons given is the high cost of transportation. I do not believe that the minister can do a good job without assessing all those facts.
I do not see any point in going into a so-called depressed area and building it up, erecting schools, churches and facilities, only to And out that it still has the disease that caused the problem, with the result that at the end of a period of 10 or 15 years the facilities constructed in school and hospital housing and which cost millions of dollars, are not being used.
I wonder whether the minister has taken a long look at some of the smaller industries that do not seem to be able to get the help they should get from the government. They are not getting the direction they should receive. This is a very important factor in decentralizing industry and getting employment out of the huge city areas.
I want to speak to the minister on another matter which I brought to his attention previously, namely the taxing of certain parts of a machine. I brought a specific instance to his attention where a manufacturer was producing a machine but one part of the machine could not be purchased in Canada.

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Nobody would offer to make it at a price which would make the complete machine competitive. For that reason I believe this is a part that should be allowed to come in tax free, and I look to the department and the minister to do something about this matter.
Another matter I wish to draw to his attention is something else I have also discussed with him previously, the question of some machines which in some instances are tax free and in other instances are not. I have a good example of this concerning people right across the street from each other in a manufacturing area. One of the firms buys a machine and pays 11 per cent tax on it, while the other company buys a machine and does not pay any tax. This matter was brought before the department and the officials said they could not do much about it. Surely these companies are creating work, and if a machine is free in one particular case it should be free in the other. I have reference to the Mosley giant shear, where one company buys a similar machine tax free and the other does not. It is used to cut scrap iron into sizes suitable for melting. I hope the minister will look into this or have the Department of National Revenue look into it to see that these inequalities are removed.
If you are going to set up industry and build an empire, you don't want a lot of impediments on the wheel. This is what the minister is operating with today, and I think he is operating the same way in choosing depressed areas. I do not think his officials have taken public health and associated problems into consideration, and I believe the Canadian taxpayer deserves a better deal than that.


Mr. Frenelfe:: Mr. Chairman, I shall take only a few minutes of the time of the house to make some observations concerning the estimates of the Department of Industry, because several of my colleagues probably also wish to get some information from the minister.
I listened with tremendous interest to the statement read by the Minister of Industry, at the beginning of the discussion on his estimates, on the situation prevailing in that field in Canada.
I congratulate him for his enthusiasm while he read his statement, giving us a description which I hope is on a par with the situation as regards industry.
[Mr. Rynard.l
Listening to him, it seems that everything is fine and dandy, that our economic situation is particularly brilliant, that the industrial growth is progressing, in brief, that we are now in the midst of an unprecedented wave of prosperity. At one time, we could have thought we were in an advertising agency to promote immigration to Canada.
However, I noted the information given to the house by the minister. It goes without saying that it is only a summary report of the activities of the department during the year, but on the other hand, that report suggested that there is some hope and that we can expect a substantial improvement in the industrial picture and, therefore, in the field of employment also.
Contrary to the hon. member for St. Hy-acinthe-Bagot (Mr. Ricard) who seemed to reproach the minister for not appointing several new officials to ensure the orderly administration of his department, instead of blaming him, I must commend him for it, because the minister seems well disposed and willing to face up to the responsibilities entrusted to him when he accepted to be Minister of Industry or when the department was set up.
The hon. member even mentioned that he found the salaries high. I disagree with him once again, because I feel that if officials of that department are well paid, they obviously deserve even more. I put all the more trust in their competence if they are well paid. Since they decided to leave private enterprise to serve the government of Canada, it follows logically, it seems to me, that they have decided to forgo promotions which they might have expected if they had remained in private industry and that leads us to expect a noticeable improvement in that respect.
However, there is a particular point on which I want to dwell longer. Other hon. members did it before me but I feel obliged to add some remarks of my own, especially with regard to the designation of surplus manpower areas.
It goes without saying that the designation of these areas is far from being perfect. I readily understand the method used by the Department of Industry, in co-operation with the Department of Labour, to look after the designation of these areas.
I could appreciate that the most accurate data available had to be used as a base for the designation of these areas. However, the practice is now approved and subject to improvement.

Once again, and I am perhaps optimistic, but I place confidence once again in the minister and his officials in the matter of reviewing the designation of certain areas, taking into consideration factors which came to their knowledge since this designation.
First, it must be taken into account that the statistical data of the various offices of the national employment service do not necessarily reflect the unemployment situation in a given area. There are surely particular needs in certain areas served by employment offices sometimes located in cities which are quite remote from the affected areas.
May I at this time, Mr. Chairman, make special reference to the Portneuf area which, in my opinion, suffers from the fact that it is located between Quebec and Three Rivers, which are relatively far from certain centres of the Portneuf area.
Inasmuch as the needs of Three Rivers as well as those of Quebec city and Sha-winigan, are not the same as those of the Portneuf area, the citizens of the Portneuf area are at a grave disadvantage.
Therefore, I think that the department ought to make a more detailed analysis of the statistics issued by the various employment offices in order to review the designated areas which may benefit from certain tax incentives that are now put into force.
Consideration should also be given, in designating those areas, to the economic situation which exists there. The people's wish to use all available natural resources should also be taken into consideration.
I appreciate the fact that it is hard to come by a solution and that this rather abstract problem is a headache for the officials who are entrusted with the designation of the labour surplus areas. The situation is so serious that departmental officials should be strongly encouraged to look deeper into the causes of unemployment in order to find the remedies which could be applicable in certain areas in particular.
I was pleased to hear the minister state, a while ago, that designated areas will not necessarily remain so for an indefinite number of years, but that their status may be revised from time to time.
Then, when he has an opportunity to reply to the questions put to him would the minister mention the new criteria to be used to designate these labour surplus areas? On what basis will such areas now be designated? What will be the standards and the criteria used to designate such areas?
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Again, may I insist on the fact that some areas, like that of Portneuf, are located between urban centres and are consequently far from the unemployment insurance office where workers go to register; consequently, statistics do not show the real situation as concerns unemployment.
This is a new department, and it goes without saying that the minister is quite willing to accept any suggestion made to him. We must not only seek long term solutions to the serious unemployment problem which prevails more particularly in eastern Canada, but also try to find immediate solutions to such problems. Mind you, I quite agree that the department should seek to develop a vast program to check unemployment, but I am also of the opinion that more immediate solutions should be sought to cope with this problem which unfortunately has prevailed for a long time.
While we are dealing with suggestions, I would also like to urge the minister and his officials to study also the progress made in the field of automation. The serious problem of automation is increasing so rapidly that even industrial promotion does not create enough new jobs to fight unemployment. Therefore, something new will have to be found, something more cogent and efficient.
The hon. member for St. Hyacinthe-Bagot (Mr. Ricard) made a remark earlier today which seemed rather whimsical. He said to the minister, that, if he was still trying to place an industry, the county of St. Hyacinthe-Bagot would be happy to receive it. I shall go one better than the hon. member for St. Hyacinthe-Bagot. In the district of Portneuf, we do not expect to get the dregs and wait till the minister is in a plight, but we cordially invite him to promote the establishment of industries in our area, because it is easy to find qualified labour there, and we also have easy access to a road and waterway system as well as other advantages which certainly deserve to be considered by some industries.
The minister has given us some information with regard to the possible establishment here of a French automotive industry. Now, we hope that the minister will do his utmost to insure the success of that project, that he will work diligently towards this aim, and make every effort to have this industry set up in the area most likely to promote the growth of that French industry.
May I suggest to the hon. minister an ideal site for that industry. As a matter of fact, Portneuf is an ideal industrial site. In

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addition to highway and railway services, it offers a deep-water wharf built nearly ten years ago at a cost, to the federal government, of $4 million and which, in spite of everything, is still unused.
Once again, Mr. Chairman, for the minister's information, I should like to give certain specific details about this deep-water wharf, located in Portneuf, which has yet to be used. At low tide, it is 37 feet high, which means that 10,000-ton ships and, needless to say, smaller ones, can berth there easily and quite safely. That is a priceless advantage and one which is readily available. It can accommodate ocean-going vessels as well as coasting ships. An industrialist can ship his products directly throughout the world without going through other ports and even receive raw material from Europe or from any other country.
Mr. Chairman, I wanted to make this small contribution during this study of the estimates of the Department of Industry. I know that the minister is well disposed; on the other hand, I realize that the means at his disposal are very limited. I trust him all the more, however, because he seems willing to surround himself with able officials who are determined to carry out their responsibilities.
In conclusion, I hope that the minister will see to it that new criteria are established for the designation of areas with surplus manpower and that with the help of his officials, he will succeed in finding a more realistic formula likely to relieve unemployment in eastern Canada and more particularly in the province of Quebec.


Mr. Pascoe:: Mr. Chairman, I have here a Department of Industry press release regarding the appointment of R. H. Dorrett as regional officer, area development agency, assigned to the western provinces. Mr. Dorrett was industrial commissioner for the city of Regina, part of which I represent in parliament. He was a fine industrial commissioner and I find no fault with his appointment by the Department of Industry. Perhaps the minister has already explained just what is involved in the position of regional officer, area development agency. If he has, I will be able to read it in Hansard. I am interested to know just how much attention the Department of Industry is paying to industrial development in the west, particularly in Saskatchewan; how Mr. Dorrett fits in with this development, and how he can help it to expand.
[Mr. Frenette.l
The hon. member for Kindersley mentioned potash mining in Saskatchewan. There is considerable development in this respect in my constituency of Moose Jaw-Lake Centre. In the area around Moose Jaw potash development has taken the form of solution mining instead of the regular shaft mining. Can the minister tell the committee whether there are any tax arrangements or other assistance which apply to shaft mining but do not apply to solution mining; and if there are, will he take steps to remedy this situation?


Mr. Aiken:: Mr. Chairman, before the minister answers the various questions that have been asked, and before any other hon. members speak, I wish to say a few words in connection with the Department of Defence Production. Really the comments made and questions asked today have not come to what I think is the root of this department, and that is the question of its reorganization and the work it is doing.
I believe this department is one of the hangovers from the days of the second world war, and to the average person, the person on the street, and to a good many members there seems to be no real reason for its existence. We do know that there is a certain amount of stand-by equipment to be maintained-I refer to defence production equipment-and that certain stationary requirements and duties have gone into this department; but there has never been, certainly since I have been here, and that is a little over seven years, any detailed inquiry by the house or by a committee of the house into the actual work that the Department of Defence Production is doing, or what it is accomplishing on behalf of the people of Canada. We have skirted around the question today and I would like to ask the minister a few direct questions, if I may.
The first item, Mr. Chairman, is this. If the name "defence production" is now a misnomer, is consideration being given to renaming the department so as to give it a name that has some relation to the duties it is performing? If it is not a misnomer, then what is the department producing? As far as I can gather, nothing is actually being produced by the department and the production is done merely under the direction of the department and not by the department itself.
I think a case has been made out today for a complete examination of the work of the Department of Defence Production. It was the subject of an examination by at least one commission and we expected there would

be some reduction in the number of personnel, some reduction in the expenditures, and an effort to bring under control what seems to me and to many others to be a colossus of administrative effort, with insufficient productive capacity and result.
I should like the minister to advise us whether there is any intention of reducing, cutting back, to the capacity of the department the personnel it employs. I notice, for example, that while, as has already been pointed out, a number of people from defence production were expected to be moved into the Department of Industry, this is certainly not shown in the estimates of the department, under the two sections of vote No. 1. Whereas last year, 1963-64, a total of 1,887 people were employed, for the upcoming year the number is 2,194. That is an increase in personnel of 300, in a department which has been questioned as to its usefulness for the job it was originally set up to do. I would like to know why there is an increase in personnel. At first I thought perhaps it was the addition of the directorate of printing; but I find they are separately detailed in the estimates. I can see no direct reason why there should be this increase of 300 personnel in the department.
It is not unusual for a member to be speaking about something of which he has not full knowledge. I admit that in my case. I will state, though, that on many occasions I have made the effort to find out what the department is doing, and in most cases have been unsuccessful. I believe the need for a referral of the estimates or the operations of the department to a parliamentary committee has been established. I would hope the minister would take some opportunity of doing so- not just explaining to us here this afternoon the reason for the increase. I think the whole scope of operation of this department is due for a re-examination. I have not any doubt in the world that everybody in the department is doing a job and the best job they can. This is not the point of my argument. If the department is not doing the job for which it was originally set up, if it is not so required, and if it is not given other duties, then an effort should be made to transfer people to the Department of Industry or other departments. I thought this was the place where this could have been done.
However, Mr. Chairman, unless I misread the estimates of this department and the estimates of the Department of Industry, there has been very little transfer; in fact, there
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has been an increase of 300 personnel in one department and over 200 in the other. I congratulate the minister for managing to put himself at the head of such a tremendous administrative machine. I merely ask him, what is it doing?


Mr. Pugh:: Mr. Chairman, I would like to say just a few words with regard to some remarks made by the minister this morning, namely with regard to the setting up of a group of experts to further our talks under GATT. I would like to sound a word of warning to the minister at this time. I feel a great deal of harm can be done to allied industries in Canada. I am now talking of various import quotas for farmers and people who grow fruit and vegetables. I hope that when the minister and his group are furthering their talks with GATT the experts will take time off to go over very carefully with the Minister of Agriculture the effect of any reductions in specific duties.
My reason for saying that is this. Let me give two specific instances. If you look at the duty on fruits and vegetables over a period of years you will see the impact of GATT when it first came into effect. If you go back to the early thirties you will find that up until 1935, quite marked specific duties existed on certain soft fruits and vegetables throughout Canada. From that time on there took place a watering down. I do not want to be political about this, but it occurred under a Liberal administration. Then when GATT came into existence Canadian producers were put in a rather invidious position simply because of large exports to this country from the United States of fruits and vegetables.
Then from 1957 on there was quite a change, in that the government of the day saw fit to increase the duties. For example, duties were increased on certain soft fruits and vegetables such as asparagus and onions, which are grown in my area. Potato quotas were made more workable and as a result Canadian farmers were put in a much better position. In other words, this was done to stop this flood of United States imports.
I should like to be sure that the minister understands that it is all very well talking about industry on a large scale, but if you make any changes in GATT, either to lower tariffs because of markets elsewhere or to get into other countries' markets, it should not be done at the expense of the farmer. He is in an extraordinarily poor position if he does not have specific duties protecting him. I might also mention the protection of fair value for duty.

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I said I would give two instances. I think it is only fair also to refer to turkeys at the present time. I understand the removal of the quota on turkeys was because of a fear of retaliation by the United States and others throughout GATT. In 1955 and 1956 there were 10 million and 12 million pounds of turkeys respectively brought in. In July 1957 import controls were put on which restricted the import of turkeys to one million pounds each quarter, or four million pounds each year. That worked very well until last year.
I see the minister is rising. Perhaps he has not been following what I have been saying.


Charles Mills (Bud) Drury: Mr. Chairman, I had been following but I just wanted to assure the hon. member that I have nothing to do with quotas or restrictions on the import of turkeys. This is entirely outside the scope of the Department of Industry, as I think it properly should be. The Department of Agriculture is very well equipped to handle this particular problem, and to endeavour to duplicate the functions of that department in one relating to manufacturing industries does not seem to be quite appropriate.


David Vaughan Pugh: I am rather glad the minister interjected because it only proves what I have thought all along, that he was not listening to the tying in of the negotiations with GATT. To reiterate what I said previously, the minister specifically said this morning that a team of experts was being geared to deal with GATT. I suggest that while dealing with GATT he should also talk it over with the Minister of Agriculture. I mentioned specific things which had been done through the years up until the commencement of GATT, and how this affected our fruits and vegetable industry.
All I am saying to the minister is this. Do not do anything with regard to making changes in GATT which might help industry to the detriment of the farmer. I am pointing out the specific instance of what happened in August last year, when it was feared that there might have been retaliation in GATT because the quota for turkeys was chopped to four million a year. Up to August of this year over seven million pounds of turkeys have already been brought in, and this has upset the industry tremendously. When the minister is in his office trying to help industry throughout Canada he should attempt to do so in conjunction with the other members of the government, and in this case specifically the Minister of Agriculture. I hope he will talk over any tariff changes which might have an

adverse effect on the farmers and fruit growers throughout Canada, and specifically in my own area where the turkey industry is suffering badly. If we take off duties on onions and potatoes and soft fruits, and change the quotas on asparagus, and do not pay attention to fair value for duty, then we are in a bad spot.
I am glad to see that the minister has been paying attention to what I have just been saying, and I know he will use his good offices in this respect.


Edward Nasserden: Mr. Chairman, in rising to say a few words on the estimates of the Department of Industry I should like to remark on the glowing way the minister referred to the export investment goals which have been reached during the last few months. I know that with this many responsibilities he has one of the heaviest loads that any cabinet minister has to carry in the present government. I might also say that he did not forget to carry part of that political load which cabinet ministers sometimes also carry.
With regard to the goals which he said had been reached, particularly in reference to investment in new plant and machinery, when you take a look at the figures the actual increase amounts to little more than the increase in taxes levied by this government in the first budget of the present Minister of Finance; and little more than the normal expected outlay for the reproduction of plant to meet the needs of automation in the changing complex of industry today could be attributed to the figures which have been given by the minister. I would also point out that even if there had been an increase in those figures at the present time the new Department of Industry could hardly expect to take any credit for that increase, because they have been in existence for about only a year.
I was very interested in the minister's reference to designated areas and the area developed criteria. I should like to remind the committee and the minister that that was one of the criticisms offered from this side of the house at the time he first brought his measure before the House of Commons several months ago. What was said on that occasion is still true, and the discrimination that has taken place as between one community and another has not contributed to that orderly development of industry in this country which should be the concern of any government having the welfare of all areas of the nation at heart.

The member for Essex West made some reference in respect of what has taken place in the Sudbury area. He referred to the Bladen report and stated that that report should have been acted upon as soon as it came out. I should like to say I believe the government should study the reports made from time to time before it takes action. Indeed, sir, if we were to look at the other reports which have come forward to the present government referring to other matters I believe they would indicate that study is necessary before action can be taken in respect of those particular matters.
Mr. Chairman, there are those who have suggested that the estimates of this department at the present time indicate that too much is being allotted to it. As I look at the figures of the various branches of the department that are concerned here it occurs to me there has been some juggling of the departmental estimates in an attempt to create the impression that this government is doing something for industry that was not being done previous to the creation of this department. Indeed, sir, that is an impression that I cannot understand, and does not have regard for the facts. I can understand that the minister would like to claim the credit for the expansion and progress that has resulted from the devaluation of the dollar, and I understand his effort to attribute some of that expansion to the creation of his department as well as perhaps to the efforts of the remnants of those other departments now included under industry, but I do not think he will fool very many people in Canada today.
Mr. Chairman, I believe that the whole concept of area development, as laid down by the government, has led to an artificial interference with the orderly development of industry in the nation. Certainly when we look at the figures given to us by the minister it can be said that very little of the investment that has taken place in the past year in Canada in industry is anything more than that compelled by the normal competitive factors of world markets today.
I should like to draw attention of course at this time to what has taken place in the province of Saskatchewan, and particularly in the area around Saskatoon where there is the prospect of the development of the potash resources, and the possibility of a chemical industry. I hope that the minister will try to bring the policies of this government to bear in an attempt to aid in that development. I remind him that the whole matter of the 20220-470
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freight rate structure enters into that particular situation. I remind the government also that in the province of Saskatchewan the south Saskatchewan dam and irrigation project will soon be a reality, and with the resource of power and water the province will have at that time, together with the potash deposits and the prospects of a chemical industry development, we believe this is one area of Canada that not only deserves but will require the very careful attention of the government in the immediate future.
Mr. Chairman, I do not wish to say anything more, except that I think with hardly a year of activity under the belt of the minister in this department we can hardly at this time assess the progress he is making. I believe perhaps during the next session it would be a good idea to refer the activities of this department to a parliamentary committee, if for no other reason than to give some publicity and knowledge across this country to the scope and mission of this department in so far as the government's plans for this department are concerned.
Thank you, Mr. Chairman.


Charles Mills (Bud) Drury: Mr. Chairman, a considerable number of questions have been asked and various suggestions offered. I should like to say that I welcome the suggestions made and have listened with interest to the criticisms offered, although I do not necessarily agree with all of them. I will endeavour to answer at least some of the questions posed.
The hon. member for Lanark asked about the duties of the officers of the department. That was the subject of a parliamentary question some time ago and a long written answer was provided on June 9 in response to question No. 1,251. I refer the hon. member for Lanark to that answer.
The hon. member for Peterborough made mention of the fact that the Fisher Company had decided, by reason of taxation policies, to have its company locate in the United States. While I agree with his description of the events, namely that the subsidiary manufacturing operations are being undertaken by the Fisher firm of Peterborough to supplement the manufacturing operation they are carrying out in Peterborough, and to this degree expansion of their operations is taking place in the United States rather than in Canada, I think the reasons given to me by the Fisher firm are perhaps not quite the same as those given to and recited by the hon. member for Peterborough.

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The fact of the matter is that in respect of equipment, materials or products manufactured in Canada for export, and in fact exported to the United States, none of the taxes complained of are payable. Indeed if they have been paid they are all remitted. So by moving to the United States there would be no savings of taxes. There would, however, be a very significant saving in duty. As the Fisher officials explained to us, they wished to save the payment of United States duties by having the fabrication or completion of the products done in the United States. This makes good economic sense.


Fred Frise Stenson: Mr. Chairman, could I ask the hon. minister a question regarding taxes? I pointed out that the company would have to retool and set up a machine to produce the product that would be shipped to the United States. If the company kept that machine in Canada and manufactured the part in Canada, shipping it to the United States, it would have to pay tax on the machine. The tax would be considerable in relation to the cost of the item. I have this part in my hand and it sells for three cents. The cost of retooling and setting up the machine is $12,000. The company would have to pay 8 per cent tax, and if after January 1 the tax was still in existence, it would have to pay another 3 per cent. This company is still trying to maintain the business in Peterborough, but how can they get around that situation? If they instal the machine in Canada, manufacture and ship the part to the United States, they will have to pay tax on this machine. I do not think that argument is fair to this company.


Charles Mills (Bud) Drury: There is no question that taxes on production machinery bought for use and employed in Canada are payable, and there is no remission on any part of those taxes by reason of the output from the machine going abroad. To this extent what the hon. gentleman says is entirely correct.
He also asked what industries were receiving research and development assistance. There is contained in the estimates a substantial sum provided for the maintenance of technological skills in Canadian industry, the so-called vote 5. The industries involved are generally speaking in the aircraft, electronics and armament fields. The amount of assistance to date since the inception of the program is some $38 million payable to some 32 companies in respect of 62 defence development projects. That is under the heading of vote 5.

In addition, there is the defence industrial research program of the defence research board on which expenditures to date amount to roughly $5 million. Some 50 projects in substantially the same categories of industries are the beneficiaries of this development assistance. Another source of help is the industrial research assistance program of the national research council. Expenditures to date have amounted to approximately $2J million on some 80 projects and the beneficiaries of this particular program cover the entire section of Canadian industrial activity. All three of the programs I have mentioned are co-ordinated, studied jointly and duplication avoided through the operation of interdepartmental committees on which representatives of these agencies sit.


Fred Frise Stenson: Could I ask the minister if the names of the industries receiving this aid are available?


Charles Mills (Bud) Drury: I think they are probably published in the public accounts and have been for a number of years. If the hon. member wants us to go back over the years and tabulate the names of the companies I will be glad to see he is furnished with this information.
The hon. member for Kindersley made reference to the location of the heavy water plant. While I will not comment on his views as to where the plant should or should not be, whether it would be more appropriate to have it in Saskatchewan or where it is going to be in Nova Scotia, I would point out that the choice of location was made by the company which put in the lowest bid for the manufacture of this heavy water for government account, and that the location of the plant was not in fact determined by the federal government but rather by the bidder for the underwriting on the 1,000 tons of heavy water that we require.
I was interested to note that while the same hon. gentleman rather feels that the best economic or social solution to our unemployment problem is to move people to work rather than to move work to people, there were other participants in the debate who did not share that view. I think I will let him settle his differences with them rather than try to argue the question myself.
The hon. member for Edmonton West asked some questions regarding performance bonds in respect of Defence Construction Limited. I think he indicated that in the past security for the performance of work had been demanded in the form of a cash bond, and that as a result of his insistence or urging, per-

haps, it is now possible to furnish bonds of another character. This has been in operation successfully for the past few years and it represents from the contractors' point of view a preferable and less expensive alternative than the furnishing of cash security, which sometimes is financially difficult. I am told that these bonds are required to a value of 50 per cent of the amount of the contract, and I think everyone will agree this is a very substantial cash requirement to have to find in addition to other problems in financing a contract. I am given to understand that the system is working well and to the satisfaction of Defence Construction Limited, and the contractors.
The hon. member asked about warehousing and suggested that the Department of Defence Production may be taking over warehousing from the Department of National Defence. It is not. The Department of National Defence is continuing to do its own warehousing for its own purposes, as it has done in the past in installations constructed to meet its own particular needs. However, in respect of warehousing operations contemplated for the balance of the government agencies to be performed by the Department of Defence Production, a very profound study has been carried out of warehousing needs and the techniques of most effectively doing the job, and arrangements have been made with the Department of National Defence that where they have facilities and space available for warehousing on behalf of other departments or agencies of the government this will be used on a co-operative basis. But warehousing by and for the Department of National Defence will continue to be done by that department.
The hon. member also asked what the story was on the Provider. As hon. members will recollect, this is a supply ship designed to provide replenishment at sea facilities for the Royal Canadian Navy. A number of difficulties arose during the course of construction and necessitated some repairs and some changes being made to the ship following her delivery for trials to the Royal Canadian Navy. A substantial amount of information was provided on July 6 in reply to question No. 1321 indicating the terms of the contracts, claims made against the government and various figures of cost. However, the major faults which were discovered during the sea trials are being rectified by the contractor and at his expense. Following rectification of these major faults the navy will endeavour to work up the efficiency of the vessel.
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I am told there is one other troublesome problem relating to vibration in the stern of the vessel. This, however, is a design rather than a construction problem and the navy hopes to give study to this when the major deficiencies have been made good by the contractor.
I think it was the hon. member for Wellington South who made mention of the fact of three observations made by the Auditor General in relation to Defence Construction Limited. These were all in connection with contracts executed some years ago, in 1961 and 1962, and do in fact represent payments by Defence Construction Limited to contractors over and above the total firm price of the contracts, for errors or changes made necessary by the crown. I think most members would agree that where additional expense is occasioned to a contractor, by changes to a plan or an error in a plan on the part of the crown, it is up to the crown in having these changes made to reimburse the contractor the cost of such rectification.
The hon. member also suggested that one might use the designated area program statistics based on a 12 months rather than a six months period. I should point out that the six months or summer period was explicitly chosen in selecting criteria for the designated area program to avoid the factors which would be introduced on a 12 months basis by winter seasonal unemployment.
As hon. members well know, there is a very extensive and, I hope, successful winter unemployment assistance program under the aegis of the Minister of Labour, and this is the series of programs which are designed to cope with the problems of seasonal unemployment, whereas the designated area program is not in itself or of itself supposed to operate to counteract seasonal unemployment. It is supposed to counteract chronic, continuous unemployment; and consequently if one looks at the statistics on the period of the year which is unaffected by a seasonal unemployment he is likely to get a more accurate and less distorted picture.
The hon. member for Saskatoon wondered whether I could not make a statement on automotive parts. Much as I would like to, and interesting, though complex, as this subject is, hon. members will appreciate that this question is now sub judice in the United States, and until such time as the commissioner of customs, who now has under advisement a plea made by some U.S. manufacturers for the application of countervailing duties

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against Canadian imports, has made a finding on this, it would be highly inappropriate for me to make observations on the state of affairs in this regard.
The hon. member also observed on the inequity, inequalities, the distortions of freight rates. This is something of which not only I but the officials in my department are very conscious, although we as a department do not have primary responsibility in this field. Basically the question of freight rates is one for the Minister of Transport and his department, but there is no question about it that freight rates in Canada are now a very significant, and will come to be an increasingly significant, determinant, not only in the location of manufacturing industry but also on its profitability and on its economic success; and just as one general observation I would point out that we have had a freight rate structure which contains a number of artificialities, productive consequently of a number of distortions.
It is extremely complicated, even more complicated than the Customs Tariff, and does require a serious examination. It suffers from one fundamental defect which is perhaps incurable, and that is that the rates are geared so as to rise with the amount of manufacture going into an article-the more an article is manufactured then the higher is the per pound freight rate. This has the effect of encouraging manufacturing establishments to set up as close to their final markets as possible, and consequently as far away as possible from the source of raw materials. If we could be successful in inverting that structure in terms so that rates per pound declined with the degree of added value this would induce manufacturers to locate close to the source of raw material, rather than to the markets, and this would have the effect of producing a powerful incentive to move industry in a northward direction from the United States. However to do this to the freight rate structure is a little implausible to suggest. It may be nice in theory, but unfortunately it may not be too practical.
The hon. member for St. Hyacinthe-Bagot quoted an article by Mr. Jean-Pierre Fournier in he Devoir. Mr. Fournier concluded, and the hon. member for St. Hyacinthe-Bagot agreed with him, that the area development agency had been a distinct failure by reason of the fact that in its history to date only nine companies had been set up in Canada, or rather had declared their intention to set up business in the designated areas, and of these three were in Quebec employing a total of 87 men.

Were these facts true I would agree both with Mr. Fournier and the hon. member for St. Hyacinthe-Bagot. Unfortunately the premise is entirely wrong. As I outlined in my remarks, and these curiously enough were part of the observations I made in French- perhaps the hon. member for St. Hyacinthe-Bagot can understand my English better than my French-I pointed out, and I am not translating, that in 23 of the 35 designated areas new enterprises representing an investment of $245 million capital, and designed to employ in excess of 9,000 people, numbering in total 103, have declared their intentions to set up in the designated areas, and to come into commercial operations so as to take advantage of these tax concessions. This is substantially far removed from Mr. Fournier's basic assumption of a total of nine companies employing 87 people. I shall repeat those figures-103 companies representing new capital investment of $245 million, to furnish employment to 9,000 people in 23 of the 35 designated areas have declared their intention to come into commercial areas have declared their intention to come into commercial operation so as to take advantage of the incentives. If the assumptions of the hon. member for St. Hyacinthe-Bagot were correct, I would agree that the plan had not been a success. But I think it has achieved more than that.
A number of members suggested that the critera for the selection of designated areas should be changed. I have undertaken on a number of occasions to have this' reviewed and the matter is currently under review. I hope to be able to make a report later in the fall on the outcome of this review by the officials and by the government. It is complained that the program is discriminatory. At I have said on previous occasions, it is. It is designed to be discriminatory. It is designed to provide additional advantages to those areas which suffer from high, chronic unemployment, and to provide these advantages over other areas which are more fortunate and which do not suffer from high chronic unemployment. If endeavouring to assist such areas by incentive measures is discrimination, then this program is discriminatory, and it is intended to be so.
The hon. member for Portneuf made a number of suggestions for which I am grateful regarding factors we might take into account in establishing criteria. While I do not undertake to accept all of his suggestions they are interesting, and will be considered. But they do present some difficulties. The hon. member

also expressed the hope that the government would play its full part in encouraging enterprises for the manufacture of motor cars of French design in Canada. This we have been doing; this we are doing, and this we will continue to do.
The hon. member for Parry Sound-Muskoka suggested that a fundamental re-examination of the work of the Department of Defence Production should be undertaken. As I indicated in my opening remarks, the entire scope of the work of the Department of Defence Production is undergoing alteration now as a consequence of the recommendations of the royal commission on government organization, and I did endeavour to indicate some of the things which are being done. As a consequence the Department of Defence Production will be, in effect, the supply department for the government, and the name which it now proudly bears will be inappropriate. It will therefore have to be changed, but this of course would require legislation and we have a heavy legislative program of priority items to get through before we can reach this one.
A number of members have referred to the staff, and to the size of the staff, of the Department of Industry. As I said in my opening remarks, we have not been as successful in recruiting staff, in terms of speed anyhow, as was anticipated, at the time these estimates were prepared. We have been insisting on high quality, and consequently we have not got the numbers at the rate we had hoped. We have been able to achieve the quality. As a result, I should like to introduce an amendment to vote 1 of the estimates of the Department of Industry. In recognition of the rate of progress which is being achieved in recruiting personnel for the Department of Industry, I would ask my colleague, the Secretary of State, to move:
That vote 1 be reduced by $600,000.


Mr. Lamontagne:: I so move, Mr. Chairman.


Lucien Lamoureux: Shall the amendment carry?


Some hon. Members:: Agreed.


Marcel Joseph Aimé Lambert: Would the Chair not put the question at the end of the minister's remarks on item 1, because this is an amendment to item 1? Perhaps it would be better to have it put at that time.


Charles Mills (Bud) Drury: This is item 1 of the estimates of the Department of Industry and I hope that my remarks on item 1 of the Department of Industry are now complete.


Marcel Joseph Aimé Lambert: If that is so-
Supply-Industry


David Vaughan Pugh: Before we vote, I wonder whether the minister would care to make any comment on the suggestion I made with regard to GATT.


Charles Mills (Bud) Drury: I have not very much to add to what I said earlier. Needless to say, in putting forward its views as a department to the interdepartmental committee on tariffs in connection with GATT, we shall have in mind the desirability of not recommending courses of action which would have a deleterious effect on any sector of the economy whether it be fruit growing, turkey raising, or the production of worsteds. I think my officials are as responsible as any of our citizens and that they will bear in mind the undesirability of inflicting damage or hardship on any segment of the community.


David Vaughan Pugh: I take it this will be the policy for the government with regard to changes in GATT, and that this will be the policy given to those who are to carry out this work under the minister.


Charles Mills (Bud) Drury: Bearing in mind the responsibilities of others, that will be the policy of my officials in the context of this work. I do not want to give the hon. member the impression that I am giving some kind of guarantee that in no circumstances will there be any tariff changes made which would adversely affect, for example, turkey growers and fruit growers. I am not doing this, because I am not responsible for this question of tariffs, as I tried to explain. Tariffs on fruit and turkeys are the responsibility of somebody else. But I can assure the hon. member that my officials will be fully responsible in the exercise of their duties to provide advice.


J.-H.-Théogène Ricard: We have learned recently that Japan intends to send to Canada textile commodities in increased amounts. I come from a city where the textile industry is the major industry and I should like to know what the minister's attitude is toward protecting our textile manufacturers. We have textile factories which are particularly interested in the manufacture of shirts and, from what I gather, shirts are to be imported in greater numbers than ever before. The same applies to shoes and shoe manufacturing. I should like to urge the minister to do all he can to protect our workers because it is just as important to protect the industries we have already as it is to bring new industries here. If we do not do this, I think we are missing the point. At the same time, I should like the minister to tell us what he plans to do to protect our textile industry.

Supply-Industry


Charles Mills (Bud) Drury: Mr. Chairman, I thank the hon. member for both the exhortation and then asking me for an account of my stewardship. The hon. member will recall a long statement made by the Minister of Finance a couple of days ago on the particular question of the entry of Japanese goods into Canada in the past, and indeed in the future, and his concern over the matter of textiles, which he undertook specifically to raise on his forthcoming trip to Japan for the interministerial council meeting. He is seized of the importance to the textiles industry of not allowing excessive entry of textile goods into Canada. This is a view which I quite naturally share. I should say, however, that I think perhaps the basic cure for our problems in this respect, not only in the textile industry but in other Canadian industries, is to increase efficiency and effectiveness of productivity. This is the main problem to which the department is going to address itself. Not only must we be able to satisfy a domestic market with domestic production-and we could achieve this by the imposition of high tariffs-but to be successful and grow we must also export. In order to export we must be able to meet world or export prices. To do this we must increase our efficiency. If we can increase our industrial efficiency to the point where we can meet world prices in exports, we do not need to worry about high tariff protection against imports.


Reginald (Reg) Cantelon: Mr. Chairman, I think the minister's oversimplification of the one point I was trying to make, when I suggested we could put more people to work by bringing the people to the work and not the work to the people, was perhaps my own fault. Perhaps I oversimplified what I was saying. However, I was trying to indicate that if the economic advantages of location, of supply of raw materials, power, and so on, are not available in a particular area, and if the taxpayer is required to subsidize industry to go into that area, in the long run we are going to find that the advantages of having the industry in that area will be overbalanced by the advantages in the areas to which it should have gone; and particularly they will be overbalanced by the advantages that industry has in other countries, which I would suggest would lead to the ruin of the industry in the long run. I think this is the reason for Sweden adopting the other policy, and I think it is a wise policy to adopt.
The other point I was endeavouring to make was that the new areas which hope to [Mr. Eicard.l
develop in this country-and there are a great many of them-are being, frankly, discriminated against by this legislation. While I realize that something needs to be done for the people in the areas where the work is required, I think that great care should be taken to see that the newly developing areas are not in this manner discriminated against.


Fred Frise Stenson: Mr. Chairman, I have just two questions. With regard to designated areas the minister was holding up the summer months. Would he take into consideration places like Windsor and Brantford, which have high employment in the winter months due to the auto industry and agricultural implements being produced in those areas? If the minister had considered the winter months in relation to Brantford, I think he would have reached a different conclusion. The auto industry does not have layoffs and is tooling in the summer months. I wonder whether the minister would take this into consideration when studying the question of designated areas?
I have another short question, Mr. Chairman. The minister just mentioned that we had to have production efficiency to gain exports in the world markets. Does he not feel that if he took off the 11 per cent sales tax on production machinery, this would be the first step in that direction?


Charles Mills (Bud) Drury: I am not sure I agree that this should be the first step, Mr. Chairman. Clearly, if the 11 per cent tax were to be removed this would lower the costs of production; there is no question about that. However I think it is a noteworthy fact that even with the removal of exemption from tax there has been a very substantial and a very satisfactory rate of growth of the gross national product, and growth of exports, too. I will not for a second argue that if the 11 per cent tax on production machinery were removed, the costs of production would go down to some degree. Whether it is essential that we do this in order to maintain our position in the export markets of the world is perhaps another question.


Harold Warren Danforth: Mr. Chairman, I was very interested to hear the minister express the interest of himself and the department in transportation problems. May I, after the minister's general statement, pursue the matter one step further? Can the minister tell the committee whether there are any particular experts in the field of transportation who have been added to his department, or whether there is a particular part of his

department that is devoted to the study of the transportation question in relation to the development of industry? In other words, Mr. Chairman, has there been any specific approach to this matter by his department?


Charles Mills (Bud) Drury: Mr. Chairman, we have engaged the services as traffic manager of a one-time employee of Dominion Tar and Chemicals, who I think enjoys as high a reputation for ability in this particular field as almost anybody in Canada.


Harold Warren Danforth: Mr. Chairman, may I pose one further question to the minister? Would the minister take under consideration the application of some corrective measures in the field of transportation, particularly where a designated area is concerned, and consider this as one of the methods that might be employed to erase such an area from the field of chonic unemployment?


Charles Mills (Bud) Drury: This suggestion might be a little difficult to put into practice, and complicated to work out; but we will certainly have a look at it, Mr. Chairman.


Fred Frise Stenson: Mr. Chairman, the minister referred to the economy and the way industry is going ahead in this country. In view of this I would ask the minister, does he have in mind the trade imbalance we have with the United States at the present time, which is growing all the time?


Charles Mills (Bud) Drury: I am not aware of the precise figures, Mr. Chairman. I do know that as a direct consequence of a substantial increase in economic activity in Canada our imports from the United States have risen materially over the past six months. This is to be expected. It is part of the job of the Department of Industry to try and see that Canadian industry progressively moves in to take up this increasing consumption in Canada, rather than by increasing imports.


Jean-Louis Frenette: Mr. Chairman, as the minister said earlier that he would make a statement next fall in respect of designated areas, could he tell us if he will make it before the beginning of the winter works period?


Charles Mills (Bud) Drury: Mr. Chairman, the program of the Department of Labour will begin on November 1. We are hoping to receive our reports just before then; we may not be lucky, but we shall try.


The Deputy Chairman:: Shall the amendment carry?
Supply-Defence Production


Some hon. Members:: Agreed.


[Stage Direction]
Amendment agreed to.
Item as amended agreed to.

[Stage Direction]
1. Departmental administration, including the care, maintenance and custody of stand-by defence plants, buildings, machine tools and production tooling and grants to municipalities in lieu of taxes on crown-owned defence plants operated by private contractors, $15,324,200.
Marcel Joseph Aimé Lambert: Mr. Chairman, before we get into item No. 1, I should like to raise a few questions which are actually dealing with vote No. 15. Since they are really concerned with the administration of the minister's department I should like to clarify the position of the Department of Public Printing and Stationery, particularly the handling of contracts with regard to public printing and publication of books.
The transfer of powers here is rather intriguing and I should like a clear indication from the minister as to what has happened in this regard. I should like to refer to orders in council P.C. 1963-1254 dated August 21, 1963; P.C. 1963-1450 dated August 3, 1963, and perhaps the last, February 3, 1964, P.C. 1964-156. The first question I would put is this. Is the Minister of Industry, qua his position as Minister of Defence Production, in charge of public printing and stationery in so far as calling of tenders and awarding of contracts is concerned? Second, what is the amount of contracts awarded in the current fiscal year as related to public printing without tenders having been called, either publicly or by invitation? There are two categories there. There may have been invitational tenders to, say, three or four approved printers. How many are there in that category, and how many contracts have been given outright on the basis of negotiation, if any?
With regard to the order in council of August 21, 1963, I should like to ask: Was there a transfer made of the supervision and control of purchasing, procurement of outside printing, and so on, to the Department of Defence Production? I presume this comes-although this is not clearly indicated-from the department of public printing and stationery, but is the minister satisfied that the order in council so states? The order in council of October 3, 1963 refers to the "responsibility for the procurement of print for books and publications". That matter is transferred from the Department of Defence Production to the department of public printing and stationery. Does this mean that there had been a transfer
7436	HOUSE OF
Supply-Defence Production of part of the responsibility from the department of public printing and stationery to the Department of Defence Production in August of last year, and in October there was then a segment carved out of that group and retransferred back to the department of public printing and stationery? Is that the explanation of this order in council? Because otherwise it means that somewhere along the line in the past defence production had some responsibility for the procurement of print for books and publications. I should like a careful and detailed explanation of that order in council.
Then might I ask: Is the committee to be satisfied that the order in council P.C. 1964156 is the final order in this series of exchanges, or has it been superseded by any other order in the interval? That order in council is a transfer to the Secretary of State for Canada of the powers, duties and functions (1) of the Minister of Industry relating to the Department of Public Printing and Stationery. I was wondering how there was any responsibility on the part of the Minister of Industry in regard to this, in that the original transfer on August 21, 1963 is from the department of public printing and stationery to the Department of Defence Production. How does the Minister of Industry have any powers or functions relating to the department of public printing and stationery if they were never transferred to him? They may have been transferred to him qua Minister of Defence Production, but unless there is an order in council missing in this reshuffle, the Minister of Industry is transferring something which he never possessed. I should like to have that point clarified.
My penultimate point is: Who has jurisdiction over the printing bureau? Is it the Minister of Defence Production, is it the Minister of Industry, or is it the Secretary of State? Where does the officer who occupied the position of queen's printer fit in now? I am referring directly to Mr. Duhamel. What precisely is his authority and under whose jurisdiction is this gentleman? Or has he in this shuffling about been trimmed of powers like one would lop off branches from a tree in the spring?
I should also like to know who is the person responsible for the control and the awarding of printing contracts. Is he an official who was formerly with the department of printing and stationery, or is he an official in the Department of Defence Production or the Department of Industry? However, my main question is: Does the Minister of Industry


feel he has authority to deal with any printing contracts? Because unless he comes up with an answer which says there is a missing order in council, there is something very much adrift. The transfer seems to have been from the department of public printing and stationery to the Department of Defence Production and then somehow from the Department of Industry to the Department of the Secretary of State. I cannot understand how that ever came about.


Charles Mills (Bud) Drury: Perhaps at the outset I should try to divide the printing business, if I can call it that, into two clear sections. One is the production of books, pamphlets and other things, which are the product of the printer, among other people, and forms, letterheads and other products of the printer, which hardly would qualify as books and pamphlets. Basically the way things are now organized is this; the production of books and pamphlets, including the procurement of print, therefore, is the responsibility of the man known under the legislation as the queen's printer, concerning whom indications have been given that he is to have his name or title changed to queen's publisher. He under the Secretary of State runs really in its entirety the business of selection, editing, printing, by whatever means necessary, distribution, and sale of books and pamphlets. This is the job of the man to be called the queen's publisher.


Marcel Joseph Aimé Lambert: Has this position actually been created at the present time, or is it to be created?


Charles Mills (Bud) Drury: The position of queen's publisher is to be created and it will require a legislative enactment. The functions are now being carried out by Mr. Duhamel, who is known officially as the queen's printer. His title, as I say, will be changed. He is carrying out these functions but not under the new title.
In addition to that there is the non-book, non-pamphlet printing and stationery business involving the editing, printing and distribution of printed forms and printed work not qualifying really as books or pamphlets but including, however, Hansard and all the publications of parliament. This operation includes the setting of the print, the running of the presses, the proofreading for Hansard, and a number of other things which are now done by the printing bureau. This is the responsibility of the Department of Defence Production, and the Department of Defence Production has as its minister the Minister of Industry.

This then is the situation. All the elements in the production of print in book or pamphlet form are the responsibility of the queen's publisher, or the queen's printer, responsible to the Secretary of State. All the mechanical printing operations done by and within government establishments is the function of the Department of Defence Production, which is responsible to the Minister of Industry.
How did we get into that position? Order in council, 1963, 1130 of July 25 provides for the transfer to the Minister of Industry of the powers, duties or functions of the Secretary of State under the Public Printing and Stationery Act. The Public Printing and Stationery Act can be found in the Revised Statutes of Canada, 1952. I am not sure of the date of its enactment. That order in council brought under the Minister of Industry the queen's printer, who then had the responsibility for the printing of books, pamphlets, provision of stationery and the mechanical printing within the government.
The next step was order in council No. 1254 of 1963, dated August 21, which transferred to the Department of Defence Production the control or supervision of the procurement, purchasing and stores for the branch of the department of printing, the production branch, the outside printing production branch, and the supporting services of the departmental secretaries branch and the administrative services branch, from the department of public printing and stationery. This included the printing operations in the bureau in Hull and the procurement of stationery, pencils, paper and the rest of it. It took this responsibility away from the department of public printing and stationery, and put it under the Department of Defence Production. That department is in turn responsible to the Minister of Industry.
The next step was order in council October 3, 1963, No. 1450, which transfers from the Department of Defence Production to the department of public printing and stationery the responsibility for procurement for printing of books and publications, and the procurement of print.


Marcel Joseph Aimé Lambert: Was that restored to the department of public printing and stationery?


Charles Mills (Bud) Drury: Under the provisions of the order in council the items I mentioned were taken from the department of public printing and stationery, and that includes all printing both inside and outside, and the procurement of print inside and the procurement of print outside.
Supply-Defence Production
Now, this purports to pass back to the department of public printing and stationery the procurement of print for books and publications, but not the procurement of print for stationery or forms. This final order in council for 1964 is No. 156, dated February 3, and transfers to the Secretary of State for Canada the powers, duties or functions of the Minister of Industry relating to the department of public printing and stationery, which had been circumscribed in its activities to editing and procuring the print for books and publications.


Marcel Joseph Aimé Lambert: I think I understand the situation now. Order in council No. 1130 is the order in council that was missing in the chain I had. That is the order in council which placed something under the control of the Minister of Industry.


Charles Mills (Bud) Drury: Perhaps if I had just referred to that order in council I could have avoided that long explanation.


Marcel Joseph Aimé Lambert: I thank the hon. minister for giving that full explanation because I think the pattern is now clear in respect of the framework relating to these transfers. I would remind the minister that I did ask other questions in respect of individual responsibilities.


Charles Mills (Bud) Drury: In respect of the hon. member's specific question dealing with contracts for print for books and publications that have been let without tender during the past period mentioned, perhaps I should say that this is under the jurisdiction of the queen's publisher, who in turn is now responsible to the Secretary of State, and his estimates will be dealt with when the estimates of the Secretary of State are called.


Marcel Joseph Aimé Lambert: The minister did not let any contracts for printing without tender when he had jurisdiction back in 1963?


Charles Mills (Bud) Drury: There was a short period during which I was responsible. I can only say I do not recollect having let such contracts but I will do a check if the hon. member would like me to.


Marcel Joseph Aimé Lambert: Yes, all right.


[Stage Direction]
Item agreed to.
Emergency measures organization-
20. Administration and operation, $2,600,000.
Charles Mills (Bud) Drury: Mr. Chairman, it was agreed that votes 20, 25 and 30 would be stood and that we would consider these items along with atomic energy and the national research council.

Supply-Defence Production


Lucien Lamoureux: Is it agreed?


Some hon. Members:: Agreed.
Item stands.
35. Expenses incurred by Defence Construction (1951) Limited in procuring the construction of defence projects on behalf of the Department of National Defence and procuring the construction of such other projects as are approved by treasury board, $2,318,000.


Marcel Joseph Aimé Lambert: Mr. Chairman, the minister has answered some questions that were raised with regard to Defence Construction Limited. As far as I am concerned, I believe everything was answered except that I do not recall the minister saying anything about the future of the corporation. Has any decision been reached on the future of the corporation, and whether or not it will continue?


Charles Mills (Bud) Drury: The committee will remember that the royal commission on government organization looked into the agencies of the government which were engaged in administering and dealing with real estate of one sort or another, including the construction of buildings. One of the agencies covered was Defence Construction Limited. The committee reviewing the Glassco recommendations is looking, inter alia, at Defence Construction Limited in this particular context, and one would hope that in the not too distant future they would have a report to make.


[Stage Direction]
Item agreed to.
40. Canadian Arsenals Limited-administration and operation, $2,500,000.
Gordon Minto Churchill: Mr. Chairman, there is a substantial reduction in the amount of the vote here and the minister might indicate how that comes about. Second, where is the major work being done in Canadian Arsenals in the manufacture of weapons and ammunition? Third, has a substantial proportion of this work been transfered to private industry?


Charles Mills (Bud) Drury: Mr. Chairman, vote No. 40 shows a substantial reduction in 1964-65 by comparison with 1963-64. This reduction is in anticipation of the disposal to private industry of a number of Canadian Arsenals plants, and advertisements inviting bids for these appeared in the newspapers last spring, specifically for the Val Rose plant just outside of Quebec near Valcartier camp, which has been devoted to the manufacture of small arms ammunition, the Valleyfield plant just outside of Montreal, which has been devoted to the manufacture of explosives, and the Long Branch plant of Canadian Arsenals Limited located on the waterfront in suburban Toronto, which has been devoted to the

manufacture of small arms. Bids were invited for all three.
Bids have been received and are now in the process of being reviewed with a view to concluding, we hope, a satisfactory arrangement whereby the government will be able to divest itself of the ownership of these three establishments with suitable safeguards for guaranteeing (a) continued production for government of Canada account of arms, ammunition and explosives of the qualities required by the Department of National Defence; (b) adequate arrangements for the security of tenure and continued employment of the present Canadian Arsenals staff and an assurance they will not be unreasonably cast out and (c), the offering of an appropriate price related to the value of these properties.
I hope that in the not distant future we may be able to make an announcement in this regard. If we are unsuccessful in securing adequate and satisfactory bids accompanied by suitable guarantees for these three properties, then perhaps the optimism which the figure of $2,500,000 reflects may not have been justified.


Marcel Joseph Aimé Lambert: Mr. Chairman, I do not know on just what hypothesis the officers of Canadian Arsenals and the government are proceeding, but it seems to me that the market for this type of establishment, with the conditions imposed by the minister, is extremely limited. It might be limited to one or two concerns. A good friend of mine, formerly in the armed services, went into the business of manufacturing small arms for sporting purposes and I know he found that the market in Canada was not particularly good. If a plant like that failed because the Canadian market for arms of this type is not sufficiently large to be able to compete with larger firms like Remington, Winchester and others in the United States, as well as the excellent arms production from Belgium and Great Britain, I am wondering what anticipation of sale there can be. After all, these plants are not for dismantling or conversion to some other use. If they are to continue to supply small arms to the government in the future, surely they will have to be kept within very narrow production limits. Therefore I am wondering what really honest anticipation there can be in this regard.
I noted the other day a report that there had been some difficulty between Canadian Arsenals and Canadian Industries Limited, I believe, concerning the manufacture of substandard small arms ammunition by one of the Canadian Arsenals plants. I think this

also requires some explanation and I shall sit down now in order to give the minister 30 seconds.


Charles Mills (Bud) Drury: What the hon. gentleman says is entirely true. The conditions imposed on the prospective purchaser of the small arms plant to which he has made reference will make it less attractive financially to him than if there were no strings involved. As a consequence of these limiting conditions we would expect to have to lower our sights as to the price we might get. But, provided the capability to manufacture small arms in the quantity indicated is retained, the purchaser is quite free to use the facilities for commercial purposes. This does not necessarily limit him in this particular plant to the manufacture of small arms or rifles. He can manufacture anything he wants. I would agree there are few purchasers in Canada who could contemplate operating that plant for the manufacture of small arms alone on a profitable basis. It has to be made use of for purposes other than purely small arms if it is going to be operated successfully. This is what we are working toward.
So far as the substandard ammunition delivered by Canadian Arsenals to C.I.L. is concerned, about which reports appeared in the newspapers, I am advised that what was defective was the finish. It appears that a Tiigher finish on high velocity sporting ammunition is required than is demanded by military specifications for military ammunition, where perhaps the purchaser is not as conscious of elegance as of reliability. Because *of the different standards of elegance required by C.I.L., both C.I.L. and Canadian Arsenals are now in consultation on adjustment for a higher price to cover the higher finish.


[Stage Direction]
Item agreed to.
Atomic energy control board-
1. Administration expenses of the atomic energy control board, $159,000.
Item stands.
Mr. Barnett:: Mr. Chairman, may I direct your attention to the fact that it is five [DOT]o'clock.
Resolutions adopted in committee of supply this day reported and concurred in.



AGRICULTURE


Hon. Maurice Sauve (Minister of Forestry):: :Mr. Speaker, would the house be agreeable
Feed Grain Policy
to reverting to motions, as I have a short statement to make?


Gordon Minto Churchill: Related to what?


Maurice Sauvé: A statement I promised the house yesterday on feed grain assistance.


Mr. Deputy Speaker:: Is it agreed?


Some hon. Members:: Agreed.


Maurice Sauvé: Mr. Speaker, I am pleased to inform the house that the government has authorized certain modifications to the new interim feed grain assistance policy announced in the house on July 24 last. The modifications are as follows:
1.	The new rates will become effective September 14, instead of August 31.
2.	A new zoning system will be applied in all eastern Canada.
3.	There will be no balance of transportation cost greater than $2 per ton by the least cost method of transporting grain.
4.	The assistance now provided for transportation will remain, with adjustments within provinces to equalize balances of transportation cost where they exist.
5.	Separate and higher levels of assistance to apply on millfeeds and screenings transported by rail or truck to certain maritime destinations have been provided for.
6.	The payment of storage costs in the Halifax elevator one month earlier in the fall than elsewhere in eastern Canada is provided for because of the extra time required to build up stocks in that area for winter use. Storage payments at Halifax will commence September 15 rather than the October 15 date which applies elsewhere in eastern Canada.
7.	Separate and higher rates of assistance will be paid for this winter only on grain moved to certain maritime destinations by rail during the period December 1, 1964 to April 30, 1965.
8.	The rates announced for British Columbia on July 24 last will remain the same.
There appears to be some misunderstanding with respect to this new policy. This is an interim policy to make necessary adjustments and remove certain inequities in the policy which has been in effect up to date. As I have indicated, adoption of a permanent policy must await the report of the house committee on agriculture, on feed grain price differentials, which subject was referred to it on June 24, 1964.
As payments of freight assistance will be allowable to shipments by trucks, and as more transportation competition occurs, the farmers

Feed Grain Policy
will have even further reductions in costs, which is an important consideration and one which seems to have been overlooked by many people.


Marcel Joseph Aimé Lambert: Mr. Speaker, I am a little surprised that we have this statement at this time in view of the minister's easy familiarity with the subject of feed grains for eastern Canada, but I am also a little concerned that it was deferred until five o'clock on Friday afternoon because those people in this party who are primarily concerned, and who have the greatest interest and knowledge of this matter, are not here. The same can be said of other parties. I am hopeful that the minister did not purposely defer his statement until this time, rather than making it this morning when those people who really know something about this subject would have been here. I trust that this practice will not continue, of coming in with statements on motions at five o'clock on Friday afternoons.


Mr. Grant Deachman (Vancouver Quadra):: On a question of privilege, Mr. Speaker, I do not believe the hon. member can raise the point that this should be deferred to another time on the grounds that members are not in the house. Hon. members interested in matters of this kind are expected to attend the house, and if they are not here perhaps they should explain to the house why not.


Mr. Deputy Speaker:: I believe the minister was about to reassure the hon. member for Edmonton West.


Maurice Sauvé: Yes, Mr. Speaker. Yesterday in answer to a question put by the hon. member for Queens-Lunenburg (Mr. Crouse) I said:
Mr. Speaker, the interim assistance measures that were announced at the end of July will be amended, but no final decision has yet been reached.
It was not until this afternoon that we could come to a final solution, and I am very sorry I had to make the announcement at this time, but this will come into effect on September 14 while the policy announced on July 24 would have come into effect on August 31. Therefore in order to give time to the trade and the people involved to make the necessary adjustments I was forced, with great regret, to make it now. I would have preferred to have made it earlier.


Gordon Harvey Aiken: Mr. Speaker, on the point of order raised by the hon. member for Vancouver Quadra (Mr. Deachman) I think a comment in reply ought

to be heard. Surely the purpose of an order paper and the purpose of designating various pieces of business is that those particularly interested will be present at a particular moment and be prepared to answer the comments that are made. There was unanimous consent given a few minutes ago, and I think it most unfair for the hon. member to make such a comment, that everyone should be ready at all times. That is not in accordance with the orderly carrying on of business in this house, and I think the comment was unnecessary.


Mr. H. W. Herridge (Kootenay West):: Mr. Speaker, the members of this group welcome this announcement as a temporary adjustment and some improvement in freight assistance policy, no doubt as a result of the government's finally listening to the representations made from the opposition benches on behalf of farmers; but we look forward to a final and more definitive policy after the agriculture committee has reported to the house.


Philip Bernard Rynard: Just one point-


Mr. Deputy Speaker:: Order please. I believe it is the custom of the house to have only one comment from each party in connection with a statement made on motions.


Gordon Minto Churchill: What about the hon. member for Vancouver Quadra (Mr. Deachman)?


Mr. Deputy Speaker:: Well, of course, there was a question of privilege raised by the hon. member for Vancouver Quadra (Mr. Deachman), and if it is necessary to say so I would state there was really no question of privilege, and I would suggest to hon. members that we now proceed with the business of the house.
It being five o'clock, the house will now proceed to the consideration of private members' business as listed on today's order paper, namely public bills and private bills.


Mr. Walker:: I wonder whether, in an attempt to gain some time, the house would agree to stand all the bills as they are listed on the order paper-the first 24 items-and then proceed to item 25.


Mr. Deputy Speaker:: Is that agreed? This, of course, would include one of the items which involves a resumption of debate. There would have to be unanimous agreement that this particular item stand.


Some hon. Members:: Agreed.

Fisheries Act



FISHERIES ACT


Mr. C. W. Carter (Burin-Burgeo) moved: the second reading of Bill No C-73, to amend the Fisheries Act (forfeiture floor).
He said: This bill contains two main features. One is a principle which simply states that there should be a limitation on the power of confiscation contained in section 64 of the Fisheries Act. The other feature is a suggested application of this principle with respect to the amount of limitation, and a method by which the limitation should be determined.
The bill suggests that the power of confiscation be limited by granting an exemption from forfeiture, and that the amount of exemption should be the same as that provided in the income tax act with a basic minimum exemption of $1,500. This amount may seem to be somewhat low to hon. members from British Columbia, but it was chosen for two reasons. One reason is that it illustrates the principle of the bill. The second reason is that the exemption laid down in the income tax act represents the minimum income for the survival level of a man and his dependants, or at least we assume this is how the exemption is justified in the Income Tax Act. I would however point out that these are mere details which can be modified at the committee stage, should the committee think this necessary in the light of further consideration. It is to the principle of the bill that I wish to draw attention now, because this is the important part of the measure, and after all it is with the principle that we are concerned on second reading.
In considering the principle of this bill the first and most obvious question which comes to my mind is this: Why limit this confiscatory power? Why not abolish it altogether? I may say I think a good case could be made out for the abolition of confiscatory powers as far as the Fisheries Act is concerned. However this is a principle which is to be found in other legislation, the Customs Act, and the Excise Act, for example. It is also to be found in some provincial game laws. Possibly a case could be made out for the retention of these powers in connection with the Fisheries Act, but I wish to emphasize that the present bill asks only that they be limited.
The second question which comes to mind is this: Why should minor breaches of the Fisheries Act be treated differently from
minor breaches of other laws? If a man commits a minor offence the usual procedure is for him to be brought before a court of justice where punishment is meted out in accordance with the magnitude of the crime. The person concerned is either fined or sentenced to a term in jail. But in cases under the Fisheries Act the penalty does not stop there. For a very minor offence a person can be hailed before the court of law, fined, and in addition face the confiscation of his property. This procedure seems to violate a basic concept of justice, namely that punishment should fit the crime. In the case of a big operator, a person who has a large fleet of ships, if one ship is confiscated he still has plenty of other ships left, which he can continue to operate to carry on his business. But take the case of a little man who has only one boat or half a dozen nets. If that one boat is taken from him, or if those nets are confiscated, he is left with nothing with which to earn his livelihood. There is a wide discrepancy in the manner in which this penalty bears on a rich man as compared with a poor man.
I should like to give one or two examples to show why I felt it was necessary to bring this bill before parliament. Two or three years ago one of my constituents set his herring nets in a position inside the mouth of a river in accordance with fisheries regulations prescribed, with the approval of the Minister of Fisheries of that day. Apparently the district fisheries officers had the power to move those stakes back and forth as they wished. Anyway, the officers moved the stakes further out and then the nets were in a position where they consituted a breach of the regulations. What happened was that this man's nets were confiscated by fisheries patrol officers in the patrol boat. They were kept a considerable time before the case was brought before a magistrate. When eventually the case came before the court, the magistrate dismissed it and held that no offence had been committed. But by the time the nets had been returned they were all mildewed and completely ruined. So although this man was legally innocent he had really paid a severe penalty-a much harsher penalty than would have been imposed by way of a fine for an offence of a similar nature.
To illustrate my point, Mr. Speaker, I might give another example of what befell a number of salmon fishermen in my riding. In my province there is an extremely idiotic regulation. I have not the time to describe it to the house now, but to show hon. members


Marcel Joseph Aimé Lambert: Mr. Speaker, there are just a few words I should like to say in connection with this bill. I will immediately disclaim any connection with the fishing industry; but I have, as a lawyer, some observations to make with

regard to the purpose or the objective that the Parliamentary Secretary to the Minister of Veterans Affairs (Mr. Carter) is trying to accomplish with his bill. I find it a little strange that the hon. gentleman, in his capacity, has to present a bill, in that he could not convince his ultimate colleague, the Minister of Fisheries (Mr. Robichaud), of the justification for his cause. I realize what he is trying to get at is the average fisherman who gets cleaned out by one of these seizures, and he has nothing else.
We know that under, for instance, the Excise Act where there has been illicit manufacture of alcohol, the vehicles used in the transportation of the goods or the equipment used in the illicit manufacture of alcohol are forfeit, and there is nothing in the way of an opportunity, as under the Customs Tariff Act, to put up a bond which is the equivalent of a fine when goods are forfeit, in order to exempt the vehicle from seizure.
I can readily see why the hon. gentleman pointed out that when waiting for a magistrate to dispose of a case the equipment is of no value. You might as well give a man the death sentence, because he loses his all. There is no doubt there must be some control and a penalty imposed on improper and illicit fishing practices, but I am wondering whether, in the case of these individuals, the penalty should be so severe.
I am also wondering why, within the legislation of the province of Newfoundland, there would not be something which is akin to the exemptions act of the province of Alberta. I should like to see any federal authority trying to impose the seizures provided for in this act in the province of Alberta in face of the exemptions act of that province, which exempts from seizures and sale the basic holding, shall we say, in so far as land, in so far as an automobile and in so far as personalty and tools of trade. You cannot touch them.
I know I have resisted some seizures under the Income Tax Act precisely under this particular heading in the exemptions act of the province of Alberta. I think there may be some parallel legislation in other provinces which comes under the heading of property and civil rights. We know that property and civil rights is under the complete jurisdiction of the province. When occupying a position on the other side of the house I had occasion to have amended by the government proposed legislation because the government were running into this particular trap. In effect it is a brutum fulmen in that it is of
Fisheries Act
no power whatsoever, since it steps beyond its jurisdiction.
Having said that, and while expressing full sympathy for the hon. member, I think there are grounds in this particular case for providing, shall we say, an umbrella for a particular individual. After all, a breach of the Fisheries Act is in the same category as a breach of the Excise Act or Income Tax Act. These are civil matters. They are not in the nature of a criminal act against the person of an individual where we provide for certain sanctions under the Criminal Code. These are actions against the crown. The crown imposes these regulations, true in the public interest; but I am wondering whether this is almost tantamount to the old provisions where one could be hanged for the theft of a shilling. The penalty here is far too severe. As the hon. member pointed out, what happens to his equipment if after a series of delays he is found not guilty? What would happen to the fish? Would they sell it? I suppose it is sold immediately, because if it was returned to him after he is released I am afraid it would be a little odorous. However, I must express a word of warning to the hon. member. I think his proposed amendment to the act is also a little loose in that if there is going to be a seizure in the case of perishables, an immediate disposition must be made in order to realize on the value of the articles concerned. Or if they are going to seize nets, and so forth, they must take care not to damage them, because until a man is found guilty he is not to be presumed guilty and be penalized right from the start. Therefore, Mr. Speaker, I think the hon. member's legislation would require a little dressing up to impose this sanction on the court. I do not think the responsibility entirely rests with the individual to be honest and just, but that the administration of justice must also be expedient. Justice delayed is justice denied.
Having now embarked on a certain sea with which I am not familiar I will not say anything about the problems of the fisheries; but as a lawyer concerned with the administration of justice I certainly commend the hon. gentleman for the principle he is trying to advance in this bill and I would support it.


Thomas Speakman Barnett: Mr. Speaker, I think the hon. member for Burin-Burgeo (Mr. Carter) is to be congratulated for bringing this bill forward because I think it does open up for discussion in this house something which may very well over the

Fisheries Act
years not have had much thought or consideration by the members of this house generally. It may result, perhaps, in some of the members who come from what I describe as non-fishing constituencies, at least in the commercial sense, and who do not understand the fisheries, taking a closer look at the Fisheries Act, in which case I would not be surprised if some of their reactions were similar to my own the first time I had occasion to look through it.
The Fisheries Act as it stands, rightly or wrongly, is really a very harsh and strong act. I have more than once remarked that if we were to show the same concern for the protection of human beings as we show for the protection of fish as set out in the Fisheries Act we would have to do a lot of revision to the current laws as they stand on our books. Having said that, I think everyone in this house, certainly anyone with any knowledge of the importance of our commercial fisheries, recognizes the need for adequate laws to protect and to conserve the fishery resources of this country, and for regulating the manner in which fish can be taken and placed on the commercial fisheries market.
1 recognize there are a great many differences in the traditions and needs of fisheries laws and regulations as between the part of the country from which the hon. member comes and the Pacific coast. Our fisheries by and large are of a different nature. I have to confess that in my years as a member of this house I have had very few complaints brought directly to my attention as to the manner in which this act has been administered by the fisheries department and the fisheries officers of British Columbia. Indeed I think it is only right to say that by and large they have administered this act in a very fair and equitable manner, and some of the harsher penalties which the act provides are rarely, if ever, carried out as a result of prosecutions in the courts of British Columbia. Nevertheless, the hon. member has raised a very real problem and has attempted by this bill to provide a solution to that problem. I am not at all certain that his proposal of creating a floor, under which confiscation cannot take place, would be particularly practicable in the part of the country from which I come. Putting the floor at $1,500 would not in most cases protect from seizures the actual boat and gear of the average fisherman in British Columbia, although the amount could be more in respect of a married man with dependants, as it is under the Income Tax Act.

I am not sure how one could seize half a boat, or a quarter of a boat, or, for that matter half a net or a quarter of a net.
Mr. Speaker, I feel that hon. members should be prepared to give careful consideration to the principle advanced in this bill. I note that the hon. member sponsoring the bill suggested the possibility of referring it to a committee of the house, I presume the marine and fisheries committee, for study and report. I certainly am happy to support that kind of suggestion.
If the same kind of penalties were applicable to other fields, for example in respect of offences committed under the motor vehicles acts across the country in a way comparable to the Fisheries Act, in which seizure and confiscation is provided, I am sure there would be a great hue and cry, because a great many people would be likely to have their automobiles seized or confiscated for offences no more serious than those provided in the Fisheries Act, which can involve seizure or confiscation. I think this bill certainly deserves the support of the members of the house and should be given consideration, particularly in respect of the principles advanced.
Mr. Speaker, I should like to quote from one section of the act to indicate the kind of powers that are vested.
Section 7 of the act, for example, provides in the first line that the minister may in his absolute discretion do so and so. There are not very many of the statutes that this parliament has placed on the statute books of this country that provide a minister of the crown with this kind of absolute power. I think this is something which should not go unnoted by hon. members of this house.
Mr. Speaker, I have often thought if I could find time to do so I should like to engage in a little historic research in respect of the genesis of our present Fisheries Act. I have the feeling that it came to its present form a number of centuries ago in the days when poaching a private fishing preserve was considered to be one of the most serious offences an ordinary citizen, not able to call himself lord or baron, could commit. I feel that some of the concepts applied at that time may have been carried forward without our having given very much attention to them.
In closing, Mr. Speaker, I should like to again emphasize, as someone who is concerned with the conservation and development of fisheries resources in this country, that I feel we need an act which will properly protect these resources and properly regulate the

manner in which various individuals should be allowed to take the products of the sea. I hope that the house will agree with the suggestion made by the hon. member, and that someone will be prepared to move that the subject matter of this bill be referred to a committee for detailed study and report back to the house. In saying that, I think it would be a good idea to have members such as the hon. member for Edmonton West (Mr. Lambert) on the committee, because he has some knowledge of the implication of laws and their relationship to basic human rights, so that the committee would not be entirely composed of members from fishing constituencies who would just discuss the subject matter among themselves.


Mr. Jean-Eudes Dube (Resligouche-Madawaska):: Mr. Speaker, I have listened very carefully and with sympathetic attention to the remarks made by the hon. member who has sponsored Bill No. C-73. I must say that he has shown in his remarks and in the drafting of the bill a great deal of compassion for fishermen. Fishermen are in a class of people which deserves our understanding and our praise. As we all know, fishermen lead lives of hardship and danger and yet more often than not their rewards are not commensurate with their labours.
The purpose of Bill No. C-73 is to amend section 64 of the Fisheries Act by adding two subsections, 5(a) and 5(b). Section 64 (1) of the Fisheries Act, as amended in 1961, is divided into 12 subsections. The first subsection deals with the seizure of vessels and other articles. Subsection 2 deals with the custody of the seized articles. Subsection 3 deals with perishable goods. Subsection 4 deals with the proceeds of the sale of seized goods. Subsection 5, which is the one of interest to us now, deals with the act of forfeiture.
Mr. Speaker, the bill now before us proposes to add two subsections in order to limit the basic exemption by a floor, to a minimum of $1,500 and up, based on the income tax exemption. As the hon. member for Burin-Burgeo (Mr. Carter) has stated, the purpose of the amendment would be to render less drastic the impact of confiscation. I must say at the outset that the goal proposed by the amendment is appealing. I think it has some merit and deserves careful consideration. However I believe that the bill itself should be examined in light of the Fisheries Act as a whole. We know that the Fisheries Act, as I see it, is to promote conservation and preservation of fish, as well as to ensure the
Fisheries Act
protection of fishermen. The regulations relating to forfeiture are not directed toward the fisherman who is lawfully engaged in his operation, but are aimed at those who would act in breach of the regulations and could be convicted of an offence. I think therefore the laws are directed toward protecting the law abiding fisherman against those who would use unlawful means to fish, as a consequence of which the lawful fisherman may be deprived of his catches.


Chesley William Carter: It should be a sensible law.


Jean-Eudes Dubé: I agree entirely. The penalty of forfeiture is a drastic one but it is not exclusive to the Fisheries Act. As was said this afternoon, forfeiture exists under the Excise Act and other federal acts as well as under provincial fish and game, and liquor acts. I would agree that the penalty should be in proportion to the offence. I would admit also it would be unfair, brutal and inhumane to seize a vessel for a very minor offence. No one would accept that a fisherman should be deprived of his means of livelihood for the mere commission of a petty offence. But the act does not say that.
Section 64 does not state that the convicting court or judge shall order that the vessel or article be seized. It provides that the convicting court or judge may order. In other words, the section is merely permissive. It means that the authority is there to punish grave offenders. The authority is there as a warning, a deterrent against major offenders. The authority is also there as a protection for law abiding fishermen. Moreover if a convicted person feels that a forfeiture penalty is excessive he may appeal to the minister and he may also appeal under the provisions of the Criminal Code. Section 75 of the act is very clear in this matter. It reads as follows:
Persons aggrieved by any conviction for any offence under this act may appeal by petition to the minister, who may remit penalties and restore forfeitures under this act; but when a conviction takes place or an order is made by a justice of the peace or fishery officer for the payment of money or dismissing an information or complaint under this act, nothing in this section prevents any person who thinks himself aggrieved by any such conviction or order or dismissal, the prosecutor or complainant, as well as the defendant, from the right of appeal that he has under the provisions of the Criminal Code relating to summary convictions.
It must also be pointed out that the Fisheries Act was extensively revised in 1961. Before 1961 fishery officers had arbitrary powers of confiscation, and confiscation was automatic following conviction. But the 1961

Fisheries Act
revision of the Fisheries Act has changed all this by taking away the powers of confiscation from fishery officers and giving these powers to the courts, where they now rest.
I would also submit that the effect of having the proposed floor of $1,500 in my humble opinion would be to nullify completely the value of the section where the item seized was of a value less than $1,500. The explanatory notes of the bill are not entirely correct in some particulars. The first sentence reads in part as follows:
The purpose of this bill is to put a floor on the penal power of the crown-
I submit that this is not correct. The crown has no penal power whatsoever in this matter. The penal power rests solely with the court, and section 64, subsection 5, spells it out very clearly by using these words:
Where a person is convicted of an offence under this act or any regulations, the convicting court or judge-
In other words, it is not the minister or his agent or any fisheries officer who would order forfeiture. This power lies solely in the judge who may or may not do so. The act does not say he shall: It says he may.


Marcel Joseph Aimé Lambert: May I ask the hon. member a question? Would that not reinforce my argument that this matter would really come under property and civil rights, and if it ran counter to any exemptions in any province it would be a nullity since the magistrate acts under provincial authority?


Chesley William Carter: Would the hon. member permit a question? The hon. member says that the power does not reside in the officer but only in the courts. Does the act say that the fisheries patrol boat officers must lay a charge before taking the fisherman's gear and nets? Does the Fisheries Act say there is a time limit within which the matter must be brought before a court? How is the man protected? The fisheries boat officers take his gear out of the water and they can keep it, with the result that his gear is ruined before the matter comes to trial.


Jean-Eudes Dubé: I do not deny this at all. I am just saying that the explanatory notes are not correct in stating that the penal power rests with the crown. It does not rest with the crown, but with the court. I do not wish to take too much of the time of the house. I only wish to say that all these points I have mentioned should be considered. In concluding I must commend the sponsor of the
bill for his devotion to the cause of fishermen.


Stanley Howard Knowles: Now you know how we feel. Mr. Herridge: It was a very fishy argument. Mr. Knowles: Question.


Some hon. Members:: Six o'clock.


[Stage Direction]
At six o'clock the house adjourned, without question put, pursuant to standing order.
[The following items were passed in committee of supply this day]:

[Stage Direction]
1. Departmental administration, including grants as detailed in the estimates, $4,677,100.
[By amendment: Less $600,000.]
5. To sustain technological capability in Canadian industry by supporting selected defence development programs, on terms and conditions approved by treasury board, and to authorize, notwithstanding section 30 of the Financial Administration Act, total commitments of $50,000,000 for the foregoing purposes during the current and subsequent fiscal years, $19,500,000.

[Stage Direction]
A-Department-
1. Departmental administration including the care, maintenance and custody of standby defence plants, buildings, machine tools and production tooling and grants to municipalities in lieu of taxes on crown-owned defence plants operated by private contractors, $15,324,200.
5. For the establishment of production capacity and for capital assistance for the construction, acquisition, extension or improvement of capital equipment or works by private contractors engaged in defence contracts, or by crown plants operated on a management-fee basis, or by crown companies under direction of the Minister of Defence Production, subject to the approval of treasury board, $1,046,000.
10. To establish qualified sources for the production of component parts and materials, subject to the approval of treasury board, and to authorize, notwithstanding section 30 of the Financial Administration Act, total commitments of $1,200,000 for the foregoing purposes during the current and subsequent fiscal years, $450,000.
15. Directorate of printing-Administration and plant equipment and replacements, $979,000.
C-Crown companies-
35. Expenses incurred by Defence Construction (1951) Limited in procuring the contruction of defence projects on behalf of the Department of National Defence and procuring the construction of such other projects as are approved by treasury board, $2,318,000.
Canadian Arsenals Limited-
40. Administration and operation, $2,500,000.
45. Construction, improvements and equipment, $336,000.
[Stage Direction]
Monday, August 31, 1964