1965-05-18

[Stage Direction]
A message from the Deputy Governor General transmitting supplementary estimates for the financial year ending March 31, 1966, was presented by Hon. G. J. Mcllraith (President of the Privy Council), read by Mr. Speaker to the House and referred to the Committee of Supply.
s (2:40 p.m.)


Mr. Donald Maclnnis (Cape Breton South):: Mr. Speaker, I rise on a question of privilege. My question of privilege arises from questions asked in this House on Wednesday, May 12, and answered by the Minister of Transport (Mr. Pickersgill), concerning air traffic safety conditions at the Halifax International Airport, a statement over the week end in reference to this matter by Mr. R. W. Goodwin, Director of Civil Aviation for Canada, and a statement by Mr. G. R. McGregor, President of Air Canada, on the same matter.
On Tuesday, May 11 the Halifax Mail Star made certain assertions about safety conditions at the Halifax International Airport. On Wednesday, May 12 the Minister of Transport was questioned by the hon. Member for Queens (Mr. MacLean) and by myself. In answer to these questions the Minister said in part:
I may say that to the best of my knowledge there is no hazard; that is according to the best information I have been able to secure from those in whom I have confidence. It will be understood, of course, that I have no technical competence myself in this field, but the trusted officers of the Department are of the opinion that there is no hazard of the kind described in the Halifax Mail Star of last night.
Later, in answer to the hon. Member for Queens, the Minister said in part:
I think I will not take the time of the House to deal with the matter, because the whole thing is set out very clearly in an excellent story in the Halifax Chronicle-Herald, of this morning.
The Minister, of course, was giving to the House the information he obtained from his
"trusted officials". That information was to the effect that no hazard existed. It becomes clear, however, from statements published over the week end in the Halifax Chronicle-Herald. that the Minister misled the House. I invite the attention of the House to an article in Saturday's Halifax Chronicle-Herald, two paragraphs of which read as follows:
Canada's civil aviation director, R. W. Goodwin, has ordered his department to initiate a crash program to train air traffic controllers in use of the new precision radar at Halifax International Airport. He has also ordered quick action to eliminate any existing snags in the idle $500,000 radar installation.
Mr. Goodwin, in a telephone call from Ottawa yesterday, confirmed that the first reports pub-blished in the Mail Star were correct on "many points" in their disclosures of conditions at Halifax airport.
Mr. Goodwin's statement shows that the Minister misinformed the House when he assured the House last Wednesday that no hazard exists of the kind originally described in the Mail Star. The same article in Saturday's Chronicle-Herald states as follows:
Meanwhile, in St. John's, Newfoundland, according to a report from the Canadian Press, Air Canada President G. R. McGregor said that the reports of a near collision in the air and of the two blind spots in radar coverage were "pure fabrication".
Mr. McGregor, who did not know that Mr. Goodwin had confirmed the reports, said that the near collision story "probably originated with a disgruntled Department of Transport employee".
My question of privilege is this, that the Minister of Transport on May 12 was misled by his own officials and gave inaccurate information to the House, on the assurances he had received from "trusted officials", on a serious matter involving the safety of human lives. The Minister of Transport should assure the House that some action is being taken in respect of those officials who victimized him and the House in this way, and the President of Air Canada should be dismissed for attempting to mislead the public by a public statement which the Director of Civil Aviation has shown to be false.


Hon. J. W. Pickersgill (Minister of Transport):: Mr. Speaker, since the hon. gentleman has been allowed to engage in what is clearly a debate on an alleged question of privilege, I assume that I might be permitted to reply. In reply I would say-
13SS

May 18, 1965
Question of Privilege


Malcolm MacInnis: Mr. Speaker, I rise on a point of order.


John Whitney Pickersgill: I did not interrupt the hon. gentleman, so surely-


Malcolm MacInnis: Mr. Speaker, a point of order.


Mr. Speaker:: Order, please. I really think I have heard enough to decide that in my opinion this is not per se a question of privilege, but is more in the nature of a complaint, or the argument that somebody made a statement with which the hon. Member does not agree, and that somebody else replied.
Under the rules of the House statements made by Members have to be accepted by other Members. If they are found to be not acceptable, then the hon. Member concerned can make a motion. But I do not see any particular question of privilege here, although I do think that perhaps the hon. Member for Cape Breton South (Mr. Maclnnis) was right in bringing to the attention of the House a matter concerning the safety and security of people who use airplanes. However, as I say, I do not see any real question of privilege, and in the circumstances I do not think we should indulge in a long argument.
I realize the position of the Minister. If he made statements I am sure he made them after due consultation with his officials. I am also sure-at least I would hope-that those officials made them in good faith as well. Therefore in the circumstances I do not think anything is to be gained by pursuing the matter, unless the Minister wishes to make a statement on motions, for example.


John Whitney Pickersgill: Mr. Speaker, without disputing the merits of anything you said, which I accept at once, I think perhaps I have a question of privilege here because the hon. Member said I misled the House. I think I can read one paragraph and one paragraph only from a statement handed to me by Mr. Goodwin himself on Friday subsequent to the article quoted by the hon. gentleman, which incidentally, if I understood the quotation correctly, did not in any place confirm the Mail Star's report that there was any danger to safety. What Mr. Goodwin said was that the radar, which is a new kind of installation that is going to improve the performance at the Halifax airport and speed up the landings, was not yet in full operation, and that is perfectly correct. But in the final paragraph of his statement which he gave to

me he says this, and for the guidance of the House I have it in my hand:
I can assure you that there is no lack of safety provisions for air traffic at Halifax and that our equipment, personnel and procedures are in keeping with the highest Canadian and international standards.
In the light of that, and so far as the alleged collision is concerned, it seems to me that no one in the Department of Transport has any evidence whatever to suggest that there was any such possible or potential collision, and I am quite sure that anyone who knows Mr. McGregor's long record and the wonderful record of Air Canada for safety will be quite sure that Mr. McGregor would not have denied a story of this sort if he had had any evidence whatever that there was anything in it.


Malcolm MacInnis: A supplementary question, Mr. Speaker.


Mr. Speaker:: No. If the hon. Member has a real complaint to make he must make a motion in the proper way, but it does seem to me that this question has been aired sufficiently. It was important to air it on the ground of national safety and the security of those using aircraft, but I suggest we leave it there.



NORTHERN AFFAIRS


Mr. R. N. Thompson (Red Deer) moved: for leave to introduce Bill No. C-106, to provide for the establishment of the Alaska-Yukon Highway Authority (Alaska Highway).


Some hon. Members:: Explain.


Robert Norman Thompson: Mr. Speaker, the purpose of this Bill is to establish an authority charged with the responsibility of the construction, relocation and maintenance of the Alaska-Yukon Highway. For a number of years there has been much discussion in Canada and in the United States about the necessity of completing this wartime emergency road which connects the United States through Alberta, B.C. and the Yukon to Alaska. Not much progress has been made as a result of these discussions and planning; therefore, Mr. Speaker, this has been proposed as a modern approach and as a means of handling a very complex subject. It is one which has been used in recent years in several countries, and it provides an integrated approach between Governments facilitating direct liaison between
May 18, 1965	COMMONS DEBATES	1397
these various Governments. It also allows for local participation and decentralized financing which would be necessary on a shared basis. Perhaps most important, Mr. Speaker, in the event of United States financial participation this Bill would eliminate the need for formal treaties between the United States and Canada, even as it provides an integrated approach among federal, provincial and territorial Governments.
Motion agreed to and Bill read the first time.



URANIUM


[Stage Direction]
On the orders of the day:
Right Hon. J. G. Diefenbaker (Leader of the Opposition):: Mr. Speaker, I should like to direct a question to the Prime Minister relating to a statement which he allegedly made during a visit to his constituency and Elliot Lake regarding the uranium deal with France, to the effect that this deal is now in danger of falling through because of failure to obtain the right of inspection by Canada of the uses to which the uranium supplied by Canada could be put. I should like to ask him about this situation because of the doubts which have arisen, and because of his statement that if the deal should fall through the Government would continue stockpiling.


Right Hon. L. B. Pearson (Prime Minister):: Mr. Speaker, it is my best recollection that I did not say anything during the week end which would indicate that the negotiations with France are in danger of falling through. I have said in the House, and repeated this over the week end, that ministerial discussions are about to begin in respect of this matter. It was our hope that the Minister of Trade and Commerce would be in Paris by now meeting with French authorities, but his arrival there has been delayed for a few days. We hope as a result of these ministerial meetings this very important contract will be agreed upon.
I have already said, however, that in view of the optimistic future of the uranium industry, which is now clear, that industry should be maintained in a viable position. If that can be done by a contract of the kind we have been discussing with France, that would be a very satisfactory way of doing it, but if this has to be done in some other way the Government will give consideration to that alternative method.
Inquiries of the Ministry


John George Diefenbaker: Mr. Speaker, can the Prime Minister, without revealing the general discussions that are taking place, say whether the reports appearing in certain world newspapers are well founded, to the effect that France takes strong objection to any interference in the uses that it may wish to make of the uranium, but wants a free hand to do what it will with the uranium it purchases?


Lester Bowles Pearson: Mr. Speaker, we are conducting negotiations with the French Government, and while these negotiations are taking place it would be quite inappropriate for me to discuss the position that the French Government might be taking.


Mr. Real Caouelfe (Villeneuve):: Mr. Speaker, I should like to direct a supplementary question to the right hon. Prime Minister.
Did he state, over the week end, in Elliot Lake that even if the trade agreement with France, with regard to uranium, did not go through, the federal government would keep the mines in operation there, stockpiling uranium in Canada if necessary, while waiting to find other markets in the world?


Lester Bowles Pearson: Mr. Speaker, I have just given the position of the Government on this matter. Perhaps I had better read the exact words I said on this point, as they were read from a text:
Given the long term requirements for uranium and the probable price structure in years to come, the Canadian Government would have to consider what steps it should take to sustain a uranium industry, if the level of sales which could be achieved through the negotiation of contracts at the present time was not in itself entirely capable of maintaining a viable industry.
What we as a Government propose to do, Mr. Speaker, is to maintain a viable industry.


Mr. R. A. Webb (Hastings-Frontenac):: Mr. Speaker, I should like to direct my question to the Prime Minister. According to last night's newspapers he made the statement to the citizens of Elliot Lake that if necessary to maintain the economy of that area the Government would consider stockpiling uranium again. Will the Prime Minister give the same consideration to the people of the Bancroft area and, if not, will he announce that a national park will soon be established in the Bancroft area?


Lester Bowles Pearson: Mr. Speaker, the statement I made referred to a viable industry and not to any particular area concerned with the industry.
1398	COMMONS
Inquiries of the Ministry [Translation]


Mr. Marcel Lessard (Lake SI. John):: Mr. Speaker, I should like to direct a supplementary question to the right hon. Prime Minister.
In its negotiations with France Canada insists on control requirements and wants to be assured that this uranium will not be used for military purposes. Why does Canada insist on those conditions in a deal with France, while the same conditions were not imposed when similar arrangements were made with Great Britain and the United States?


Lester Bowles Pearson: Mr. Speaker, there is a distinction, in that the arrangements with the United States and the United Kingdom covering uranium were made during the war. Those arrangements were recognized after the war, and the purpose of the United Nations intervention and the United Nations resolutions for setting up certain regulations was for the prevention of the spread of nuclear weapons to other countries.


David Réal Caouette: Mr. Speaker, may I put a
supplementary question?
The right hon. Prime Minister's explanations are not clear. Does he mean that agreements arrived at after the war are about the same as, or identical to those we are now trying to reach with France and that if the United States wanted to buy Canadian uranium now the government would say to them: we agree to sell uranium to you, but we forbid you to use it for nuclear weapons or for non-peaceful purposes?


Lester Bowles Pearson: Mr. Speaker, I do not think I can add anything to what I have said. There are certain international commitments undertaken by Canada and established by the United Nations. We are bound by those commitments. I do not want to go beyond that at this time.


EXTERNAL AFFAIRS
[Stage Direction]
RUSSIA-NEWSPAPER ATTACK ON CANADIAN MILITARY ATTACHE:
On the orders of the day:
Hon. Michael Starr (Ontario):: Mr. Speaker, I wish to address a question to the Secretary of State for External Affairs with regard to a matter which has been brought to my attention. The U.S.S.R. publication, Izvestia, has

DEBATES	May 18, 1965
launched a personal attack upon Colonel Curtis Greenleaf, our senior military attache in Moscow, using such terms in describing him as "hooligan". Can the Minister say whether this is a form of retaliation arising out of events that took place recently involving certain U.S.S.R. attaches in Ottawa? What action is the Government taking to protect the reputations of our representatives abroad?


Hon. Paul Martin (Secretary of State for External Affairs):: Mr. Speaker, I have not seen the article to which my hon. friend directs my attention, but I shall make a point of looking at it forthwith. In the meantime I may say, of course, we have every confidence in our military attache.


[Stage Direction]
On the orders of the day:
Mr. H. W. Herridge (Kootenay West):: wish to direct a question to that most amiable gentleman the Secretary of State for External Affairs. In view of reports in today's press that the United States Government has now switched its support from the dictatorship in the Dominican Republic to the democratic forces, is the Minister in a position to give the House any information with respect to this change of position?


Paul Joseph James Martin: I am sure the hon. gentleman will not misunderstand me if I say I sometimes find it difficult to understand why he persists in showing such an unfriendly attitude toward our neighbour, the United States. I shall have to examine the question and see whether there is anything I can usefully say.


Mr.  R. Gordon L. Fairweather@Royal: Mr. Speaker, I should like to direct a question to the Secretary of State for External Affairs. The Minister dismissed somewhat summarily the question asked by the hon. Member for Kootenay West, and I think the Minister will recognize that it is hard for those of us who are not privy to the information he has available to him to keep up with events in this part of the hemisphere. I am wondering whather the Minister could give us the authentic latest news on the Dominican Republic.


Mr. Fisher:: Rawhide had it this morning.


Mr. Martin (Essex Easf):: I am sorry, Mr. Speaker, if I summarily dismissed the hon.
May 18. 1965

Inquiries of the Ministry Member for Kootenay West, because he is Mr. Pearson: Mr. Speaker, there will be full the last man in the world I would summarily explanation of that matter when the resolu-dismiss.	tions are before the House.


Mr. Fairweather:: Don't dismiss me, either.


Paul Joseph James Martin: No, I will not dismiss my hon. friend.


John George Diefenbaker: On political grounds.


Paul Joseph James Martin: On political
grounds. I promised to examine the question, and I will do so.


Mr. W. B. Nesbitt (Oxford):: Mr. Speaker, I have a question supplementary to that asked by the hon. Member for Royal. Is the Minister or his Department receiving any information on this subject from Washington?


Paul Joseph James Martin: Yes, Mr. Speaker.
In addition to our own staff normally resident at the mission in the Dominican Republic we have asked one of our own people in Ottawa to go to the Dominican Republic, and he has been there now for a matter of days. We are in continuous telephonic communication with him, and we are following events there with great concern.



FINANCE


[Stage Direction]
On the orders of the day:
Mr. T. C. Douglas (Burnaby-Coquitlam):: Mr. Speaker, may I direct a question to the Prime Minister respecting the suggestion he made in Regina last night, and ask him whether the House may now assume it is the Government's intention to remove any discrimination which may exist with respect to solution mining of potash as compared with shaft mining operations?


Lester Bowles Pearson: Mr. Speaker, this matter will be discussed when the budget resolutions are before the House, and I said nothing last night which
would prejudice that discussion.


Thomas Clement (Tommy) Douglas: As a supplementary question, in view of the fact that the Premier of Saskatchewan has stated that neither he nor his ministers have been able to get any explanation from the Government as to why this discrimination does exist, would the Prime Minister undertake himself to give, or have the Minister of Finance give an explanation to the House, which we have never had?


Mr.  R. Gordon L. Fairweather@Royal: As
a supplementary question, Mr. Speaker, I wonder if the Prime Minister did in fact use the word "ingrate" when referring to the Premier of Saskatchewan. How ungrateful does one have to be to be awarded this classification by the Prime Minister?


Lester Bowles Pearson: No, Mr. Speaker, I did not use that word. It is a term I seldom use in any connection, and certainly not in regard to any discussions I had with the Premier of Saskatchewan or his cabinet, discussions which were very friendly, very helpful and very constructive.



COMPANY OF YOUNG CANADIANS


[Stage Direction]
On the orders of the day:
John George Diefenbaker: Mr. Speaker, the press must be wrong in its description of the glacial nature of the meeting. I would like to ask the Prime Minister how many companies for the training of young Canadians are going to be set up.


Lester Bowles Pearson: Mr. Speaker, that matter is under discussion now. The advisory committee which has been announced has already had two meetings, and it will be reporting shortly to the Government.


John George Diefenbaker: I ask this question, Mr. Speaker, because when the Prime Minister was on his Santa Claus tour in the north he said Elliot Lake will become a training ground for the Company of Young Canadians. Did he make that statement or did he not?


Lester Bowles Pearson: No, Mr. Speaker. The right
hon. gentleman when he was up in the same area attempting to be Santa Claus-


Some hon. Members:: Hear, hear.


Lester Bowles Pearson: -although he was not bearing many gifts-


Michael Starr: He wasn't giving any promises, anyway.


Lester Bowles Pearson: *-he must have misunderstood what was said because I mentioned to my constituents at Elliot Lake that I had already mentioned to the advisory committee dealing with this matter, the setting up of a
May 18, 1965

Inquiries of the Ministry Company of young Canadians, that Elliot Lake itself with all its capacity and the facilities which are available there-unfortunately not being used now-would make an admirable training base for the Company of Young Canadians if the executive of that organization so desired; and I hope they will.


John George Diefenbaker: Mr. Speaker, might I say I was not in that area playing Santa Claus, but was advertising the natural resources of that particular part of the country.


Lester Bowles Pearson: I hope the right hon. gentleman was successful in his fishing.


John George Diefenbaker: Mr. Speaker, ordinarily I do not answer questions, and it is not allowable, but in both fields I was successful.



DOMINION-PROVINCIAL CONFERENCE INQUIRY AS TO REASONS FOR POSTPONEMENT

[Stage Direction]
On the orders of the day:
Robert Norman Thompson: Mr. Speaker, my question is directed to the right hon. Prime Minister. Would he confirm whether the federal-provincial conference planned for the end of the month has been postponed and, if so, could the Prime Minister tell us what are the reasons for this postponement?


Lester Bowles Pearson: No, Mr. Speaker, the conference has not been postponed; but as a result of the replies to the letter which we sent out some time ago with a draft suggested agenda and a date, we have written to the provinces asking if they would care to reconsider the date and a postponement because all the Premiers-at least the Premier of B.C.-cannot come on May 31, and also because several provinces have requested additional subjects, some very important ones, to be placed on the agenda, and they will require consideration before agreement can be reached on the agenda. In view of that we have written to the provincial Premiers to see if they would consider it wise to postpone the conference which was to have met on May 31.



PUBLIC SERVICE


[Stage Direction]
On the orders of the day:
David Réal Caouette: Mr. Speaker, my question was to the Minister of 
National Revenue, but in his absence I will direct it to the right hon. Prime Minister.
Following complaints I received yesterday concerning the income tax division at the Jackson Building, could the Prime Minister tell us why there are no French speaking employees at the desk or general counter of that income tax division? I would also like to know if the Prime Minister can take steps so that French speaking persons can be answered in their own language when they apply at the income tax division at the Jackson Building?


Lester Bowles Pearson: Well, Mr. Speaker, I am not aware of the facts as announced by my hon. friend, but I would point out to him for one thing that the newly appointed Deputy Minister of the Department is French speaking.


Mr. Gilbert Rondeau (Shefford):: Mr. Speaker, may I ask a supplementary question?
At the same time, could the Prime Minister inquire from the Minister of Agriculture as to why information circulars sent to farmers and agriculturalists throughout the province of Quebec have been published only in English for months?


Lester Bowles Pearson: I will be glad to, Mr. Speaker. LABOUR RELATIONS



VANCOUVER-THREATENED STRIKE OF GRAIN HANDLERS

[Stage Direction]
On the orders of the day:
Hon. Alvin Hamilton (Qu'Appelle):: Mr. Speaker, I would like to ask the Minister of Trade and Commerce a question about the movement of grain from the west coast. In view of the threatened strike of the terminal workers I wonder if the Minister would not consider holding a meeting with all the parties concerned, before the situation degenerates like it did in 1963, particularly in view of the fine record of this particular union in honouring the commitment made at a meeting in 1961 for the movement of wheat to China without strike action.


Hon. Mitchell Sharp (Minister of Trade and Commerce):: Mr. Speaker, both the Minister of Labour and I have been very much concerned to avoid any stoppage of work in Vancouver. I can assure my hon. friend that no one in the House desires to see a continuous movement
May 18, 1965

Inquiries of the Ministry of wheat out of the west coast more than I involved has already accepted the Majority do, and he can depend on the Government to Report of the conciliation board, while the make every effort that can usefully be made, companies involved have not?


Francis Alvin George Hamilton: As a supplementary question, Mr. Speaker, would the Minister see if a meeting could be held, because the commitment was made at a meeting with both sides in front of the Minister, and I think if that commitment were put up to both sides the threatened stoppage would probably end.


Mitchell William Sharp: Mr. Speaker, I would be very happy to give this suggestion consideration. It may be that a meeting of this kind would be useful but I can assure my hon. friend there are many other ways of handling this, as he knows; and I think we have been at least as successful as he was in keeping the movement of grain going through the Pacific coast ports-even more successful.


Francis Alvin George Hamilton: As a supplementary question, Mr. Speaker, in view of the opinions expressed in the latter part of the Minister's answer I am sure he will admit that there was a big loss of markets in the winter of 1963-64. Therefore I ask him again, would he not consider giving a direct commitment that a meeting will be called under his auspices?


Mitchell William Sharp: I deny the statement made by the hon. Member, who was not really asking a question. He has made a statement, and he knows perfectly well that the greatest movement of wheat ever made in the history of this country was made in the crop year 1963-64.


Mr. R. R. Southam (Moose Mountain):: As a
further supplementary question, Mr. Speaker, is the Minister aware that Alberta wheat pool officials said yesterday that Alberta and Saskatchewan farmers, already hit by a drop in the price of wheat, will suffer more seriously if the grain handlers' strike is called in the Vancouver area?


Mitchell William Sharp: Yes, Mr. Speaker. I entirely agree with the hon. gentleman that it would be most unfortunate if a strike were called in Vancouver, and I earnestly hope it can be avoided. I can assure the hon. Member that the Government is doing everything possible to avoid a strike.


Mr. Barry Mather (New Westminster):: wanted to direct a supplementary question to the Minister of Trade and Commerce in connection with the grain handlers dispute in New Westminster and Vancouver. Is the Minister aware of the fact that the union


Mitchell William Sharp: Yes. I have been discussing this question over the last few days with all the parties directly concerned, and I am fully aware of the facts the hon. Member has put forward.



CROWN CORPORATIONS


[Stage Direction]
On the orders of the day:
Hon. Paul Mariineau (Poniiac-Temiscamin-gue):: I wish to address a question to the Minister of Finance. Will the Minister say whether the Government has received a bid by private interests for the purchase of Polymer Corporation? Would he further state whether the Government would entertain such a bid if one were made, on conditions similar to those applicable to the Canada Development Corporation when it is set up?


Hon. Walter L. Gordon (Minister of Finance):: This seems to be a rambling and hypothetical question. The answer to the first part is, not to my knowledge.


Paul Raymond Martineau: What about the second part?


Walter Lockhart Gordon: Hypothetical.



ADMINISTRATION OF JUSTICE


[Stage Direction]
On the orders of the day:
Mr. Guy Marcoux (Quebec-Monlmorency):: Mr. Speaker, I should like to direct a question to the Minister of Justice.
Following the escape of four prisoners from the Prince Albert penitentiary can the minister tell the house whether he intends to set up an inquiry to find out if any political influence has been at the root of these spectacular escapes?



DORION COMMISSION-INQUIRY AS TO REPORT

[Stage Direction]
On the orders of the day:
Mr. Lloyd R. Crouse (Queens-Lunenburg):: Mr. Speaker, I should like to direct a question to the Prime Minister. Has the Prime Minister any information concerning the date the report of the Dorion Commission will be available or filed with the Government?
1402	COMMONS
Inquiries of the Ministry


Lester Bowles Pearson: No, Mr. Speaker, I have no information on that matter.



QUEBEC-LEGALITY OF RAIN MAKING OPERATIONS

[Stage Direction]
On the orders of the day:
Mr. Gerard Girouard (Labelle):: Mr. Speaker,
I should like to put a question to the Minister of Transport.
The hon. member for Lake St. John (Mr. Lessard) and the hon. member for Lapointe (Mr. Gregoire) have already mentioned the rain-making machines which are now causing a commotion in my riding.
Could the minister tell us whether the companies involved have a permit from the Department of Transport to fly their aircraft and cause rain to fall just about everywhere?
If not, does the minister intend to exercise his jurisdiction over air traffic and have an investigation carried out concerning this activity which is highly detrimental to agriculture?


John Whitney Pickersgill: Mr. Speaker, the hon. gentleman has opened up a very large question indeed. I will be pleased to take his question as notice, consider it carefully and make a reply.


Mr. Gilles Gregoire (Lapointe):: Mr. Speaker, I should like to direct a supplementary question to the Minister of National Health and Welfare.
Could the minister tell us whether it is her intention to inquire into the operations of the rain-making machines in the areas of Saguenay, Lake St. John, Abitibi and Labelle to see whether the use of these machines is prejudicial to the health of the people living in these areas?


Mr. Speaker:: Obviously this question,
while interesting, does not contain that element of urgency that would require an answer at the moment.


Gilles Grégoire: On a point of order, Mr. Speaker.
I merely ask the minister whether she intends to inquire into that matter. In my opinion there is always an element of urgency when the health of hundreds of
[Mr. Crouse.)
DEBATES	May 18. 1965
citizens is concerned. Health is one of the most urgent problems, and this is why I ask the minister whether she intends to inquire into the matter.


Hon. Judy V. LaMarsh (Minister of National Health and Welfare):: Mr. Speaker, this is the first I have heard of it, and I will be intrigued to see the report.


Hon. Gordon Churchill (Winnipeg South Centre):: Mr. Speaker, I rise on a point of order. I understood your ruling to be that the question was not urgent. The hon. Member for Lapointe (Mr. Gregoire) is arguing that it is urgent; he is differing in his opinion from the Speaker. I think the House would uphold the Speaker's ruling in this connection, and that the hon. Member for Lapointe should be called out of order when he interferes, as he does so frequently, with the conduct of business in this House.


Some hon. Members:: Hear, hear. [Translation]


Gilles Grégoire: Mr. Speaker, I think that you have understood my argument. It does not rest with the hon. member for Winnipeg South Centre (Mr. Churchill) to lecture other members and call them to order, when he is out of order more often than not.


Mr. Speaker:: Order, please. The question was not so urgent that it required an immediate answer, and I do not see how the Minister could be expected to reply to a vague, general question, important as it may be. The proper place for it, of course, is on the Order Paper and it should be put there.



CAPITAL PUNISHMENT-INQUIRY AS TO WHITE PAPER

[Stage Direction]
On the orders of the day:
Mr. Harold E. Winch (Vancouver East):: Mr. Speaker, I should like to direct a question to the Minister of Justice. In view of the growing interest in the matter of capital punishment, on which a decision will be made in this House some time this session, I should like to ask the Minister whether he is now in a position to inform this House when he will table the white paper on this question which was promised a number of weeks ago.


Hon. Guy Favreau (Minister of Justice):: Mr. Speaker, the first draft of the information paper is now prepared, and I should like to show it in confidence to the leaders of the various parties so as to have a relative assur-
May 18, 1965

ance that it is totally objective and shows no possible bias; because the paper is intended to allow Members to objectively inform their respective minds on the problem. I repeat that the first draft is now completed, but I yet have to have these interviews.


Harold Edward Winch: A supplementary question. Can I ask whether this submission is to be made to the leaders of the various parties, to the whips of the various parties, or to those Members who, as the Minister knows, have an interest in and some knowledge of this question? In other words, to whom and when will the submission be made so as to form a basis for debate in this House?


Guy Favreau: Mr. Speaker, I did propose to attempt to obtain the names of the appropriate Members of each Party through their respective House Leaders.



DOMINION-PROVINCIAL RELATIONS LACK OF QUEBEC REPRESENTATION AT RESOURCE MINISTERS MEETING

[Stage Direction]
On the orders of the day:
Hon. W. G. Dinsdale (Brandon-Souris):: have a question for the Minister of Northern Affairs and National Resources. Perhaps in his absence and in the absence of his Parliamentary Secretary I may address it to the Acting Minister. Can the Acting Minister inform the House whether the absence of representation from the Province of Quebec at the recent resource ministers' council meeting in British Columbia is an indication that that province is opting out of this important Federal-Provincial co-operative group?


Hon. E. J. Benson (Acting Minister of Northern Affairs and National Resources):: The answer to that question is no. Mr. Levesque's telegram expressed his disappointment at being unable to attend the plenary session of the Canadian Council of Resource Ministers in Victoria on May 13 and 14 due to pressure of duties both within and outside the legislature in Quebec. The other resource ministers from Quebec were faced with the same dilemma. Quebec was represented by Mr. Eric Gourdeau, assistant director of planning in the Quebec Department of Natural Resources.



HEALTH AND WELFARE


[Stage Direction]
On the orders of the day:
Mr. Stanley Knowles (Winnipeg North Centre):: Mr. Speaker, may I direct a ques-
Inquiries of the Ministry tion to the Minister of National Health and Welfare. What steps is the Government taking to establish medicare in Canada on a universal basis before too many provinces institute schemes which cover only part of the population, which would have the effect of making it difficult to implement on a Federal-Provincial basis a satisfactory health program such as that recommended by the Hall Commission?


Julia Verlyn (Judy) LaMarsh: The Federal Government is taking all the appropriate steps.


Stanley Howard Knowles: Does the impending postponement of the Federal-Provincial conference have any bearing on this question?


Julia Verlyn (Judy) LaMarsh: No.



FISHERIES


[Stage Direction]
On the orders of the day:
Mr. D. W. Groos (Victoria, B.C.):: Now that we are all facing west I have a question for the Minister of Fisheries. Has the Minister received a brief from the Amalgamated Conservation Society in Victoria, British Columbia, drawing attention to the serious decline in sports salmon catches on the west coast following the use of mercury vapor lights at sea in the herring fishery, and is the Minister taking steps to correct matters and check this decline?


Hon. H. J. Robichaud (Minister of Fisheries):: Yes. A few weeks ago I did receive a brief from the secretary treasurer of the Amalgamated Conservation Society, and in my reply I stated that investigations were going on which we hoped would give sound and reliable data on which to reach a basis for action. I assured the secretary treasurer of the Society that consideration would be given to his representations.



REDISTRIBUTION


[Stage Direction]
On the orders of the day:
John Whitney Pickersgill: Yesterday the hon. Member for Que-bec-Montmorency asked the Acting Prime Minister about the publication of reports by some provincial redistribution commissions.

May 18. 1965
Inquiries of the Ministry Perhaps I could give a reply to that question in my capacity as Acting Secretary of State.
The hon. Member asked whether it was normal for such reports to be given to the press before the commissions concerned had reported to the House. I do not need to remind hon. Members that the commissions were established in a completely independent way. They are not under the direction of the Government or, indeed, of Parliament, except for the provisions which were placed in the Electoral Boundaries Readjustment Act.
A number of the commissions have published their draft maps, as they are required by the law to do in one newspaper at least in the province, as well as in the Canada Gazette. I am informed that no commission is yet in a position to report, or even close to being in such a position, because public hearings have to be held and other procedures have to be followed as prescribed in the Electoral Boundaries Readjustment Act. So I do not anticipate that any of these reports will be available for submission to Parliament for some considerable time.


Gilles Grégoire: Mr. Speaker, I should like to ask a supplementary question.
In view of the fact that under the new redistribution the constituency of Iles-de-la-Madeleine will be removed from the electoral map, may I ask the Prime Minister whether this is due to the fact that the hon. member for Iles-de-la-Madeleine (Mr. Sauve) belongs to the new guard of the Liberal party and, as such, has fallen out of favour with the old guard of the party?



SHIPPING


[Stage Direction]
On the orders of the day:
Mr. G. L. Chaiterion (Esquimall-Saanich):: I wish to direct a question to the Minister of Transport. Can the Minister say whether the interdepartmental committee considering ship subsidies has completed its report? Would the hon. gentleman care to make an announcement in order to allay uncertainty?


John Whitney Pickersgill: I made inquiries this morning. The interdepartmental committee is working assiduously on this subject but it is not yet in a position to make a report, and I do not

think it will be in such a position for several weeks at least.



CANADIAN PACIFIC RAILWAY


[Stage Direction]
On the orders of the day:
John Whitney Pickersgill: May I take this opportunity to table, with the consent of the House, a letter which I received at the end of last week from the President of the Canadian Pacific Railway in response to a letter I wrote to him pursuant to a question asked by the hon. Member for Port Arthur regarding passenger service. This letter only came to my attention this morning. I do not think I need take the time of the House by reading this correspondence, but I think it would be a convenience to hon. Members if it were made available to them as an official document, and I am prepared to table it if I have consent.


Mr. Speaker:: Does the House give consent?


Some hon. Members:: Agreed.


Hon. Leon Balcer (Three Rivers):: Mr. Speaker, I have a supplementary question for the Minister of Transport on the question of shipbuilding subsidies. I wonder whether the Minister is aware of the statement made by Mr. K. C. Irving, President of the new oil refinery that is going to be built across from Quebec City, in which he said that unless the Government comes across with a decision on the shipbuilding subsidy, Canadian shipyards might miss out on the construction of a whole fleet of super tankers and a lot of Canadian labour would be forced into unemployment because of the slowness of the Government in this matter.


John Whitney Pickersgill: Mr. Speaker, I had not seen Mr. Irving's statement; but I will be glad to have it looked up for me and read it. Perhaps it would be convenient for all hon. Members if I reminded them, the purchasers of ships and the shipyards, that the Canadian Vessel Construction Assistance Act is still in full operation.


David Walter Groos: A supplementary question, Mr. Speaker. Will the Minister of Transport give consideration to making an immediate announcement that firms which decide now to go ahead with shipbuilding plans will get full advantage of any revised shipbuilding subsidy which is
May 18, 1965	COMMONS DEBATES	1405
Inquiries of the Ministry
subsequently announced by the Government ment, in connection with the new, proposed when the present subsidy freeze is over? facilities there? This would mean that for the Mr. Pickersgill: Mr. Speaker, I am very first time the Federal Government would be much afraid that a declaration of that kind, directly involved in the fact that this service much as I would like to be able to make it,	no^ be able to go forward on a long
would be open to misconstruction and mis- term basis.
interpretation. For that reason, while I will Mr. Pickersgill: I will be glad to examine take the hon. gentleman's suggestion into this statement, Mr. Speaker. I have not seen consideration, I would not like to hold out it up till now. any great hopes that it could be accepted.


Mr. Thomas M. Bell (Saint John-Alberl):: Mr. Speaker, may I ask a supplementary question in this connection. Will there be an announcement this week, as anticipated, regarding the various defence and other departmental construction programs that are anticipated, apart from the question of assistance?


John Whitney Pickersgill: Mr. Speaker, I am sure that all these construction programs, as they are carried out and as contracts are let, will be announced just as quickly as possible. I know my hon. friend the President of the Privy Council is very anxious to get on with the consideration of these matters in Treasury Board.



CONTINUATION OF FERRY SERVICE, DIGBY-SAINT JOHN

[Stage Direction]
On the orders of the day:
Thomas Miller Bell: A supplementary question while we are on the subject. Has the Minister any information on the discussions he said he would hold with the Canadian Pacific regarding the ferry service between Digby and Saint John? I think he said he would prod the C.P.R. about this.


John Whitney Pickersgill: It may be I said the questions asked in the House would prod the C.P.R. However, I am not anxious to quibble about that, because I did say I believed this service to be essential in the national interest. And I do. I understand it is to be carried on. The real problem lies in getting good wharfage facilities on the Nova Scotia side, and I know my colleague the Minister of Public Works is in communication with the railway about this matter.


Thomas Miller Bell: A supplementary question in this connection, Mr. Speaker. Will the Minister examine the statement made by the President of C.P.R. this week end in Nova Scotia, to the effect that dock and wharfage rates in Digby would be increased by the Federal Govem-
22620-91 h



NATIONAL DEFENCE


[Stage Direction]
On the orders of the day:
Gordon Minto Churchill: Mr. Speaker, I have a question for the Minister of National Defence. Does the Minister agree with the reported statement of Mr. McNamara of the United States that the threat of attack by manned bombers on North America has declined more rapidly than anticipated, and that the Bomarcs are even less useful now than he considered them to be two years ago; and is the Minister planning to dismantle the Bomarc bases?


Hon. Paul Hellyer (Minister of National Defence):: Mr. Speaker, I do not agree with that alleged report, which I question. But I do agree with the evidence that Mr. McNamara gave before the subcommittee on appropriations of the U.S. Congress. I will be pleased to get an extract and send it to my hon. friend.


Marcel Lessard: Mr. Speaker, I should like to ask a supplementary question.
I had exactly the same question for the Minister of National Defence, but I wonder if he could tell us also whether that statement of Mr. McNamara, that the radar systems on the North American continent are no longer necessary, will affect the Canadian government's policy concerning the two radar lines still in operation, namely Pine Tree and Mid-Canada? Should we come to the conclusion that these two radar lines will be disposed of shortly?


Paul Theodore Hellyer: Mr. Speaker, first of all I do not think we should indulge in a debate, on orders of the day, based on inaccurate information. Mr. McNamara did not say they were not required; he said they were of decreased importance from what was previously the
May 18. 1965

Inquiries of the Ministry position. In so far as the Mid-Canada line is concerned, we have already shut it down. So there is no difference of opinion between the Defence Department in the United States and the Department of National Defence here in respect to either the threat from the manned bomber nor the counter measures that should be taken in respect of it. We are working in consonance and are both reducing the amount of resources that go into this particular aspect of our defence preparedness, and at the same time increasing the quality of the remaining part.



RESPONSIBILITY FOR OFF DUTY ACTIVITIES OF CIVILIAN EMPLOYEES

[Stage Direction]
On the orders of the day:
Mr. T. S. Barnett (Comox-Alberni):: Mr. Speaker, I should like to direct a question to the Minister of National Defence in his capacity as an employer. I am sure the Minister appreciates that he wears the boss's hat for quite a considerable number of Canadians. I should like to ask the Minister whether he considers he has any responsibility over the activities of civilian employees of the Department of National Defence when they are off duty, or in an off duty, off base situation. If so, what are those responsibilities which he, as their boss, feels he has a right to assume? If he does not wish to go into a full statement, could he tell the House whether any such powers which his Department exercises have been set out in any form of official code or set of rules which could be tabled in this House?


Mr. Speaker:: Order. May I suggest this is a question for the order paper.



AIRPORTS


[Stage Direction]
On the orders of the day: tTranslation]
Gilbert F. Rondeau: Mr. Speaker, may I direct a question to the Minister of Transport?
A few days ago I asked him a question about the St. Hubert airport. Can he tell us now if his department intends to acquire that airport which was put on sale some time ago and use it as an air terminal to give better service to visitors to the world fair, when we will undoubtedly need improved air transport facilities on the south shore of the St. Lawrence river?


John Whitney Pickersgill: I apologize to the hon. gentleman, Mr. Speaker; several days ago I did take his question as notice, or a question similar to it. The airport at St. Hubert is a military airport, and I believe my hon. friend the Minister of National Defence is prepared, on notice, to give some reply about the future policy of the Department of National Defence with respect to this airport.


Gilbert F. Rondeau: Could the Minister of National Defence make a statement about the St. Hubert airport?


Paul Theodore Hellyer: Mr. Speaker, I think we will hang on to it for the moment, until we are sure what our long range plans will be.



HALIFAX-REPORTED INADEQUACY OF RADAR FACILITIES

[Stage Direction]
On the orders of the day:
Malcolm MacInnis: Mr. Speaker, I have a further question for the Minister of Transport. Did Mr. Goodwin, the Director of Civilian Aviation, in his report, correspondence or press release to which the Minister referred and which he had earlier, indicate more than one blind spot in the radar system servicing the Halifax International Airport?


John Whitney Pickersgill: Mr. Speaker, there is a blind spot on the radar. That is well known and it has not been denied. The new radar in fact is not being used at all at the present time for the purpose of effecting landings. The purpose of this new radar installation is to speed up landings at Halifax. The safety precautions at Halifax, I am assured by Mr. Goodwin, are equal in every respect to those at any other of our major airports. The fact that the radar is not yet fully operational has no effect whatever on safety, according to the information that has been given me and upon which I must rely; but it is hoped that when it does become fully operational it will avoid a good many of the delays which many hon. Members have no doubt experienced when landing at Halifax owing to certain technical aids to landing which are not yet available there.


Malcolm MacInnis: A supplementary question. The Minister indicated on Wednesday last when I originally put this question to him that he had trouble understanding my ques-

May 18, 1965	COMMONS
tion. If he does not mind I would call his attention to the fact that he has trouble understanding because apparently he does not listen.


Some hon. Members:: Oh, oh.


Malcolm MacInnis: I had asked the Minister whether Mr. Goodwin-


Mr. Speaker:: Order, please. Would the hon. Member pose his question; this is not the time to debate the matter.


Malcolm MacInnis: My question to the Minister was this, Mr. Speaker. I had asked the Minister whether Mr. Goodwin, Director of Civil Aviation, had indicated in the report, press release or whatever it was the Minister had from Mr. Goodwin, that there was more than one blind spot on the radar system servicing the Halifax International Airport. The Minister then got up and admitted there was one, of which we are all aware. Has he indicated more than one?


John Whitney Pickersgill: Mr. Speaker, I have a rather lengthy technical statement from Mr. Goodwin, and I will be very glad to send it over to the hon. gentleman and allow him to read it himself. But I do not think this is the appropriate time for a debate on this subject. I agree with Your Honour that if there is any question of safety it should be cleared up at once. It has been cleared up on three separate occasions. I think it is more than unfortunate that the original and mischievous story appeared in the Halifax Mail Star, and I am grateful to the newspaper, through its morning paper the Chronicle-Herald., for correcting the story so promptly. I do not think we should do anything to foster the feeling that there is any lack of safety or any danger there. As for the technical improvements, I think they can be debated at an appropriate time, but not on orders of the day.


Malcolm MacInnis: Mr. Speaker, I rise on a question of privilege.


Mr. Speaker:: Order. I do hope the hon. member for Cape Breton South, if he is rising on a question of privilege, will make it short and to the point; and I hope it is a question of privilege.


Malcolm MacInnis: Mr. Speaker, I would rather think that where the safety of the travelling public is involved a question of privilege is most appropriate. In this case the Minister of Transport has offered to send me a very technical document. I suggest that in his responsibility as Minister of Transport it is his place to examine this document, and to examine
DEBATES	1407
Inquiries of the Ministry statements made by public servants in the interests of-


Mr. Speaker:: Order. Surely the point is crystal clear by now. The hon. Member for Vancouver East.


Malcolm MacInnis: I am sorry, Mr. Speaker, it is not sufficiently clear. The Minister wants-


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order. There is such a thing as order in this House. The hon. Member for Vancouver East.


Malcolm MacInnis: Mr. Speaker-


Harold Edward Winch: I wish to direct a question to-


Malcolm MacInnis: I have a question of privilege.


Mr. Speaker:: If it is the same question, then it is not a proper question of privilege; I have ruled that twice. It is a complaint, and this is not the time to debate it. The hon. Member for Vancouver East.


Malcolm MacInnis: Mr. Speaker, I say this is a question of privilege.


Some hon. Members:: Order.


Malcolm MacInnis: I consider it a question of privilege if I am trying to get the Minister of Transport to accept responsibility for public safety. If the Chair wishes to rule it not a question of privilege, well, I will have to go along with that.


Mr. Robert Muir (Cape Breton North and Victoria):: Mr. Speaker, I have a question for the Prime Minister based on an article that appeared on Saturday last in the Halifax
Chronicle-Herald which was lauded so highly and deservedly by the Minister of Transport a few minutes ago. The headline is "Crash Program Ordered, Aviation Chief Admits Defects", and the article reads in part as follows:
Mr. Goodwin, in a telephone call from Ottawa yesterday, confirmed that the first reports published in the Mail Star were correct on "many points" in their disclosures of conditions at Halifax airport.
These reports were referred to by the Minister of Transport as being mischievous. May I ask the Prime Minister to allay the fears of the general public regarding the safety or otherwise of those using this airport? Will he not order a top level investigation and issue a statement as soon as possible indicating whether there are any hazards to people using this airport, and if there are will he see that they are remedied? 1 am
May 18, 1965

Inquiries of the Ministry sure the Prime Minister will agree that this is a most serious situation.


Lester Bowles Pearson: Of course, Mr. Speaker, anything that concerns the safety of the travelling public is of importance; but surely the Minister of Transport has given very detailed information on this point, including an assurance that the safety regulations at Halifax airport are as effective as those at other major airports in this country.



SUBVERSIVE ACTIVITIES


[Stage Direction]
On the orders of the day:
Thomas Clement (Tommy) Douglas: Mr. Speaker, I posed a question last week to the Minister of Justice which he promised to take under consideration. I asked him at that time when he first became acquainted with the fact that a Canadian citizen had been enticed to carry on espionage activities for a foreign power. The Minister said he would look into this matter and decide whether or not he could answer that question.


Guy Favreau: Mr. Speaker, additional questions were asked, I think yesterday, of the Acting Prime Minister in relation to the general circumstances of these two espionage cases. The Acting Prime Minister said he was seeking the understanding of the House as to the advisability of making further comments or statements about this matter. As a member of the Government and in my responsibility as Minister of Justice, I must stand by that answer.


Thomas Clement (Tommy) Douglas: I have a supplementary
question, Mr. Speaker. The statement made yesterday by the Acting Prime Minister had to do with the names of the persons who were involved; but in view of the fact that the Russian Embassy, which allegedly was responsible for making contact with these Canadian citizens, must have known the facts when this approach was made, and as a result no new information can be provided to that Embassy by the Minister informing the House when this Canadian citizen first approached the R.C.M.P., surely this is information to which the House is entitled. There is nothing in this information that could be of help to a foreign power, and I am asking the Minister of Justice whether he is now refusing to inform the House when he first became acquainted with the fact that
[Mr. Muir (Cape Breton North and Victoria).!
espionage activities were being carried on in this country.


Guy Favreau: Mr. Speaker, the answer given yesterday by the Acting Prime Minister was of a general nature. I feel that I must give myself the same answer to the question just put, and I do so in keeping with my responsibilities.


Thomas Clement (Tommy) Douglas: A further supplementary
question, Mr. Speaker. I should like to ask the Prime Minister whether he seriously considers that this House should be kept completely in the dark regarding this very serious case of espionage in this country, and that this House should have no information as to when these activities began or when the information was given to the Minister of Justice, particularly in view of the fact that the Prime Minister told the House that he had not been made aware of this situation until immediately before the whole matter was exposed to the public. I should like to know whether the Prime Minister intends that this whole matter shall be kept under a veil of silence.


Lester Bowles Pearson: Mr. Speaker, this House has not been kept in the dark on this matter. More information has been given in regard to this case than on previous occasions. The specific question asked by the hon. Member involves detailed information which I regret cannot be given to the House on security grounds. If he has a question, however, which he thinks should be answered, and he puts it on the order paper, providing it is an appropriate question we will answer it. As I said yesterday, we cannot give details regarding this matter which relate to security.


Robert Norman Thompson: Mr. Speaker, I have a supplementary question. Will the Prime Minister tell us whether Government policy is being formulated as to how to deal with these espionage activities, particularly in view of the statement that was released yesterday by the F.B.I. chief, J. Edgar Hoover, to the effect that there has been no let-up whatsoever in regard to the communist bloc espionage attack? Mr. Hoover went on to say that every diplomatic and cultural mission that comes to this side of the world contains within it an element of the Soviet espionage force.


Lester Bowles Pearson: Mr. Speaker, there is Government policy in respect of security, the details
May 18, 1965	COMMONS
of which I cannot go into at this time. That policy is, I think, well known to the House, and is to protect the security of this country against espionage and subversion. That policy is implemented through the R.C.M.P., and that body has discharged its duties in this regard, I believe, Mr. Speaker, with a great deal of skill and effectiveness.


Robert Norman Thompson: Mr. Speaker, if that is true, does the Prime Minister not think it would be a good idea to keep the public better informed than it is at the present time, and particularly the Civil Service, as to just how to meet and recognize this kind of activity when confronted with it?
flight Hon. J. G. Diefenbaker (Leader of the Opposition): Mr. Speaker, there is one question which under no circumstances could be considered an invasion of that degree of security which must be maintained. In the press report which was given on Saturday two weeks ago, as I recall it the statement was made that one of the two men involved had used money from the U.S.S.R. to compromise women in the employ of the civil service. I cannot believe that the R.C.M.P. would agree to the use of this type of method after it became aware of the techniques being used. Did the R.C.M.P., that respectable force, permit itself under the direction of the Minister of Justice-


Some hon. Members:: Oh, oh.


John George Diefenbaker: That force is under the direction of the Minister of Justice, and I cannot see what anyone is laughing about unless it is because they do not know of that. Did the R.C.M.P. permit itself, under the direction of the Minister of Justice, to use money to undermine Canada through the medium of compromise, involving photography, of young women in the civil service or outside of it? Surely the Minister is prepared to assure us that type of thing was not carried on from the moment these two men were brought under surveillance.


Guy Favreau: Mr. Speaker, all I can say in
this regard is that the R.C.M.P., one of the greatest police forces in the world, of which we are so proud, in its experience uses all means of detection which are consistent with the best interests of this country and of its security. I cannot say more than that and must stand by the answer I gave previously.


John George Diefenbaker: Mr. Speaker, no one disagrees with the Minister's viewpoint regarding the R.C.M.P., but why does he not answer this question and remove any suggestion
DEBATES	1409
Inquiries of the Ministry that that force allowed itself to use these despicable characters to undermine the morality of young women?


Mr. Speaker:: Order, please. It does seem to the Chair that this citation was read a day or two ago. I have forgotten the exact date, but the Chair did read citation 181 (4) of Beauchesne, as follows:
An answer to a question cannot be insisted upon, if the answer be refused by the Minister on the ground of the public interest; nor can the question be placed on the notice paper. The refusal of a Minister to answer on this ground cannot be raised as a matter of privilege.
It is my opinion that the ground of public interest has been raised twice in connection with this long series of questions regarding this spy investigation, and that the whole matter should be left in that position.


Thomas Clement (Tommy) Douglas: Mr. Speaker, I have a supplementary question. This is a very important matter which affects the whole security of this country. May I say with the greatest deference that the House of Commons has not been given any information whatsoever and-


Some hon. Members:: Oh, oh.


Mr. Speaker:: Order, please. The hon. Member surely heard the citation I just read. If I am not mistaken he has asked the same question on two occasions; once today when the full answer was refused on the ground of public interest, and once two or three days ago. Surely he is not going to ask the same question in different words on a third occasion.


Thomas Clement (Tommy) Douglas: Mr. Speaker, I was not proposing to ask the same question. I wanted to ask a supplementary question of the Prime Minister in view of his statement which appears at page 1147 of Hansard, which reads as follows:
-the matter was brought to my attention when our security people felt the time had come to expose it.
I should like to ask the Prime Minister whether at any time prior to the time the R.C.M.P. was ready to expose this espionage plan this matter was ever discussed with him by the Minister of Justice.


Lester Bowles Pearson: Mr. Speaker, security questions are continually being discussed between the Ministers concerned and also with the members of the security panel. They are continually being discussed. That is as far as I can go.
May 18, 1965

Retiement Age for Senators HOUSE OF COMMONS



PROVISION OF LITERATURE FOR TOURISTS- REQUEST FOR MORE STUDENT GUIDES

[Stage Direction]
On the orders of the day:
Mr. Speaker:: Orders of the day.


Harold Edward Winch: Mr. Speaker-


Mr. Speaker:: Order. Would the hon. Member allow me to point out that it is now five minutes to four and there is a very heavy agenda of business before the House. Unless the matter is of vital importance, could the hon. Member delay his question until tomorrow?


Harold Edward Winch: Mr. Speaker, I desire to direct a question to the President of the Privy Council but in his absence I will direct it to anyone acting in his place. I would ask the Minister to convey to the members of the Internal Economy Commission the thanks of the Members of the House of Commons for the fact that after many years facilities have been provided whereby visitors to the House of Commons, to their advantage, can obtain literature and photographs of the operations within this building. May I also direct a question through the President of the Privy Council to you, Mr. Speaker, and ask whether it is possible to arrange immediately for the employment of more student guides because of the thousands now visiting the House of Commons, a month prior to the beginning of the usual deluge of visitors.



THE SENATE


Hon. G. J. Mcllrailh (for the Prime Minister) moved: the third reading of Bill No.
C-98, to make provision for the retirement of Members of the Senate.


Mr. Speaker:: Is it the pleasure of the House to adopt the said motion?


Stanley Howard Knowles: On division.


John George Diefenbaker: Mr. Speaker, I shall make my remarks comparatively brief. The attitude that we in this party have taken throughout the debate, and that we took during the period we were in office, has been that changes should be brought about in connection with the membership of the other place. Indeed, in 1962 as Prime Minister I had the honour of moving an amendment to the British North

America Act with respect to the Senate which provided that a Senator should, subject to the Act, hold his place in the Senate until he attained the age of 75 years or until the coming into force of the section if at that time he had already attained that age.
In doing that we were following the course we had taken in connection with the judiciary. While recognizing that there have been many in the judiciary who after the age of 75 have made great contributions on the bench, it was our feeling that on balance retirement from the judiciary at 75 was both proper and appropriate. We followed that course in connection with Bill No. C-86 of that year when we endeavoured to bring about an amendment regarding the age limit in the Upper House.
The question of Senate reform is one that has been before the people for many years. Some there are who talk glibly of abolishing the Senate while realizing, as they must, that such action cannot be effectually carried out and that to do so would require the consent of the Senate. Indeed, if the new formula for the amendment of the constitution is brought in and accepted, Parliament will be forever emasculated from making amendments regarding those things that fall exclusively within the jurisdiction of the Federal Parliament unless it is able to secure the consent of all the Provinces.
That is one of the most serious objections that can be taken to that formula. That is one of the differences between the formula offered by the Minister of Justice today and that on which we endeavoured to secure agreement by submitting it to a dominion-provincial conference. We would never be able to deal with Senate reform at all, even in the present form, if there were in effect the amendment formula now about to receive the attention of the Legislature of Quebec and thereafter, if passed by that Legislature, of the Parliament of Canada.
I recall so well that when this matter was before the House Right Hon. Louis St. Laurent was in favour of preserving to the Federal Parliament its right to amend the constitution in those fields which are entirely within the jurisdiction of Parliament. That is to be swept aside. I mention this as an aside. This is one of the consequences that would have flowed if the new formula had been accepted prior to the introduction of this bill.
It is an interesting study to go back over the years and read the records of Parliament
May 18, 1965

on the subject of an Upper Chamber. One of the most enlightening experiences is to read the debates in the British House in May 1792 when the Constitutional Act was being considered.
[DOT] (4:00 p.m.)
There there were debates, even in the narrative form, revealing the greatness of the contributions of Charles Fox and William Pitt, the giants of that day, and Burke, and one or other took the view that in Canada we should have a hereditary second chamber. Indeed, as I recall my reading of those debates years ago, Fox believed that the only way in which the 13 American colonies would have remained under the British Crown would have been if Great Britain of that day had provided for a hereditary second chamber in the 13 colonies.
Through the years there have been many discussions about reform and change. I am not going to review the speeches of Right Hon. William Lyon Mackenzie King, but he was going to bring about great reforms in this connection; and those ideas died, after they had been electorally confirmed and had achieved the votes that he hoped for at that time.
Periodically in recent days there has been discussion about the possibility of a general election. Well, Mr. Speaker, I have not been much impressed with the threats that a general election will be called. Some people have stated that Parliament, that this House, has not acted in a manner in keeping with the dignity and greatness of Parliament. All I have to say is, when criticisms of that kind are made, it is of interest that the Government, even though it has many absentee Members-and yesterday was quite a record with 12 Ministers out of the House-throughout always seems to have enough Members on hand to assure that it will not be defeated.
Indeed, I think the Prime Minister would not mind a defeat, because if he possibly could be defeated then he would get out of the sea of troubles he is in and go to the people; but he wants the responsibility to rest on someone else. He does not intend to grasp the problem directly but expects that some time, somewhere, the Government will be defeated.
However, I do not think there was ever any expectation of defeat, nor would it have been tolerated until this measure received passage by the House and the other place for, Sir, never before in history did a Prime Min-
Retirement Age for Senators ister find himself with such an unusual pork barrel-36 appointments-if the press is correct that some 36 members of the Upper Chamber will be submitting their withdrawal from that body. That is a lot of appointments.
In the Province of Saskatchewan-I am not going to designate any Senator, but one has not been here through illness-a vacancy will be created, and it is said one of the great advantages that will come to Saskatchewan if this legislation is passed is that we are going to have a Minister of the Crown. Either Mr. "Hamy" McDonald, a member of the Government of Saskatchewan, or the ex-mayor of Saskatoon, who was a candidate in two elections, would be elevated to that place and be able to protect the people of Saskatchewan from the discrimination against which the Premier of Saskatchewan has voiced such strong exception.
This may mean one of two things. If you have nobody in the Cabinet you will be discriminated against, or else that Saskatchewan has been forgotten about. But nothing of the kind-Saskatchewan has not been forgotten. The Prime Minister has just been out there and he met with Mr. Thatcher. Even though today he said he did not use the expression "ingrate", the Prime Minister certainly used words that were strong and powerful, just as a few days ago he used strong words against Premier Lesage after they had sat together, dined together, and apparently agreed together.
We do not know what happened in Saskatchewan but we do know what the Premier of Saskatchewan said on May 13 about discrimination. He was making sure that the Prime Minister knew before he arrived in the salubrious climate of Saskatchewan-I am not speaking about the political climate for the Federal Government-how we were ill-treated in that Province.
Saskatchewan Premier Ross Thatcher made it clear-


Mr. Deputy Speaker:: Order. I hesitate to interrupt the right hon. Leader of the Opposition but it does seem to me that the comments he is now making are quite beyond the scope of the matter being considered by the House, which is an Act to make Provision for Retirement of Members of the Senate. I find it very difficult to relate his comments to the bill now before us.


Some hon. Members:: Hear, hear.


John George Diefenbaker: Well, Mr. Speaker, you are a lawyer and you know that lawyers have to lay a foundation, and that is what I
May 18, 1965

Retirement Age for Senators have been doing. You suggest that you find it difficult to understand the connection. Sir, it is the consequences that will flow from this legislation that I am speaking about. In other words, if this legislation goes through, there will be an end of discrimination in Saskatchewan because there will be available appointments that at the moment are not available.
I am surprised that the Minister of Finance (Mr. Gordon), who applauded the suggestion you made a moment ago, would not have joined me in this because I was showing that there was going to be an end of discrimination against Saskatchewan if this bill goes through, which indicates why I and my party as a whole give such support to the bill to bring about changes in the Senate.
Premier Thatcher said, according to a press report:
Saskatchewan Liberals are eager to support Mr. Pearson and especially to get Cabinet representation, but it is hard for them to get "enthusiastic" because of the Federal Government's agricultural and other policies.
He also dealt with the subject of potash and the unfairness to Saskatchewan in the cancellation of the northern roads. I am pointing out that I am torn between Scylla and Charybdis. I see the advantages to Saskatchewan if this bill goes through, because we are going to get a Cabinet Minister. On the other hand I see there are difficulties in the way and there are matters that deserve to be considered before we pass the bill.
Never has a Prime Minister looked forward with such avid interest to the passing of a bill, because he is going to be able to satisfy the hunger and the thirst of 36 outstanding Liberals across the country, among them one or possibly two in Saskatchewan, and one can understand the anxiety that this legislation should be passed. After all, we are living in the era of new politics, so we have been told, and the newness is that this is going to permit the Prime Minister, who constitutionally has the power of appointment of members of the Senate-
[DOT] (4:10 p.m.)


George James McIlraith: Would the Leader of the Opposition permit a question?


John George Diefenbaker: Oh, yes.


George James McIlraith: Is the reasoning the right hon. gentleman is using in connection with this bill, now, the reasoning which compelled him to bring in a similar bill in 1962?


John George Diefenbaker: I am glad the hon. gentleman asked that question. It indicates that he never read that bill, because if he will make himself acquainted with the measure we brought in he will see, in a few minutes, that I intend to ask him to follow it exactly today. I thank the hon. gentleman, because he has an unusually perceptive mind. He gets to the heart of things, and in this case he has gone right to the bottom of my argument. I would point out that when we brought the legislation down in April, 1962, it provided as follows:
This Act shall come into force on the day fixed for the return of the writs of election at the first general election of Members to serve in the House of Commons of Canada held after the day this Act is assented to.


An hon. Member:: You thought you were going to win.


John George Diefenbaker: I am very glad the Minister suggested that the legislation before us is the same as the bill we brought in. I intend to ask the House to divide on that question. I know in this age of new politics when the very suggestion of partisanship exacerbates the sensibilities of the Prime Minister (Mr. Pearson) and his associates, members opposite will grasp eagerly at the amendment I am about to move. We already have the support of the President of the Privy Council (Mr. Mcllraith) and I only hope it will be forthcoming from the other Ministers. The President of the Privy Council has clearly established the subject of my proposed amendment. I am going to be fair because I know that in this age of new politics, when the Prime Minister can go out dispensing largesse and promises in his own constituency, when uranium gets purchased and stockpiled and appointments are promised, and locations are promised for Canadian youth corps-in this age of new politics I am sure there will be immediate acceptance of this amendment.
I will make it very clear: we are not trying to vote the Government out.
Oh, that interested the Prime Minister. There is one thing about the Prime Minister -sometimes he is beaten to it by the President of the Privy Council, but you can invariably bring him up. This appeals very strongly to the Prime Minister, but we do not want to put any members in the position of voting against the high and admirable policies which are implicit in the new politics. This amendment will, therefore, simply give the House an opportunity of supporting a position which already has the approval of the President
May 18, 1985

of the Privy Council, namely: the day of the old politics is over; the old pork barrel idea that all these appointments will go to the faithful before the election will be ruthlessly turned down because of the desire of hon. gentlemen opposite to reform. They will agree that as a minority Government they should not be making all these appointments. If we defeat them on the floor of the House-and I am sure they have thought of that eventuality-they would not be able to make any appointments to the Senate and the vacancies would remain. We found ourselves in that position in 1962


Lester Bowles Pearson: We know what you did.


John George Diefenbaker: I did not get the interruption.


Lester Bowles Pearson: We know all about the right hon. gentleman's position at that time, and his appointments.


John George Diefenbaker: I am very glad. Apparently members opposite are going to learn as a result. The Prime Minister indicates they are giving consideration to that. They realize that if they are defeated in the House these appointments cannot be made. The Prime Minister says he has made a full study of that situation. So it will be seen that any suggestion that the Government would like to be defeated has no foundation whatsoever up till now-it is just the Prime Minister belching fire and brimstone as to what he is going to do, but knowing that at all times, sitting across the way, is a group which will criticize, condemn, find strong objection -and vote strong support. It amounts to this: The Prime Minister can take a strong stand while knowing he has allies who, come what may, will support him.


Mr. Greene:: Why did you have only 42 members here for yesterday's vote?


John George Diefenbaker: I did not get the interruption from the modern Lincoln.


Some hon. Members:: Oh, oh.


John George Diefenbaker: I did not designate him in that way; that is his own designation. But I would point this out: As a Member from Saskatchewan I want to see this legislation passed so that we shall not be discriminated against any more. We have nobody to represent the western farmer in the Cabinet. From Manitoba we have the Minister of Veterans Affairs (Mr. Teillet) when he is here, and from Alberta we have the perambulating Minister of Agriculture (Mr. Hays) who, ac-
Retirement Age for Senators cording to Mr. Thatcher, does not know anything about agriculture and-does the hon. Member for Matapedia-Matane (Mr. Tremblay) wish to interrupt?-neither does he know anything about chesterfields and love-seats.
I am therefore giving the fullest support to the need for amendment, following strictly the course we have taken throughout and making it crystal clear that this amendment is not a vote of non-confidence but is advanced in the interest of the first major step in the reform of Parliament.
I therefore move, seconded by the hon. Member for Ontario (Mr. Starr):
That the said bill be not now read the third time but that it be referred back to the Committee of the Whole House with instructions that they have the power to amend it by adding thereto a clause to the effect:
"That this Act shall come into force on the day fixed for the return of the writs of election at the first general election of Members to serve in the House of Commons of Canada held after the day this Act is assented to."


John James Greene: Get your Members out, Whip; out.
[DOT] (4:20 p.m.)


George James McIlraith: I wish to address myself to two of the points made in the course of his remarks by the Leader of the Opposition (Mr. Diefenbaker). The rest of the remarks were undoubtedly of high entertainment value to his followers and may be amusing to others, but perhaps they do not warrant discussion in this Chamber because of their irrelevance. However, Mr. Speaker, he raised two points that were relevant and of considerable importance, and therefore they should be dealt with. The first was the right hon. gentleman's assertion that this bill could not have been brought forward had the new constitutional provisions set out in what is now known as the Fulton-Favreau formula been the law of this country.


John George Diefenbaker: Without the consent of all the provinces.


George James McIlraith: Yes, without the consent of all the provinces. I should point out to any hon. Members who are interested in this point that there has been no change proposed by the Fulton-Favreau formula on this point. At the present time the authority for the bill being dealt with by Parliament alone without the consent of the provinces is contained in section 91(1) of the British North America Act; and in the Fulton-Favreau formula the proposals that would have relationship to this subject matter are set out in the appendix-
May 18. 1965

Retirement Age for Senators


Mr. Graffiey:: Those proposals will never get through this House.


George James McIlraith: Then that perhaps disposes of the argument of the Leader of the Opposition (Mr. Diefenbaker) more devastatingly than anything else. I had assumed that the Leader of the Opposition was acting in good faith when he spoke, and meant what he said; and if the hon. Member, who purports to be his follower, dismisses his argument-


William Heward Grafftey: Not at all.


George James McIlraith: -as summarily as that, I do not want to join with the hon. Member for Brome-Missisquoi (Mr. Grafftey) in that kind of treatment of his leader. In any event, Mr. Speaker, the proposals are set out rather extensively at pages 107 and 108 of the White Paper that has been tabled in the House. It will be seen that in those proposed changes to the British North America Act that have to do with this general subject matter, the provisions that require the consent of the provinces are not applicable to the powers that are used in bringing forward this bill.


John George Diefenbaker: Under the new formula you remove section 91(1).


George James McIlraith: In other words, the provision under section 91(1) of the present British North America Act is not interfered with, in this respect, in the proposed new legislation.


John George Diefenbaker: Oh yes, it is.


George James McIlraith: The other point I wanted to make had to do with some of the latter part of the remarks of the right hon. Leader of the Opposition where he purported, as I understood it, to change the practice of this House. He was making it very clear that his motion was not a want of confidence motion.


John George Diefenbaker: That is right.


George James McIlraith: I do not know by what divine right he makes that choice, because as a matter of law-


John George Diefenbaker: Mr. Speaker, may I ask the Minister a question?


George James McIlraith: Yes.


John George Diefenbaker: When he was Parliamentary Secretary to the late Right Hon. C. D. Howe, did not Mr. Howe do that?


Lester Bowles Pearson: You have made your speech.


George James McIlraith: No, that is not a correct statement at all. What I was coming to was this, Mr. Speaker. The point as to whether

this is a material matter is a matter of law, and not something that can be determined by the Leader of the Opposition. So whether his amendment is in fact a want of confidence motion against the Government is something that is determined, under our constitution and parliamentary practice, other than by the Leader of the Opposition. However, much he might like to take to himself that power, I would be very much interested in hearing him produce his authority for any such extensive power given to the right hon. Leader of the Opposition-


Michael Starr: Let us get on and have a vote.


George James McIlraith: -in this regard.


William Heward Grafftey: Do you consider it a want of confidence motion?


George James McIlraith: Yes, clearly.


Gordon Minto Churchill: Any amendment proposed by the Opposition, then, would be a want of confidence motion?


George James McIlraith: No. But it is an amendment to this legislation proposed by the Government; that is the point.


William Heward Grafftey: Do you consider this amendment one of no confidence?


George James McIlraith: The Leader of the Opposition cannot change that fact. That is a matter of law, as he will find if he checks with his parliamentary authority.


Gordon Minto Churchill: Mr. Speaker, would the Minister permit a question?


George James McIlraith: Yes.


Gordon Minto Churchill: I would like to ask the Minister a question so we can be clear on this. Is the Minister stating now that any amendment proposed by the Opposition to legislation brought down by the Government is automatically a want of confidence motion?


George James McIlraith: No; I made no such proposition at all.


Michael Starr: That is what you said.


George James McIlraith: No, that is not what I said. I was very careful not to do so. This is a piece of legislation that changes the constitution of Canada by amending a section of the British North America Act, and deals with one of the parts of the Parliament of Canada. Surely that is a matter of major importance and cannot by any assertion of any Member of the Opposition be cut down to be something of no material importance-


William Heward Grafftey: We never said that
May 18, 1965


George James McIlraith: -to a Government.


John George Diefenbaker: By consent?


George James McIlraith: That legislation has been dealt with, on two stages, by the House of Commons. On third reading it is proposed that it be amended by an amendment put forward by the Leader of the Opposition. The Leader of the Opposition cannot, I am saying, by his own assertion change the character of the legislation proposed by the Government in such a way as to make it the type of legislation the defeat of which would not involve want of confidence. I think hon. Members should understand that position quite clearly.
I thought the point ought to be made, because they might be voting now under a complete misapprehension as to what is involved in the amendment by the right hon. gentleman.
As I said, Mr. Speaker, the other parts of the right hon. gentleman's argument perhaps could be replied to, but I do not know that it is necessary or desirable at this stage to deal with them. However, I did feel that those two points demanded the attention of the House.


William Heward Grafftey: Mr. Speaker, would the Minister permit a question? As I understand it, he considers this amendment to be a motion of want of confidence in the Government.


Mr. Deputy Speaker:: Order. May I suggest to hon. Members that whether this amendment is or is not a motion of confidence in the Government is rather irrelevant to the essence of the amendment now before the House. Is the House ready for the question?


Stanley Howard Knowles: Mr. Speaker, our words on this amendment will be very few. We do not feel that the proposed reform contained in the bill that the Government has presented amounts to any significant reform at all. As a matter of fact, we had an amendment before the House yesterday that would give the bill a six months hoist. I am sorry that our friends to the right did not join with us in delaying it at least that long.


John George Diefenbaker: No; that destroys, not delays, it.


Stanley Howard Knowles: They have come back with a proposal to delay the coming into force of this measure perhaps even longer, if the election is more than six months away.


Gordon Minto Churchill: The six months hoist destroys it. You know that.

Retirement Age for Senators


Stanley Howard Knowles: My hon. friend and neighbour from Winnipeg South Centre (Mr. Churchill) tells me that the six months hoist would destroy the bill, and he says I know that. Of course I know that. We feel that this reform is not worth supporting; that it is a delusion of the people of Canada to create the impression that by this change something is being done to re-invigorate the Parliament of Canada. Therefore, because the bill itself has so little value we are quite prepared to join in the suggestion that its coming into force be delayed as long as possible. I was, of course, interested in the concern of the right hon. gentleman lest the present Government, which is in a minority position, were to make a batch of appointments to the other place while it is in that minority position. The assumption behind the remarks of the Leader of the Opposition is, of course, that all 35 or 36 Senators who are over 75 years of age will resign immediately. That remains to be seen; but it is a reasonable assumption that they will certainly give serious consideration to the question within one year, in view of the form the bill has now taken.
[DOT] (4:30 p.m.)
However, I am a little puzzled by this concern of the Leader of the Opposition that the Government on the other side might now make appointments that it ought not to make.


John George Diefenbaker: Mr. Speaker, so that there be no misunderstanding, I said that if the Government were defeated in the House on a vote of non-confidence no appointments could be made between that date and the date of the election. That is the point I was making, not that they cannot make appointments as a minority Government. Nothing of the kind. If they had been defeated at any time in the last ten days or two weeks, then they could not make any appointments in respect of those things which are not necessary to the operation of Government.


Stanley Howard Knowles: Mr. Speaker, I accept the point the right hon. gentleman has made, which brings me to the point about which I am concerned. I recall that on February 4, 1963, an amendment was moved by the then Liberal Opposition to a supply motion. For a while on that day, which was a Monday, it looked as though that amendment would be defeated. The remarks made by the hon. Member for Red Deer (Mr. Thompson) before the supper adjournment on that day seemed to go in that direction.
May 18, 1965

Retirement Age for Senators


Gordon Minto Churchill: That was before he got his orders during suppertime.


Stanley Howard Knowles: Then after the supper adjournment we got a different interpretation, and it became obvious during the evening of Monday, February 4, 1963, that the chances were pretty strong that the Conservative government of that day would be beaten on the vote to be called at 8.15 in the evening of February 5.
I have sent for Hansard in order to have my dates correct, Mr. Speaker, but for the rest of what I am going to say I am relying on my memory. My memory tells me that some appointments were made on that day.


John George Diefenbaker: No. It is not the first time the hon. gentlemen's memory has been deficient. There were-


Mr. Deputy Speaker:: Order, please.


John George Diefenbaker: There were no appointments made.


Mr. Deputy Speaker:: Order. The hon. Member for Winnipeg North Centre has the floor.


Stanley Howard Knowles: Mr. Speaker-


John George Diefenbaker: He has the floor, but-


Some hon. Members:: Sit down.


John George Diefenbaker: Mr. Speaker, I rise on a question of privilege. The hon. Member was asking a question. He said he had an idea that some appointments were made, and I was answering him by saying that no appointments to the Senate, or any other appointments other than those affecting the actual operation of Government, were made. There was no interruption; I do not do that.


Some hon. Members:: Oh, oh.


John George Diefenbaker: Listen to the anvil chorus across the way.


Mr. Deputy Speaker:: Order. The Leader of the Opposition knows-


Lester Bowles Pearson: Mr. Speaker, on a question of privilege arising from what the right hon. gentleman has said, I have before me the Canadian Parliamentary Guide for 1965, which shows that four appointments were made to the Senate at that time, three on February 4 and one on February 5, 1963.


Some hon. Members:: Oh, oh.


Mr. Deputy Speaker:: Order, please.


John George Diefenbaker: Mr. Speaker-


Mr. Deputy Speaker:: Order, please.


John George Diefenbaker: -that statement is incorrect.


Mr. Deputy Speaker:: May I suggest to the right hon. gentleman that that is a matter for debate. It is not a question of privilege. Both right hon. gentlemen will have an opportunity to take part in this debate later on, if they want to do so.


Stanley Howard Knowles: I did not have time to send for the documents which I knew would be available; I was relying on my memory, which turns out to be correct. I am asserting that on that Tuesday we learned that certain appointments were made to the Senate. Also an appointment of at least one Lieutenant-Governor was made.


John George Diefenbaker: Before defeat.
Mr. Knowlesr Oh. That is exactly the point. The right hon. gentleman says they were made before his Government was defeated.


John George Diefenbaker: Absolutely.


Stanley Howard Knowles: But they were made on the day that he knew he was going to be defeated.


John George Diefenbaker: No.


Stanley Howard Knowles: Oh yes, and I submit that the right hon. gentleman, having followed that course on Tuesday, February 5, has little cause to be concerned about what a Government might do, because it is in a minority position, in the meantime. I agree with him that they ought not to make any appointments until-


John George Diefenbaker: They cannot.


Stanley Howard Knowles: If there are 35 or 36 resignations in the other place, then the Government now in power, if it continues in power, will have to act very responsibly in filling those 35 or 36 positions. Perhaps the best they can do is leave them vacant for the balance of the present Parliament, and go on leaving them vacant. At any rate, I suggest there has been a good deal of the pot calling the kettle black in the course of this debate.
As I have already said, Mr. Speaker, we think this reform, whether it be now or in six months from now or at the end of this Parliament, is no reform at all. It is not worth taking up any more time on it, but as far as this proposal for a further delay is concerned, we will go along with that further delay and we shall vote accordingly.


Mr. H. A. Olson (Medicine Hat):: Mr. Speaker, the amendment moved by the Leader
May 18, 1965	COMMONS
of the Opposition (Mr. Diefenbaker) on third reading of the bill which is before us is a rather interesting one from several different points of view. Before I get into that, Mr. Speaker, to clear up something which is perhaps not well known in this House or in the country generally, at one o'clock on the afternoon of February 4, 1963, the Leader of the Opposition, who was then Prime Minister, knew that there was going to be an amendment moved. Following that, at 8.15 the next day it was exactly that same amendment which defeated his Government. So that any appointments that were made after noon on February 4 were certainly made with the full knowledge that the Government was going to fall when the vote came at 8.15 on February 5.


John George Diefenbaker: Why did the hon. Member for Red Deer (Mr. Thompson) change his mind between six and eight o'clock?


Horace Andrew (Bud) Olson: Mr. Speaker, if there was any good purpose in the amendment which has been moved by the Leader of the Opposition which would have the effect of bringing about some genuine reform in the Senate, I think there would be some merit in giving it consideration. But what he has said this afternoon in support of this amendment is, in my opinion, tantamount to an admission that in so far as he is concerned Senate appointments are made on the basis of pork barrel tactics. He is concerned that the present Prime Minister (Mr. Pearson) shall not have the opportunity of making appointments to the Senate until after the next election, and then, of course, provided he is still Prime Minister. As far as we in this party are concerned, we do not care which of the two right hon. gentlemen have their fingers in the pork barrel.


An hon. Member:: They should get them out anyway.


Horace Andrew (Bud) Olson: Yes, they should get them out. If this amendment had called for genuine and important changes in the way these appointments are going to be made, then we could find our way clear to support it. It is obvious, however, that all the Leader of the Opposition is asking is that these appointments-I think he speculated on the figure of 36- should be delayed until some time when he, hopefully, may have the opportunity of getting his fingers back into the pork barrel and be able to make these appointments himself. That, Mr. Speaker, does not seem to us
DEBATES	1417
Retirement Age for Senators to be very much of an improvement so far as Senate reform is concerned.
[DOT] (4:40 p.m.)
During the course of his remarks the right hon. Leader of the Opposition (Mr. Diefenbaker) seemed to put a great deal of weight on the fact that the whole purpose of the bill now before us was to provide the Prime Minister with the means of giving added representation to the Province of Saskatchewan in the Government of the day. The Leader of the Opposition went on at great length to say that this seemed to be the whole purpose of the Government in bringing this bill before the House.
Let me point out to hon. Members that citation 415 of Beauchesne's Fourth Edition, paragraph (4) states:
On the third reading of a Bill, an amendment to refer back to the Committee of the Whole must not tend to change the principle approved-
If the whole purpose or principle of this bill is to create a situation in which the Prime Minister can correct the representation problem of the Province of Saskatchewan, perhaps the amendment is out of order because it does change the purpose.


Some hon. Members:: Oh, oh.


Horace Andrew (Bud) Olson: That may sound like a ludicrous and facetious argument, but it is no more so than that argument advanced by the Leader of the Opposition.
If there was something in the instructions to the committee as a result of this amendment to give the provinces some say in the appointment of Members to the other place, then I think it might have some merit. After all, if you want to look back over the debates leading up to Confederation, you will find that the Upper Chamber of this Parliament was established at the insistence of the Maritime Provinces for the purpose of protecting provincial rights. It seems to me it is ridiculous to suggest that the Upper Chamber can do an effective job of protecting the rights of provinces, especially some of the smaller ones, when none of the appointments to that Chamber are made by the governments of those provinces.
The Leader of the Opposition also took some delight in accusing a group, and I assume he meant us when he said to his left, of voting against certain want of confidence motions which were proposed in this House. He really is not serving his purpose well by attacking us on that ground, because we are not ashamed, nor shrinking at all
May 18. 1965

Retirement Age for Senators from the fact that we have provided some stability to this Parliament. I think the history of the achievements of Parliament during the last four or five years will show that the twenty sixth Parliament has produced more major legislative measures and cleaned up more tag ends of things that were left undone, than at any time during that period when over 200 Members sat behind a Prime Minister.
We are not ashamed to have been a part of the stability that allowed this progress to be made. So when the Leader of the Opposition attempts to heap scorn and ridicule upon us for doing the job that we were elected to do, I should like him to know that he is wasting his time and his breath. I should like him to know-


William Heward Grafftey: On a point of order, Mr. Speaker.


Horace Andrew (Bud) Olson: Sit down.


Mr. Deputy Speaker:: Order, please.


William Heward Grafftey: On a point of order, Mr. Speaker.


Mr. Deputy Speaker:: Order, please. Will the hon. Member kindly resume his seat. I understand the hon. Member for Brome-Missisquoi was rising on a point of order.


William Heward Grafftey: It is all right, Mr. Speaker.


Some hon. Members:: Oh, oh.


Horace Andrew (Bud) Olson: In view of the fact there is no point of order, Mr. Speaker, I shall continue.
I should like to make it clear to the right hon. Leader of the Opposition, and all other Members on this side of the House, that we have consistently done what we said we were going to do at the outset of this Parliament.


Lloyd Roseville Crouse: You have voted with the Grits; that is what you have done.


Mr. Deputy Speaker:: May I suggest to the hon. Member who has the floor that his remarks, though interesting, would appear to go beyond the scope of the amendment or the bill now before us. I assume it is proper for the hon. Member to explain why he intends to vote one way or another, but it does seem to me that the hon. Member for Medicine Hat is unduly directing his remarks in that way. I would ask him to return, if he will, to the amendment under consideration at this time.


Horace Andrew (Bud) Olson: With deference to your suggestion, Mr. Speaker, I shall return to the amendment. I might state, however, that the Leader of the Opposition did make quite a
[Mr. Olson.1
case in pointing out that as a result of the action of certain Members of this party the progress of this bill through Parliament has been frustrated or changed. It was for that reason I referred to it, and attempted to give some answer to the rather foolish, if I may use that word, argument he advanced. I will now leave that subject in compliance with your suggestion, Mr. Speaker.
If there was any substance to the kind of amendment we would ask the committee to make, in referring this bill back to the committee, then we might have some reason to support it. Whether or not there is any good or useful purpose to be served by reserving all of these appointments so that the right hon. gentleman may have an opportunity to make some of them, we fail to see that this would be a useful reform to the Senate.
For the reasons I have stated, there does not seem to be substantial reason for delaying the passage of this bill. We do not believe that it meets the needs, in so far as Senate reform is concerned. Both the Liberals and Conservatives voted for this proposal a few days ago. It seems that this is the sum total of the reform that we are going to obtain at this time. We do not take the position that the Canadian people gave us the right to impose all of our policies on this Parliament all of the time, like some hon. Members who continually hold up the progress of the business of this House, without regard for the fact that they were not given that majority which would allow them to direct the affairs of this place. As I have said, there does not seem to be any useful purpose to be served by delaying the passage of this motion any further.


Mr. Deputy Speaker:: Is the House ready for the question?


John Whitney Pickersgill: Mr. Speaker, in view of the protestations of the right hon. gentleman, I think a few facts about Senate appointments should be brought out.


Gordon Minto Churchill: Is this relevant to the bill?


John Whitney Pickersgill: This is very relevant to the bill, Sir, and particularly relevant to the point made by the right hon. gentleman, that he would not consider doing anything such as appointing anyone after he was defeated.


John George Diefenbaker: Mr. Speaker, I rise immediately on a question of privilege.
May 18, 1965


John Whitney Pickersgill: Perhaps the right hon. gentleman will state what he did say.


John George Diefenbaker: Mr. Speaker, I said that no appointments were made after dissolution excepting those necessary to maintain the Government, and Senate appointments cannot be made after defeat.


John Whitney Pickersgill: The right hon. gentleman, as the hon. Member for Winnipeg North Centre (Mr. Knowles) pointed out, got in under the wire with Senate appointments.


Some hon. Members:: Oh, oh.
[DOT] (4:50 p.m.)


John Whitney Pickersgill: He rushed down to Government House on February 4 and designated three. At that time he was mixed up about which Phillips he wanted to appoint. Everyone thought that he was going to appoint Nathan Phillips of Toronto. It was not until the next day, February 5, that he designated the other Phillips from Prince Edward Island.


John George Diefenbaker: That is completely false.


John Whitney Pickersgill: He also-


Mr. Deputy Speaker:: Order, please. It seems to me that the particular remarks which the Minister of Transport is now making are beyond the scope of the amendment we are considering.


John Whitney Pickersgill: Mr. Speaker, I would draw Your Honour's attention to the amendment which contains these words:
That this Act shall come into force on the day fixed for the return of the writs of election at the first general election of Members to serve in the House of Commons of Canada held after the date this Act is assented to.
Though it should not in fact be necessary according to the conventions of our constitution, if the right hon. gentlemen had seen fit to suggest an amendment that no appointment should be made to the Senate under this or any other act between the date on which a Government is defeated in the House of Commons and the return of the writs after a subsequent election, such an amendment would have made some kind of sense. But all this amendment represents, as the hon. Member for Medicine Hat (Mr. Olson) pointed out, is a patent last minute effort by the right hon. gentleman, in the hope that there may be an election before his party has seen fit to make certain changes and in the hope that there might be a certain outcome to that election, to reserve these appointments for his own nomination. I doubt that that will commend itself very much to most hon.
Retirement Age for Senators Members, particularly when we recall that the right hon. gentleman did not in fact observe this principle in all appointments. He appointed a former Member of Parliament in March, or caused him to be appointed on the 12th of March, I think it was.


An hon. Member:: Not to the Senate.


John Whitney Pickersgill: Not to the Senate. He was appointed to the Tariff Board. After the Government had been defeated a gentleman who had sat in this House and who apparently was a rejected Conservative candidate in his own constituency was then appointed to the Tariff Board, a board with the jurisdiction of a court, by a Government that had been defeated in this House. I think that was a reprehensible and constitutionally wrong thing to do.


John George Diefenbaker: Would the hon. gentleman-


John Whitney Pickersgill: Perhaps the right hon. gentleman could make his speech when I have finished mine.


John George Diefenbaker: After all, the hon. gentleman is in continued communication with Mr. Mackenzie King. Did he not do the same thing?


John Whitney Pickersgill: The right hon. gentleman mentions Mr. Mackenzie King. I might say that Mr. Mackenzie King was very scrupulous about these matters. Although Mr. Mackenzie King was still in office after the election of 1925, it is a matter of record that he refused to make any appointments of any kind, except purely routine appointments.


John George Diefenbaker: He undertook that with the Governor General.


John Whitney Pickersgill: I am suggesting that the right hon. gentleman might also have observed the decencies of the constitution. That indeed was all that I was suggesting. I was suggesting that in the case of the appointment of Mr. McPhillips, an appointment which certainly could have waited until after the return of the writs, he was not observing the decencies of the constitution. I have suggested also that in appointing three Lieutenant Governors about an hour before defeat he was not doing something that was essential either, particularly in view of the fact that those holding those offices at that time would constitutionally remain in office until new appointments were made.
It seems to me that what we have had this afternoon is a typical example of the right

May 18. 1965
Division
hon. gentleman's double standard. There is one standard for the right hon. gentleman, who said in Edmonton in 1958, "When I say something it is true", and another for the rest of us who must establish the facts according to the ordinary rules.


John George Diefenbaker: This Government will never say that what they are saying is true.


Mr. Frank Howard (Skeena):: Mr. Speaker, may I say that in listening to the old line parties talk about such things as pork barrels, pay-offs and "payola" it is certainly revealing how exercised and emotional they can get about such things. After listening to this debate one is almost inclined to say that those who answer the query, "Is politics a dirty game?", in the B and B Commission questionnaire should perhaps reply in the affirmative.


An hon. Member:: Sit down before your wings fall off.


Mr. Speaker:: I declare the amendment lost.


David Walter Groos: Mr. Speaker, I was paired. Had I not been, I should have voted against the amendment.
May 18, 1965


Mr. Tucker:: I was paired, Mr. Speaker. Had I voted, I would have voted against the amendment.


Mr. Pennell:: I was paired, Mr. Speaker. Had I voted, I would have voted against the amendment.


Mr. Lloyd:: Mr. Speaker, I was paired. Had I voted, I would have voted against the amendment.


Mr. Speaker:: The question is on the main motion.


Michael Starr: Mr. Speaker, may I call it five o'clock.


Mr. Speaker:: The hon. Member calls it five o'clock. It being five o'clock p.m., the House will now proceed to the consideration of private Members' business as listed on today's Order Paper; namely private bills, public bills.



PRIVATE BILLS


[Stage Direction]
The House resumed from Thursday, April 29, consideration of the motion of Mr. Bas-ford for the second reading of Bill No. C-95, to incorporate Laurentide Bank of Canada.
Mr. Speaker:: Is the House ready for the question?


Some hon. Members:: Question.


Some hon. Members:: No.


Barry Mather: Mr. Speaker, in rising to say a few words in connection with the proposition that is before us, I thought it might be timely to put something on record as to the economic case which can be made out in support of British Columbia having a bank with its headquarters in British Columbia and being, I would hope, by and of British Columbia. It is now something more than 80 years since British Columbia entered Confederation. At that time the banks were already well established in the central and eastern provinces of Canada, and it was very natural that British Columbia should at that period conduct its financial operations on the basis of branch facilities-


The Acting Speaker (Mr. Batten):: Order. I apologize for interrupting the hon. Member for New Westminster, but there is a little more noise in the chamber than is usual and it is rather difficult to hear what the hon. Member is saying.
Private Bills


Barry Mather: Thank you, Mr. Speaker. I was saying that it is over 80 years since British Columbia entered Confederation, and at that time the banks were already well established in the central provinces; so it was natural and necessary that British Columbia conduct its banking operations largely through the branches of the banks in the central provinces. I would like to quote very briefly from what I thought to be an interesting sidelight on British Columbia's position at that time. I think this will show how B.C. was regarded and how it has grown in its financial needs since this period. I quote from the "London Truth" of September 1, 1881. This was written by the financial editor of that paper:
The Canadian Pacific Railway will run-if it is ever finished-through a country frost-bound for seven or eight months in the year and will connect with the western part of the Dominion, B.C. a province which embraces about as forbidding a country as any on the face of the earth.
British Columbia, they say, has forced on the execution of this part of the contract under which it became incorporated with the Dominion, and believes that prosperity will come to them when the line is made. This is a delusion.
British Columbia is a barren, cold, mountain country that is not worth keeping.
[DOT] (5:30 p.m.)
It would never have been inhabited at all (unless by trappers of the Hudson's Bay Company) had the gold fever not taken a party of mining adventurers there. And ever since the fever died down the place has been going from bad to worse-
That is the end of the quotation from the financial editor of the "London Truth" for September 1, 1881. I just wanted to cite that in passing, to show what the financial prospects in British Columbia were considered to be at that time.
Since then, Mr. Speaker, a great deal has happened. Since those words were written, even without having a bank of its own, or a bank with its headquarters in British Columbia as the bill proposes, the province has made, as we all know, tremendous progress and great changes have taken place. For example, today British Columbia has a population which is almost comparable to the combined populations of the four Atlantic Provinces. Today British Columbia has a labour force 2.5 per cent greater than the four Atlantic Provinces combined. Today British Columbia has a labour income 55 per cent greater than the four Maritime Provinces combined. She also has factory shipments 135 per cent greater than those of the Atlantic provinces combined. Cheques cashed in British Columbia are 238 per cent greater in volume and in value than those of the four Atlantic provinces. Yet, Mr. Speaker, British

May 18, 1965
Private Bills
Columbia is still without a bank with headquarters in its own area.
I think that the realities of the economic situation in British Columbia today underline the need for and the common sense of the province having a bank located in its own financial headquarters of Vancouver. To that extent I am certainly in favour of this legislation presently before us proceeding to committee. But I want to say in addition to that, as we have said before, that we think that this other fact should be taken into consideration.
There are, and have been for some time, three bank applications under consideration in Ottawa. For several months this has been the case. Two of these bank applications for charters, the one before us and the one considered last week in connection with the Bank of Western Canada, have been approved, and they were sent through the Senate some months ago. The third bank application for a charter, that of the Bank of British Columbia, has up to now not received the green light.
It has always been our position, Mr. Speaker, that the only fair way to deal with these applications, such as the Laurentide one, is to consider them as nearly as possible at the same time so that, as they all affect British Columbia, they have equal and appropriate consideration, and so that none, in the event of a charter being granted, would have an advantage over the others.
For this reason we have persistently examined in this chamber the applications which have come before us and have taken the stand we have. However, some 10 or 12 days ago in the Senate a new petition respecting the Bank of British Columbia was put forward. My understanding is that it will be proceeded with. If this is the case, the application of the Bank of British Columbia and the application of Laurentide for a charter, and probably the Western Canada application as well, will reach committee stage, we hope, approximately at the same period.
This is all I wish to put on the record, Mr. Speaker. We approve of the location in British Columbia of a bank with its headquarters in that province. I personally favour, as does the Government of British Columbia and the Opposition of that province, the establishment of a Bank of British Columbia. I think this would be very much more to the point than the establishment of additional private banks. However, now that we have arrived at the point that the three charters are receiving attention in Ottawa at approximately the

same time, we have no further opposition to the proposal now before us going to the committee.
[DOT] (5:40 p.m.)


Mr. L. P. Antoine Belanger (Charlevoix):: Mr. Speaker, we have once again before us Bill No. C-95, an act to incorporate Laurentide Bank of Canada, and I am at a loss to understand why these people known as the Laurentide Bank of Canada persist in submitting to us a bill to secure a bank charter, when they already know as well as we do that one of the measures on the order paper of this house has to do with the revision of banks and banking.
I for one have been denouncing for years the excessive and discretionary powers now granted to banks and banking. The powers now held by chartered banks are excessive because the absolute control of our country's economy is thus entrusted to a few.
Chartered banks are the basis of our whole monetary system and, consequently, the basis of the economy of the whole nation. Now, the monetary system of a country is to the economy of that country what the steering wheel, the accelerator or the brakes are to a car, that is its most vital parts. In fact, chartered banks, with the powers they hold, control the economy and they can speed it up at will or slow it down to practically the idling point, as indeed they did from 1929 to 1939. The economic life or the economic fate of the individual, the companies or the whole nation is in their hands.
Therefore, on the basis of that principle, I am against this bill, and I hope that when amendments to the Bank Act are up for discussion, it will be realized, better than it was in the past, that there is a fatal danger in leaving in the hands of a few individuals as dangerous a weapon as that which can be used to accelerate, create or reduce credit at will.
That is why I think it would be wise for us, legislators, to postpone consideration of bill No. C-95 and, to this effect, I now move the following motion:
I move, seconded by the hon. member tor Compton-Frontenac (Mr. Latulippe), that Bill No. C-95 be not now read a second time but that it be read this day six months.
Once again, Mr. Speaker, I want to repeat that it is not a matter of political partisanship; a question of principle is involved and I would not consider granting to larger groups powers that I deny and that I have been denouncing for so many years
May IB. 1965


Mr. Henri Lalulippe (Compion-Fronienac):: Mr. Speaker, on this Bill No. C-95 and especially on the amendment just moved, I wish to point out all the privileges enjoyed by chartered banks and all they have received from the government in the operation of their activities within the Canadian economy.
Mr. Speaker, there is much to be said about chartered banks.
The point I wish to make is that they have unlimited powers, that they enjoy a right of life or death over the Canadian people, the national economy and even over the economy of the whole world. I would go as far as saying that the banking system has become an international system.
Our aim is to turn our national debt into a national asset and to change into social dividends the interests on our debts. Surely, it is not by giving everything to chartered banks and by favouring them that we will improve the banking system and the credit system of Canadians.
Mr. Speaker, the banks take away from society its social assets, its social credit. They make it pay interest charges on that capital, which I would call stolen capital. In brief, it is stealing legalized by the government.
I do not want to lay too much blame on the banks, since the powers they enjoy were granted to them by Canadian legislation, by parliament itself. If they enjoy too great privileges, they are less to blame than those who granted them those privileges.
Let us now consider on what grounds we are openly denouncing and condemning the present financial system. At the very beginning, we must say that our studies deal with the whole of the principles and mechanisms which make up the basis of the issuing and withdrawing of currency. Together with the credit of a nation, this is what we call a monetary system. But the one we are now using is condemnable from three points of view.
It is based on erroneous principles. It paralyses the distribution of material goods, which are the results of the labour of the nation, and it distributes them in an unjust way. In fact, it has fallen into the hands of a group of individuals who exploit it for their personal benefit instead of using it for the benefit of the community.
Mr. Speaker, it can certainly be said that money was invented to facilitate trade. That is the main purpose of money controlled by the banks. In itself money has no property which enables it, as such, to meet human
Private Bills
needs. Money as such, no matter what it is made of, cannot be digested. One cannot use it to clothe or cover oneself. It has become a mere instrument of exchange that man is to use to get the food, clothing and accommodation he requires. When it does not perform that function or prevents an adequate exchange of material goods, money must be condemned.
But, besides being a means of exchange, money has been assigned another role by men, a secondary one. It is also used to evaluate goods and services, and consequently it becomes the measure of the value of human labour.
One should never forget that double role money has been given up to now: medium of exchange, measure of the value of goods, services and human labour. That is the part money is to play within the economy of this country.
There should be only two essential conditions in order that money, medium of exchange, be worth anything.
First, that it be accepted by all. Second, that it be limited.


Mr. Robert Beaule (Quebec East):: On a
point of order, Mr. Speaker. I want to draw your attention to the fact that there does not appear to be a quorum in the house at this time.


The Acting Speaker (Mr. Batten):: Order, please. Perhaps I should read citation 60 of Beauchesne's Fourth Edition as it appears on page 48. In part it states:
Any member may direct the Speaker's attention to the fact that there is not a quorum present. The Speaker will proceed at once to count the
House-
I shall now proceed to do so. Perhaps I should also read the paragraph which appears at the top of page 49 in that same citation. It reads as follows:
While the House is being counted the doors remain open and members can come in during the whole time occupied by the counting.
I declare that there is now a quorum present.


Mr. Rapp:: Saved by the bell.


Mr. Rinfret:: Thank you for the warning.
[DOT] (5:50 p.m.)


Henry P. Latulippe: Mr. Speaker, this means that the volume of currency in circulation, which is an instrument of exchange, must be

Statistics bear witness to that fact. In 1955, total consumer debt in Canada was $2,500 million; in 1961, it had reached $4,200 million. As you can see, it had practically doubled in five years. In 1952, Canada's total public debt, including federal, provincial, municipal and school board debts, was $15,730 million. In 1960, it had increased by more than $14 billion and the total debt of Canada was over $32 billion.
Mr. Speaker, on the basis of the 1964 official figures, the debts incurred by the federal, provincial and municipal governments, school boards, federal and provincial agencies with regard to consumer goods and commercial goods, mortgages guaranteed by C.M.H.C., mortgages on personal loan, small loan businesses, debts incurred for instalment purchasing and U.S. investments amount to $85,580,933,687. Assuming at about 20 million people, the total population of Canada this means that an average $4,000 debt rests on the shoulders of every Canadian citizen.
Mr. Speaker, may I call six o'clock?


The Acting Speaker (Mr. Batten):: Order. The hour for the consideration of private Members' business has expired.
At six o'clock the House took recess.


[Stage Direction]
AFTER RECESS

The House resumed at 8 p.m.


[Stage Direction]
The house resumed consideration of the motion of Hon. G. J. Mcllraith (for the Prime Minister) for the third reading of Bill No. C-98, to make provision for the retirement of members of the Senate.
Mr. Heath Macquarrie (Queens):: Mr. Speaker, I have never been noted for speaking very long on third reading, second reading or any other stage of measures before the House. However, I think it might be a bit inappropriate to have this important measure go on to the other place without someone endeavouring to sing a swan song, or pronounce some kind of soliloquy in a quiet and gentle tone about this measure, which is the culmination of so many years of gentle striving.
Retirement Age for Senators
I want to say at the outset that I do not quite associate myself with the hon. Member for Red Deer (Mr. Thompson), who accepted a self-denying ordinance when he said he would never accept a position in the other place. I am close to him in that I no longer anticipate that I shall be offered one. Therefore I speak with as much objectivity as any reasonably youthful politician can.
I am grateful in passing, Mr. Speaker, and I will pass very quickly, to my friend, the hon. Member for Medicine Hat (Mr. Olson) for his succinct and highly favourable appraisal of the twenty sixth Parliament, to most of which I do not subscribe, and I could not help but feel some satisfaction in his suggestion as to which political party would be forming the next government. But I will not dwell on this. I do not want to dwell on this, lest someone think that my suggestions in respect to the Senate are founded on his hopfeul views as to which party will be forming the next government. Since I missed out on appointments to the other place when our party was in power I expect to be equally as luckless when our party returns to power. Therefore the whole thing is objective.
This is an old question, Mr. Speaker. Down through the years the general question of bicameralism-two	legislatures-has	concerned people interested in political matters and has troubled those who sought the best possible means of developing a representative form of government. It is noteworthy that through the years relatively few countries have dispensed with the second chamber. In Canada, all but one of our provinces are unicameral, and I will not dilate upon the difficulties that seem to trouble certain people in the Province of Quebec, which is bicameral. In the United States, however, all the state legislatures, with one exception, are bicameral, and I think it would take a very shrewd and astute political scientist or sociologist to demonstrate that by abolishing the upper chamber the State of Nebraska has achieved any purer form of democracy than have its 49 sister states with bicameral legislatures.
There have been many varieties as to forms of developing the second chamber. One of the Scandinavian countries has a most interesting device. When all the members of the lower house are assembled together after an election they decide that a quarter of them shall go to the quieter realms of the upper house. This might be interesting and it might stimulate
May 18. 1965

Retirement Age for Senators competition among those who had run the gamut of public appeal.
There have been many reasons, conservative and otherwise, as to the value of the second chamber. Sir John A. Macdonald's well known description of "sober second thought" value for the second chamber is interesting. It is said that Thomas Jefferson, who was not on hand when the constitution was developed in the United States, came back and asked George Washington in the name of heaven why they decided to have two chambers. The second chamber at that time was not an elected body. In fact the United States Senate did not become an elected body until about 50 years ago.
It is said that Washington demonstrated to Jefferson what it was all about when he took his tea and put it into his saucer and drank therefrom, saying, "You see, it is cooler this way." Whether this is a reflection on the table manners of the eighteenth century, or of Washington in particular does not matter, but I was impressed by the fact when I was in Brazilia, that great modern capital of the republic of Brazil, to see that the legislature halls there are modernistic in the extreme. The chamber of the lower house looks very much to the unarchitectural eye like a cup, and that in which the senate assembles very much like a saucer. I asked the Speaker of the house at that time if they had had in mind the explanation of George Washington, and he indicated this was not the case.


Mr. Deputy Speaker:: Order please. At this point I have to bring to the attention of the hon. Member that we are dealing at the moment with a bill that has reference to the retirement of members of the Senate.
[DOT] (8:10 p.m.)
I would also remind the hon. Member that we are on third reading and that on third reading the discussion is more limited than on second reading. I would refer him to the second edition of Campion's book "Introduction to the Procedure of the House of Commons" where at page 224 it is stated:
The debate on third reading is more restricted than on second reading and is limited to the contents of the bill.
I have examined the contents of the bill and I fail to find much connection with any of the subjects which have been considered until now by the hon. Member for Queens.


Heath Nelson Macquarrie: I have looked at many of the authorities, but not at Campion. I have known many long discussions to take place on third reading. I think Your Honour would

have some difficulty in finding precedents which affect the operation of the second chamber of Parliament. I suggest that a question of such historic moment as an alteration in the structure of one of the branches of our Parliament has broad implications. Deep historic rights are involved. However, I am in the hands of the Chair.


Mr. Deputy Speaker:: Of course I was interested in the remarks which the hon. Member for Queens was making. I took it that what he was saying until now was intended to form the basis of something which would be more germane to the contents of the bill. The hon. Member says this is an important bill. Of course it is. But I am wondering whether the speech he is now making would not have been more in order at another stage of the bill, perhaps on second reading or on consideration of clause 1 during the committee stage. I am sure the hon. Member can find some way to relate his remarks to the bill which is under consideration.


Heath Nelson Macquarrie: I am a great pragmatist. I could, of course, move another amendment and that would certainly allow me an ample framework within which to continue my remarks. That would not be out of order. If I recall the discussion this afternoon, it was not greatly restricted or especially narrow.
In any event, I am wondering whether the reform of the Senate which is involved in Bill C-98 is sufficient to meet the demands of the hour, or indeed whether it is sufficient to meet the promises of a much earlier hour. I was interested to read that at a great political meeting of a great national party the following resolution was passed:
The present constitution of the Senate is inconsistent with the Federal principle in our system of Government and is in other respects defective, as it makes the Senate independent of the people and uncontrolled by the nublic opinion of the country, and should be so amended as to bring it into harmony with the principles of popular Government.
This convention took place, not in 1949, nor 1919, but in the year 1893. It was addressed by the leader of the party, Sir Wilfrid Laurier, as he later became.
Before agreeing to the passage of this bill I cannot refrain from commenting on its inadequacy. I should like at least to say that after 72 years it is a very small step indeed toward the reform of the second chamber and I should like to say to the Minister responsible -I do not know how deeply he has thought about this or how much he cares about it or how far he goes beyond technicalities and tactics: I hope that when he has piloted this
May 18, 1965
measure through he will regard it as a first step in reform and that he and his leader will think carefully of the prospect that better use might be made of the existing machinery rather than that there should be a concentration upon the gradual discarding of that machinery. It is not always necessary to cut down a tree in order to produce better fruit. While I do not agree at all with many of the extreme statements which have been made in the far corner of the House denouncing Members of the other chamber, I think the Prime Minister would be well advised to make better use of his tremendous power of appointment so that the other place may, without the introduction of an elective aspect, without its being made competitive with this chamber, produce a body of men and women which would command far greater respect than it does command at the present time and make it a far more effective body than it is at the present time.
It is true, Mr. Speaker, that none of this is involved in the present bill. But surely when an attempt is made to alter one of the features of a Parliamentary system all these things must be involved. I say this reform measure is a most inadequate one and I can only support it in the hope that it will be one step in this direction and that the reform will not only be a reform in mechanistic or financial terms determining when Senator A or Senator B shall retire; in the hope that some thought will be given to the basic fabric of our political system and that greater use will be made of the second chamber and that far less political consideration will be involved in the construction of that body or, to put it more plainly, in the naming of people to that second chamber. The system can work if the sense of values can be improved. I do hope that the Prime Minister who has in this respect disappointed many people-and I respect him as a person-will not look casually at this whole matter. I hope he will not feel any great sense of satisfaction that Members of the other place may retire at the age of 75 in accordance with some formula which they may choose, but that more careful thought and more statesmanship may be shown in the appointments made to that body.
Fearful of your structures, Mr. Speaker, and mindful of the fact that there is much which must be done by this Parliament, and concerned lest we this session find ourselves as we did before enmeshed in a great morass of order paper material, I will desist from further observations on this interesting and 22620-92
Retirement Age for Senators important topic. I will only say I am sorry there has been such concentration on the financial aspects of this question, because there are far more important aspects involved here than the question of what Senator A or Senator B should receive on his 75th birthday. A change is being made in one of the most fundamental of our institutions and I believe a discussion on a more basic nature should be taking place.


Stanley Howard Knowles: May I ask the hon. Member a question. Since he has indicated that he is prepared to support this bill, which he calls a mild measure of reform, can he say what practical change he expects to follow the passage of this measure so far as the working of our Parliamentary democracy is concerned?
[DOT] (8:20 p.m.)


Heath Nelson Macquarrie: Mr. Speaker, I am prepared to support it, in that I have seen no better alternative. The suggestion of the ruthless abolition of the second chamber, by a party which has not been noted for its appreciation of some of the most important political institutions of our country, does not commend itself to my judgment. I have no other choice but to accept this tiny morsel, in the hope that out of this meagre forward step something more consistent, more imaginative, a little more appealing and more effective will emerge.


Stanley Howard Knowles: Mr. Speaker, would the hon. Member permit one other question? Is he not afraid that by accepting this tiny morsel, which he says has taken 72 years to come, he may not live to see another morsel?


Heath Nelson Macquarrie: Mr. Speaker, I am not hopeful of my prospects of living that long, and certainly I have no prospects of getting into the other place. But considering that nothing has been done for 72 years, I think I would be a bit churlish, cynical and pessimistic if I did not at least indicate a mild degree of appreciation for this forward step.


Mr. Deputy Speaker:: Is the House ready for the question?


Some hon. Members:: Question.


Mr. Deputy Speaker:: Is it the pleasure of the House to adopt the motion?


Stanley Howard Knowles: On division.
Motion agreed to and bill read the third time and passed.

1428	COMMONS
Bank Act BANK ACT



DECENNIAL REVISION AND EXTENSION OF CHARTERS

Walter Lockhart Gordon: the second reading of Bill No. C-102, respecting banks and banking.


Mr. Deputy Speaker:: Is it the pleasure of the House to adopt the said motion?


Some hon. Members:: Carried.


Some hon. Members:: No.


Walter Lockhart Gordon: Thank you, Mr. Speaker. For a moment I thought that the bill was so clear and so convincing that hon. Members would be prepared to pass it without going through the usual formalities; but in the circumstances perhaps I might make a few remarks. When I moved the resolution on this bill I made a brief statement on the background considerations involved and on the more important changes that are being proposed. As is customary, I would now like to make a more complete explanation of the bill.
We have all been assisted in the preparation and consideration of this revision of the Bank Act by the report of the Royal Commission on Banking and Finance, which was published in April of last year. Our proposed legislation on the Bank Act and the Bank of Canada Act, as well as legislation already enacted in regard to insurance, trust and loan companies, all contain provisions based upon the recommendation of the Commission. The bill before us contains many such provisions, as will be noted in Committee.
The general principle advocated by the Commission was to make no radical changes in our financial structure or the institutions comprising it, which the Commission felt were generally functioning well, but to make a number of changes in legislation to permit or encourage increased competition between institutions of the same type and those of different types. With this general direction of approach the Government is in broad agreement.
In regard to the banking legislation specifically, the Commission proposed that its scope be broadened very greatly to include in principle all institutions accepting deposits or issuing claims on themselves maturing or redeemable at a fixed price within 100 days, or which are transferable immediately or on short notice by cheques or on customers' orders. From this broad class it would exclude existing provincial agencies and local credit

DEBATES	May 18, 1965
unions, but not their centrals. It would also exclude certain institutions that issue short term paper in the money market or which borrow from small groups, as well as stockbrokers and securities dealers. The banking legislation would apply to the rest, including trust and loan companies, whether federally or provincially incorporated, the Quebec savings banks and the centrals of credit unions and caisses populaires. All of these would be required to hold cash reserves with the central bank and participate in a unified clearing system, in which cheques would be cleared without charge.
The Government considers that such a comprehensive extension of our banking legislation is neither necessary nor desirable at this time. In the first place, Parliament cannot itself decide that an arbitrary limit of 100 days to maturity for deposits or liabilities is the proper definition of what constitutes "banking". We must have regard to what the courts will determine in law to be the meaning of "banking", for that defines our exclusive jurisdiction under head 15 of section 91 of the British North America Act. There have been many judicial decisions in this field in the past, and in essence they have taken the view that "banking" is the acceptance of deposits transferable on demand by cheques. We have to be guided by this in assessing the scope of our jurisdiction, unless and until the Supreme Court of Canada may otherwise decide. Pending any such decision, it is not certain that our jurisdiction extends quite as far as that suggested by the Commission.
Moreover, we do not believe that this proposed comprehensive scope for our banking legislation is necessary either to carry out monetary policies effectively or to safeguard the public who deposit or invest money in these institutions which the Commission proposed be brought within the scope of the banking laws. The chartered banks are many times larger, in their total assets or liabilities, than the other institutions that might be regarded as partly engaged in banking, and the Commission has explained in its report how monetary policy exerted through the banks transmits its effects to the other institutions even though they are not required to hold reserves with the central bank. In regard to inspection and control, all these other institutions are already subject either to federal or provincial law and inspection, and if this is not adequate in some areas, it is the responsibility of those concerned to strengthen it.
May 18, 1965

Our chartered banks are not only large in comparison with the other institutions that are partly engaged in banking. We have a very concentrated banking system in Canada as compared with most other countries and the absolute size, power and influence of our banks is such that there is a responsibility of government to see that this power and influence is exercised in the best interests of the Canadian public as a whole-not just in the best interests of the shareholders of the banks. This is a responsibility which must be taken into consideration in deciding the powers given to the banks under the Bank Act. The traditional view in Canada has been that while the banks should be encouraged and assisted to expand in their own fields, they should not be able to expand into fields not covered by the Bank Act. The Government subscribes to this view.
[DOT] (8:30 pun.)
For the various reasons I have mentioned, Mr. Speaker, it is not our intention now to extend our banking legislation to cover such institutions as trust and loan companies, credit unions, caisses populaires, provincial treasury branches, or others who may engage to some degree in banking as the Commission defined it. We have given careful study to the Commission's suggestions about the clearing system. The present clearing system is operated by the banks under the authority of the Act incorporating the Canadian Bankers Association. Cheques on other institutions are cleared through the system by the banks, who make a charge for this service.
The establishment and regulation of a cheque clearing system is a matter of exclusive federal jurisdiction. We intend to give further consideration to possible changes in the clearing system, including those suggested by the Commission, and to the extent the changes are considered desirable we will bring forward legislation to implement them. The changes proposed by the Commission would have important implications which we shall have to take carefully into account.
The changes proposed in the Bank Act and the Quebec Savings Banks Act, together with those already made by Parliament during the past year in the legislation relating to the insurance, trust and loan companies, constitute a major program of improvement in our laws relating to financial institutions, the largest ever undertaken in a single year by any Parliament, let alone one that has
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had the vast array of other legislation before it that this one has had. We shall plan to proceed in future with other improvements, taking into account the conclusions and recommendations of the Porter Commission.
I should like to turn now, Mr. Speaker, to the specific matters on which the Government is proposing revisions to the Bank Act. I shall not attempt to cover the many technical changes which are involved but I should like to describe briefly the more important proposals.
It is proposed, as recommended by the Royal Commission, to allow the banks to make conventional mortgage loans. Until now the banks have been generally barred from making loans on the security of real and immovable property, with the exception of N.H.A. mortgages. The effect of this prohibition has not to any large extent interfered with the financing of corporate borrowers who are able to issue bonds and debentures on the security of their fixed assets, but this prohibition has tended to make it more difficult for unincorporated or personal borrowers to obtain credit on the security of their fixed assets.
In order to increase the extent to which the banks will be able to compete in the mortgage lending field they will be permitted to charge the going rate of interest on conventional mortgage loans that meet certain specified requirements. In order to protect other lenders against a sudden major invasion of their principal lending function and to ensure that banks will be able to take care of the needs of other borrowers, it is proposed that the holdings by the banks of such mortgages on which the interest rate exceeds 6 per cent will be subject to a gradually increasing limit in relation to their deposit liabilities. These proposals affecting the banks' role as mortgage lenders will provide more competition in this important area of the capital market and pave the way for a reduction in the average cost of mortgage borrowing, particularly by smaller borrowers.
It is also proposed to provide explicitly that the banks may receive the same rate of interest on N.H.A. mortgages as is fixed by the Government for other authorized lending institutions, including the banks operating under the Quebec Savings Banks Act. When the level of interest rates in the market has made it appropriate for the N.H.A. rate to be above 6 per cent, the effect has been that the Government, through C.M.H.C., has done a considerable amount of direct N.H.A.

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lending and has had to borrow substantial sums of money to do so.
It is hoped that the step which is now being taken will encourage the banks to resume N.H.A. lending and increase the supply of mortgage funds available. This was contemplated in 1954, when the Bank Act was revised to permit banks to acquire N.H.A. mortgages. It is also expected that the participation of the banks in these fields of lending will help to increase the flow of N.H.A. mortgage money in the smaller communities across Canada.
There is another area in which the chartered banks have already contributed to a substantial lowering of credit costs to Canadian borrowers. I refer to small personal loan plans. The amount of unsecured personal loans has increased from $611 million to $1,865 million over the last six years. In this area the banks have been making service charges in addition to interest, but the total cost of credit to borrowers has been considerably less than that from alternative sources. In this kind of lending the banks have been competing vigorously with each other and with other financial institutions. The Canadian public has benefited from this competition.
The same degree of competition has not prevailed within the more traditional areas of activity of the chartered banks-commercial loans, fully secured personal loans, in fact the whole area coming under the 6 per cent ceiling on interest rates. Agreements between banks have heretofore not been prohibited by law and have in fact been standard practice both with respect to deposit rates and with respect to interest rates on the types of loans I have just mentioned. The Royal Commission expressed the view that the presence of these agreements has made for an inflexibility in rates and a reluctance to introduce innovations. In their view-that is, in the view of the Commission-these agreements have been, and I quote, "bad for the banks and for their customers and should be prohibited". That quotation can be found at page 370 of the Royal Commission's report. The Government agrees with this conclusion. Accordingly it is proposed that in the legislation before the House agreements between banks with respect either to loan or deposit rates in Canada be prohibited except those specifically exempted.
As I said in speaking to the resolution, Mr. Speaker, it is not proposed at this time to adopt the other main recommendation of the Royal Commission in this area-that is, the abolition of the 6 per cent ceiling on interest

rates chargeable by the chartered banks. The exception to the ceiling being proposed with respect to mortgages, the fairly recent incursion of the banks into areas new to most of them, such as small personal loan plans, and the proposed prohibition on restrictive agreements between the banks themselves, all should encourage a greater degree of competition amongst financial institutions in Canada and provide room for more flexible practices with respect to loan and deposit rates.
[DOT] (8:40 p.m.)
We cannot yet foresee the full effects upon interest rates of the measures being taken in this bill and I do not feel we can rely on them without the ceiling, until we have seen their effects. The Government wishes to keep interest rates in Canada as low as possible, having regard to the monetary policy requirements of the domestic economic situation and the level of interest rates in the United States and across the Atlantic. I believe that if the ceiling were removed at the present time there would be increased interest rates charged on many of the smaller loans made by the banks to businesses in Canada.
The minimum cash reserve requirement of the chartered banks is to be reduced from 8 per cent to 7 per cent of Canadian deposits over a period of months. The development of the short term money market over the past ten years makes it unnecessary for banks to hold quite as much cash reserve as seemed desirable in 1954 when the present requirement was set. However, in order to ensure predictable results when cash reserves are changed by the central bank, it is necessary that the cash reserve requirements should continue to be somewhat above the level which banks might wish to keep on a voluntary basis.
Members of the House will realize of course that the reduction in the cash reserve from 8 per cent to 7 per cent need have no effect on the total money supply and total chartered bank assets, as these are determined in the final analysis by the central bank, taking the required cash ratio into consideration. I hope my friends in the southeast corner of this chamber will take that remark to heart.
It is also proposed to reduce the averaging period-


Stanley Howard Knowles: He once took their words to heart.


Walter Lockhart Gordon: I did not quite catch the significance of the interjection that was made,
May 18, 1965

but perhaps we can leave it until my hon. friend participates in this debate.
It is also proposed to reduce the averaging period over which cash reserve requirements are computed, from one month to one half month. This is a technical change which should lead the banks to respond more rapidly and more predictably to changes in cash reserves brought about by the central bank. In the United States the larger banks are required to work to a weekly averaging basis while in the United Kingdom banks are expected to keep quite close to their cash ratio objective at all times.
The way in which the chartered banks' minimum Canadian cash reserve requirement is to be reduced differs from the technique suggested by the Royal Commission, which recommended a cash reserve system in which there would be three categories of Canadian deposit liabilities based on their original term to maturity, with different ratios of cash reserves being required against these various categories of deposits. This proposal was of course tied in with the thought that the Bank Act would be broadened to cover institutions other than the chartered banks. The nature of the deposit liabilities of some of the nearbank institutions which perform banking functions are sufficiently different from those of banks that a lower level of required cash reserves might be warranted, as is the case for the Quebec savings banks. But there does not seem to be enough difference in this regard between the individual chartered banks to make it necessary or desirable to have as complicated a cash reserve formula for these banks as that proposed by the Commission. It has been decided, therefore, not to set up at this time more than one class of deposit liabilities for the purpose of determining the amount of required cash reserves.
The Government has come to the conclusion that it is desirable to have legislation which permits the central bank to restrict or release a portion of chartered banks' liquid assets to deal with special situations that may arise from time to time. Such power now exists in the authority of the Bank of Canada to vary the cash reserve ratio between 8 per cent and 12 per cent. This power, however, has never been used.
The legislation before the House proposes to substitute for the present authority of the Bank of Canada, to vary the cash reserve, a stand-by power to impose a secondary reserve requirement initially not exceeding 6 per cent, which the bank subsequently may
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vary gradually up to 12 per cent. This will give the Bank of Canada the ability to cope with any special situations that may arise and without the implications for bank earnings that would have been involved in the use of the present authorization to vary the cash reserve. A secondary cash reserve formula is not new since for some years there has been an agreement between the banks and the Bank of Canada under which banks have kept a secondary reserve of at least 7 per cent of their Canadian deposits in the form of treasury bills and day loans.
I announced in the House on September 22, 1964 that basically the same proposals regarding non-resident holdings of bank shares would be included in this Bill as have been made for insurance, trust and loan companies. These limits are 10 per cent of a bank's shares for any one non-resident investor and 25 per cent for non-residents as a group. The reasons for this proposal have already been given in connection with the other legislation. On February 16 last I announced that in the case of banks, it would also be proposed that no shares may in future be acquired in the name of any Government and that the same 10 per cent limit on an individual shareholding would be applied to residents as well as non-residents.
On February 16, and on a later occasion in the House, I explained the reasons for prohibiting governments being shareholders in our banks. As a shareholder the government concerned might acquire a position of special influence over the bank concerned. Such a situation might well lead to differences of opinion between this Government and another Government in regard to matters regulated by the Bank Act or powers given the Government or Inspector General thereunder.
I hesitate to interrupt this dissertation, Mr. Speaker, but I see my hon. friend across the way, who is a great supporter of the Government of British Columbia and interested in this matter, and this has always been a peculiar combination which has puzzled me. Every time my hon. friend propounds it, I become more and more puzzled. It never oc-cured to me that he, with his understanding of central banking and the whole banking system, would find himself allied with the Social Credit theorists on this particular matter. But that is what he has done and that is what he persists in doing, and believe me he will not be allowed to forget it.
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May 18, 1965
[DOT] (8:50 p.m.)
If I may get back to this matter, Mr. Speaker, there are not at present any significant holdings of chartered bank shares by governments and it seems appropriate to ensure that this situation will continue. If, after study, the Banking and Commerce Committee were to recommend that specific provision should be made in the Act to permit government pension funds and perhaps other similar funds to make modest investments in bank shares, possibly on a non-voting basis, the Government would be prepared to consider such an amendment sympathetically.
So far as the 10 per cent limit on the holding of bank shares by any one resident investor is concerned, it has been traditional for the share ownership of our banks by residents of Canada to be widely spread among many holders, rather than for large blocks of shares to be held by a few special interests which might dominate the management and policies of the banks. The Government believes that it is in the long run best interests of the public that share ownership of our banks continue to be widely diversified. It is provided, therefore, that no one shareholder and his associates, if any, can hold more than 10 per cent of a bank's capital stock. If there are any individual holdings already in excess of 10 per cent, they will be permitted to continue. New banks will be expected to conform to this requirement in due course, but Treasury Board will have discretionary power to grant exemptions for resident shareholdings to permit small new banks to get under way.
To ensure that no bank dominated by any special group can become a major factor in our banking system and to give banks an incentive to broaden the basis of their share ownership, it is proposed that a bank with more than 25 per cent of its shares held by one shareholder cannot have total resources in excess of 20 times the amount of its authorized capital.
It is not the intention that these new measures affecting both resident and non-resident shareholdings in the banks should interfere to any important extent in normal market transactions in bank shares. The typical holder of bank shares is a small investor. Last year over 93 per cent of registered holders of bank shares held less than 500 shares. Total turnover of bank shares on Canadian stock exchanges last year exceeded two million shares. The bill to revise the Bank Act contains various qualifying provisions to make it

feasible for normal small transactions in bank shares, which are obviously not related to matters of control, to take place with a minimum of interference or delay so far as the investor is concerned.
Before leaving the matter of ownership and control of banking, I should like to point out that there would be very serious implications for Canada if foreign owned banks or their agencies were free to do any substantial volume of banking in this country. Canada is in a rather special position in this regard. First, a large number of Canadian corporations are controlled from abroad and would be inclined to do their banking business with the same bank as their parent corporation if that bank could offer facilities in Canada. Second, a great many Canadians, particularly exporters and importers, because of the nature of their business can choose whether to borrow or maintain deposit accounts in Canadian dollars or in a foreign currency. They are more likely to choose the foreign currency if foreign banking facilities are readily at hand. Any serious tendency in this direction would have unfortunate implications for the effectiveness of our future monetary policies. For these reasons no provision is being made in this bill to permit the establishment in Canada of agencies of foreign banks, whose presence in Canada's special situation would tend to have much the same implications for our financial and monetary independence as would the presence of banks owned and controlled abroad.
In this connection I should like to mention that the increasing tendency in recent years for our own banks to do foreign currency banking business with Canadians has somewhat the same implications as those to which I have just referred. I would very much hope that our banks, as part of an increasing competition for Canadian dollar business, would offer at least as favourable terms on loans and deposits in Canadian dollars as they would offer on a foreign currency basis. If the amount of foreign currency banking in Canada by Canadians continued to become more and more important in relation to Canadian dollar banking, specific legislative measures might have to be considered to provide for the regulation of this type of banking.
It is desirable to guard against the possibility that banks might acquire too much control over corporations engaged in other lines of business. The Government has accepted the view expressed by the Royal Commission that it is undesirable for banks to
May 18, 1965

have close ties with other Canadian corporations by way of share ownership or interlocking directorates. The basic position is that the Bank Act sets forth the powers of the banks and prohibits them engaging in other activities. It is anomalous if this prohibition can be avoided by operating through control of affiliated corporations. It is proposed, therefore, to limit a bank's holdings of voting shares in other Canadian corporations to not more than 10 per cent and to restrict the number of its directors serving on the board of directors of any other Canadian corporation to not more than 20 per cent of that board, with an exception for the bank's own realty company. Incidentally, the definition of this exception as set out in the bill may need to be tightened. We did not think it practical or desirable for Treasury Board to exercise power to grant special exemptions for investments in other corporations, as has been suggested by the Commission. It is proposed, therefore, that banks divest themselves of existing affiliations over a period of five years to the extent that such connections would not be permitted under the revised Act.
I mentioned earlier that as compared with most other countries Canada has a high degree of concentration in banking. It is to be hoped, therefore, that part of the future growth in our banking system will take place on the basis of a larger number of banks as well as growth of existing banks. The revisions which have already been mentioned should encourage the formation of new banks.
There is, however, another difficulty in the way of new banks and that is the necessity of obtaining a charter by special Act of Parliament. The Bank Act prescribes in very considerable detail the requirements which must be met by a new bank. It seems unnecessary, therefore, that Parliament should be asked to decide if a particular application for a charter should be approved. We have seen this past year the difficulties to which these applications for charters can give rise both in this House and in the other place.
[DOT] (9:00 p.m.)
We are dealing in this revision of the Bank Act with certain questions of policy which previously might have been thought to need the attention of Parliament on particular applications. Mr. Speaker, I submit it is not a proper use of Parliament's time, however, in the second half of the 20th century to debate the merits of particular applications.
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This does not occur in other countries with which comparisons might be appropriate, such as the United States or United Kingdom. It is proposed therefore that new banks may be incorporated by letters patent, which would become effective if the House of Commons does not annul them within a stated period of time.
As recommended by the Royal Commission, provision is being made to increase the amount of information given each year with respect to banks' earnings, expenses, losses and reserves on loans and investments. For banks as a group, Schedule "Q" has been expanded to include the amount of each year's loss experience, and the amount of reserves on loans and investments at the end of the year. Individual banks will now be required to publish information concerning their earnings and expenses in the form of a new Schedule "O" which gives the same classification of earnings and expenses as Schedule "Q", and also shows the amounts transferred to and from reserves.
It is proposed to amend section 88 of the Bank Act to give priority over the rights of a bank to claims of growers of perishable agricultural products delivered to the manufacturer within the last three months, up to a maximum of $5,000 in any one case. This is an extension of the principle of priority for claims for wages owing for a period up to three months, which is already in section 88 of the act.
It is believed desirable to extend this form of protection to small growers who deliver their produce to processing plants for payment at a later date, and who may have no security for their claims if the processor should become bankrupt. This change is being introduced as a result of consideration given by the Government to the proposals made by the hon. Member for Essex South (Mr. Whelan) in Bill C-5 of the last session. Others of those proposals are under consideration in connection with a revision of the Bankruptcy Act.
The report of the Royal Commission recommended that banks should be able to determine the par value of their shares and the price at which new shares may be issued. It has been decided to give the banks a great deal more flexibility in these matters. It is proposed that a bank may fix the par value of its shares at any multiple of $1 not exceeding $10, and may fix any price on new issues of shares which is not less than the par value of such shares.

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Following the debate on second reading the intention is to refer this bill to the House Banking and Commerce Committee for thorough and detailed study. I hope this can be completed before the banks' charters expire on July 1, but if this is not feasible we shall bring forward a bill to provide for a temporary extension.
Mr. Colin Cameron (Nanaimo-Co wichan-
The Islands): Mr. Speaker, if there is anything I like to be able to do it is to fascinate my good friend, the Minister of Finance (Mr. Gordon). I thought my days of fascinating anybody were long since past.


Walter Lockhart Gordon: Oh, no.


Mr. Cameron (Nanaimo-Cowichan-The Islands):: But I would like to call to his attention that possibly not having really as
exhaustive a knowledge as he has of central banking, however I have a faint, slight knowledge which I have gleaned by patient listening to some of the ideas of Social Credit, and I find no similarity between the proposals of the ebullient premier of my province and the theories of Social Credit, even though he calls himself a Social Crediter. However, I do not intend to debate this issue with the Minister of Finance tonight. We have debated it in public and in private on several occasions.
Except for this, I would call to his attention that I would imagine by the public utterances of the Premiers of British Columbia and Quebec that these two gentlemen are at the present time consulting constitutional lawyers to see whether it is worth their while taking this matter to the Supreme Court of Canada. I am quite sure if they find any possibility of success they will do this, which may leave the Minister of Finance in a rather difficult position for a while until it has been decided.
I was interested in the Minister's statement with regard to the proposed new method of incorporating new banks. I can see his point, and an additional one which I do not think he made, which is that any bank charter that is issued by the provisions of the Bank Act will be precisely the same as any other bank charter. There will be no details of difference to be discussed in the House.
However, there is one point that I have some misgivings about, and this is that no provision whatsoever is made for a group which has applied for letters patent, which has been denied them and feel they have been discriminated against. There is no provision by which they can appeal the decision

of the Governor in Council in this regard. Possibly this difficulty might be overcome if the Government were to spell out its policy with regard to the numbers, if you like within a fairly wide range, of new charters it would consider desirable at the present time.
I must confess also that one incidental of this revision rather appeals to me, in that it eliminates the other place from any consideration of the measure, which I think is highly desirable. I suspect the Minister was hoping no one would notice that little provision, but it struck me immediately and I was very pleased to see it.


Stanley Howard Knowles: He is on our side after all.


Colin Cameron: Yes, on some things. In the provisions with regard to the directors I notice one change. I do not think it is a change of any great substance, and anyway not one I would object to, in that now we shall require three quarters of the directors to be Canadian citizens resident in Canada. Previously I believe the provision specified British subjects resident in Canada, which I suppose went for citizens of Australia, New Zealand, Great Britain and various other members of the Commonwealth.
When we get to the committee stage I would like to ask the Minister with regard to the prohibition of only 10 per cent to one investor, to one person, whether in this instance "person" covers "corporations"? I presume it does.
The provision with regard to revealing expenditures and undivided profits is, I suppose, a step toward giving more publicity to the actual operations of banks, but I am just wondering, from my memories of the last decennial revision, whether this provision will in actual fact reveal precisely the position of the chartered banks, because at that time I remember there were numerous references to what sometimes were called the inner reserves, and sometimes the hidden reserves, which were not disclosed and which the banks did not have to disclose at that time. I do not know if that is the same situation now under this legislation, but it seems to me it probably is.
I do not imagine that the reduction in the cash reserve requirement of chartered banks to 7 per cent is anything more than adjusting to the realities of the day.
[DOT] (9:10 p.m.)
I was pleased to see the provision with regard to placing growers of agricultural
May 18. 1965

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products in a preferred position, and I was also pleased to hear the Minister of Finance give a lot of the credit for this to my good friend the hon. Member for Essex South (Mr. Whelan). The hon. Member for Essex South and I fought a persistent battle in the Banking and Commerce Committee trying to obtain this result by way of an amendment to the Bankruptcy Act. That may, perhaps, not have been the best way of doing it. I recall that we suggested then that the provision in respect to wage earners would be extended to cover producers of agricultural products. The particular provision contained here will go a considerable distance to overcoming the conditions about which the hon. Member for Essex South complained then, and about which I have heard complaints both before and since.
I was interested in the provision designed to prevent banks from combining to fix interest rates. It was only a few minutes earlier that the Minister had been telling us about the vigorous competition which existed between banks and it occurred to me that his faith in the competitive nature of their activities was probably not so profound as he would lead us to believe. I am not sure how he proposes to prevent this competition. Does he intend to make it illegal for bank A to charge the same interest as bank B? How does he intend to reply to the perfectly honest statements which I have no doubt will be made to him that "we were bound to arrive at this particular rate by reason of the present condition of the market"? I am at a loss to understand how he will be able to combat such statements.


Douglas Mason Fisher: How will he prevent bank presidents playing golf together?


Colin Cameron: Yes. As my hon. friend suggests, it will be difficult to prevent bank presidents playing golf together or having lunch together. All in all, this provision seems to me to be an empty one. I doubt whether it will stop banks combining or agreeing with regard to interest rates on loans. The same idea occurred to me when the Minister said he did not intend to follow the advice of the Porter Commission and eliminate the 6 per cent interest ceiling. Again I share the minister's feeling that the probability of the banks really competing basically, and not coming to arrangements, is not very high.
I should like to make one comment on the Porter Commission. I do not want to be rude about it. I certainly would not be as 22620-93
rude as Professor Weldon of McGill who had an article on the Porter Commission report in the Queens Quarterly last year under the intriguing title "Women Preachers and the Porter Commission". This puzzled me at first because I could not understand the connection between women preachers and the Commission. Then I saw it was based on a quotation in Dr. Boswell's "Life of Johnson"-"A woman's preaching is like a dog walking on its hinder legs; it is not done well but you are surprised to find it done at all". This summarizes the Professor's attitude toward those who were appointed to the Porter Commission; with the best intentions in the world, according to him, they lack the capacity to fulfil their responsibilities. I must say, though, I think Professor Weldon must, like Dr. Johnson himself, be a bachelor or he would not have made any reflection on a woman's capacity to preach.
I was disappointed in this report, not so much by its contents, though these disappointed me to some extent, as by its make-up which I thought was unsatisfactory. I had great difficulty in finding the supporting arguments in favour of the recommendations. The recommendations were in one spot and I had to hunt through the volume to find the supporting arguments. The presentation was confused. I was relieved to hear that the Minister did not intend to follow the report line by line.
There is not much one can say on second reading of a bill of this kind. There is only one principle involved and it is a principle which has been accepted for many years- that we are to have chartered commercial banks operating in Canada under the authority of Parliament. One could perhaps embark on a discussion of the relative desirability of having a privately owned banking system or a publicly owned banking system. One could perhaps delve into the peculiarities of a banking system one part of which is publicly owned and the other part of which is privately owned. But I do not propose to do that this evening because I have a feeling that before too many years have gone by this development will take place anyway in our economy. I hope to be able to increase my knowledge of banking and of the monetary system as a whole during the hearings of the Banking and Commerce Committee and I hope the Minister's anxiety to get this bill concluded before June 30 will not cause him to curtail the opportunity-I am confident it is a valuable one-of furthering the educa-

May 18, 1965
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tion of Members of the House, members of the press and, by that means, the general public with regard to a matter which is usually considered as deadly dull but which affects the lives of every Canadian. The more they can understand the operation of our monetary system, the more they will be able to understand the terms and conditions of their lives in a modern monetary economy. I hope the Minister will bear this in mind and not try to rush us in the committee to meet this deadline. It will surely be possible to do as we did last year and extend the charters temporarily for a short period of time after June 30 if necessary.
With these words I will finish just now. I hope to have a great many questions to ask during the committee hearings and as I say, I hope to add to my knowledge and perhaps I will be able, by drawing out information, to add to the knowledge of others at that time.
[DOT] (9:20 p.m.)


Mr. Maurice Cote (Chicoutimi):: Mr. Speaker, I perused most carefully this rather bulky Bill No. C-102, entitled "An Act respecting Banks and Banking", and I found no amendment likely to cure the evil affecting the world and which I would call the monetary evil. This bill has some 20 new sections, including two which I consider of major importance, the one concerning the transfer of shares to foreigners and that allowing banks to make loans on mortgage.
As we all remember, recently a Canadian bank, namely the Mercantile Bank, was taken over by American interests.
As far as the other sections are concerned they are, in my opinion, of minor importance. However, I notice that the Minister of Finance (Mr. Gordon) has decided to keep the bank's rate of interest at 6 per cent. In a speech I delivered recently, I asked that the bank's rate of interest be not increased but rather decreased to 5 per cent for the purpose of eliminating the pernicious inflation affecting our country.
With regard to the monetary power held by chartered banks and enabling them to create credit out of nothing, that is sacred and cannot be interfered with. On the contrary, their power is increased by lowering their reserves from 8 to 7 per cent.
In fact, faced with the need to revise our financial policy, the government is taking a do-nothing attitude.

The ever-increasing momentum of history and modern economics requires a bold and firm policy, one which is adapted to the needs of this day and age. However, the government sticks to the system which was in effect at the time when oxen-drawn carts ran through the streets of Bytown and when my grandfather was a pioneer in this community.
You will admit, Mr. Speaker, that there is in fact nothing sensational in this bill, since it does not take into account the essential elements of economic activity: problems of demography, production and overproduction problems, automation, time factor in production, etc., which should have influenced the Minister of Finance and his advisers in the preparation of Bill No. C-102.
The wealth potential of our country could easily provide a decent living for 150 million people. But, in a population which has not yet reached 20 million people, 4 million people live in great poverty.
The famous French economist, Henri Guit-ton, in his book entitled Economic politique, volume II, page 78, very rightly wrote this:
One would say that scrip money has initiated a sort of long war between private banks and the government. Of this war, the banks have won the first battle.
That is the shocking truth: chartered banks impose their will, and I would even say, their dictature, upon the federal government.
We have got into the era of credit money about 75 years ago and the federal government has not yet understood from this development that to use its regalian prerogatives only on money plants makes no sense because the greater mass of money in circulation is credit created by commercial banks.
That is why I say that the monetary power is now being wielded by the banks, which in fact enjoy regal rights that should be reserved to the federal government. As long as that primary function of the state which is to regulate production, to constantly inventorize the quantity and quality potential of available manpower so as to appraise the financing possibilities is not carried on by the federal government, we shall go on living in an economy of poverty.
Bill No. C-102 gives us an opportunity to take back that authority over the chartered banks so that credit money be issued only by the Bank of Canada, according to the requirements of the economy and under the supervision of monetary engineers selected
May 18, 1965

for their intellectual and moral qualifications, in the public interest.
Those were the few remarks I wanted to make, in view of the fact that in recent days, I had two occasions to put forward the views of our group on that all important matter of the Bank Act and of the Bank of Canada Act.
I hope that during the discussion in the banking and commerce committee, major amendments enabling a Christian democracy such as Canada to free itself from such an economy of poverty will be presented in a specific manner.


Henry P. Latulippe: Mr. Speaker, I would be remiss if I did not say a few words on Bill No. C-102.
The Minister of Finance (Mr. Gordon) introduced several amendments which may lighten the burden while he left the biggest piece of the pie to the banks and consequently the Canadian economy is still in the hands of the big financial institutions. The monopoly of finance is left practically intact; it is a terrible and cruel monopoly. As the Holy Pope stated:
Those who have control over money and credit have become the masters of our lives and we can no longer breathe without their permission.
The government with all its prerogatives is not in the least interested in regaining control of money and credit for the benefit of the nation.
How can such a weak monetary system survive by the simple process of getting new loans to pay off old ones? This leads finally to the periodic and wholesale write-off of private and public debts which is done by one of the following well-known three means: bankruptcy, repudiation or devaluation.
We went through all those stages of the economy. There is no end to bankruptcies in Canada; their number is terrific. It is shocking that a country like ours has to devaluate its currency in order to survive and to keep the system going.
As for collective and personal debts, they are the undeniable proof that our banking system has to be improved and that the outmoded concept of creating credit based on the scarcity of products should be changed. And this is precisely what is proposed by Social Credit, which maintains that the insufficient purchasing power may be accounted for by the failure of the present financial system to provide enough money for the buying of production.
22620-93J
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[DOT] (9:30 p.m.)
Mr. Speaker, what we must do at all costs -I am talking about the 265 members of parliament, 26 ministers and 102 senators- if we want our economy to improve, is to put our present financial system in order by turning the national debt into a national asset. And the Minister of Finance is far from advocating or doing this.
But how can the national debt be turned into a national asset? All the country's consumption should no longer be financed by chartered banks but by a central bank or a credit board, a non-profit organization, as opposed to the chartered banks. The entire country's consumption should be financed by the money required and without interest; the entire private production and the entire public production should be financed by debt free money. Thus, the national debt would disappear, and be turned into national capital, a national asset; it would bear national interests that would be distributed as national and social dividends.
The national debt should immediately be converted into national assets and the interests on the national debt should become dividends for all Canadian citizens.
That part of our present taxes which is used to pay bank interests is sheer robbery and should be abolished as well as that portion of taxes which is used to pay off loans; and everybody knows that those two parts are enormous, considering all the municipal, school, provincial and federal administration they require.
Mr. Speaker, the national debt is an unequalled fraud and interests on public debt extorted from the taxpayers are the product of fraudulent activities.
Bank bookkeeping authorized by the government is dishonest, since with the government's knowledge the bank appropriates the financial credit of the country. The bank enters to Canada's account the asset of the country, but whereas in the debit column, it passes the country's asset to its own credit.
The bank has simply taken the total asset of the country and transferred it to the bank's credit and to Canada's debit; a deadly mix-up in columns for the Canadian citizens. It is the greatest fraud ever known in this country. The population has been kept in the dark, in total ignorance about this aspect of the economy.
I shall go even further, Mr. Speaker, and say to the face of those responsible in this house that banks are forgers much more dangerous than the counterfeiters we put

May 18, 1965
Bank Act
in jail. It is really counterfeit money that we allow the banks to create, since it is debt money, debt credit, instead of debt- free money that the Canadian citizens could spend without binding themselves for ever to creditors such as international financial interests.
The Creditistes have understood that it is the financial system, the present indebtedness system that must be changed if we want to escape that individual and collective indebtedness; this is why they suggest that the financial credit reflect the real credit, that of existing goods, taking into account the potential of our production and the needs to be met.
We are still wide of the mark, Mr. Speaker. Privileges granted to those institutions go far beyond the limits of social justice. Something has to be done and this is the time to do it, while we are authorizing banks to operate for another ten years. Canada will again be in the dark for ten years and the victim of the big financiers who, without taking production into account, will create money and put it into circulation, relying only on the judgment of a few, to the detriment of the population, disregarding besides the volume of production, the value of which will be $50 billion in 1965.
The national credit will be controlled by a commission independent from the government; the credit and the population of Canada will be controlled simultaneously; Canadian workers will increase production, while the bankers will enter no figures in the books to balance this production increase.
So, we will have to tighten our belt and witness a large number of bankruptcies, all kinds of frauds, simply because the Minister of Finance and those responsible in the government do not want to assume their responsibilities. It is not the banks' fault if the administration of the nation's credit is in their favour, but those who are letting them do it are to blame, that is the government and the Minister of Finance. I would then ask each and every one before voting in favour of this charter, to fully consider this bill, because the credit of the nation and the control of our economy stem from our monetary system.
We lack absolutely nothing in Canada, except that our monetary system is ill-balanced. We are not complaining about production, since labour does its work well; the proof of this is that production goes up year after year. However, even if the volume of

production increases, credit does not expand at the same rate and that is a disaster. That is what the people concerned fail to correct- perhaps because they are shareholders of banks which have a greater degree of control than usual. Something will have to be done about that one day; otherwise, the people will rebel, because they are becoming aware of the principles of finance; the public is getting to know who controls Canada's economy. The people are starting to realize that production is abundant but that there is not enough money to purchase that production. In other words, great developments are physically possible but funds are lacking to implement them.
Mr. Speaker, I would like to say a lot more, but I shall conclude by asking the minister to consider carefully the situation in Canada, for rebellion is closer at hand than he thinks.
We must, at all costs, tidy up the economy and finance in this country, but the Minister of Finance and the government do not want to do it.
I therefore ask him to take his responsibilities because he has more influence than he thinks.
The people have had enough. In fact, they are fed up with all the unfair advantages enjoyed by financial interests. We must put a stop to that situation and the day may not be too far away when we will witness dreadful events because we will have failed to assume our responsibilities.
I therefore urge once again all hon. members and ministers, including the Minister of Finance, to think twice and to open their eyes to the situation of the national economy and the present financial system, because that system is indeed liable to render great services to the Canadian people by making everything work in this country, but it is restricting almost everything.
If you want to progress you must go into debt. Now that everybody is in debt up to his neck, no one dares go any deeper. Even if the government should set up some system of loans for every Canadian citizen, we must realize that Canadians are afraid of further debts and new loans. It is absolutely necessary to remedy that situation.

[DOT] (9:40 p.m.)


Mr. G. H. Aiken (Parry Sound-Muskoka):: Mr. Speaker, this very important long range piece of legislation has been left dangerously near the point where it might get into dif-
May 18, 1965

Acuities, and we do not wish to delay the passage of the Bill, nor keep it out of the Committee of Banking and Commerce. I hate to think what might have happened if there had been an accident, which so many have been speaking about, resulting in the dissolution of this Parliament or in some adjournment, and allowing this bill to expire within the next few weeks. Therefore, I do not intend to delay it, certainly beyond ten o'clock. I hope we can give it second reading and get it into the committee tonight.
The only really new provision in this bill is the one permitting the banks to get into the real estate mortgage held. That is not really new either, because over the past few years the banks have gradually entered this land mortgage security held, which they for so many years completely avoided.
At the beginning of their venture into land mortgages, additional security was required when notes or other instruments became precarious. Following this Arst venture they then began to go into the mortgage Aeld in response to Government requests to put money into properties. We see now that the banks are getting into matters, such as small business loans, on which they take mortgage security, and mortgages which have been put forward on the basis of public policy in order to provide housing for the people of Canada.
From the original stage of being institutions which relied almost entirely in respect of their loans on the signature of a person whom they considered responsible, the banks may now develop into institutions which take land loans as a matter of routine. I hope that the authority for banks to move into the land mortgage Aeld does not divert too much bank money from the traditional lending practices they have followed in the past.
A good deal of the development of this country has been based upon short term loans from banks and quick loans given merely on a signature in the case of individuals, and fairly unsecured loans to larger Arms and businesses on the basis of their histories, balance sheets and reputation. I hope that this venture into a new Aeld, which is already well covered by a great many other institutions in this country, will not cause a drying up of traditional funds.
I hope when this matter gets into the committee it will be considered very carefully. We did look at the question of mortgage securities recently in respect of another bill, by which certain trusts, loan and mortgage companies were permitted to increase the amounts of their mortgages to 75 per cent of
Bank Act
the asset value of real estate. I was one of the Members of that committee who felt that the bill had gone too far, but I was not of the majority. The majority of the committee Members at that time felt that the Central Housing and Mortgage Corporation was lending close to 90 per cent, in some cases, of value, and that many other organizations were lending up to 75 per cent and more of value and, even as high as 83 and 84 per cent on Arst and second mortgages, and that there was no reason why trust and insurance companies should not get into this Aeld and take part in this lending program.
I still think that the percentage is too high and that there is too much money going into land mortgages, and that as a result of the banks getting into this Aeld the situation will grow even worse. For that reason, Mr. Speaker, I express real hesitation about the move to put banks into the land mortgage Aeld. One of the things that could easily happen-


Walter Lockhart Gordon: Mr. Speaker, I wonder whether the hon. Member would permit a question.


Gordon Harvey Aiken: Yes.


Walter Lockhart Gordon: Can I take it that he is speaking on behalf of his party in opposing this move to allow banks into the mortgage Aeld? Is this the opinion of the Conservative Party?


Gordon Harvey Aiken: Mr. Speaker, I have not said that I am in opposition to this. I said that when it got to the committee I hoped there would be a great deal of consideration given. I suggest to the Minister that in connection with the other legislation, to which I referred, there was a very extensive discussion in the committee. I might also say to the Minister, and I am sure he knows this very well, that the discussions in that committee were not conducted along party lines. It is my hope that in respect of legislation such as this it can be approached not as a partisan matter but on the basis of what is best for Canada.
I am not prejudging the position that will be taken in the committee on this subject, Mr. Speaker, but I am expressing serious doubts about it, and suggest, once again, and I am sure the Minister listened to me carefully the Arst time I said it, that when this bill gets to the committee serious consideration will be given to it. Unless there is evidence that it will be beneAcial to the country, it may be opposed on several counts.
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May 18, 1965
[DOT] (9:50 p.m.)
I was about to say, Mr. Speaker, that I hoped the movement into the land mortgage field by banks would not make bankers security conscious. By that I mean that local bank managers in many cases are not accustomed to working in the mortgage field and, quite frankly, do not like it. I have talked with a number of bank managers who have told me they do not particularly like this mortgage business because it involves a great deal of legal procedure and often results in their becoming security conscious. In the event that loans are made against mortgages instead of on notes and personal reputation, and corporate balance sheets, many bankers will become too security conscious. I hope this does not make them security conscious.


An hon. Member:: Carried.


Gordon Harvey Aiken: I hope my hon. friend is not in too big a hurry. I want to see the bill given second reading by ten o'clock and I trust there will not be too many interruptions. I want to say a few words about interest rates. There is nothing in the bill which will alleviate the existing situation with regard to the back door charging of interest rates by the chartered banks. I think we all know what is happening. The legal rate of 6 per cent is being maintained on the surface. If you borrow money from a bank and sign a note you will be charged 6 per cent, the legal rate, but for the past couple of years the banks have been employing certain back door methods by which they can make more interest on their money.
One method, of course, is the elimination of the overdraft practice and the requirement that notes be given for money borrowed from the chartered banks. The way this has worked out is that in most cases the banks now require a depositor to keep a credit balance in his account by virtue of notes. By doing this they are in almost every case charging interest on money which is in a current account and for which they allow no interest, so there is a double interest feature involved.
Then there is also a more recent innovation in most banks in that if perchance there is an overdraft, even in a current account, they pay the cheque but they charge 50 cents as a handling fee. On a very small overdraft a handling charge of 50 cents can mean quite a large amount of interest. I think it is well known in the banking field that this is happening, and in fact the banks are having difficulty in maintaining the interest rate of

6 per cent which is what they are allowed to charge legally. I would have hoped that some way could have been found to remove these back door methods of charging interest.
There is one more matter to which I wish to refer, the competition faced by the chartered banks from the so-called near-banks that are growing in numbers in Canada. I referred to the question of mortgage loans and the matter of interest rates, both of which are affecting the chartered banks. They are having difficulty in meeting the competition from other corporations which are permitted to charge greater interest rates. While the provision with regard to chartered banks dealing in mortgages will increase the interest rate in some cases, nothing has been done with regard to the over-all interest rate so as to permit our chartered banks to compete with these near-banks which are causing them so much difficulty.
I see it is almost ten o'clock, Mr. Speaker, and we are anxious to have this bill go to the committee and to have the matters I have raised and a good many others studied very thoroughly. Therefore I will say no more at this time in the hope that the bill can be given second reading immediately.


Mr. Bernard Pilon (Chambly-Rouville):: Mr. Speaker, I am pleased to approve the introduction, by the Minister of Finance (Mr. Gordon), of Bill No. C-102 dealing with the revision of the Bank Act. I wish to congratulate him over the realistic way in which he points out specific means of dealing with our economic expansion and preventive measures against inflation.
Since 1867, chartered banks under federal jurisdiction have undergone many amendments, and it is evident that the royal commission, in its new recommendations, took into consideration economic expansion and modern operating methods, together with the new methods concerning transfer of securities properly so-called.
The royal commission also made recommendations so as to simplify our financial system which has become complex due to the diversity of present needs.
Apart from considering this report as businessmen dealing with banking institutions, the commissioners have extended their analysis into fields which were unexplored up to now but which could prove useful under our present system.
May 18. 1965



It is not my intention to criticize the commission and to make suggestions at this stage. The Minister of Finance is anxious, of course, to preserve our basic economic principles. He wants to enable our banking institutions to establish the best relations possible with our businessmen, and this in every sector of the financial field.
The minister also wants to maintain the present rate of interest at 6 per cent, despite the legitimate protests of some bank presidents. One must recognize the fact that this 6 per cent rate is used as a scale of our economy, as an essential guide for proper control of our business, in the field of shares and bonds as well as in the mortgage and personal loans field.
The minister was also anxious to protect small borrowers who can now do business with banks more easily than before, thanks to personal loans. This type of loans enables banks to grant loans, without violating the law, at a rate of interest higher than 6 per
Business of the House
cent by adding operation and life insurance costs.
Taking into consideration the fact that competition creates a more diversified field of action, the minister amends the old legislation by authorizing banks to grant mortgage loans at the current interest rates of the market and gives the privilege to increase by 1 per cent the reserve to that effect.
Mr. Speaker, may I call it ten o'clock?

May I call it ten o'clock, Mr. Speaker?



BUSINESS OF THE HOUSE

George James McIlraith: Mr. Speaker, tomorrow the House will be asked to consider Order No. 14 on today's order paper, the resolution having to do with procedures in the House of Commons, and then Order 15, the further proposed resolution amending certain standing orders.
At ten o'clock the House adjourned, without question put, pursuant to standing order.

Wednesday, May 19, 1965